Episode 226 - Current, Pending Legislations Affecting California Employers

Welcome to the Workplace, a podcast by Cal Chamber. I'm Matthew Roberts, Associate general Counsel with the California Chamber of Commerce. Hello listeners. As usual, the California state legislature has been busy proposing, amending and tabling bills the first half of this year. And as usual, the slate of pending legislation includes some very significant employment related bills. Recently we've gotten a small measure of clarity on some pending legislation that was either advanced from or held on the suspense file in the appropriate fiscal committees between the two houses. Unfortunately, several cost drivers under Cal Chambers affordability agenda advance and continue on in the process. So to discuss these and other employment bills that are still pending, we welcome back Ashley Hoffman, Kal Chambers, Senior policy advocate for labor and employment. Thanks for being here, Ashley.

Thanks for having me, Matt.

All right, so before we get into the bills, Cow Chamber of course has been known around the state for more than two decades as the producer of the job killer list. And as you may have noticed in the intro this year we've kind of changed things up with something called our affordability agenda and labeling bills as either cost cutters or cost drivers. So Ashley, can you kind of touch on how this new system works for us as we label bills?

Sure, sure, Matt. As you mentioned, I think the word of the year is definitely affordability and we really wanted to convey that, you know, especially lobbying labor and employment bills. You know, I had some folks ask me about the job killer title and our explanation has always been it's really intended not only where there is job loss, but also just what is going to deter, you know, business growth and new business in California. So really emphasizing that year. But I think functionally, you know, a cost driver is something that we'll see as increasing costs that we would have tagged previously as a job killer. And then a cost cutter is something that see as reducing costs on the business community and the state and something where we would have previously labeled it as a job creator.

Excellent. Well, I look forward to seeing how this new approach impacts our pending legislation that of course you're going to be working through this year. So speaking of pending legislation, let's just get into it and let's start with something that involves workplace surveillance, a bill titled AB 1331. Currently, employers of course can generally surveil their non private workplace areas for safety and security except for, you know, such areas as like restrooms or locker rooms or other rooms designed for changing clothes. Now for us, how does AB 1331 propose to change the use of workplace surveillance tools?

So Matthew, I think this is definitely the assembly bill that I have received the most concern about because it touches every single employer in California, public or private. So what it does is. Well, it does a couple of things, but primarily it says that workplace surveillance tools cannot be used in areas that, you know, I think we as employers do not see as being on the same privacy level as a bathroom. So areas like designated smoking areas, break rooms, cafeterias, lounges, and those are areas where not only may you have employees walking around, but you could also have members of the public or patrons or patients or students, you know, depending on the employer at issue. It also allows employees to disable or leave behind workplace surveillance tools when they enter one of those areas or when they're even just on their lunch break. So I know we have members who have concerns where for security protocol reasons, they require employee badges to be on at all times or they have geolocation devices on a company owned vehicle. Especially when you have workers out in the field. That's not something that we necessarily want an employee to just be able to disable if the entire purpose behind some of those tools is anti theft. You know, it undermines that purpose if people can just turn them off and on. And importantly. Right. The bill also applies to independent contractors. So it's not even just applying to your employees that, you know, it is applying to contractors that you may not have, you know, little to. To no familiarity with.

Okay, so we've kind of mentioned a couple tools here where I've talked about, you know, video cameras in non private areas and you've talked about badges for employees. But really what are we talking about in terms of the breadth of what this bill defines as a workplace surveillance tool?

I have yet to think of a tool that the bill wouldn't apply to. Just to convey, I think, how broad it is. You know, really, when we're talking about it to offices, we're explaining this is everything from just a basic security camera to cybersecurity software, to badging to geolocation devices, to even like an email server or messaging system system that's collecting communications between workers or to or from workers. So the breadth of the definition, again, I'm struggling to think of something that wouldn't qualify.

Okay, so we're looking at a broad set of tools here that will impact, as you said, all employers up and down the state. Now, as I've noted before, businesses are allowed to surveil their non private work areas. Would there be any circumstances where they would still be allowed to do this under the bill?

There are recent amendments with those circumstances. But to Be frank, we do not see those as moving the needle at all. So, for example, you could surveil an employee break room, for example, if you had video, but there cannot be audio, there must be signage noticing. Right. That surveillance is there. But then really significantly, you couldn't actually monitor the feet. The only circumstances under which you could even review that video is if law enforcement or a court order demanded it or if an employee who's actually on the video requests for review. So as you can imagine, if you have a scenario where you have a suspicious person on the premises or there's, you know, God forbid, allegations of an active shooter or something, technically under this law, you could not go look at a camera right. In a break room. And, you know, nefarious actors would know that there are areas in California that are legally not allowed to be monitored. And again, we just simply do not see these areas as being on the same level as like a bathroom, for example.

