Episode 171: Four 2023 Bills That Would Negatively Affect California Employers

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Welcome to the Workplace, a podcast by Cal Chamber. I'm Matthew Roberts, the Labor Law helpline manager and Employment Law council with the California Chamber of Commerce. Hello everybody. To co opt a popular Benjamin Franklin quote, in this world, nothing can be said to be certain except death in taxes and a California state legislative session with employment law proposals that will continue to negatively impact California employers. Of course, this year is no different. And as employers continue to grapple with new compliance issues like California's pay scale requirements, mandatory bereavement leave and CFRA, and paid sick leave expansions, the state legislature already has a menu of impactful proposals early in this year's session. So to help pull back the veil on some potential new employment issues, we invited back Ashley Hoffman, Cal Chambers hardworking advocate focusing on employment law issues. Thanks for joining me today, Ashley.

Yeah, thanks for having me today.

So it seems just like yesterday we were doing a final rundown of 2022's employment laws and now we are back already with a full slate of bills that have been introduced thus far that have the potential to significantly alter our employment practices. So I think in the interest of time, let's just dive into it and let's start with a big one, SB809, authored by Senator Smallwood Cuevas. This bill does a lot. So, Ashley, I'm going to need you to break this down for us.

Yeah, it is a very long bill. So really, at its core, it is replacing the Fair Chance Act. I think colloquially this was often called the Ban the Box act, which was passed in 2017, which many of you may remember prohibited you from asking about conviction history when you were doing your hiring. And you could not ask or run a background check until after you had made a conditional offer. So this bill goes quite a few steps past that and essentially says that no employer may ever inquire about conviction history or run a background check, even if that information is voluntarily disclosed to you or is readily available online. So even if you saw an article about your employee or an applicant, it's something that they did, you could not consider it when you're deciding whether to hire or whether to promote someone. The only exception to this is if there is existing law that specifically grants you the right to do a background check or essentially grants you the right by saying, you know, something like you can't hire someone who has had maybe like a DUI right for this position. Something along those lines. You see this sometimes in like healthcare with patient care, sometimes delivery or sorry, not delivery, but well, yeah, I guess still sometimes delivery you know, driving positions, things like that. Banking. Right. That's another industry that's pretty heavily regulated when it comes to this. But unless you fall into one of those exceptions, you could never run a background check or consider any conviction history about your employees or an applicant.

Yes. So obviously that raises a lot of red flags with a lot of our members, a lot of employers, just in general. But in addition to that, there's also these steps that employers have to take when they run criminal background checks in the first place following another set of laws, the fcra, or here in California, what we call ichra. These are those disclosures and authorizations to even run the check in the first place. How does this law impact those as well?

So we would amend ICHRAD to require any investigative consumer report notice to also include all specific job duties for the position that may have a direct or adverse relationship to, you know, a potential conviction. Right. You would also have to say all of the laws and regulations that impose restrictions or prohibitions for employment on the basis of a conviction, if there are any. So again, say you're in the banking industry, you would basically have to list out all the laws that, you know, would prohibit you from hiring a certain person. And I think the big issue here is, you know, ichra, FCRA litigation, is a really big moneymaker. Right. For trial attorneys, these are brought all the time. They're kind of like a second pocket of the labor world, is kind of how I think of them. And so if you were to forget, you know, one regulation, one law you were to forget or not really realize you should include one job duty, you could face serious litigation for a violation of this.

Now, I know we've identified, you know, some of these issues out of this bill, but really, from the Chamber's perspective, what is our biggest concerns? What's wrong with this bill?

Yeah, our biggest concern is truly, you know, the prohibition on the background checks and the conviction history, because there's not actually. I mean, there are a lot of laws out there that allow someone to run a background check or say you can't hire, you know, so and so for a certain position. But there's a lot of industries that are not covered. You know, especially when you think about, like customer facing industries where someone may be alone with someone of the public or in a small setting, Right. Where, or if you're like going to deliver food or something to someone's store, obviously they're kind of in a vulnerable position at that point. You know, there's nothing in there saying a restaurant is, you know, has to run a background check. Right. We have some members that handle really, really sensitive financial information that are not banks, you know, so they're not covered by those statutes or IT folks, you know, is is another example I like to raise because a lot of times in order to fix issues or to, to make changes to software, they're going to have access to other employees or customers, really sensitive financial information. So a lot of this actually seems at odds with some of the other policies that California has as well as I've heard from a lot of members. You know, they're concerned about like workplace violence, sexual harassment, sexual assault. You know, you don't want to be hiring someone that has a record of that and then put them in a position where they may be, you know, working alone with a coworker. And unbeknownst to you, you know, that coworker is now vulnerable.

