Episode 174: Five 2023 Legislative Proposals Negatively Impacting California Employers

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 and good afternoon, listeners. Well, afternoon while we record this, maybe whatever time it is when you're listening, the lawmaking festival known as the 2023 California State Legislative session continues on in full swing. As many bills found success or failure in their respective committees over this past week, a number of significant employment law bills continue their journey towards the governor's desk and that includes several that we discussed in the prior episode about criminal background checks, employer speech, non compete clauses and a health care minimum wage. To check in on what's happening at the Capitol lately, we have Ashley Hoffman back Cal Chambers, hardworking advocate focusing on employment issues. Thanks for joining me today, Ashley.

Thanks, Matt.

All right, so let's start by revisiting a bill we discussed previously, SB809, authored by Senator Smallwood Cuevas. The initial bill we had talked about in the context of criminal background checks generally banned criminal history checks unless some other law, state, federal, local, required the employer to do them. Also created a lot of new Fair Credit Reporting act and the California equivalent notice requirements. Now, this bill has softened a little bit, at least off of that total ban, but we still have some concerns. So where are we with this bill, Ashley?

Yeah, Matt, as you mentioned, the recent amendments reverted it back to the existing framework. So where you can conduct a background check but you have to wait to do so until after a conditional offer. Still a couple concerns. It's a pretty dense bill, so you know, still needs some work, for example, enforcement. You know, the penalties are pretty high and we have some concern about that just given all of the den technical requirements that are in the bill. Some of those that we also have concerns with, as you mentioned, are some of the notice requirements that are pretty verbose that would have to be on a job posting or in an ICHRA notice. And as we know, under ICHRA there's really steep penalties if you miss even one thing in that notice, commonly the impetus for class action. So there's definitely concern there. I want to make sure you know that we are allowed to consider a situation where maybe we find out about a conviction from an outside source. Right now it says that we could not consider any information. We think just the same rule should apply if you do find out from a different source. You should just have to go through the same individualized assessment process. And then finally, another big one is the way it's currently written, if an applicant disputed the content of a background check report, even if we ask them for evidence, it says in there that we could not basically hold it against them if they don't give us evidence. So practically that would mean all an applicant would have to do is say that the import that the report is inaccurate, and then there's really nothing we could do from there. So, you know, definitely still continuing to work on the bill. Again, it's just getting out of its first policy committee, so we still have a long way to go.

And you had mentioned something about the individualized assessment, which is kind of a core aspect of this bill and something that's already existed for us as employers. As we speak. Right now, the Civil Rights Council, which is the regulatory agency under the Civil Rights Department doing regulations, are considering individualized assessment and fair chance process regulations. In your mind, how do those regulations play with this bill?

Yeah. So, you know, even though we're working kind of from the same framework, there is a lot that's being added in this bill. So the CRD would definitely, or, sorry, crc, would definitely need to go back and retake a look at those regulations. So if this bill passes, I would assume that we will see another regulatory process start on those, you know, potentially next year.

Okay. Yeah. So those employers out there, if you're doing your criminal background checks, a lot's going to be happening over the course of this year. So, you know, stay up to date with that news. Well, let's move to a new bill that we haven't talked about yet this year in the podcast SB6 16. This is authored by Senator Gonzalez. Now, this bill involves changes to the Healthy Workplaces Healthy Family act, otherwise known as the California Mandatory Paid Sick Leave Bill. Those of you who are remember, we got this in 2014 and 2015, where we now have to provide our three days or 24 hours of paid sick leave. And that bill and that law hasn't really been touched until this year. So what's the expansion that SB616 proposes here, Ashley?

Yeah, so current law, and I probably won't go through all the different accrual methods, but kind of the top line is under current law, as you mentioned, you have to provide at least three days of paid sick leave per year. This would actually increase it to seven, which is is a higher proposal than we had seen in prior years. Prior years, we had seen an increase to 5. This is an increase to 7, which of course is a pretty big concern for not only for our small businesses, but even for larger businesses that already offer more than three. Because this statute requires seven. You would lose certain abilities, like to ask documentation, you know, or things like that. You would have to make sure that for your first seven days offered, you're following the rules of this statute, which can greatly impact, you know, what you can and can't do as far far as maintaining and implementing your sick leave policy.

Yeah. And I can't tell you how many times on the helpline and in our seminars and webinars we talk about this aspect because you want doctor's notes. Right. And you want to be able to ensure that the leave isn't being abused. It's a massive expansion, especially for those who do the lump sum method. Right. Because if the lump sum method you just drop in three days or 24 hours annually on January 1st or say anniversary or higher, and that's all you have to worry about. If this expansion goes as proposed, you're looking at a massive lump sum drop of seven days. Now, employers may have to reconsider how they do this and maybe switch to the accrual method if they're worried about providing all seven days up front in this method. So something there to keep an eye on. All right, Ashley, let's move to a trio of bills that kind of involve layoffs, rights to rehire, and that area of the law. And you know, generally here in California, of course, outside of a collective bargaining context, an employee is not entitled to a right to rehire if they're laid off. This changed a little bit with COVID especially in the hospitality and airport industries, being required to provide a rehire opportunity for those who lost their job because of the lockdowns and the closures. We now have two bills on this subject that kind of build off of that scheme that we got back in 2020. The first one is SB723, authored by Senator Durazzo. And Ashley, what does that one do?

