Legislative

Legislators sneak-in wage lien change
Change gives property priority over workers' wages

For years, Wisconsin law has given wage liens, filed to recover wages owed workers, a priority over other property or business related liens.

All of that changed, when a provision backed by the state's banking community, that effectively gives priority to property liens, made its way into the recently passed "mini-budget."

According to state Representative Bob Dueholm (D-Luck), the provision was attached to the mini-budget at the "eleventh hour" in as the bill was being amended in the legislature's Joint Finance Committee.

The change was a part of a motion, offered by Rep. John Gard (R-Peshtigo) and Sen. Tim Weeden (R-Beloit) covering "Miscellaneous Provisions" and included items ranging from sales tax on prepaid calling cards to land recycling loan applications.

"Before we had time to study the impact of the provision, it was being voted on," said Dueholm, whose attempt to reverse the change on the Assembly floor was defeated by majority Republicans in a straight party-line vote.

The lien change was engineered in response to a recent Wisconsin Court decision* that gave priority to liens for unpaid wages, causing a conflict with the lien priority of federal bankruptcy code which uses the actual date of the lien, and not its nature, to establish lien priority.

In explaining its ruling the Court reasoned, "The absolute or sacred nature of the wage claim lien flows from a simple proposition: if workers are not paid their wages, they and their families will suffer."

While the decision was good news for Wisconsin workers, it was not good news for banks and other lending institutions whose business property lien dates typically precede wage liens.

The Department of Workforce Development has the power to file a lien on an employer for wages owed employees. The lien provides some leverage for working people who cannot afford the cost and delay of a long litigation.

No longer a priority, it is questionable whether the wage lien will provide any leverage at all on employers in the future.

While the bill's changes do not seriously impact a Union's ability to recover back-wages and benefits or other compensation owed employees who do construction work under a collective bargaining agreement, the change may affect non-represented workers interested in recovering wages and other compensation.

That in turn will impact the construction industry — especially prevailing wage work — by making it easier for unscrupulous contractors to risk their employees' compensation for the chance to win work.

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