Legislative Session Continued Arduous Path for Businesses
The 2019-20 Legislative Session was built upon the previous year’s anti-business agenda as Democrats held supermajorities in both the Senate and Assembly. That limited the impact that Republicans and, more so, moderate Democrats could have to stave off legislation that harms the business landscape in California. This trend can be anticipated to continue into next year, and we fully expect to work harder to realize business-friendly amendments to skewed and unwarranted legislative proposals.
Below, we wrap-up the 2019 year of the 2019-20 Legislative Session and highlight many of the pivotal bills that passed through the Legislature. Some of the proposals are now considered carry-over legislation into the 2020 year of the Legislative Session and others are potential or actual initiatives for the November 2020 ballot.
This summary is the introduction for our 2019 Year-End Legislative Report, which we are printing now. We will be mailing out hard copies to you next week, but will also have a zip file copy we can email upon your request. Please email Gabby at email@example.com to request your zip file copy.
2019 Legislative Session Summary
The California State Legislature adjourned the 2019 legislative session in the early morning hours of September 14. Legislators are scheduled to return to the Capitol on January 6, 2020, for the second year of California’s two-year legislative session.
This year Legislators introduced a total of 2,625 bills, 792 in the State Senate and 1,833 bills in the State Assembly. Of those, 1,042 bills made it all the way through the legislative process and were sent to the Governor for signature. The Governor signed 870 of these bills and vetoed 172. When Legislators return to Sacramento in January of next year, it is likely a similar number of new bills will be introduced. In addition, Legislators will be able to consider so-called two-year bills left over from the 2019 session.
The term “the new normal” has been often used over the last couple of years associated with climate change and the risk of wildfires in California. However, the results of the 2019 legislative session raise the question of whether this is the new normal as far as what can be expected to emerge from the legislative process. If so, California's business interests are facing major battles over the next few years. The state has a new and very progressive Governor combined with Democrat supermajorities in both houses of the Legislature. It’s fair to say organized labor, trial, and employment attorneys and consumer groups did extremely well in 2019, and there is really nothing on the horizon that would suggest a different result going forward for the 2020 legislative session and beyond.
In previous legislative sessions, a loose group of moderate Democrats from both houses of the Legislature would occasionally band with Republicans to defeat, or more often amend, some of the worst anti-business bills that made it to the floor of one house or the other. In addition, then-Governor Jerry Brown demonstrated moderation in both spending and anti-business bills by vetoing or threatening to veto bills that were tagged as “job killers” by the California Chamber of Commerce. However, with the elections in 2018, Democrats picked up so many seats that it is almost impossible to put together enough Republicans and moderate Democrats on the floor to defeat a bill. The so-called Moderate Democrat Caucus seems to be in disarray, partly because none of its philosophical members want to invite a primary challenge from the left. Lastly, Governor Gavin Newsom is setting a path quite different from his predecessor. For example, Governor Newson signed 67 bills previously vetoed by then-Governor Brown.
Key issues for the 2019 legislative session were Pacific Gas & Electric’s (PG&E) bankruptcy, wildfires, Dynamex, privacy, and an ever-growing list of changes to employment and labor laws of which many were founded from the #MeToo movement or aimed at anti-arbitration agreements. That having been said, homelessness, affordable housing, fighting to curb greenhouse gases, and proposed new taxes on everything from insurance policies to water, communications, sugary drinks, tires, and more were introduced and debated. It is expected we will see more of the same in 2020, and major fights lining up in the initiative process for the 2020 general election may well influence a number of these debates.
In 2017, California experienced the largest and most destructive wildfire season in its history. Nearly 9,000 wildfires tore through the state, burning 1.2 million acres of land, destroying more than 10,800 structures – more than the previous nine years combined – and killing at least 46 people. In addition, mudslides following and resulting from the Thomas fire in Santa Barbara County destroyed or damaged more than 400 homes and killed at least another 21 people. Insured fire losses for 2017 reached an estimated $15 billion. As a result, almost 30 bills were introduced in 2018 on the topic of wildfires and/or homeowners insurance, particularly in the areas of underinsurance, availability of coverage, and timeframes for resolving claims. In addition, the investor-owned utilities launched a multi-million dollar lobbying and public policy campaign aimed at altering the state’s Inverse Condemnation laws to limit their liability and the ability of insurers and others to subrogate against the utilities for losses caused by fires associated with utility electrical equipment.
