pathways to justice conference june 10 – 11, 2015 speakers: mechanic’s lien litigation:...
TRANSCRIPT
Pathways to Justice Conference June 10 – 11, 2015
Speakers:
Mechanic’s Lien Litigation: Combating Wage Theft in the Day Laborer Community
Matthew N. SirollyOscar Espino-PadronRenee Amador
Pathways to Justice Conference June 10 – 11, 2015
Session Overview
1. Wage theft explained, impact on low-income communities
2. Day laborer community demographics and the challenges to countering wage theft
3. Mechanic’s lien law overview and use as an innovative approach to recover unpaid wages for day laborers
4. Legislative proposals inspired by mechanic’s lien law
Pathways to Justice Conference June 10 – 11, 2015
Wage Theft: What is it?
• Wage theft: non-payment or underpayment of minimum and/or overtime wages, failure to provide rest and meal breaks
• Particularly impacts low-wage workers, often toiling in the underground economy
• Los Angeles is the wage theft capital of the U.S.(Source: “Wage Theft and Workplace Violations in Los Angeles: The Failure of Employment and Labor Law for Low-Wage Workers” (2010), Ruth Milken, et al; “Hollow Victories: The Crisis in Collecting Unpaid Wages for California’s Workers” (2013), Eunice H. Cho, et al.)
Pathways to Justice Conference June 10 – 11, 2015
Wage Theft: The Statistics
• Various studies have looked at the wage theft crisis in Los Angeles and in California generally – 30% of low-wage Los Angeles workers surveyed were paid less
than minimum wage in the week prior to the survey– 80.3% of low-wage Los Angeles workers experienced a meal
break violation in the week prior to the survey– $26.2 million is stolen from low-wage workers each week in Los
Angeles as a result of wage theft– 83% of workers who receive a judgment for unpaid wages never
recover a dime in California
(Source: “Wage Theft and Workplace Violations in Los Angeles: The Failure of Employment and Labor Law for Low-Wage Workers” Ruth Milken, et al. (2010); “Hollow Victories: The Crisis in Collecting Unpaid Wages for California’s Workers” Eunice H. Cho, et al. (2013))
Pathways to Justice Conference June 10 – 11, 2015
Wage Theft: The Statistics (cont’d)
• Wage theft has an impact on the health of low-income communities– Poor housing conditions – Food insecurity forcing workers to rely on cheaper
processed foods, leading to obesity and diabetes– Stress leading to poor physical and mental health
• Disadvantages law-abiding businesses & reduces local, state and federal tax revenue
(Source: “Health Impact Assessment of Proposed Los Angeles Wage Theft Ordinance”, Humane Impact Partners (2014); “Workers Without Rights: The Informal Economy in Los Angeles”, Economic Roundtable (2002).)
Pathways to Justice Conference June 10 – 11, 2015
Day Laborer: Demographics
• Persons seeking work at informal hiring sites, such as in front of businesses, home improvement stores, gas stations, and streets– 117,600 are either working or looking for work daily (fluid)– 80% are undocumented immigrants– 87% from Mexico or Central America– 59% received 8 years or less of formal education – 43% employed by construction contractors– Top five occupations include construction, painting, roofing
and drywall installation(Source: “On the Corner: Day Labor in the United States”, Abel Valenzuela , et al (2006); “Day Labor in the Golden State”, Public Policy Institute of California and Arturo Gonzalez (2007).)
Pathways to Justice Conference June 10 – 11, 2015
Day Laborer: Wage Theft
• Nature of the employer-employee relationship– Informal– Cash– Temporary
• Day laborers experience serious workplace abuses, particularly wage theft– 44 % denied breaks or food within two months of survey– 49 % were denied wages – 48 % received less than promised– 27 % abandoned at worksite(Source: “On the Corner: Day Labor in the United States”, Abel Valenzuela , et al (2006); “Day Labor in the Golden State”, Public Policy Institute of California and Arturo Gonzalez (2007).)
