Making Workers Whole: A Retrospective Analysis of SB 588 and Enhanced Post-Judgment Collection in California

40 Pages Posted: 21 Mar 2019

Date Written: February 27, 2019

Abstract

When wages are stolen, workers end up navigating a complex legal landscape to obtain relief. Indeed, they do so largely on their own and in the face of sometimes fierce opposition and retaliation. If they somehow reach a final judgment, many employers do not pay or attempt to shift or shield assets and dissolve their corporate form, all in an attempt to make themselves collection-proof. In fact, recent research suggests that only 17 percent of all final judgments are ever recovered by employees who use the state administrative process. In response to these trends, California enacted SB 588 which became effective January 2016. The legislation provides new and potentially powerful tools to help workers recover judgments entered in their favor. Using new data from the state Labor Commissioner and interviews with 22 non-profit and for-profit advocates, this paper provides a first-of-its-kind look at the effect of the new law. The paper assesses the Labor Commissioner’s use of new mail levy authority, its power to issue stop orders for companies with outstanding wage claims, the effect of expanded liability included in the final law, and more.

This retrospective look at the effect of the new law reveals a mixed report. While new mail levy and stop order authority have together helped workers recover over $3.7 million in money otherwise out of their reach, it represents only 13 percent of the outstanding judgments owed to workers. While a modest figure, these new tools have helped increase overall successful judgment collection to nearly 28 percent. At the same time, while advocates have stressed that new individual liability provisions have made wage claims more likely to settle (and thus more valuable to workers), many are still unaware of other key provisions in the law. Yet, the law is still in its infancy, and outcome data suggest that in certain industries, the Labor Commissioner’s collection efforts have resulted in significant sums of money returning to workers. With continued training and implementation, there is a potential for more workers to be made whole. The paper concludes with reflections on the further effects of this sweeping law and suggestions for future research and reform.

Keywords: Wage Theft, SB 588, California, Labor Commissioner, Final Judgment, Mechanic's Liens, Levy, Lien, Stop Order, Section 558.1, Individual Liability, Mail Levy, Berman Hearing, Judgment Recovery

JEL Classification: J80, J83, J88, J30, J38, J39, J46, J48

Suggested Citation

Fuentes, Rey, Making Workers Whole: A Retrospective Analysis of SB 588 and Enhanced Post-Judgment Collection in California (February 27, 2019). Available at SSRN: https://ssrn.com/abstract=3343931 or http://dx.doi.org/10.2139/ssrn.3343931

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