Episode 17: Employment Law Update: What’s Moving and What’s Not

Welcome to the Workplace, a podcast by Cal Chamber. I'm Erica Frank, Cal Chamber's General Counsel. With me today is Jennifer Barrera, Cal Chamber's Executive Vice President and head of Cal Chamber's policy team. Today we are discussing employment law legislation and the status of a number of bills being considered by lawmakers that could impact California employers. Jennifer, welcome.

Thank you so much for having me.

Oh, it's our pleasure to have you back again. So back in episode nine, we talked about a number of leave law bills that were pending, and at that time it was fairly new in the session. Can you tell us, where are we at this point with the legislative calendar and deadlines that have come and gone?

So the House of origin deadline just passed this last week, and the significance of that deadline is basically all. All the bills that are introduced in each House, the Assembly and the Senate, if they want to continue through the legislative process, they have until last week to pass out of their House of origin. So all the assembly bills had to pass out of the assembly, all the Senate bills had to pass out of the Senate. And generally, if they didn't pass out of their House of origin, then they're dead for this legislative cycle.

Okay, so when we say they're dead for this legislative cycle, that means we don't have to worry about them, at least for this year.

Generally speaking, there's always some surprises at the end of the legislative year that we have to deal with, but usually that's the case.

So let's talk about a couple of the leave of absence bills that we talked about a while back. First one was AB555 by Assemblyman Gonzalez. Tell us what happened with this one.

So Assemblymember Lorena Gonzalez put this bill on the inactive file, which means that she chose not to bring it up for a vote on the assembly floor. And when we spoke with her and her office staff, they just said they felt that it needed more time to kind of work out some of the issues dealing with paid sick leave and that they were going to leave it until next year. So I feel pretty confident that that one is done for this legislative sess.

And just for a quick recap, what exactly was AB 555 trying to do?

It was basically expanding the paid sick leave law we have here in California from three days to five days. And while that may not seem significant, it is really a big burden for a lot of the smaller employers. Documentation is always an issue. And, you know, with this one, there really isn't an ability for the employer to verify A leave of absence for sick leave. So it creates a lot of challenges with absenteeism in the workplace. And so there are some issues that need to be worked out on this one. And while it's dead for this year, it certainly will be back next year.

Okay, so stay tuned. Next year then?

Yeah, for sure.

Okay. The next bill that we talked about was AB628 by Assemblymember Banta. Tell us a little bit about that one and what has happened to it.

So that one was challenging just because of the policy area in which it's dealing with, which is sexual harassment in the workplace. And as we've talked about on prior podcasts, the MeToo movement still has an effect in this legislative cycle. And it basically said that any individual who is a victim of sexual harassment could take a protected leave of absence from work. In addition, any family member of that victim could also take a protected leave of absence from work. And it was basically an unlimited leave of absence with little to no notice to the employer of taking the time off. Obviously a huge challenge to employers.

Definitely. Definitely.

The bill was taken up on the assembly floor and did not get the requisite votes to get out. And so it failed passage on the assembly floor. It is what they call reconsideration. It was granted reconsideration, which means that next January it could be brought back up by the author if they wanted to try and do it again. But for this legislative cycle, or, excuse me, this legislative year, I think it's probably dead for the year.

Okay. So AB628 has been parked in its house of origin, so to speak, but could be resurrected back in January of next year. And then finally, the final bill that we talked about a while back was by Senator Jackson. And I remember that we talked. This was very significant as far as expanding existing leave rights. Can you talk a little bit about it and what happened?

Yeah. So SB 135 was expanding basically our California Family Rights act from 50 employees or more to employers that only had five employees or more. And it's a 12 week protected leave of absence, which is obviously a significant burden on those smaller employers who don't have the workforce to kind of COVID the work by somebody's out on that leave. You know, family leave is a tough policy issue because obviously legislators are sympathetic to the needs of and medical conditions and taking time off to care for that. But there is a balance that needs to be appreciated with regards to kind of the smaller employers, similar to the paid sick leave bill that we just talked about. Senator Jackson also moved her bill to the inactive file in the Senate, which means it's probably not moving this year, but it would be eligible to move January of next year.

