A Bullet Dodged

In February 2013 AB 1164, known as the California Fair Paycheck Act, was introduced. The Bill, if passed, would allow an employee, or an entity including a governmental agency on behalf of the employee, provided that agency was to receive a portion of the compensation payable, to record and enforce a wage lien upon an employer’s or property owner’s real property, including a principal residence, for wages, other compensation, and related penalties and damages allegedly owed the employee. The text of the Bill proposed that such a lien would apply to currently owned property, as well as to after-acquired interests in real property. It also authorized recording of this lien prior to any action being taken by the employee to prove entitlement to the claimed wages! As proposed, the Bill provided for the employee to file an enforcement action in civil court within 90 days after recordation of the lien. The Bill also provided that upon entry of a judgment in favor of the employee, the court could order a sale of the property at sheriff’s auction or transfer to the employee (or representative agent) title or possession of any property subject to the lien. Removal of the lien in the event of a wrongful recording and clouding of title was vaguely addressed, with no specific or summary procedure being established in the event of a wrongful lien.

Thankfully, on January 30, 2014, the Bill was ordered inactive at the request of its author, Assembly Person Lowenthal, where it died on February 3, 2014.

California employers and property owners dodged a bullet. Think of the havoc such a right would have wreaked on financing by the creation of a new super-priority lien without the benefit of due process for the property owner.