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The annual “job-creator” and “job-killer” lists are out — 31 top priorities of the California Chamber of Commerce.

The pro-business group, which spent nearly $4.3 million in 2015 on lobbying in the Capitol, is primarily focused on reducing “meritless” litigation for job creation. And there are a range of bills spanning oil production barriers, increased labor costs and barriers to affordable housing considered “job killers.”

CalChamber announced the 13th “job-creator” bill on Monday, having introduced the other 12 earlier this month. SB 1228 would help small businesses comply with state-mandated regulations and give a little relief from fines for failure to comply.

“The growth of small businesses in California is a key component to maintaining a strong economy,” Jennifer Barrera, a policy advocate for CalChamber, wrote in a letter of support for the measure. “SB 1228 will help ensure such growth by providing small businesses with the tools and resources needed to comply with California’s regulations.”

Track record

CalChamber didn’t fare very well with its job-creator list in 2015, going 2-12 with one more bill still bouncing around the legislature. Three bills suffered death by veto.

The “job-killer” list has not gotten off to a good start. It was introduced late last month and already one of the bills, an increase in the minimum wage, has been signed into law.

The 2015 “job-killer” list fared much better, as only one of the bills was signed into law. The “job-killer” tag was removed from one bill, but CalChamber remained opposed.

Partisan divide

While all of the 2016 “job killers” are sponsored by Democrats, four “job creator” bills are sponsored by Democrats.

Plaintiffs claim the companies — which are not necessarily based in the state but are subject to its laws — have misled consumers about the origin of their products.

“Defendant does not advise U.S. consumers, in its packaging or otherwise, that the supply line for farmed prawns has been tainted by the use of slave labor in Thailand,” reads a complaint against Costco, which contends the shrimp were harvested in waters of Thailand using slave labor.

“This lawsuit seeks to give Californians confidence that they are not serving slavery for dinner,” plaintiff’s attorney Derek Howard, of the Howard Law Firm in Mill Valley, said in a press release.

After the lawsuit was filed, Costco released a statement reiterating the company’s goal “to promote better labor practices through accountability, verification and transparency.” The company’s 2011 supplier code of conduct bars certain practices including use of slave labor, and Costco last year formed a shrimp “task force” to look into the operations of Thai suppliers.

California Transparency in Supply Chains Act

The Costco complaint is one of six separate actions filed in California federal courts in August and September against entities doing business here, including Nestle, Proctor & Gamble and Costco. The plaintiffs are using, in part, disclosures on company websites pursuant to the California Transparency in Supply Chains Act.

The potential legal bonanza comes as state lawyers have become more hands-on in policing the 2010 law, which backers said would stem human trafficking and slavery by requiring public disclosures about how companies are ensuring workers are not being exploited to produce their goods.

The Attorney General’s office recently distributed to large manufacturers and retailers a 50-page “resource guide” on complying with the California Transparency in Supply Chains Act.

Companies this year also received a letter from the AG’s office, informing them that “your company must post on its Internet website the required disclosures if it meets the eligibility criteria – namely, if your company is a retail seller or manufacturer doing business in California and has annual worldwide gross receipts that exceed $100,000,000.”

California Targeted

California is home to courts that tend to be sympathetic to pro-consumer, anti-big business claims. There is also an army of law firms eager to take on the full coffers of large corporations.

To call it venue shopping for these lawsuits “would not be inaccurate,” said John Kloosterman, a lawyer who has advised companies on how to comply with the mandates of the supply chain act.

While other states have decried human trafficking and its connection to goods peddled in the U.S., “California is the only state that has enacted legislation” that requires an online assurance of vigilance, Kloosterman said.

“These lawsuits are about the promise that these companies advertise about the products,” he said. “They allege that they advertise these products are properly made or cultivated and then say, ‘I was led to believe by your website disclosures to believe that they wouldn’t be made by slave labor.’”

He said some companies that had previously established outposts in California have scaled back.

Unlikely Alliances

The notion of tracking a supply chain is being embraced by attorney generals of both political stripes and creating some unlikely alliances. California AG Kamala Harris is in league with Tea Party favorite Florida AG Pam Bondi, for example. But Florida is not requiring the disclosure that California is. Instead, it is releasing “recommended” policies including employee training and policies.

