With the California Legislature in the final three weeks of its session, big tech companies and business lobbies have so far had little success in getting changes to the California Consumer Privacy Act. The landmark online privacy law – enacted in summer 2018 – takes effect Jan. 1, 2020.

The law parallels a sweeping measure adopted by the European Union that took effect in May 2018. It gives consumers the right to know who is collecting what data on them from their online browsing and provides them the choice of opting out from collection.

Defenders of the state law say the reason it has been targeted so vigorously is because tech firms know that California often influences what other states or even Congress does. These companies prefer the present anything-goes data accumulation landscape allowed under federal law. The Golden State law did appear to inspire 24 states to consider online privacy laws this year, according to Pew’s Stateline research site, though few have been enacted so far.

Critics: Flaws will hurt bottom lines, customers

But critics say they are going after the law because it is poorly crafted and could both drive companies out of business and reduce the ways that online information gathering actually helps consumers by connecting them to goods and services they are likely to want. Among the criticisms offered by the California Chamber of Commerce and the state chapter of the National Federation of Independent Business:

• The limits put on what “personal information” can be gathered are so broadly written that they apply to broad swaths of information that can’t be linked to individuals but that can help businesses develop marketing strategies.

• The provision banning businesses from the sale of information gathered online is so broad it will make it difficult for businesses to use information that it has gathered directly and legitimately from use of their websites to determine what customized content to provide customers.

Legislation that would address these concerns has not advanced. 

Local agencies fear effect on public health, tax collection

The Bay Area News Group also reported on the failure of a bill that would have allowed government agencies to have access to consumer information for a variety of priorities, including helping government officials “to collect child support, find people exposed to infectious diseases, locate foster children’s family members, determine social service eligibility, and collect delinquent taxes and judgments.”

One measure – Assembly Bill 25 by Assemblyman Ed Chau, D-Monterey Park – has made progress. It would make clear that the law doesn’t cover employees acting within the scope of their basic job duties. As a co-sponsor of the original law, Chau had more credibility than some of the lawmakers’ who appeared to be proposing changes at the tech industry’s behest.

AB25 passed the Assembly on a 77-0 vote in May and an amended version was approved by the Senate Judiciary Committee on an 8-0 vote last month. But it has not been considered by the Senate Appropriations Committee since its referral.

Dramatic late-session moves could resurrect some of the more controversial bills seeking to narrow the Consumer Privacy Act. But an official with the Electronic Frontier Foundation told the Bay Area News Group that come Jan. 1, the foundation expected that “the same bill [adopted last year] goes into effect.”

Why focus is likely to shift from Sacramento to Albany

The tech companies and lobbying groups could soon shift their attention from California, the richest state in terms of GDP, to New York, the third richest.

In 2020, lawmakers there are expected to consider perhaps the most far-reaching online privacy law in the world. One likely provision would make it a “fiduciary duty” for companies to use the data they accumulate in ways that advance the customer’s best interests. Depending on how this is interpreted, this could mean the end of the present model of micro-targeting of consumers through information gained from their online searches and activity – at least in New York state.

In an uncertain political landscape, cap and trade in California faced a fresh hurdle as hearings began before an appeals court over the constitutional legitimacy of the regime. 

“A long-running lawsuit filed by the California Chamber of Commerce seeks to have the system declared an illegal business tax that should have required a two-thirds vote of the legislature to take effect,” the San Francisco Chronicle reported. “Oral arguments in the case, first filed in 2012, are scheduled to begin in January.”

“Gov. Jerry Brown, who has made addressing climate change a central part of his legacy, spent much of the summer trying to convince legislators to explicitly extend the system past 2020. But he set a high bar, trying to line up the support of two thirds of legislators, in case the Chamber of Commerce won its suit. Republicans and business-friendly Democrats balked.”

That set the stage for the state Chamber of Commerce to bring a challenge. Rather than making a direct frontal attack on the provisions of California’s landmark emissions legislation, its lawsuit claims that California lacks an adequate legal ground to perform one of its central tasks, arguing “the state has no right to sell permits and generate revenue,” Reuters noted. 

