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Legislative Update: Sept. 6, 2019 - Dynamex Gets Spotlight



Dynamex Bill Gets Spotlight in Final Weeks, Other Bills Also Active

The Dynamex bill, AB 5, continues to get the lead role as we work through the final two weeks of the legislative session. To ensure its passage, the author has continued to accept clarifications of who is subject to the Dynamex “ABC Test” and who is subject to the Borello test. Recently, those clarifications indicated that commercial fishermen are subject to the Borello test.

Other professions continue to request clarification for consideration under the Borello test but, so far, have not been so lucky. Those professions include newspaper delivery and rabbis.

Two developments have emerged as a result of this ongoing battle. As we reported last week, Uber, Lyft, and DoorDash committed $90 million to a ballot effort. However, they are still determining if they plan to pursue a referendum on AB 5 or a ballot initiative to repeal AB 5 entirely.

The other development is Governor Gavin Newsom has picked his horse and declared his support for AB 5. That, along with today’s amendment deadline, all but ensures the final language of AB 5 will be known by Monday at the latest. We expect this bill to be signed shortly after it is sent to the Governor.

The anticipated amendments include a delayed effective date of July 1, 2020 for claims involving workers’ compensation, but other specifics of the amendments to be submitted today are unknown.

Although the bill is expected to be signed, the California Chamber of Commerce is still heavily opposed. CalChamber was actively negotiating and proposing language to the author and labor sponsors to no avail. None of their suggestions, especially on the business-to-business provisions, were accepted by proponents of AB 5.

While the Dynamex bill has gotten the lion’s share of attention, there are some other bills that have seen some activity this week.

Privacy:

While the debate over what additional amendments will be considered this year and chaptering issues get dealt with, AB 874 (Irwin) was amended on September 4 to amend the definition of “personal information” to state that PI is information reasonably capable of being associated with, or could reasonably be linked, directly or indirectly, with a particular consumer or household. The “reasonable” amendment was on the list of Chamber of Commerce’s asks.

We also anticipate amendments for a business-to-business exemption from the California Consumer Privacy Act, specifically for commercial transactions. This exemption would be effective for one year, which was necessary to ensure labor groups remained neutral. Language to that effect will be added to a measure authored by Assemblymember Ed Chau. We will be sure to inform you as we learn more.

Employment:

SB 142 (Weiner) required the California Building Standards Commission to develop and propose for adoption building standards for the installation of lactation space for employees, specifies criteria for lactation rooms provided by employers, requires employers to develop and implement a lactation accommodation policy, as specified, and instructs the Division of Labor Standards Enforcement to create a model lactation accommodation policy. The bill was amended on September 3 to only require the Building Standards Commission to develop a “best practices” guidance for providing lactation space. The bill remains on Assembly Third Reading. 

AB 9 (Reyes) extends the deadline by which victims of workplace harassment, discrimination, or civil rights-related retaliation must file their allegations with the Department of Fair Employment and Housing (DFEH) or forever forgo redress on those grounds. Currently, a victim must ordinarily file within one year of the most recent incident giving rise to the claim. This bill would give victims three years to file instead. The bill passed the Senate on September 4 and is awaiting concurrence in the Assembly. 

AB 170 (Gonzales) requires a client employer to share with a labor contractor all civil legal responsibility and civil liability for harassment, as defined, for all workers supplied by that labor contractor. Senate Floor amendments of August 20 revise and recast the previous version of this bill to specify that client employers share with labor contractors all civil legal responsibility and civil liability for harassment for all workers supplied by that labor contractor. Instead, this bill now amends existing law to achieve the same goal in a narrowed approach which specifies that an employer is responsible for the acts of contracted supervisors with respect to harassment. The bill failed passage on Senate Third Reading on September 3, reconsideration granted. 

Employment-related legislation still on Assembly Third Reading include SB 530 (Galgiani) relating to discrimination and harassment prevention in the construction industry, which was amended on September 3 to address seasonal and temporary workers. Measures that are in the Senate on Third Reading include: AB 171 (Gonzales) relating to sexual harassment; AB 547 (Gonzales) relating to sexual harassment training for janitorial workers; and AB 589 (Gonzales) relating to unfair immigration-related practices, which was amended on September 4 to give an employer a 30-day right to cure if certain notices are not provided. 

