Episode 179: Update on Harmful Proposals as Legislature Heads for Summer Break

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. Welcome back, listeners. Well, the July recess is nearly here for the California State Legislature, and before we know it, the deadline to pass any and all bills will be here on September 14th. This means it's a good time to check in on the status of several significant employment law bills that we have already addressed earlier in this year on the show to discuss the latest developments, we welcome back Chris McKayley, an attorney and lobbyist with his own firm, Aprion McKayley in Sacramento. Chris also works regularly with the Cal Chamber Policy Advocates and serves as an adjunct professor at my alma mater, McGeorge School of Law. Thanks for joining me today, Chris.

Thanks for having me back, Matthew. And good to sit here and chat with a McGeorge grad.

Yeah, absolutely. It's great to see you again and I think it's a good opportunity here to start the show out by kind of setting the stage as to what the rest of the session will look like from here on out. We've had a few podcasts about the bills and kind of tracked early on, but what does it look like going forward here for our listeners?

Well, believe it or not, even with just over three months left, we are just over the halfway point. As you know, Matthew, the legislature convenes in early January, and of course we have the governor's budget proposal. And then we sit for about two months, almost through the end of February and wait for all the bills to get introduced. And as you're also well aware, this year we had just over 1,000 bills that were either intent language or spot bill language, meaning either. Those types of bills lack any substantive language. So believe it or not, about 40% of the bills when they were introduced didn't have any substantive language. So as you know, Matt, we have to sit around and wait for those bills to get amended. And then once we do, the hearings get started really in April and into May, and then they have to clear their house of origin by the first week, June, and then we start the whole process over again in the second house. What does house of origin mean? It just means that the assembly bills clear the assembly and the Senate bills clear the Senate. So, Matthew, mid July, just before the legislature goes on its annual summer recess, is also the deadline for bills to clear their second House Policy Committee. So again, that means those Senate bills have to clear the assembly policy committees like labor and Employment and Judiciary, et cetera. And of Course, the abs, the assembly bills have to clear their Senate policy committees. And then when they return in mid August, we are doing a five week sprint to the end. So at the end of August we have the policy, sorry, the fiscal committee deadline. And that just means that the old dreaded suspense file, which dreaded for some if their bills get held. But as you know from past years, Matt, that that's often a place where the business community has some success to stop some of the really most onerous. And then as you noted at the outset, September 14th is the scheduled deadline. That's because we're in the first year of the two year session. And so they go longer to mid September, as you're aware, in the second year, the even numbered year, which will be next year. The Constitution says they have to shut down by August 31st. So that's sort of an outline of the time that we have ahead of us over the next three months. And then don't forget, even after they adjourn.

Your policy advocates and the rest of us in the business community still have a busy 30 days because the governor has until mid October to act on the between 1000 and 100 bills or so he's getting every year now.

Since COVID Thank you, Chris. Yeah, and that was a great background on kind of, you know, where we're going with this and the path that these bills still have to go through. And the suspense file is great discussion because as a little bit of a spoiler, we had a big one that ended up in that in their house of origin that we'll talk about in a little bit.

Actually, Matt, we had one in each house, thankfully.

Oh, excellent. One in each house, which we'll touch on as we close out the show today. What I want to start with today is one that's always a common topic for us here in the compliance arena, which involves SB616, a bill that's designed to amend our mandatory paid sick leave law. So Chris, a little bit of background about what this bill does and what's going on with it presently.