Californians interested in researching products can go to Knowthechain.org and look up a corporation to see if it is complying with the state requirement. The website is supported by Humanity United, a progressive foundation set up by eBay founder Pierre Omidyar and his wife, Pam.

It provides grants to a number of other non-profits, including the Center for American Progress, the Art of Revolution and the Clinton Foundation.

Last year, the group released a presser outing the 85 firms that it believed were silent on the requirements of the transparency act with regard to the state law.

Calls to the California Chamber of Commerce and the California Grocers Association, both of which opposed the supply chain act and represent members subject to the act, went unreturned.

That has increasingly become the case for job applicants. Forty-three percent of companies nationwide now require employees to sign arbitration clauses precluding class-action suits, according to the Wall Street Journal. That’s an increase from 16 percent of companies in 2012. It’s paid off for businesses – employee class-action lawsuits have declined 5 percentage points since 2011, saving employers $136 million.

Assemblyman Roger Hernández, D-West Covina, believes mandatory employee arbitration agreements provide California businesses with an unfair advantage in employee disputes. He authored Assembly Bill 465, which would make it illegal to require such agreements as a condition of employment.

The bill passed the Senate Labor and Industrial Relations Committee along party lines on June 10 after a debate over the pros and cons of arbitration. Hernández said:

“This bill, AB465, will ensure the waivers of important employment rights and procedures arising under California law are made voluntarily and with the consent of the employee. Many of us are aware of the vast proliferation of waivers in arbitration clauses contained in consumer contracts. This problem is even more egregious in the employment context through the use of mandatory or forced arbitration clauses … forced upon workers on a take-it-or-leave-it basis.

 

“Let’s not fool ourselves, there is not an equal bargaining power between an employer and a worker who is desperate for a job to support themselves and their families. Especially in today’s still struggling economy, workers are desperate for a job, any job, and will almost always sign any document that is put in front of them as a condition for employment.

 

“This system is entirely unfair because the employer generally selects the arbitrator, who has a financial incentive to rule in the employer’s favor. This bill attempts to bring some balance to the equation by simply ensuring that these agreements are truly voluntary.

 

“All of the important bills that we work so hard to pass here in the California Legislature would be meaningless if on day one workers are forced to sign away enforcement of those rights. That is exactly what is happening in California today, much like it is in most parts of the country.”

Hernández noted that his bill is similar to AB2617, which became law last year. It bans the requirement of arbitration agreements affecting civil rights when consumers purchase goods and services.

Caitlin Vega, representing the California Labor Federation, said that her organization and the Teamsters sponsored the bill based on reports from employee representatives over the past couple of years:

“Increasingly when they were talking to workers who were experiencing wage theft, they would find that they hadn’t been paid for all of the hours, they were doing overtime off the clock, they weren’t getting meal periods. They would start to try to help these workers, only to discover that they had signed an [arbitration] agreement upon hire and as a condition of employment. In almost every case the worker did not even know that they had signed.

 

“The harm from these kinds of agreements goes beyond the impact on the individual worker. Obviously, no workers should be required to give up such core protections when it’s not knowing or voluntary. But beyond that, this takes away the ability to the state labor commissioner to even know what is happening in these work sites. These arbitration agreements are private, they are individual.

 

“They do not provide a forum for the state labor commissioner or anyone else to know what is happening and try to find a more systemic solution or to say, ‘Wow, there’s a lot of violation coming out of this one site or employer. Maybe we should consider a more efficient enforcement plan than just each individual worker having to take their claim separately to an arbitrator.’

 

“In addition, low-wage workers are highly unlikely to find counsel for an arbitration process. In almost every case they are going to be trying to navigate the process alone because there are no real incentives for lawyers to take those cases. In most cases what we are finding is what it means is not that the worker’s claim is stuck in arbitration but that workers don’t even bother to file a claim.

 

“We say that these contracts, like all adhesion contracts, have to be knowing and voluntary. They cannot be entered into because the worker was coerced. And in our view, being told you only get this job if you sign away your rights is inherently coercive.”

Chamber argues value of arbitration

Opposition to the bill was led by Jennifer Barrera, representing the California Chamber of Commerce, which has labeled the bill a “job killer.” She said the bill is unnecessary because the law already requires that contracts be entered into knowingly and voluntarily.

