A California Chamber of Commerce-opposed job killer bill to ban settlement agreements and arbitration agreements for labor and employment claims is awaiting action by the Senate.
The CalChamber has tagged AB 3080 (Gonzalez Fletcher; D-San Diego) as a job killer because it will create more litigation, significant delays in the resolution of disputes, and higher costs for employers and employees.
Besides interfering with and essentially eliminating settlement agreements for labor and employment claims, AB 3080 exposes employers to criminal liability regarding arbitration agreements and essentially prohibits arbitration of labor and employment claims as a condition of employment.
AB 3080 is likely preempted under the Federal Arbitration Act (FAA) and will only delay the resolution of claims. Banning such agreements benefits the trial attorneys, not the employer or employee.
by federal law.
AB 3080 interferes with and will essentially eliminate settlement agreements as it prohibits an employer from requiring an applicant or employee to waive any right, forum, or procedure, or the right to pursue any claim in court under the Fair Employment and Housing Act (FEHA) or the Labor Code as a condition of any “contractual agreement.”
Precluding the informal resolution of civil claims would simply overwhelm California’s judiciary system by forcing all claims to be tried by a jury or judge, creating significant delays that would harm individuals who have suffered a wrong.
Given where AB 3080 provisions have been placed in the Labor Code, any violation will be a misdemeanor. Accordingly, an employer will face not only civil liability for any violation of the various provisions of AB 3080, but can face criminal charges as well.
Pre-Empted by Federal Law
AB 3080 prohibits arbitration agreements made as a condition of employment for any claims arising under the Labor Code or FEHA and/or including class action waivers. Arbitration is a less formal, less costly, and less time-consuming forum to resolve a dispute. The cost savings is not in the compensation paid to the employees; it is in the fees paid to attorneys.
Although studies demonstrate that employees generally win the same percentage of cases in arbitration, if not more, the trial attorneys may not recover as much in fees. The ultimate beneficiaries of an arbitration and class action waiver ban are trial attorneys, not the employers and not the employees.
AB 3080 is also likely preempted, and therefore will create significant litigation without actually providing any benefit to employees. AB 3080 is very similar to AB 2617 (Weber; D-San Diego), passed and signed into law in 2014, which prohibited as “a condition of entering into a contract for the provisions of goods or services” the waiver of a forum for the resolution of claims, i.e. an arbitration clause. On March 14, 2018, the Second District Court of Appeal held in Saheli v. White Memorial Medical Center that AB 2617 was preempted under the FAA. The court stated:
“The above legislative history clearly shows the motivating force behind the enactment of AB 2617 was a belief that arbitration is inherently inferior to the courts for the adjudication of Ralph Act and Bane Act claims. In accordance with this dim view of arbitration, the Legislature placed special restrictions on waivers of judicial forums and procedures in connection with such claims. In practice, such restrictions discourage arbitration by invalidating otherwise valid arbitration agreements. It is precisely this sort of hostility to arbitration that the FAA prohibits.”
Similar to AB 3080, the “special restrictions” at issue in AB 2617 was that arbitration clauses could not be created as a condition of the contract. The court in Saheli deemed such restrictions as preempted under FAA.
The decision in Saheli is consistent with a long history of cases on the issue of FAA preemption. To the extent that AB 3080 will undoubtedly be challenged as preempted under the FAA if passed and potentially invalidated, it will serve only to create additional litigation and not necessarily benefit employees as intended.
The CalChamber is asking members to contact their senators to urge them to oppose AB 3080.
California is home to nearly two million residents who choose to work for themselves. As pillars of the workforce, these independent contractors are part of virtually every industry in the state including child care, healthcare, insurance, financial services, construction, technology and transportation.
A recent California Supreme Court ruling, however, has called into question the ability of these independent contractors to continue to work for themselves in their chosen professions. The practical consideration is whether a business and its associated workers have an employee-to-employer relationship or not. In such a relationship, the state regulates working conditions; independent contractors determine for themselves when and how they perform their jobs.
OpinionBecause of the potential disruption, the business community is asking the Legislature to immediately limit the court’s ruling to the workers directly involved in the Dynamex case and not have the decision apply to other contractors for the next two years.
The Dynamex decision created a new test that assumes workers are employees. This occurred because the company changed its workers’ status from employees to independent contractors without a significant change in circumstances. The workers sued to regain their status as employees, and the court agreed. But what may have been an appropriate outcome for Dynamex employees has much broader implications for many different types of independent contractors and self-employed professionals, and jeopardizes the businesses that rely on their services. This includes on-demand services such as transportation, child care and health care, as well as music instructors, insurance agents and physicians.
Although the justices may have had all the necessary facts to make an appropriate decision in the Dynamex situation, they could not consider all the other workers, businesses and consumers who rely on the independent contractor business model. The appropriate role of the Legislature is to determine the broad-based rule beyond what was decided by the court.
