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E-206 - Saturday, August 10, 2019
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RECENT AURAL PLEASURE:
UPDATED: Lawsuit information page for SB 27 (McGuire and Wiener): Primary elections: ballot access: tax returns.
IN TODAY'S NOONER:
Happy Saturday! Just a few items and our bill for the day...
VOTE: For the AP, Kathleen Ronayne reports on a new outside audit of the state's "motor voter" program of registrations at the Department of Motor Vehicles. She writes:
"After the report’s release, the Secretary of State’s office said six people who were registered to vote despite opting out cast ballots in 2018. Deputy Secretary of State Paula Valle said the state can’t confirm if the people were legally eligible to vote, but that none of them obtained driver’s licenses under a program for immigrants living in the country illegally.
California launched the “motor voter” program in April 2018, and it automatically registers people to vote when they visit the Department of Motor Vehicles unless they opt out. Potential errors in voter registration and other issues prompted former Gov. Jerry Brown to initiate an audit by the Department of Finance, which then hired the private firm Ernst & Young to help.
At the same time the DMV was rolling out motor voter, it was experiencing a surge in long lines related to Californians seeking new federally mandated identification cards known as “Real ID.” Gov. Gavin Newsom recently named a new head of the agency and included roughly $240 million for DMV improvements and additional staff in the state budget.
The audit found many customers are confused by the voter registration questions they are asked at the DMV and that many people feel “forced to register to vote.”
HARASSMENT: In the LAT, Taryn Luna chases down the results of an Assembly Rules sexual harassment investigation:
"An investigation by the California Assembly has substantiated complaints that a former chief of staff to Assemblyman Mike Gipson (D-Carson) grabbed a Capitol employee’s buttocks and sent inappropriate text messages to another staffer, according to records released Friday.
Basically, what this means is that Lomeli won't be disciplined as an employee but the state is on the hook for damages in a civil claim.
GUNS: The AP's Don Thompson writes that the reshaping of the federal courts through President Trump's appointments has gun control advocates on edge. "They worry that federal courts, especially if Trump wins a second term next year and Republicans hold the Senate, will take such an expansive view of Second Amendment rights that they might overturn strict gun control laws enacted in Democratic-leaning states."
LET THERE BE INSIGHT: For CalMatters, Felicia Mello looks at the "side doors" to admissions available to some students at the University of California. Mellow writes:
"Now, the Varsity Blues scandal has cast a spotlight on a once-obscure part of that admissions process. Known as “admissions by exception,” it gives campuses flexibility to admit up to 6% of each entering class from applicants who don’t meet UC’s minimum standards, but have a special talent or come from a disadvantaged background.
While it’s unclear if admissions by exception played a direct role in the college cheating scandal, it has surfaced as a potential weak spot as policymakers seek ways to bulletproof the university’s admission system from scammers."
RECYCLING: Also for CalMatters, Rachel Becker looks at the legislation to reduce plastic waste. She writes:
"As bills that take aim at plastic waste make their way through California’s legislature, the damage they intend to fix already is rippling through the state’s recycling economy.
On Monday, rePlanet, a major collector of beverage bottles and cans, shut its 284 collection centers in California, citing lower subsidies from the state as well as challenges facing recyclers and municipalities across California: higher operating costs and dwindling returns from post-consumer recyclables.
It was a vivid example of challenges threatening the ability of Californians to recycle and helps explain the progress a trio of bills is making through the legislature. All aim to change the economics of recycling by legislating a tough financial incentive for manufacturers."
SEVEN BILLS IN SEVEN DAYS - AB 5 Dynamex, CAKEDAY, and NEW CLASSIFIEDS after the jump...
SEVEN BILLS IN SEVEN DAYS
This series is a simplification of issues to illustrate the legislative process. They are not meant to be comprehensive analyses of all the issues raised by proponents and opponents, which would simply not be possible in the space allowed in The Nooner.
AB 5 (Gonzalez): Worker status: employees and independent contractors.
Location: Senate Appropriations
Summary: Codifies the Supreme Court of California decision in Dynamex v. AFSCME to apply an "ABC" test for when an a person is performing work for an employer may be considered an independent contractor rather than employee. The bill provides specified exemptions for persons performing specified duties in certain professions. While the law is prospective, the endorsement of the Supreme Court's interpretation of current Labor Code means that the ABC test applies retroactively.
Background: In April 2018, the Supreme Court of California held that the frequently used "12-point" test for determining that someone is an independent contractor exceeded the Labor Code's authority. The definition had largely been expanded administratively through "wage orders" by the state's Industrial Welfare Commission that largely followed the court's decision in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341. The court held that employers must instead use an ABC test, which is stricter in who can be considered an independent contractor. I've written about this in detail on this on July 14 and July 11 and previously.
Dynamex was a class action case that only applies to similarly situated employees of that specific company. Thus, before the flurry of lawsuits following Dynamex, the Legislature is considering the court's new independent contractor test and whether retroactivity is applied retroactively. Under Dynamex, many well-known corporations are literally accruing financial liabilities daily.
Supporters include: Organized labor, National Employment Law Project, Sierra Club California, Western Center on Law and Poverty
Opponents include: Business organizations, including TechNet representing the "gig economy" companies such as Lyft, Uber, and food delivery services
The full list of supporters and opponents to the current version of the bill can be found in the Senate, Labor, Public Employment, and Retirement Committee analysis (pp. 14-16).
