BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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          |SENATE RULES COMMITTEE            |                       AB 1386|
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                                    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:
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          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  

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            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  

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          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.   

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          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

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