The insurance industry worked hard to come to a compromise on 11 of the bills introduced in 2018 relative to homeowners insurance recovery issues. None of these bills ended up with a retroactive effect as initially introduced. Additionally, insurance interests joined in a coalition with fire victims, public entities, and trial lawyers to ultimately defeat any changes to the Inverse Condemnation statutes; although, the Legislature and Governor did pass legislation to make substantial new investments in state efforts and equipment to fight wildfire, provide limited options for investor-owned utilities to socialize the cost of wildfires, and establish a commission to look at additional recommendations to combat wildfires, including liability issues.
Unfortunately, another disastrous wildfire season hit California in late 2018 after the Legislature adjourned thus assuring that wildfire issues would continue to be at the top of the agenda items in 2019. Language included in SB 901 that was intended to assist PG&E and other utilities socialize the cost of wildfires proved to be inadequate, especially in light of the fact that wildfire losses for PG&E virtually doubled from 2017 as a result of the fires in the fall of 2018.
PG&E filed for federal bankruptcy protection the last week in January of 2019 spurring Governor Gavin Newsom to announce his own wildfire strike force and setting a 60-day deadline for a report and recommendations. The Governor also proclaimed a state of emergency throughout California ahead of the coming fire season directing his administration to immediately expedite forest management projects that will protect 200 of California’s most wildfire-vulnerable communities.
Although wildfire issues were certainly a priority in 2019, lack of any real leadership in the Legislature on the issue created a vacuum wherein Legislators preferred to await the recommendations of the Governor’s Task Force in May and the SB 901 Commission in June before taking any real action to finalize bills to address the issue.
In its report, the Governor’s Strike Force set forth steps the state should take to reduce the incidence and severity of wildfires, including the significant wildfire mitigation and resiliency efforts the Governor had already proposed. One step it recommended was to change how the California Public Utilities Commission (CPUC) regulates companies by linking the rate-setting process and company profitability to fire safety performance. Another step was recommended to limit the financial burden of wildfires to insurers by creating a state-run fund to help utilities deal with the immediate costs of wildfires through contributions from utility shareholders. The report recommended California renew the state’s commitment to clean energy and outlined actions utility regulators should take to hold the state’s utilities accountable, as well as recommended changes to stabilize California’s utilities to meet the energy needs of customers and the economy.
The Commission on Catastrophic Wildfire Cost and Recovery, also known as the SB 901 Commission, followed the Governor’s Strike Force and submitted its own report five weeks ahead of its July 1st deadline. Key recommendations of the Commission centered on the Legislature passing legislation to tackle the issues central to mitigating and preventing further catastrophes, including necessary improvements to the state’s emergency response, firefighting systems, energy grid, and utility infrastructure to stabilize the energy market and utility deliverance. The Commission also recommended legislative efforts to seek equitable resolution on the prudent manager standard, bridge financing, and allow cost recovery for electricity providers who act responsibly for the public’s best interest in order to stabilize investor-owned utilities. However, legislative leaders specifically rejected the idea of change to inverse condemnation, the legal theory holding public utilities strictly liable for the damage they caused by their activities or equipment.
Legislators responded to the recommendations of both the Governor’s Strike Force and the SB 901 Commission by holding hearings aimed at developing a legislative response that was particularly fueled by the national credit rating agencies’ threats to downgrade investor-owned utilities to junk bond status if the Legislature did not act by the time it was scheduled to adjourn for its summer recess in July.
Legislation establishing a Wildfire Fund and creating additional safety oversights and processes for utility companies finally emerged from negotiations between State Legislators and the Governor’s office in July. Assembly Bill 1054, authored by Assemblymember Chris Holden (D-Pasadena), aims to minimize the impact and recast the recovery of costs from wildfire damages, including establishing the Wildfire Fund to pay eligible claims from a covered wildfire. This fund will be backed by contributions by the three investor-owned utilities (IOUs) in the initial amount of $7.5 billion and $300 million annually. Those contributions will be divvied up, by an allocation metric, among the IOUs, 64.2% contributed by Pacific Gas & Electric, 31.5% by Southern California Edison, and 4.3% by San Diego Gas & Electric.
The bill also established the California Wildfire Safety Advisory Board to advise and make recommendations related to wildfire safety to the Wildfire Safety Division for each utility on the sufficiency of their wildfire mitigation plans, authorize the California Public Utilities Commission (CPUC) to assess a penalty up to specified amounts for utility-related violations, and authorize certain processes through the CPUC for a utility company to recover costs and expenses related to catastrophic wildfires.
In the end, the Governor and the Legislature passed and signed into law 22 bills to address wildfire mitigation, preparedness, and response. Key bills include:
· AB 38 by Assemblymember Jim Wood (D-Santa Rosa) provides mechanisms to develop best practices for community-wide resilience against wildfires through home hardening, defensible space, and other measures.
