Amended in Assembly March 21, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 1164

Introduced by Assembly Member Lowenthal

(Coauthor: Assembly Member Roger Hernández)

February 22, 2013

An act begin insert to add Chapter 3 (commencing with Section 3000) to Title 14 of Part 4 of Division 3 of the Civil Code, end insert relating to liens.

LEGISLATIVE COUNSEL’S DIGEST

AB 1164, as amended, Lowenthal. Liens: employees and workers.

Existing law grants specified persons, including laborers, as defined, who contribute labor, skill, or services to a work of improvement the right to record a mechanic’s lien upon the property so improved.

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This bill would state the intent of the Legislature to enact legislation that would allow an employee or worker to record a lien on the real or personal property of his or her employer if the employer fails to pay the wages to which the employee or worker is entitled.

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This bill would authorize an employee to record and enforce a wage lien upon specified real and personal property for wages, other compensation, and related penalties and damages owed the employee. The bill would prescribe requirements relating to the recording and enforcement of the wage lien. The bill would require a notice of lien on real property to be executed under penalty of perjury.

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By expanding the scope of the crime of perjury, this bill would impose a state-mandated local program.

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The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

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This bill would provide that no reimbursement is required by this act for a specified reason.

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Vote: majority. Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program:  begin delete no end delete begin insert yes end insert .

The people of the State of California do enact as follows:

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begin insert SECTION 1. end insert   

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begin insert Chapter 3 (commencing with Section 3000) is
added to Title 14 of Part 4 of Division 3 of the end insert begin insert Civil Code end insert begin insert , to read: end insert

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Chapter   begin insert 3. end insert Wage Liens

 

begin insert 3000. end insert   

(a) An employee shall have a lien for the full amount of
any wages, other compensation, and related penalties and damages
owed to the employee on the following property:

(1) All property of the employer, including any after-acquired
property.

(2) The property upon which the employee bestowed labor,
provided that the amount of the lien on this property shall be equal
to the amount of wages, compensation, and related penalties and
damages accrued during the time the employee bestowed labor
on that specific property.

(b) The amount of this lien shall include unpaid wages, all other
compensation required under California law, penalties and
damages available under the Labor Code, interest at the same rate
as for prejudgment interest in this state, and the costs of filing and
service of the lien. The amount of compensation that may be
claimed as a lien under this section includes the entire
compensation package agreed to be paid to the employee, but no
less than the amount required by law, including direct wages and
compensation required to be paid to other persons or entities, that
would qualify as “employer payments” described in Section 1773.1
of the Labor Code.

(c) An employee’s lien upon personal property shall be limited
to property subject to a security interest under the Commercial
Code pursuant to the filing of a financing statement with the
Secretary of State.

(d) Any act authorized or required under this chapter with
regard to an employee may also be undertaken by any person or
entity, including any governmental agency, to which a portion of
an employer’s compensation is payable or that has standing under
applicable law to maintain a direct legal action on behalf of the
employee to collect any portion of compensation owed to the
employee.

(e) A lien pursuant to this chapter shall not be claimed by an
employee who is exempt from the protections of Industrial Welfare
Commission wage orders. However, in any action involving such
a lien, the employer or property owner shall plead and prove
exempt status as an affirmative defense.

(f) A lien pursuant to this chapter is in addition to any other
lien rights held by the employee and shall not be construed to limit
these rights.

begin insert 3001. end insert   

(a) The lien described in Section 3000 shall be
permanently extinguished unless a notice of lien in accordance
with Section 3002 or 3003 is recorded and served within one year
of the date that the employee ceased working for the employer.

(b) The employee shall commence an action to enforce the lien
and prove the amount owed within 180 days of the date of filing
or recording of the notice of lien. If the employee does not
commence an action to enforce the lien within that time, the lien
shall be permanently extinguished and is unenforceable.

