The California Chamber of Commerce has added to the job killer list a bill that recently was amended to impose on both public and investor-owned utilities an extreme, costly mandate to procure 5,000 megawatts (MW) of energy from renewable sources. Adding AB 893 (E. Garcia; D-Coachella) brings the total number of job killer bills identified this year to 29. Currently, in addition to AB 893, only one other job killer remains active, AB 3080 (Gonzalez Fletcher; D-San Diego), which passed the Senate last week and is awaiting action by the Governor.
CalChamber has identified AB 893 as a job killer because it would discourage energy-dependent businesses from growing in California and would add new overhead costs for all California employers. AB 893 also creates incentives for utilities to purchase out-of-state power to satisfy the mandate, threatening even more California jobs.
Unrealistic Procurement Numbers
California’s investor-owned utilities (IOU) and publicly owned utilities (POU) already use a diverse mix of renewable resources and are on track to meet and exceed California’s aggressive Renewable Portfolio Standard (RPS) goals.
According to CalChamber’s analysis, AB 893’s procurement mandate significantly increases costs by removing the utilities’ ability to meet RPS goals in a cost-effective manner. AB 893 will inevitably increase energy costs for California ratepayers and requires all of this procurement on an expedited timeline—some utilities must submit a plan a mere nine or 10 months from now, giving the Public Utilities Commission a deadline of just 30 days to evaluate those plans.
Significant Cost Increases
Per kilowatt hour electricity rates in California are already among the highest in the nation. As of April 2017, some ratepayers pay a premium of 68% for electricity and 73% for natural gas over the national average, which has an impact on businesses’ ability to be competitive if they continue to be located in California.
The RPS standard uses the “least-cost, best-fit” competitive bidding process to meet California’s ambitious goals in a cost-effective manner. According to CalChamber’s letter, AB 893 thwarts that process by forcing utilities to purchase more expensive power and pass along increased rates to California ratepayers.
AB 893 is on the Senate Floor. The Legislature has until August 31 to send bills to the Governor’s desk.
For up-to-date information on the job killer list, follow @CAJobKillers on Twitter.
The California Chamber of Commerce (CalChamber) is the largest broad-based business advocate to government in California. Membership represents one-quarter of the private sector jobs in California and includes firms of all sizes and companies from every industry within the state. Leveraging our front-line knowledge of laws and regulations, we provide products and services to help businesses comply with both federal and state law. CalChamber, a not-for-profit organization with roots dating to 1890, promotes international trade and investment in order to stimulate California’s economy and create jobs. Please visit our website at www.calchamber.com
MWS Wire Industries was founded in 1968 in Canoga Park, California, under the name Magnet Wire Supply Company as an independent distributor of film insulated copper wire (magnet wire), engineered alloy and plated wire for manufacturers of aerospace components, computer memory devices, sensors, specialized motors, transformers, solenoids and related electromagnetic components. In 1973 MWS purchased a building in Chatsworth where it began manufacturing custom engineered wires to complement the distribution operation and in 1979 the company name was changed to MWS Wire Industries. As the business thrived a new facility was built in Westlake Village where MWS has operated the past 37 years. In that time the product line expanded with the revival of a vintage insulation formulation for electric guitar pickup wire, micro-diameter insulated wire used in ‘smart catheters’ for minimally invasive surgical procedures and a variety of engineered products used in industrial, automotive and aeronautic devices. In 2014 MWS was acquired by Elektrisola, Inc., the world’s leading manufacturer of fine gauge copper magnet wire. Last year the company purchased a 5.7 acre lot in the McInnes Ranch Business Park in Oxnard and has developed plans for a 60,000 square foot manufacturing and warehouse building projected to open in 2019. With 49 employees having an average tenure of 21 years, MWS Wire Industries looks forward to many more years of growth and success as a member of the business community in Oxnard.
Additional information about MWS Wire Industries is available at www.mwswire.com
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.
A message from our CEO, Nancy Lindholm:
Things are looking pretty nice at the Oxnard Chamber office. After 13 years in our location on Esplanade Drive in the Topa Financial Plaza, we've updated our look with new paint and carpet. While it's been a bit hectic going through the process, the end result will be a welcoming place for members and guests.
Considering we are tucked up on the third floor of a low-rise building in the center, we get an amazing number of visitors every month. Between our committee meetings, the Board of Directors, SCORE counselors, members utilizing our conference rooms, and people inquiring about various services, we log close to 150 visits per month.
We are happy to greet all those visitors with new carpet and fresh paint!
We will also have a new face greeting our visitors. Michael Lee is the new Operations Manager for the Oxnard Chamber. Michael come to us with an extensive background database management, special events management, and excellent customer service skills. Michael is a native of North Dakota and is looking forward to his first California "winter." Please help us welcome Michael when you are in the Chamber office or at an event.
Tom Carrese joined the Chamber team on June 1 and has jumped in with both feet. Tom is our new Business Development Manager. The number of new members we had last month more than doubled from our average prior to his arrival. Not only does Tom recruit new members, but he works with all members on helping them increase their exposure in the community.
I would like to very much thank our veteran team members, Sharen Strong and Janet Pozos, for taking on extra work while we filled our staff openings. Not only did they cover a vacant position, they got to do most of the packing and unpacking for the paint and carpet project! They are the best!!
If you're in the neighborhood, please stop by to see our new look and meet our new team members!
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.