· SB 190 by Senator Bill Dodd (D-Napa) includes a specific requirement to develop best models for defensible space and additional standards for home hardening and construction materials to increase the resilience of communities.
· SB 167 by Senator Bill Dodd (D-Napa) requires IOUs to improve their WMPs by including specified requirements to mitigate the impacts of Public Safety Power Shutoffs (PSPS).
· SB 209 by Senator Bill Dodd (D-Napa) requires the establishment of a new weather technology center modeled after the state's intelligence fusion centers.
· AB 836 by Assemblymember Buffy Wicks (D-Oakland) establishes a program for retrofits of air ventilation systems to create community clean air centers, prioritizing areas with high cumulative smoke exposure burden.
· SB 670 by Senator Mike McGuire (D-Healdsburg) will improve the coordination of emergency communication systems during 9-1-1 outages.
· SB 632 by Senator Cathleen Galgiani (D-Stockton) sets a deadline for completion of CAL FIRE’s vegetation management environmental review.
· AB 1823 by Assemblymember Laura Friedman (D-Glendale) facilitates fuel reduction and other forest health projects.
· SB 550 by Senator Jerry Hill (D-San Mateo) provides requirements for additional CPUC safety reviews, conducted together with the CPUC's review of utility asset transactions.
In addition, the Governor made wildfire prevention and mitigation a top priority. The Governor redirected National Guard members from the border to undertake fire prevention activities throughout the state, included $1 billion in additional funding in the state budget to enhance the state’s preparedness, and expanded the state’s capacity to respond to emergencies which included the purchase of 13 new fire engines. He also:
· Invested $127.2 million to expand CAL FIRE’S fleet with C-130 air tankers and modified Black Hawk helicopters for nighttime firefighting operations;
· Signed an executive order authorizing the surge of almost 400 seasonal firefighters to CAL FIRE this year;
· Began overdue modernization of California’s 9-1-1 system;
· Announced the selection of the first two contracts for the Wildfire Innovation Sprint, intended to modernize the way the state contracts for acquisition and development of technology systems, with the goal of getting cutting-edge firefighting technology in the hands of emergency responders by next fire season;
· Supported local fire operations which included $2 million for the Butte County Fire Department to maintain its current level of service and continue operation of one year-round fire station through its cooperative agreement with CAL FIRE;
· Partnered with the federal government to secure state access to remote sensor-based technology to detect wildfire ignitions, including securing delegation of authority from the Secretary of Defense to fly infrared equipped Unmanned Aerial System in support of CAL FIRE missions;
· Invested $210 million Greenhouse Gas Reduction Fund for forest health and fire prevention projects and programs to enable CAL FIRE to complete more fuel reduction projects and increase the pace and scale of fire prevention; and
· Developed and implemented the Forestry Corps Program, to operate four Forestry Corps crews who will undertake forest health and hazardous fuel reduction projects in areas of high fire risk.
Wildfire Insurance Issues
Increasingly homeowners in California are experiencing insurance affordability and availability issues relative to fire insurance and are communicating their displeasure to the Governor, Legislators and the Insurance Commissioner. The work the insurance industry did to develop compromise wildfire insurance legislation in 2017 proved to deter Legislators in 2019 from introducing more onerous proposals; however, as discussions proceeded relative to new legislation to address utility liability issues, a growing group of Legislators felt the insurance industry did not have enough skin in the game when it came to doing more to address homeowners availability and affordability issues.
The good news for the industry in 2019 was the Legislature was too consumed with trying to develop a response to saving the utilities as explained above, so they did not have the bandwidth to focus on additional legislation relative to homeowners insurance. In addition, the industry had a relatively good story to tell Legislators in response to the growing complaints about non-renewals and substantial increases in premiums in rural areas and the Wildland Urban Interface (WUI). Losses from the 2017 wildfire effectively wiped out over a decade of underwriting profits for homeowners insurance companies in California. Insured losses from the 2018 wildfires doubled those losses and created combined ratios for many homeowners insurers in excess of 200%. California's average homeowners insurance costs are substantially below-average when you look at nationwide statistics and almost 50% below other catastrophe-prone states like Texas, Florida, and Louisiana. Homeowners insurance rates in California are highly regulated and subject to prior approval by the California Insurance Commissioner. The state provides a market of last resort for homeowners known as the FAIR Plan and its rates are approved by the Commissioner.
