Episode 107: California Labor Law Predictions

Welcome to the Workplace, a podcast by Cal Chamber. I'm Erica Frank, Cal Chambers executive vice president and general counsel. And back on the podcast today are Ashley Hoffman, Cal Chambers policy advocate on labor and employment issues, and Chris McKayley, who is a partner with the Apria and McKelly lobbying firm in Sacramento. Welcome back, Ashley and Chris.

Thanks, Erica.

Thanks for having us on.

So I'm excited to have you back for our Part two because we left folks hanging at the last podcast where we were concluding our discussion of the federal horizon as far as it relates to labor and employment laws. And now we're really going to get into the gritty here and talk about what the state of California's labor and employment policies may look like. So what are you both seeing as coming down the pike from legislators in California this year?

What are we seeing?

Ashley see the excitement?

I was going to say, what haven't we seen? Ashley?

So funny enough, I feel like bill proposals are slow to come out this year. The deadline is February 19th. So we still have a couple weeks to go. But we have plenty that we're hearing about and that we're anticipating. I think the biggest one would be what's going to happen as far as sick leave goes. Both the state and federal mandate for paid supplemental Covid sick leave expired at the end of last year. And while some local cities have expanded their ordinances, nothing has been done yet on the state or federal level. And President Biden and his America Rescue plan did lay out a proposal that he'd like to submit to Congress that would mandate paid sick leave for all employers, not just under 500. It would do away with some of the exemptions for smaller employers as well as first responders. However, it would also have a tax credit for small employers under 500 to help reimburse for that. So we haven't seen a paid leave proposal come out of the state legislature yet. We're waiting also, I think, to see what Congress is doing. So while we expect it, I think some people are waiting to see if the federal government makes any action. However, Cal osha, for those who haven't read it, issued an emergency temporary standard in November. And that regulation, which we're finding not a lot of people actually have read or know about, says that if an employee needs to be excluded from the workplace, either because they themselves have been diagnosed with COVID or have been potentially exposed, they have to be excluded for about 10 to 14 days depending, and are entitled to full paid benefits. So it's an uncapped paid leave provision that I think is really concerning a lot of businesses that are kind of barely staying afloat right now and thought they were going to get, I guess, a little bit of a break from paid leave. And then here comes in this uncapped mandate. So we're really waiting to see from the state level what's going to shake out there.

Erica I would just add in this area of workplace safety and potential paid leave is it highlights the fact that the employer community at the federal level as well, but here in particular at the state level, need to be aware of both legislation and regulations because the legislature can obviously enact statutes and do a lot of this by state statute. Of course, whether it's the Cal OSHA Standards Board or the labor Commissioner's office or of course, the governor by way of executive order under the state of emergency, where he's given great powers under the California Emergency Services act, employers have to be aware. Remember, for example, the worker comp presumption began as an executive order by the governor in the spring and was eventually codified in a statute authored by the then Senate Labor Committee chair, Jerry Hill from San Mateo. But, you know, Ashley's comments about the leave program, not only do you have to consider federal and state, but again, you have to track what's going on, both with the regulatory agencies and by legislators at the state Capitol.

And employers have certainly had to, especially the under 50. They're already managing a new leave, the 12 weeks of California Family Rights act that just went into place on January of this year. So what you're saying, Ashley, is we might see more leave.

Leave rights for employees and leave management that employers have to take to follow in the coming year?

Yeah, that's what we're hearing, I think, both on the state and federal level. And so we're, you know, our position largely is, you know, employers have a lot to deal with right now, and that could be crippling for a lot of businesses, especially with this Cal OSHA regulation, which is pretty, you know, unprecedented. Cal OSHA has mandated paid leave before, but it's been in extremely narrow circumstances like toxic substance exposure and things like that. Nothing, you know, nearly as close to what this emergency temporary standard requires.

Are we seeing that these leave proposals or rumors are still tied to COVID 19?

We don't know yet. That's one of the things. In the past, there's been efforts to expand just the healthy Workplace, healthy families to, to increase it from three to five days. So we don't know whether these new proposals will be tied to Covid or Not so. Yeah, and that'll be an interesting piece of it too, to see whether there's an attempt to narrow it or whether people are looking to expand paid leave outright.

Chris, what were your thoughts?

Well, I was just gonna add. Yes, we've heard that the author of the original 3 day paid sick leave law that is applicable to all employers in this state is contemplating increasing the number of days some have talked as high as doubling it to six. And we're seeing other leaves. Assemblyman Lowe's bereavement leave from last year has been reintroduced in one of the first introductions of this new 2021 session. So it might not just be the COVID related leaves. We could see other types of leaves expanded or created in the state of California as well.

And as we know, a lot of proposals are brought back to life in the legislature. So, for example, the two examples that you just gave Chris, didn't the author try to expand the California mandatory sick leave in previous sessions?

Was defeated? Yeah, yeah, she did.

And then the same with the bereavement leave that was last year, which Cal Chamber opposed. Both of those proposals to expand the Healthy Families, Healthy Workplace act and the bereavement leave. Anything else that you are seeing out there that we should let our employers know? Now, granted, one thing to mention this is at the beginning of the legislative session because this is now the first week of February when we're recording. It'll be later into February when this is released and the legislative cycle is all the way until August, September, when bills go to the governor's desk. So we're at that infancy, infant stage, so to speak, of legislation. What else are you hearing?