It is important to note that the court based its ruling on a government regulation that was last reviewed before invention of the smart phone. The Industrial Welfare Commission, which was established in 1913 to regulate hours, wages and working conditions, created the rule. But it has not been funded since the Gray Davis administration and the commission could never have imagined an on-demand economy powered by mobile devices. It seems obvious that it is time for the state to fund and reconvene the commission to update this obsolete regulation.
With all that is at risk for workers and our economy, the Legislature should act quickly.
The California State Assembly and Senate return today from their month-long summer recess and will consider the remaining job killer bills over the next several weeks.
The next significant deadline for the job killer bills is August 17, the date by which fiscal committees must send the bills along for consideration by the entire Senate or Assembly.
In addition, seven tax-related job killer bills remain alive because they were not subject to the July 6 deadline for bills to pass policy committees and move to fiscal committees. Although they still are eligible for consideration, they are not set for hearings at this time.
Job Killer Bills
Two Senate job killer bills and one Assembly job killer bill remain active.
The California Chamber of Commerce has identified 28 job killer bills to date.
The following job killers are still moving:
CalChamber is asking businesses to contact their legislators and urge them to oppose these job killers.
Easy-to-edit sample letters are available at www.calchambervotes.com.
More than a dozen wildfires are raging up and down California, forcing evacuations and bringing tragedy and loss. The monstrous Carr fire in Shasta County has taken several lives, destroyed hundreds of residences and burned nearly 99,000 acres — and its currently only 20 percent contained.
During this trying time, the California Chamber of Commerce often receives questions from the employer community about how to help their employees, and employers must remember some key obligations.
Here are a few things you should know about paying employees, leaves of absences, workplace safety and planning ahead for emergencies.
Even in an emergency, employers must be mindful of obligations under state employment laws and consider pay issues for exempt and nonexempt employees related to office closures.
Employers must pay exempt employees a full weekly salary for any week in which any work is performed. If the business is closed for the whole week, however, employers don’t need to pay exempt employees.
In emergencies, special pay rules apply for nonexempt employees.
If your business shuts down for any of the following reasons, you must pay nonexempt employees only for the hours they worked prior to being sent home:
However, if you shut down your business at your discretion (and not for one of the above reasons), reporting time pay may be owed. When a nonexempt employee shows up for work as scheduled and is not put to work or is given less than half of his/her scheduled hours, the employee would be eligible for reporting time pay: pay for one-half of the scheduled shift, but no less than two hours and no more than four hours.
Of course, employers are always free to pay employees or let them use vacation or other personal time. Many employers may choose to provide some paid time during emergency situations. Just remember to be consistent!
EDD Resources for Disaster Victims and Employers
The California Employment Development Department (EDD) provides a variety of disaster-related services to individuals and businesses affected by disasters in California, including assistance filing claims for unemployment insurance (UI) benefits and extensions of time for filing and paying payroll taxes.
Generally, once the Governor has issued an emergency proclamation for a specific disaster area, the one-week waiting period for UI benefits is waived, and individuals can begin receiving partial wage replacement benefits for the first week they are unemployed due to the disaster. The EDD maintains a current list of state declared disasters where the waiting period has been waived.
In addition, as with the wildfires last year, a Presidential Disaster Declaration makes federal Disaster Unemployment Assistance (DUA) benefits available. DUA provides temporary unemployment benefits to people whose jobs or work hours are directly impacted by emergencies. The EDD will provide updates on its website as DUA benefits become available.
Employers directly affected by a disaster may request extensions of time from the EDD to file state payroll reports and/or deposit payroll taxes — some employer extensions have already been granted. The IRS also may provide help during disasters.
Employers and affected workers should stay abreast of recent developments by visiting www.edd.ca.gov.
Leaves of Absence for Emergency Personnel
Some of your employees may serve as volunteers for local fire departments or other emergency response entities. All employers must provide leaves of absence for employees who are required to perform emergency duty. Employers are not required to compensate the employee during this time off.
Leave for Health Issues
Employees may be entitled to time off to deal with health issues that occur as a result of the disaster.
For instance, employees may use their California mandatory paid sick leave for the care or treatment of a health condition for themselves or a family member, as defined by the law.
They also may be eligible for time off for family or medical leave for themselves or to care for family members with any serious health conditions under the federal Family Medical Leave Act (FMLA) or the California Family Rights Act (CFRA). The FMLA and the CFRA cover employers with 50 or more employees and provide a maximum of 12 weeks of unpaid leave in a 12-month period.
Employers may have obligations to reasonably accommodate an employee under the federal Americans with Disabilities Act (ADA) and the state Fair Employment and Housing Act (FEHA). Should an employee suffer a physical or mental injury because of a natural disaster, they may be entitled to protections under these laws.
In some situations, State Disability Insurance (SDI) partial wage replacement benefits may be available for individuals injured by the disaster (non-work related injury). Similarly, Paid Family Leave (PFL) partial wage replacement benefits may be available for workers who take time off to care for a covered family member injured in the disaster. The EDD can provide support services for employers and employees with these determinations.
