Episode 189: Business Legislative Wins and What Employers Can Expect in 2024

Welcome to the Workplace, a podcast by Cal Chamber. I'm Matthew Roberts, Associate General Counsel for Labor and Employment with the California Chamber of Commerce. Happy New Year, listeners. As we ring in 2024 here at Cal Chamber, we hope everyone was able to recharge a little bit over the holiday season to get themselves ready to start fresh in January, getting up to speed on all of our new legal obligations that took effect January 1st. Of course, if you need a refresher about any of these or to catch up on anything you missed, please check out prior episodes of this show as well as other Cal Chamber publications to kick off your New year. Right. Of course, it is never too early to begin keeping an eye on the state Legislature as they begin the second of their two year session on January 3rd this year to discuss the hot employment law topics we may see in the Legislature this year. We have two guests today. First, we welcome back Ashley Hoffman, Cal Chambers Employment law policy advocate. Thanks for joining me today, Ashley.

Happy New Year and good to be here.

Happy New Year, Ashley. Also joining us today is Chris McKayley, an attorney and lobbyist with his own Firm, Snodgrass and McKelly in Sacramento. Chris works regularly with the Cal Chamber policy advocates, including Ashley here today, and also serves as an adjunct professor at McGeorge School of Law. Chris, it is always a pleasure to have you on the show. Thanks for joining us.

Great to be back on Matthew. Happy New Year to you and Ashley.

All right, Happy New Year to everybody. Well, it's kind of crazy how time flies as it feels like I was just sitting here with the two of you in separate episodes after the session ended and Governor Newsom had signed or vetoed the bills that made their way to his desk. I kind of can't believe that we are back to grind, back to the grind to talk about what's hot for 2024. So let's dive in.

Trust me, Matthew, neither are Ashley nor.

I. I know it starts tomorrow for you guys. How quick was that holiday for you?

Much.

All right, so you know what? Why don't we take it nice and easy and start with, I don't know, artificial intelligence. So AI, of course, as it's colloquially known, dominated national headlines and introduced millions to the potential benefits of generative AI in all facets of life, including at the workplace. In response, we did see some government leaders, including President Biden and Governor Newsom, issue executive orders late in 2023, setting early standards for the development and use of AI in the public and government. Chris, I'll start with You. Is AI an area we expect to see legislature work in this year? And in what capacity do you think it'll be related to employment law issues?

Well, this is the bot of Chris McKayley responding, actually.

Yes.

So wait, does Chris. I mean, I have to do some like, input, right? Like our chat GPT. I've got to put in a question to Chris and see if I get.

A feedback, see what answer gets regurgitated back to you. Seriously, Matthew? Yeah, it's a hot area. It was in 2023 legislative session, but I think that a number of factors, including concerns expressed by the business community, particularly the tech sector, resulted in most of the measures being held up. But a couple of factors. Obviously, President Biden has issued some executive guidance, as has the governor. And so that coupled with the fact that one of the main bills, Assembly Bill 331, is authored by Democratic assembly member Rebecca Bauer Cahan, who just recently was actually named to be the chair of the Privacy and Consumer Protection Committee in the California State Assembly. So, so I think that we will definitely see.

An AI bill, an artificial intelligence regulation bill in the state of California by the end of the 2024 legislative session. What exactly it says? That, of course, is the $65,000 question, if you will. But clearly there is a significant amount of concern by California legislators about how AI can be used positively, but also their concern negatively in the California workplace.

Great, Ashley. We've already seen some enforcement from government agencies regarding the use of AI in the employment context back in 2023, with the EEOC kind of taking particular point on that. With our current set of rules pending whatever we might see in the legislature, how would you counsel employers who are looking to use AI in their organization in order to mitigate any emerging risk, risk of. Of enforcement or liability from the government?

Great question, Matthew. I think it's really important to remember that, you know, this concept, for example, of, you know, discrimination, right, by an AI tool is something that is already illegal. The EEOC demonstrated that. And I think that was, you know, pretty clear that the Fair Employment Housing act does already prohibit discrimination in, for example, hiring. And if you're using an AI tool to do hiring, that does not, you know, somehow exempt you from that law. So I think it's very important, you know, if you are using AI, especially in that space, which is where I think probably most employers are using it, to make sure that you, you know, you're not inadvertently discriminating against certain applicants or in favor of certain applicants, and to make sure that whatever tools you're using, you know, you're still following all of the applicable.