Nonetheless, the pressure is building on Legislators to respond to steep increases in premiums in the WUI and the difficulty in finding insurers willing to underwrite homes located in high fire risk areas in the state. The Legislature only passed one key bill in 2019 relative to homeowners insurance. That bill, AB 1816 (Daly, D-Anaheim), requires insurers to provide a 75-day notice of intent to non-renew homeowners insurance policies, up from 45-day notice in current law; raises the limit on homeowners insurance claims covered by the California Insurance Guarantee Association from $500,000 to $1 million; and, allows insurers who voluntarily write properties in High Fire Hazard Severity Zones in Local Responsibility Areas to be proportionately relieved of the responsibility to participate in the state’s FAIR Plan requirements.
In signing AB 1816, the Governor noted, “While the enactment of this bill may help some homeowners, it does not do enough to address the full scope of this issue. We must do more. I look forward to working with the Legislature and the Insurance Commissioner next year on additional solutions.”
More to look forward to in 2020….
On April 30, 2018, the California Supreme Court kicked off what can only be captioned as a frenzy of activity in the area of employment law when they issued the Dynamex Operations West, Inc. vs Superior Court of Los Angeles County decision relative to which test should be used to determine whether an individual is an employee or an independent contractor. The case involved delivery drivers who sued a nationwide package and delivery company alleging they were misclassified as independent contractors and were unlawfully denied overtime among other wage and hour violations by the employer.
The court unanimously ruled in favor of the drivers abandoning the long-standing Borello test and replacing it with a more restrictive ABC test. Shocked, the California employment community immediately criticized the decision as to the court by legislation, seeking the help of the California State Legislature in delaying the decision for up to two years to allow sufficient time for the Legislature to debate the issue and provide for appropriate changes and/or exemptions.
Organized labor interests immediately reacted and successfully brought enough pressure on legislative leaders to block any activity on this issue until the 2019 legislative session. During the legislative interim, numerous organizations and industries including the California Chamber of Commerce initiated discussions with the California Labor Federation relative to this issue. The ideal goal of those discussions was to develop some flexibility in the strict ABC test that would allow broader use of independent contractors where applicable. For example, some 22 states reportedly use some version of the ABC test. However, in some of those states, there is flexibility in the “B” portion of the test which is so difficult for many industries or businesses to overcome, even where the use of independent contractors is clearly not a misclassification.
Right or wrong, organized labor interests chose to look separately at requests by numerous industries/professions to be exempted from the ABC test as opposed to creating flexibility in the test itself. Lead by IIABCal, a leading trade association of independent insurance agents and brokers, the author’s office and California Federation of Labor began the task of agreeing to individual industry/profession exemptions to the ABC test, so long as those industries/professions remained subject to the Borello test.
On September 13, 2019, the California Senate and Assembly passed AB 5 (Gonzalez, D-San Diego), Worker Status: Employees and Independent Contractors. Governor Gavin Newsom signed the bill on September 18, which becomes effective on January 1, 2020. The bill establishes the more restrictive “Dynamex” worker classification rules in state law. Under these rules, some workers previously classified as independent contractors may now qualify as employees.
The bill adopts in statute a three-part test adopted by the California Supreme Court in its 2018 Dynamex decision to determine whether a worker is an employee, which generally makes it harder to qualify brokers as independent contractors. Workers would be considered an employee by default unless the hiring entity can demonstrate all three of the following:
1. The individual is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.
2. The individual performs work that is outside the usual course of the hiring entity’s business.
3. The individual is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
Classification as an employee is viewed as beneficial to workers, who receive various workplace protections not afforded to independent contractors, such as workers’ compensation, unemployment, and disability insurance; paid sick days; and family leave. Wages are also subject to withholding and various employment taxes.
The bill lists several exemptions for specific occupations, such as licensed insurance agents; certain health care professionals; registered securities broker-dealers or investment advisers; direct sales salespersons; real estate licensees; commercial fishermen; barbers; and cosmetologists; certain professionals including attorneys, architects, engineers, investigators, and accountants, among others.
The new California law has no effect on federal rules. However, treatment as an employee for state purposes would certainly make it more likely that the IRS would also consider a worker to be an employee. Most payroll and tax reporting systems also generally apply any worker classification decisions at both the federal and state level.
During the final days of the legislative session when the bill was debated on the floors of the Assembly and the Senate, there were many Legislators who criticized the bill for picking winners and losers. Republicans on both floors proposed more than a dozen amendments adding further exemptions such as nonprofits, independent truckers, Uber and Lyft Drivers and many more. All of those amendments were quickly tabled by the Democrat majorities in both houses. However, floor authors of the bill committed to ongoing discussions with other industries creating the likelihood that many more bills on the subject will be introduced next session.
