Employees Could File Liens Against The Employer’s Property? Really??
Just when you think that California cannot get any more employer-unfriendly, the California Legislature reminds us that it actually can. The latest reminder is legislation that was recently introduced by Democratic Assemblyman Mark Stone (AB 2416) to allow employees to record liens against their employers’ property for alleged unpaid wages. That’s right—alleged. In order to record a lien, the employee does not need to have proven his entitlement to unpaid wages in a court action or Labor Commissioner proceeding or otherwise. It is only after the lien is recorded that the employee must prove up the lien by demonstrating that he is actually owed the unpaid wages. If the employee succeeds, he is also entitled to recover attorneys’ fees and costs. A lien can also be recorded and enforced by a group of employees or by a government agency (e.g. the DLSE). The only way the employer can avoid the lien is by obtaining a surety bond (similar to that required to stay a money judgment pending appeal), which is itself a costly procedure.
At least there’s some faint protective relief built in to the legislation for employers–well, sort of. If an employer defeats an action to enforce a lien, the employer can, in very limited circumstances, recover its attorneys’ fees and costs IF the employer can prove that the employee’s action was brought unreasonably and in bad faith. (Conversely, the employee of course automatically gets awarded his attorneys’ fees and costs if he proves entitlement to unpaid wages, regardless of whether the wage withholding was in good faith.)
The proposed legislation has exclusions for employees covered by collective bargaining agreements if certain specified conditions are met, and also excludes employees who are exempt administrative, professional or executive employees (of course, the employee can challenge his exempt status and thereby avoid this exclusion, and the legislation specifically states that it is the employer’s burden to prove, as an affirmative defense, that the employee meets the test for exemption).
Employers should voice their opposition to this unnecessary legislation, which has already passed one labor committee and, if enacted, will provide one more tool for the plaintiffs’ employment bar to use to pressure employers to settle wage and hour claims, particularly those brought on behalf of a class of employees.
During the interim, make sure you are following all state and federal guidelines regarding the payment of wages. Have an HR Audit done to ensure compliance. Do not take it for granted that everything is being done properly!