Why it matters: The California legislature has been busy recently with multiple laws related to employment. The state Assembly passed a bill that would allow employees to place a lien on the real or personal property of employers for unpaid wages. Sponsored by a union, the proposed law faces opposition from groups like the California Chamber of Commerce, which argue that such liens could negatively impact business and real estate in the state. Meanwhile, the Senate approved a bill that would bump the state’s minimum wage up to $13 in 2017 – just months after Governor Jerry Brown signed legislation increasing the state’s minimum wage from $8 to $10 in 2016. Employers should keep a close eye on both bills for continued developments.

Detailed Discussion

Could employees be given the right to file a lien against employers for unpaid wages? If California legislators have their way, the answer could be yes.

A.B. 2416 “would 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 unpaid wages and other compensation owed the employee and certain other penalties, interest, and cost.” Once an employee files the lien, he or she has 90 days to commence an action to enforce it or face the permanent extinguishment of the lien and its unenforceability.

The proposed law includes exceptions where an employer has obtained a surety bond or insurance that provides for the payment of the wages and other compensation in an amount adequate to fully satisfy the employee’s claim as well as for employees governed by certain collective bargaining agreements.

An employee that “acts unreasonably and in bad faith” in relation to the recording or filing of a lien could be fined up to $1,000.

Supporters of the legislation – which passed the Assembly in a 43 to 27 vote – include Service Employees International Union, which contends the measure is necessary to combat employee wage theft, which the union says reaches billions of dollars every year.

But opponents argue that the bill allows liens to be filed based simply on allegations before a wage claim has been proven. “A.B. 2416 would cripple California businesses,” the California Chamber of Commerce said in a statement, dubbing it a “job killer.” “This bill would also severely disrupt commercial and personal real estate markets in this state.”

On the opposite side of the Assembly, state Senators voted 21 to 12 in favor of S.B. 935 to raise the state’s minimum wage.

Currently, the state’s minimum wage is $8 per hour. Pursuant to a law signed by Gov. Brown last September, the hourly wage will increase in steps to $9 in 2015 and $10 in 2016, making it one of the highest in the nation.

But apparently it wasn’t high enough for state lawmakers, who proposed an additional increase to $13 in 2017 (by jumping to $11 in 2015 and $12 in 2016). Going forward in 2018, the state’s minimum wage would be adjusted on an annual basis, tied to the rate of inflation. If the average percentage of inflation for the previous year was negative, the wage would not be adjusted.

The legislation’s sponsor, Sen. Mark Leno (D-San Francisco), said that last year’s increase was insufficient. Adjusted for inflation, the 1968 minimum wage would be worth $10.77 per hour today, he said, leaving state residents with less purchasing power than they had almost 50 years ago.

Now being considered by the Assembly, the bill faces pushback from business groups and employers arguing they cannot afford the increase.

  1. To read A.B. 2416, click here

To read S.B. 935, click here.