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AB-1164 Liens: employees and workers.(2013-2014)

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AB1164:v95#DOCUMENT

Amended  IN  Assembly  January 23, 2014
Amended  IN  Assembly  May 06, 2013
Amended  IN  Assembly  April 24, 2013
Amended  IN  Assembly  March 21, 2013

CALIFORNIA LEGISLATURE— 2013–2014 REGULAR SESSION

Assembly Bill No. 1164


Introduced by Assembly Member Lowenthal
(Coauthor: Assembly Member Roger Hernández)

February 22, 2013


An act to add Chapter 3 (commencing with Section 3000) to Title 14 of Part 4 of Division 3 of the Civil Code, relating to liens.


LEGISLATIVE COUNSEL'S DIGEST


AB 1164, as amended, Lowenthal. Liens: employees and workers.
Existing law grants specified persons, including laborers, as defined, who contribute labor, skill, or services to a work of improvement the right to record a mechanic’s lien upon the property so improved.
This bill would, with certain exceptions, authorize an employee to record and enforce a wage lien upon real and personal property of an employer, or a property owner, as specified, for wages, other compensation, and related penalties and damages owed the employee. The bill would prescribe requirements relating to the recording and enforcement of the wage lien and for its cancellation and removal. The bill would require a notice of lien on real property to be executed under penalty of perjury.
By expanding the scope of the crime of perjury, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

The people of the State of California do enact as follows:


SECTION 1.

 This act shall be known, and may be cited, as the California Fair Paycheck Act.

SECTION 1.SEC. 2.

 Chapter 3 (commencing with Section 3000) is added to Title 14 of Part 4 of Division 3 of the Civil Code, to read:
CHAPTER  3. Wage Liens

3000.
 (a) An employee shall have a lien for the full amount of any wages, other compensation, and related penalties and damages owed to the employee on the following property:
(1) All property of the employer, including any after-acquired property, except that if the employer is a natural person, a lien shall apply to the employer’s principal residence only to the extent that the employee provided labor to the benefit of that household or residence.
(2) The property upon which the employee bestowed labor for the benefit of the property owner and with the owner’s consent or knowledge that such labor was being provided. The amount of the lien on such property shall be limited to the amount of wages, compensation, and related penalties and damages accrued during the time the employee bestowed labor on that specific property.
(b) The amount of this lien shall include unpaid wages, all other compensation required under California law, penalties and damages available under the Labor Code, interest at the same rate as for prejudgment interest in this state, and the costs of filing and service of the lien. The amount of compensation that may be claimed as a lien under this section includes all wages agreed to be paid to the employee, but no less than the amount required by law, including direct wages and compensation required to be paid to other persons or entities, that would qualify as “employer payments” described in Section 1773.1 of the Labor Code.
(c) The lien shall be subject to the following limits:
(1) An employee’s lien upon personal property shall be limited to property subject to a security interest under the Commercial Code pursuant to the filing of a financing statement with the Secretary of State.
(2) The lien described in paragraph (2) of subdivision (a) shall not apply to a claim relating to property bought or services furnished primarily for personal, family, or household purposes, including those benefitting any real property that is the principal residence of the owner.
(3) The lien described in paragraph (2) of subdivision (a) shall not attach if the employer has obtained a surety bond or insurance that provides for payment of the wages, related damages, and penalties sought by the employee and is in an amount that is adequate to fully satisfy the employee’s claim. If the surety bond or insurance contract is inadequate to cover the entire amount of the employee’s claim, the lien shall be limited to the amount of the claim that exceeds the bond or insurance coverage. Within 30 days of being provided with proof of a valid surety bond or insurance contract that applies to the claim, the employee shall file a release of any lien recorded against that property or a notice reducing the lien to the amount that exceeds the bond or insurance coverage.
(d) Any act authorized or required under this chapter with regard to an employee may also be undertaken by any person or entity, including any governmental agency, to which a portion of an employer’s compensation is payable or that has standing under applicable law to maintain a direct legal action on behalf of the employee to collect any portion of compensation owed to the employee.
(e) A lien pursuant to this chapter shall not be claimed by an employee who is exempt from the protections of Industrial Welfare Commission wage orders under the administrative, executive, or professional exemptions. However, in any action involving such a lien, the employer or property owner shall plead and prove exempt status as an affirmative defense.
(f) A lien pursuant to this chapter is in addition to any other lien rights held by the employee and shall not be construed to limit these rights.

