The California Legislature last year considered a bill that would have given workers a mechanism for collecting unpaid wages by filing a lien against their employer. It wasn't a perfect solution, but it would have made it harder for business owners to evade their obligations. The measure failed to get enough traction for passage, though. Now Senate President Pro-Tem Kevin de Leon (D-Los Angeles) is revisiting the issue with an even better solution, putting the enforcement power in the hands of the state labor commissioner.
Workers in California lose up to $1.5 billion a year in unpaid wages, according to the federal Department of Labor. And a UCLA Labor Center study found that only 17% of workers who had won back-wage judgments were able to collect. In most cases, the offending employer simply closed up shop, often shifting operations to a new company.
SB 588 addresses the problem in two key ways. It would empower the labor commissioner to file claims directly against the business owner, rather than just the business, which means the obligation follows the offender. It also would allow the labor commissioner to seek payment from a new, related business if it does "substantially the same work in substantially the same working conditions under substantially the same supervisors" or if it engages in similar work with the original business' customer base. That wording gives us pause. It is intentionally vague in order to give the labor commissioner discretion in determining who is responsible for the owed wages. But vague wording can create unintended problems, and we believe the final measure should require a clearer link between the new business and the previous owner who failed to pay the wages, to preclude the innocent from being saddled with another person's debt.
The enforcement mechanism is strong. If, after appeals are exhausted, the employer still doesn't pay the back wages, the labor commissioner can file a lien or a stop-work order suspending business operations and demand a $150,000 bond to cover future wage-theft complaints.
Overall, this bill offers a reasonable recourse for workers who have been cheated out of their wages without burdening legitimate businesses.