“But there is a level of responsibility that the law imposes on parties to actually read the document that you sign,” said Barrera. “The fact that you sign a document and you may not have reviewed the document – the law does impose some responsibility for you actually to have reviewed that.”

Barrera acknowledged that mandatory employment arbitration agreements are based on employers having more bargaining power than prospective hires.

“That is no different than a lot of the consumer arbitration that you have with regard to the sale of products,” she said. “All across our state you don’t have parties with equal bargaining power, and they are required to take the contract and can’t negotiate it [if they want to purchase that product or service].”

But she argued that there is nothing unfair about the arbitration process, which requires that the arbitrator be neutral, allows both sides to reject prospective arbitrators, allows for evidence discovery by both sides and requires the employer to pay the costs of the arbitration.

On that last point, she rejected the claim that arbitrators favor employers because employers are paying their fee. According to Barrera:

“My [business] members would be open to sharing the cost to avoid that unfair advantage from the financial incentive perspective. But right now under the law we are required to pay for arbitration. Companies generally hire an arbitration company. They don’t contract with a specific arbitrator. The company will provide a list of arbitrators for both sides to pick from.

 

“The arbitrators themselves are required to go through a very extensive list of disclosures before the arbitration. So they have to disclose any relationship they have had with any of the parties involved, any attorneys involved and any type of professional or personal relationship. So the employees are fully aware upfront of any relationship or prior cases that the arbitrator has had with the employer.

 

“So from our perspective there is not a ‘repeat player’ issue. And there are studies that show that employees fare better in arbitration if not the same. And if there was a repeat player [problem] you wouldn’t have that type of success rate.”

Barrera acknowledged that many arbitration agreements don’t allow employees to pursue a class action grievance. But she said that the winners in class actions are usually the attorneys with little winnings left over for each plaintiff.

She also disputed the argument that arbitration ties the hands of the state labor commissioner. “There’s nothing that an arbitration agreement can do to limit a state agency’s opportunity to investigate and pursue a claim,” she said.

Overburdened courts will take brunt of caseload

AB465 would lead to an increase in the caseload in California’s underfunded, overburdened court system, according to the Chamber’s website. The median time for a complaint reaching trial in northern California is 31 months. More than 2,100 cases had been pending in federal court for more than three years as of June 2014.

“[T]he American Tort Reform Association’s ‘Judicial Hellholes Watch List’ for 2014/2015 found that California was ranked as having the second worst litigation environment,” the Chamber said. “AB465 will neither help California’s litigation environment nor promote businesses’ ability to create jobs as it will drive up California employers’ litigation costs.”

Chris Micheli, representing the Civil Justice Association of California, told the committee that many employees can’t afford to wait years for resolution of their disputes.

“The sponsors have talked a lot about low-wage workers,” Micheli said. “Frankly, I’m not sure how they would benefit where arbitration is generally a more efficient and quicker process than the civil court system. So if we’re trying to protect low-wage workers subject to wage theft, I don’t know why we are shoving them in the civil court system.”

Complicated legal language

But Senator Hannah-Beth Jackson, D-Santa Barbara, who describes herself as “a recovering lawyer,” said she doesn’t like being forced to sign a binding arbitration agreement in order to receive care from her doctor.

“Sometimes, reading these contracts, you need a lawyer to understand them,” she said. “They are not easily understood. But you do sign them because you assume you will have some protections. … What’s your choice? You’ve waited two months for your doctor’s appointment, you feel lousy, you’re in their office. You finally have your appointment and are told ‘take it or leave it.’ To me that’s not an equally bargained agreement.”

Scott Bernstein, representing the California Employment Lawyers Association, rebutted Barrera’s argument that arbitrators don’t favor the businesses that pay their fee, often at their legal hourly billing rate.

“There’s massive repeat player bias,” he said. “They want that work. So who are they going to upset? If they upset the worker, if they do something unfair to an individual worker in an arbitration, what does it matter? That worker will never be in another arbitration in his or her life.

“The people that founded this country understood the people resolving disputes have to be independent, and they created an independent judiciary. Do we have some judges who we’d rather not have on the bench? Yeah, that’s the price we pay. It’s an insurance policy to have an independent third branch.”

