Assembly Bill 2416 Would Permit Employees to Impose Liens on All Employer Property for Alleged (but Unproven) Wage Claims

California’s controversial Assembly Bill (AB) 2416, the “Wage Theft Recovery Act” continues to make progress through the Legislature.   Patterned on a unique Wisconsin law, the Act, if passed, would enable an employee to create a lien upon an employer’s real and personal property for the full amount of any unpaid wages, penalties and interest allegedly owed to that employee.   The Assembly passed the bill on May 23, 2014.  It was also recently approved, with various proposed revisions, by the Senate Judiciary and is now under consideration by other committees on that side.

Proponents of the bill cite a 2010 “wage theft” study from UCLA that estimated nearly 656,000 workers in Los Angeles County experience at least one pay-based violation of the law every week, supposedly totaling some $26,200,000 weekly.   Characterizing even inadvertent underpayments of straight or overtime pay as “theft,” the study concludes the shortfall “robs local communities of … spending and ultimately limits economic growth.”  Another 2013 UCLA study concludes that current government lines and procedures are ineffective, with only an estimated 17% of California workers successful in collecting on claims, thus leaving 83% of claimants unpaid.”

AB 2416’s sponsors point to Wisconsin’s reported example.  The above 2013 UCLA study asserts that since implementing a lien procedure for workers alleging  underpayment of wages,  80% of claimants have been paid in part or in full through the collection process.   That UCLA study also notes that only a small number of liens are actually filed in Wisconsin every year (about 3,300), suggesting that merely the prospect of liens provides a deterrent to such wage underpayments there.

The opponents to AB 2416 – including the California Chamber of Commerce and at least 60 other state and local commercial associations – obviously do not condone violation of wage laws.  They assert the proposal goes too far, harming business’s ability to operate (and thus provide jobs) as liens for alleged, but unproven, wages can cripple the ability to finance and thus grow an enterprise.  The opponents also point out that AB 2416 allows wage liens against third party commercial property owners who had no actual control over the employee.  They also claim the new law would place significant burdens on the court system and that there are already sufficient protections in place for failure to pay wages.

With the California Chamber taking the lead and terming it a “job killer,” an earlier version of the proposal, AB 1164, died in the Assembly for lack of support this past January.  Now over to the Senate, AB 2416 obviously has greater momentum.  Its provisions are detailed and of course subject to change as it moves along through committees.  We will be tracking the measure along with advocates on both sides of the debate.