Sure. Well, just a brief history. A former assembly member who is now the head of the California Labor Federation, Lorena Gonzalez, about a decade ago authored the bill that created the three paid sick days in California. And she had really two main sticking points. One was every employee had to benefit. So there were no carve outs or anything. And every type of employer, as you know, whether it's feeha, minimum wage, sometimes we have thresholds, sometimes we treat the size or the type of business differently. But the original legislation required all employers, regardless of size or type of industry, to offer those three paid days and cap it six days, you know, over the course of two years. So this year, even though then Assemblymember Gonzalez had made some efforts in prior years, the bills never cleared the assembly. This year, Senator Lena Gonzalez, unrelated, she's from Long Beach, California. She introduced a bill that does one simple change, obviously with significant consequences. She would more than double the number of paid sick days in this state from three to seven and no guardrails. Now, the business community, led by Cal Chamber, had a bill earlier this year that would have allowed a more modest increase in the Number of days, SB881 by Senator Alvarado Gill. But it would have made some important changes. For example, as you know, from earlier this year, despite the understanding that the paid sick leave law would not be enforceable by paga, unfortunately, a district court of appeal earlier this year actually decided, no, it can be enforced by a representative action under the Private Attorneys General act, which has caused great consternation in the business community. And then there are some other things. For example, whether or not you can, you know, request documentation if there's more than three days of the nine or so local ordinance out there, Matthew, on paid sick days, you know, which creates some confusion, confusion, some duplicity and all. Even some of those local ordinances, like in Los Angeles, has that doctor's note after three days. So I think, you know, to set the stage here, the bill coming out of the state Senate on a party line vote, SB616, merely more than doubles the number of paid sick days. I think the business community is hoping that the State assembly is going to provide some guardrails and some limitations, hopefully not increase it by that number of days.

Yeah. Thanks, Chris. And that is really one of our biggest compliance issues. You mentioned the California Court of Appeal case that allowed for individuals to now bring PAGA actions, which of course is a bill that we continue to work on in terms of limiting the effects of paga. But what made that so important was previously you could only bring claims with the labor commissioner individually if you had a sick leave claim. So it was just one at a time. One thing that we've noticed over the years is that although paid sick leave has been around for, geez, about eight years now, employers still don't understand all of the complete nuances of it because the bill has a lot of different technical requirements. And that's all PAGA digs at, is these technical failures by employers. And so this is something that Employers will really need to track and see because once if the bill is passed, of course, in its current form with the seven days, it creates all sorts of operational differences in terms of what your policies might be. Do you wrap these things into a a one size fits all PTO plan, in which case it may all of a sudden become, you know, out of compliance. So to keep an eye on this and see, you know, where this bill goes that way, should it get signed, you've only got six weeks this year to kind of get up to speed with everything that you have. So this is a big one that we continue to monitor. I know we've listed it as a job killer for the reasons that you've said there, Chris. Now let's move to the other side of the aisle, so to speak. As I talk about employment law, we have our labor code, which is where you find the California paid sick leave, but we also have the Fair Employment and Housing act and the government code, which gives us all of our harassment, discrimination, retaliation laws and lawsuits that come out of that. And let's talk about a bill there, AB524, which attempts to add to our ever growing list of protected classes. Chris, can you refresh us on what this bill looks like, its current status and the ongoing business community concerns around it?

You bet, Matthew. You know Assembly Bill 524 by assembly member Buffy Wicks out of the Oakland Alley, Alameda area. She would, as you noted, add what she calls the family caregiver status to the currently there are 18 protected classes out there in FEHA, the Fair Employment and housing law. As you noted, it prohibits basically discrimination in either housing or employment context. And interestingly, FEEHA applies not just to the private sector for employers of five or more employees, but also the public sector. And this is her third effort at this bill and the last two times getting back to the fiscal committee. This bill has been held on the suspense file this year. We were surprised, not pleasantly, by the way that AB524 cleared suspense, made it to the floor and of course passed off the floor to add this new family caregiver status. I've always noted in my testimony on this bill, for example, one of the things that makes FEHA so.