I think that's something that's going to be really important too, to keep in mind as we do see legislation to kind of differentiate between situations where maybe, you know, we need to clarify that something, you know, some use of AI is already against the law versus situations where we're coming up with brand new regulations and brand new laws that is not already, you know, illegal under the law.

Excellent. I'll actually throw this last question to you on this, to both of you, so feel free to chime in either way. But I know businesses are looking to make use of this because of a number of reasons. One is increasing efficiency in our workforce, filling in the gaps where we may not have been able to fill them in through hiring or through other means. And so for the both of you, I'm kind of curious what your take in the business community's take is on how beneficial AI will be for everybody, keeping in mind the risks that we might see down the road.

Ashley?

Sure. For me, I'm honestly still myself learning a little bit of the differences between artificial intelligence and maybe something like an automated decision making tool, right? Something that kind of learns from prior, you know, iterations or almost experience versus maybe something that helps you come up with a decision more quickly, but doesn't really, in a sense, learn on its own. So it'll be, you know, I honestly am still learning myself and I think the business community is still itself learning. You know, how, how can this be useful and where can we use it? You know, as far as innovation, as far as hiring, as far as making sure, you know, that we have a workforce maybe for purposes of improving diversity, you know, something along those lines, something that we're still, I think, really grappling with. And I think that's one thing that we want to also be cautious of when we are trying to regulate this technology is that there's so many situations and kinds of AI that we haven't even dreamt of yet and that we haven't even thought of. And so we want to make sure that we are, you know, there's a good balance between regulation, but then also not kind of stifling innovation.

I think Matthew Ashley's hit the proverbial nail on the head in this sense. Like anything else, new technology in particular, it's striking the right balance. It's ensuring that it is used in a beneficial, innovative way, not in a negative, discriminatory way, et cetera. It should be viewed hopefully as a useful tool rather than Say a replacement for.

Someone or something. So there are a lot of potential beneficial uses. We just want to make sure that it's used in a responsible manner. And of course we also have to balance the innovation, the ability for the tech sector to utilize it to ensure those beneficial uses come forward and without having so many restrictions that innovation is limited. So it is a true balancing of interest type of subject matter for the legislature and government generally, both at the federal, state and even international levels to grapple with. We know that the EU has issued recent guidance on artificial intelligence and others have as well. So there's also potential a number of regulatory bodies that have some sort of impact or influence over what sort of regulation we'll have regarding artificial intelligence.

Yeah, I think this is really going to be one of those areas that we keep close eye on because as I'm with both of you, I'm not quite sure entirely what we're talking about, not quite sure entirely how we'll be able to use it. And I think for a lot of us, especially our members and those who are just trying to run a business.

It'S difficult to wrap our heads around what it is that we might be looking at AI regulatory wise and to not, you know, rush headlong into something that, you know, we might just have to like fiddle with and change over the course over the next few years as AI kind of picks up its usage. Now, another set of laws that we've actually not will be totally new like AI is, but has been floated around the legislature in previous years without much traction, is something called predictive scheduling. That however, has not stopped a few California cities from passing their own local ordinance on the issue as we saw Los Angeles City and Berkeley pass industry specific predictive scheduling scheduling ordinances last year. Ashley, will we see efforts again at the statewide level on this issue and what might that look like?

As you mentioned, Matthew, there had been several efforts to create a statewide predictive scheduling set of rules in the past years. Prior to Covid. That was actually something when I started in 2020 that I was told to kind of keep my eye out for. And I think because of COVID 19, you know, that issue kind of fell away. But as you mentioned, we have seen some local ordinances recently and then actually in a.

SEIU, which is the union that was responsible for the fast act and most recently AB 1228 regarding fast food workers, you know, did make a comment about predictive scheduling and that being important to them. And so I, for me that that kind of pricked my ears a little bit to see whether they will make an attempt, you know, at a statewide rule. Will be interesting to see if there is a bill, whether it is for all workers or if it is only for specific industries. We have seen a really significant trend of industry specific bills in recent years and I could see this being industry specific as well. And I think some of, and correct me if I'm wrong, Matthew, but I think some of the local ordinances are industry specific as well.