The committee passed AB465 by a 4-1 vote with the lone no vote cast by Senator Jeff Stone, R-Temecula.

“I do have some grave concerns,” Stone said. “We still have high unemployment numbers. People are very happy to get a job. As a small businessman, arbitration is very attractive to employers, especially in the state of California. …

“You get as much of an opportunity, I think, to get a fair arbitrator as you will ultimately getting a fair judge. The difference is that you’re going to get that arbitrator a lot sooner rather than later. Because when you get into our congested court system our employees are going to wait months, maybe in some cases a year or more before they get the compensation that may be due.”

The bill is scheduled to be considered by the Senate Judiciary Committee on June 23.

Senate Bill 3, jointly authored by state Senator Mark Leno, D-San Francisco, and Senator Connie M. Leyva, D-Chino, would raise the minimum wage to $11 per hour in 2016 and $13 per hour in 2017. The bill also adds a requirement, starting in 2019, for automatic adjustment of the minimum wage based on the California Consumer Price Index. According to bill text, the minimum wage rule applies “to all industries, including public and private employment.”

“Despite our recovering economy, millions of Californians, many of them children, continue to live in poverty,” Sen. Leno wrote in a press release. “Full-time workers in this state should not be forced onto public assistance simply because they earn the minimum wage. It is time to lift up poor Californians and reward all hardworking employees with the resources they need to put food on the table for their families. Sub-poverty wages should not be legal in California.”

“California’s economic resurgence hasn’t changed the fact that we still have the highest poverty rate in the nation,” Senate President pro Tem Kevin de León, D-Los Angeles, principal co-author of SB3, also wrote in the release. “Senator Leno’s SB3 to raise the state’s minimum wage from $9 an hour to $13 by 2017 is a necessary first step in combating poverty in the swollen ranks of our state’s working poor.”

The release continued with several data points:

California has the highest poverty rate in the nation. The U.S. Census Bureau reports that nearly a quarter of the state’s 38 million residents live in poverty. An employee working full time earning $9 an hour brings home just $18,000 annually before taxes, which is just 75 percent of the federal poverty line for a family of four. As a result, many cities have taken the matter into their own hands, raising local minimum wages either by government action or at the ballot box. San Francisco has approved a minimum wage hike of $15, and Oakland has a $12.25 minimum wage. In addition, the Los Angeles City Council has approved a preliminary plan to pay its lowest-earning workers $15 an hour by 2020.

SB3 is “co-sponsored by the Western Center on Law and Poverty, United Food and Commercial Workers and the SEIU California State Council.” The bill also touts support from various other organizations, such as the Women’s Foundation of California, California Teachers Association, Children’s Defense Fund of California, California Association of Food Banks and California Catholic Conference of Bishops.

Sen. John Moorlach, R-Costa Mesa, opposed the minimum wage hike and made the following comments during the Senate floor debate:

“What kind of society are we running? It’s a capitalistic society. And we need to honor work. We need to honor the work of those that are creating the jobs; that are paying the taxes that allow us to subsidize the transportation and everything else. And it’s the risk takers, it’s the small business people that have to figure out and do the quantifying and analysis. And they sit down and say how much is it going to cost to do the job of running this small business.  Whether they are a franchisee or starting their own professional business, they’ve got to sit down and say, ‘what am I going to have to pay for rent, and what am I paying for utilities, and what am I paying for all the other expenses, and then what am I paying for payroll, payroll taxes, unemployment insurance, workers comp, benefits, all the rest?'”

Sen. Moorlach added, “We have to be real careful. With a minimum wage increase, you’re attacking business people that are subsidizing this state and this nation. And, I encourage a no vote.”

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.

Last week, the California Chamber of Commerce, known simply as CalChamber, announced a preliminary draft of its “job killer” bills, an annual list of proposed legislation that will hurt the state’s business community and economic competitiveness.

This year’s list includes 16 bills that, the chamber says, will make it harder to do business in California by increasing labor costs, litigation costs, health care costs and taxes. Notably excluded from the chamber’s list is a $10 billion sales tax on services that is being proposed by State Senator Bob Hertzberg, D-Van Nuys.

