GMM:cjs:rs
2009 - 2010 LEGISLATURE
ASSEMBLY SUBSTITUTE AMENDMENT 1,
TO 2009 ASSEMBLY BILL 40
April 19, 2010 - Offered by Representative Garthwaite.
AB40-ASA1,1,7 1An Act to amend 109.03 (5), 109.03 (6), 109.09 (1), 109.09 (2) (a), 109.09 (2) (b)
21., 109.09 (2) (b) 2., 109.09 (2) (b) 3., 109.09 (2) (c) 1m., 109.09 (2) (c) 2., 109.09
3(2) (c) 3. and 109.11 (2) (a); and to create 109.09 (2) (c) 1r. and 109.09 (2) (d) of
4the statutes; relating to: the filing of a wage claim or the bringing of a wage
5claim action by a collective bargaining representative on behalf of an employee
6and the priority of a wage claim lien over a prior lien of a commercial lending
7institution and over the rights of a purchaser of any property of the employer.
Analysis by the Legislative Reference Bureau
Under current law, the Department of Workforce Development (DWD) must
investigate and attempt to adjust any claim by an employee that his or her employer
has not paid the employee any wages that are owed to the employee (wage claim).
Currently, DWD or an employee who brings a wage claim action has a lien upon all
property of the employer, real and personal, located in this state for the full amount
of any wages owed to the employee (wage claim lien). Currently, a wage claim lien
takes precedence over all other debts, judgments, decrees, liens, or mortgages
against an employer, except for a lien of a commercial lending institution that
originates before the wage claim lien takes effect (prior lien), regardless of whether

those other debts, judgments, decrees, liens, or mortgages originated before or after
the wage claim lien takes effect. Current law provides, however, that a wage claim
lien takes precedence over a prior lien of a commercial lending institution as to the
first $3,000 of unpaid wages covered under the wage claim lien that are earned
within the six months preceding the filing of the wage claim with DWD or the
commencement of an action by the employee to recover the wages due.
This substitute amendment increases that $3,000 cap to $4,500, eliminates
that six-month time limit, and applies that cap to the aggregate of all prior liens of
commercial lending institutions so that under the substitute amendment the first
$4,500 of unpaid wages covered under a wage claim lien that are earned at any time
takes precedence over the aggregate of all prior liens of commercial lending
institutions.
The substitute amendment also requires the secretary of workforce
development (secretary), at least once every five years or more frequently if DWD
finds reasonable cause to believe that the cap should be adjusted, to appoint a wage
claim lien review committee (committee) for the purpose of studying the need for an
adjustment to the cap and making recommendations to the legislature for any
adjustments to the cap. In conducting that study and making those
recommendations, the committee may consider any changes in the consumer price
index and the effect that an adjustment to the cap might have on the economy of the
state. The committee must submit a report of its recommendations, together with
an explanation for those recommendations and any proposed legislation that may be
necessary to implement those recommendations, to the secretary, the governor, the
speaker of the assembly, the senate majority leader, and the minority leaders of each
house of the legislature and to the standing committees of each house of the the
legislature that are concerned with labor issues and issues affecting financial
institutions. Those standing committees must then review and conduct public
hearings on those recommendations.
In addition, the substitute amendment provides that a wage claim lien takes
precedence over the rights of any person that purchases any property of the employer
after the lien is created, including any bona fide purchaser. This change reverses In
Re Globe Building Materials, Inc.,
463 F. 3d 631 (7th Cir. 2006), which held that the
trustee in bankruptcy could avoid a wage claim lien because under the current wage
claim lien law a wage claim does not expressly take precedence over the rights of a
bona fide purchaser under the federal bankruptcy law.
Finally, the substitute amendment permits a recognized or certified collective
bargaining representative of an employee to file a wage claim with DWD, or to bring
a wage claim action in court, on behalf of an employee and grants a wage claim lien
to a collective bargaining representative that brings a wage claim action.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB40-ASA1, s. 1 1Section 1. 109.03 (5) of the statutes is amended to read:
AB40-ASA1,3,14
1109.03 (5) Enforcement. Except as provided in sub. (1), no employer may by
2special contract with employees or by any other means secure exemption from this
3section. Each employee shall have a right of action against any employer for the full
4amount of the employee's wages due on each regular pay day as provided in this
5section and for increased wages as provided in s. 109.11 (2), in any court of competent
6jurisdiction. An employee may bring an action under this subsection on his or her
7own behalf or the recognized or certified collective bargaining representative of the
8employee may bring an action against an employer under this subsection on behalf
9of the employee.
An employee or collective bargaining representative may bring an
10action against an employer under this subsection without first filing a wage claim
11with the department under s. 109.09 (1). An employee who or collective bargaining
12representative that
brings an action against an employer under this subsection shall
13have a lien upon all property of the employer, real or personal, located in this state
14as described in s. 109.09 (2).
AB40-ASA1, s. 2 15Section 2. 109.03 (6) of the statutes is amended to read:
AB40-ASA1,3,2116 109.03 (6) Wage claim. In an action by an employee, a collective bargaining
17representative,
or the department against the employer on a wage claim, no security
18for payment of costs is required. In any such proceeding the court may allow the
19prevailing party, in addition to all other costs, a reasonable sum for expenses. No
20person other than an employee, a collective bargaining representative, or the
21department shall be benefited or otherwise affected by this subsection.
AB40-ASA1, s. 3 22Section 3. 109.09 (1) of the statutes, as affected by 2009 Wisconsin Act 28, is
23amended to read:
AB40-ASA1,4,2224 109.09 (1) The department shall investigate and attempt equitably to adjust
25controversies between employers and employees as to alleged wage claims. An

