(August 28, 2020) Three California Chamber of Commerce job killer bills that will significantly increase labor costs and create more liability for employers are expected to be voted on in the coming days in the Senate and Assembly as the legislative session comes to a close on Monday.

California’s businesses are enduring historic economic hardship and challenges, so it is more critical than ever that lawmakers avoid saddling them with new and unworkable mandates that will slow the economy and further cripple the state’s job creators.

The CalChamber is encouraging members to urge legislators to oppose the following job killer bills:

AB 3216

AB 3216 (Kalra; D-San Jose) imposes an onerous and stringent process for specific employers to return employees to the workforce, which will delay rehiring and subject employers to litigation for any alleged mistakes.

The bill establishes a new “right to recall” requirement that applies to certain hotels, event centers, airport hospitality operations, or the provision of building services to office, retail, or other commercial buildings. These rights also extend where an employer goes out of business and there is a change in control or ownership.

Among other things, AB 3216 requires covered employers not only to offer to rehire employee who held the same position, but also to offer the position to any employee who “is or can be qualified for the position.” This is vague and unworkable and would appear to require the employer to offer almost any position to employees by order of seniority as virtually any employee “is or can be qualified” for a given position with appropriate training. This will only serve to further delay the reopening process to the detriment of both the business and the workers.

Lastly, since AB 3216 establishes a new section of the Labor Code, any violation (even a technical or minor one) would subject a business to liability under the Labor Code Private Attorneys General Act (PAGA).

SB 1383

SB 1383 (Jackson; D-Santa Barbara) significantly burdens small employers by requiring small employers with only five employees to provide eligible employees with 12 weeks of mandatory family leave, which can be taken in increments of 1–2 hours, and threatens these small employers with costly litigation if they make any mistake in implementing this leave.

The bill also is problematic because the leave it mandates is enforced through a private right of action that includes compensatory damages, injunctive relief, declaratory relief, punitive damages, and attorney’s fees. Any employee who believes an employer did not properly administer the leave, interfered with the leave, or denied the leave, can face litigation.

Lastly, even though the leave required in SB 1383 is not “paid” by the employer, that does not mean the employer will not endure added costs. The leave is “protected,” meaning an employer must return the employee to the same position the employee had before going out on leave. This means holding a position open for three months or more. This 12-week leave of absence on small employers cannot be viewed in isolation, but must be considered with regard to all of the other California-specific leaves employers must juggle, such as Pregnancy Disability Leave (up to four months); workers’ compensation injury (amount of leave based upon doctor’s recommendation); and California Paid Sick Leave (minimum of 3 days), among many others.

SB 1399

SB 1399 (Durazo; D-Los Angeles) significantly increases the burden on non-unionized employers in the garment manufacturing industry in California by eliminating piece rate as a method of payment even though it can benefit the employee, creating joint and several liability for contractors for any wage violations or the employer, and shifting the evidentiary standards in a Labor Commissioner hearing to limit the ability for an employer to defend against an alleged wage violation. These additional requirements will encourage companies to contract with manufacturers outside of California, thereby limiting the demand and workforce of garment manufacturers in California.

Specifically, SB 1399 imposes joint and several liability on any company that contracts with another person for the performance of garment manufacturing or which contracts with a “brand guarantor” as defined, for the minimum wages, overtime, break premiums, liquidated damages, penalties, attorney’s fees, and workers’ compensation coverage. Basically, any person or entity that contracts in the apparel industry could be on the hook and liable for the wage and hour violations, penalties, attorney’s fees, etc. even though that person or entity exercised no control over the workers.

The bill also proposes to eliminate piece rate compensation for any employee engaged in the performance of garment manufacturing. Eliminating this form of payment is unnecessary given that California law already ensures that all time is compensated at no less than minimum wage. Even when a worker is not performing “productive work” for purposes of earning piece rate compensation, the employee is still entitled to no less than minimum wage. Piece rate compensation can be beneficial for employees, as it provides an opportunity to earn a higher income.

This section of the bill provides a collective bargaining exemption, meaning it does not apply to unionized workers. Employees who do not choose to be unionized should not be punished by eliminating the opportunity to earn income through a piece rate model that can provide higher wages.

Staff Contacts: Jennifer Barrera, Ashley Hoffman