This issue is likely far from over. At least two courts have determined the ABC test to be retroactive and employers are awaiting a decision by the California Supreme Court on that issue. Uber, Lyft, and DoorDash have committed $90 million to an initiative recently filed for the November 2020 General Election ballot that would provide their industry and the gig economy with relief.
Much more to come in 2020…
No issue in the State Legislature received more attention than proposed amendments to California’s historic privacy law adopted in 2018 by the Legislature to avoid a costly initiative war on the subject in next year’s general election. Despite a last-minute agreement on the bill and even a clean up bill intended to fix unintended consequences last year, numerous bills were introduced in 2019 with proposed fixes to the new law pitting an array of privacy interests against almost every conceivable industry.
The California Chamber of Commerce initiated a privacy working group designed to identify unintended consequences, develop a priority list of fixes, and to work with the Legislators and privacy interests in developing compromise bills for consideration during the legislative session. The group often had as many as 200 individuals on the weekly call.
Initially, it was thought efforts in 2019 would be all about California Consumer Privacy Act (CCPA) clean up; however, as bill introductions continued to roll out, it became clear this year will be about clean up PLUS efforts to go even further. Even Republicans jumped into the issue of privacy with their own legislative package. All in all, just short of 30 bills were introduced to address various privacy issues. In addition, the Attorney General held a series of public hearings to take testimony for the development of regulations to implement the CCPA.
In the Assembly, efforts of the privacy coalition to move bills aimed at resolving issues relative to CCPA went surprisingly well. The Assembly Privacy Committee passed eight bills supported by various business interests. These included:
AB 25 (Chau, D-Arcadia) – Excludes from the definition of consumer under the California Consumer Privacy Act of 2018 a person’s personal information only to the extent that their personal information is collected and used solely within their employee role, or in similar roles within the employment context.
AB 846 (Burke, D-Inglewood) – Replaces the “financial incentive programs” provisions in the non-discrimination statute of the California Consumer Privacy Act of 2018 with an authorization for offerings that include, among other things, gift cards or certificates, discounts, payments to consumers, or other benefits associated with a loyalty or rewards program.
AB 873 (Irwin, D-Thousand Oaks) – Narrows the definition of personal information in the California Consumer Privacy Act of 2018 to: (1) exclude information that “is capable of being associated with” a particular consumer; (2) exclude information that could be linked to particular “households”; and, (3) potentially exclude items that are otherwise listed as types of PI even if those items actually identify a particular consumer.
AB 874 (Irwin, D-Thousand Oaks) – Expands the “publicly available” information that is exempted from the definition of “personal information” in the California Consumer Privacy Act of 2018 to ensure that “publicly available” information includes any information that is lawfully made available from government records.
AB 981 (Daly, D-Anaheim) – Exempts insurance institutions, agents, and support organizations to which the Insurance Information and Privacy Protection Act applies from the California Consumer Privacy Act of 2018.
AB 1138 (Gallagher, R-Yuba City) – Prohibits a person or business that conducts business in California, and that operates a social media website or application, from allowing a person under 16 years of age to create an account with the website or application unless the website or application obtains the consent of the person’s parent or guardian before creating the account.
AB 1355 (Chau, D-Arcadia) – Excludes, for purposes of the California Consumer Privacy Act of 2018, consumer information that is de-identified or aggregate consumer information from the definition of personal information.
AB 1564 (Berman, D-Palo Alto) – Revises a requirement in the California Consumer Privacy Act of 2018 (CCPA) for businesses to make available to consumers “two or more designated methods” for submitting requests for information to be disclosed pursuant to specified provisions of the CCPA, and requires that businesses: (1) make available to consumers either a toll-free telephone number or an email address; and, (2) if the business maintains an internet website, make an internet website available to consumers to submit requests for information required to be disclosed pursuant to specified provisions of the CCPA.
However, in the Senate, the Appropriations Committee defeated a bill introduced by the Chair of the Committee to add a private right of action to the CCPA, thus setting up a confrontation in the Senate when the privacy bills, passed by the Assembly, reached the Senate Judiciary Committee, wherein each of the bills was narrowed significantly by the Chair. Efforts over the last few weeks of the session to get the Senate Judiciary Committee to reconsider several of the privacy bills failed, setting up as efforts play out as we write this report wherein several versions of a privacy initiative have been filed to address some of the key issues raised in the Legislature along with other new issues that have the attention of the sponsor. Any of these versions of the initiative will also make it much more difficult for the Legislature to subsequently amend the law.
