The California Chamber of Commerce is urging members to ask senators to oppose a "job killer" bill that would allow employees to harass employers by filing prejudgment unproven wage liens on their property. The bill, AB 2416 (Stone; D-Scotts Valley), creates a dangerous and unfair precedent in the wage and hour arena by allowing employees to file liens on an employer’s real or personal property, or property where work was performed, based upon alleged-yet-unproven wage claims. 

 

AB 2416 would cripple California businesses by allowing any employee, governmental agency, or anyone "authorized by the employee to act on the employee’s behalf" to record liens on an employer’s real property or property where an employee "performed work" for an alleged, yet unproven, wage claim. The bill also would severely disrupt commercial and personal real estate markets in California.

At the time of recording the lien, the employee would have no burden to provide any actual evidence that the employer violated any wage and hour law.

There is no question that improper liens will be recorded on the employer’s or third party’s property. In fact, as set forth in the Assembly Appropriations Committee analysis dated May 13, 2014, the Labor Commissioner’s office will incur significant costs due, in part, to needing to investigate and/or remove the lien in the majority of all wage claims.

These liens will not necessarily be recorded in bad faith by the employee. Rather, as the Labor Commissioner indicates, the underlying allegations may just be wrong or mistaken, which is why it is so necessary for there to be a third-party review of the lien, wage claim and property identified before the lien is recorded on the property.

The CalChamber also is concerned that AB 2416:

• Holds Nonemployer Third Parties Liable for Unpaid Wages. AB 2416 allows an employee to record a wage lien on any real property at which the employee performed work.

• Allows an Employee’s Creditor the Right to Record a Lien. Any person or entity that has standing under the law to collect any portion of the compensation owed the employee may record a lien.

• Still Puts Someone’s Home at Risk. Amendments attempting to preclude the recording of a lien on someone’s home did not remove the risk that a homeowner will have to pursue legal action to have an improper lien removed.

• Precludes Any Financing Option for Real or Personal Property. AB 2416 will interfere with commercial investments or lending in California, as well as personal home loans.

• Contains No Effective Statute of Limitations on Timing to Record Lien. AB 2416 states that the employee must record the lien within 180 days after ceasing work for the employer, not 180 days from when the alleged wage violation occurred. This significantly expands the existing statute of limitations for wage violations.

• Forces Property Owners to Courts That Already Are Underfunded. Under AB 2416, if a lien is improperly filed against an employer’s property or third party’s property, and the employee fails to withdraw the lien but does not necessarily act in bad faith or with the intent to defraud, there is no consequence. Rather, the employer or property owner must petition the court for removal of the lien before being able to fully utilize their property.

There already are sufficient protections in place for the failure to pay wages, including the following:

• An employee may file a claim with the Labor Commissioner’s office; 

• An employee may file a civil claim, with the right to obtain attorneys fees and costs; 

• The Labor Commissioner can require an employer who has been convicted of any provision of the Labor Code to file a bond in an amount deemed sufficient by the Labor Commissioner;

• The Labor Commissioner can record a lien on an employer’s property within the state for final orders; and

• A court can order a judgment lien or a bank levy on an employer’s property. 

The CalChamber is urging members to ask their Senate representatives to oppose AB 2416.

An easy-to-edit sample letter is available at www.calchambervotes.com.