Workers’ Comp: 

SB 537 (Hill) requires third-party networks that arrange physician and ancillary medical services for employers, but that do not qualify as “Medical Provider Networks” (MPNs) as that phrase is used in the Labor Code, to disclose to employers “rate sheets” that show the discounted prices paid to providers, and makes several additional amendments to the laws governing MPNs. The bill was amended on September 3 to revise the disclosure required of entities that provide network services. This reflects an apparent compromise with some of these entities. The bill also addresses important issues regarding what is a “business day” for purposes of utilization review and requiring unique provider numbers to be included on medical billings. The bill is on Assembly Third Reading. 

There are two presumption bills still on Assembly Third Reading, SB 416 (Hueso) and SB 542 (Stern).


Lawmakers Pass Insurance Adjuster Bill to Governor

On August 30, the Legislature approved a bill from Senator Bill Dodd (Napa) that would eliminate the confusion and delays caused by uninformed, out-of-state or multiple insurance adjusters during the 2017 North Bay wildfires.

SB 240 requires the California Department of Insurance to produce information on the most significant state insurance laws related to disasters and set training standards for agents handling catastrophic events. It also mandates that insurers provide a single point of contact for customers to make processing claims easier.

“After the devastating 2017 wildfires, we heard numerous complaints about insurance industry practices that delayed the processing of claims, and really, re-victimized the victims,” Senator Dodd said. “This bill will prevent that from happening again when the next fire or disaster strikes.”

SB 240, which would become the Insurance Adjuster Act of 2019, is supported by Insurance Commissioner Ricardo Lara as well as state and local consumer advocates.

“As I have met with survivors of California’s devastating wildfires, I have seen first-hand that a well-trained insurance adjuster often makes the difference in resolving their claims,” said Commissioner Lara. “SB 240 will help ensure that out-of-state adjusters and insurers have the training to provide accurate information to survivors of future fires.”


Governor Gavin Newsom Announces Members of the Future of Work Commission 

Governor Gavin Newsom announced members of the Future of Work Commission, which include prominent leaders from technology, labor, business, education and other sectors across the state. The Commission will be co-chaired by James Manyika, chairman and director of the McKinsey Global Institute, and Mary Kay Henry, president of the Service Employees International Union, and will be guided by senior members of the Governor’s team, including Secretary of the Labor and Workforce Development Agency Julie Su, Chief Economic and Business Advisor Lenny Mendonca, and Senior Policy Advisor Lande Ajose. 

The Commission, established by Governor Newsom through executive order, will be tasked with making recommendations to help California leaders think through how to create inclusive, long-term economic growth and ensure workers and their families share in that success. 

The Commission will work in a public-private partnership with the Institute for the Future, which will bring together diverse stakeholders to support and guide the work of the Commission and help develop a public agenda to promote shared prosperity for all Californians. Funding for the Institute for the Future's work with the Commission will be provided by the James Irvine Foundation and the Ford Foundation, both of which have been leaders in promoting equitable approaches to the future of work. The Commission will produce an interim report on its progress by May 1, 2020.


Legislative Analyst Releases Report on California’s Cash Situation

As yield curves invert and the market continues a stretch of volatility, the Legislative Analyst’s Office released a timely report on Managing California’s Cash. The key takeaway from the report is that the state’s current cash position is “very strong.”

This differs from the state budget in that the budget is the plan for how much the state will spend in expenditures and receive in revenues over the course of the subsequent fiscal year, while the cash situation is when these expenditures and revenues will occur.

After a long history of budgetary problems and a fluctuating cash position, California is now enjoying both a healthy budget and cash situations. There are several reasons the state’s cash situation is positive. In particular, the state has built sizeable budget reserves in recent years and these monies are available to the Controller to manage the state’s cash flows. The state has also created new state funds that are available for General Fund cash flow borrowing, and balances have increased in other existing funds.

The state’s cash situation has been so positive in recent years that the Legislature has been able to commit a small part of its liquidity pool to make loans to fund other priorities. In particular, the Legislature made two loans: with SB 84 (2017), the state reduced its longterm pension debt, and with AB 1054 (2019), it can address utilities’ liabilities arising from wildfire claims.

While the cash position is positive now, it is unlikely to last forever. The report mentions that when a recession occurs, it will mean lower revenue receipts, larger cash deficits, and declining balances of internal borrowable resources. Moreover, these risks are correlated so when one condition deteriorates, other conditions also are likely to deteriorate.


Legislative Update

We’re in the home stretch with one more week of the legislative session to consider bills. This week, the Senate and the Assembly took action on many non-controversial bills while finalizing details on more contentious bills leading up to today’s deadline to amend on the floor. Here’s an update on some other bills you should be aware of.

