BILL ANALYSIS Ó
Senate Committee on Labor and Industrial Relations
Ted W. Lieu, Chair
Date of Hearing: June 29, 2011 20011-2012 Regular
Session
Consultant: Alma Perez Fiscal:Yes
Urgency: No
Bill No: AB 350
Author: Solorio
Version: As amended April 27, 2011
SUBJECT
Displaced Janitor Opportunity Act
KEY ISSUES
Should the Legislature extend the provisions available to
janitors and building maintenance employees under the Displaced
Janitor Opportunity Act to other employees of a particular site?
Should the Legislature extend the requirement that a successor
contractor retain licensed security, landscape, window cleaning
and food cafeteria services employees when their services are
under a new contract?
Should the Legislature require that these specified employees be
retained for a 90 day transition employment period?
PURPOSE
To expand the provisions of existing law pertaining to employee
retention and offers of employment, currently available to
janitorial or building maintenance services, to other specified
property services.
ANALYSIS
Existing law establishes the Displaced Janitor Opportunity Act
(The Act) which requires contractors and subcontractors that are
awarded contracts or subcontracts by an awarding authority to
provide janitorial or building maintenance services within the
State of California, to follow specified procedures when a
service contract is being terminated or will be terminated.
(Labor Code §1060-65)
Existing law requires the terminated contractor, within three
working days after notification by the awarding body of the
termination of the contract, to provide to the successor
contractor, the name, date of hire, and job classification of
each employee employed at the site or sites covered by the
terminated service contract at the time of the contract
termination.
Existing law requires that the successor contractor or
subcontractor, among other things, do the following:
Retain, for a 60-day transition employment period,
employees who have been employed by the terminated
contractor or its subcontractors, if any, for the preceding
four months or longer at the site or sites covered unless
the successor contractor or subcontractor has reasonable
and substantiated cause not to hire a particular employee
based on that employee's performance or conduct while
working under the terminated contract.
Make a written offer of employment to each employee, as
specified, stating the time within which the employee must
accept that offer (not less than 10 days). Nothing in The
Act requires that the successor contractor or subcontractor
pay the same wages or offer the same benefits as were
provided by the prior contractor or prior subcontractor.
If at any time the successor contractor or subcontractor
determines that fewer employees are needed to perform
services under the new service contract than were required
under the terminated contract, the successor contractor or
subcontractor shall retain employees by seniority within
the job classification.
During the initial 60-day transition employment period,
the successor contractor or subcontractor shall not
discharge without cause an employee retained pursuant to
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Senate Committee on Labor and Industrial Relations
The Act. Cause shall be based only on the performance or
conduct of the employee.
At the end of the 60-day transition employment period,
the successor contractor or subcontractor shall provide a
written performance evaluation to each employee retained.
If the employee's performance during the 60-day period
is satisfactory, the successor contractor or subcontractor
shall offer the employee continued employment which shall
be at-will employment under which the employee may be
terminated without cause.
Existing law provides that an employee who was not offered
employment or who has been discharged in violation of The Act
may bring an action against a successor contractor or
subcontractor in any superior court of the State of California
having jurisdiction. Upon finding a violation of The Act, the
court shall award backpay, including the value of benefits, for
each day during which the violation has occurred and continues
to occur. The amount of backpay shall be calculated as
specified.
Existing law specifies that nothing in The Act shall prohibit a
local government agency from enacting ordinances relating to
displaced janitors that impose greater standards than, or
establish additional enforcement provisions to, those prescribed
by The Act. (Labor Code §1064)
This Bill would expand the provisions of existing law which
requires janitorial or building maintenance service contractors
to retain employees for 60 days following the awarding of a
contract.
Specifically, this bill would:
1) Rename the law the "Displaced Property Service Employee
Opportunity Act."
2) Expand the employee retention and related provisions of
existing law applicable to janitorial and building
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Senate Committee on Labor and Industrial Relations
maintenance service contracts to contracts for "property
services."
3) Define "property services" to include janitorial,
building maintenance, licensed security, landscape, window
cleaning, or food cafeteria and dietary services.
4) Expand the employee retention provisions from 60 to 90
days.
COMMENTS
1. Need for this bill?
Under current law, a successor contractor or subcontractor
providing janitorial or building maintenance service is
required, for a 60-day transition employment period, to retain
employees who have been employed by the terminated contractor
or its subcontractors. At the end of the 60-day transition
employment period, existing law requires a successor
contractor to provide a written performance evaluation to each
retained employee. If the employee's performance during that
60-day period is satisfactory, the successor contractor is
required to offer the employee continued employment. Any
employment after the 60-day transition employment period is
at-will employment under which the employee may be terminated
without cause.