A long road

The Chamber’s suit was accepted for hearings along with a separate filing, which could result in joint appeals if the court ends up siding with the California Air Resources Board. The plaintiff in the second lawsuit is Morning Star Packing Company, “the world’s largest tomato processor and a company that is required to buy carbon-emissions permits through the program,” as the Christian Science Monitor observed. “The case is expected to reach the state Supreme Court, as both sides have said they will appeal if they lose.”

Although, four years ago, the Sacramento Superior Court ruled that CARB “was given broad authority to design a program to meet emissions targets, including the sale of permits,” Reuters added, “CalChamber’s appeal of that ruling has kept the issue alive, casting a shadow over the emissions trading market, which has at times suffered a lack of participation due to uncertainty over its future. Despite the state’s earlier victory, the Third Appellate District Court’s request last year for supplemental information indicates they are taking a close look[.]”

The money factor

Still, this year, the market for carbon bounced back to a degree from previous lows. “For much of 2016, many companies appeared to be boycotting the state’s emissions-trading system,” the Chronicle noted, with buyers hesitant to commit if the system’s end might be in sight. “In May, when the state held its quarterly auction of greenhouse gas permits, only 11 percent sold.” This week, however, “state officials reported the results of the year’s last quarterly auction, held Nov. 15 — and they showed a dramatic rebound,” the paper reported. “This time, companies snapped up more than 88 percent of the current-year permits offered, the best performance of any quarterly auction since February.”

Critics of the lawsuit, including CARB, have warned that a defeat in court could wipe out a myriad of projects reliant on cap-and-trade revenues for funding. “Auction revenue is a key funding source for a high-speed rail project seeking to link Los Angeles and San Francisco by train,” the Associated Press recalled. “It also generates billions for transit construction, housing and energy conservation efforts.” But the state Chamber has countered that even a clear victory would leave a broad array of options open for the air authority. “If the auction is allowed to stand, there’s nothing to prevent the California Air Resources Board from inventing new ways to raise revenue, James Parrinello, a lawyer representing the Chamber of Commerce, told the judges.”

In yet another blow to California’s besieged bullet train, revenues from this year’s cap-and-trade carbon credit auction fell drastically below the state’s goals, triggering a selloff that left analysts unsure of the system’s long-term viability.

“The results of last week’s quarterly auction were posted and revealed that instead of the $500-plus million expected from the sale of state-owned allowances, the state will get only about $10 million, less than 2 percent,” the Sacramento Bee reported. 

“The poor results confirmed reports circulating in financial circles that the cap-and-trade program has begun to stumble. February’s auction resulted in some allowances being left unsold — the first time that had happened. Afterward, there was a brisk trade in the secondary market as speculators began dumping their holdings due to uncertainty about the future of the program, which may expire in 2020.”

Officials and activists swiftly sought to downplay the damage. “Over the long-term allowances will be needed, and so the allowances that will be offered through the auction will need to be purchased,” said Ross Brown of the Legislative Analyst’s Office. “But in the short-term it’s hard to know and it depends on the underlying supply and demand.” From an environmentalist standpoint, meanwhile, “it’s important to remember that […] it’s the declining cap — not the price or number of allowances sold at auction — that drives emissions reductions,” wrote Alex Jackson at the National Resources Defense Council. “That is the purpose of the program, not raising revenue.” But with 2020 looming, Jackson allowed, the one-two punch against high-speed rail and cap-and-trade have cast doubt on California’s strategy of fusing infrastructure and environmentalism into a single economic policy.

Case and controversy

Adding to the upheaval, the carbon credit regime itself has wound up in court, as the state Chamber of Commerce pushes to prove that the legislation authorizing its creation — AB32 — has run afoul of the state constitution. “Propositions 13 and 26 require a two-thirds majority for the Legislature to approve new or higher taxes and fees,” as Hoover Institution fellow Carson Bruno wrote at the Bee. “Whether or not AB32, which barely passed in 2006, is unconstitutional depends on whether the cap-and-trade revenues constitute either a tax or a fee. These auction revenues fit the definition of both a tax and fee. They are imposed by a government entity, spent on government activities and are collected in exchange for a transaction — in this case a permit to emit greenhouse gases.”

Officials have countered that argument in court. “The state contends the fees are not taxes, but a consequence of regulations,” as the Times noted. But a judge hearing arguments “recently asked a series of questions that perhaps fueled speculation that he might rule in favor of the suit,” according to the paper. 