Okay. And I think you've touched on quite a bit of this as you've described what's in this bill. But really, specifically, why is cal chamber labeled AB 1331 as a cost driver and something that we oppose?

Yeah, I think, you know, for us, just the breadth of the bill and then really the implementability is concerning. Just a lot of safety concerns, too. You know, again, we've talked to a lot of legislators where they're just concerned. You know, footage can really come in handy when you are trying to find, again, suspicious folks who are on premises or there's an incident and you want to go back and look at it. Or again, like when we talk about things like theft, you know, a lot of times theft happens internally. And if you have employees who know that these certain areas just can't be monitored, it just, I think, very concerning for us. And also too, you know, when the bill says, you know, there's limitations on, quote, off duty areas, the list is not exhaustive. It simply just gives some examples. And so there's also a lot of ambiguity and a lot of potential litigation exposure for any misstep.

Yeah. And I also found this bill kind of interesting in light of the fact we just implemented workplace violence prevention standards up and down the state for general industry. And now we're looking to try and make that already difficult to meet standard even harder with this particular bill. Okay, Ashley, so let's stick with technology. And another one of the major tech bills we are watching is Senate Bill 7, SB7, that proposes to regulate the use of what is known as automated decision systems for employment Purposes. So, Ashley, can you kind of run through generally what SB7 is trying to do here with regards to automated decision systems?

There are a number of bills on automated decision Systems this year. SB7 is focused on employment. I'll start by saying I think we agree with the crux of the argument, which is that there is some concern about, you know, a machine just automatically deciding, for example, that someone should be terminated without any human involvement. Completely understand that perspective. Our concern is really the breadth of the bill. So, for example, the notice requirements would be triggered by any use of the ads, even when you are indirectly impacted. So we have members who use scheduling software. Right. If you, Matthew, are scheduled for a shift, does that indirectly impact me who may work the same shift as you and things like that? Also its applicability to health and safety? Right. We have a lot of members who use ADS for purposes of health and safety, triggering a notification if someone's not wearing the right ppe, if someone's driving a forklift too quickly. So we want to maybe be able to show that we can still use, but also that we can use that for disciplinary purposes where it is appropriate, because the bill says that we cannot primarily rely on the use of ads for things like discipline. And so that is a really critical safety concern for us. There's also just a general right to appeal decisions when an ADS is used at all in the decision. I see that as really undercutting the idea of at will employment, which is a cornerstone of California law, if we are now opening up potentially every little employment decision to a appeal. Right. So the, again, I think, you know, the intent of the bill and wanting to make employees, you know, where to some degree of the use of these systems, I think is totally laudable. It's just the bill goes far beyond that.

Yeah. And I think we've seen a lot of this, of course, with the regulatory agencies like the Civil Rights Council, where different terms are being thrown around to try and mean somewhat of the same thing. Artificial intelligence, automated decision systems. So with this bill, SB7 and maybe some others, what is the kind of technology they're looking to regulate here?

Yeah, so I'll say what. I guess I think it applies to versus what they're looking at. You know, I think again, the definition is very broad. So it's anything that's even just used to assist decision making. So again, some of the technology, you know, that we've brought up is the scheduling. It's task allocation, where even if task allocation is simply done based on, you know, geography of where an employee may be. Or for national companies, sometimes if there's a question coming through customer service, they're routing it to the state where the consumer is, or based on who has knowledge of what law, or something simple things like that. Again, the health and safety examples, all of that is going to assist in some sort of decision making or potentially replace it. And so it is quite broad. Again, the examples that are brought up, I don't even know if it's really, this bill is so much about the types of technology as it is about whether or not there is human involvement in how much. I really think that is more of the concern versus specific types of technology, if that makes sense.

Yeah. And I think actually one of the more interesting parts of this bill, especially with recent amendments, is when you're talking about employment decisions, a lot of us are looking at the use of automated decision systems really primarily to help with hiring practices. Right. So things like resume screening and interview software. And along those lines, how does this bill apply to hiring decisions versus others?