Yeah, they are. And you know, they tend to focus on retail, retail businesses of certain sizes. I find Berkeley's that takes effect on January 12th to be more expansive than any of the ones we've seen before because they're picking up hotels, they're picking up building services employees. They've dropped the threshold for the number of employees you need to have in your business to be subject to these predictive scheduling rules. So I'm kind of curious, Chris, if your thoughts on what you see and if we're going to see more expansive efforts at predictive scheduling than what we've seen in the past, looking to get more workers under the umbrella.

Yeah, it's hard to say. When this issue first reared its head, there was an effort to make it applicable to everybody. I can remember that. Now, former state Senator Connie Leyva from the Inland Empire was the author of these efforts and she had convened a meeting of all interested parties and there was a legislative committee hearing room that was filled to the maximum, every seat taken because she wanted to do a predictive scheduling across the board. The last time we saw it was in 2020, as Ashley mentioned, almost four years ago when she began. Leyva had it and she was Sen. Former Senator Leva had that bill and she was going to try to narrowly tailor it to grocery retail and some other sectors. And I think what happened, at the urging of her supporters, among others, was to try and let local jurisdictions do it. And I think their strategy is to maybe build momentum from the local level up to the state. In other words, get as many local ordinances as possible on the books and then proceed at the state level. So I don't know, honestly, if 2024 is the year for predictive scheduling or if it may be two or three years out before there's another serious effort undertaken in the state legislature. But even if the legislature doesn't contemplate doing a bill this year, as both of you have mentioned, it's alive and well at the local level.

Right on. All right. So let's move off of new stuff, you know, stuff we hadn't seen in the legislature in the last couple of years and move on to what I like to call the 2023 failures, or from the business community's point of view, probably successes, especially killing a couple bills that we labeled as job killers. So let's start with one that.

Chris, you and I had talked about last year, and we thought that there was a substantial chance that this thing would get through, and ultimately it didn't. And I'm referring to AB 1356, which were efforts to expand our what I'll call the layoff notice law or cal warn. Chris, can you remind us what AB 1356 attempted to do and whether we might see another attempt at this extension expansion this year?

Yeah. This is a bill that Ashley and I worked on for most of the 2023 session. As you said, it concerns the California Worker Adjustment and Retraining Act. Basically, the author and his supporters wanted to substantially.

Expand the Cal Warren act in a couple of ways. One is he wanted to increase the amount of time from the current 60 days to 90. We ultimately, I hate to say compromised because the rest of the bill wasn't a compromise, but he did reduce that to 75 days, which is still, you know, a substantial increase in the number of days, but not as many as the 90. The second is that he wanted to expand the definition of a covered establishment. Today, of course, it is a mass layoff or closure at a one specific facility.

He wanted to expand that definition basically to all facilities. In other words, if, you know, if you're a single establishment, then this expansion issue is not of concern. But as both of you well know, there are lots of businesses in this state that have multiple facilities in multiple jurisdictions. And so you could get something where that threshold is when the mass layoff occurs or the plant closure occurs and the WARN act notice has to go out to both the workers as well as state and local government officials. And then you might have just a handful of at another facility, for example, and they too, in those jurisdictions would also get notices. And we thought that that would be an unwarranted expansion. So I think those are really the the two main things that were of particular concern. The third is the inclusion of labor contractors, which, as you know, would be a substantial expansion of the Warren Act. Generally, it's for employees. And so the question becomes, how do you define that labor contractor? He, in his bill had a very broad definition, a huge expansion of it, while Ashley and others had advocated for a narrower definition of labor contractor. We were fortunate enough that Governor Newsom agreed with a number of the points in the Cal Chamber veto request letter and actually ended up vetoing that bill. But I would expect it to come back.

Okay. Another bill we saw last year that Cal Chamber did label a job killer was AB524, which sought to expand protected classes under the Fair Employment and Housing act by adding something called, quote, unquote, family caregiver status. Ashley, how would this have changed employers obligations under feeha? And might we see this introduced again this year just like the calhorn bill?