The governor’s gambit

Flexing his considerable political skill and discipline to balance competing interests to his ideological left, Gov. Jerry Brown had labored to ensure that cap-and-trade funds could be leveraged to make the train a viable public and private sector investment. That presumed a degree of stability in revenues that now can’t be relied on. “The rail authority had been expecting about $150 million,” the Los Angeles Times observed; now, it will receive just $2.5 million. “Whatever prompted the lack of buyers, the auction is a stark example of the uncertainty and risk of relying on actively-traded carbon credits to build the bullet train, a problem highlighted in recent legislative testimony by the Legislative Analyst’s Office and a peer-review panel for the $64-billion high-speed rail.”

Brown had hedged against just such an eventuality, however. State finance spokesman H.D. Palmer “noted that there is a $500-million reserve set up in anticipation of volatility that could help close the gap,” the Times added. But Brown will have to clear the emergency expenditure in Sacramento, where some liberal lawmakers, hoping to channel more money to environmental policy, could try to nix the scheme by aligning with Republicans long bent on scrapping the train.

A number of large business organizations have offered support for funding sources to be used for transportation infrastructure purposes on one hand, while on the other strongly opposed both general and specific tax measures such as a property tax increases on commercial property (SCA5) and making it easier to raise local taxes (ACA4).

Some in the business community probably hope that support for transportation revenue may be balanced with other tax measures and other bills meeting a dead end.

The focus on the minimum wage issue, so recently debated in cities and counties, will come back to the state capitol (Senate Bill 3) along with concerns for rising workers compensation costs. Capitol-centered business interests will argue a double whammy on the economy with minimum wage increases and rising workers comp costs. They will try to find a solution to workers comp increases while leaving the politics of minimum wage to local jurisdictions.

The saga of environmental regulations and the resulting costs imposed on businesses will continue to be played out, especially focused on fuel costs if petroleum reduction measure SB350, and an increased greenhouse gas regulation (SB32) become law.

The California Chamber of Commerce is monitoring its list of Job Killer bills as it does every year.

Business is not a monolith, however. Small business and big business may express different views and even within these broad business categories there are differences of opinion. That could complicate the drive to find common ground with the Legislature and governor.

Business often survives on the art of the deal – a negotiation that leads to a gain for both sides of the negotiation. Similarly, government is said to advance on the art of compromise. So will broad business interests achieve certain goals while satisfying the powers-that-be under the capitol dome?

You can bet the discussions are already taking place. As to the results — we shall see.

The only theory that makes sense is that it was former GOP Mayor Jerry Sanders holding a grudge. Sanders is now chair of the San Diego-Imperial counties Chamber of Commerce. He dislikes DeMaio because they both claim credit for a lot of the reforms accomplished in San Diego in recent years, and because DeMaio — much younger and relatively new to San Diego — was anything but deferential to Sanders, who is 64 and has been a San Diego fixture for decades.

Whatever drove the decision, it is sure making the U.S. Chamber of Commerce look foolish. Consider a recent essay highlighted on the chamber’s website:

The most important issue you probably won’t hear about during the run up to this year’s election is public sector pension liabilities. Even though it accounts for billions of dollars in spending and affects millions of state and municipal employees, the sad state of many pension funds barely makes a blip on the radar.

At its core, adequately funding pensions is about keeping a promise. Public sector employees were told while they were working what they would receive when they retired. Governments have a responsibility to ensure that they put enough money away to meet those obligations.

Pension deceit and ‘likely’ securities fraud

An institution that believes this shouldn’t be endorsing pension arsonists. But that is what the U.S. chamber did when it endorsed Scott Peters, who in 2002 voted to raise pensions while reducing funding. What did a 2006 fact-finding investigation conclude?

A culture of obfuscation and denial so corrupted San Diego’s financial management that its meltdown reached the historic levels of such poster children of governmental and corporate malfeasance as Orange County, Enron and WorldCom, according to a long-awaited report released Tuesday.

The report likely cements San Diego’s collapse as one of the greatest in modern municipal history, stating that eight former city staff members likely committed securities fraud in acting with “wrongful intent” to withhold important information from the investing public – a finding that could foreshadow potential enforcement actions from the Securities and Exchange Commission.

