AB359 places a number of mandates on the purchaser of a grocery store that is larger than 15,000 square feet:

• The new owner must employ the store’s workers for at least 90 days after the purchase.
• If the new owner does not require as many employees, the workers must be retained based on seniority.
• None of the retained employees can be fired “without cause.”
• The new owner must provide a written performance evaluation for each worker and “shall consider” offering workers continued employment after 90 days.
• The new owner must abide by the collective bargaining agreement that was in effect for the previous owner of the store.

Importance of preserving CA jobs

The bill’s author, Assemblywoman Lorena Gonzalez, D-San Diego, argued on the Assembly floor May 26 that it’s important to preserve California jobs in the face of corporate takeovers:

“When Wall Street-style mergers, private equity firms and leveraged buyouts hit the grocery industry, a high number of jobs are put at risk, wages are reduced and workers are fired. It’s unsustainable for many of our communities.”

 

“Historically, these are some of the last good-paying middle-class jobs that have played an important role in our communities. They are jobs that can’t leave California, they can’t be outsourced to another country. They are part of the backbone of our very communities. I think we should respect our grocery workers.”

Two Assembly Democrats spoke in favor of the bill.

Roger Hernandez, D-West Covina, complained that 41 percent of the state’s largest grocery stores are owned by private equity firms:

“We know that such firms don’t always have the best interest of workers in our local communities at heart. So I think this bill is an important check to protect middle class jobs.”

 

“Folks, we all say we are all in support of protecting middle-class jobs and stopping the erosion of good-paying jobs in California. We have the opportunity to do that just here. And we have the right and the ability here to stand up for these workers that depend on their jobs and sustain for their families. Let’s send a message to our communities that we back up the workers that enjoy benefits, access to health care, proper hours and the opportunity to sustain their families.”

Assemblyman Eduardo Garcia, D-Coachella, believes AB359 will help his 56th Assembly District, including Imperial County, which has a 21 percent unemployment rate:

“Sometimes we have to push public policy to ensure the retainment of jobs in California. I think this bill does exactly that, protecting the opportunity for workers to stay employed until the company has the opportunity to make the proper assessment in order to make a permanent hire. I cannot afford for Imperial County to continue to see rising unemployment rates for this state.”

Small business owner concerns

The bill was opposed by nearly every Republican Assembly member, several of whom spoke in opposition. James Gallagher, R-Nicolaus, noting that most grocery stores are not owned by private equity firms, is concerned that the employment mandate will hurt small business owners.

“When we discussed this in Judiciary Committee, one of my concerns was this would impact a lot of small and family-owned grocery stores in the state,” said Gallagher. “At least part of when you take over a new grocery store is that that store wasn’t doing well. You’re trying to keep it alive in the community moving forward, so you need to make personnel decisions. This could inhibit that.”

Gonzalez responded that family-owned grocery stores tend to be smaller than 15,000 square feet and would not be affected by the bill.

“But even if they did [own a larger store], they would simply be required to maintain a workforce for 90 days,” she said. “After which time, as long as they gave them a good shot and allowed them to apply for a job, they could say no to every single one of those employees. It’s a cushion, it is not a mandate.”

But Assemblywoman Shannon Grove, R-Bakersfield, argued that the employment provisions would lead to litigation and punitive penalties under a portion of the state’s labor code known as the Private Attorney General Act:

“You have to make personnel decisions, decisions on making a grocery store succeed or survive or any business,” Grove said. “PAGA’s a hot issue because we have lot of trial lawyers in the state of California who are abusing PAGA under modern extortion with the protection under the law.

 

“But in this particular situation, if you have an employee who stays on 90 days and the successor grocery stores chooses not to hire them, they will have 33 days to cure it. Meaning 33 days to change your mind or ‘I will sue you.’ It’s just a law that creates an unfair burden on all of the employers, especially if they are trying to salvage companies that are in a transition.”

Will bill increase litigation?

Assemblyman Donald Wagner, R-Irvine, echoed Grove’s concerns:

“Bottom line is this: if you’ve got a workforce and at the end of that 90-day period you fire them all, there is not a lawyer in this state that would not salivate at the opportunity,” he said. “It does not matter if, for example, you’ve got a store, your neighborhood is changing, perhaps more of our Hispanic constituents are moving into the neighborhood, and you would like to reflect the change and hire those workers in your new establishment that perhaps is catering to that demographic.

 

“You cannot, under this bill, respond to that demographic change and make the necessary changes in the workforce. Because there will be lawyers lined up out your door waiting to hired by every one of those workers.

 

“We aren’t talking about a zero sum game here. We aren’t talking about firing a whole bunch of workers and hiring nobody else. We are talking about hiring different workers coming up out of that community that maybe are now more reflective of that community than they were in the past.