Yes. So that was, you know, a piece of our letter was actually really talking about how hiring, we think should be used differently. Because if you say that you cannot primarily rely on the use of ads in hiring, you are eliminating resume screening software completely. Right. And the reality is, especially if you're a smaller company, you do not have the manpower potentially to review all of the resumes you're receiving. Staffing agencies, you know, this is a big deal for them, as you can imagine. They sometimes get hundreds of applicants for one job, but they may only have a staff of five. And so that. And then also the appeals process and the notice provision. Right. If every applicant can appeal not getting a job, I mean, that's just quite frankly, untenable to deal with. Also the notices, how do you really give someone a pre or post use notice for purposes of application? So Senate Judiciary, you know, was sympathetic to those concerns and I think the author's office was as well. And so hiring did largely come out of the bill.

Okay, so we did get that. But of course this is still a cost driver for us. So based on everything that you've said here, what is it that we're looking for to change or, you know, be modified in this bill for it to no longer be a cost driver?

I think our priorities are really, again, the breadth of the bill. Right. The assisting decision making, the triggering of the notices, when it even simply indirectly impacts someone. Also, you know, the not being able to primarily rely on these tools, especially when we're talking about workers who may be working remotely or in a construction site or warehouse where there's not human observation all the time and we need to know if incidents have occurred. And then also the appeals process. I do know some folks as well have some concerns about like for example, the complete ban on like predictive behavior, you know, analysis or some of the bans on the facial recognition just because, you know, financial institutions, for example, sometimes can use predictive behavior analysis for detecting fraud. And that, you know, that applies to employees too. So again, I think there's, you know, some agreement on some of the intents, but this bill has quite a few components.

Alrighty. So we've got a third cost driver to talk about here, but this time not in the technology field. Instead we have a revisit of what is known as a return to work mandate that we kind of first saw during the COVID 19 pandemic. So within this bill this year, AB858, we see an expansion of that return to work mandate. So Ashley, what does this bill include for us?

We are going back to COVID 19 times, Matthew.

We can't get away from it, Ashley. I know we cannot get away from it.

So yes, as folks will remember, you originally had a bill. Well, had a bill that was actually vetoed, AB3216 in 2020 that would have created a statewide return to work recall mandate for the hospitality industry that would have applied to all states of emergency. Following spring that was narrowed to a COVID 19 specific requirements that was time limited. There was one expansion, but AB 858 now unfortunately not only wants to extend that COVID 19 mandate, then also really return back to the original proposal which was that this would apply to every state of emergency. That bill was vetoed in part due to that language which would create a patchwork application throughout the state. As oftentimes you have states of emergency that only apply to certain counties and that will remain in place for years because states of emergency are in place until they are officially revoked. And then also kind of on top of all of that, you have really two competing presumptions in the bill. If there's a non disciplinary layoff, it would both be presumed that it was due to Covid or any state of emergency that's applicable and it would be on the employer to prove otherwise. So I know the hospitality industry has really felt that these mandates delay hiring and also forcing them to call back employees in order of seniority versus in order of maybe, you know, best suited for the job has been a big concern for Them as well.

Now, this return to work mandate doesn't apply statewide in terms of all industries. Right. There's a specific list in terms of who this first in terms of who the COVID 19 mandate does actually apply to and then who this expansion to all states of emergency would apply to. Right?

Correct. So it is airports, it is hospitality, it's hotels, it's building services, event centers and things of that nature.

All right. So of course, I think it goes without saying, and you've kind of mentioned this, but why did this one land on our cost driver list Again?

You know, we've seen from the industry just how burdensome and tedious this entire procedure has been. And you know, the industry says it well, if you're looking for a job in the hospitality industry, it's hard not to find one. It is of course natural that they are going to hire back workers who are maybe laid off. But when you place such rigid restrictions on who needs to be hired back, in what order and how long you need to wait for those responses, all it really does is slow down hiring unnecessarily in an industry that is, you know, just as volatile as any other and probably honestly even more so than most.

Okay, well, the last cost driver we will touch on is one that's titled SB310, which relates to the recovery of wage and hour penalties. Now, of course, Ashley and anybody who had been listening to us for the last year, this is an issue we spent considerable time on in successfully reforming the private Attorneys General act last year. So Ashley, how does SB310 potentially impact that hard fought reform we got last year?

Yes, this one is, I think, particularly frustrating to the business community. As you mentioned, we succeeded last year after many years in reforming paga, and there are many penalty provisions in the Labor Code that are recoverable through paga. That is why PAGA was created is because originally they could only be recovered through the agency and PAGA served as that provision, private right of action mechanism. This pulls out one of the most common, I'd say, provisions, labor code section 210, which is a big derivative claim that applies to almost anything that you see in a garden variety lawsuit and creates an alternate avenue through its own private right of action to collect those penalties. So from our perspective, this undermines the reform because it basically pulls out that penalty provision from a lot of the guardrails we put in place, like the increased and more robust right to cure the penalty caps for good actors. The processes that we created through the LWGA and the courts and it just feels like it is an effort by attorneys to get around some of those reforms and just, you know, be able to basically add it as a line item in their settlement demand.

