What is the nature of a wage lien?

If an employee is not paid by his or her employer, the employee can file a complaint with the Texas Workforce Commission. There is a hearing and appeals process. If the commission finds the claim is valid, the workforce commission can file a lien against the employer.

What can a lender do to monitor these liens?

The lender can call the Texas Workforce Commission and inquire whether wage claims have been filed against an employer. The lender should have the name and employer account number when it calls.

What priority does a lien filed by the Texas Workforce Commission have?

Effective September 1, 2002, a lien established under subchapter E of Chapter 61 of the Labor Code is superior to any other lien on the same property, with the only exception of ad valorem taxes. Such a lien will have priority over your deed of trust!

How is a wage claim filed?

After the wages become due for payment, the claim must be filed not later than 180 days in writing on a form prescribed by the commission and verified by the employee. The Texas Workforce Commission will review the claim and will determine whether or not to proceed. If they make a preliminary order, the employer must contest it or pay it within 21 days. If the employer fails to pay it in 21 days or does not successfully contest the preliminary order it becomes final, a lien is filed and neither party is entitled to judicial review.

What happens after the order becomes final and the employer does not pay within 21 days?

If, under a final order, a person is determined by the commission to be delinquent in the payment of wages, penalties, interest or other amounts due under this chapter, the commission may notify personally or by mail any person who (i) possesses or controls any of the delinquent person’s assets, including a credit, bank, or savings account or deposit, or other intangible or personal property, or (ii) owes a debt to the delinquent person.

What happens if the lender receives notice?

No later than the 20th day after the date on which the lender receives notice, the lender is to notify the commission of each asset belonging to the delinquent person that is possessed or controlled by the lender and of each debt owed by the lender to the delinquent person. Unless the commission consents to an earlier disposition, a lender may not transfer or dispose of the asset or debt possessed, controlled, or owed by the lender within the 60-day period after the date of receipt of the notice.

What happens if they levy on lender?

On receipt of the levy notice the lender shall transfer the asset to the commission or pay to the commission the amount owed to the delinquent person. If the lender complies they are discharged from liability.

May the lien securing wages due be assigned?

Yes, but only to the claimant.

What happens if the employer acts in bad faith?

In addition to the commission ordering the payment of the wages they may assess an administrative penalty against the employer. They consider a number of things like the amount necessary to deter future violations, and the seriousness of the violation. There is no cap on the administrative penalties.

Is there anything to deter employees from making bad faith claims?

Yes, the commission can impose a $1,000.00 penalty against the employee or the amount of the wages claimed whichever is lesser.