CalChamber Capitol Report: Assembly Committee Passes Double Holiday Pay Bill

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OpposeThe Assembly Labor and Employment Committee this week approved a California Chamber of Commerce-opposed bill requiring double pay for work on certain days.

During testimony to the committee on AB 67 (Gonzalez; D-San Diego) CalChamber Policy Advocate Jennifer Barrera explained that the bill increases costs, creates a competitive disadvantage, and potentially violates employers’ constitutional rights by forcing employers to recognize certain days as “family holidays” and compensate all employees with double pay for work performed on those days.

Violates Religious Freedom

AB 67 provides that employers shall compensate an employee at no less than twice the employee’s regular rate of pay on a “family holiday,” defined as “December 25 of each year” and “the fourth Thursday of November of each year,” commonly referred to as Christmas and Thanksgiving.

While the recognition of these holidays may seem benign to some persons, employers who have nonChristian-based beliefs or are immigrants to America might not see the recognition the same way. The Legislature should not mandate certain days as more significant based upon religious or cultural beliefs that are not maintained by all.

Further questions about the First Amendment implications of AB 67 were raised during the hearing and directed at Barrera, but she was stopped from answering them by the committee chair, who cited procedural precedent issues.

Unavoidable Increase in Costs

Although some employers may close their place of business on a “family holiday” to accommodate their employees, others do not realistically have that option for their business models.

Competitive Disadvantage

AB 67 would also unilaterally increase the cost of doing business only for those employers who have a physical presence in California, thereby automatically placing them at a competitive disadvantage with online companies and out-of-state businesses that would not be subject to this cost.

Recently, the Legislature tried to even the playing field between online retailers and brick-and-mortar stores in the sales-tax arena. AB 67 would further distort this playing field by increasing the cost of doing business for local employers, as opposed to online retailers, who would not have to comply.

Regular Rate of Pay/PAGA Enforcement

Determining the regular rate of pay of many employees requires a detailed calculation that goes beyond just an employee’s hourly pay. As defined by the Division of Labor Standards Enforcement, the “regular rate of pay includes a number of different kinds of remuneration, for example hourly earnings, salary, piecework earnings, commissions, certain bonuses, and the value of meals and lodging.” While this calculation is performed for overtime purposes, it is subject to good faith errors as to what types of “remuneration” should be included in the calculation.

Due to being included in Section 511.5 of the Labor Code, the provisions of AB 67 are subject to the Private Attorneys General Act (PAGA) (Labor Code Section 2699 et seq.). Therefore, errors in calculating the regular rate of pay or failures to comply with other provisions of this mandate would add another threat of litigation against California employers.

Key Vote

AB 67 passed the Assembly Labor and Employment Committee 5-2.

Ayes: Chu (D-San Jose), Hernández (D-West Covina), Low (D-Campbell), McCarty (D-Sacramento), Thurmond (D-Richmond.

Noes: Harper (R-Huntington Beach), Patterson (R-Fresno).

The bill now heads to the Assembly Appropriations Committee; no hearing date has been set.

Contact: Jennifer Barrera

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Jennifer Barrera
About Jennifer Barrera
Jennifer Barrera, senior policy advocate, works with the executive vice president in developing policy strategy and represents the CalChamber on labor and employment, taxation and legal reform issues. Before joining the CalChamber in September 2010, she worked at a statewide law firm that specializes in labor/employment defense. She also advised small and large businesses on compliance issues, presented seminars on employment-related topics, and authored articles in human resources publications. Barrera earned a B.A. in English from California State University, Bakersfield, and a J.D. with high honors from California Western School of Law.