Amended in Assembly January 23, 2014

Amended in Assembly May 6, 2013

Amended in Assembly April 24, 2013

Amended in Assembly March 21, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 1164

Introduced by Assembly Member Lowenthal

(Coauthor: Assembly Member Roger Hernández)

February 22, 2013

An act to add Chapter 3 (commencing with Section 3000) to Title 14 of Part 4 of Division 3 of the Civil Code, relating to liens.

LEGISLATIVE COUNSEL’S DIGEST

AB 1164, as amended, Lowenthal. Liens: employees and workers.

Existing law grants specified persons, including laborers, as defined, who contribute labor, skill, or services to a work of improvement the right to record a mechanic’s lien upon the property so improved.

This bill would, with certain exceptions, 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 wages, other compensation, and related penalties and damages owed the employee. The bill would prescribe requirements relating to the recording and enforcement of the wage lien begin insert and for its cancellation and removal end insert . The bill would require a notice of lien on real property to be executed under penalty of perjury.

By expanding the scope of the crime of perjury, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert This act shall be known, and may be cited, as the
California Fair Paycheck Act. end insert

begin delete SECTION 1. end delete
begin insert SEC. 2. end insert   

Chapter 3 (commencing with Section 3000) is added
to Title 14 of Part 4 of Division 3 of the Civil Code, to read:

 

Chapter  3. Wage Liens

 

3000.  

(a) An employee shall have a lien for the full amount
of any wages, other compensation, and related penalties and
damages owed to the employee on the following property:

(1) All property of the employer, including any after-acquired
property, except that if the employer is a natural person, a lien
shall apply to the employer’s principal residence only to the extent
that the employee provided labor to the benefit of that household
or residence.

(2) The property upon which the employee bestowed labor for
the benefit of the property owner and with the owner’s consent or
knowledge that such labor was being provided. The amount of the
lien on such property shall be limited to the amount of wages,
compensation, and related penalties and damages accrued during
the time the employee bestowed labor on that specific property.

(b) The amount of this lien shall include unpaid wages, all other
compensation required under California law, penalties and damages
available under the Labor Code, interest at the same rate as for
prejudgment interest in this state, and the costs of filing and service
of the lien. The amount of compensation that may be claimed as
a lien under this section includes all wages agreed to be paid to
the employee, but no less than the amount required by law,
including direct wages and compensation required to be paid to
other persons or entities, that would qualify as “employer
payments” described in Section 1773.1 of the Labor Code.

(c) The lien shall be subject to the following limits:

(1) An employee’s lien upon personal property shall be limited
to property subject to a security interest under the Commercial
Code pursuant to the filing of a financing statement with the
Secretary of State.

(2) The lien described in paragraph (2) of subdivision (a) shall
not apply to begin insert a claim relating to end insert property bought or services
furnished primarily for personal, family, or household purposes,
including begin insert those benefitting end insert any real property that is the principal
residence of the owner.

begin insert

(3) The lien described in paragraph (2) of subdivision (a) shall
not attach if the employer has obtained a surety bond or insurance
that provides for payment of the wages, related damages, and
penalties sought by the employee and is in an amount that is
adequate to fully satisfy the employee’s claim. If the surety bond
or insurance contract is inadequate to cover the entire amount of
the employee’s claim, the lien shall be limited to the amount of the
claim that exceeds the bond or insurance coverage. Within 30 days
of being provided with proof of a valid surety bond or insurance
contract that applies to the claim, the employee shall file a release
of any lien recorded against that property or a notice reducing
the lien to the amount that exceeds the bond or insurance coverage.

end insert

(d) Any act authorized or required under this chapter with regard
to an employee may also be undertaken by any person or entity,
including any governmental agency, to which a portion of an
employer’s compensation is payable or that has standing under
applicable law to maintain a direct legal action on behalf of the
employee to collect any portion of compensation owed to the
employee.

(e) A lien pursuant to this chapter shall not be claimed by an
employee who is exempt from the protections of Industrial Welfare
Commission wage orders begin insert under the administrative, executive, or
professional exemptions end insert . However, in any action involving such
a lien, the employer or property owner shall plead and prove
exempt status as an affirmative defense.

(f) A lien pursuant to this chapter is in addition to any other lien
rights held by the employee and shall not be construed to limit
these rights.

3001.  

(a) The lien described in Section 3000 shall be
permanently extinguished unless a notice of lien in accordance
with Section 3002 or 3003 is recorded and served within begin delete one year end delete
begin insert 180 days end insert of the date that the employee ceased working for the
employer.

(b) The employee shall commence an action to enforce the lien
and prove the amount owed within begin delete 180 end delete begin insert 90 end insert days of the date of filing
or recording of the notice of lien. If the employee does not
commence an action to enforce the lien within that time, the lien
shall be permanently extinguished and is unenforceable.