I'll start by saying I do think that we will see it introduced again. This was, I believe, the third or fourth attempt. And so I could say see it, you know, coming back one more time at least. So. So under the Fair Employment Housing act, there are of course, many protected groups. And this would have added a new protected class under the Fair Employment Housing act called family caregiver status. As you had mentioned, Matthew, that would be anyone who provides direct care to a list of family members or has designated someone as a designated person under sefra. So, for example, like a neighbor or something. And there was really no definition as far as what direct care meant. For example, one of the proponents actually said that they play cards with their grandmother once a week and they would consider that to be direct care. And our really, you know, significant concern was it was kind of twofold. One, you know, that could be a huge trigger for litigation. I mean, it's not uncommon when you have a category so, so broad like this or something like age or gender to just kind of see it honestly tacked on to a complaint. Right. To make it so that whenever an employer disciplines someone, terminates someone, you know, this could be kind of used as potential for litigation, even if it's, it's not really a merit, a meritorious claim. And then also, you know, does this mean then that you have to accommodate the worker? Right. If they say that they are late because they're providing care to someone, if their work product is slipping, you know, and they cite reason of providing care, you know, what does that mean as far as your obligations? And the bill did include language about not creating an obligation for a, quote, special accommodation. But again, it didn't really, it wasn't really clear what that meant. That's different from kind of the reasonable accommodation language that we're used to. And again, even though it mentioned things like absent, you know, being absent or, or late or what have you, again, I think a lot of concern about what does that actually mean, mean in practice? And I think a lot of our argument Was, you know, if you have concerns right, about someone be able to provide their this care, we have leaves on the books to kind of deal with a lot of those situations. And that's how we kind of feel this issue is appropriately dealt with already in the law. So really we just saw this as unfortunately kind of a means to litigation and especially with the lack of definitions in the bill.

All right. Well if at first you don't succeed and fail and fail again, Ashley, why not try one more time?

Matthew, can I just add one point as you've raised these two interesting bills, both of which were vetoed by Governor Newsom. I think it's interesting to note for your listeners that the governor in both of his veto messages of both AB 13, 1456 as well as AB 524 described the concerns with the language contained in the bill, which I think was pretty satisfying to Ashley and me because we repeatedly raised some of those language concerns in legislative committee hearings that we testified at and for lack of a better description, really didn't get much receptivity from legislators to deal with our language concerns. And then to see the governor citing those concerns and the ambiguous language gave us a little bit of satisfaction that somebody in this process was listening. You know, if you're going to impose as a general statement to the legislature, if you want to impose a new mandate or a leave something on the legislature on the business community here in California, at the very least make it as clear in the language as possible to ensure much easier compliance. And you know, a lot of those concerns generally go unheeded. And so it was nice to see the governor raise it in his veto messages.

And I couldn't agree more. There's nothing that makes me bang my head against my desk than getting a law and not being able to tell my members exactly what they need to do to comply with it for the very same reason, if you're going to regulate business, businesses at least make it so we know how to comply with the regulations, for goodness sake.

Moving on to another bill that did not survive 2023. We had several bills that worked on eliminating non compete agreements in California. That was clearly a mission of the state legislature last year. A couple got through and succeeded. So there are requirements around non competitive agreements, some confirmation that these things are not valid here in California, some notices you have to provide if you have anybody who signed some recently. So take a look on what we do have to do with non competes early on this year. But there was one bill that did not pass AB747 that also included kind of a peculiar provision that would have placed limitations on employers abilities to recoup money from employees. Say when an employer provides training funds or puts them through a class or provides a hiring or retention bonus with the condition that hey, we want to put you through these training or education programs because it's going to help you here, but we don't want to invest this money if you go through the class and then leave us, you know, two, three, five, six months later. And so you would put this condition in that you will stay with us for X number of months or years and if you leave early, you'll owe us at least some of that background. Well, AB 747 tried to do away with that. Chris, can you discuss what happened with that bill and what kind of renewed effort we might see to restrict employers in this fashion?

