BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 1386| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 1386 Author: Assembly Labor and Employment Committee Amended: As introduced Vote: 21 SENATE LABOR & INDUSTRIAL RELATIONS COMMITTEE : 4-0, 6/12/13 AYES: Monning, Leno, Padilla, Yee NO VOTE RECORDED: Wyland SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8 ASSEMBLY FLOOR : 70-0, 5/16/13 (Consent) - See last page for vote SUBJECT : Employment: employee complaints: final orders SOURCE : Author DIGEST : This bill authorizes the Labor Commissioner (LC) to file, within 10 days of a wage claim order becoming final, a certified copy of the final order with the county recorder of any county in which the employer's property may be located, as specified. ANALYSIS : Existing law allows an employee to bring a claim for unpaid wages, penalties, and damages before the LC. Existing law vests with the LC the authority to hear employee complaints regarding the payment of wages and other employment-related issues. Among other things, existing law requires the LC to do the following: CONTINUED AB 1386 Page 2 1.File an order, decision, or award within 15 days of hearing an employee complaint. If no party to the action appeals within 10 days after its service, the order, decision, or award becomes the final order for the action. An employer seeking to appeal a decision must first post an undertaking (bond or cash deposit) with the reviewing court in the amount of the order, decision or award. 1.File the final order with the clerk of the superior court of the appropriate county within 10 days of the order, decision, or award becoming final, unless the parties reach a settlement agreement approved by the LC. Existing law then requires the clerk of the superior court to enter judgment in conformity with the final order, which has the same force and effect as a judgment entered in a civil action. This bill authorizes the LC to take some additional steps to streamline the collection procedure for employee wage claims that are final. Specifically, the bill: 1.Authorizes the LC to file, within 10 days of the order becoming final, a certified copy of the final order with the county recorder of any county in which the employer's property may be located. 2.Specifies that the order may be filed in any and all counties of the state depending upon information obtained concerning the employer's assets. 3.Specifies that the amount found due under the order shall be a lien in favor of the employee named in the order, and against the personal and real property of the employer named, within the county in which the order is filed. 4.Provides that the recorder shall accept and file the order and record it as a mortgage on real estate, shall file the same as a security interest, and shall index the same as a mortgage on real estate and as a security interest. 5.Provides that the recorder shall include all charges for the CONTINUED AB 1386 Page 3 services to be performed by him or her in the amount due under the lien. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: Yes SUPPORT : (Verified 6/24/13) California Rural Legal Assistance Foundation OPPOSITION : (Verified 6/24/13) Commercial Transactions Committee of the California Business Law Section of the California State Bar ARGUMENTS IN SUPPORT : According to the author, under the current procedure, the LC files a certified copy of the order, decision or award with the clerk of the superior court who then enters it as a judgment on the judgment rolls of the court. This is a ministerial act of the clerk and does not require any action by the court itself in oversight or approval. The author argues that in order to record the judgment debt, the employee must first obtain an Abstract of Judgment from the court which often takes several weeks, and unfortunately, during that time the employer may have liquidated its business, or otherwise divested itself of tangible and real property, thereby denying the employee the opportunity to collect the wages found due and owing by the LC. This bill allows the LC to simply record a final order, decision or award with the local county recorder, eliminating the two-step process requiring action by the Superior Court. The author argues that this will speed collection activity and will help ensure that employees are able to collect on their wage claims before an unscrupulous employer is able to move or hide their assets. ARGUMENTS IN OPPOSITION : The Commercial Transactions Committee of the Business Law Section of the State Bar of California (Committee) is opposed to this measure, not because the legislation would shorten the time necessary to obtain a lien after an order is issued, but because the specific procedures for creating the lien, and the interaction between CONTINUED AB 1386 Page 4 this lien and other liens are likely to create unnecessary confusion and litigation. Among other things, the Committee cites the following arguments in opposition: The method for creating the lien in personal property is inconsistent with the means by which other liens are created, which is by a filing with the California Secretary of State. The bill would provide for the recording of the order with the county recorder to obtain a lien on the personal property of the employer. Additionally, they argue that this new method would make it difficult to locate liens because a person would have to search every county in which the employer may be located - increasing the costs for businesses to obtain financing. The bill conflicts with other state and federal laws that govern property rights. The bill provides for a lien on all personal property of an employer located within a particular geographical area. By extending the lien to all personal property, the lien would cover personal property in which property rights may be governed by other state laws or even pre-empted by federal laws. For example, liens over vehicles and certain vessels are required to be registered with the California Department of Motor Vehicles, or aircrafts which are registered with the FAA, or vessels documented with the U.S. Coast Guard which may be governed by U.S. federal law. The bill provides for a lien on property in which a judgment lien is not permitted. Under current law, a judgment lien can only be created in property that is subject to enforcement of money judgments; specifically listed types of personal property (namely, and subject to other limitations, accounts receivable, equipment, farm products, inventory and negotiable documents of title). By allowing the proposed lien to cover a broader range of assets, the bill puts other judgment creditors, including employees that have obtained judgments, at a disadvantage to an employee that has obtained a lien by the filing of a LC's order. Additionally, opponents argue that current provisions governing judgment liens are covered in over 40 sections of the Code of Civil Procedure. With the brevity of the bill, there are a number of significant procedural and protective provisions applicable to judgment liens that are not covered or addressed. CONTINUED AB 1386 Page 5 Among the questions not addressed by the bill are the term of a lien, the timing of creation of a lien, issues with property acquired after the creation of a lien, removal of property from applicable county, lien priorities, and termination of a lien upon satisfaction, among others. ASSEMBLY FLOOR : 70-0, 5/16/13 AYES: Achadjian, Alejo, Ammiano, Atkins, Bigelow, Bloom, Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown, Ian Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley, Dahle, Daly, Dickinson, Donnelly, Fong, Fox, Frazier, Garcia, Gatto, Gomez, Gordon, Gorell, Gray, Hagman, Hall, Harkey, Roger Hernández, Jones, Jones-Sawyer, Levine, Linder, Logue, Lowenthal, Maienschein, Mansoor, Medina, Mitchell, Mullin, Muratsuchi, Nazarian, Nestande, Olsen, Pan, Patterson, Perea, V. Manuel Pérez, Quirk, Quirk-Silva, Rendon, Salas, Skinner, Ting, Torres, Wagner, Waldron, Weber, Wieckowski, Wilk, Williams, Yamada, John A. Pérez NO VOTE RECORDED: Allen, Buchanan, Eggman, Beth Gaines, Grove, Holden, Melendez, Morrell, Stone, Vacancy PQ:nl 6/24/13 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED