The California Legislature is contemplating passing a new law that would allow a person with a labor board judgement to slap a lien on the real and personal property of their employer.
Update: as of August 29, 2014, this bill has failed to pass from the Senate. Hopefully it will not become law this year.
AB 2416, authored by Assembly Member Stone, is currently pending in the Senate after being passed from the Assembly 43 to 27.
According to the author, AB 2416 is intended to provide aggrieved employees a path to collect on labor board judgements.
Most experts agree that labor board judgements are unusually difficult to collect upon. However, this bill goes too far and would create massive headaches for business owners in California.
Labor board judgments are often one sided and incorrectly decided. However, the costs associated with appealing these judgments often outweigh the amount of the judgements themselves. Many California businesses simply ignore the judgements as opposed to appealing because of the high cost of appeal.
AB 2416 would make it impossible to ignore these judgements. As currently drafted, the bill would require the employee to commence an action to enforce the lien within 90 days of the date of filing or recording the notice of lien. If the employee does not do so within the 90 day period, the lien will be extinguished as a matter of law. This would make the lien unenforceable.
While the 90 day period does provide employers with some level of protection, it would also encourage more litigation in these cases. Because the employee would be required to â€œcommence an action to enforce the lienâ€ in order to keep the lien alive, additional litigation is almost ensured.
One other protection in the bill for employers is a provision that would allow an employer to seek up to $1,000 in attorneyâ€™s fees and costs if the employee refused to file a release of lien within 15 days demand by the employer.
AB 2416 still has to pass from the Senate and be signed by the Governor in order to become law. The bill will likely change as it works its way through the legislative process. I will keep an eye on this bill and provide an update on my blog should it become law.
Please contact Rick Morin if you need assistance with labor board judgements. Rick's office can be reached at (916) 333-2222.