Proponents of the measure contend that these employment
retention provisions available for janitorial and building
maintenance employees are especially crucial during our
current economic downturn. The author and proponents argue
that California's unemployment rate has been consistently
above 12% since the start of the Great Recession, which has
made it nearly impossible for workers to find new jobs and
significantly increased long-term unemployment. Additionally,
they argue that worker retention means higher quality of
services from a capable and experienced workforce.
This bill would address these concerns by amending current law
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to expand coverage of these employee retention requirements
and related provisions to include contracts for licensed
security, landscape, window cleaning, and food cafeteria
services. Additionally, the bill expands the employee
retention requirements from 60 to 90 days in order to give
employees who are soon to be terminated more time to adjust
and look for work.
2. Staff Questions :
Existing law contains employee retention requirements when
specified services are under a new contractor or
subcontractor. These provisions exist for employees in the
janitorial and building maintenance industry, under the
Displaced Janitor Opportunity Act (enacted in 2001, Labor Code
§1060-65), as well as employees in public transit service
contracts (enacted in 2003, Labor Code §1070-74). Both
sections of the Labor Code contain similar retention and
procedural requirements.
Provisions governing public transit service contracts require
that the existing contractor provide the name, addresses,
dates of hire, wages, benefit levels, and job classifications
of employees to the successor contractor. Provisions of the
Displaced Janitor Opportunity Act, on the other hand, only
requires that the name, date of hire and job classification of
employees be provided.
Should the provisions governing the Displaced Janitor
Opportunity Act also require that the existing contractor
provide the addresses, wages and benefit levels of current
employees to the successor contractor?
Provisions governing public transit service contracts require
that a successor contractor retain employees unless there is
reasonable and substantiated cause not to, however, that cause
is limited to the employee's performance or conduct while
working under the prior contract or his/her failure to pass
any controlled substances and alcohol test, physical
examination, criminal background check required by law as a
condition of employment, or other standard hiring
qualification lawfully required by the successor contractor or
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Senate Committee on Labor and Industrial Relations
subcontractor. Provisions of the Displaced Janitor
Opportunity Act, on the other hand, requires a successor
contractor or subcontractor to retain employees previously
employed by the terminated contractor unless the successor
contractor or subcontractor has reasonable and substantiated
cause not to hire a particular employee based on that
employee's performance or conduct while working under the
terminated contract. However, these provisions do not include
any background checks or hiring qualifications.
Should the provisions governing the Displaced Janitor
Opportunity Act also include requirements regarding background
checks or other standard hiring qualifications, particularly
with regards to licensed security employees?
3. Proponent Arguments :
According to the author, it is common practice in the property
management industry to seek out the lowest bidders for
property services without regard to their labor practices.
According to the author, contracted out property service
workers, such as building maintenance, licensed security,
landscape, window cleaning and food cafeteria personnel, can
lose their jobs with little - or no warning - when the
property manager decides to award the service contract to
another contractor. This bill would provide a measure of job
stability when contractors are changed, through no fault of
their own.
Proponents argue that California continues to face record high
unemployment levels, still in excess of 12 percent in many
communities, and the economy is not expected to rebound for
years. Property service workers who have diligently maintained
and secured business properties should be afforded a measure
of job stability when contractors are changed, through no
fault of their own. Taking into consideration the dire
economic situation facing California, extending the retention
period from 60 to 90 days will allow property service workers
to maintain their jobs for an additional 30 days.
Proponents argue that when a building services contract
changes hands, there is often little regard for the workers
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who have been doing these jobs, sometimes for decades. They
contend that in this economy it is particularly inhumane to
treat trained and experiences workers as "disposable."
Moreover, they argue that not only does this bill protect
workers and increase economic stability, but it will also
improve security, maintenance and food safety because worker
retention means a higher quality of services from a capable
and experienced workforce. They conclude that this benefits
the community as a whole while keeping families from falling
into poverty.
4. Opponent Arguments :
According to opponents, this bill constitutes a government
mandate that completely usurps the employers' discretion in
who to hire in its workforce and precludes the subsequent
employer from conducting any pre-hiring background checks or
interviews to determine if the employees of the prior
contractor/employer are individuals who meet the unique and
specific criteria of the subsequent employer. Opponents argue
that this bill basically eliminates any distinction from one
contractor to the next regarding the type of workforce that
contractor can deliver, thereby minimizing competition amongst
contractors. Additionally, opponents argue that by limiting a
subsequent employer's ability to properly conduct background
checks of potential employees, it is setting up these
subsequent employers for potential negligent hiring
litigation.