1employee may file a wage claim under this subsection on his or her own behalf or the
2recognized or certified collective bargaining representative of the employee may file
3a wage claim under this subsection on behalf of the employee.
The department may
4receive and investigate any wage claim which is filed with the department, or
5received by the department under s. 109.10 (4), no later than 2 years after the date
6the wages are due. The department may, after receiving a wage claim, investigate
7any wages due from the employer against whom the claim is filed to any employee
8during the period commencing 2 years before the date the claim is filed. The
9department shall enforce this chapter and ss. 66.0903, 66.0904, 103.02, 103.49,
10103.82, 104.12, and 229.8275. In pursuance of this duty, the department may sue the
11employer on behalf of the employee to collect any wage claim or wage deficiency and
12ss. 109.03 (6) and 109.11 (2) and (3) shall apply to such actions. Except for actions
13under s. 109.10, the department may refer such an action to the district attorney of
14the county in which the violation occurs for prosecution and collection and the
15district attorney shall commence an action in the circuit court having appropriate
16jurisdiction. Any number of wage claims or wage deficiencies against the same
17employer may be joined in a single proceeding, but the court may order separate
18trials or hearings. In actions that are referred to a district attorney under this
19subsection, any taxable costs recovered by the district attorney shall be paid into the
20general fund of the county in which the violation occurs and used by that county to
21meet its financial responsibility under s. 978.13 (2) (b) for the operation of the office
22of the district attorney who prosecuted the action.
AB40-ASA1, s. 4 23Section 4. 109.09 (2) (a) of the statutes is amended to read:
AB40-ASA1,5,524 109.09 (2) (a) The department of workforce development, under its authority
25under sub. (1) to maintain actions for the benefit of employees, or an employee who

1brings an action under s. 109.03 (5), or the recognized or certified collective
2bargaining representative of an employee that brings an action under s. 109.03 (5),

3shall have a lien upon all property of the employer, real or personal, located in this
4state for the full amount of any wage claim or wage deficiency. A lien under this
5paragraph is created when the services for which the wages are due are performed.
AB40-ASA1, s. 5 6Section 5. 109.09 (2) (b) 1. of the statutes is amended to read:
AB40-ASA1,5,157 109.09 (2) (b) 1. A lien under par. (a) upon real property takes effect is perfected
8when the department of workforce development or, employee, or collective
9bargaining representative
files a notice of the lien with the clerk of the circuit court
10of the county in which the services or some part of the services were performed, pays
11the fee specified in s. 814.61 (5) to that clerk of circuit court, and serves a copy of that
12petition
the notice on the employer by personal service in the same manner as a
13summons is served under s. 801.11 or by certified mail with a return receipt
14requested. The clerk of circuit court shall enter the notice of the lien on the judgment
15and lien docket kept under s. 779.07.
AB40-ASA1, s. 6 16Section 6. 109.09 (2) (b) 2. of the statutes is amended to read:
AB40-ASA1,6,217 109.09 (2) (b) 2. A lien under par. (a) upon personal property takes effect is
18perfected
when the department of workforce development or, employee, or collective
19bargaining representative
files a notice of the lien with the department of financial
20institutions
in the same manner, and form, and place as financing statements are
21filed under subch. V of ch. 409 regarding debtors who are located in this state, pays
22the same fee provided in s. 409.525 for filing financing statements, and serves a copy
23of the notice on the employer by personal service in the same manner as a summons
24is served under s. 801.11 or by certified mail with a return receipt requested. The

