Critical Employment Bill Awaiting Action by Governor

(September 18) The Legislature has wrapped up for the year, and the onus is now on Governor Gavin Newsom to decide which bills to sign into law.

In this episode of The Workplace, CalChamber Executive Vice President and General Counsel Erika Frank, CalChamber Policy Advocate Robert Moutrie, and longtime Capitol lobbyist Chris Micheli discuss the important bills affecting employers that await action by the Governor and some of the related last-minute political scenarios.

Job Killer Stopped

The first bill they discuss is AB 1066 (Gonzalez; D-San Diego), which was labeled a job killer by the CalChamber. The bill would have made employees who are on strike eligible to receive unemployment insurance (UI) benefits if the strike lasts more than four weeks.

“Because of the way UI is funded across the state, if one employer’s payments get too high, because they’ve drained too much out of the fund, the cost is spread to every other employer in the fund,” Moutrie explains. “We saw that as certain to happen because of the amount of people that AB 1066 was going to add to the UI rolls. So at that point, it becomes a UI increase to every employer across the state, whether or not you have labor disputes, whether or not you have any of those issues.”

Burdening the UI fund is particularly problematic given that California had problems maintaining the solvency of the UI fund during the last recession, Moutrie says. In fact, some current legislators were in office when the state borrowed money to cover the fund, Micheli says, which perhaps is one reason AB 1066 did not pass out of the Legislature.

The fight is not over, however. The bill can return next year, Micheli points out, and was just two votes short of passing.

Moutrie agrees.

“Because they got to 19 [total votes] in the end, I think that proponents are not going to take 19 as a sign of certain defeat…They think, ‘a little more work, give another go.’ So, I think we will see it next time,” Moutrie replies.

Bills Sent to Governor

Two bills the Legislature sent to the Governor that will have a huge impact on employers are AB 5 (Gonzales; D-San Diego) and job killer AB 51 (Gonzalez; D-San Diego).

AB 5

AB 5 codifies into the Labor Code the court decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles, which rejected the long-standing Borello test (where employer control over the worker was a key) and adopted the “ABC” test for determining whether workers should be classified as either employees or independent contractors.

The Governor signed AB 5 on September 18, and issued a signing statement. The bill contains more than 31 exemptions for a number of industries, but exemptions are still not broad enough. AB 5’s author has committed to work on a clean-up bill over the fall and add more exemptions, Micheli explains.

Read CalChamber statement on AB 5

AB 51

The last bill discussed in the podcast is AB 51. The bill bans arbitration agreements made as a condition of employment, Frank explains.

AB 51 is similar to legislation vetoed last year by Governor Edmund G. Brown Jr. for plainly violating federal law, Micheli says. If passed, the bill would create more cost, litigation and uncertainty for employers, who would have to wait until a court definitively resolves the conflict with federal statute.

In fact, if Governor Newsom signs AB 51, Moutrie says, the courts will have to decide whether AB 51 is federally pre-empted. During this ambiguous period, Moutrie advises that employers should consult their attorney to develop a strategy to ensure compliance.

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