BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 588|
|Office of Senate Floor Analyses | |
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UNFINISHED BUSINESS
Bill No: SB 588
Author: De León (D), et al.
Amended: 9/4/15
Vote: 21
SENATE JUDICIARY COMMITTEE: 4-1, 4/28/15
AYES: Jackson, Leno, Monning, Wieckowski
NOES: Anderson
NO VOTE RECORDED: Moorlach, Hertzberg
SENATE LABOR & IND. REL. COMMITTEE: 4-1, 4/29/15
AYES: Mendoza, Jackson, Leno, Mitchell
NOES: Stone
SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/28/15
AYES: Lara, Beall, Hill, Leyva, Mendoza
NOES: Bates, Nielsen
SENATE FLOOR: 26-13, 6/1/15
AYES: Allen, Beall, Block, Cannella, De León, Galgiani,
Glazer, Hall, Hancock, Hernandez, Hill, Hueso, Jackson, Lara,
Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning, Pan,
Pavley, Roth, Wieckowski, Wolk
NOES: Anderson, Bates, Berryhill, Fuller, Gaines, Huff,
Moorlach, Morrell, Nguyen, Nielsen, Runner, Stone, Vidak
NO VOTE RECORDED: Hertzberg
ASSEMBLY FLOOR: Not available
SUBJECT: Employment: nonpayment of wages: Labor Commissioner:
judgment enforcement
SOURCE: Koreatown Immigrant Workers Alliance
Service Employees International Union California
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Page 2
Wage Justice Center
DIGEST: This bill allows 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.
Assembly Amendments create a sliding scale for the surety bond
depending on the amount of outstanding wages, require that the
Labor Commissioner reports to the State Department of Public
Health or the State Department of Social Services if a long-term
care facility is operating in violation of the surety bond
provisions, clarify technical issues with wage orders, appeals,
and attorney's fees, and also add co-authors.
ANALYSIS:
1) 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)
2) 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)
3) 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).
4) Requires the Labor Commissioner and his or her deputies and
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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)
5) 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)
6) 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)
7) 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))
8) 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 authorizes the Labor Commissioner to file a lien on
all property of the employer in California for the full amount
of any wages and other compensation, penalties, and interest
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owed to the employee.
Specifically, this bill:
1) Allows 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) 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 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) 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 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.
Surety Bond Requirements
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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
10 days after the time to appeal therefrom has expired, the
employer must cease business operations unless the employer
has obtained a surety bond. 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. The surety bond
amounts are as follows:
a) Fifty thousand dollars ($50,000) if the unsatisfied
portion of the judgment is no more than five thousand
dollars ($5,000).
b) One hundred thousand dollars ($100,000) if the
unsatisfied portion of the judgment is more than five
thousand dollars ($5,000) and no more than ten thousand
dollars ($10,000).
c) One hundred fifty thousand dollars ($150,000) if the
unsatisfied portion of the judgment is more than ten
thousand dollars ($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.
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:
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.
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10)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.
11)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.
12)Provides notice requirements to the Labor Commissioner in
the event of the surety bond being cancelled or terminated.
13)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 10 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 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.
14)Creates 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
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15)Prohibits 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 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.
Joint and Several Liability
16)Holds 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.
17)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
18)Allows 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
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19)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.
Comments
1)Wage Theft: A Brief Background: 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.
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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
recommendations to address these issues, which included
strengthening government enforcement of existing employment
and labor laws and stiffening the penalties.
2)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.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
According to the Assembly Appropriations Committee, 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.
This bill imposes new duties on the Labor Commissioner, for
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example the ability to utilize the levy process as a
supplemental option beyond placing liens. The bill also expands
duties related to surety bonds and the stop order process.
Additionally, the bill could also result in unknown but
potentially significant court costs associated with additional
proceedings regarding wage claims.
SUPPORT: (Verified9/8/15)
Koreatown Immigrant Workers Alliance (co-source)
Service Employees International Union California (co-source)
Wage Justice Center (co-source)
9to5
Alliance of Californians for Community Empowerment
Alliance San Diego
Asian Americans Advancing Justice- Los Angeles
Bet Tzedek Legal Services
California Employment Lawyers Association
California Immigrant Policy Center
California Labor Federation, AFL-CIO
California Professional Firefighters
California Rural Legal Assistance
California School Employees Association
Center on Policy Initiatives
Central American Resource Center
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
Coalition For A Safe Environment
Coalition to Abolish Slavery & Trafficking
Community Action Board of Santa Cruz County Inc.
Community Services
Day Labor Center Hayward/ Oakland
Day Worker Center of Mountain View
Dignity Campaign
Dolores Street Community Services
Employment Rights Center
Equal Rights Advocates
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Filipino Advocates for Justice
Filipino Migrant Center
Fresno County Democrats
Garment Worker Center
Gender Justice LA
Graton Day Labor Center
Holman United Methodist Church
Housing Long Beach
Human Impact Partners
InnerCity Struggle
Instituto de Educacion Popular del Sur de California
Katharine & George Alexander Community Law Center
Khmer Girls in Action
LA Black Worker Center
La Colectiva De Mujeres
Liberty Hill Foundation
Los Angeles Alliance for a New Economy
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
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UCLA Labor Center
Union de Vecinos
Workplace Justice Initiative
Worksafe, Inc.
OPPOSITION: (Verified9/8/15)
None Received
ARGUMENTS IN SUPPORT: 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.
Prepared by:Gideon L. Baum / L. & I.R. / (916) 651-1556
9/8/15 18:58:09
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