(c) (1) Subdivision (b) does not apply if the employee and the
owner of the property subject to the lien agree to extend the time
for enforcing the lien in writing and record or file notice of the
fact and terms of the extension within either of the following
periods:

(A)  begin delete 180 end delete begin insert Ninety end insert days after recordation or filing of the notice of
lien.

(B) More than begin delete 180 end delete begin insert 90 end insert days after recordation or filing of the
notice of lien but before a purchaser or encumbrancer acquires
rights in the property for value and in good faith.

(2) In the event of an extension, the employee shall commence
an action to enforce the lien within begin delete 180 end delete begin insert 90 end insert days after the expiration
of the extension. If the employee does not commence an action to
enforce the lien within that time, the lien shall be permanently
extinguished and is unenforceable.

(d) If the lien has been extinguished pursuant to subdivision (b)
or (c), upon demand and 15 days’ notice by any affected party, the
employee shall record or file a release of the lien. begin insert If an employee
or employee representative refuses to file a release of the lien after
proper notice, an employer or property owner may petition the
court for an order to file a release of the lien and the employer or
property owner shall be entitled to attorney’s fees and costs
incurred in the action. The court in its discretion may also issue
a fine, not to exceed one thousand dollars ($1,000), for refusing
to file a release of lien after proper notice. end insert

3002.  

(a) With regard to a lien on real property, the employee
shall record a notice of lien with the county recorder in the county
where the real property is located.

(b) The notice of lien shall be executed under penalty of perjury begin insert ,
as defined in Section 118 of the Penal Code, end insert and shall include all
of the following:

(1) A statement of the employee’s demand for unpaid wages,
other compensation, related penalties, and damages. The statement
shall specify the amount owed to the employee, and if the amount
is estimated, shall provide an explanation for the basis of the
estimate.

(2) A general statement of the kind of work furnished by the
employee and the dates of employment.

(3) The name of the person by whom the employee was
employed.

(4) The employee’s mailing address.

(5) For property described in paragraph (2) of subdivision (a)
of Section 3000, both of the following:

(A) A description of the site upon which the work was
performed sufficient for identification.

(B) The name of the owner or reputed owner, if known.

(c) The employee or employee representative shall serve the
notice of lien on the employer and the owner or reputed owner of
the real property subject to the lien, as follows:

(1) For an employer, notice of lien shall be served by begin delete registered
mail, certified mail, or first-class mail, end delete begin insert end insert begin insert certified mail with return
receipt requested, end insert evidenced by a certificate of mailing, postage
prepaid, addressed to the employer at the employer’s residence or
place of business.

(2) For an owner or reputed owner who is not the employer,
notice of lien shall be served by begin delete registered mail, certified mail, or
first-class mail, end delete begin insert end insert begin insert certified mail with return receipt requested, end insert
evidenced by a certificate of mailing, postage prepaid, addressed
to the address of the property subject to the lien or to the residence
or place of business of the owner or reputed owner.

(d) For property described in paragraph (1) of subdivision (a)
of Section 3000, the lien attaches to all real property owned by the
employer at the time of the filing of the notice of lien, or that is
subsequently acquired by the employer, that is located in any
county in which the notice of lien is recorded, regardless of whether
the property is identified in the notice of lien. For property
described in paragraph (2) of subdivision (a) of Section 3000, the
lien attaches only to the property that is specifically identified in
the notice of lien.

3003.  

(a) With regard to a lien on personal property, the
employee shall file a notice of lien with the Secretary of State.
Except as otherwise provided in this chapter, the manner, form,
and place of filing shall be as described in Chapter 5 (commencing
with Section 9501) of Division 9 of the Commercial Code. The
notice of the lien shall be placed in the same file as financing
statements pursuant to Section 9522 of the Commercial Code.

(b) The notice shall be executed under penalty of perjury begin insert , as
defined in Section 118 of the Penal Code, end insert and shall state the
following:

(1) The amount of the claim for unpaid wages, other
compensation, related penalties, and damage, and if the amount is
estimated, shall provide an explanation for the basis of the
estimation.

(2) A general statement of the kind of work furnished by the
employee and the dates of employment.

(3) The name of the person by whom the employee was
employed.

(4) The employee’s mailing address.

(5) To the extent known, a description of the property on which
the lien is made. Regardless of whether the property is specifically
described in the notice, the lien attaches to all personal property
owned by the employer or subsequently acquired by the employer
that can be made subject to a security interest under the
Commercial Code.

(c) The employee or employee representative shall serve the
notice of lien on the employer and the owner or reputed owner of
the property subject to the lien, as follows:

(1) For an employer, notice of lien shall be served by begin delete registered
mail, certified mail, or first-class mail, end delete begin insert end insert begin insert certified mail with return
receipt requested, end insert evidenced by a certificate of mailing, postage
prepaid, addressed to the employer at the employer’s residence or
place of business.