Mayor Dick Murphy and a number of current and former City Council members acted negligently in approving false financial statements released to investors, the report states, a finding that would put their behavior on the bottom rung of the three levels of potential securities fraud.

In all, the report paints the picture of a culture premised upon “non-transparency, obfuscation, and denial of fiscal reality” that repeatedly sought to delay the impact of tough decisions, ignored pertinent advice time and again, and failed to inform investors of the consequences of its actions.

That’s from the Voice of San Diego. Among the negligent City Council members: Duke Law School grad Scott Peters.

The U.S. Chamber of Commerce: We’re for pension reform. Also pension abuse.

That’s the warning from the California Chamber of Commerce in a press release headlined “CalChamber, State Agency Question Exposing Employers to Public Shame​​​​​​​​​.” Assemblywoman Diane Harkey, R-Dana Point, said the bill’s effect would be akin to pillorying business owners in the stocks.

Assembly Bill 1792 by Assemblyman Jimmy Gomez, D-Los Angeles, would require the California Department of Finance to issue and post online an annual report listing businesses with 25 or more employees enrolled in Medi-Cal, CalFresh or CalWORKS. The report would also calculate the cost to the state of providing benefits for those companies’ employees.

More than half the state on the dole

Twenty-one million Californians receive state public assistance, according to the committee’s legislative analysis of the bill, citing Employment Development Department data. That equates to 55 percent of California’s 38 million residents on the dole.

AB1792 passed the Assembly along party lines on May 28, and the Senate Health Committee on June 25. It’s scheduled to be considered by the Senate Appropriations Committee on Monday.

Gomez argued on the Assembly floor that his bill merely seeks to provide data in order to better inform legislative decision-making.

“Last year we had a major debate when it came to the impact certain business models have on our health care safety net and to our state budget,” he said. “But one of the criticisms I encountered was that our arguments were not based on real data. And the debate often relied too heavily on anecdotal evidence or projections of evidence from other states.

“As public policy makers and as legislators, we have an opportunity to make decisions that impact our economy, our budget and our residents. But we need to base those discussions and decisions not only on personal testimonies or arguments from proponents or opponents of a particular bill, but on data and facts from California. I believe this bill does just that. And it does it in a way that doesn’t raise costs on employers or additional burdens on them.”

Williams: Businesses profit from public assistance

Assemblyman Das Williams, D-Carpinteria, was the only Democrat to speak in favor of the bill. He said it will identify the businesses profiting from the state’s public assistance programs.

“If a business is making profits because they’re pushing benefits onto public assistance and onto the government, it’s something that taxpayers should at least have the right to know who they are indirectly subsidizing with their tax dollars,” he said.

“This is something that we need to be very consistent about. This Legislature has taken a stand against public bodies like community colleges pushing benefits onto the public dole. We should be opposed to businesses doing it as well. At least we should have the right to see when businesses are purposefully reducing hours or pushing benefits onto taxpayers.”

Republican opposition

Several Republicans spoke against the bill, arguing that it would place another burden on the state’s beleaguered businesses.

“These public stockades, so to speak, where we just pillory everybody and make an example of them do lead to more litigation, do lead to more problems,” said Harkey. “And quite honestly, make us very, very more unbusiness-friendly than we are. The governor is trying to recruit business to the state of California. This is no time to put people in a stockade or businesses in a stockade for some kind of exhibition purposes or litigation.

“I … ask for everyone to, please, let’s try to just chill a little bit on our business community, because we cannot afford to be losing small businesses or large businesses out of the state of California. L.A. just had a huge hit between Boeing and Toyota. And there’s more going. These are thousands of jobs. So I respectfully ask for a no vote on anything more that penalizes or makes businesses in the state feel less welcome.”

Shannon Grove, R-Bakersfield, said businesses are already facing an increase in the FICA unemployment insurance tax along with additional costs from the Affordable Care Act.

“I had an employer call my office,” she said. “He has to pay an additional $100,000 a year for this tax on 26 employees. That’s a huge dollar to come up with, especially if you’re a small business. This bill is just another attack on business. And businesses are doing everything they can to try to survive with all of the regulatory issues and all of the new laws that are being passed on them.