 

“And we up here, because we are so much smarter than they are and know better than any one of our individual business owners, are saying, ‘No, you can’t do that.’ Well, we are not smarter and we shouldn’t be saying that. We should say no instead to this bill and allow our business owners on the ground to respond to our constituents on the ground, rather than pretend that we up here know better.”

Gonzalez dismissed the concern that her bill will lead to litigation abuse under the Private Attorney General Act.

“Twice last week we voted for bills that are subject to PAGA – 69 times in the last two years,” she said. “Once last week this entire body voted for a bill that had worker retention for airport workers. On the books of our state we have worker retention for janitors. And at nearly every one of our airports, we have had at some point adopted worker retention ordinances.

 

“This is not new. There are not lines of attorneys lining up to sue these agencies or the grocery stores in the five cities that have already passed this. This is in fact less litigation-happy than a lot of the bills that we pass through here.”

Bill labeled “Job Killer”

The California Chamber of Commerce issued a floor alert calling AB359 a “job killer” and charging that the bill:

• Subjects employers to multiple threats of litigation.
• Denies employers the basic choice of whom to hire in their workforce.
• Eliminates an employer’s opportunity to investigate applicants before hiring.
• Forces an employer to adhere to terms of a contract to which it is not a party.
• Does not provide stability or reduce unemployment in the grocery industry.
• Discourages investment in grocery establishments and jeopardizes jobs.

The bill will next be considered by the Senate Rules Committee.

On Tuesday, the committee is scheduled to consider a proposal by Assemblywoman Lorena Gonzalez, D-San Diego, that would provide greater labor protections for professional cheerleaders. Assembly Bill 202, which scored a 5-2 win in the Assembly Committee on Labor and Employment earlier this month, would protect cheerleaders of professional sports teams from workplace abuses by classifying them as employees, not independent contractors.

Specifically, the bill would amend the Labor Code to state that “a cheerleader who is utilized by a California-based professional sports team directly or through a labor contractor during its exhibitions, events, or games, shall be deemed to be an employee.”

Gonzalez: Treat cheerleaders fairly

Gonzalez says that professional cheerleaders are being exploited by multi-billion-dollar professional sports franchises.

“AB202 simply demands that any professional sports team – or their chosen contractor – treat the women on the field with the same dignity and respect that we treat the guy selling beer,” said Gonzalez, who was a cheerleader in high school and college. “NFL teams and their billionaire owners have used professional cheerleaders as part of the game day experience for decades.”

She added, “They have capitalized on their talents without providing even the most basic workplace protections like a minimum wage.”

Gonzalez’s legislation, which has the support of the California Employment Lawyers Association, California Labor Federation and Consumer Attorneys of California, comes on the heals of high-profile lawsuits by professional football cheerleaders that allege widespread workplace violations. The allegations include claims that the Cincinnatti Bengals, Buffalo Bills, Tampa Bay Buccaneers, Oakland Raiders and New York Jets failed to pay overtime or even the minimum wage.

Cheerleaders claim NFL teams broke labor laws

Caitlin Yates, one of the former NFL cheerleaders that has filed a lawsuit for labor violations, testified earlier this month before the Assembly Committee on Labor and Employment about her experiences with the Oakland Raiders.

“When I first started working as a Raiderette, I was just happy to make the squad and support my team,” Yates said. “However, over time I realized that the way I was being treated was unfair.”

Yates claimed that cheerleaders were sexually harassed, forced to pay out-of-pocket for job-related expenses and work with injuries.

“There are some teams out there who don’t treat their cheerleaders as employees or pay their cheerleaders a fair wage,” she told lawmakers. “We are professionals who deserved to be paid fairly no matter what team we play for.”

The issue has been a black eye for the National Football League, which has acted quickly to settle lawsuits and avoid similarly embarrassing testimony. Last September, two former Raiderette cheerleaders reached a $1.25-million settlement over accusations of “failing to pay minimum wage, withholding wages for months and refusing to reimburse cheerleaders for their business expenses,” according to the Los Angeles Times. Earlier this year, the Tampa Bay Buccaneers paid out $825,000 to settle allegations that one cheerleader was paid just $2 per hour over two seasons.

Independent contractor vs. employees

For all of its sex appeal, much of the debate about Gonzalez’s legislation centers on the highly-technical differences in employment law between an independent contractor and employee. Some companies seek to designate their workers as independent contractors to avoid payroll taxes or other workplace requirements that are mandated on employees.

A 2006 study by the United States Government Accountability Office found that “misclassification of workers as independent contractors … cost the United States government $2.72 billion in revenue from Social Security, unemployment and income taxes in 2006 alone.”

“When companies misclassify workers as independent contractors instead of as employees, these workers do not receive worker protections, including minimum wages, overtime pay, and health and vacation benefits, to which they would otherwise be entitled,” a legislative analysis of AB202 contends. “Because employers do not pay unemployment taxes for independent contractors, workers who are misclassified cannot obtain unemployment benefits if they lose their jobs.”

