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While Creative, This Bill Will Not Be An Effective Way To Enforce Unpaid Wage Claims

Two weeks ago, I wrote about AB 3075 (Limón), a bill that would that would require a "filer" of articles of incorporation to attest under the penalty of perjury that the purpose of the corporation is lawful and that the filer is not an owner, director, officer, managing agent, or any other person acting on behalf of an employer, that has an outstanding judgment issued by the Division of Labor Standards Enforcement or a court of law for violation of any wage order or provision of the Labor Code.  A week ago, the bill, with minor amendments, passed out of the Assembly Committee on Banking and Finance on a 9 to 3 vote.

According to the Committee's analysis the bill is a "creative way to enforce unpaid wage claims".  However creative the bill might be, it is likely to be ineffective.  As I noted in my earlier post, a person who signs the articles of incorporation will in many cases have no ongoing relationship to the corporation.  For example, the individual may be a paralegal working in a law firm.  There is also the ontological question.  A corporation's existence does not begin until the articles of incorporation are filed with the Secretary of State.  Cal. Corp. Code § 200(c).  Therefore, the nascent corporation cannot be the subject of an outstanding judgment.  

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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm

Keith Paul Bishop is a partner in Allen Matkins' Corporate and Securities practice group, and works out of the Orange County office. He represents clients in a wide range of corporate transactions, including public and private securities offerings of debt and equity, mergers and acquisitions, proxy contests and tender offers, corporate governance matters and federal and state securities laws (including the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act), investment adviser, financial services regulation, and California administrative law. He regularly advises clients...