Concerning to the employer community, as you know, is the enforcement mechanism. You know, if you violate feha, not only is there attorney's fees and injunctive relief and compensatory damages, but even punitive damages are available. So anytime California in any way tries to amend or in this case add a new protected class to FEHA statute, we really get quite concerned. You know, we did work with the Assembly Member on AB 10412 years ago on the family leave statute. And this is where she takes the language of family caregiver. So the problem is with family caregiver status. How it's defined, Matthew, is it's a person who contributes to the care of one or more family members, as well as somebody that's called a designated person. Now, there are two words, if you caught them, contributes and care. What is contributing and what is care? Now, you and I may have a difference of opinion, not one being right and one being wrong. It's just, is contributing like a majority of your time is spent, for example, or is it far less? One of our colleagues in lobbying this bill talked about the fact that once a week he brings dinner to the neighbor down the street, an elderly woman. Now, is that contributing care? Yeah, under a general definition it would be. But does that equate to, you know, falling under the FEEHA statute? And what is care? Some may equate it to, again, bringing somebody a meal once a month or once a week. Others may view care as, you know, far more extensive, maybe several meals a day, maybe daily bathing, some people need to be able to get out of bed during the day, etc. Etc. So unfortunately, when you add such a broadcast and use undefined terms in the definition of this new protected classification of family caregiver status, boy, what are we going to have? And what sort of litigation are we going to have? One other thing on this bill, Matthew, is the business community asked about a clear statement that despite this new family caregiver status, that you wouldn't have to provide any sort of reasonable accommodation, which is a very familiar term for all of us. It's defined in feha. There's lots of litigation and other guidance out there that defines it. However, in this bill, they would instead create a brand new term not giving employees preferred treatment. And not surprisingly, Matt, here's what makes it worse. Do they define preferred treatment? Of course not. So that too is going to open employers up to litigation. And so you can see the problems with a bill like this, even though everyone has, you know, a degree, of course, of sympathy and a lot of employers would allow employees to take some time off to care for family member. When you add it to the FEEHA statute as a protected classification, boy, even if you're going to expand it to a 19th classification, at least provide some clear definitions to it.

Yeah, and what's really interesting is the family member list that They've put in there that you mentioned, rings familiar with those of us who administer CFRA leave, California Family Rights act leave. And in that, there's some guardrails about taking that time or having protections around that, because it requires a medical provider to certify that this employee will be integral to the care, like this employee needs to provide the care of this person. So at least there's some guardrails there. As you mentioned, you know, with.

Well, look at. If I can rudely interrupt you, Matt.

No, interrupt.

Look at how you describe it. Integral to the care. Right. This bill says contribute to the care, but look at how much more certain and better defined integral to the care is in the SEFRA statute, as you note.

Yeah. And I think that's a major concern. And then to piggyback on the protected classes issue, I'm a former plaintiff's attorney, Kris Reformed now, of course, as everybody. Shame on you, Matt, as everybody's familiar. But I will tell you, a plaintiff's attorney will get a client in, a potential client in. And one of the first things we'll do is run down the protected class checklist. Are you a member of this one? Are you a member of this one? And we'll figure out ways to do this. Did you provide care to a family member and give the list to the potential client? And that adds another avenue to already many that exist, which is why now where we are as best practices, we always tell employers, when you're making termination decisions, part of your analysis of making sure that you're doing this for a legitimate business reason is to address that fact. Are they a member of a protected class? Do we have issues with potential motivation there? Chris, let's shift gears entirely and let's return to a discussion that we've had earlier on the show about SB399, which I've colloquially called the employer speech bill. As I've looked at it today, it.

Looks like most of chilling employer speech. Matthew.

Yes. Preventing us from talking bill. It looks like most of the main points remain in the bill that we've discussed here in the past. So can you kind of take us through where we are and the issues around this bill?

Yeah, unfortunately. Yeah. This bill has passed along and, you know, it basically precludes an employer from, you know, forcing employees to receive communications or to participate in any communications, which is a, pretty, you know, vague phrase. Right. What does participate? Does that mean a recipient or there's back and forth, either verbally in writing and of course, as we're often pointing out, In a lot of these bills that we're talking about today, Matthew, is these phrases, these terms are undefined. And, you know, whether they become law or not. And I think you can appreciate this from, you know, your position here at Cal Chamber is you have to have specificity. You have to have clear guidelines for the employer community. Even if you're going to impose a new burden or a new mandate on employers, at least make it as easy as possible to comply with. And this bill, unfortunately, doesn't do that. And it basically precludes an employer from talking about religious matters, which I think is not common. However, they also use the term political matters. Now here, as you're familiar with, there are already prohibitions forcing employees, for example, to participate in political events. You know, if a gubernatorial or presidential candidate came to your facility in California, there are already provisions of the Labor Code that say the employer cannot mandate their employees to show up and participate in that rally. And yet that's the example that they cite in this bill. And so the political matters, sure, it includes that sort of participating in purely political events. But you know what else it says it includes legislation and regulation.