1department of financial institutions shall place the notice of the lien in the same file
2as financing statements are filed under subch. V of ch. 409.
AB40-ASA1, s. 7 3Section 7. 109.09 (2) (b) 3. of the statutes is amended to read:
AB40-ASA1,6,94 109.09 (2) (b) 3. The department of workforce development or, employee, or
5collective bargaining representative
must file the notice under subd. 1. or 2. within
62 years after the date on which the wages were due. The notice shall specify the
7nature of the claim and the amount claimed, describe the property upon which the
8claim is made, and state that the person filing the notice claims a lien on that
9property.
AB40-ASA1, s. 8 10Section 8. 109.09 (2) (c) 1m. of the statutes is amended to read:
AB40-ASA1,6,2411 109.09 (2) (c) 1m. A lien under par. (a) takes precedence over all other debts,
12judgments, decrees, liens, interests, or mortgages against the employer, except a lien
13of a commercial lending institution as provided in subd. subds. 1r. and 2. and 3., a
14lien of a financial institution as provided in subd. 3.,
or a lien under s. 292.31 (8) (i)
15or 292.81, regardless of whether those other debts, judgments, decrees, liens,
16interests, or mortgages originate are created before or after the lien under par. (a)
17takes effect is perfected. A lien under par. (a) also takes precedence over the rights
18of any person that purchases any property of the employer after the lien is created,
19including any bona fide purchaser
. A lien under par. (a) may be enforced in the
20manner provided in ss. 779.09 to 779.12, 779.20, and 779.21, insofar as those
21provisions are applicable. The lien ceases to exist if the department of workforce
22development or the, employee, or collective bargaining representative does not bring
23an action to enforce the lien within the period prescribed in s. 893.44 for the
24underlying wage claim.
AB40-ASA1, s. 9 25Section 9. 109.09 (2) (c) 1r. of the statutes is created to read:
AB40-ASA1,7,7
1109.09 (2) (c) 1r. Except as provided in this subdivision, a lien under par. (a)
2does not take precedence over a lien of a commercial lending institution against the
3employer that is perfected before the lien under par. (a) is perfected. Subject to subds.
42. and 3., a lien under par. (a) takes precedence over the aggregate of all liens of
5commercial lending institutions against the employer that are perfected before the
6lien under par. (a) is perfected only as to the first $4,500 of unpaid wages covered
7under the lien.
AB40-ASA1, s. 10 8Section 10. 109.09 (2) (c) 2. of the statutes is amended to read:
AB40-ASA1,8,59 109.09 (2) (c) 2. Except as provided in this subdivision, a lien under par. (a) does
10not take precedence over a lien of a commercial lending institution against the
11employer that is perfected as of the day before the effective date of this subdivision
12.... [LRB inserts date], and
that originates is perfected before the lien under par. (a)
13takes effect is perfected or over a lien of a commercial lending institution against the
14employer for any amount advanced by the commercial lending institution after a lien
15under par. (a) is perfected under a contract entered into before the effective date of
16this subdivision .... [LRB inserts date], including any renewal or time extension of
17such a contract
. Subject to subd. 3., a lien under par. (a) takes precedence over a lien
18of a
the aggregate of all liens of commercial lending institution institutions against
19the employer that are perfected as of the day before the effective date of this
20subdivision .... [LRB inserts date], and
that originates are perfected before the lien
21under par. (a) takes effect is perfected, or over the aggregate of all liens of commercial
22lending institutions against the employer for any amount advanced by the
23commercial lending institutions after a lien under par. (a) is perfected under
24contracts entered into before the effective date of this subdivision .... [LRB inserts
25date], including any renewal or time extension of such contracts,
only as to the first