All right, well, we're going to keep in close contact on that one, Ashley, and hopefully we see some successful resolution from, for the business community there. So the last two bills we will close with are not on our affordability agenda, but as you and I have discussed offline, have kind of wide reaching implications for employers. So first we'll touch on SB642, which amends our pay scale and Equal Pay act laws. So generally, what does this bill propose?

Yeah, so, you know, we've worked with the author's office on this bill. I think one positive piece of this bill is that it does clarify that the pay stage scale should be what employers expect to pay upon hire, which I know is a question that you all were still receiving. And it, you know, it really solidifies, it must be a good faith estimate. You can't have some $400,000 right range if that's not a good faith belief in the range that the job would have. And then on the Equal Pay act, you know, it does mirror some of the federal Equal Pay act provisions. So, for example, when a cause of action can accrue and what kinds of payments can be considered to be wages for purposes of this claim only, really our outstanding concern is that it expands the damages recovery period up to back to 10 years for a violation. And of course, just as we generally have concerns about long statutes of limitations, we have concerns really about employers ability to litigate back that far to demonstrate even if right now maybe someone is not being paid for substantially similar work, that doesn't mean that five years ago their pay wasn't justified. And so it always, you know, makes a difficulty, I think, when you risk evidence and witnesses no longer, you know, being available. And so we have a big concern with that look back period.

Yeah. And I think that's a good, you know, segue into what we like to talk about both with the PAGA issues and, you know, with any kind of wage and hour stuff, is with the Equal Pay act and with their desire to expand it. As much as you're talking about here, your audits of your own internal pay practices, just ongoing and perspective and even looking back at what you had are going to be really important for these purposes, are going to be really important for PAGA purposes at the end of the day. So I think that's really important. But we are looking forward to if this thing goes through the upon hire language, Ashley, I'll tell you, because the amount of questions we got when we were telling employers you have to be able to provide a pay scale to applicants who ask for it, or if you have 15 or more employees, put it on the job posting. The question was, well, is it just what we will pay this person forever while they're in the position or what is it that we're really supposed to do? And that's where I think you start to see a lot of those wide ranges. Right. Ashley, was 50 to 400,000 range. That isn't great. So upon hire now gives us some good parameters to look at. Okay. Upon hire, just stepping into this role, I think would be really helpful language to clarify what our obligations are there. All right, Ashley, let's conclude then with One more bill, SB294, this one adds a new notice requirement. And as we all know in the employment law field, it can be a full time job just keeping up with notice requirements under the law. So what does SB 294 propose to add to our growing list of required notices?

Always new notices. Yes. And you know, I really think the intent for this bill came from a lot of the concerns about the increased immigration enforcement and potential raids. Right. That the new administration was talking about. And so this has undergone significant amendments. Really appreciate the author's office here working with us. So we now have no position on the bill. They did address quite a few of our concerns. But it requires a labor commissioner to develop a know your rights notice that has information on several different kinds of worker rights. So worker misclassification, heat illness prevention, workers comp, sick leave, and a couple of others. So there will be a template. The employer is not required to use it, but it is required to be developed. Then there is also a provision related to the emergency contact. Originally the bill was talking about, you know, if an employee was arrested or detained, you know, notifying the emergency contact and providing final wages. There were some kind of like sticky implementation issues there. And so now it simply provides the employees the ability to direct employers to contact their emergency contacts on file if there is a situation where an employee is arrested, detained at the workplace. Again, I think this was primarily aimed at some concerns about immigration enforcement and raids that could happen. So, you know, in the list of topics, overall rights was cut down pretty significantly, especially because there was a lot of duplicativeness with some of the items were already required to provide notice for. So we are continuing to work on just a couple of implementation issues. But that's, you know, really the intent behind the bill. And, of course, you know, this is now the time really, where the agencies start to, you know, look at the bills that are left and engage. And so I wouldn't be so surprised if we also maybe saw some input from the agency on how this will work.

Alrighty. Well, Ashley, this was obviously quite a list that we went through today, and it was a real treat having you on the show to walk us through these legislative proposals. And, you know, we look forward to future updates and changes as they may become available. So thank you again for joining us.

Thank you.

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