A state Assembly bill that would allow employees to file wage liens against commercial and some residential property is moving through the state Legislature, but AB 2416 won't be approved without a fight.
The battle has been joined between the bill's author, Assemblyman Mark Stone, D-Scotts Valley, and the California Association of Realtors (CAR), which has alerted its members to fight the proposed law.
Under existing statutes, when an employer fails to pay wages, the employee may file a claim against the present or former employer with the California Division of Labor Standards.
AB 2416 would, with certain exceptions, authorize an employee to record and enforce a wage lien against real and personal property of an employer or property owner for wages, other compensation and related penalties and damages.
The proposal has earned the ire of the Realtors group, which issued a "red alert" to its members last week.
"CAR opposes AB 2416 because it denies due process to the owner of the property, and unnecessarily clouds title," the real estate trade organization writes.
Under an earlier version of the bill, a wage lien could have been imposed against any real property. The bill has since been amended so liens wouldn't be imposed against primary residences.
"This issue was a major point of concern for CAR," Stone told The Daily Transcript.
However, the liens can still be imposed on all other types of residential and commercial real estate.
Jim Taylor, immediate past president of the San Diego Association of Realtors' Commercial Real Estate Alliance, said his organization vehemently opposes the legislation.
"We are definitely against that one. This could cover almost anybody's property for any reason," Taylor said. "It's ridiculous. It would leave a lot of properties in a lurch and could jeopardize financing."
"Innocent property owners are unfairly burdened. The bill allows a lien against commercial property of a landlord whose tenant has a dispute with one of his or her employees," CAR added.
"Liens on a commercial landlord already exist under mechanic’s liens," Stone said. "Providing the ability to place a lien on a property, even in cases where the employer does not own the property, is an important part of the solution to wage theft."
Stone said that 83 percent of claims received that receive a judgment by the State Labor Commissioner are not paid. Put another way, Stone said only 17 percent of those ordered judgments are actually satisfied.
"Allowing employees to place a lien on a property will allow them to have something tangible to attach to as that claim is decided," Stone said.
While mechanic’s liens tying up real property have long existed, Stone said that such liens are available only to contractors.
"This leaves some of our lowest-wage workers without a tool to claim owed wages," Stone said.
CAR argues that due process would be denied because the measure would allow an employee to record a lien against an employer’s property without adequate notice. Stone said this is not only false, but his bill also offers greater protections than mechanic’s liens.
"Our bill provides a 20-day notification to the property owner prior to filing a lien, as well as a review process for employers or property owners to challenge the validity of a lien," he said.
Stone said CAR’s claim that an employee may place a lien against a property even if it has no connection with the dispute isn’t true.
"Wage liens under this bill would only be placed on a property if the business owner and the property owner are related parties, or if the work was done to benefit the property," he said.
When asked if a wage lien could be placed against an employer's real estate or personal property assets simply out of spite, Stone said his bill is worded to prevent that from happening.
"This bill provides a review process to ensure that a lien has validity, and it also includes penalties for malicious placements of liens," he said.
And CAR contends that avenues for wage disputes already exist with labor boards, rendering the bill unnecessary. Stone countered that the current ways to address wage theft are inadequate.
"The claims process takes up to a year and a half, and during that time over 60 percent of businesses in question close their doors, leaving employees with wage claims no way to recover the wages they earned providing work for businesses," Stone said.
"AB 2416 will ensure that those workers who are owed wages have a way of collecting those wages upon a judgment of the Labor Commissioner."
Don't tell that to CAR, which says there is a huge potential for abuse.
"Allowing unscrupulous creditors to take over the employee's wage claim, without even the need for a garnishment order, invites employees and property owners to be victimized twice," the association states.
The bill has gone through the required state Senate committees and is expected to be considered by the full Senate this week.