Yeah, what a crazy wide reaching bill that one is. Ashley. Let's shift gears then. Non compete clauses. So recently the Federal Trade Commission made some news by declaring it was going to work towards restricting these kinds of non compete agreements in California. Non compete clauses or, you know, agreements that usually amount to telling an employee they cannot go work for a competitor with a certain timeframe are already unenforceable here. But because something makes news and because the federal government's working on it, that doesn't stop the California legislature from trying to tighten the screws a bit further. Now, I'm aware that there's a few bills that kind of touch on the subject matter, but I think for the interest of this podcast, we'll focus on one in particular, and that is AB747 authored by Assemblymember McCarty. What does that do? Ashley?

Yeah, as you mentioned, because of everything going on at the FTC and some remarks that were made by President Biden, non competes are kind of the hot issue right now in labor law coming out of the legislature. As you mentioned, in California, these have been outlawed for a very long time. The statute that has been interpreted outlying them. It's actually been on the books since like the 1800s. And courts have held in California that you can enforce non competes for decades. So this is really nothing new. But there isn't, I guess, anything, at least to the satisfaction, I think, of some of the legislature in the code specifically calling out non competes. It's just how a different code has been interpreted. And so 747 wants to codify that as well as include an enforcement mechanism by which there could be penalties if you are including these agreements in your employee contracts or something of the like. Also, there's a huge portion that's definitely concerning about training. So basically right now, you know, under Labor Code 2802, you are required to reimburse employees for any reasonably necessary business expense. That has been interpreted to also include employer mandated training. It doesn't include something like a license. So, you know, Cal Chamber didn't have to pay for me to go to law school or take the bar. Right. But if Cal Chamber wanted me to have a very specific training, then, you know, under Labor Code 2802, arguably they would need to pay for it. Here it's going really above and beyond that and it's saying essentially any training that you would need to do your job and why it exempts licensure. If you read the actual language of the bill, it really only exempts it kind of before you're in the position. It could be read to also include having to pay maybe to keep someone's license or, you know, to keep a certain certification or something they have once they're in the job. A lot of really the impetus for this came from some reports about employers who sometimes will pay for an employee to have certain training. And then they say, oh, if you leave before two years, you have to pay us back. And that is being viewed, I think by the author as a form of a non compete, essentially. So there's been a lot of discussion going on there. You know, we want to make sure this is not hindering employers willingness to run programs that are really good for employees. For example, offering to pay for them to get like a master's degree or something along those lines or also some of the fairness. Right. If an employer truly is going to put, you know, $10,000 into you getting a certain certification, it's not necessarily fair if you then leave two weeks later. And so trying to kind of strike the balance, there is definitely something that we're discussing, you know, with the author's office.

Yeah. And I think the lesson here, of course, with the non competes as we started out at the beginning, is that these have just long not been usable here in California. No real reason as employers to tread down this road of, you know, still requiring employees to sign them anyway, you know, as they're not going to be enforceable and you know, the future may hold some stronger penalties for trying to use them in that fashion. Now, shifting gears again, there is an interesting employer speech bill in the legislature that I find kind of interesting. Employers nowadays, especially since I think the outset of the pandemic and everything that's gone on since then either, you know, socially in our communities, at the Supreme Court, employers are becoming more and more comfortable finding their voice in political issues. So this employer speech bill, you know, caught my eye. SB399, which was authored by Senator Wahab. What does this bill do in terms of employer speech?