Okay, so we have three significant bills that would have had a huge impact on employers stalled for the rest of the year, which is fantastic.

It is.

Were any of these labeled jobs killer bills?

Yeah. So two out of the three were job killers. SB 135 by Senator Jackson and AB 628 by Assemblymember Bonta were both on the job killer list.

So fantastic. Kudos to our lobbying team. Definitely defeating those. All right, so we know that of the thousands of bills that are introduced every year, there's many that do get through their first hurdle and get past the House of origin and move on to the other House. We talked back in episode two, one of our early, early episodes, about the Dynamex case.

Yes.

At that time we had also talked about legislation that you have been working on with the coalition of business groups who are extremely concerned about the impact the ruling has on the business community. Tell us what's happening with AB5, which is the main vehicle. Correct. For the Dynamex fix?

No, that's right. The EB5 is again, Assemblymember Lorena Gonzalez, familiar name that we bring up a lot on legislation. She carries a lot of these big bill. She's carrying the bill that is addressing the Dynamex issue. It passed out of the House of origin with a significant support. And really the support given was we need to see something moving and we need to address the Dynamex issue. So we're going to vote for this in hopes that it kind of gets amended and worked out over in the Senate. Right now, the version of the bill codifies the Dynamex decision, which is significant. It puts it into the Labor Code. It also specifies that that ABC test would be applicable for the Unemployment Insurance Code as well. And then it has some exemptions in there, which is what businesses are all interested in, are the exemptions. And when I talk about the exemptions, it's not an exemption or a statutory guarantee of independent contractor status. The exemption is just reverting back to the Borrello factors, which is the test that everybody was familiar with for the prior, basically 30 years before this Dynamics decision.

Right.

So some of those industries that have been exempted currently in the bill are doctors, insurance agents, financial brokers, direct sellers professionals who have a business license and have a degree in law, dentistry, architecture, engineering. I know I'm missing. Oh, accounting is the other one, human resources or marketing. And you know, when she presented it on the floor, she also talked about the need for a business to business exemption so that Dynamics wouldn't apply to that situation. And she also recognized that there may be some need in the Trekk industry to deal with independent owner operators as a potential exemption as well. So a lot more to come on the Dynamex issue and the Senate will certainly be a place where things are worked on and expanded.

So really encouraging for such a huge issue to move forward to the next House and for the author to show such commitment as well as the different members that spoke in support of finding some kind of resolution and a general recognition that the Dynamex decision is just too broad, broadly impacting too much of the economy and other workers in California.

Yeah, I think it's a great positive sign and we're certainly encouraged by the momentum that it has. I think one of the most significant issues will remain that remains is the gig economy and how that's going to be addressed with regards to the Dynamex decision. And so again, that's like, you know, the second half of the legislative session. One of the highlights to watch for.

Okay. And that's a huge issue.

Yeah, huge.

Okay. So at least we have some, some of the fixes already put in place and leave the best for last so to speak on some of these issues. We will continue to invite you back to keep us all updated on what's happening. It's fair to say you've been hearing from a number of individuals or business owners that have been caught in the Dynamics trap now, and it's a real tough one. What else is out there, Jen? What else do we have to look forward to?

Well, there's certainly a lot still remaining that we need to work on and address. Two of the top ones that I would like to highlight are we'll start with AB51, Lorena Gonzalez Ville again. And it's dealing with arbitration agreements in the workplace and essentially says you cannot have an arbitration agreement as a condition of employment to resolve employment disputes. Big issue, repeat issue that we've been dealing with year after year.

I was going to say, didn't we have this very issue last year? And wasn't the governor, Governor Brown at the time pretty clear in his veto message of what he found problematic about the bill?