“Although we will be opposing a number of bills throughout this year, the ‘job killer’ list represents the worst of the worst,” said Allan Zaremberg, president and CEO of the California Chamber of Commerce. “These proposals will unnecessarily increase costs on California employers that will likely lead to a loss of jobs.”

“Job Killer” Bills: 93 percent defeated since 1997

Although organized labor and environmental groups provide major financial and grassroots support to legislative Democrats, they’ve largely been unsuccessful in passing bills branded “job killers” by CalChamber.

Since 1997, the not-for-profit business advocacy group has identified 631 bills as “job killers,” of which only 46 have made their way into becoming state law. That’s a 93 percent success rate for the organization that represents 13,000 members, including Fortune 500 companies such as Microsoft and Walt Disney.

The chamber’s success has remained constant under both Republican and Democratic governors. During the past decade, 357 bills have been dubbed job killers with just 14 becoming law. It’s also scored major legislative victories while Democrats maintained a super-majority in both houses of the legislature.

Gov. Jerry Brown delivers for CalChamber

And the chamber’s best years have come with Jerry Brown in the governor’s mansion.

“Over the past four years, the Chamber has marked 129 bills as job killers. Only 8 of these measures have been signed into law,” points out Joel Fox, publisher of Fox and Hounds Daily, the state’s leading business blog.

Fox also credits the chamber’s success at defeating “job killer” bills with the state’s improving economic climate. California’s unemployment rate has dropped from 8 percent in February 2014 to 6.7 percent in February 2015. According to the state’s Employment Development Department, California added nearly a half-million jobs, a year-over-year increase of 3.1 percent.

Although California’s unemployment rate is higher than the national average of 5.5 percent, the state has been the country’s most improved economy. In February, the Golden State added 29,400 jobs, the nation’s best over-the-month increase, according to the Bureau of Labor Statistics.

“If many of the defeated bills passed,” Fox asks, “would California’s job creation number be so strong?”

“Part of the credit for this success goes to the California Chamber of Commerce’s effort to rally against bills that would hinder job creation and hurt the economy,” he said.

So, what’s included in this year’s list of “job killer” bills?

2015 “Job Killer” Bills

AB357 (David Chiu, D-San Francisco): Requires retailers and restaurants to give employees at least two-weeks’ notice for their work schedule.

SB3 (Mark Leno, D-San Francisco): Increases the minimum wage by $3.00 over the next two and a half years and imposes future automatic increases tied to inflation.

SB406 (Sen. Hannah-Beth Jackson, D-Santa Barbara): Eliminates the small business exemption from the state’s family and medical leave law.

SB350 (Kevin de León, D-Los Angeles): Forces the state by 2030 to reduce petroleum use by 50 percent, increase the current Renewable Portfolio Standard to 50 percent and increase energy efficiency in buildings by 50 percent.

SB684 (Sen. Loni Hancock, D-Berkeley): Raises taxes on publicly-held corporations and financial institutions.

ACA 4 (Jim Frazier, D-Oakley): Lowers the vote threshold from two-thirds to 55 percent for new local tax measures.

SCA 5 (Hancock): Lowers the vote threshold from two-thirds to 55 percent for new local tax measures.

AB356 (Das Williams, D-Santa Barbara): Imposes new regulations and water monitoring restrictions on oil and gas drilling projects.

AB1490 (Anthony Rendon, D-Lakewood): Imposes a de facto ban on oil fracking and oil well stimulation activities by halting any activity after a nearby earthquake of a magnitude 2.0 or higher.

SB32 (Fran Pavley, D-Agoura Hills): Raises California’s greenhouse gas emissions limits to 80 percent below the 1990 level by 2050 and gives the State Air Resources Board authority to set interim standards for 2030 and 2040.

SB546 (Leno): Requires health insurance companies to comply with new regulations before increasing their premiums.

AB359 (Lorena Gonzalez, D-San Diego): Bans grocery stores from laying off workers during a transfer in store ownership.

SB576 (Leno): Prevents mobile applications from collecting or sharing a user’s location data without consent.

AB244 (Susan Talamantes Eggman, D-Stockton): Makes changes to the state’s foreclosure rules with respect to successor in interest.

AB465 (Roger Hernández, D-Baldwin Park): Prevents workers and employers from reaching agreements that include any waiver of labor protections as a condition of employment.