This is a bill that is modeled after a law that several states have tried before. And I will come back to that in a second. What it says is, it says that you are not allowed to require an employee to attend a meeting or participate in communications regarding political matters or religious matters. Political matters is really where the heart of the bill is. It's essentially where the player is expressing their viewpoint on political matters, which could include legislation, it could include political party, a candidate, what have you. It also includes whether or not to join or not join a labor organization. So it essentially takes away the employer's right to have what are sometimes referred to as captive audience meetings where you can require employees to attend and you can express your opinion on unionization. But the way the bill is written, our belief is that it would have essentially a full chilling effect on any discussion regarding politics or unionization. If you're standing in the hallway with your supervisor and they start talking about something, or maybe someone else comes up and asks a question and you could see an employee saying, oh, I felt like I couldn't leave. We've heard of cases in the context of the NLRA alleging there was a captive audience meeting or someone got a benefit for attending a meeting simply because donuts were offered in a meeting even though they were explicitly told they didn't have to stay. So really, I think the consequence of the bill is that it's going to make employers feel like they can't ever talk about these subjects. You know, a lot of our members have, like, voluntary employee packs, right? It's, again, completely voluntary. But when you have a bill out there like this, it makes you feel like you really can't say anything to your workers. Again, as I mentioned, this bill has been tried in other states also in local ordinances. We are aware, you know, that similar local ordinance was struck down another state law when it was challenged as being preempted by the nlra. The state actually agreed and didn't attempt to pursue the lawsuit. They didn't try to defend the law. And then another one in Connecticut is actually in the process of being challenged right now. So at least, you know, the portion about not talking about unionization, I think definitely has issues concerning preemption by the nlra. And then obviously there's also concerns about the First Amendment and employer's right to talk about some of these issues. And then, you know, California does have a lot of existing guardrails about already, you know, not being able to force an employee right to engage in politics. You cannot retaliate against them based on engaging or not engaging on certain issues. There's also already a lot of rules surrounding what you can do as far as talking about unionization. You cannot threaten someone, you cannot promise them something in exchange, you cannot spy on them, et cetera. So a lot of these protections, you know, from our point of view, really are already in place.

Yeah. And I think actually that's what really struck me about this is because of all of those guardrails, as you said, that are already in place. We already can't force employees to do things that we want them to do politically.

Right.

We can't force them to vote for a particular initiative or candidate or join a party. So, you know, when I was reading the bill, I just you kind of questioned the need for something additional when we already have so many protections on this. Now, the last bill for our podcast today is an industry specific bill which as we know, the legislature over the last few years has moved into more of these industry specific rules that apply only to particular industries with this. And so the bill we'll be talking about Today, Senate Bill 525, authored by Senator Durazzo, involves a healthcare minimum wage. So what does SB525 do, Ashley?

Yes. So as you mentioned, there have been a lot of industry specific bills lately. And while certainly, you know, requiring health care facilities to pay all of their workers minimum $25 an hour, which would mean for salary, workers minimum, really 50 an hour. Right. Whatever that salary turns out to be, I think for our listeners it is important to note that this is not at all actually limited to health care employees. If you read the language, this $25 per hour requirement actually applies to anyone who steps foot on the premises of a health care facility or does work for a health care facility. So, for example, deliveries, if you make a delivery at a hospital, you know, when you are at the hospital or you are doing that work, that will qualify catering, if the hospital is having an event and they're having, you know, a caterer come, that would qualify. Right. And so it's actually putting this really significant minimum wage increase and the obligations from that actually on quite a few number of companies that are not themselves healthcare facilities here. Yeah.

And I think that's what's really interesting. I kind of put this akin to how our local ordinances work. Right. It's where you're performing the work and you know, with the local ordinances, you know, where you're performing the work is within the city limits. And as you've kind of explained with this healthcare minimum wage, you're just performing the work at a healthcare facility. You're not an actual healthcare employee, which I think is a problem. Yes. Here. So Ashley, this was wonderful. I'm glad to see you again at the start of another legislative session. So thank you for taking the time out of your busy schedule there at the Capitol to provide some insight into this year's employment law proposals thus far.

Of course. Thank you for having me. I'm sure we will be talking about a lot of these bills going forward.

I look forward to it. And thank you listeners for joining this discussion on the workplace. Please comment, share and subscribe to Cal Chambers podcast by visiting calchamber.com.