So in 2021, SB93 did create a right to recall specifically related to Covid for the hospitality industry. A prior version of that bill had actually been vetoed for being too broad. And so our deal was really struck between a number of parties, including the administration. And it was passed through the budget because it was seen as urgent by the legislature regarding Covid. Essentially what this does is it strips out the sunset and it makes it apply to anyone in these industries who has been laid off for non disciplinary reason of any kind. So it no longer is related to Covid. From our point of view. This is not what the original deal was with the older bill. And this we see is really troubling. We know that those industries that were under that bill saw delays in hiring. They saw increased costs and administrative burdens because there's no opt out provision for an employee. Even if an employee is yelling at you saying, I don't want to keep getting these notices, you are legally required to keep sending them. So proponents say the Bill, you know, SB93 works so well, and our experience from the employer side is that it did not work at all. There's a lot of openings in these industries right now. We don't see it as necessary. And from our point of view, the larger impact is we see this as actually chipping away at at will employment by having really overly prescriptive hiring rules or only allowing us to consider seniority and not consider any other, you know, aspect of the person's application.

Now, the bill refers to hospitality and airport service employers. What are some of the employers that this bill would cover?

Yeah, so hotels is one of the big ones. Another would be if you have like a location in an airport or I believe it says an event center. So like restaurants, you know, for example, or like a gift shop or something that are located in those are arenas or in an airport would be captured by this bill.

Okay, and then let's move on to the second one, SB627, that again also builds off of and identifies, you know, this Covid right to rehire bill we had as the impetus for this new expansion. This is another one authored by Smallwood Cuevas, and this one targets chain employers. So what do we do here with this one, Ashley?

So as defined under the bill, a chain employer is any employer that has at least 100 establishments nationwide. And so if you have one of your locations in California close, if there is another location within 25 miles, that location must hire anyone from the closed location in order of seniority for a job, you know, that they are qualified for. So for example, if I run, you know, a store, the store down the street from me closes and say I have a supervisory position open up. The way I read this, instead say, there's a really hardworking associate in my store that I want to promote. I can't. I have to first offer that job to anyone who's qualified for a supervisor position from that closed store. And I have to do that for a year. I have to keep that list for a year. Which again, you know, we see as chipping away at at will employment, but then also really acting to the detriment of of some of the employees in the store that didn't close and barring them honestly for promotional opportunities, potentially for an entire year.

Okay, ASHLEY and then with our last bill for this episode at least, we'll stick with the layoff kind of component and talk about AB 1356, which involves an expansion to the California WARN Act. Generally, for those out there who may have heard this in passing or not, employers that conduct mass layoffs of 50 or more employees or relocate or close an entire facility have to provide a 60 day notice both to the employees and to the EDD in the area informing them, hey, we're going to lay you off or we're going to close this facility or we're going to relocate this facility. This law has been around for a long time, a little bit of litigation around it because of the notice period, which of course, 60 days is a substantial lead out. You really need to be on top of it. If if you're thinking about mass layoffs or if you're thinking about closing a facility, that needs to be part of your calculus. But this bill, who's authored by Assemblymember Haney, broadly expands a few provisions of the Warren Act. So what does AB 1356 do?

Ashley well, if you thought you had to be on top of it with 60 days, this one would make it so that you have to give it 90 days of notice, which is actually a full quarter, which means that you have to know who is potentially getting laid off far before you know the 90 days. And our concern there is that it's likely to lead to over notifications. You see this sometimes, for example, like with with teachers, because they have to be given a notice so far in advance, it's very common for them to get like pink slipped, basically, and then to find out that they actually do have a job, from our point of view, is detrimental to the worker and the employer and also just, you know, morale overall. They also change the definition of covered establishment. So presently it's if you have, I believe it's 75 or more employees in one location, this would mean if you have 75 or more employees across all of your locations in the state. So practically what that means is if you were to do maybe you did layoffs, you had 100 people that you're laying off in San Francisco, right? That would trigger the WARN Act. Normally it would still hear if at the same time you're having two layoffs in San Diego, that would now also trigger the WARN act because you're hitting that threshold by your combined two locations. And as you mentioned, right. One of the purposes of this is to notify the local community that there's about to be massive layoffs in their area. And so you're unnecessarily essentially notifying local city and county officials in San Diego about two people getting laid off. And then finally, really, the most significant expansion is you would have to provide warnock notice to employees of labor contractors. And, you know, I think to some degree, we're understanding if you have a contractor who's doing the same work, largely as some of your employees, they're working side by side every day. You know, I think that rationale makes some sense. But where our concern is is the way that it's defined in the bill. It could be someone who's performing work that's not that related. Right. To what your workers are doing or really what your business is about. And it could be people who are just showing up to your facility maybe a couple hours a month, and they would count. And that's not really, I think, getting at the purpose of the Warrant Act.

Yeah. And I think what's really important is the kind of the. So what off the Warrant act, right, Ashley, is if you don't do this, notice, there's reinstatement remedies, there's back pay remedies.

Right.

The, the damages for a Warrant act violation are huge, which is why, you know, the broadening expansion of this kind of bill is something that causes us with concern. Well, Ashley, thank you again for taking time out of your busy schedule there at the Capitol. I know you guys are in full swing. I really appreciate having you on the show. So thank you for your insight into some more of this year's employment law proposals thus far.

Thanks, Matt.

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