BILL ANALYSIS Ó
SB 588
Page 1
SENATE THIRD READING
SB
588 (De León)
As Amended September 1, 2015
Majority vote
SENATE VOTE: 26-13
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Labor |5-2 |Roger Hernández, Chu, |Harper, Patterson |
| | |Low, McCarty, | |
| | |Thurmond | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Judiciary |7-3 |Mark Stone, Weber, |Wagner, Gallagher, |
| | |Alejo, Chau, Chiu, |Maienschein |
| | |Cristina Garcia, | |
| | |Thurmond | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |12-5 |Gomez, Bloom, Bonta, |Bigelow, Chang, |
| | |Calderon, Nazarian, |Gallagher, Jones, |
| | |Eggman, Eduardo |Wagner |
| | |Garcia, Holden, | |
| | |Quirk, Rendon, Weber, | |
| | |Wood | |
SB 588
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| | | | |
| | | | |
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SUMMARY: Authorizes the Labor Commissioner to file a lien or
levy on an employer's property in order to assist an employee in
collecting unpaid wages where there is a judgment against the
employer, and contains related provisions. Specifically, this
bill:
1)Allows the Labor Commissioner, beginning 20 days 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)Provides 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 ten 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)Provides 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)Provides that any person who fails or refuses to surrender any
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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.
7)Requires 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 30 days after
the time to appeal therefrom has expired, the employer must
cease business operations, including conducting business using
labor of another business or contractor unless the employer
has obtained a surety bond. The principal sum of the bond
shall not be less than:
a) $50,000 if the unsatisfied portion of the judgment is no
more than $5,000.
b) $100,000 if the unsatisfied portion of the judgment is
more than $5,000 and no more than $10,000.
c) $150,000 if the unsatisfied portion of the judgment is
more than $10,000.
8)Allows 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. However, if the accord provides for the
judgment to be paid in installments, and an installment
payment is not made, the employer is no longer excused from
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satisfying the bond requirements.
9)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:
10)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
11)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.
12)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 penalty of $2,500 and that
any employer that has previously paid a fine pursuant to this
section shall be subject to an additional fine of $100 for
each calendar day that the employer conducts business in
violation of this section, capped at $100,000. The civil
penalty may be assessed by the Labor Commissioner, but shall
not be assessed against an entity determined to be a successor
employer within the first 30 days after the notice of
judgment.
13)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.
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14)Provides notice requirements to the Labor Commissioner in the
event of the surety bond being cancelled or terminated.
15)Provides the following in the event of an employer failing to
comply with the bond provisions listed above:
a) 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 ten days.
b) 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 (to the extent specifically
allowed to be recovered under existing law) 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 ten years from the date of its
creation.
16)Creates notice and filing requirements for the lien
provisions discussed above.
17)Prohibits the State Department of Public Health or the State
Department of Social Services from allowing a long-term care
industry employer from obtaining or renewing a license if the
employer is conducting business in violation 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 agency, or home care organization.
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18)Provides that any individual or business entity that, as part
of its business, contracts for services in the property
services or long-term care industries shall be jointly and
severally liable for any unpaid wages, as provided, to the
extent the amounts are for services performed under the
contract. The issue of joint and several liability shall be
determined in specified administrative or court proceedings
before or by the Labor Commissioner, but no action shall be
brought under the Private Attorneys General Act of 2004.
19)Creates a notice requirement for an employer that contracts
to provide services in the property services or long-term care
industries regarding unsatisfied judgments, but also states
that the failure by the employer to provide this notice shall
not be a defense to the joint and several liabilities as
described above.
20)Provides that this bill shall not be interpreted to impose
joint liability on an individual, or the owner of a home-based
business, for any property services, to the extent that such
property services are provided at the individual or home-based
business owner's primary residence, provided that the primary
residence does not have multiple business units.
21)Allows for the Labor Commissioner provide for a hearing to
recover civil penalties against an employer or other person
acting on behalf of any employers, for specified violations.
22)Provides that any employer, or other person acting on behalf
of an employer, that violates or causes to be violated, any
provision of law regulating minimum wages or hours and days of
work, as specified, may be held liable as the employer for
such a violation.
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23)Defines "other person acting on behalf of an employer" to be
limited to a natural person who is an owner, director, officer
or managing agent of the employer.
24)Provides that nothing in the foregoing provision shall be
construed to limit the definition of "employer" (including
natural persons) under existing law.
25)Creates 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.
FISCAL EFFECT: According to the Assembly Appropriations
Committee, this bill would result in initial administrative
costs of approximately $2.6 million [Labor Enforcement and
Compliance Fund (LECF)] and ongoing costs of approximately $2.2
million (LECF) for the Department of Industrial Relations to
implement the provisions of this bill.
COMMENTS: Supporters argue that wage theft is a significant
problem in California, with Los Angeles County's wage theft
resulting in over $1 billion unlawfully failing to reach the
workers who desperately need it. Supporters 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. Supporters believe
that this bill 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. Supporters, noting Wisconsin's success, argue that wage
liens are simple, effective, and a time tested approach to
halting wage theft.
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This bill is co-sponsored by the Service Employees International
Union, the Koreatown Immigrant Workers Alliance, and the Wage
Justice Center. They write:
[This bill] gives the Labor Commissioner additional
tools to collect from employers who have exhausted all
appeals for their non-payment of wages and have final
judgments owed. It requires a business that has an
outstanding unpaid judgment against them to purchase a
wage bond of $150,000. If it fails to do that, the
employer can be subject to a stop work order and a
lien at the Labor Commissioner's discretion.
This bill also gives the Labor Commissioner the
authority to hold individual business owners
accountable for their debts to workers. This will
discourage business owners from rolling up their
operations and walking away from their debts to
workers and starting a new company.
In addition, [this bill] targets two high-risk sectors
- property services and long-term care - by
establishing procedures to ensure parties are held
individually responsible to ensure that employers
can't evade the law through contracting and
subcontracting arrangements.
There is no opposition on file.
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Analysis Prepared by:
Ben Ebbink / L. & E. / (916) 319-2091 FN:
0001688