Pathways to Justice Conference June 10 – 11, 2015
Mechanics’ Liens to Counter Wage Theft in Day Laborer Community
• Mechanic’s lien (or laborer’s lien): pre-judgment remedy that allows a laborer to record a lien claim in the amount of wages owed against the real property on which the laborer made a permanent improvement and to foreclose on that lien if the claimed wages are not paid.
• Mechanic’s lien clinics in Los Angeles County and Orange County (See Attachment 1)
Pathways to Justice Conference June 10 – 11, 2015
Origin of Mechanics’ Liens in U.S.
• In existence since founding of United States– Thomas Jefferson and James Madison lobbied Maryland
legislature for mechanic’s lien law in 1791 to encourage development in D.C.
– U.S. rich in land but poor in capital and labor– Allowed small landholders to use land as security for
improvements(Source: “A Practitioner's Guide to Construction Law”, John G. Cameron)
• Premised on the idea of unjust enrichment– e.g. Burton v. Sosinky (1988) 203 Cal.App.3d 562, 568; T.O. LX,
LLC v. Superior Court (2008) 65 CA4th 140, 146.
Pathways to Justice Conference June 10 – 11, 2015
Mechanic’s Lien Law in California
• California Constitution: “Laborers of every class, shall have a lien upon the property upon which they have bestowed labor … for the value of such labor …” (Article 14, Section 3)
• Codified by the legislature under California Civil Code section 8400, et seq.– Lien right available to contractors, equipment and
material providers, laborers…
Pathways to Justice Conference June 10 – 11, 2015
Mechanic’s Lien Pre-requisites
• Pre-requisites for a worker to qualify for a mechanic’s lien claim (basic checklist):(1) Laborer (i.e. employee)(2) Permanent “work of improvement” on the property(3) No more than 90 days have passed since completion
of the work of improvement (generally)
Pathways to Justice Conference June 10 – 11, 2015
(1) Laborer (i.e. Employee)
• Laborer – Laborers are entitled to a mechanic’s lien for providing
labor for a work of improvement. (Cal. Civ. Code § 8400)
– Person who, acting as an employee, performs labor or bestows skill or other necessary service on a work of improvement. (Cal. Civ. Code § 8024(a))
Pathways to Justice Conference June 10 – 11, 2015
Independent Contractors
• Unlicensed independent contractors – Barred from bringing any action for compensation for
performance of any act unless licensed. (B&PC § 7031(a)).– Possible liability to property owner and criminal penalties and
fines. (B&PC § 7031(b); B&PC §§ 7028(b)-(d)).
• Person engaged in activities as an employee, who receives wages, and does not have control over performance of work is exempt from license requirements. (B&PC § 7053).
Pathways to Justice Conference June 10 – 11, 2015
(2) Work of Improvement
• Work of improvement broadly defined (Cal. Civ. Code § 8050(a)), includes:– Construction, alternation, repair, demolition or removal,
in whole or in part, of, or addition to, a building …– Seeding, sodding or planting for landscaping purposes– Filling, leveling or grading of real property– Includes “site improvements” (Cal. Civ. Code § 8402)
• Improvements must be permanent
Pathways to Justice Conference June 10 – 11, 2015
(3) Recording Deadline
• Laborer must record mechanic’s lien claim after departing from property and within the earlier of the following (Cal. Civ. Code § 8414):– 90 days after completion of the work of improvement– 30 days after a notice of completion or cessation of
labor is recorded by owner
Pathways to Justice Conference June 10 – 11, 2015
Completion of Work of Improvement
• Completion of work of improvement occurs upon any of the following (Cal. Civ. Code § 8180(a)): – Actual completion – Occupation or use by the owner, accompanied by a
cessation of labor– Cessation of labor for a continuous period of 60 days– Recordation of a notice of cessation after cessation of
labor for a continuous period of 30 days
Pathways to Justice Conference June 10 – 11, 2015
Preparing and Serving the Mechanic’s Lien