Supporters argue: While the expansion of the "gig economy" has provided consumers with new options, much of it controvenes the state's policies and interests, such as the minimum wage, unemployment and workers' compensation insurance, job and personal security, and benefits. The Supreme Court has now correctly stated the law to ensure these "new economy" as well as traditional industries aren't working around state policies for the fair treatment of workers. Environmental organizations argue that the proliferation of transportation network companies and food delivery is leading to increased traffic congestion and emissions.
Opponents argue: The new economy has proven popular with consumers and workers alike. Consumers have far more transportation options as well as having their lives enhanced through expeditious delivery of food, groceries, and other goods. This has provided Californians with flexible employment that works around their schedule, which can include school and work in fields such as the arts. Food delivery has enabled many small, independent restaurants that could not operate their own dedicated service to offer food delivery to customers. This bill sweeps into the definition of "employee" into many traditional independent contracting fields, such as among owner-operated truckers, many of whom have loudly expressed their desire to not lose their independent status.
Beyond the "new economy," by leaving the court's decision in Dynamex to be retroactive, the state is opening all employers up to liability to previous employees when the companies were in good faith operating under the 12-point test identified by the Industrial Welfare Commission.
Why this is Noonerifically interesting: While on the surface, this seems to be a traditional employers v.s employees/labor Capitol fight, it's unique because of the involvement of the "new economy." This puts Democrats at odds with Silicon Valley, which has become a player akin to Hollywood in Democratic politics. And frankly, many of these lawmakers use these services in their travel-heavy jobs, whether it's an Uber to get to the airport or late night food in their Sacramento homes-way-from-home after a full day of hearing, sessions, and bad fundraiser canapes.
As we prepare for the final month of session, two things are clear -- AB 5 is very likely to pass and it's very likely to be significantly amended before it sees Governor Newsom's desk.
AB 5 is authored by one of the most influential and tenacious lawmakers, Assemblywoman Lorena Gonzalez (D-San Diego). Prior to being elected to the Assembly, she was secretary-treasurer/CEO of the San Diego and Imperial Counties Federation of Labor. She is now chair of the Assembly Appropriations Committee, a key gatekeeper of bills.
There are three camps of opposition--1) the gig economy folks, 2) the traditional economy folks who want exemptions, and 3) business generally on retroactivity.
The gig economy folks argue that they built businesses popular among consumers and many workers, and the businesses utilize independent contractors as defined by well-understood law prior to Dynamex. Applying the ABC test now could curtail customer choice and the ability for workers who enjoy the available flexible schedules.
Many of the traditional economy folks argue that, while the legislation has been amended to include some exemptions, many more "reasonable" exemptions have been demonstrated and the ABC-test language should be changed rather than industry-specific exemptions.
And, many in the business community accept that something is changing on independent contractors but are concerned with the retroactive liability. They want to know the new rules of the game and adjust their business operations accordingly.
In other words, while the support is mostly unified, the opposition has different levels of interest. That makes negotiations a challenge.
Before the Legislature left for Summer Recess, Senate Public Employment and Retirement committee approved AB 5 on a 4-1, party-line vote. Before doing so, committee chair Jerry Hill (D-San Mateo) and Hannah-Beth Jackson (D-Santa Barbara) stated that they were moving the bill forward in consideration of the policy committee deadline while each expressed concerns on the need for either more specific exemptions or a change to the underlying "ABC" test.
So, there are two issues--exemptions and retroactivity--that are the focus of heavily lobbying leading up the final month of session. There is plenty of campaign money on both sides between labor in support and business--particularly Silicon Valley--on the other side. Silicon Valley investors are major campaign players.
The retroactivity issue is likely also a big one for the Consumer Attorneys of California, which represents the trial lawyers and major player in Democratic campaigns. Its members likely believe Dynamex should be applied retroactively so those "wronged" may be made right, as the plaintiffs in the Dynamex case were.
Labor is willing to deal on some, but not all, of the requests for exemptions that are not already included in the bill. Labor fears the "slippery slope" of opening up the bill for more exemptions, but would prefer exemptions to a change in the Dynamex "ABC" test itself. Bill author Gonzalez seems resistant to the biggest ones being discussed, such as owner/operator truck drivers, but also wants to see a bill enacted this year.
The governor's office would like to see a compromise with the time until Senate Appropriations suspense file on August 29 or 30th, as well as Democratic lawmakers who rarely cross labor but also don't want to be blamed for the end of several popular "new economy" businesses. The governor, while elected with strong labor support, has deep ties too many venture capital and equity investors in Silicon Valley and has received contributions from then. He either doesn't want the bill on his desk now, allowing the courts to handle cases under Dynamex or would appreciate the two sides provide a compromise so that they can stand behind him at a bill-signing ceremony.
While all but three Democrats voted in favor of the bill in the Assembly, many did so uncomfortably. They don't want to cross labor but they also don't want the failure of Uber, Lyft, DoorDash, FoodJets, etc. on their hands. While several "gig economy" companies will fail regardless among competition and consolidation, it's a lot easier to blame it on "Sacramento."
It's a clash of the titans, with a Silicon Valley twist. Stay tuned.
CAKEDAY: Happy birthday to Senator Steve Glazer, Assemblywomen Wendy Carrillo and Buffy Wicks, Dominique Dimare, Alex Gurfinkel, Lisa Matocq, Krystal Moreno, and Kimi Shigetani!