BILL ANALYSIS �
AB 1164
Page 1
Date of Hearing: January 23, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 1164 (Lowenthal) - As Amended: May 6, 2013
Policy Committee: JudiciaryVote:6-3
Labor 4-2
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill authorizes an employee to record a wage lien on an
employer's property, subject to specified conditions and
procedures. Specifically, this bill:
1)Entitles an employee to file a lien for the full amount of any
wages, other compensation, and related penalties and damages
owed to the employee on the following property:
a) All property of the employer. However, a lien shall not
apply to the employer's personal residence, except as
specified.
b) The property upon which the employee worked for the
benefit of the property owner and with the owner's consent
or knowledge that such labor was being provided. The lien
would not apply to property bought or services furnished
primarily for personal, family, or household purposes,
including any real property that is the owner's principal
residence.
2)Stipulates that such a lien shall be permanently extinguished
unless a notice of lien is recorded and served within one year
of the date that the employee ceased working for the employer,
and requires the employee to commence action to enforce the
lien within 180 days of filing or recording notice of the lien
3)Requires, with regard to a lien on real property, the employee
to record notice of the lien with the county recorder, and
further requires the lien to be executed under penalty of
perjury and to include specified information.
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4)Requires, with regard to a lien on personal property, the
employee to file a notice of the lien with the Secretary of
State (SOS), and further requires the notice to be executed
under penalty of perjury and to include specified information.
5)Specifies that, in order to enforce a lien authorized by this
bill, the employee shall demonstrate in a civil action or in
an administrative proceeding before the Labor Commissioner,
that he or she is owed wages, compensation, or penalties and
damages.
6)Stipulates that in a proceeding file with the Labor
Commissioner, the commissioner may establish the amount of the
lien, and if no lien has been yet been recorded, may record
the lien on behalf of the employee.
7)Provides that the employee is entitled to court costs and
reasonable attorneys' fees for filing a successful action to
enforce a lien.
FISCAL EFFECT
1)The Department of Industrial Relations' Division of Labor
Standards Enforcement (DSLE) has processed more than 33,000
wage claims annually in recent years. The number of such cases
that will involve wage liens is unknown. The department
estimates ongoing special fund costs (Labor Enforcement and
Compliance Fund) of about $1.6 million for 16 additional
positions related to increased workload involving:
a) Determining whether specific property on which an
employee bestowed labor implicates rights of property
owners, other than employers, who would have to be an
additional party in an administrative proceeding involving
the Labor Commissioner.
b) Additional prehearing investigation of wage claims to
confirm the appropriateness of a lien's contents, including
whether an employee claimant is likely not eligible to
obtain a lien for being exempt from the protections of
Industrial Welfare Commission wage orders, and performing
actions necessary to record the lien with either the
recorder's office or the Secretary of State.
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c) Performing additional administrative functions,
including preparing the lien form, providing notices to
parties, and service of documents.
DIR also may incur one-time costs should rulemaking or
regulations be required to implement the bill's provisions.
2)The Secretary of State estimates special fund costs of
$500,000 to $700,000 to modify its existing, antiquated
business filing system to enable wage liens to be identified
in searches on individual properties. A new business filing
system is currently under development and scheduled to be
operable by June 2016. These additional costs to the Business
Fees Fund would reduce the amount of excess monies in this
fund that are annually transferred to the General Fund.
3)Unknown, potentially significant court costs associated with
additional proceedings regarding wage claims.
COMMENTS
1)Background and Purpose . Under existing law, when an employer
fails to pay wages due, the employee has the right to file a
claim against his or her employer with the Division of Labor
Standards Enforcement (DLSE), which is directed by the State
Labor Commissioner. After conducting an investigation, the
Labor Commissioner may hold an administrative conference or
hearing, or both. If a party is unhappy with the
Commissioner's decision, it can appeal to the appropriate
civil court.
The author contends, however, that even where a worker wins a
favorable decision, the process of collecting the award is
often difficult and ineffective. Irresponsible employers may
have already hidden their cash assets, declared bankruptcy, or
otherwise become judgment-proof. According to the author,
state agencies simply do not have the resources to collect
wages even where a decision has been rendered in favor of the
employee. The author believes that giving employees a "wage
lien," similar to the customary "mechanic's lien," will
provide an additional and arguable more effective tool for an
employee to recover unpaid wages.
This bill is supported by numerous employment rights
organizations and by the California Labor Federation, which
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argues that this expansion of the wage lien "will ensure that
where an employer disappears, files for bankruptcy, shirks
responsibility, closes its door and reopens under a different
business name, or engages in any other shady and unscrupulous
practice,? the worker is paid for his or her labor."
2)In opposition is a large coalition of business-related
interests, including the California Chamber of Commerce, the
California Building Industry Association, the Associated
General Contractors, and the California Retailers Association.
Opponents argue in part that employees should not be allowed
to interfere with an employer's business or property by filing
liens of such potential significance without having to first
prove the merit of their allegations, and that such
authorization will subject employers to constant extortion in
order to avoid a lien on their property. Moreover, opponents
are also concerned about provisions allowing a lien on
property other than employer's property, thus potentially
placing a burden on a third party having no knowledge or
control over the alleged violation.`
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081