BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 2440|
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THIRD READING
Bill No: AB 2440
Author: Klehs (D)
Amended: 8/14/06 in Senate
Vote: 21
SENATE JUDICIARY COMMITTEE : 3-1, 6/27/06
AYES: Dunn, Escutia, Kuehl
NOES: Harman
NO VOTE RECORDED: Morrow
ASSEMBLY FLOOR : 47-32, 5/31/06 - See last page for vote
SUBJECT : Child support obligations: liability
SOURCE : Author
DIGEST : This bill imposes liability upon any person or
business entity that knowingly, or should have known of a
child support obligation, assists a child support obligor
who has an unpaid court-ordered child support obligation to
avoid, escape, or evade paying the obligation. The
liability would be for three times the value of the
assistance provided, such as three times the amount of
wages paid to the child support obligor but not reported,
but would not exceed the entire child support obligation
due.
The bill contains legislative findings and declarations
regarding the $19 billion in unpaid child support
obligations as of January 2006, the effect of a parent's
CONTINUED
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failure to pay child support obligations on the child's
living conditions, and the effect of such parent's failure
to pay child support obligations on the next generation of
Californians.
Senate Floor Amendments of 8/14/06 are a result of the
author's agreement in committee to tighten-up language
concerning an employer's knowledge of an unpaid child
support obligation. To clarify the intent of the Senate
Judiciary Committee and the author, these amendments would
replace committee language that required actual knowledge
of the child support obligation with language holding the
employer liable if they knew or should have known of the
child support obligation. The remaining changes are
technical and clarifying.
ANALYSIS : Existing law imposes liability on persons who
intentionally transfer assets in an attempt to avoid having
to pay an actual or potential money judgment. Existing law
also imposes liability on those who conspire with the
debtor or potential debtor to accomplish such a fraudulent
transfer of assets.
This bill imposes liability on a person or entity that
knowingly assists a child support obligor who has an unpaid
child support obligation to escape, evade, or avoid paying
the court-ordered child support obligation. The liability
would be for three times the value of the assistance
provided such as the fair market value of the obligor's
assets transferred or hidden, but not to exceed the entire
child support obligation due. The bill provides that any
funds collected shall be paid to the child support obligee,
and shall not reduce the amount of the unpaid child support
obligation.
This bill eliminates the liability upon satisfaction of the
unpaid support obligation.
This bill enumerates the following actions as constituting
the acts of assisting a child support obligor to escape,
evade, or avoid payment of a court-ordered child support
obligation:
1.When the individual or entity knew of should have known
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of the child support obligation, helping to hide or
transfer assets of the child support obligor.
2.When the individual or entity knew of should have known
of the child support obligation, hiring the obligor as an
employee and failing to timely file a report of new
employees to the Employment Development Department, as
required.
3.When the individual or entity knew of should have known
of the child support obligation, engaging the obligor as
an independent contractor service provider and failing to
file a timely report to the Employment Development
Department, as required.
4.When the individual or entity knew of should have known
of the child support obligation, engaged in a trade or
business paying wages or other forms of compensation
(cash or barter or trade) for services rendered by a
child support obligor without reporting to the Employment
Development Department, as required.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 8/15/06)
American Federation of State, County, and Municipal
Employees, AFL-CIO
California Labor Federation, AFL-CIO
National Center on Youth Law
Partnership for Responsible Parenting
ARGUMENTS IN SUPPORT : According to the author's office:
"The purpose of AB 2440 is to encourage individuals and
businesses to not engage in the underground economy while
getting thousands of children and parents the child support
money that these families are owed?In California as of
January 2006 there was an estimated $19 billion in unpaid
child support obligations. The failure to pay child
support obligations often subjects the child and the parent
to a life of poverty or substandard living conditions,
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reduced access to medical care, and diminished educational
opportunities. The failure of a parent to satisfy
court-ordered or a court-approved child support obligations
depletes California of one of its more valued resources:
the next generation of healthy and well-educated
California?
"?The underground economy causes law abiding business[es]
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
[obligations]."
ASSEMBLY FLOOR :
AYES: Arambula, Baca, Bass, Berg, Bermudez, Calderon,
Canciamilla, Chan, Chavez, Chu, Cohn, Coto, De La Torre,
Dymally, Evans, Frommer, Goldberg, Hancock, Jerome
Horton, Jones, Karnette, Klehs, Koretz, Laird, Leno,
Levine, Lieber, Lieu, Liu, Matthews, Montanez, Mullin,
Nation, Nava, Oropeza, Parra, Pavley, Ridley-Thomas,
Ruskin, Saldana, Salinas, Torrico, Umberg, Vargas, Wolk,
Yee, Nunez
NOES: Aghazarian, Benoit, Blakeslee, Bogh, Cogdill,
Daucher, DeVore, Emmerson, Garcia, Harman, Haynes,
Shirley Horton, Houston, Huff, Keene, La Malfa, La Suer,
Leslie, Maze, McCarthy, Mountjoy, Nakanishi, Niello,
Plescia, Richman, Sharon Runner, Spitzer, Strickland,
Tran, Villines, Walters, Wyland
NO VOTE RECORDED: Negrete McLeod
RJG:nl 8/15/06 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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