New Law Enhances Labor Commissioner’s Ability to Lien Employer Real Property

Ervin Cohen & Jessup LLP
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Ervin Cohen & Jessup LLP

In 2013 the California Legislature passed Assembly Bill 1386, which amended Labor Code section 98.2, giving the Labor Commissioner additional means to collect wages and penalties on behalf of workers. Labor Code section 98.2 was modified so that any amount due under a final order by the Labor Commissioner permits the Labor Commissioner to record a Certificate of Lien against the employer’s real property.

Fast forward to September 2021 and the passage of Senate Bill 572.  This bill adds section 90.8 to the Labor Code, which becomes effective January 1, 2022.  This statute will allow the Labor Commissioner’s office to record a lien on real property to secure the amount due to the Labor Commissioner based on any “citation, findings, or decision that has become final.” The nuance between the two bills is easy to miss. Under SB 572 the Labor Commissioner no longer needs a final “order” before filing a lien, but instead may do so upon any type of final decision, finding, or even a citation. As with other liens on real property, the Labor Commissioner would also be entitled to renew the lien every ten years until the amount cited, plus interest, is fully paid.

From a practical standpoint, SB 572 appears more remedial than punitive by closing a technical loophole created by the wording of AB 1386.  Regardless of whether the Labor Commissioner issues an order, citation, or other final decision, employers should comply with any such decision to avoid increasingly aggressive collection efforts by the Labor Commissioner.

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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