Proposed California Wage Theft Prevention Act

Savvy business owners stay apprised of proposed legislation by working closely with their employment law attorneys.  AB 2416, first proposed in February, 2014 and still undergoing amendments, is the California Wage Theft Prevention Act.  Under this bill, employees can place a wage lien on employer properties for the full amount of the following items:

  • Any wages owed
  • Other compensation owed
  • Penalties under the Labor Code
  • Interest (at the same rate as prejudgment interest)
  • Costs of filing and service of the lien

Employees may file liens on principal residences only when the employee's labor benefited the employer's household or principal residence.

For employers to be free from lien attachment, they must obtain a surety bond or insurance that covers payment of wages, other compensation, interest and penalties. The surety bond or insurance must be adequate to satisfy the employee's claim. When coverage is inadequate, employees may file liens. However, the lien may cover only the monetary amount owed that exceeds the surety bond or insurance policy's coverage.

Note that such wage liens may be filed prior to proving in a court of law or through a Division of Labor Standards Enforcement action that the wage claim is valid. If the employee files the lien unreasonably and in bad faith or refuses to file a release or reduction of the lien, employers are entitled to recover the legal fees and court costs involved with removing or reducing the lien. Courts also have the discretion to fine the employee an amount not exceeding $1,000.

Employees must provide employers with a notice of their intent to record a lien at least five days prior to filing the lien. Within 180 days of filing the lien, the employee must commence an action to enforce the lien and prove the amount owed.

Topics:  Wage and Hour, Wage Theft, Wage Theft Prevention Act, Wages

Published In: Labor & Employment Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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