Double-Pay Holiday Bill Set for Committee Hearing

OpposeA California Chamber of Commerce-opposed bill requiring double pay for work on certain days is scheduled to be considered by the Assembly Labor and Employment Committee on March 18.

The CalChamber opposes AB 67 (Gonzalez; D-Sherman Heights) because it 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.

AB 67 significantly increases costs and interferes with employers’ religious beliefs by forcing all employers to recognize Christmas and Thanksgiving as family holidays by paying employees double compensation for hours worked on those days, which will place brick-and-mortar stores at a competitive disadvantage to online retailers.

Violates Constitutional Right to 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.

Forcing a nonChristian employer to recognize Christmas as a unique workday by paying all employees double their regular rate of pay is likely a violation of that employer’s constitutional free exercise of religion. As Justice Sandra Day O’Connor was quoted in the Sands v. Morongo Unified School District case, 53 Cal.3d 863, 879 (1991): “‘If government is to be neutral in matters of religion, rather than showing either favoritism or disapproval…, government cannot endorse the religious practices and beliefs of some citizens without sending a clear message to nonadherents that they are outsiders or less than full members of the political community.’”

Again quoting Justice O’Connor on the subject in the case of Catholic Charities of Sacramento, Inc. v. Superior Ct., 32 Cal.4th 527, 547-548 (2004): “The government may not regulate beliefs as such by compelling or punishing their affirmation. Nor may it target conduct for regulation only because it is undertaken for religious reasons.”

AB 67 is not neutral on its face, but rather, affirmatively recognizes Christmas as a “family holiday” on which employers must provide double compensation to all employees. This is a government endorsement of a Christian holiday, to the detriment of all other nonChristian religious denominations and beliefs.

Similarly, forcing an employer, especially those who are immigrants and do not embrace American culture, to recognize Thanksgiving as a special “family holiday” fails to embrace other cultures and beliefs. The Legislature should not mandate certain days as more significant based upon religious or cultural beliefs that are not maintained by all.

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.

For example, hospitals, medical facilities and lodging accommodations need to stay open even on “family holidays” for public benefit. Despite this, AB 67 would increase these employers’ costs of doing business by forcing them to provide all employees with double pay. This mandate places such employers in an unfair predicament as they do not have the option to avoid those costs by closing.

Moreover, such employers cannot simply pass on the costs through higher prices for consumers. For example, a Medicaid provider cannot bill the state a “family holiday” rate for treating a patient on Thanksgiving or Christmas, thereby placing that provider at a significant disadvantage.

Competitive Disadvantage for Brick-and-Mortar Stores

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.

Includes Exempt, Salaried Employees

AB 67 is not explicitly limited to hourly paid employees, and therefore includes exempt, salaried employees.

Under AB 67, no matter how long the exempt employee actually worked on a “family holiday,” the exempt employee would be entitled to double compensation for the entire day, thereby significantly increasing the cost of all employers. This mandate would create a windfall for exempt employees who may work only an hour on a “family holiday.”

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.

Action Needed

AB 67 will be heard in Assembly Labor and Employment on March 18. Contact committee members and your Assembly representatives and urge them to oppose AB 67.

Follow @CalChamber on Twitter to see how the Assembly Labor and Employment Committee votes.

Staff Contact: Jennifer Barrera