The Redlands Chamber of Commerce Government Review Committee is constantly on the lookout for legislation that will have a negative impact on the business community. Once again another bill as come along that creates more problems than it solves – California Assembly Bill 2416. Thank you Jan Hudson of Hudson Realty for bringing this one to our attention.
AB 2416, titled as the California Wage Theft Prevention Act, is intended to give employees an additional mechanism to recover unpaid wages. It allows an employee to file a lien on property where they provided their services for the amount of the unpaid wages. The problem is the legislation bypasses normal due process procedures, and can victimize parties having no control over wage dispute.
Here are some of the problems with the current version of the bill:
- Proof of wrongdoing by the employer is not required to file the lien
- The lien is filed against the property owner, even if the property owner is not the employer.
- The lien can apply even if there is not a formal agreement between the employer and employee.
For example, should this legislation pass a building owner could have a lien placed on their property by an employee of a building tenant, or even by the employee of a subcontractor that was hired by the tenant to perform work on the tenant space. And since there is not a requirement for a formal work agreement, there is potential for abuse. Someone could come onto a property and perform maintenance service without being asked. They could then claim that the services were requested by a building tenant, and file a lien against the building owner for lack of payment. In another situation, a contractor remodeling a home could hire a day laborer for some hourly work and not pay them. The homeowner would then find a lien placed on their property, possibly after the work was completed and they had paid the contractor in full.
Another side effect is the impact a lien can have on the owner’s operations. I this tight credit market a lien, even an unjustified one, can have a dramatic negative impact for someone trying to refinance to obtain a line of credit. While on the other side the penalty for filing an unjustified lien is up to $1,000 towards legal expenses.
California already has processes to resolve unpaid wage disputes. The last thing we need right now is more legislation to drive business out of the state. And the scary part is this bill is moving fast. It has already passed the Assembly on a party line vote, and is on its way to the Senate. The Redlands Chamber of Commerce Board of Directors has taken a position opposing this bill, and written a letter to our State Senator Mike Morrell stating such. But given the ease this moved out of committee and through the Assembly, it appears it is on path for approval.
Senator Mike Morrell already opposes the bill, but letters of opposition from you will give him ammunition to help plead his case. In addition, any contacts you can rouse from other Senate districts will help. The more voices the better. Contact the Chamber if you would like a sample letter to send.