SB203 (Bill Monning, D-Carmel): Singles out sodas and some sugar-added drinks for health warning labels, but excludes other unhealthy beverages.

1. “California compares poorly in national rankings to other states in the issues of business friendliness and taxes, legal, energy and labor costs.” In the chart, the higher number is worse. California ranks 41st, or even worse, on key factors:

2. California’s cost of doing business is 5 to 33 percent higher than in other states on average:

3. Silicon Valley remains the key place in the world for the premier information companies. But not every company is at the level of Apple, Google or Facebook. For everyday computer companies, the cost of working here takes its toll:

California labor law soon could become even more problematic for business.

Assembly Bill 2416 is by Assemblyman Mark Stone, D-Monterey Bay. It would allow employees with unpaid-wage claims to file liens on the property of business owners. Stone said it would thwart “wage theft” by employers and recover hundreds of millions of dollars for abused employees.

Business groups warn the bill would create a “dangerous and unfair precedent in the wage and hour arena.”

AB2416 already passed the Assembly, 43-27. It’s scheduled for consideration by the Senate Appropriations Committee on Thursday.

Chamber warns of employer harassment

The California Chamber of Commerce argued in an Aug. 8 press release the bill “would allow employees to harass employers by filing prejudgment unproven wage liens on their property.”

The bill does provide penalties for frivolous, malicious liens, according to the committee’s legislative analysis. An employee acting “in bad faith” by refusing to release a lien could receive a $1,000 fine and have to pay the employer’s attorney fees and court costs.

Employers can ask the California Labor Commissioner to remove the lien if the employee doesn’t respond in 30 days to the employer’s request to release it. In response to critics, the bill was amended to exempt an employer’s principal residence from a lien.

But the Chamber warned:

“AB2416 would cripple California businesses by allowing any employee, governmental agency, or anyone ‘authorized by the employee to act on the employee’s behalf’ to record liens on an employer’s real property or property where an employee ‘performed work’ for an alleged, yet unproven, wage claim.

“At the time of recording the lien, the employee would have no burden to provide any actual evidence that the employer violated any wage and hour law. There is no question that improper liens will be recorded on the employer’s or third party’s property.”

The Chamber is also concerned that AB2416:

• Allows a wage lien on property where an employee worked, potentially making third parties liable.
• Allows an employee’s creditor the right to record a lien.
• Does not remove the risk that a homeowner will have to pursue legal action to have an improper lien removed.
• Precludes financing options for property, interfering with commercial investments, lending and personal home loans.
• Forces property owners into the state’s underfunded, over-booked court system to petition for removal of the lien before being able to fully utilize their property.​​

​The Chamber argues there are already sufficient protections in place for workers, including the ability to file an unpaid wage claim with the labor commissioner and to appeal that decision in civil court.

Jackson: Wage theft a serious problem

Senate Judiciary Committee Chairwoman Hannah-Beth Jackson, D-Santa Barbara, speaking at the committee’s June 17 hearing, said something needs to change.

“There is clearly, and I don’t think we have any dispute, we have a serious problem with people who are getting cheated out of their hard-earned money,” she said. “So the question becomes: How do we address that problem in a way that is fair to them?

“A lot of these folks are Spanish-speaking people who are working in minimum wage jobs who are working their tails off and getting stiffed on their wages. There’s $300 million of unpaid hard-earned wages [taken] from people.”

Chamber policy advocate Jennifer Barrera responded that the solution is to expand the powers and increase the budget for the Labor Commissioner’s Office in the Department of Industrial Relations.

“We agree there is a problem and would like to remedy it as much as anyone else,” she said. “Wage theft impacts good actors in the employment community who are trying to do it right and comply with the law.

“What we have proposed and have been trying to do, through either legislation or support for the recent wage-theft campaign that the labor commissioner has launched, is to support the labor commissioner in increasing the labor commissioner’s authority to deal with this issue.”

The commissioner should review a claim to determine whether it has merit before a lien is filed, she said. He also should determine the amount of the claim rather than leaving that to the employee.

“We believe increasing the labor commissioner’s authority is the way we should be going, not necessarily giving this authority to every employee,” said Barrera.

Increasing labor commissioner power would be expensive

But the increase in funding needed to provide that authority would be astronomical, according to Matthew Sirolly, an attorney at the Wage Justice Center who said he’s litigated dozens of lien cases.