School or Childcare Leave
Employers with 25 or more employees working at the same location may need to provide unpaid time off to employees whose children’s school or child care closed due to a natural disaster, such as a fire, earthquake or flood. For emergency situations, the time must not exceed 40 hours per year.
Keeping Workers Safe and Cal/OSHA Guidance
Wildfires pose health hazards, Smoke can contain chemicals and fine particles that harm health. And other hazards, such as electrical hazards, unstable structures, flammable gasses, ash, soot and dust are rampant.
As an employer, you have an obligation to create and maintain a safe workplace for your employees. Cal/OSHA advises employers to take special precautions to protect workers from hazards related to fires and smoke. Cal/OSHA provided guidance on how to keep workers safe in heavy smoke conditions and during fire clean-up.
The single, most important thing employers can do is create an Emergency Action Plan (EAP) and communicate that plan to employees. Employers should inform employees that the plan exists and what steps it outlines. All California employers are required to have an EAP designating the actions that must be taken to protect employees from fire and other emergencies. California employers must also have a Fire Prevention Plan (FPP) that details the fire hazards your employees may face and how to handle a fire should the situation arise.
When employees are initially assigned to a job or transferred to a new position, the employer should review parts of the EAP and FPP employees must know so they can protect themselves in the event of an emergency. Employers should retrain employees if they change the EAP or FPP and should periodically conduct emergency training and drills.
When considering emergency situations, employers should plan how they will handle and communicate office closings and determine who will make the final decision on whether or not to close. Also, determine if alternative workplaces are available, whether certain employees can work from home, or whether to shut down all work during the emergency.
CalChamber members can find more information on Emergency Action Plans and Fire Prevention Plans on HRCalifornia. Cal/OSHA offers resources as well. Not a member? See how CalChamber can help you.
Reliable energy infrastructure is a hallmark of a modern world, and affordable power is vital for economic development and social cohesion. Ensuring that electricity is both affordable and reliable are ultimately the responsibility of our state government leaders when they set the ground rules for how electricity is generated and how it is transmitted around the grid.
California’s world-leading greenhouse gas reduction efforts have curbed the state’s carbon footprint, but have also resulted in more expensive electricity and greater challenges to utilities to maintain service reliability, issues of great concern to California businesses. Just as the Legislature has led the way in insisting that more of our electricity come from renewable sources, it must also have a plan to ensure that our electricity grid can deliver power when businesses and residents need it, at the most affordable rates possible.
That’s why business groups are encouraging the Legislature to approve legislation that could reshape the future of the state’s energy infrastructure and lower energy costs for consumers and businesses.
AB 813, authored by Assemblyman Chris Holden, D-Pasadena, sets the stage for the development of a western regional energy market that would allow California and neighboring states to integrate their energy resources and meet rapidly changing supply and demand conditions in an electricity system increasingly reliant on renewables.
Regional energy markets function in a straightforward manner. In a regional market, when the sun is shining in California and producing an oversupply of solar energy within the state, that energy can be exported to other states. Likewise, when the wind is blowing in abundance in the Northwest and creating a surplus of power there, that energy can be imported cheaply to meet demand in California when our own state’s renewable energy resources are unable to meet it.
In the absence of a Western regional market, large swings in electricity oversupply and undersupply conditions could increase, threatening the reliable delivery of power. Both scenarios are occurring with more frequency each passing year. When California renewable energy generators are overproducing, solar and wind plants are forced to curtail their output or sell their energy at a loss — undermining the value of the investments California businesses and homeowners have made. On the other hand, when renewable generation is unable to meet demand, the reliability of the state’s grid is threatened, and California is typically forced to rely on fossil fuel generators that are more expensive, undercut our environmental goals and increase the cost of electricity.
The economic benefits of such a system are clear. A regional energy market has the potential to reduce energy costs in all participating states by integrating diverse generating resources into a single coordinated grid. A recent economic study estimates that a regional system will reduce energy costs for California households and businesses by up to $1.5 billion annually by 2030, along with boosting the state’s economy and income.
AB 813 will incentivize other states in the region who are not as far along in developing renewable energy sources to speed things up. The bill will create a ready market for renewables where one state provides clean power to others during the times when they must now rely on less clean sources of energy like coal. The plan is a win-win because it helps us meet our own environmental goals while also lowering energy prices for consumers who will benefit from access to surplus electricity generated by renewable sources from states that may otherwise dump that power.
A Western grid is especially important for cities like San Diego, which is aiming to boost its use of renewable energy to meet citywide electricity demand over the next two decades. An integrated regional grid could help ensure the city has access to the renewable resources it needs to meet its energy demand in a secure, reliable fashion.
The promise of energy cost savings and reliability is why the California Chamber of Commerce and many other business groups join Gov. Jerry Brown in supporting a regional energy market. We need a system that will help California meet its climate change goals and mitigate future cost increases.
Allan Zaremberg is president and CEO of the California Chamber of Commerce.