BILL ANALYSIS                                                                                                                                                                                                    Ó




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          |SENATE RULES COMMITTEE            |                        SB 588|
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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:  58-18, 9/08/15 - See last page for vote

           SUBJECT:   Employment: nonpayment of wages: Labor Commissioner:  
                     judgment enforcement


          SOURCE:   Koreatown Immigrant Workers Alliance 
                    Service Employees International Union California








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                    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.

           ASSEMBLY FLOOR:  58-18, 9/08/15
           AYES: Achadjian, Alejo, Baker, Bloom, Bonilla, Bonta, Brown,  
            Burke, Calderon, Campos, Chau, Chiu, Chu, Cooley, Cooper,  
            Dababneh, Daly, Dodd, Eggman, Frazier, Cristina Garcia,  
            Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray,  
            Hadley, Roger Hernández, Holden, Irwin, Jones-Sawyer, Lackey,  
            Levine, Linder, Lopez, Low, Maienschein, McCarty, Medina,  
            Mullin, Nazarian, O'Donnell, Perea, Quirk, Rendon,  
            Ridley-Thomas, Rodriguez, Salas, Santiago, Mark Stone,  
            Thurmond, Ting, Weber, Williams, Wood, Atkins
           NOES: Travis Allen, Bigelow, Brough, Dahle, Beth Gaines,  
            Gallagher, Grove, Harper, Jones, Mathis, Melendez, Obernolte,  
            Olsen, Patterson, Steinorth, Wagner, Waldron, Wilk
           NO VOTE RECORDED: Chang, Chávez, Kim, Mayes










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          Prepared by:Gideon L. Baum / L. & I.R. / (916) 651-1556
          9/8/15 19:01:26


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