Insurance-related

AB 47 (Daly) Removes the prohibition on the Department of Motor Vehicles (DMV) on assessing a point on a driver’s license if they are convicted of a violation of operating a handheld wireless or communication device while driving and requires DMV to assess a point for a second violation in a three-year period occurring after January 1, 2021. Recent action: Senate amendments concurred in by Assembly, sent to Engrossing and Enrolling before heading to Governor’s desk. 

AB 179 (Reyes) Requires car manufacturers to reimburse franchised new car dealers for warranty repairs based on a specified formula instead of using the existing practice of determining a reasonable rate and recasts other existing provisions on the relationship between manufacturers and dealerships; Senate amendments deleted a provision that prohibits a franchisor from requiring a franchisee to condition access to financing upon the sale of service contracts. Recent action: Senate amendments concurred in by Assembly, sent to Engrossing and Enrolling before heading to Governor’s desk. 

AB 295 (Daly) Modifies the definition of "working capital" for underwritten title companies (UTCs) to prevent unintended consequences that could result from accounting changes adopted by the Financial Accounting Standards Board (FASB). Recent action: Senate amendments concurred in by Assembly, enrolled and presented to the Governor on August 27. 

SB 240 (Dodd) Exempts licensed independent adjusters from the licensing renewal requirements during active military service; requires the California Department of Insurance (CDI) to publish a bulletin regarding significant California laws pertaining to property insurance policies and an insurance adjuster handbook; requires specified unlicensed independent insurance adjusters to read and understand those materials; and requires insurers to provide a claimant with contact information of an individual or team who will be familiar with the claim if the insurer assigns a third or subsequent adjuster to the claim within a six-month period. Recent action: Assembly amendments concurred in by Senate, sent to Engrossing and Enrolling before heading to Governor’s desk. 

SB 740 (Mitchell) Requires life insurers to use the U.S. Social Security Administration’s Death Master File to match deceased Social Security recipients with insureds on life insurance policies, and requires insurers to attempt to locate and notify the beneficiary about the policy; Assembly amendments strike the rulemaking provision and expand the requirement to compare all contracts that have lapsed within the last 18 months at least semiannually for all life insurers. Recent action: Assembly amendments concurred in by Senate, sent to Engrossing and Enrolling before heading to Governor’s desk. 

Labor-related

AB 749 (Stone) Prohibits settlement agreements that contain a provision that restricts an employee from working for the employer against which the employee has filed a claim; Senate amendments clarified this bill only applies to agreements that restrict future employment and permit settlement provisions that prohibit the employee from obtaining future employment if the employer has made a good faith determination that the aggrieved employee engaged in sexual harassment or sexual assault. Recent action: Senate amendments concurred in by Assembly, sent to Engrossing and Enrolling before heading to Governor’s desk. 

AB 1607 (Boerner Horvath) Requires a local government to provide businesses with notice of the provisions of the Gender Tax Repeal Act of 1995 when they issue a license to that business and specifies the notice must be provided in specified languages. Recent action: Senate amendments concurred in by Assembly, enrolled and presented to the Governor on September 5. 

SB 688 (Monning) Authorizes the Labor Commissioner (LC), after inspection or investigation, to issue a citation to an employer who pays an employee less than contract wages; defines "contract wages" as wages based upon an agreement, in excess of the applicable minimum wage, for regular, non-overtime hours; and provides that any bond which is forfeited because an employer fails to pay the amounts owed after a writ proceeding challenging a citation issued by the LC must be forfeited to the LC for appropriate distribution. Recent action: Assembly amendments concurred in by Senate, sent to Engrossing and Enrolling before heading to Governor’s desk. 

Health-related

AB 1309 (Bauer-Kahan) Revises the enrollment periods for individual health benefit plans offered outside of the California Health Benefit Exchange (Exchange or Covered California) and through the Exchange for policy years beginning on or after 2020, to allow enrollment from November 1 to January 31. Recent action: Senate amendments concurred in by Assembly, sent to Engrossing and Enrolling before heading to Governor’s desk. 

SB 39 (Hill) Requires a tobacco product to be delivered only in a container that is conspicuously labeled as being a tobacco product that requires the signature of a person 21 years of age or older; and requires, before completing a delivery, a specified entity to obtain the signature of a person 21 years of age or older upon delivering the product to the recipient's or purchaser's address. Recent action: Senate amendments concurred in by Assembly, sent to Engrossing and Enrolling before heading to Governor’s desk. 