Yes, definitely. So we have seen this bill and Governor Brown, our former attorney general as well, issued a very strong veto message that said he was not signing the bill because it was a. I'm paraphrasing, but directly violated federal law, and so he couldn't sign it. And this bill really is almost identical to last year's version. So I think it suffers the same flaws.

And what's the federal law that actually supersedes whatever the state's trying to do here?

It's the Federal Arbitration Act. Right. And so the Federal Arbitration act basically says you can't have any state statute that interferes with or discourages or any way treats arbitration agreements different than any other contract. And it's been consistent law from the Supreme Court on this issue probably for the last decade. So, you know, I think that this bill, as it moves through, it's a very political issue. Obviously, it's a heavily discussed policy issue across the country right now with regards to the meat movement as well. And so, you know, I don't know that it's going to slow down, but if anything, it will likely get challenged under federal law.

And for those of us that may not exactly know what arbitration means, can you give just a quick explanation of what arbitration is?

So arbitration is basically an alternative forum in court to resolve your dispute. There's companies in California that handle it. It's done in a more efficient and expedited manner than civil litigation, and it's usually resolved within six months to a year, as opposed to waiting in civil litigation for four to five years to have your dispute resolved.

So much more efficient, faster way to get a dispute resolved. Move on, get it behind you and move on to the next.

Yes, yes.

Okay. So what else? Arbitration. What else do we have out there?

We're also mixing it up with unemployment insurance and unemployment benefits. And again, the author will be familiar to you. It's another Lorena Gonzalez bill, AB 1066, that says workers who are on strike for a certain amount of time would be entitled to receive unemployment benefits if they remain on strike.

So let me understand this. So when workers are on strike, they're not unemployed.

Right.

But this would allow them to capture unemployment benefits after they've been striking for a specified amount of time.

Exactly. And so it kind of flips the idea of what unemployment benefits really are supposed to be utilized for and kind of puts the state in the middle of a labor dispute, essentially by funding striking workers.

Right. And we always talk, or we have in the past, about concerns with the UI fund and whatnot. So this definitely would put a greater strain on the state's fund if now we're permitting striking workers to now start to collect.

Definitely. And when we have a recession on the Horizon. And there's a concern about what the employment and unemployment rate will look like at that time. I think it is concerning to now add a huge portion of the population that has access to this fund that has never had it before.

Absolutely. Absolutely. Okay. Well, that's definitely something that we're going to watch out. So, Jennifer, for those that are listening that are wanting to get a little bit involved or perhaps reach out to their legislator to let them know or express their opinions about AB51 and AB1066, where should our listeners turn to? Where should they go?

We would invite you to come onto the California Chamber website. We have a great advocacy page that lists out our different positions, our bill letters, and we also have a grassroots page where you can literally just link a couple clicks and you would have a direct access to your legislator to express your concerns and issues with regards to any of the legislation we've discussed.

Fantastic. And for those of us who may not know exactly who our legislator is, there's a way in which they can find that as well, correct?

Yep. You just put in your address and it will automatically populate who your legislator is.

Oh, that's awesome.

Yeah.

And then as far as you know, I may not know what to say or know the proper verbiage. Are there sample letters that our listeners can pull up and basically use and copy?

Yeah, great question. We do have sample form letters available that kind of highlight the arguments and concerns we have. And to the extent those are similar to the concerns of your business or your employer or you as the owner, definitely you can replicate those form letters.

Well, great. Well, thank you, Jennifer. This was, again, very informative. And it's always nice to get an update from someone who has boots on the ground overseeing what's happening over at the Capitol. And we will continue to keep everyone apprised of these issues that we've talked about today. And of course, there is a possibility for other issues to pop up.

Yes, definitely. Always surprises at the end.

Okay, so it's really not the end until the session is over, correct?

Yes. Mid September. Thank you for having me.

You're welcome. Well, thanks for joining us at the Workplace. Please comment, share and subscribe to Cal chambers podcast@calchamber.com.

Sam.