​(June 1, 2012) A California Chamber of Commerce-opposed “job killer” bill that  would have crippled certain California businesses by allowing any employee or employee representative to file liens on real and personal property for alleged, yet unproven wage claim failed to pass the Assembly yesterday.

AB 2517 (Eng; D-Monterey Park) would have created a dangerous and unfair precedent in the wage and hour arena and  allowed employees in the car washing industry to file liens on an employer’s real property or any property where work was performed.

Imposed Liability on Non-Employers

AB 2517 would have allowed an employee to impose liability against a non-employer for an alleged, yet unproven wage claim.

Specifically, AB 2517 stated that an employee may file and enforce a lien on any real or personal property “used in the commercial car wash business upon which the employee performed work.” This meant that an employee could have filed and enforce a lien against a landlord who simply leases the property to a car washing business, or even a lien on the vehicles that the employee washes as a part of his/her job.

AB 2517 would have basically imposed liability for alleged, unpaid wages on consumers and other businesses that have absolutely no control, input, or responsibility over the working conditions of the employee. Such a significant extension of liability for wage claims on a person or entity that has no relationship with the employee would have been simply unfair and unprecedented.

Onerous Wage and Hour Laws in California

California has some of the most onerous wage and hour laws in the country. Litigation is constantly filed for wage-related disputes such as whether an employee has been properly classified as exempt versus non-exempt, as an independent contractor versus an employee, or even paid at the appropriate rate for the proper amount of time. Even the Labor Commissioner, charged with interpreting and enforcing wage and hour laws, disagrees with courts regarding the proper application of California law in this area.

Despite the undeniable complexity of wage and hour law in this state, AB 2517 would have allowed any employee or employee representative to file a lien against the employer’s real property or personal property, and a non-employer’s real or personal property, simply on the basis that the employee believed he or she has a valid wage claim against the employer.

At the time of filing the lien, the employee would have no burden to provide any actual evidence that the employer violated any wage and hour law. Rather, all the employee would have to do was simply provide:

a demand statement of the alleged amount owed;

employer’s name;

description of the property;

and the employee’s address.

Under AB 2517, this lien would be applied for single employee wage claims that amount to several hundred dollars in damages and/or class action and representative wage claims that allege millions of dollars in damages.

Employees should not be allowed to interfere with an employer’s business or property, or someone else’s real or personal property where work was performed, through filing a lien of such significance without first proving the merit of their allegations. To allow otherwise would  have basically subjected employers, consumers, and other businesses to constant extortion in order to avoid dealing with a lien on their property.

Unprecedented Lien Right

Although California does allow lien rights in limited circumstances, those lien rights are more narrowly tailored than the lien right proposed under AB 2517.

For example, as often raised by the sponsor and supporters, California allows employees who harvest or transport crops to file a lien on the severed crops for work performed. Such a lien, however, only lasts for 45 days after the last day of work performed and the amount of the lien is limited to two weeks of the employee’s maximum earnings, not to exceed 25% of the fair market value of the crops harvested.

Comparatively, AB 2517 would have remained in effect for one year after being filed and there was no limit on the amount of the lien. A lien under AB 2517 could be filed for a single wage claim, class action, or representative action based upon the unpaid wages, penalties, interest, and potential attorney’s fees allegedly owed.

Given the multiple layers of statutory penalties in the Labor Code for unpaid wages, including the Private Attorney General Act (PAGA), and the exorbitant amount of attorney’s fees, the stated amount of a lien for a class or representative action under AB 2517 would have easily exceed the one million dollar mark. Such a lien would have obstructed all of the employer or non-employer’s real and personal property for a year, despite the fact that the wage claim is unproven and may have no merit.

Additionally, even though AB 2517 was limited to those employees working in the car wash industry, allowing an employee to file a lien on real or personal property of an employer and non-employer for an unlimited amount, was a dangerous precedent to set in California. If AB 2517 would have passed, it would only be a short amount of time before the scope of wage liens was expanded to all employers, as originally requested with the introduced version of this bill.

Overburdens the Judicial System

Amendment to AB 2517 removed the Labor Commissioner as an avenue of enforcement for an asserted lien. Accordingly, all actions to enforce a lien under AB 2517 would have gone through the judicial system. In the California Governor’s May Revise Budget, it proposes to reduce funding to the California court system by over $500 million. If this proposal went into effect, courts would have been overwhelmed with existing litigation, much less new litigation that such legislation as AB 2517 would have created.