“I don’t think we need to keep attacking our employers. They are under so much pressure right now. Why don’t we reward them for providing a job?  Why don’t we give them the opportunity to increase the pay on those jobs without sticking them with additional debt?”

Don Wagner, R-Irvine, argued that because the bill applies only to businesses with at least 25 employees receiving public assistance, it would disincentivize some businesses from hiring more employees.

Health Committee debate

The debate before the Senate Health Committee was along similar lines.

Megan Scott, a research and policy analyst at the UC Berkeley Center for Labor Research and Education, argued in favor of collecting and publishing more information.

“As a researcher, I support any and all efforts to collect good quality, publicly accessible data,” she said. “When it comes to state-funded benefit programs, the state has a compelling interest to collect this data about program participation and cost, and to make the data available for public review and analysis. This will allow policy makers to better understand the trends in the labor market.

“As the economy recovers post-recession, we are seeing higher rates of job growth in low-wage sectors. And this suggests that a growing number of working families are relying on these public benefit programs to help make ends meet. And therefore we have as a state really a compelling interest to learn more about these trends and how to respond.”

About one-quarter of the workforce has a family member receiving public assistance, said Scott. More than half of fast-food workers nationally and more than a third in California have a family member enrolled in federal benefit programs. More than 250,000 Californians, working in companies with more than 500 employees, are enrolled in Medi-Cal.

“Our research would be even further enhanced if we had access to the data that this bill proposes to collect,” she said. “Right now we have to build our models and our estimates by combining a number of publicly available data sets. But the data that would be collected through this bill and issued as a public report would provide really a much better means to understand some of these trends and dynamics that I’ve talked about.”

Jessica Bartholow, legislative advocate for the Western Center on Law and Poverty, argued that the data will support the effort to further increase the minimum wage. Assembly Bill 10 has raised the minimum wage to $9 an hour, with another increase to $10 an hour taking effect in 2016.

“Even with the changes implemented by AB10, a family of three with a full-time worker will land at 90 percent of the federal poverty line,” Bartholow said. “And here in California we know that that does not go far enough. Raising the wage for low-income workers is the single most effective way to move families with earners out of poverty.

“With regards to public benefits, 11 percent of California’s population receives CalFresh and over 10 million Medi-Cal. And California’s poverty rate is getting worse. While the rest of the country is getting better, California is one of just three states that had an increase in childhood poverty in 2012.

“We join the author and the cosponsors in supporting a robust public benefit program that supports everybody who needs it, and provides enough benefit for people to live healthy lives. But we also don’t think that the public benefit programs should be used to bolster low wages and the companies that pay them. We think that the information that comes from this [bill] will help us build towards a day where low-income workers are not below the poverty line.”

Business opposition

Opposition to the bill came from business groups, arguing that it would lead to misleading information, resulting in bad legislation.

“We oppose the bill not only because it drastically oversimplifies the conversation about how to help the working poor, but also because we believe the information it provides – and the narrow scope of the information it provides – is actually misleading and will be misleading to the public and to policy makers, and could be used to defend bad policy proposals in the future,” said Mira Guertin, policy advocate for the California Chamber of Commerce.

“As the Department of Finance points out in its analysis, where it opposes the measure, the bill suggests that no one with a job should ever need public assistance. And that’s simply not true. There are going to be circumstances, because there are myriad circumstances that cause people to need public assistance, many of which are not dependent at all upon the behavior of the employer.

“The bill also implies that every job in the state of California should provide enough to support a family of any size under all circumstances with one working adult. And we don’t believe that’s a fair assertion to make about every business in the state.”

Nicole Rice, policy director for the California Manufacturers and Technology Association, argued that the bill avoids the issue of how to help businesses provide better paying jobs in California.

“Should the discussion be about the names of companies that are on the list, or should it be about how to create middle class jobs?” she asked. “In the manufacturing community we would state that we are the answer to California’s middle class crisis.

“And that there needs to be discussion about how to expand and grow those opportunities so that individuals will have a place to transition from their entry level jobs into these middle-class opportunities. We’re very concerned that the information contained in this report will not give us enough information to have that very important conversation.”