(c) (1) Subdivision (b) does not apply if the employee and the
owner of the property subject to the lien agree to extend the time
for enforcing the lien in writing and record or file notice of the
fact and terms of the extension within either of the following
periods:

(A) 180 days after recordation or filing of the notice of lien.

(B) More than 180 days after recordation or filing of the notice
of lien but before a purchaser or encumbrancer acquires rights in
the property for value and in good faith.

(2) In the event of an extension, the employee shall commence
an action to enforce the lien within 180 days after the expiration
of the extension. If the employee does not commence an action to
enforce the lien within that time, the lien shall be permanently
extinguished and is unenforceable.

(d) If the lien has been extinguished pursuant to subdivision (b)
or (c), upon demand and 15 days’ notice by any affected party,
the employee shall record or file a release of the lien.

begin insert 3002. end insert   

(a) With regard to a lien on real property, the employee
shall record a notice of lien with the county recorder in the county
where the real property is located.

(b) The notice of lien shall be executed under penalty of perjury
and shall include all of the following:

(1) A statement of the employee’s demand for unpaid wages,
other compensation, related penalties, and damages. The statement
shall specify the amount owed to the employee, and if the amount
is estimated, shall provide an explanation for the basis of the
estimate.

(2) A general statement of the kind of work furnished by the
employee and the dates of employment.

(3) The name of the person by whom the employee was
employed.

(4) The employee’s mailing address.

(5) For property described in paragraph (2) of subdivision (a)
of Section 3000, both of the following:

(i) A description of the site upon which the work was performed
sufficient for identification.

(ii) The name of the owner or reputed owner, if known.

(c) The employee or employee representative shall serve the
notice of lien on the employer and the owner or reputed owner of
the real property subject to the lien, as follows:

(1) For an employer, notice of lien shall be served by registered
mail, certified mail, or first-class mail, evidenced by a certificate
of mailing, postage prepaid, addressed to the employer at the
employer’s residence or place of business.

(2) For an owner or reputed owner who is not the employer,
notice of lien shall be served by registered mail, certified mail, or
first-class mail, evidenced by a certificate of mailing, postage
prepaid, addressed to the address of the property subject to the
lien or to the residence or place of business of the owner or reputed
owner.

(d) For property described in paragraph (1) of subdivision (a)
of Section 3000, the lien attaches to all real property owned by
the employer at the time of the filing of the notice of lien, or that
is subsequently acquired by the employer, that is located in any
county in which the notice of lien is recorded, regardless of whether
the property is identified in the notice of lien. For property
described in paragraph (2) of subdivision (a) of Section 3000, the
lien attaches only to the property that is specifically identified in
the notice of lien.

begin insert 3003. end insert   

(a) With regard to a lien on personal property, the
employee shall file a notice of lien with the Secretary of State.
Except as otherwise provided in this chapter, the manner, form,
and place of filing shall be as described in Chapter 5 (commencing
with Section 9501) of Division 9 of the Commercial Code. The
notice of the lien shall be placed in the same file as financing
statements pursuant to Section 9522 of the Commercial Code.

(b) The notice shall be executed under penalty of perjury and
shall state the following:

(1) The amount of the claim for unpaid wages, other
compensation, related penalties, and damage, and if the amount
is estimated, shall provide an explanation for the basis of the
estimation.

(2) A general statement of the kind of work furnished by the
employee and the dates of employment.

(3) The name of the person by whom the employee was
employed.

(4) The employee’s mailing address.

(5) To the extent known, a description of the property on which
the lien is made. Regardless of whether the property is specifically
described in the notice, the lien attaches to all personal property
owned by the employer or subsequently acquired by the employer
that can be made subject to a security interest under the
Commercial Code.

(c) The employee or employee representative shall serve the
notice of lien on the employer and the owner or reputed owner of
the property subject to the lien, as follows:

(1) For an employer, notice of lien shall be served by registered
mail, certified mail, or first-class mail, evidenced by a certificate
of mailing, postage prepaid, addressed to the employer at the
employer’s residence or place of business.