“The reality is that as it stands, hearings take a year or two for the labor commissioner to have their resources to actually hold a hearing,” he said.

“So if we were to follow statutory timelines requiring these things to happen in a couple months, let alone some sort of expedited pre-decision to determine whether a lien is valid, it seems the inquiry and resources would have to be on the magnitude of 100-fold. We’re not talking of something that’s realistic.”

The business community is prepared to increase the fees it pays to the labor commissioner’s office if it results in increased power for that office, said Barrera.

“What I’m suggesting is, maybe not this year but next year if this were in place, there would have to be an adjustment of the employer assessments in order to account for the resources necessary to enforce the proposal that I’ve set forth to have the labor commissioner do this as part of the process that already exists for hearings before the labor commissioner’s office,” she said.

Stone joined Sirolly in dismissing that possibility.

“We do require statements made under penalty of perjury, so that we can assure that there’s some legitimacy to the claim,” said Stone. “The issue with the labor commissioner is … we would have to significantly increase the amount of money going to the labor commissioner so they can hire the staff and do that job. I’m not sure that’s realistic in this form.

“This is a form that would not cost the state or anybody else additional administrative fees to put into place, because it’s a self-enforcing mechanism.”

Analyst: ‘Potentially significant court costs’

There actually will be some costs to the state budget and potentially big impacts on the state court system if the bill passes, according to the legislative analysis. The labor commissioner’s office would incur first-year costs of nearly $9 million, with ongoing annual costs around $8 million. The Secretary of State’s office estimates increased costs of $100,000 annually.

The analysis also warns of “unknown, potentially significant court costs associated with additional proceedings regarding wage claims.”

Stone argued those costs are nothing compared to the costs that unpaid workers are facing.

“Government works best when we provide balance,” he said. “The system is completely out of balance. That’s to the detriment of the lowest paid worker. They have rights but absolutely no remedy. If we … have employees without any remedy, what else are they going to be doing, how else are they going to get their issues met, unless there’s something of value against which to attach the claim?”

‘Chilling impact’ on California real estate market

The bill’s costs could also take a toll on the statewide real estate industry, warned Craig Page, executive vice president for the California Land Title Association.

“We think it’s going to have a profound chilling impact on the real state economy of California, both in a residential context and a commercial context,” he said. “I think what will happen is the dragnet of unintended consequences will pull a lot of innocent homeowners into this as well as commercial property owners.”

What is now a fairly straightforward process for a title company to search county records would be complicated by also having to search court records to discover whether a wage lien action is underway and whether the property affected is a principal residence.

“It’s going to take the escrow process that now is a 30-to-45 day process on average and extend it perhaps months if not years as we try to interact with the courts and the labor commissioner to determine how real property transactions will happen,” warned Page.

“We have by definition many wage lien holders who are unsophisticated and not familiar with the recording process who are going to record these. And they are going to be recorded against homeowners in districts throughout California by accident.

“Once the damage is done you have to undo that either through quiet title action, or you’re going to have to go through the courts to get those liens removed. It’s not an easy process to do. Consumers are going to be adversely impacted by this.”

“Assembly Bill 907 would have allowed Californians to work more than eight hours in a day without overtime in exchange for additional time off,” said the bill’s author, Assembly Republican Leader Connie Conway of Tulare, in a statement.

State law requires employers to pay employees 1½ times their normal rate when they work more than eight hours in a day or 40 hours in a week.

The bill’s opponents, including more than a dozen labor unions, are concerned it would result in employees being forced to work longer days at regular pay. They say that adequate scheduling flexibility is already provided under current law.

AB907 joins SB1335, SB187, AB2127, AB510, AB2217, SB1254, AB640 and AB244 on the slag heap of similar Republican bills that met their demise in Democrat-controlled committees in the last decade.

Despite that morbid legislative history, Conway and several business groups gave it another try before the Assembly Labor and Employment Committee on Jan. 8. Conway recounted a tour that she took at the Kraft plant in her district.

‘I just want my four 10s’

“Some of the workers said, ‘I just want my four 10s back, Connie, I just want my four 10s. If I had that, I wouldn’t have to miss my son’s games. I’d go back to a schedule that I’m comfortable with,’” she said. “While nothing in life is perfect, I vowed to them that I would do what I could to try to help them with that goal.