Gomez: Will paint complicated picture

Gomez acknowledged the criticism, but defended the bill as a step in the right direction.

“They are correct,” he said. “When it comes to taxes, our economy, economic development, the use of our public benefit system, it is complex. And this bill will, I believe, present a report that paints a more complicated picture.”

Gomez noted that Massachusetts provides this information, much to its chagrin.

“Most people would never assume that it was the state of Massachusetts that would have more people on the public assistance rolls than some of the brick-and-mortars,” he said. “And at the same time right now there’s brick-and-mortars that get blamed for every single problem we’re having, while others are just as culpable.

“So this bill is going to paint a picture that I believe will have benefits and negatives for different groups and individuals as well as elected officials who make these decisions.”

“DOWNTOWN SAN DIEGO — The city of San Diego’s minimum wage would increase to $13.09 an hour during the next three years under a proposal unveiled Wednesday by City Council President Todd Gloria.

“The proposed hikes, which would make San Diego’s minimum wage among the highest in the nation, would be part of a measure that Gloria and other supporters plan to place on the November ballot. …

“Gloria described Wednesday’s proposal, which was the first time he’s attached specific numbers to his campaign for a higher minimum wage, as a starting point for debate about the details of the possible ballot measure. …

“The proposal would put San Diego’s minimum wage significantly above what the state requires, which is $8 an hour but will rise to $9 on July 1 and $10 in 2016.”

Relocation costs worry businesses — but not payroll?!

I went to the news conference at San Diego City Hall where Gloria announced and took questions on his plan.

The council leader is much better-liked by Republicans, conservatives and libertarians than most San Diego Democrats. A big reason for this is that he abandoned the Dem-union push to nullify through obstruction a voter-endorsed 2006 initiative that calls for some city services to be subject to bidding that pits private companies and groups of government workers.

But the candor and pragmatism Gloria displayed in standing up to unions on that issue just wasn’t in evidence Wednesday. Here’s some of the editorial I wrote for U-T San Diego about his defense of his proposal:

“… the council leader was asked if much higher minimum wages were so good for the economy — as he contended — why didn’t businesses clamor for them? He responded by noting that many companies already pay more than $13.09 an hour. But that’s a decision they made — not one forced on them by local government.

“Gloria also said having much higher minimum wages was widely supported by the business community. That’s just not so. If his proposal is adopted, it ‘puts San Diego at a competitive and economic disadvantage,’ said Chamber of Commerce President Jerry Sanders.

“Gloria was asked if he worried about companies relocating to cities with lower minimum wages. But he said they wouldn’t because of relocation costs.

“So according to Gloria, businesses aren’t troubled by the prospect their payrolls may permanently get much bigger — but they are daunted by relocation costs. Really?”

How to help the CA middle-class: Revive redevelopment?!

Then Gloria really drove me around the bend with his economic rX for the Golden State:

“After saying there were economic policies he couldn’t influence because they were ‘above my pay grade,’ Gloria was asked what he thought Sacramento policymakers should do to create middle-class jobs.

“His response was strikingly government-centric: The council president didn’t say the state should try to change a business climate that U.S. CEOs have long called the most hostile in the nation. Instead, he said the state should revive redevelopment, in which public funds are used to attempt to revive blighted areas.”

With a handful of exceptions, some of them arguable, redevelopment was an ongoing fiasco in California for decades before Jerry Brown killed it. Doing so was the best decision Brown has made in his second turn as governor. Redevelopment sounds peachy keen, but in practice — both in California and around the U.S. — it has a lengthy history of allowing politically connected developers to use government eminent-domain powers to grab the land of existing, successful businesses without clout or fund-raising prowess.

So fear for the future, Californians. If this sort of policy prescription is the best we can hope for from one of the more reasonable members of the state’s dominant political party, we’re doomed.

The assault on California businesses has been going full throttle in the current legislative session. It’s conducted by union-backed Democratic legislators oblivious to the state’s 11.8 percent unemployment rate and ranking as one of the the worst states in the country in which to do business. The California Chamber of Commerce lists 30 job-killing bills that have been introduced, 18 of which remain active, including AB 350.