3001.
 (a) The lien described in Section 3000 shall be permanently extinguished unless a notice of lien in accordance with Section 3002 or 3003 is recorded and served within one year 180 days of the date that the employee ceased working for the employer.
(b) The employee shall commence an action to enforce the lien and prove the amount owed within 180 90 days of the date of filing or recording of the notice of lien. If the employee does not commence an action to enforce the lien within that time, the lien shall be permanently extinguished and is unenforceable.
(c) (1) Subdivision (b) does not apply if the employee and the owner of the property subject to the lien agree to extend the time for enforcing the lien in writing and record or file notice of the fact and terms of the extension within either of the following periods:
(A) 180 Ninety days after recordation or filing of the notice of lien.
(B) More than 180 90 days after recordation or filing of the notice of lien but before a purchaser or encumbrancer acquires rights in the property for value and in good faith.
(2) In the event of an extension, the employee shall commence an action to enforce the lien within 180 90 days after the expiration of the extension. If the employee does not commence an action to enforce the lien within that time, the lien shall be permanently extinguished and is unenforceable.
(d) If the lien has been extinguished pursuant to subdivision (b) or (c), upon demand and 15 days’ notice by any affected party, the employee shall record or file a release of the lien. If an employee or employee representative refuses to file a release of the lien after proper notice, an employer or property owner may petition the court for an order to file a release of the lien and the employer or property owner shall be entitled to attorney’s fees and costs incurred in the action. The court in its discretion may also issue a fine, not to exceed one thousand dollars ($1,000), for refusing to file a release of lien after proper notice.

3002.
 (a) With regard to a lien on real property, the employee shall record a notice of lien with the county recorder in the county where the real property is located.
(b) The notice of lien shall be executed under penalty of perjury, as defined in Section 118 of the Penal Code, and shall include all of the following:
(1) A statement of the employee’s demand for unpaid wages, other compensation, related penalties, and damages. The statement shall specify the amount owed to the employee, and if the amount is estimated, shall provide an explanation for the basis of the estimate.
(2) A general statement of the kind of work furnished by the employee and the dates of employment.
(3) The name of the person by whom the employee was employed.
(4) The employee’s mailing address.
(5) For property described in paragraph (2) of subdivision (a) of Section 3000, both of the following:
(A) A description of the site upon which the work was performed sufficient for identification.
(B) The name of the owner or reputed owner, if known.
(c) The employee or employee representative shall serve the notice of lien on the employer and the owner or reputed owner of the real property subject to the lien, as follows:
(1) For an employer, notice of lien shall be served by registered mail, certified mail, or first-class mail, certified mail with return receipt requested, evidenced by a certificate of mailing, postage prepaid, addressed to the employer at the employer’s residence or place of business.
(2) For an owner or reputed owner who is not the employer, notice of lien shall be served by registered mail, certified mail, or first-class mail, certified mail with return receipt requested, evidenced by a certificate of mailing, postage prepaid, addressed to the address of the property subject to the lien or to the residence or place of business of the owner or reputed owner.
(d) For property described in paragraph (1) of subdivision (a) of Section 3000, the lien attaches to all real property owned by the employer at the time of the filing of the notice of lien, or that is subsequently acquired by the employer, that is located in any county in which the notice of lien is recorded, regardless of whether the property is identified in the notice of lien. For property described in paragraph (2) of subdivision (a) of Section 3000, the lien attaches only to the property that is specifically identified in the notice of lien.

3003.
 (a) With regard to a lien on personal property, the employee shall file a notice of lien with the Secretary of State. Except as otherwise provided in this chapter, the manner, form, and place of filing shall be as described in Chapter 5 (commencing with Section 9501) of Division 9 of the Commercial Code. The notice of the lien shall be placed in the same file as financing statements pursuant to Section 9522 of the Commercial Code.
(b) The notice shall be executed under penalty of perjury, as defined in Section 118 of the Penal Code, and shall state the following:
(1) The amount of the claim for unpaid wages, other compensation, related penalties, and damage, and if the amount is estimated, shall provide an explanation for the basis of the estimation.
(2) A general statement of the kind of work furnished by the employee and the dates of employment.
(3) The name of the person by whom the employee was employed.
(4) The employee’s mailing address.
(5) To the extent known, a description of the property on which the lien is made. Regardless of whether the property is specifically described in the notice, the lien attaches to all personal property owned by the employer or subsequently acquired by the employer that can be made subject to a security interest under the Commercial Code.
(c) The employee or employee representative shall serve the notice of lien on the employer and the owner or reputed owner of the property subject to the lien, as follows:
(1) For an employer, notice of lien shall be served by registered mail, certified mail, or first-class mail, certified mail with return receipt requested, evidenced by a certificate of mailing, postage prepaid, addressed to the employer at the employer’s residence or place of business.
(2) For an owner or reputed owner who is not the employer, notice of lien shall be served by registered mail, certified mail, or first-class mail, certified mail with return receipt requested, evidenced by a certificate of mailing, postage prepaid, addressed to the residence or place of business of the owner or reputed owner.
(d) For property described in paragraph (1) of subdivision (a) of Section 3000, the lien attaches to all personal property that can be made subject to a security interest under the Commercial Code that is owned by the employer at the time of filing of the notice of lien or that is subsequently acquired by the employer, regardless of whether the property is identified in the notice of lien. For property described in paragraph (2) of subdivision (a) of Section 3000, the lien attaches only to the property that is identified in the notice of lien.
(e) This section shall become operative on July 1, 2016, or on a date that the Secretary of State determines, whichever is sooner.