Now, does it define either of those terms? Of course not. What do we have to comply with? Statutes, not legislation and regulations. We employers. Right. But they don't define it that way. So are these proposed pieces of legislation, are they enacted ones? So can we not say anything, for example, that AB123, if enacted, would adversely impact our business? Or if a department of Fair or the civil rights department enacts a new regulation that could prevent some of our employees from continuing in their position, we can't inform our employees of that. This is the kind of stuff that we're dealing with. And this is why, as you said, it's really chilling employer speech to their employees and is really an overreach. I mean, frankly, the employer community led by Cal Chamber, has been advocating that, you know, this would violate employers First Amendment rights to speak to their own employees again about these amorphous religious or political matters.

Yeah, Chris and I still continue to struggle with the overall need, as you've highlighted. We have so many guardrails in the Labor Code already and in other aspects that protect employees from being coerced into or forced into an employer's political viewpoint. I'm not sure I see the need. And to make things worse, as you said, half of the frustrations we hear from our members and from those who attend our seminars is these laws exist in the first place. But the second half of their frustrations are that these laws exist and you make it really unclear how we're supposed to comply with them.

Exactly.

So I think both those points are well taken.

Let's.

And can I just make one other point on 399. Like a lot of these bills, this would add a new provision of law, a new statutory.

Section to the labor code, which of course means it's subject to our very favorite term paga. And so you know, what sort of financial penalties are employers going to face if they have somehow had their employees participate in any sort of political or religious communications received by that employer?

Yeah, absolutely.

Chris. Okay.

Let's move on to a topic that has been trending over the last few years. All of our favorite not mind numbing topic of arbitration. Of course.

Yeah.

The courts have been getting involved here quite a bit with arbitration, the legislature as well, really ever since California attempted yet again to ban mandatory arbitration through AB51, which is a bill we've talked about quite frequently over the last few years.

Sure.

Now SB365 addresses a different aspect of arbitration. Where are we on this bill? What does it do?

Yeah. So SB365 is a continuing effort by the plaintiffs bar, employment lawyers on the plaintiff side and labor unions to limit the use of arbitration agreements in this state. As you know, after the 2011 decision in AT&T Mobility versus Concepcion, overturning a California appellate court decision, a decision rendered by our U.S. supreme Court, there have been efforts over the past decade plus here in the California Legislature to either undermine, limit or in some instances ban outright the use of arbitration. And this is just another one of those efforts. And you know, Governor Brown had vetoed prior efforts leading to AB51, which unfortunately got signed five years ago. And we warned the legislature and governor that it would be struck down as preempted by the faa. And sure enough, granted, it took a few years. But the ninth, the district court, of course, Judge Kimberly Mueller got it right. It went back and forth at the Ninth Circuit. But again, earlier this year in spring of 2023, the Ninth Circuit properly ruled and interestingly, the state didn't even appeal to the US Supreme Court. So what does SB365 do? It's a bill by Senator Weiner out of San Francisco and it basically says that today under existing law, under the code of civil procedure, all types of orders or judgments are automatically stayed upon appeal. Existing law does not differentiate. And that's, as you know, Matt, is an important point when it comes to arbitration. Unfortunately, SB365 targets arbitration and says, notwithstanding code of civil procedure section 916 for arbitration agreements, if you appeal, the civil case can continue on, which totally undermines the entire purpose of arbitration. Now what I find most problematic, Matt, in this bill being presented to the legislature is the proponents freely toss around terms like employers bring frivolous appeals when an arbitration agreement is said to be non binding. So the trial court basically says, we're not going to enforce this arbitration agreement, the employer or the business, because it applies across the board. The employer or a business decides to appeal under existing law. Today, the civil case is stayed. We wait for the court of appeal to decide. And then if, for example, they say, yep, the trial court was right, the arbitration agreement is unenforceable, then that case would go to trial. But what happens most often, as you're well aware, is that the court of appeal says, nope, trial court got it wrong. I started looking over some of the court of appeals decisions over the last couple of years and what do we find? What I have found most common is that trial court judges don't distinguish properly between procedural unconscionability and substantive unconscionability. Now I don't want to go down a rat hole and start talking about that differentiation, but suffice it to say you've got to have both of those tests met in order for an arbitration agreement not to be enforced. And unfortunately, a lot of these trial court decisions that they say the arbitration agreement shouldn't be enforced, they actually end up being wrong. But what do the proponents of this bill say? They say, oh, those big bad employers, they're filing frivolous appeals and they're doing it just to delay to harm the injured worker or the injured consumer. And that there's just no proof of that, as I've raised in testimony in legislative committees, as has the calculation chamber, is, look, if there's such abuse going on, then those attorneys should be sanctioned. And oh, by the way, where's that litany of cases? They don't produce any. So they make some pretty outrageous claims besides the poor policy. Matthew, this bill is federally preempted. Now they've tried to make arguments just like the legislature did with the enactment of AB51. And we told them back then this is not going to survive an FAA challenge. If this bill, God forbid, goes through and gets signed into law, it too will be challenged. And I assure you it too will be struck down by the federal courts. But I really hope the legislature or the governor does the right thing and doesn't end up signing this bill.

