BILL ANALYSIS Ó
SENATE COMMITTEE ON LABOR AND INDUSTRIAL RELATIONS
Senator Tony Mendoza, Chair
2015 - 2016 Regular
Bill No: SB 588 Hearing Date: April 29,
2015
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|Author: |De León |
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|Version: |April 20, 2015 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Gideon Baum |
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Subject: Employment: nonpayment of wages: Labor Commissioner:
judgment enforcement
KEY ISSUE
Should the Legislature allow the Labor Commissioner to file a
lien or levy on an employer's property in order to assist the
employee in collecting unpaid wages when there is a judgment
against the employer?
ANALYSIS
Existing law provides mechanics, persons furnishing materials,
artisans, and laborers of every class the right to file a lien
upon the property upon which they have bestowed labor or
furnished material for the value of such labor and material.
Existing law also requires the Legislature to provide, by law,
for the speedy and efficient enforcement of such liens.
(California Constitution Article XIV, Section 3)
Existing law provides for mechanics liens relating to services
and supplies authorized and provided on a work of improvement.
Existing law also regulates the conditions under which a
mechanics lien may be enforced. (Civil Code §§ 8400-8494)
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Existing law recognizes prejudgment wage liens against property
as a remedy in certain industries, including mining (Civil Code
§ 3060), agriculture (Civil Code §§ 3061.5-3061.6), and logging
(Civil Code § 3065).
Existing law requires the Labor Commissioner and his or her
deputies and representatives authorized by him or her in
writing, upon the filing of a claim therefor by an employee, or
an employee representative authorized in writing by an employee,
with the Labor Commissioner, to take assignments of, among other
things, wage claims and incidental expense accounts and advances
and mechanics and other liens of employees. (Labor Code § 96)
Existing law authorizes the Labor Commissioner, after
investigation and upon determination that wages or monetary
benefits are due and unpaid to any worker in the State of
California, to collect such wages or benefits on behalf of the
worker without assignment of such wages or benefits to the
Commissioner. (Labor Code § 96.7)
Existing law authorizes the Labor Commissioner to investigate
employee complaints and provide for a hearing in any action to
recover wages, penalties, and other demands for compensation,
including liquidated damages if the complaint alleges payment of
a wage less than the minimum wage fixed by an order of the
Industrial Welfare Commission or by statute, properly before the
division or the Labor Commissioner, including orders of the
Industrial Welfare Commission, and is required to determine all
matters arising under his or her jurisdiction. (Labor Code §
98)
Existing law authorizes the Labor Commissioner, at the
Commissioner's discretion and upon a final order, to place a
lien on real property for amounts due under the final order and
in favor of the employee or employees named in the order, with
the county recorder of any county in which the employer's real
property may be located. (Labor Code § 98.2(g))
Existing law provides that, if any employer or other person
acting on behalf of an employer who violates, or causes to be
violated, any provision regulating hours and days of work in
either statute or regulation shall be subject to a civil
penalty. (Labor Code § 558)
This bill would authorize the Labor Commissioner to file a lien
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on all property of the employer in California for the full
amount of any wages and other compensation, penalties, and
interest owed to the employee.
Specifically, this bill would:
1) Allow the Labor Commissioner, after a judgment is
entered by a court of competent jurisdiction in favor of
the Labor Commissioner or in favor of any employee, to
collect any outstanding amount of the judgment by mailing a
notice of levy upon all persons having in their possession,
or who will have in their possession or under their
control, any credits, money, or property belonging to the
judgment debtor, or who owe any debt to the judgment debtor
at the time they receive the notice of levy. This can only
be done with the consent of the aggrieved worker.
2) Provide that, any person, upon whom a levy has been
noticed for either possessing or owing credits, money, or
property belonging to the judgment shall surrender the
credits, money, or property to the commissioner or pay to
the commissioner the amount of any debt owing the judgment
debtor within 10 days of service of the levy. This
includes property, money or credits coming into the
person's possession within one year of receipt of the
notice of levy.
3) Provide that any person who complies with the notice of
Levy from the Labor Commissioner shall be discharged from
any obligation or liability to the judgment debtor to the
extent of the amount paid to the commissioner.
4) Provide that any person who fails or refuses to
surrender any credits, money, or property or pay any debts
owing to the judgment debtor shall be liable in his or her
own person or estate to the commissioner in an amount equal
to the levy.
5) Provides a process for filing a levy with a bank or
other financial institution, as defined under federal law.
6) Limits the above-discussed provisions to property that
IS NOT real property.
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Surety Bond Requirements:
This bill would also:
1) Require that, 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 10 days after the time to appeal therefrom has expired,
the employer must cease business operations unless the
employer has obtained a surety bond of $150,000. The bond
must be filed with the Labor Commissioner and be payable to
the people of the State of California 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) Allow the employer to provide the Labor Commissioner
with a notarized copy of an accord reached with an
individual holding an unsatisfied final judgment instead of
filing a surety bond described above.
