Labor/Employment-Related Job Killer Bills Moving in Legislature

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Several troubling labor and employment-related job killer bills have been moving through the legislative committee process.

The bills passed last week including California Chamber of Commerce-opposed proposals that undermine arbitration, increase the minimum wage, chill employer speech on political matters, place onerous mandates on return-to-work activities, and expand costly litigation.

Committee actions are summarized below.

To Senate Appropriations

Two bills passed from Senate policy committees to the Senate Appropriations Committee.

SB 365 (Wiener; D-San Francisco) Undermines Arbitration. Discriminates against use of arbitration agreements by requiring trial courts to continue trial proceedings during any appeal regarding the denial of a motion to compel, undermining arbitration and divesting courts of their inherent right to stay proceedings.

SB 365 incorrectly assumes that all appeals related to arbitration are meritless. Moreover, the motive behind SB 365 to deter arbitration and single out arbitration from other types of proceedings will result in a finding that it is preempted by the Federal Arbitration Act.

Passed the Senate Judiciary Committee on April 11, 8-2, and will be considered next by the Senate Appropriations Committee:

Ayes: Allen (D-Santa Monica), Ashby (D-Sacramento), Durazo (D-Los Angeles), Laird (D-Santa Cruz), McGuire (D-Healdsburg), Min (D-Irvine), Umberg (D-Santa Ana), Wiener (D-San Francisco).

Noes: Niello (R-Sacramento), Wilk (R-Santa Clarita).

No vote recorded: Stern (D-Canoga Park).

SB 525 (Durazo; D-Los Angeles) Costly Minimum Wage Increase. Imposes significant cost on health care facilities and any employer who works with health care facilities by mandating increase in minimum wage to $25/hour.

If passed, the bill will cost health care facilities billions of dollars, reducing access to critical health care services, increasing health care costs and reducing jobs. The inevitable ripple effect of SB 525 would be a mix of increased cost of care and reduced jobs and services.

Broad language in the bill covers employers of all sizes outside the health care sector, including those that may employ any worker who sets foot on the premises of a health care facility or who performs any “health care service” for a facility. These services are broadly defined to include janitorial staff, food service, laundry and more.

Passed the Senate Labor, Public Employment and Retirement Committee on April 12, 4-1, and will be considered next by Senate Appropriations:

Ayes: Cortese (D-San Jose), Durazo (D-Los Angeles), Laird (D-Santa Cruz), Smallwood-Cuevas (D-Los Angeles).

No: Wilk (R-Santa Clarita).

To Senate Judiciary

Senate Labor passed two bills along to Senate Judiciary for further work by the same 4-1 vote as SB 525:

SB 399 (Wahab; D-Hayward) Bans Employer Speech. Chills employer speech regarding religious and political matters, including unionization. Is likely unconstitutional under the First Amendment and preempted by the National Labor Relations Act.

In opposing SB 399, the CalChamber noted that it will have a chilling effect on any speech related to political matters and that existing state and federal laws already protect employees.

The bill violates the First Amendment by prohibiting employers from providing a forum for discussion, debate and expressing their opinions about matters of public concern. In addition, any prohibition against employers speaking about unionization is preempted by the National Labor Relations Act.

SB 627 (Smallwood-Cuevas; D-Los Angeles) Onerous Return to Work Mandate. Imposes an onerous and stringent process to hire employees based on seniority alone for nearly every industry, including hospitals, retail, restaurants, movie theaters, and franchisees, which will delay hiring and eliminates contracts for at-will employment.

SB 627 will bog down hiring and undermine basic management for businesses. It seeks to micromanage the rehire process for the affected businesses. Several of the provisions will delay rehiring and increase costs on employers.

The CalChamber has pointed out there is no justification for SB 627 and it likely violates the contracts clauses in the U.S. and California constitutions. As defined in the bill, “chain” would include a multitude of businesses and industries, such as retail, restaurants, grocery stores, hotels, hospitals/health care facilities, movie theaters, and more. For all these industries, SB 627 creates a problematic, permanent statutory scheme that eliminates at-will employment and mandates hiring based on seniority alone.

In addition, SB 627 would have a negative impact on franchisees; its definition of “chains” would include locations independently owned by franchisees. California has nearly 76,000 franchise units. Franchise establishments are locally owned small businesses operating under a national brand or identity. The local business owners are in charge of all employment decisions, including hiring, firing, wages and benefits. It is the local franchisee who owns and operates the establishment, not the franchisor. In fact, the national brands have no role whatsoever in determining any day-to-day operations of a franchisee’s employees, employment or hiring practices of a franchisee.

To Assembly Appropriations

The Assembly Labor and Employment Committee sent one job killer to the Assembly Appropriations Committee:

AB 524 (Wicks; D-Oakland) Expansion of Litigation Under FEHA. Exposes employers to costly litigation under the Fair Employment and Housing Act (FEHA) by asserting that any adverse employment action was in relation to the employee’s family caregiver status, which is broadly defined to include any employee who contributes to the care of any person of their choosing, and creates a de facto accommodation requirement that will burden small businesses.

Problems with AB 524 identified by the CalChamber include the broadly defined term “family caregiver status,” which is a subjective determination.

The de facto accommodation requirement established by the bill is in addition to existing leave laws that provide employees time to act as a caregiver with penalties for employers that retaliate against an employee for using the leave such as: school or childcare center being unavailable, California Family Rights Act (broadened this year to include designated nonfamily members), the Healthy Workplace Healthy Family Act and related “kin care” laws.

AB 524 exposes employers, including small businesses, to costly litigation due to its private right of action.

Passed Assembly Labor and Employment on April 12; will be considered next by Assembly Appropriations:

Ayes: Haney (D-San Francisco), Kalra (D-San Jose), Ortega (D-San Leandro), Reyes (D-San Bernardino), Ward (D-San Diego).

Noes: Chen (R-Yorba Linda), Flora (R-Ripon).

Staff Contact: Ashley Hoffman

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Ashley Hoffman joined the CalChamber in August 2020 as a policy advocate specializing in labor and employment and workers’ compensation issues. She was named a senior policy advocate starting January 1, 2024 in recognition of her efforts on behalf of members. Before joining the CalChamber, she was an associate attorney in the Sacramento office of Jackson Lewis P.C., representing employers in civil litigation and administrative matters, as well as advising employers on best practices, including compliance with labor laws. She previously worked as a litigation associate and a summer associate at Gibson, Dunn & Crutcher, LLP, Los Angeles. She also was a law clerk at the U.S. District Court for the Western District of Tennessee in Memphis and a judicial extern for the Ninth Circuit U.S. Court of Appeals in Pasadena. Hoffman holds a B.A. with high honors in political science from the University of California, Santa Barbara, and earned her J.D. from the UCLA School of Law, where she was a Michael T. Masin scholar, an editor at the UCLA Law Review, and staff member for the Women’s Law Journal. See full bio