“I think AB907 is also good for the environment. Less people commuting on a daily basis means fewer people on our roadways, which results in less traffic and less pollution. Members, we don’t live in a 9-to-5 world, we certainly know that. California workers need a work-life balance, and AB907 may help them achieve that goal.”

Jennifer Barrera, legislative director for the California Chamber of Commerce, said that California is one of only three states that require daily overtime pay, and California makes it much more cumbersome to waive the requirement than the other two states.

“California requires employers to navigate through a multi-step process to have employees elect an alternative workweek schedule that, once adopted, must be ‘regularly’ scheduled,” said the chamber in a statement. “This process is filled with potential traps for costly litigation, as one misstep may render the entire alternative workweek schedule invalid and leave the employer on the hook for claims of unpaid overtime wages.”

As a result, no more than 2 percent of California’s 1.3 million businesses have alternate workweek schedules, according to Division of Labor Standards Enforcement data.

The other flex-time option allows employees to take time off only if the time is made up in the same workweek, which doesn’t always fit with employees’ plans, said Barrera.

“So those existing procedures that we have here in California aren’t effective,” she told the committee. “We believe that Assembly Member Conway’s bill provides the necessary flexibility and protection for employees as well. Because it’s only at the request of the employee that the employer can adopt these flexible work weeks.”

Barrera pointed out that the bill prohibits employers from forcing employees to adopt alternate work schedules. Employees can sue if they feel that they have been coerced, intimidated or discriminated against for refusing to adopt a new schedule.

“So I believe there’s enough protection in here for those employees, and it provides the necessary flexibility that we need here in the work place to create jobs in California,” she said.

No coercion in evidence in 47 states with work flex

Chris Micheli, representing the California Grocers Association, argued that the employer coercion hasn’t occurred in the 47 other states with no daily overtime requirement.

“Where are the examples of the abuses, of the favoritism, of the intimidation, of the retaliation threats in those 47 other states?” he asked.

The construction industry needs to have flexible work schedules due to the vagaries of the weather and other factors, said Julianne Broyles, representing the Associated Builders and Contractors of California.

“We think that providing flexibility when you can is an important benefit to the worker in every way that you can provide it,” she said. “Having artificial barriers to individual schedules, I think hurts the workers of California, hurts commerce in California, makes businesses less likely to want to site here as a result.”

Caitlin Vega, legislative advocate for the California Labor Federation, explained why this issue is so important to labor:

“The eight-hour day is one of the most fundamental rights for workers in this state. And it’s a right that was established more than 100 years ago. For us the eight-hour day actually is about work-family balance. The whole belief in fighting for an eight-hour day is for the worker to be able to go home to their family after eight hours work.

“And if they’re not going to be allowed to do that, that they be paid premium time for the loss of that time with their family. That’s one of the reasons that it’s so important to us, and that we fight for it year after year after year.”

Employees would have to approve change

Vega said that alternate workweek schedules can be adopted through elections. Two-thirds of employees in a work unit must approve before adopting a new schedule.

“We think that process has been designed to give the employer tons of control over the way that they implement this process,” she said. “But also to balance. Fundamentally taking away the eight-hour day or taking workers off the eight-hour day is a pay cut. It is something that saves a lot of money for employers. Which creates such a huge financial incentive for there to be pressure on individuals to waive the eight-hour day. We see it already under existing law.

“The election process is designed to keep individuals from feeling pressured, feeling obligated, from being told that it’s what they have to do to keep the company going and all the various subtle forms that employers can use to influence the decisions of workers. So we believe that existing law was carefully structured to provide flexibility, but also to protect the rights of workers.”

Chairman Roger Hernandez, D-West Covina, was the only committee member to weigh in on the issue: “Having the privilege and opportunity to sit in this chair, I’ve had the chance to visit folks in manufacturing factories, small and large. And today I believe that there is a system that allows for workers and employers to strike a balance. There should be a workplace balance in terms of making sure that there is a safe working environment for workers.”

After the five Democrats voted down the bill (two Republicans voted in favor), Conway invited Hernandez to visit her district and vowed, “We’ll continue to study this issue and make sure we get it right.”