3) Provides that a subsequent employer similar in operation
and ownership to an employer with an unsatisfied final
judgment for unpaid wages shall be deemed the same employer
for purposes of this section if:
a) The employees of the subsequent employer are
engaged in substantially the same work in
substantially the same working conditions under
substantially the same supervisors; or
b) 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.
1) Requires that 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 fine $2,500 and
that any employer that has previously paid a fine pursuant
to this section shall be subject to an additional fine of
one hundred dollars ($100) for each calendar day that the
employer conducts business in violation of this section,
capped at $100,000.
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2) Exempts employers from the requirements of the bond if
they employ workers who are covered by a bona fide
collective bargaining agreement that expressly provides for
wages, hours of work, working conditions, includes a
process to resolve disputes concerning nonpayment of wages,
and contains a waiver of the bond.
3) Provides notice requirements to the Labor Commissioner
in the event of the surety bond being cancelled or
terminated.
This bill provides the following in the event of an employer
failing to comply with the bond provisions listed above:
I. A stop order prohibiting the use of employee labor by
that employer or use of subcontracted labor until the
employer complies with bonding requirements. The stop order
must become effective immediately, and the employer must
pay any worker for their lost time due to the stop order,
not exceeding 10 days.
II. A lien on the real property and personal property of an
employer that for the full amount of any wages, interest,
penalties, and attorney's fees claimed to be owed to any
employee. This lien would be filed by the Labor
Commissioner. Unless the lien is satisfied or released, the
lien must continue until 10 years from the date of its
creation.
This bill would create notice and filing requirements for the
lien provisions discussed above, as well as give the Labor
Commissioner the ability to foreclose on the property.
Licensure:
This bill would also prohibit the State Department of Public
Health or the State Department of Social Services from allowing
a long-term care industry from obtaining or renewing a license
if the employer is conducting business of the surety bond
requirement. This bill defines a long-term care industry as a
skilled nursing facility, intermediate care facility, congregate
living facility, hospice facility, adult residential facility,
residential care facility for persons with chronic
life-threatening illness, residential care facility for the
elderly, continuing care retirement community, home health
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agency, or home care organization.
Joint and Several Liability:
This bill would hold individual, partnership, corporation,
limited liability company, joint venture, or association jointly
and severally liable for liens against real property if the
entity provides janitorial, security guard, valet parking,
landscaping, gardening services, and long-term care and has been
named a defendant and to the extent that the amounts are for
services performed under that contract.
This bill creates a notice requirement for contractors of
janitorial, security guard, valet parking, landscaping,
gardening services, and long-term care if there are outstanding
wage violations for prospective contracts, but also states that
the employer to provide such notices shall not be a defense to
the joint and several liability as described above.
Liability for Acting on Behalf of the Employer:
This bill would allow provide for the Labor Commissioner to hear
complaints against a person acting on behalf of an employer who
violates, or causes to be violated, any provision regulating
hours and days of work in either statute or regulation, and
would also make a person acting on behalf of an employer liable
for willfully failing to pay wages, provide a paystub, unpaid
minimum wages or overtime, and failing to indemnifying an
employee.
Enforcement Provisions:
This bill would also create enforcement provisions for liens and
levies discussed above within the Code of Civil Procedure.
These provisions would bestow jurisdiction on the superior court
and detail the service and hearing requirements for levies and
liens filed by the Labor Commissioner.
COMMENTS
1. Wage Theft: A Brief Background
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In 2008, the Ford Foundation sponsored a survey of 4,387
workers in low-wage industries in the three largest U.S.
cities: Chicago, Los Angeles and New York City. The report of
that survey, titled Broken Laws, Unprotected Workers:
Violations of Employment and Labor Laws in America's Cities,
revealed that 26 percent of workers in the sample were paid
less than the legally required minimum wage the prior work
week, and 60 percent of these workers were underpaid by more
than $1 per hour. In addition, 76 percent of the respondents
who worked overtime in the previous week were not paid the
legally required overtime rate by their employers.
The study also notes that minimum wage violation rates vary
significantly by industry, and occupation. For example, some
industries, such as apparel and textile manufacturing and
personal and repair services have minimum wage violation rates
that exceed 40 percent, while others, including restaurants,
and retail and grocery stores, have rates of 20 to 25 percent.
However, the study found that undocumented immigrant women
were at the greatest risk of minimum wage violations. The
study estimated that the workers in low-wage industries
Chicago, Los Angeles, and New York City lose more than $56.4
million per week due to labor law violations.
A follow-up study by the UCLA Institute for Research and Labor
and Employment was published earlier this year, and that study
utilized the data from the 2008 survey, but focused
specifically on Los Angeles County. This study, titled Wage
Theft and Workplace Violations in Los Angeles: The Failure of
Employment and Labor Law for Low-Wage Workers focused on a
survey results of 1,815 workers in Los Angeles County.
This study found similar results to the national survey:
almost 30 percent of the workers sampled were paid less than
the minimum wage in the prior work week, and 63.3 percent of
these workers were underpaid by more than $1 per hour.