In the end, the Governor signed all legislation sent to him amending the California Consumer Privacy Act of 2018 (CCPA). However, this does not mean that privacy issues are now settled. For the next several months, stakeholders of all types will be navigating the Department of Justice rulemaking process in anticipation of the regulatory enforcement operative date of July 1, 2020.
To further complicate both the legislative and regulatory processes, there are active negotiations ongoing with the proponents of the CCPA regarding their newly proposed initiative, The California Privacy Rights and Enforcement Act of 2020. The latest iteration was filed with the Department of Justice on October 9.
The following bills involving privacy were signed into law by Governor Newsom.
AB 25 (Chau, D-Arcadia) – Authorizes a business to require authentication of consumers, as specified, in connection with requests made pursuant to the CCPA and allows a business to require requests to be made through an existing account. The bill exempts certain personal information collected by employers (who otherwise qualify as a “business” under the CCPA) from job applicants, employees, and contractors to the business from much of the scope of the CCPA.
In addition, AB 25 exempts from much of the CCPA, “… personal information reflecting a written or verbal communication or a transaction between the business and the consumer, where the consumer is a natural person who is acting as an employee, owner, director, officer, or contractor of a company, partnership, sole proprietorship, non-profit, or government agency and whose communications or transaction with the business occur solely within the context of the business conducting due diligence regarding, or providing or receiving a product or service to or from such company, partnership, sole proprietorship, non-profit, or government agency.”
This narrow but significant exception appears to address the collection of what would otherwise be covered personal information obtained during the due diligence phase of discussions prior to the formalization of a business relationship.
AB 874 (Irwin, D-Thousand Oaks) – Amends the definitions of “personal information” and “publicly available” for purposes of the California Consumer Privacy Act (CCPA). The bill, sponsored by the Chamber of Commerce, seeks to address concerns over existing definitions in the CCPA, namely that the definitions are vague, confusing, and may run afoul of the First Amendment of the United States Constitution.
AB 1130 (Levine, D-Marin County) – Updates the definition of “personal information” in various consumer protection statutes to include certain government identification numbers and biometric data. This bill is significant because it amends Civil Code § 1798.81.5. While not part of the CCPA, the definition of “personal information” is the operative definition for the private cause of action under the CCPA, Civil Code § 1798.150.
AB 1146 (Berman, D-Palo Alto) – Narrowly limits the California Consumer Privacy Act’s opt-out and deletion rights in order to facilitate prompt and effective recalls and warranty work.
AB 1355 (Chau, D-Arcadia) – Makes a series of amendments to the California Consumer Privacy Act, including many technical fixes and clarifying revisions.
AB 1564 (Berman, D-Palo Alto) – Reduces the methods a business must make available to consumers for submitting requests for information required to be disclosed pursuant to the California Consumer Privacy Act. The bill removes the requirement that a business provides a toll-free telephone number for such purposes.
The California State Legislature continues to pass new employment and labor laws. Since both the Senate and Assembly Labor and Employment Committees are heavily weighted Democrat due to their supermajority, business interests rarely have an opportunity to alter any of the bills supported by organized labor. This session sexual harassment and anti-arbitration bills again lead the way in bills sent to the Governor for signature.
The following employment and workers’ compensation bills were signed into law by the Governor and, unless indicated otherwise, will become effective January 1, 2020.
SB 142 (Wiener, D-San Francisco) – Requires 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.
SB 530 (Galgiani, D-Stockton) – Provides that construction industry employers who employ workers pursuant to a multi-employer collective bargaining agreement can satisfy sexual harassment training and education requirements by verifying completion of specified training provided by a state-approved apprenticeship program, labor-management training trust, or labor-management cooperation committee.
SB 688 (Monning, D-Carmel) – Provides if the Labor Commissioner determines an employer has paid a wage less than the wage set by contract in excess of the minimum wage, the Labor Commissioner may issue a citation to the employer to recover restitution of the amounts owed.
AB 5 (Gonzalez, D-San Diego) – Codification of the Dynamex “ABC” employment test articulated by the California Supreme Court last year. The application of the test is subject to multiple exceptions and, in general, there is still considerable confusion as to the application of the new law. The author of the bill, Assemblymember Lorena Gonzalez, authored what is known as a Letter to the Journal expressing her intent that AB 5, and specifically Labor Code § 2750.3(e) relating to “business-to-business” contracting, was not intended to change the law on co-employment. This will be one of the many issues litigated in the coming year. Even with the newly filed initiative from ride-sharing and other digital platform companies, this issue will be the subject of additional legislation in 2020.
