California Labor Code Section 238

238. (a) If a final judgment against an employer arising from the employer s nonpayment of wages for work performed in this state remains unsatisfied after a period of 30 days after the time to appeal therefrom has expired and no appeal therefrom is pending, the employer shall not continue to conduct business in this state, including conducting business using the labor of another business, contractor, or subcontractor instead of the labor of an employee, unless the employer has obtained a bond from a surety company admitted to do business in this state and has filed a copy of that bond with the Labor Commissioner. The bond shall be effective and maintained until satisfaction of all judgments for nonpayment of wages. The principal sum of the bond shall not be less than the following:

(1) Fifty thousand dollars ($50,000) if the unsatisfied portion of the judgment is no more than five thousand dollars ($5,000).

(2) One hundred thousand dollars ($100,000) if the unsatisfied portion of the judgment is more than five thousand dollars ($5,000) and no more than ten thousand dollars ($10,000).

(3) One hundred fifty thousand dollars ($150,000) if the unsatisfied portion of the judgment is more than ten thousand dollars ($10,000).

(b) In lieu of filing and maintaining the bond required by this section, the employer may provide the Labor Commissioner with a notarized copy of an accord reached with an individual holding an unsatisfied final judgment. If the accord provides for the judgment to be paid in installments, and an installment payment is not made, the employer is no longer excused from satisfying the bond requirement of this section.

(c) (1) The bond required by this section shall be in favor of, and payable to, the people of the State of California, and shall be for the benefit of any employee damaged by his or her employer s failure to pay wages, including any interest, penalties, and attorney s fees.

(2) This section shall not require a bond in favor of employees covered by a bona fide collective bargaining agreement, if the agreement expressly provides for wages, hours of work, working conditions, a process to resolve disputes concerning nonpayment of wages, and a waiver of the bond required by this section.

(3) Thirty days prior to the cancellation or termination of any bond required by this section, the surety shall send written notice to both the employer and the Labor Commissioner, identifying the bond and the date of the cancellation or termination. If the bond is terminated or canceled, the employer shall obtain a new surety bond and file a copy of that bond with the Labor Commissioner to remain in compliance with this section.

(d) For purposes of this section, a judgment also includes any final arbitration award where the time to file a petition for a trial de novo or a petition to vacate or correct the arbitration award has expired and no petition is pending.

(e) Subject to subdivision (f), an employer similar in operation and ownership to an employer with an unsatisfied final judgment for unpaid wages, upon receiving written notice of the unsatisfied judgment, shall be deemed the same employer for purposes of this section if (1) the employees of the successor employer are engaged in substantially the same work in substantially the same working conditions under substantially the same supervisors or (2) if the new entity has substantially the same production process or operations, produces substantially the same products or offers substantially the same services, and has substantially the same body of customers.

(f) Any employer, or other person acting on behalf of an employer, that conducts business in violation of this section shall be subject to a civil penalty of two thousand five hundred dollars ($2,500). Any employer that has previously been assessed and failed to pay a penalty pursuant to this section shall be subject to an additional penalty of one hundred dollars ($100) for each calendar day that the employer conducts business in violation of this section; however, this additional amount shall not exceed one hundred thousand dollars ($100,000). These civil penalties may be assessed under a citation issued by the Labor Commissioner and the procedures for issuing, contesting, and enforcing judgments shall be the same as those set forth in Section 1197.1. The Labor Commissioner shall not assess these civil penalties against an entity determined to be a successor employer pursuant to subdivision (e) within the first 30 days after notice of the judgment.

(Added by Stats. 2015, Ch. 803, Sec. 4. Effective January 1, 2016.)

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Last modified: September 9, 2016