• Lien document must conform to requirements under Cal. Civ. Code § 8416 (See Attachment 2)– e.g. statement of claimants demand, description of
property sufficient for identification, etc.– Notarization not required
• Copy of mechanic’s lien must be served on owner or reputed owner prior to recording– Failure to serve makes lien unenforceable as a matter of
law (Cal. Civ. Code § 8416(c)-(e))
Pathways to Justice Conference June 10 – 11, 2015
Serving Copy of Mechanic’s Lien
• Copy of mechanic’s lien must be served as follows:– Owner or reputed owner must be served with copy via
first-class (with certificate of mailing), certified mail, or registered mail at residence or place of business (Cal. Civ. Code § 8416(c)(1),(2))
– If owner or reputed owner cannot be served, copy can be served on direct contractor or construction lender instead (Cal. Civ. Code § 8416(d))
Pathways to Justice Conference June 10 – 11, 2015
Recording Mechanic’s Lien
• After service of copy, mechanic’s lien must be recorded – Record with County Recorder where property is located
(Cal. Civ. Code § 8060(b))– Recordation of mechanics lien in good faith is absolutely
privileged (Cal. Civ. Code § 47(b)) – Not liable for slander of title even if claim is subsequently
held invalid (e.g. Pisano v. Taggart (1972) 29 CA3d 1, 24)• Record in person if possible to avoid backlogs and
possible rejection of lien by County clerks
Pathways to Justice Conference June 10 – 11, 2015
Enforcing Mechanic’s Lien
• Complaint must be filed within 90 days after lien is recorded, otherwise lien expires and becomes unenforceable (Cal. Civ. Code § 8460(a)) (See Attachment 3)
• Extension to foreclose can be provided by owner, but lien must be enforced no later than 1 year after completion of work of improvement (Cal. Civ. Code § 8460(b))
Pathways to Justice Conference June 10 – 11, 2015
Enforcing Mechanic’s Lien (cont’d)
• Amount recoverable– Lesser of the reasonable value of the work provided or
the price agreed upon by claimant and person that contracted for the work (Cal. Civ. Code § 8430).
– Interest allowed by law or contract (Cal. Lab. Code §218.6)– Cost of recording lien (Cal. Civ. Code § 8464)– Generally cannot recover attorney’s fees
• Record lis pendens on or before 20 days after filing action (Cal Civ. Code § 8461) (See Attachment 4)
Pathways to Justice Conference June 10 – 11, 2015
Other Issues and Considerations
• Be prepared to release unenforceable, invalid mechanics’ liens (Cal. Civ. Code §§ 8480, 8482) (See Attachment 5)– Owner required to give 10-day notice– Possible liability for reasonable attorney’s fees
• No preliminary notice requirement for laborers (Cal. Civ. Code § 8200(e)(1))
• Check for “Notice of Non-Responsibility” if tenant (Cal. Civ. Code § 8444)
Pathways to Justice Conference June 10 – 11, 2015
Policy and Legislative Efforts• AB 1164 (died on Senate floor last year)– Expands existing Mechanic’s Lien to all sectors. Currently,
construction workers can put a temporary hold (a lien) on the property of an employer who owes back wages while the case is being decided.
– Modeled after Wisconsin’s wage lien law which has helped 80%
of workers recover payment for wages owed, compared to fewer than 20% in California.
– Alaska, Idaho, Maryland, New Hampshire, Texas, and Washington have also enacted wage lien laws.
Pathways to Justice Conference June 10 – 11, 2015
• Currently– SB 588 is pending in California Senate. It would provide some lien rights in
limited situations to those working outside of the construction industry.– Los Angeles Wage Theft Ordinance currently under consideration includes
a broad lien right for all employees.
• Looking toward the future– Possible expansion of mechanic’s lien remedy to other workers based on
broad constitutional language (“Laborers of every class, shall have a lien upon the property upon which they have bestowed labor”)? Or statutorily changing requirement of “permanent” improvement to property?
– Attorneys’ fees for mechanics’ liens filed by laborers.
Policy and Legislative Efforts