AB 9 (Reyes, D-Grand Terrace) – Extends the deadline by which victims of workplace harassment, discrimination, or civil rights-related retaliation must file their allegation with the Department of Fair Employment and Housing 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.
AB 51 (Gonzalez, D-San Diego) – Prohibits California employers from forcing employees to waive, as a condition of employment, continued employment, or the receipt of any employment-related benefit, their right to have future legal disputes over incidents of harassment, discrimination, civil rights-related retaliation, or Labor Code violations heard in the dispute resolution forum of their choice. The bill also protects California workers from retaliation if they refuse to agree to such a waiver.
AB 170 (Gonzalez, D-San Diego) – Adds newspaper delivery services to the list of exempt work not subject to the “ABC” employment test in Labor Code § 2750.3 (AB 5 and Dynamex).
AB 547 (Gonzalez, D-San Diego) – Requires the Director of the Department of Industrial Relations to re-form an advisory committee to refine the recommendations on in-person sexual violence and harassment prevention training requirements for janitorial employers and employees. The bill also adds requirements to the janitorial employer registration process, including, but not limited to, the employer has no wage and hour final judgments outstanding, pending wage and hour liens or suits in court or with the Department of Fair Employment and Housing (DFEH), or lack of compliance with all terms of any DFEH administrative settlement.
AB 749 (Stone, R-La Quinta) – Prohibits settlement agreements which contain a provision that restricts an employee from working for the employer against which the employee has filed a claim.
SB 159 (Wiener, D-San Francisco) – Addresses preexposure and postexposure prophylaxis relating to HIV. The bill does not specifically refer to workers’ compensation, but there could be a conflict in cases where an injured worker has an exposure where prophylaxis is indicated. This is a situation where the licensing laws do not neatly align with the prescription drug formulary.
SB 537 (Hill, D-San Mateo) – Requires third-party networks which 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 makes two important amendments for workers’ compensation claims administrators. First, it clarifies the times during which a claims administrator must be available to respond to a request for authorization. Second, the bill requires providers to include the national provider identifier (NPI) number for the physician or provider who actually provided the services and authorizes the employer to withhold payment until the NPI is provided.
As it relates to the use of NPI numbers for billing, it should be noted while SB 537 requires the Division of Workers’ Compensation to adopt rules governing how this is supposed to work for standardized billing forms, nothing precludes an employer, insurer, pharmacy benefit manager, or third-party claims administrator from requiring the physician’s or provider’s NPI at an earlier date. It is also interesting to note this requirement, per SB 537 and now Labor Code § 4603.2(b)(1)(C), is declaratory of existing law.
SB 542 (Stern, D-Canoga Park) – Establishes a rebuttable presumption that post-traumatic stress disorder (PTSD) and other mental health conditions, when diagnosed for firefighters and peace officers, are injuries for purposes of the workers’ compensation system. As amended, the presumption applies to injuries occurring on or after January 1, 2020. This language adding the presumption remains in effect only until January 1, 2025, and as of that date is repealed. This will assure that the debate over presumptions will remain part of the dialogue in Sacramento for the foreseeable future. The amendments also specifically limit the presumption to PTSD.
Consumer Attorneys Find Friend in the Governor’s Office
Over the last several weeks, Governor Gavin Newsom approved numerous pieces of consumer- and worker-friendly legislation with potentially sweeping implications. Bills that extend and re-open the statute of limitations for child sexual abuse, privacy legislation, anti-arbitration bills, and Dynamex are sure to result in an explosion of lawsuits and litigation that will line the pockets of trial lawyers for years to come.
AB 218 (Gonzalez, D-San Diego)—This bill re-opens the statute of limitations for a three-year period beginning January 1, 2020, wherein any past victims of child sexual abuse may bring a lawsuit against the employer of the perpetrator. In addition, the bill extends the current statute of limitations from the victims age 26, or anytime thereafter within three years of the time the victims make a connection between his or her abuse and damages to victims age 40 or within five years for repressed memory situations. The Department of Finance estimates that for public schools alone, the cost of damages could be in the billions of dollars, especially with the bill allowing for treble damage in the event of any cover-up.
AB 1510 (Reyes, D-Grand Terrace) – University of Southern California students who fell victim to Dr. George Tyndall, the campus gynecologist accused of molesting hundreds of women in his care over nearly three decades, will have a fresh opportunity to hold the physician and university accountable under this bill. More than 600 of his former patients have filed civil lawsuits against Dr. Tyndall and USC for sexual battery and related sexual abuse, but USC will likely seek dismissal of these assault cases, claiming they are time-barred by the state’s statute of limitations. Thus, AB 1510 is vital to giving these women an opportunity to have their day in court.
