​(August 30, 2013) The California Chamber of Commerce is urging businesses to contact their Senate and Assembly representatives to help stop two “job killer” bills from reaching the Senate and Assembly floors. Today is the last day for the appropriations committees to meet and send bills to the floor.

• AB 10 Alejo (D-Salinas) Automatic Minimum Wage Increase. This “job killer” unfairly imposes an automatic $2 increase in the minimum wage over the next five years, that will continue to increase costs on employers of all sizes, regardless of other economic factors or costs that California employers are struggling with to sustain their business. On Senate Appropriations Committee Suspense File.
• SB 404 ​(Jackson; D-Santa Barbara) Expansion of Discrimination Litigation. This “job killer” makes it virtually impossible for employers to manage their employees and exposes them to a higher risk of litigation by expanding the Fair Employment and Housing Act (FEHA) to include a protected classification for any person who is, perceived to be, or associated with an individual who provides medical or supervisory care to a listed family member. On Assembly Appropriations Committee Suspense File.

AB 10: Automatic Minimum Wage Hike

Automatically indexing the minimum wage to inflation has always been troubling to the business community because it fails to take into consideration other economic factors or cumulative costs to which employers may be subjected. While the CalChamber appreciates the removal in AB 10 of the automatic adjustment in the minimum wage according to the Consumer Price Index (CPI), the proposed incremental increases over the next five-year period are essentially the same as tying the minimum wage to inflation, and in fact may be even worse.

Historically, the Legislature has never imposed a minimum wage increase that has extended more than two years, given the unpredictability of the economy and the changing dynamics of the labor force.

Economy Slowly Improving

Although California’s economy is showing signs of improvement, such improvement is still at the infant stage. California still has one of the highest unemployment rates in the country at 8.6%, with some counties still facing unemployment rates over 20%. An increase in the minimum wage that starts in 2014 and continues through 2018 will have a negative impact on any economic recovery by either limiting available jobs or, worse, creating further job loss.

Other Costs for Employers

AB 10 also forces this proposed five-year increase without concern to other costs California employers may be facing:

• California employers will face an increase next year in the annual assessment they are required to pay in order to fund programs within the Department of Industrial Relations.
• In 2014, California employers will also lose a part of their federal tax credit due to California’s failure to repay money borrowed from the federal government for unemployment insurance benefits. This will increase the total federal tax California employers are required to pay for any employee who earns more than $7,000 per year.
• Additionally, the tax increases approved under Proposition 30 for personal income tax, as well as the sales-and-use tax, will also be in full effect in 2014.

These cumulative costs are just in 2014. In 2015, California employers will also undoubtedly face an increase in costs as a result of the implementation of the Affordable Care Act. While employers are not sure of the exact costs associated with the implementation, they do know there will be a cost. Any further additional costs in 2015 through 2018 are unknown, which is why the minimum wage should not be increased for such an extended period as AB 10 proposes.

SB 404: Familial Status

SB 404 proposes to include “familial status” as a protected classification under the FEHA to prevent discrimination on such basis. The term “familial status” is broadly defined as:

1. any individual who provides “medical or supervisory care” to a child, parent, spouse, domestic partner, or in-law;
2. any employee who is “perceived” as someone who provides medical or supervisory care to a child, parent, spouse, domestic partner, or in-law; or
3. 3. any person who is “associated” with a person who provides medical or supervisory care to a child, parent, spouse, domestic partner, or in-law.

The term “medical” care is undefined and therefore could be liberally interpreted to include such tasks as administering over-the-counter medication once a day or even driving a listed family member to a doctor’s appointment on a quarterly basis. Moreover, “supervisory” care is also ambiguous and would expand this proposed classification to employees who are not actually providing any care to a covered family member, but rather “supervising” the care the family member receives.

Furthermore, SB 404 applies to anyone who is perceived to provide familial care or associated with someone who provides familial care. Such a broad application of a protected classification will essentially encompass almost all employees in the workforce and, therefore, will hamper employers’ ability to manage their business, as any adverse employment action an employer takes against an employee could potentially be challenged as discriminatory on the basis of “familial status.”

Burdens Small Businesses

This burden that SB 404 creates will have an impact on small businesses as well as large ones. The FEHA applies to any employer who has five employees or more. Accordingly, SB 404 will subject these small businesses to potential costly litigation based on the allegation that an employee who suffered an adverse employment action provided familial medical or supervisory care, was perceived as providing such care, or was associated with someone providing such care.

Employees Already Protected

California already protects employees from discrimination on the basis of sex, pregnancy, medical condition, mental disability, or physical disability. Similarly, California provides employees with leave to care for the serious medical condition of family members, which may be compensated through California’s Paid Family Leave Act. Additionally, California requires “kin care” that mandates an employee be allowed to use at least half of any accrued sick leave to care for family members. These various leaves and protections are in addition to those provided by federal law. Given these existing protections, there is simply no basis to include the broad protected classification under California law as proposed by SB 404, other than to increase litigation opportunities.

Action Needed

The CalChamber is urging businesses to contact their state legislators and ask them to vote no on AB 10 and SB 404.