Costly Workplace Bills Advance in Legislature

The July 2nd CalChamber Alert newsletter reported that two California Chamber of Commerce-opposed "job killer" bills that will place costly workplace mandates on employers passed policy committees in the second house on June 26. AB 10 unfairly imposes an automatic $2 increase in 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. SB 404 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.

AB 10 (Alejo; D-Salinas)

AB 10 is unprecedented in that it locks in an automatic 25% increase in the minimum wage over the next five years, which far exceeds any reasonably expected rate of inflation, regardless of any other economic factors or costs employers may face.

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.

Although employers appreciate the removal from 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 even worse.

The average rate of inflation over the last 10 years in California is 2.5%. Applying a 2.5% rate of inflation over the next five years to the current minimum wage would increase the minimum wage only to $9.06, almost a dollar less than the current proposal under AB 10.

Negative Impact

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 exceeding 22%. 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.

SB 404 (Jackson; D-Santa Barbara)

SB 404 proposes to include "familial status" as a protected classification under the FEHA to prevent discrimination on such basis.

Such a broad application of a protected classification will essentially encompass almost all employees in the workforce and therefore will hamper an employer’s ability to manage its business, as any adverse employment action the employer takes against an employee could potentially be challenged as discriminatory on the basis of "familial status."

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. In addition, California also requires "kin care," mandating that 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 no reason to include under California law the broad protected classification SB 404 proposes, other than to increase litigation opportunities.

Key Votes

•AB 10 passed the Senate Labor and Industrial Relations Committee on June 26, 3-1: Ayes: Leno (D-San Francisco), Monning (D-Carmel), Yee (D-San Francisco/San Mateo). Noes: Wyland (R-Escondido). No vote recorded: Padilla (D-Pacoima).

•SB 404 passed the Assembly Labor and Employment Committee on June 26, 5-2.

Ayes: Alejo (D-Salinas), Chau (D-Alhambra), Gomez (D-Los Angeles), R. Hernández (D-West Covina), Holden (D-Pasadena),