Dubbed the “Displaced Property Service Employee Opportunity Act,” AB 350 forces companies that provide building security, maintenance, window cleaning or food services to retain the employees of the previous service contractor for 90 days and then offer those employees continued employment unless their performance is unsatisfactory.

For example, a building owner notices that supplies are disappearing and suspects that security guards are sleeping on the job and may be complicit in the thefts. As a result, he fires the security firm and hires a new one. Under AB 350, all of the same security guards must remain on the job for at least three months — and perhaps much longer — unless the new firm can prove that they aren’t doing the job.

Sponsor Assemblyman Jose Solorio, D-Anaheim, introduced the bill in the Assembly on May 31. He noted that it’s an expansion of the Displaced Janitor Opportunity Act, which has been in effect for 10 years and requires building maintenance contractors to retain the previous contractor’s employees for 60 days.

Solorio said the legislation “has been working fairly smoothly for both employers and employees” and added that AB 350 “will provide security to workers to maintain and secure buildings and provide flexibility for employers throughout California. These type of employees can lose their job with little or no warning. California continues to have very high unemployment levels.”

Opposing Views

Two Republicans spoke in opposition.

Kevin Jeffries, of Lake Elsinore, argued that AB 350 makes it unfair for service companies when bidding on a contract. “How do you know what to bid?” asked Jeffries. “Because if you’re the successor bidder, and you didn’t plan to absorb all of the employees who were working in that building, you have just bankrupted your own business by winning the contract. You have to guesstimate what the cost would be of all of those employees. So that will put your bid over the top and probably cause you to lose the bid. So it’s a no-win scenario if you’re trying to have competition at the best prices.”

Shannon Grove of Bakersfield said, “So this legislative body is now going to legislate and tell private businesses who they can hire, who they can fire and to retain employees who they no longer wish to retain. It’s amazing to me. We are again attacking businesses. If you bid on a contract and have your own employees and are awarded that contract, why wouldn’t you want to use your own employees? And then to [be forced to] let those employees go to hire other employees that aren’t even a part of your company? I can’t believe this legislative body is going to dictate to employers and small businesses who they can hire and fire.”

AB 350 passed easily 46-31 with only four Democrats voting against it along with all of the Republicans. It’s scheduled for the Senate Appropriations Committee on Aug. 15.

The real intent of the bill, which is backed by a variety of unions, may be to strengthen the unions’ power in the building services industry. Federal law requires that when a company hires and retains unionized employees for 90 days, the company must then open union contract negotiations, according to a Los Angeles Business Journal article, citing an employment law specialist.

Forced unionization is one of the arguments against the bill cited in the legislative analysis:

“[O]pponents contend that this bill is designed to ensure that a union, who has been elected as the bargaining representative through the proper procedures for the prior contractor, will remain the bargaining representative for the subsequent employer. According to opponents, since this bill mandates that subsequent employers hire the predecessor’s employees, it would provide automatic protection to the incumbent union to maintain its status as the bargaining representative, thus forcing all contractors/employers of ‘property services’ to be union employers. Opponents believe the decision of whether or not to have a union in the workplace should be left to the employers and employees, after following the proper procedures outlined by the National Labor Relations Act.”

Protected Class

The anti-unionization argument is not used by the ad hoc No On AB 350 coalition, however. A sample letter the coalition provides for supporters to send to legislators argues that AB 350 “violates the fundamental relationships governing contracting services and the most basic tenets of employer hiring review.” And it “creates a protected class of building services employees” who must be retained “even if those employees were directly responsible for the previous contractor losing the job.

“AB 350 takes away the fundamental right and responsibility for an employer to screen its new hires for things such as competency in the skills required for the job. Finally, this bill would add to the already uncompetitive regulatory environment we have in California, making it more difficult for employers to expand their businesses, hire more employees, and contribute to the economic vitality of the state.”

If the bill makes it through the Appropriations Committee, it’s likely to sail through the state Senate on a party-line vote. The question is whether Gov. Jerry Brown will sign it. Although he’s usually as union-friendly as most Democrats, Brown has also shown an independent streak. He vetoed a card check bill that threatened to end secret balloting in farm worker unionization elections. And he scuttled another bill that had the effect of giving public employee unions control over the commissions that govern public employees.

He might decide that another bill goosing unemployment isn’t needed right now in the Golden State.