(2) For an owner or reputed owner who is not the employer,
notice of lien shall be served by registered mail, certified mail, or
first-class mail, evidenced by a certificate of mailing, postage
prepaid, addressed to the residence or place of business of the
owner or reputed owner.

(d) For property described in paragraph (1) of subdivision (a)
of Section 3000, the lien attaches to all personal property that can
be made subject to a security interest under the Commercial Code
that is owned by the employer at the time of filing of the notice of
lien or that is subsequently acquired by the employer, regardless
of whether the property is identified in the notice of lien. For
property described in paragraph (2) of subdivision (a) of Section
3000, the lien attaches only to the property that is identified in the
notice of lien.

begin insert 3004. end insert   

(a) In order to enforce a lien under Section 3000, the
employee shall demonstrate in a civil action, or in a proceeding
under Section 98 of the Labor Code, that he or she is owed wages
or other compensation and any related penalties and damages. In
addition, if the owner or reputed owner of the property is not the
employer, the employee shall demonstrate that the property was
property subject to the lien under paragraph (2) of subdivision (a)
of Section 3000.

(b) If the employee chooses to pursue the wage claim in an
administrative proceeding before the Labor Commissioner
pursuant to Section 98 of the Labor Code, the Labor Commissioner
may establish the amount of lien if a lien has been recorded. If no
lien has been recorded at the time the administrative claim is filed,
the Labor Commissioner may record the lien on behalf of the
employee.

(c) If a notice of lien is recorded or filed pursuant to Sections
3002 or 3003 and an action to recover unpaid wages has been
filed by the employee or employee representative, that action shall
also be deemed an action to enforce the lien and foreclose upon
any property subject to the recorded lien. In the judgment resulting
from an action, the court may order the sale at a sheriff’s auction
or the transfer to the plaintiff of title or possession of any property
subject to the lien. Whether or not the court makes an order as
part of the judgment, any property subject to the lien may be
foreclosed upon at any point after a judgment for unpaid wages
is issued.

(d) The employee or employee representative is entitled to court
costs and reasonable attorneys’ fees for filing a successful action
to enforce a lien pursuant to this section.

(e) If judgment is entered against the employee or employee
representative in the action to enforce the lien or if the case is
dismissed with prejudice, the lien shall be extinguished upon
expiration of the applicable appeals period if no appeal is filed.
If an appeal is filed, the lien shall continue in force until all issues
on the appeal have been decided. If the lien is extinguished, upon
demand and 15 days’ notice by the property owner, the employee
or employee representative shall file a release of the lien.

(f) Any number of claims to enforce employee liens against the
same employer may be joined in a single proceeding, but the court
may order separate trials or hearings. If the proceeds of the sale
of the property subject to a lien are insufficient to pay all the
claimants, whether or not claims have been joined together, the
court shall order the claimants to be paid in proportion to the
amount due each claimant.

begin insert 3005. end insert   

(a) A lien established pursuant to this chapter takes
precedence over all other liens, claims, or encumbrances perfected
after the date that the notice of lien is filed or recorded, and is
effective against the estate of the employer, or any subsequent
purchaser of the property subject to the lien.

(b) In addition, as to the first fifty thousand dollars ($50,000)
of the amount claimed, a lien established pursuant to this chapter
takes precedence over all other liens, claims, or encumbrances
perfected prior to the date of filing or recording of the notice of
lien, except for the following:

(1) A tax lien or other government lien.

(2) A purchase money mortgage.

(3) Other liens that also arise from the performance of labor,
including, but not limited to, mechanics liens arising under Section
8400.

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begin insert SEC. 2. end insert   

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No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.

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SECTION 1.  

It is the intent of the Legislature to enact legislation
that would allow an employee or worker to record a lien on the
real or personal property of his or her employer if the employer
fails to pay the wages to which the employee or worker is entitled.

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