BILL ANALYSIS
AB 2440
Page 1
ASSEMBLY THIRD READING
AB 2440 (Klehs)
As Amended May 16, 2006
Majority vote
JUDICIARY 6-3
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|Ayes:|Jones, Evans, Laird, | | |
| |Levine, Lieber, Monta?ez | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Harman, Houston, Leslie | | |
| | | | |
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SUMMARY : Makes individuals and business entities that knowingly
assist child support obligors evade their child support debt
jointly and severally liable, as specified. Specifically, this
bill :
1)Declares the intent of the Legislature that an estimated $19
billion is owed in unpaid child support and that the failure
to pay support subjects children to poverty.
2)Makes any person or business entity that knowingly assists a
child support obligor to escape, evade or avoid paying
court-ordered child support jointly and severally liable for
10 times the value of the assistance provided, up to a maximum
of the entire child support debt. Defines "knowing
assistance" as, among other things:
a) With actual knowledge of the child support obligation,
helping to hide or transfer assets;
b) Hiring or engaging the child support obligor as an
employee or independent contractor and failing to timely
report the hire to Employment Development Department (EDD)
as required; or,
c) Paying wages to the obligor that are not reported to EDD
as required, including payment in cash, via barter or
trade.
EXISTING LAW :
AB 2440
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1)Governs the collection of child support.
2)Requires employers to file with EDD a report, within 20 days
of the hiring, of any new employee hired who works in
California and to whom the employer anticipates paying wages.
Requires each service recipient to file with EDD a report of
any service provider (i.e., independent contactor) engaged by
the service recipient within 20 days of either paying them at
least $600 or agreeing to pay them at least $600, whichever
comes first.
3)Makes fraudulent, under the Uniform Fraudulent Transfer Act, a
transfer by a debtor with intent to hinder, delay or defraud
any creditor of the debtor or without receiving a reasonably
equivalent value in exchange for the transfer.
4)Makes an employer who willfully fails to withhold child
support pursuant to a valid earnings assignment liable for the
support not withheld and forwarded.
FISCAL EFFECT : None
COMMENTS : This bill seeks to both improve child support
collections and help curtail the underground economy by making
any person or business entity that knowingly assists a child
support obligor evade his or her responsibility jointly and
severally liable for 10 times the value of the assistance
provided, up to the total amount of the child support debt.
Under this bill, "knowingly assists" is defined to include: 1)
with actual knowledge of the child support obligation, helping
to hide or transfer assets; 2) hiring the child support obligor
as an employee or independent contractor and failing to timely
report the hire to EDD; or, 3) paying wages to the obligor that
are not reported to EDD, such as payment in cash, or via barter
or trade.
The author believes this bill is necessary to help get child
support to needy children and thus help children avoid poverty.
Additionally, this bill could help reduce the underground
economy:
The underground economy not only is illegal but hurts
California and many Californians in variety of ways;
AB 2440
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one such atrocity is evading child support
obligations. According to The National Center for
Policy Analysis, "Economists estimate that as many as
25 million Americans earn a large part of their income
from underground activities". . . . The Employment
Development of California estimates that in California
the underground economy generates $60 to $140 billion.
In terms of tax revenue this is over $3 billion each
year the State is losing. . . . The underground
economy causes law abiding business to pay higher
taxes and expenses, and puts the employees of
underground employers in danger because their working
conditions may not meet legal standards and they might
not be receiving legally mandated wages and benefits.
Additionally, by not having their earnings reported
parents who owe child support avoid having to pay it,
because it appears to the government they have no
income from which they could pay their child support.
Analysis Prepared by : Leora Gershenzon / JUD. / (916)
319-2334
FN: 0014480