BILL NUMBER: AB 2440 CHAPTERED
BILL TEXT
CHAPTER 820
FILED WITH SECRETARY OF STATE SEPTEMBER 30, 2006
APPROVED BY GOVERNOR SEPTEMBER 30, 2006
PASSED THE ASSEMBLY AUGUST 24, 2006
PASSED THE SENATE AUGUST 22, 2006
AMENDED IN SENATE AUGUST 14, 2006
AMENDED IN SENATE AUGUST 8, 2006
AMENDED IN SENATE JUNE 26, 2006
AMENDED IN ASSEMBLY MAY 16, 2006
AMENDED IN ASSEMBLY APRIL 17, 2006
AMENDED IN ASSEMBLY MARCH 30, 2006
INTRODUCED BY Assembly Member Klehs
FEBRUARY 23, 2006
An act to add Sections 1714.4 and 1714.41 to the Civil Code,
relating to child support.
LEGISLATIVE COUNSEL'S DIGEST
AB 2440, Klehs Child support obligations: liability.
Existing law imposes joint and several liability upon a parent or
guardian having custody and control of a minor for the injury done to
another person by that minor under certain circumstances.
This bill would impose liability upon any person or business
entity that knowingly assists a child support obligor who has an
unpaid child support obligation to escape, evade, or avoid current
payment of those unpaid child support obligations. The bill would
also include a related statement of legislative findings and
declarations.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature hereby finds and declares all of the
following:
(a) In California, there were an estimated $19 billion in unpaid
child support obligations as of January 2006.
(b) The failure of a parent to pay child support obligations often
subjects the child and the other parent to a life of poverty or
substandard living conditions, reduced access to medical care, and
diminished educational opportunities.
(c) The failure of a parent to satisfy court-ordered or
court-approved child support obligations depletes the State of
California of one of its most valued resources-- the next generation
of healthy and well-educated Californians.
SEC. 2. Section 1714.4 is added to the Civil Code, to read:
1714.4. (a) Any person or business entity that knowingly assists
a child support obligor who has an unpaid child support obligation to
escape, evade, or avoid paying court-ordered or court-approved child
support shall be liable for three times the value of the assistance
provided, such as the fair market value of the obligor's assets
transferred or hidden. The maximum liability imposed by this section
shall not exceed the entire child support obligation due. Any funds
or assets collected pursuant to this section shall be paid to the
child support obligee, and shall not reduce the amount of the unpaid
child support obligation. Upon the satisfaction of the unpaid child
support obligation, this section shall not apply.
(b) For purposes of this section, actions taken to knowingly
assist a child support obligor to escape, evade, or avoid paying
court-ordered or court-approved child support include, with actual
knowledge of the child support obligation, helping to hide or
transfer assets of the child support obligor.
(c) This section shall not apply to a financial institution unless
the financial institution has actual knowledge of the child support
obligation and, with that knowledge, knowingly assists the obligor to
escape, evade, or avoid paying the child support obligation.
However, a financial institution with knowledge of an asset transfer
has no duty to inquire into the rightfulness of the transaction, nor
shall it be deemed to have knowingly assisted an obligor to escape,
evade, or avoid paying the child support obligation if that
assistance is provided by an employee or agent of the financial
institution acting outside the terms and conditions of employment or
agency without the actual knowledge of the financial institution.
SEC. 3. Section 1714.41 is added to the Civil Code, to read:
1714.41. (a) Any person or business entity that knowingly assists
a child support obligor who has an unpaid child support obligation
to escape, evade, or avoid paying court-ordered or court-approved
child support shall be liable for three times the value of the
assistance provided, such as the fair market value of the assets
transferred or hidden, or the amount of the wages or other
compensation paid to the child support obligor but not reported. The
maximum liability imposed by this section shall not exceed the entire
child support obligation due. Any funds or assets collected pursuant
to this section shall be paid to the child support obligee, and
shall not reduce the amount of the unpaid child support obligation.
Upon the satisfaction of the unpaid child support obligation, this
section shall not apply.
(b) For purposes of this section, actions taken to knowingly
assist a child support obligor to escape, evade, or avoid paying
court-ordered or court-approved child support include, but are not
limited to, any of the following actions taken when the individual or
entity knew or should have known of the child support obligation:
(1) Hiring or employing the child support obligor as an employee
in a trade or business and failing to timely file a report of new
employees with the California New Employee Registry maintained by the
Employment Development Department.
(2) Engaging the child support obligor as a service provider and
failing to timely file a report with the Employment Development
Department as required by Section 1088.8 of the Unemployment
Insurance Code.
(3) When engaged in a trade or business, paying wages or other
forms of compensation for services rendered by a child support
obligor that are not reported to the Employment Development
Department as required, including, but not limited to, payment in
cash or via barter or trade.