AB 721

Under current law, the Department of Workforce Development (DWD) must

investigate and attempt to adjust any claim by an employee that his or her employer

has not paid the employee any wages that are owed to the employee (wage claim).

Currently, DWD or an employee who brings a wage claim action has a lien upon all

property of the employer, real and personal, located in this state for the full amount

of any wages owed to the employee (wage claim lien). Currently, a wage claim lien

takes precedence over all other debts, judgments, decrees, liens, or mortgages

against an employer, except for a lien of a commercial lending institution that

originates before the wage claim lien takes effect (prior lien), regardless of whether

those other debts, judgments, decrees, liens, or mortgages originated before or after

the wage claim lien takes effect. Current law provides, however, that a wage claim

lien takes precedence over a prior lien of a commercial lending institution as to the

first $3,000 of unpaid wages covered under the wage claim lien that are earned

within the six months preceding the filing of the wage claim with DWD or the

commencement of an action by the employee to recover the wages due.

This bill increases that $3,000 cap to $4,500, eliminates that six-month time

limit, and applies that cap to the aggregate of all prior liens of commercial lending

institutions so that under the bill the first $4,500 of unpaid wages covered under a

wage claim lien

that are earned at any time

takes precedence over the aggregate of

all prior liens of commercial lending institutions.

The bill also requires the secretary of workforce development (secretary), at

least once every five years or more frequently if DWD finds reasonable cause to

believe that the cap should be adjusted, to appoint a wage claim lien review

committee (committee) for the purpose of studying the need for an adjustment to the

cap and making recommendations to the legislature for any adjustments to the cap.

In conducting that study and making those recommendations, the committee may

consider any changes in the consumer price index and the effect that an adjustment

to the cap might have on the economy of the state. The committee must submit a

report of its recommendations, together with an explanation for those

recommendations and any proposed legislation that may be necessary to implement

those recommendations, to the secretary, the governor, the speaker of the assembly,

the senate majority leader, and the minority leaders of each house of the legislature

and to the standing committees of each house of the legislature that are concerned

with labor issues and issues affecting financial institutions. Those standing

committees must then review and conduct public hearings on those

recommendations.

In addition, the bill provides that a wage claim lien takes precedence over the

rights of any person that purchases any property of the employer after the lien is