1$3,000 of unpaid wages covered under the lien that are earned by an employee within
2the 6 months preceding the date on which the employee or collective bargaining
3representative
files the wage claim under sub. (1) or brings the action under s. 109.03
4(5) or the date on which the department receives the wage claim under s. 109.10 (4)
5(a), whichever is applicable.
AB40-ASA1, s. 11 6Section 11. 109.09 (2) (c) 3. of the statutes is amended to read:
AB40-ASA1,8,187 109.09 (2) (c) 3. Notwithstanding subd. subds. 1r. and 2., a lien of a financial
8institution that exists on is perfected as of November 30, 2003, and that originates
9is perfected before a lien under par. (a) takes effect is perfected takes precedence over
10the lien under par. (a), and a lien of a financial institution for any amount advanced
11by the financial institution after a lien under par. (a) takes effect is perfected under
12a contract entered into before December 1, 2003, including any extension or renewal
13or time extension of such a contract, takes precedence over the lien under par. (a).
14Notwithstanding subd. subds. 1r. and 2., a lien under par. (a) that exists on is
15perfected as of
November 30, 2003, takes precedence over a lien of a commercial
16lending institution that is not a financial institution, regardless of whether the lien
17of the commercial lending institution originates is perfected before or after the lien
18under par. (a) takes effect is perfected.
AB40-ASA1, s. 12 19Section 12. 109.09 (2) (d) of the statutes is created to read:
AB40-ASA1,8,2320 109.09 (2) (d) 1. In this paragraph, "consumer price index" means the average
21of the consumer price index over each 12-month period for all urban consumers, U.S.
22city average, as determined by the bureau of labor statistics of the U.S. department
23of labor.
AB40-ASA1,9,524 2. At least once every 5 years, or more frequently if upon investigation the
25department finds that there is reasonable cause to believe that the amount specified

1in par. (c) 1r. should be adjusted, the secretary of workforce development shall
2appoint a wage claim lien review committee under s. 15.04 (1) (c), selected so as fairly
3to represent employers, employees, commercial lending institutions, and the public,
4for the purpose of studying the need for an adjustment to that amount and making
5recommendations to the legislature for any adjustments to that amount.
AB40-ASA1,9,76 3. In conducting the study and making the recommendations under subd. 2.,
7the wage claim lien review committee may consider any of the following:
AB40-ASA1,9,118 a. The percentage difference between the consumer price index for the
912-month period ending on the last day of the month in which the amount specified
10in par. (c) 1r. was last adjusted and the consumer price index for the 12-month period
11ending on the last day of the month in which the committee is appointed.
AB40-ASA1,9,1512 b. The effect that an adjustment to the amount specified in par. (c) 1r. might
13have on the economy of the state, including the effect of such an adjustment on job
14creation, retention, and expansion; on the availability of entry-level jobs; and on
15regional economic conditions within the state.
AB40-ASA1,9,2416 4. The wage claim lien review committee shall submit a report of its
17recommendations, together with an explanation for those recommendations and any
18proposed legislation that may be necessary to implement those recommendations, to
19the secretary of workforce development, the governor, the speaker of the assembly,
20the senate majority leader, and the minority leaders of each house of the legislature
21and to the standing committees of each house of the the legislature that are
22concerned with labor issues and issues affecting financial institutions under s.
2313.172 (3). Those standing committees shall review and conduct public hearings on
24those recommendations.
AB40-ASA1, s. 13 25Section 13. 109.11 (2) (a) of the statutes is amended to read:
AB40-ASA1,9,26
1109.11 (2) (a) In a wage claim action that is commenced by an employee before
2the department has completed its investigation under s. 109.09 (1) and its attempts
3to compromise and settle the wage claim under sub. (1), a circuit court may order the
4employer to pay to the employee, in addition to the amount of wages due and unpaid
5and in addition to or in lieu of the criminal penalties specified in sub. (3), increased
6wages of not more than 50% of the amount of wages due and unpaid.
AB40-ASA1, s. 14 7Section 14. Initial applicability.
AB40-ASA1,10,10 8(1) Wage claim lien priority. The treatment of section 109.09 (2) (c) 1m. of the
9statutes first applies to a lien under section 109.09 (2) (a) of the statutes that is
10created on the effective date of this subsection.
AB40-ASA1, s. 15 11Section 15. Effective dates. This act takes effect on the first day of the 4th
12month beginning after publication, except as follows:
AB40-ASA1,10,1513 (1) Wage claim lien review committee. The treatment of section 109.09 (2) (d)
14of the statutes takes effect on the first day of the 24th month beginning after
15publication.
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