BILL ANALYSIS Ó
AB 2517
Page 1
ASSEMBLY THIRD READING
AB 2517 (Eng)
As Amended May 16, 2012
Majority vote
LABOR & EMPLOYMENT 4-2 JUDICIARY 6-3
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|Ayes:|Swanson, Alejo, Bonnie |Ayes:|Feuer, Atkins, Dickinson, |
| |Lowenthal, Yamada | |Monning, Wieckowski, |
| | | |Alejo |
|-----+--------------------------+-----+--------------------------|
|Nays:|Morrell, Gorell |Nays:|Wagner, Gorell, Jones |
| | | | |
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APPROPRIATIONS 11-5
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|Ayes:|Fuentes, Blumenfield, | | |
| |Bradford, Charles | | |
| |Calderon, Campos, Davis, | | |
| |Gatto, Ammiano, Hill, | | |
| |Lara, Mitchell | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Harkey, Donnelly, | | |
| |Nielsen, Norby, Wagner | | |
| | | | |
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SUMMARY : Authorizes "wage liens" in the car wash industry
against the real and, personal property of an employer for
unpaid wages, and makes changes to existing mechanics lien law,
as specified. Specifically, this bill :
1)Provides that the following provisions related to "wage liens"
apply only to employees and employers in the "car washing and
polishing" industry as that term is defined.
2)Provides that an employee or employee representative may file
a lien for the amount of unpaid wages, other compensation and
related penalties and damages owed on all of the following:
a) Real or personal property owned by the employer that is
located within the state, except that if the employer is a
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natural person, the lien shall not be applied to
residential real property owned by the employer; and,
b) Real or personal property used in a commercial car wash
business upon which the employee performed work or bestowed
labor as part of the employee's employment, as specified.
3)Provides that a lien upon real property shall be recorded with
the county recorder where the property is located, as
specified.
4)Provides that a lien upon personal property shall be recorded
with the Secretary of State, as specified.
5)Specifies that the lien attaches to all personal property
owned by the employer or subsequently acquired by the
employer, whether tangible or intangible.
6)Specifies that a lien may be filed at any time before the
expiration of the statute of limitations for the wage claim
the lien would enforce.
7)Provides that an action to enforce a lien may be brought by
the employee or employee representative, who may recover court
costs and reasonable attorney's fees in a successful action to
enforce the lien.
8)Requires an employee, in order to enforce a lien, to
demonstrate that he or she is owed wages or other compensation
and any related penalties and damages.
9)Specifies that if a lien is recorded and an action to recover
wages has already been filed, that action shall also be deemed
an action to enforce the lien upon any property subject to the
recorded lien. If there is a judgment, the court may order
the sale at a public auction, or the transfer to the plaintiff
of title or possession, of any property subject to the lien.
10)Specifies that if judgment is entered in favor of the
employer or if the case is dismissed with prejudice, any
applicable lien shall be extinguished upon expiration of the
appeals period if no appeal is filed. If an appeal is filed,
the lien shall continue in force until all issues have been
decided.
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11)Specifies that if the lien is extinguished, upon demand and
15 days' notice by any affected party, the lienholder shall
file a release of the lien in the manner set forth under
current law.
12)Provides that to enforce the lien, an action shall be brought
within one year of the recording of the lien.
13)Provides that all liens established pursuant to this bill
shall have equal priority. If there are insufficient funds to
fully satisfy all liens, the funds shall be divided
proportionally among all lien claimants.
14)Provides that an employee's lien is effective against the
employer, the estate of the employer, or a subsequent bona
fide purchaser of the project subject to the employee's lien.
15)Makes other related and conforming changes.
16)Contains a January 1, 2018, sunset date for the
aforementioned provisions.
17)Makes the following changes to existing law related to
mechanic lien law generally:
a) Provides that a "laborer" (as that term is defined under
current law) may file a lien before the earlier of: i) one
year after completion of the work of improvement; or, ii)
one hundred eighty days after the owner records a notice of
completion or cessation; and,
b) Provides that a "laborer" shall be entitled to court
costs and attorneys' fees incurred as a result of recording
and foreclosing on a lien. Upon award, these amounts shall
be considered part of the lien and shall relate back to the
date of recording of the lien.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, this bill will have no direct state fiscal impact,
but will have indeterminate, likely minor costs to the court
system.
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COMMENTS : This bill attempts to address an issue that the
Legislature has struggled with for many years, if not decades -
how to ensure that workers (particularly low-wage workers) have
a meaningful opportunity collect on judgments issued in their
favor for unpaid wages.
According to the author, liens are a proven and longstanding
remedy to address wage theft. For example, California's
longstanding mechanics' lien, which is currently available only
to construction workers and contractors, is a proven,
cost-effective, and widely used remedy for building contractors.
Similar liens are also commonly used by banks loaning money to
businesses, lawyers seeking to secure payment of their fees,
architects, storage facilities, tax authorities and many others
seeking to ensure payment.
Similarly, other supporters argue that the wage lien is a
proven, simple legal tool that costs the state nothing. It
creates no new bureaucracies and no new agencies with
complicated enforcement procedures. Instead, workers simply
file with the County Recorder or Secretary of State and pay a
$10 to $30 filing fee. The worker can foreclose (through a
legal process that provides protections for the accused
employer) on a delinquent employer, just as a bank does on a
mortgage, a creditor on an outstanding debt, a lawyer on unpaid
retainer fees, a hospital on unpaid medical costs, a
construction contractor, an agricultural worker, an architect, a
dry cleaner, a hotel, a landlord, storage facilities, and many
more. Supporters argue that such a streamlined, cost-effective,
common tool to enforce wages is long overdue in California.
A large coalition of employer groups oppose this bill and state
that it will cripple California businesses by allowing any
employee or employee representative to file liens on an
employer's real property or any property where an employee has
performed work for an alleged, yet unproven wage claim.
Opponents also state that this bill will negatively impair an
employer's opportunity to seek future financing that is secured
against real property. The employer will not be able to expand
or hire new employees due to the inability to secure financing
to do so. In short, no lender is going to extend a loan to
someone with a lien placed on their real or personal property.
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Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091
FN: 0003761