That explains why professional sports teams would want to treat cheerleaders as independent contractors. But, do they meet the standard?

“Under common-law rules, anyone who performs services for you is your employee if you can control what will be done and how it will be done,” the IRS explains on its information page detailing the differences between employees and independent contractors. “This is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed.”

The IRS identifies three areas for determining whether the individuals providing services are employees or independent contractors. Those questions are: behavioral, whether the employee has control over the work; financial, who controls the business aspects of the work relationship; and the type of relationship, whether the work performed is a key aspect of the business.

According to the Internal Revenue Service, “You are not an independent contractor if you perform services that can be controlled by an employer – what will be done and how it will be done.”

If the claims in some of the lawsuits are accurate, some NFL teams clearly exercised controlled of what and how cheerleaders performed their jobs.

“If a Raiderettes cheerleader forgets to bring the right pom-poms to practice, she’s fined $10,” Mother Jones summarized of the claims in one lawsuit. “The same thing happens if she wears the wrong workout gear to a rehearsal, she forgets to bring a yoga mat to practice, or her boots aren’t cleaned and polished for game day.”

Legislative gift-taking eroding public trust

In an effort to stem the damaging headlines, Senate Democrats announced on Thursday their plans to introduce a package of bills to reform the gift rules for elected officials. The proposals include a ban on receiving any gifts from lobbyists, an overall reduction in the annual gift limit from $440 to $200 and an outright prohibition on accepting gifts of spa treatments, golf games and tickets to theme parks, concerts and sporting events.

“There is no question that recent events are testing the public’s faith in how our government does its work,” Sen. Ricardo Lara, D-Bell Gardens, said at the press conference. “We need to restore the public trust.” Of course, legislative leaders wouldn’t need more laws if they followed the best practices of their colleagues.

In the Assembly, Gatto has set the standard for ethics and transparency. He not only declined all international junkets, but disclosed gifts that even the state’s political watchdog would find unnecessary to report. His disclosure reports even include footnotes. 

Gatto follows spirit and letter of the law

“Giving and receiving small tokens are part of life,” Gatto said. “I try to follow the letter and spirit of the law, and that’s anything over $50.” In explanation of the gift certificate given to his daughter, Gatto said, “The rules are very clear that we have to report anything over $50.” 

Technically, Gatto’s interpretation of the law is correct. According to Fair Political Practices Commission’s instructions for the Form 700, the annual statement of economic interests, elected officials must report “gifts given to members of your immediate family” if the official can “exercise discretion or control over the use or disposition of the gift.” This “control over the use or disposition of the gift” also includes tickets to concerts and sporting events. It explains why Gatto reported tickets to the Rose Parade and Rose Bowl that he gave away to local high school students who had overcome adversity.

For several years, unlike many of his colleagues, Gatto has worked with teachers and administrators and found deserving students to take his spot at the big game.  And don’t think Gatto does it for the positive publicity. He’s been doing it for years and never told the press. The only place you’ll find it: on Gatto’s financial disclosure report, in compliance with state law.

Ethics: Appearance of impropriety

Jessica Levinson, a Loyola Law School professor who specializes in governmental ethics, said that the issue of elected officials accepting gifts is a balance between what is allowed versus what appears to cross the line of undue influence. “If the laws allows legislators to accept gifts, then is it improper or indecent for them to do so?” she asked. “While some gifts are permissible, it can intuitively feel problematic when our elected lawmakers accept gifts when we all strongly suspect they would not receive those gifts were it not for their official roles, and the power they wield in those roles.”

That appearance of impropriety is exacerbated when lawmakers travel with lobbyists on extravagant junkets to exotic locales. Last year, California lawmakers collected passport stamps from Germany, Switzerland, Cuba, Mexico, Poland, Norway, Taiwan, Israel, China, Armenia, Sweden, Canada and South Korea, much of it on the dime of special interest groups.

“When it comes to traveling and attending conferences, I want our officials to leave the Capitol and learn from others,” Levinson said.  “I don’t necessarily want them to do all of that on the public’s dime. When the conferences look fishy, or the sources of the funds have substantial business before the state, it is certainly fair to ask questions.”

Some legislators have avoided the questions altogether. During the Legislature’s 2013 spring break, while dozens of lawmakers were relaxing in Taiwan, Eastern Europe and Cuba, state Sen. Ted Lieu, D-Torrance, fulfilled his monthly Air Force reserve duty. In addition to Lieu, state Sen. Jim Beall, D-San Jose, and Assemblywoman Lorena Gonzalez, D-San Diego, have declined to participate in junkets. And, of course, so did the Legislature’s ethical leader, Mike Gatto. “We are a big state with international implications, but I choose to stay in California,” he said. “My policy is simple: I will travel for limited circumstances but only in California. I am a California official.”