(2) For an owner or reputed owner who is not the employer,
notice of lien shall be served by begin delete registered mail, certified mail, or
first-class mail, end delete begin insert end insert begin insert certified mail with return receipt requested, end insert
evidenced by a certificate of mailing, postage prepaid, addressed
to the residence or place of business of the owner or reputed owner.

(d) For property described in paragraph (1) of subdivision (a)
of Section 3000, the lien attaches to all personal property that can
be made subject to a security interest under the Commercial Code
that is owned by the employer at the time of filing of the notice of
lien or that is subsequently acquired by the employer, regardless
of whether the property is identified in the notice of lien. For
property described in paragraph (2) of subdivision (a) of Section
3000, the lien attaches only to the property that is identified in the
notice of lien.

begin insert

(e) This section shall become operative on July 1, 2016, or on
a date that the Secretary of State determines, whichever is sooner.

end insert

3004.  

(a) In order to enforce a lien under Section 3000, the
employee shall demonstrate in a civil action, or in a proceeding
under Section 98 of the Labor Code, that he or she is owed wages
or other compensation and any related penalties and damages. In
addition, if the owner or reputed owner of the property is not the
employer, the employee shall demonstrate that the property was
property subject to the lien under paragraph (2) of subdivision (a)
of Section 3000.

(b) If the employee chooses to pursue the wage claim in an
administrative proceeding before the Labor Commissioner pursuant
to Section 98 of the Labor Code, the Labor Commissioner may
establish the amount of lien if a lien has been recorded. If no lien
has been recorded at the time the administrative claim is filed, the
Labor Commissioner may record the lien on behalf of the
employee.

(c) If a notice of lien is recorded or filed pursuant to Sections
3002 or 3003 and an action to recover unpaid wages has been filed
by the employee or employee representative, that action shall also
be deemed an action to enforce the lien and foreclose upon any
property subject to the recorded lien. In the judgment resulting
from an action, the court may order the sale at a sheriff’s auction
or the transfer to the plaintiff of title or possession of any property
subject to the lien. Whether or not the court makes an order as part
of the judgment, any property subject to the lien may be foreclosed
upon at any point after a judgment for unpaid wages is issued.

(d) The employee or employee representative is entitled to court
costs and reasonable attorneys’ fees for filing a successful action
to enforce a lien pursuant to this section.

(e) If judgment is entered against the employee or employee
representative in the action to enforce the lien or if the case is
dismissed with prejudice, the lien shall be begin delete extinguished upon
expiration of the applicable appeals period if no appeal is filed end delete begin insert end insert
begin insert extinguished. The judgment shall include the date the notice of
lien was recorded, the county in which it was recorded, the book
and page or series number of the place in the legal records in
which the lien was recorded, and a legal description of the property
to which the lien attaches. The judgment may be appealed by filing
a notice of appeal on or before 60 days after the entry of judgment end insert .
If an appeal is filed, the lien shall continue in force until all issues
on the appeal have been decided. If begin insert end insert begin insert the period for appeal runs
without an appeal having been filed, or if the appeal fails, the
judgment entered under this section shall be equivalent to
cancellation of the lien and its removal from the record. A judgment
entered pursuant to this subdivision is a recordable instrument.
Upon recordation of a certified copy of the judgment, the property
described in the judgment is released from claim of lien.
Alternatively, if end insert the lien is extinguished, upon demand and 15 days’
notice by the property owner, the employee or employee
representative shall file a release of the lien. begin insert If an employee or
employee representative refuses to file a release of the lien after
proper notice, an employer or property owner may petition the
court for an order to file a release of the lien and the employer or
property owner shall be entitled to attorney’s fees and costs
incurred in the action. The court in its discretion may also issue
a fine, not to exceed one thousand dollars ($1,000), for refusing
to file a release of lien after proper notice. end insert

(f) Any number of claims to enforce employee liens against the
same employer may be joined in a single proceeding, but the court
may order separate trials or hearings. If the proceeds of the sale
of the property subject to a lien are insufficient to pay all the
claimants, whether or not claims have been joined together, the
court shall order the claimants to be paid in proportion to the
amount due each claimant.

begin insert

(g) If a court finds that false information was knowingly and in
bad faith included in a notice of lien by an employee or an
employee’s representative with an intent to defraud, the following
shall apply:

end insert begin insert

(1) The lien shall be extinguished and the right to a lien as
provided by this chapter shall be forfeited.

end insert begin insert

(2) The court may award reasonable attorney’s fees and court
costs to the property owner or employer for action taken to defeat
the lien claim.

end insert

begin insert

begin insert 3005. end insert   

If the judgment in the action is against the property of
a property owner who is not the employer, the owner may deduct
the amount of the judgment and costs from any amount owed to
the employer. If the amount of the judgment and costs exceed the
amount owed to the employer, the owner may recover from the
employer, or the sureties on a bond given by the employer, if any,
the remaining amount of the judgment and costs.

end insert

begin delete SEC. 2. end delete
begin insert SEC. 3. end insert   

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.