Yeah, sure. The first two bills that we talked about were vetoed, obviously. These other ones are what the California legislature refers to as two year bills or carryover bills. And just like the US Congress, because we work in two year sessions for the benefit of your listeners, bills that were introduced in the first year, the odd numbered year can carry over and be considered in the second or even numbered year. And that's what this one is. Assembly Bill 747 by Assemblyman Kevin McCarty here from Sacramento wanted to do stuff as it relates to non compete clauses, as you said, despite the Arthur Anderson decision by the Cal Supreme Court effectively invalidating non competes in this state. We did two new bills, an assembly bill and a Senate bill to really clamp down left no ambiguity. But the second provision, as you mentioned, you know, will limit the ability for employers to provide some benefits to their employees, such as bonuses or tuition reimbursement. And sometimes employers have, if you will, strings attached. In other words, if I'm going to grant you a signing bonus perhaps of a few thousand dollars, I would like to ensure that you can't or that you wouldn't take off the next day or two weeks later.

I don't think anyone would be particularly surprised by such a requirement. But the author and his supporters of the bill think that an employee can and should be able to walk away the next day, which obviously would limit, if not eliminate much of an incentive for the employer to grant those types of economic considerations to their employees. And you know, we heard a lot when Ashley and I were doing lobbying visits on these bills. Our friends in the restaurant industry grocers really talked about the bonuses, signing bonuses, in fact, that they were granting to workers to, you know, attract them back to the workplace, such as in grocery stores and restaurants up and down the state of California. The restaurant industry was particularly hard hit in the pandemic when they were forced to shut down. And so, you know, again, what economic incentive would there be for them to operate and grant those types of signing bonuses and get people back working for them if the individual could turn around and leave the next day or the next week?

Yeah, and I think that's kind of disappointing sometimes when you see these things, because employers are trying to do something to, you know, boost the growth of their employees. But the employers, of course, need the.

Understanding that the employee is going to stick around there. And so some of these bills we see out there that are going to end up eliminating employees, are going to eliminate bonuses or eliminate training programs. It's kind of disappointing to see that we can't get the big picture out there to them. All right, Ashley, let's close out today's show with the discussion around worker rehire and retention bills that have gained traction recently. Last year we saw the extension of the COVID r19 bill that requires certain industries like hotels, airports, building services, event centers, et cetera, to maintain a rehire list of employees who were laid off for non disciplinary reasons. Separately, another bill, SB627, was passed to provide transfer rights to employees of chain employers with 100 plus establishments nationally, like certain retail stores, quick service, full service restaurants and the like when that establishment would close. So in essence giving this employee the opportunity to go to another establishment under the same brand. Ashley, is this, this a trend generally we might see in other industries or we might see more growth in these rehire and retention bills?

Yeah, Matthew, this one is really interesting because a lot of these bills have really been born out of very specific instances. So for example, a number of years ago you actually had a retention bill that did get signed related to grocery stores. And the reason being is that there had been some mergers. And so, you know, some of the unions that represent grocery workers, I think were concerned about layoffs and so wanted to kind of ensure that workers were being kept even if there was a merger. And then we had the COVID 19 rehire bill specific to hotel workers because of the impact of the COVID 19 pandemic on that industry. And then SB627, it became very clear in the first committee hearing that, you know, even though it only kind of talked about chain employers with 100 more establishments, that really the impetus for that had been allegations of certain companies kind of closing locations if there had been maybe rumors or attempts at unionizing. So it's very interesting in that, you know, the, the response to each of these instances has been a retention rehire bill, but really the impetus for it has been very, very different events. So it'll be interesting to see, you know, whether this trend continues and whether we do see it in other industries. I think, you know, the administration and the veto of SB6 and actually the veto of the original COVID 19 hotel rehire bill has made it pretty clear that, you know, they are not, I think, a fan of this kind of concept, just, just this blanket concept and that if you are going to do something like this, it needs to be pretty narrowly tailored for a very specific reason. So we'll be intriguing to see if we see something like this back again.

Yeah, me too as well because, you know, the more growth that we see in these industry specific things is becoming more complicated because you'll have general business bills and you have these industry specific bills and we're starting to see just a massive growth in this industry specific legislation. Well, Ashley, Chris, I get the sense the two of you will be as busy as ever on behalf of the business community this year. So thank you both for spending some time on the show today as we gear up for the 2024 legislative session.

Thanks, Matthew, for having us.

Thanks, Matthew. I'm sure we'll be back with all the new bills soon.

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