3004.
 (a) In order to enforce a lien under Section 3000, the employee shall demonstrate in a civil action, or in a proceeding under Section 98 of the Labor Code, that he or she is owed wages or other compensation and any related penalties and damages. In addition, if the owner or reputed owner of the property is not the employer, the employee shall demonstrate that the property was property subject to the lien under paragraph (2) of subdivision (a) of Section 3000.
(b) If the employee chooses to pursue the wage claim in an administrative proceeding before the Labor Commissioner pursuant to Section 98 of the Labor Code, the Labor Commissioner may establish the amount of lien if a lien has been recorded. If no lien has been recorded at the time the administrative claim is filed, the Labor Commissioner may record the lien on behalf of the employee.
(c) If a notice of lien is recorded or filed pursuant to Sections 3002 or 3003 and an action to recover unpaid wages has been filed by the employee or employee representative, that action shall also be deemed an action to enforce the lien and foreclose upon any property subject to the recorded lien. In the judgment resulting from an action, the court may order the sale at a sheriff’s auction or the transfer to the plaintiff of title or possession of any property subject to the lien. Whether or not the court makes an order as part of the judgment, any property subject to the lien may be foreclosed upon at any point after a judgment for unpaid wages is issued.
(d) The employee or employee representative is entitled to court costs and reasonable attorneys’ fees for filing a successful action to enforce a lien pursuant to this section.
(e) If judgment is entered against the employee or employee representative in the action to enforce the lien or if the case is dismissed with prejudice, the lien shall be extinguished upon expiration of the applicable appeals period if no appeal is filed extinguished. The judgment shall include the date the notice of lien was recorded, the county in which it was recorded, the book and page or series number of the place in the legal records in which the lien was recorded, and a legal description of the property to which the lien attaches. The judgment may be appealed by filing a notice of appeal on or before 60 days after the entry of judgment. If an appeal is filed, the lien shall continue in force until all issues on the appeal have been decided. If the period for appeal runs without an appeal having been filed, or if the appeal fails, the judgment entered under this section shall be equivalent to cancellation of the lien and its removal from the record. A judgment entered pursuant to this subdivision is a recordable instrument. Upon recordation of a certified copy of the judgment, the property described in the judgment is released from claim of lien. Alternatively, if the lien is extinguished, upon demand and 15 days’ notice by the property owner, the employee or employee representative shall file a release of the lien. If an employee or employee representative refuses to file a release of the lien after proper notice, an employer or property owner may petition the court for an order to file a release of the lien and the employer or property owner shall be entitled to attorney’s fees and costs incurred in the action. The court in its discretion may also issue a fine, not to exceed one thousand dollars ($1,000), for refusing to file a release of lien after proper notice.
(f) Any number of claims to enforce employee liens against the same employer may be joined in a single proceeding, but the court may order separate trials or hearings. If the proceeds of the sale of the property subject to a lien are insufficient to pay all the claimants, whether or not claims have been joined together, the court shall order the claimants to be paid in proportion to the amount due each claimant.
(g) If a court finds that false information was knowingly and in bad faith included in a notice of lien by an employee or an employee’s representative with an intent to defraud, the following shall apply:
(1) The lien shall be extinguished and the right to a lien as provided by this chapter shall be forfeited.
(2) The court may award reasonable attorney’s fees and court costs to the property owner or employer for action taken to defeat the lien claim.

3005.
 If the judgment in the action is against the property of a property owner who is not the employer, the owner may deduct the amount of the judgment and costs from any amount owed to the employer. If the amount of the judgment and costs exceed the amount owed to the employer, the owner may recover from the employer, or the sureties on a bond given by the employer, if any, the remaining amount of the judgment and costs.

SEC. 2. SEC. 3.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.