(April 4, 2011) A California Chamber of Commerce-supported bill that will help provide certainty for California employers regarding the correct application of the state’s stringent wage and hour laws is scheduled to be considered by a Senate policy committee on April 13.

The CalChamber-sponsored bill, SB 883 (Correa; D-Santa Ana), provides employers who rely in good faith upon and in conformity with the opinions, interpretations, guidance, advice, or orders of the Division of Labor Standards Enforcement (DLSE) with an affirmative defense against claims challenging the validity of the employer's wage and hour practices on such issues.

Division Role

The DLSE is a state agency that is charged with the responsibility and authority to enforce the wage, hour and working condition labor laws.  As a part of its effort to fulfill this responsibility, the DLSE issues opinion letters on various wage, hour and working condition topics, as well as an enforcement manual that sets forth the DLSE’s interpretation and position on these issues. 

Currently, employers are encouraged to refer to the DLSE’s written materials for "guidance" on these topics when there is no published, on-point case available. Employers are provided with no certainty, however, that they will be shielded from liability if they comply in good faith with the DLSE’s opinions/interpretations and such opinions or interpretations are later directly or indirectly reversed or rejected by a court. SB 883 provides employers with that needed certainty.

Affirmative Defense

Specifically, SB 883 allows employers to assert as an affirmative defense in any litigation where a wage and hour practice, policy, action or omission is challenged, that such practice, policy, action or omission was based upon their good faith reliance and conformity with an opinion letter, interpretation, advice or order issued by the DLSE. 

This policy provides credibility to the DLSE, which is charged with the responsibility to enforce such laws. In addition, it encourages employers to comply with the DLSE’s guidance, which in return will provide a positive and consistent environment for employees.  

Affirmative Defense Under Federal Law

Notably, the federal government allows the same defense for employers who rely in good faith upon the advice, opinion letters and guidance of the U.S. Department of Labor regarding the Fair Labor Standards Act. 

In its findings and declaration of policy regarding the Portal-to-Portal Act, in which this affirmative defense is found, Congress recognized that "uncertainty on the part of industry" as well as the "difficulties in the sound and orderly conduct of business and industry" could have a negative impact on commerce. Accordingly, Congress enacted the Portal-to-Portal Act, which included this affirmative defense for employers who rely upon the interpretations and opinions of the Wage and Hour Division of the U.S. Department of Labor. 

CalChamber Support

CalChamber believes that providing employers with certainty through SB 883 by allowing them to rely upon the interpretations of the DLSE, will assist in relieving this burden on employers, produce a better environment for employees, and contribute to the growth of the economy.

Action Needed

SB 883 will be considered in the Senate Labor and Industrial Relations Committee on April 13. Contact your senator and urge support for SB 883.

Staff Contact: Jennifer Barrera