Well, one of the issues that Ashley and I have talked about the last few weeks as the new session has gotten underway is what we sort of deem to be the targeting of specific industries. For example, several labor organizations and some Democratic lawmakers at the Capitol held a briefing about the plight of garment industry workers and renewed state efforts to crack down on the garment manufacturing industry. We've seen and read some of these local ordinances on hero pay for fast food workers and grocers. And so just as I think the business community, often led by Cal Chamber, has been concerned about, for example, targeted tax increases, I think that the industry in general is concerned with targeting some labor and employment laws to specific industries as well.

Yeah, yeah, Chris is definitely correct on that. You know, it's something we're seeing on the local level, especially right now. As Chris mentioned, the garment manufacturers, also sibling member Gonzalez introduced it's right now, just intent language. But it will be a bill to deal with fast food employees specifically. And so we don't yet know what that will look like. But you know that that is coming. Also, as far as, you know, gig drivers, we have the passage of Prop 22 last year on the ballot. We do know that there will be a bill kind of attempting to cap some of the commissions that those companies can make. We expect, you know, there may be also provisions related to drivers to the extent those, you know, that's permissible in Prop 22, which does have some restrictions as far as what the legislature can pass and in the majority or, sorry, the seven eighths that it would need to do so. So we're definitely seeing a lot of industry specific bills and ideas this year, which is kind of interesting in compared to prior years.

And Erica, certainly worker classification continues to be an issue and our codification of the ABC test and the exemptions, you know, between the enactment of AB5 in 2019 as well as AB 2257 during the 2020 session, we're now at 109 exemptions from the ABC test. Of course, those exemptions mean you're subject to the old Borrello standard, but I think that we'll see some more industries, such as those in the franchise model still trying to pursue exemptions and some other cleanup changes. You know, even though there's that business to business exemption, those 12 factors, even though last year's bill made some modifications, we'd still love to see some, you know, loosening of the reins, so to speak. And I think that use of the model there and whether or not Prop 22, for example, might be expanded to include other industries down the road, will also be something to keep an eye on as well.

Okay, so never a dull moment for California employers. Anything else?

You know, one of the messages I think that we've been putting out, you know, when talking to legislative offices and staff is especially with the Cal osha, you know, regulation, obviously workplace safety is on top of mind this year. And because that regulation really is so broad and covers a lot, you know, we've really been trying to encourage staff, you know, to read it and consider it before, you know, everyone puts out a workplace safety bill, you know, that may be duplicative of that regulation. So I'm sure we'll see, you know, more. More bills related to workplace safety, certainly, certainly also unemployment insurance, a lot of bills aimed at reforming edd, given all the fraud and everything that's happened there, as well as making it easier for people to receive payments through direct deposit and other means. So those are some other issues that we're seeing this year. Chris, if you have anything else to add.

Yeah, one final thought, Erica, and this is certainly an area that I've been working a lot with Ashley on. You know, a lot of employers and employees for that matter, with telecommuting are looking for ways to ensure a flexible work schedule. And certainly the notion of telecommuting and how to make it work effectively for both employers and employees is also likely to be a hot topic. There are a couple of what we call spot bills, meaning the meat on the bones has not been placed into the bill yet. But telecommuting certainly is an area of interest to both employers and employees. And I know that Ashley's been leading a work group trying to figure out are there some possible avenues for the employer community to pursue?

Yeah, absolutely. As you well know, Erica, the wage and hour laws in California are really meant, you know, for employees that are at the workplace. They've been around. The wage orders haven't really been updated in earnest in a very long time. And so that those rules, right, that an employee can waive a meal break if they work less than six hours, but they can't waive the fifth hour rule if they work more than that. Little things like that that I think really don't make sense for telecommuters or split shift premiums where employees especially, there's been a huge effect on working parents and working mothers having to help children at home with zoom or the closure of a childcare center and having taken care of children, would actually like to instead be scheduled to work maybe a chunk of time in the morning and in the evening because that works better for them. But with just simply the cost of the penalties and the premiums associated with allowing non exempt employees to do that, employers really can't afford to. And it unfortunately, I think, creates an equity issue between non exempt and exempt employees where exempt employees have that flexibility and non exempt employees don't.

That is definitely a common thing that we have been hearing since pandemic hit and employees became the teacher, the parents, the employee working from home and trying to balance everything. And it certainly is frustrating for the employer, but really for the employee to see that the labor and employment laws tie their hands and prevent the flexibility that they're longing for. So I think those are fantastic goals and issues for us to be working on on behalf of the business community, but also for all of the California employees that have been really working hard through this pandemic trying to keep everything going, keep all of the balls up in the air, so to speak. Well, thank you both for joining us today. This will not be our only podcast. We'll continue to keep a tab on what's happening both on the federal and stateside, as we talked about today. So we will have you both back again. But Chris and Ashley, thank you so much.

Thank you, Erica.

And thank you all for joining us on the Workplace. Please comment, share and subscribe to Cal Chambers podcast by visiting calchamber.com.