Assuming a full-year work schedule, Los Angeles County survey
respondents lost an average of $2,070.00 annually out of total
earnings of $16,536.00. The study estimated that workers in
low-wage industries in Los Angeles County lose more than $26.2
million per week as a result of employment and labor law
violations.
Both of the studies make the same public policy
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recommendations to address these issues, which included
strengthening government enforcement of existing employment
and labor laws and stiffening the penalties.
3. Wage Theft in California: Collecting Unpaid Wages
Equally troubling, if not more troubling, than the high rate
of wage theft in California is the low rate of collections.
According to a 2013 report published by the National
Employment Law Project (NELP) and the UCLA Labor Center, only
17% of workers who PREVAILED in their wage claims before the
DLSE and won a judgment were able to receive any payment
between 2008 and 2011. Of those who did receive payment
between 2008 and 2011, workers were able to collect 15% of
what was OWED . In short, the vast majority of wage theft
victims received nothing, and those that received anything
received little of what they were legally due.
4. Proponent Arguments :
Proponents, noting the 2010 wage theft study discussed
earlier, argue that wage theft is a significant problem in
California, with LA County's wage theft resulting in over $1
billion unlawfully failing to reach the workers who
desperately need it. Proponents also note that current wage
theft collection rates are less than 20%, meaning the vast
majority of scofflaw employers are successful in robbing their
workers of their lawful wages. Proponents believe that SB 588
will help combat the high rate of wage theft in California by
creating a simple lien process for the Labor Commissioner to
use against employers who rob workers of their wages.
Proponents, noting Wisconsin's success, argue that wage liens
are simple, effective, and a time tested approach to halting
wage theft.
5. Concerns :
This bill is currently unopposed. However, a coalition of
employers raises several concerns with SB 588. First, they
would like to see the surety bond capped at $150,000, with the
Labor Commissioner able to ask for a lower bond. They would
also like employers to have 25 days, rather than 10 days, to
file a surety bond after a final order. Second, the employer
coalition would like to remove the ability of the Labor
Commissioner to retrieve attorney's fees through the lien
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process. Finally, the employer coalition would like to see the
joint and several liability provisions mirror existing law.
6. Prior Legislation :
AB 2416 (Stone) allowed an employee request that the Labor
Commissioner files a pre-judgment lien on an employer's real,
personal property, or on the real property where a contracted
employee conducted work, in order to assist the employee in
collecting unpaid wages. AB 2416 failed passage on the Senate
Floor.
SUPPORT
Alliance of Californians for Community Empowerment
Alliance San Diego
Asian Americans Advancing Justice- Los Angeles
California Employment Lawyers Association
California Immigrant Policy Center
California Labor Federation, AFL-CIO
California Professional Firefighters
California Rural Legal Assistance
Center on Policy Initiatives
Central American Resource Center (CARECEN -- Los Angeles)
Centro Legal de la Raza
Chinese Progressive Association
CHIRLA-Coalition for Humane Immigrant Rights of Los Angeles
CLEAN Car Wash Campaign
Clergy and Laity United for Economic Justice (CLUE)
Coalition For A Safe Environment
Coalition to Abolish Slavery & Trafficking (CAST)
Community Action Board of Santa Cruz County Inc.
Community Services
Day Labor Center Hayward/ Oakland
Day Worker Center of Mountain View (DWCMV)
Dignity Campaign
Dolores Street Community Services
Employment Rights Center
Equal Rights Advocates
Filipino Advocates for Justice
Filipino Migrant Center
Fresno County Democrats
Garment Worker Center
Gender Justice LA
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Graton Day Labor Center
Holman United Methodist Church
Housing Long Beach
Human Impact Partners
InnerCity Struggle
Instituto de Educacion Popular del Sur de California (IDEPSCA)
Katharine & George Alexander Community Law Center
Khmer Girls in Action
Koreatown Immigrant Workers Alliance (KIWA)
LA Black Worker Center
La Colectiva De Mujeres
Liberty Hill Foundation
Los Angeles Alliance for a New Economy (LAANE)
Los Angeles Fight for $15 Organizing Committee
Maintenance Cooperation Trust Fund
Making Change at Walmart
Mi Familia Vota
National Association of Working Women
National Day Laborer Organizing Network
National Employment Law Project
One LA-IAF
Pacoima Beautiful
Pilgrim United Church of Christ
Pilipino Association of Workers and Immigrants - Silicon Valley
Restaurant Opportunities Center of Los Angeles
Sacramento Area Congregations Together
San Diego and Imperial Counties Labor Council, AFL-CIO
San Francisco Day Labor Program & Women's Collective, a program
of Dolores Street
San Francisco Progressive Workers Alliance
Santa Clara University
SoCalCosh, Southern California Coalition for Occupational Safety
and Health
Social Justice Learning Institute
Street Level Health Project
T.R.U.S.T. South LA
The Institute of Popular Education of Southern California
The Wage Justice Center
UCLA Labor Center
Union de Vecinos
Workplace Justice Initiative
Worksafe, Inc.
9to5
OPPOSITION
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None on file.
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