AB 51 (Gonzalez, D-San Diego) – Would ensure a worker is not forced into arbitration and stripped of the right to take harassment, discrimination and labor claims to court. Forcing workers to sign arbitration waivers lets companies keep harassment, discrimination, and other labor violations out of court, effectively cloaking them in secrecy and, in some cases, allowing serial harassers and repeat violators to continue their conduct for years. Such arbitration contract conditions should be voluntary, not the result of coercion, or simply as a requirement for a prospective California worker to get a job.
AB 9 (Reyes, D-Grand Terrace) – The SHARE Act (Stopping Harassment and Reporting Extension) will extend the time for filing harassment and discrimination claims under California’s Fair Employment and Housing Act. This bill would extend the filing requirement from one year to three years, allowing victims additional time to seek redress and making it more consistent with the filing time limits for other actions. Low wage earners are particularly harmed by the short filing time. Most low wage workers who suffered harassment or discrimination are not aware of their legal rights and do not know that they are time-barred if they do not file within a year.
Promoting Safety of Scooters, Bikes and Other Shared-Mobility Devices
AB 1286 (Muratsuchi, D-Torrance) – E-scooters and bikes have appeared in major California cities often overnight, leaving municipalities in the dust as they attempt to catch up and create regulations. The result is a patchwork of different laws and regulations. Meanwhile, riders and pedestrians are at risk. Four scooter riders have died, and many riders and pedestrians have suffered injuries. Although scooters provide an eco-friendly, low-cost transportation option, the lack of uniform consumer protection is problematic. Riders leave the scooters everywhere, creating a mess and tripping hazard. There are public safety concerns, as riders tend to not wear helmets as well as drive and park on sidewalks, creating a hazard for the elderly, children and people with disabilities. This bill will enact minimum state protections requiring e-mobility companies to carry minimum insurance to protect riders and third parties, prohibit them from waiving consumer legal rights, and require that cities and counties adopt and enforce safety rules.
Protecting the Vulnerable Elderly in Emergencies
SB 314 (Dodd, D-Napa) – During the 2017 Wine Country wildfires, about 100 elderly residents at two Santa Rosa care homes were abandoned as flames closed in. One of the homes burned to the ground, and as many as 20 of the elderly residents likely would have died if not for the heroic rescue efforts by family members and emergency responders. SB 314 will update the Elder Abuse and Dependent Adult Civil Protection Act to include “abandonment” as an enhanced remedy that qualifies for civil action. By making this change, nursing homes and other senior facilities will be on notice: Don’t leave the frail elderly behind in a life-threatening emergency.
Stopping Companies Trying to Stall the Legal Process
SB 707 (Wieckowski, D-Fremont) – Individuals who have been forced to submit to mandatory arbitration to resolve an employment or consumer dispute would be provided with procedural options and remedies under this bill when a company stalls or obstructs the arbitration proceeding by refusing to pay the required fees.
Prohibiting Racial Profiling on Damage Awards
SB 41 (Hertzberg, D-Van Nuys) – Prohibits the use of racial- and gender-biased data in determining civil damage awards for personal injury or wrongful death actions, ensuring women and people of color are not deprived of fair compensation.
Improving the Daily Practice of Law
SB 370 (Umberg, D-Santa Ana) – Would create a more efficient standard for Requests for Production of Documents. Specifically, the bill will require the documents to be organized and labeled to correspond with the categories in the demand. This bill is a placeholder bill for substantive civil procedure changes to improve everyday practice.
Protecting Dying Asbestos Victims
SB 645 (Monning, D-Carmel) – Would protect dying mesothelioma and silicosis victims by limiting their deposition time.
Major Initiative Year in 2020
As has become the norm, the next state general election, November 2020, is shaping up to be another election with a long list of initiatives for the public to digest. Among the initiatives that are expected to be on the ballot include:
1. A split roll property tax measure amending Proposition 13 to allow commercial properties to be reassessed more frequently;
2. A $15 billion bond proposal to support K-14 public schools backed by the California Schools Board Association;
3. A new privacy initiative backed by Bay Area businessman, Alastair Mactaggart;
4. An initiative to amend California’s Medical Malpractice Act to increase the $250,000 cap;
5. An initiative to repeal the Legislature’s amendments to California’s bail bond system;
6. An initiative backed by Uber, Lyft, and DoorDash to provide an exemption from Dynamex for the gig economy;
7. A replay of the Dialysis Initiative from 2018;
An initiative backed by the California Realtors Association providing certain property tax breaks for seniors.