Yeah, me too as well, Chris. Well, let's round out today's discussion, looping all the way back to some good news since I know we spent a lot of time about things that we're not liking progressing through the legislature. And let's talk about a brief update on what happened with SB809. This was the criminal history check bill that we've discussed here on the show a couple times that we're gonna make some really substantial changes to how criminal background checks worked in California. What happened with this bill?

Sure. So Senate Bill 809 by a new state senator, Senator Smallwood Cuevas was introduced at the request of a number of different groups. And their argument was, despite all the efforts that the employer community made with a lot of different groups, with Assemblyman Kevin McCarty in 2017 when he enacted the so called ban the box legislation. As you know, some employers prior to that utilized a simple form where you would check a box. You know, do I have criminal background history? Have I ever been convicted of a crime? And unfortunately, some employers use that as an automatic disqualification. That changed in 2017 after the enactment of the McCarty legislation, what SB809 originally did, and it became obviously a Cal Chamber job killer. And much to the dismay of the employer community, we said, look, if there are problems with the ban the box statute, let's talk about those. But what you're doing in this bill is you are striking that statute entirely and you're replacing it with basically a complete ban on ever considering any criminal history, even if it was voluntarily provided to you by the employee or if it came to you through a third party. The Senate Judiciary Committee fortunately had significant concerns and they basically went Back to the McCarty statute, the ban the box statute, and they said, let's make some tweaks to it. They couldn't do everything that they had wanted to. And then it went on to the Fiscal Committee. And this is one of those times where the fiscal committee said, you know what, this bill is not quite right for consideration. And so we're going to hold it. So SB 809 was held on the suspense file, which means it doesn't proceed any further this year. It could be considered next January when the legislature reconvenes for its second and final year of the two year session. Matt.

Thanks, Chris. You know what I found interesting about this bill, and I've mentioned it before, was that the Civil Rights Council, which is the regulatory agency for the Civil Rights Department who oversees feha, they had already put in substantial work on kind of increasing regulations around the ban, the box law, and the fair chance process.

That goes with it and guidance. Yeah, yeah.

And so they finally got that through. And just for the listener's sake, those regulations finally got to the OAL, the Office of Administrative Law on the 9th. And so we expect to see some finalization of those regulations. So some things will still change with your criminal history checks, but we'll also provide some good guidance, as Chris said, with regards to how to go through and comply with the ban the box laws requirements. Well, Chris, it's been an absolute pleasure to have you back on the show to share your incredible insight and expertise of the legislative arena. So again, thank you so much for joining me today.

Thank you so much for having me, Matt. It's always good to be with you on these podcasts. I'm a regular listener myself, so I appreciate being your guest today. Thank you.

I appreciate that so much as well. And thank you all listeners for joining this discussion on the workplace. Please comment, share and subscribe to Cal Chamber's podcast by visiting calchamber.com.