SB 276 (Pan) Requires the Department of Public Health (DPH) to develop an electronic, statewide, standardized medical exemption request form for immunization requirements in existing law, to make the request form available for use by physicians and to be transmitted directly to a state database, and requires the request form to be the only medical exemption documentation that a governing authority may accept. Recent action: Assembly amendments concurred in by Senate, sent to Engrossing and Enrolling before heading to Governor’s desk. 

Cannabis-related

SB 527 (Caballero) Clarifies that commercial cannabis may be designated as a compatible use under the Williamson Act and provides that industrial hemp cultivation is an agricultural use. Recent action: Senate amendments concurred in by Assembly, enrolled and presented to the Governor on August 30.


Governor Newsom Signs Legislation

This week Governor Gavin Newsom signed the following bills.

AB 17 (Salas) – Elections: vote by mail ballots.

AB 273 (Gonzalez) – Fur-bearing and nongame mammals: recreational and commercial fur trapping: prohibition.

AB 299 (Salas) – Vote by mail ballot tracking.

AB 305 (Nazarian) – Public capital facilities: public water or wastewater agencies: rate reduction bonds.

AB 321 (Patterson) – Sales and use taxes: exemptions: trucks for use in interstate or out-of-state commerce.

AB 330 (Gabriel) – Appointed legal counsel in civil cases.

AB 477 (Cervantes) – Emergency preparedness: vulnerable populations.

AB 498 (Weber) – Business licensing: fees: exemptions: veterans.

AB 548 (Rodriguez) – Earthquake Brace and Bolt program.

AB 605 (Maienschein) – Special education: assistive technology devices.

AB 630 (Arambula) – Board of Behavioral Sciences: marriage and family therapists: clinical social workers: educational psychologists: professional clinical counselors: required notice: exemptions.

AB 689 (McCarty) – Municipal Utility District Act: nonstock security.

AB 714 (Wood) – Opioid prescription drugs: prescribers.

AB 845 (Maienschein) – Continuing education: physicians and surgeons: maternal mental health.

AB 956 (Diep) – Telecommunications: automatic dialing-announcing devices: emergency alert notifications.

AB 1017 (Boerner Horvath) – New or modified railroad crossings: approval.

AB 1051 (Smith) – Community colleges: temporary faculty members: clinical nursing faculty.

AB 1065 (Berman) – Insurance transactions: notice: electronic transmission.

AB 1104 (Calderon) – California Life and Health Insurance Guarantee Association.

AB 1168 (Mullin) – Emergency services: text to 911.

AB 1208 (Ting) – Utility user taxes: exemption: clean energy resource.

AB 1266 (R. Rivas) – Traffic control devices: bicycles.

AB 1414 (Friedman) – Urban retail water suppliers: reporting.

AB 1518 (Chu) – Student athletes: contracts.

SB 20 (Dodd) – Surplus state property: Napa County Regional Park and Open Space District.

SB 129 (Pan) – Health care coverage reporting.

SB 141 (Bates) – Parole: sexually violent offenses: validated risk assessment.

SB 143 (Skinner) – Junk dealers and recyclers: nonferrous material: payment by general-use prepaid cards.

SB 234 (Skinner) – Family daycare homes.

SB 259 (Nielsen) – Department of Justice: crime statistics reporting.

SB 271 (Wiener) – Employment: motion picture production workers.

SB 343 (Pan) – Health care data disclosure.

SB 355 (Portantino) – Joint powers agencies: Clean Power Alliance of Southern California: meetings.

SB 534 (Bradford) – Insurers: minority, women, LGBT, veteran, and disabled veteran business enterprises.

SB 540 (Jones) – Nonprofit public benefit corporations.

SB 557 (Jones) – Criminal proceedings: mental competence: expert reports.

SB 657 (Monning) – Cannabis cultivation: county agricultural commissioners: reporting.

SB 671 (Hertzberg) – Employment: payment of wages: print shoot employees.

SB 677 (Allen) – Retail food safety: nonlatex gloves.

SB 779 (Committee on Natural Resources and Water) – Water.

SB 781 (Committee on Public Safety) – Public Safety Omnibus.

SB 788 (Committee on Governmental Organization) – Alcoholic beverages: appeals: decision: tied-house restrictions.

SB 789 (Committee on Governance and Finance) – Local government: administration.