Opponents also argue that this bill will not reduce the
current unemployment rate since the subsequent contractor will
be forced to either 1) displace its existing workforce to take
on the new employees; or 2) eliminate positions it would have
opened to new applicants in the industry as those positions
would now be filled by the prior contractor's employees.
Additionally, opponents argue that if the incoming contractor
becomes responsible for determining what employees are poor
performers and are not eligible to stay on site, then they
could become liable for the unemployment claim, which could
result in an increase in a contractor's or subcontractor's
experience modification rate for unemployment insurance.
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Furthermore, opponents contend that this bill is designed to
ensure that a union, who has been elected as the bargaining
representative through the proper procedures for the prior
contractor, will remain the bargaining representative for the
subsequent employer. According to opponents, since this bill
mandates that subsequent employers hire the predecessor's
employees, it would provide automatic protection to the
incumbent union to maintain its status as the bargaining
representative, thus forcing all contractors/employers of
"property services" to be union employers. Opponents believe
the decision of whether or not to have a union in the
workplace should be left to the employers and employees, after
following the proper procedures outlined by the National Labor
Relations Act.
The California Disability Services Association (CDSA) opposes
this measure, arguing that it will greatly limit the ability
of people with disabilities to secure employment. CDSA notes
that many people with developmental disabilities perform
services such as janitorial, landscaping, window cleaning and
food cafeteria services. CDSA states if they are required to
hire non-disabled workers under the terms of this bill, they
would simply be blocked from carrying out their mission to
increase employment opportunities for persons with
developmental disabilities where the unemployment rate already
exceeds 80 percent. Moreover, they argue that it is not
possible for them to employ people to work with persons with
disabilities who have not gone through existing hiring
procedures, including criminal background checks, many of
which are required by existing laws and regulations.
5. Prior Legislation :
SB 20 (Alarcon) of 2001: Chapter 795, Statutes of 2001
This bill enacted the Displaced Janitor Opportunity Act which
requires contractors and subcontractors that are awarded
contracts to provide janitorial or building maintenance
services to retain, for a period of 60 days, certain employees
who were employed at the site by the previous contractor.
SB 1521 (Alarcon) of 2004: Vetoed by the Governor
This bill would have (1) extended, from 60 to 90 days, the
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Senate Committee on Labor and Industrial Relations
transition employment period for retaining janitors, and would
have (2) expanded responsibility to building owners. In his
veto message the Governor stated that "The current law already
offers a measure of protection for janitorial employees not
afforded to any employee in any other industry. Extending the
retention period another 30 days would not only create more
disparity with other industries, but it would also further
delay an employer from exercising his or her rights under
California's at-will employment doctrine."
SB 2850 (Ridley-Thomas) of 2004: Vetoed by the Governor
This bill would have enacted the Private Security Service
Assurance Act, which would have required contractors awarded
contracts to provide private security to retain, for a period
of 90 days, certain employees who were employed at that site
by the previous contractor. The provisions of this bill would
have mirrored the Displaced Janitor Opportunity Act currently
in law. In his veto message the Governor stated that, "In
many cases, a new contractor will call upon the knowledge and
expertise of the existing employees in order to provide that
protection. This is even more likely considering the amount
of training required for private security guards under current
law. Retaining current employees would not only provide the
contractor this expertise but also save the contractor the
costs of the training. A statutory mandate is not needed for
contractors to appreciate these incentives."
SUPPORT
CA Conference Board of the Amalgamated Transit Union
CA Conference of Machinists
CA Official Court Reporters Association
California Labor Federation
California Teamsters Public Affairs Council
Engineers and Scientists of California
International Longshore and Warehouse Union
Professional and Technical Engineers, Local 21
Service Employees International Union
UNITE HERE!
United Food and Commercial Workers-Western States Conference
Utility Workers Union of America, Local 132
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Senate Committee on Labor and Industrial Relations
OPPOSITION
Apartment Association, California Southern Cities
Apartment Association of Greater Los Angeles
Building Owners and Managers Association of California
California Apartment Association
California Association of Bed & Breakfast Inns
California Association of Licensed Security Agencies, Guards &
Associates
California Association of Realtors
California Attractions and Parks Association
California Business Properties Association
California Chamber of Commerce
California Disability Services Association
California Grocers Association
California Hospital Association
California Hotel & Lodging Association
California Independent Grocers Association
California Landscape Contractors Association
California Manufacturers & Technology Association
California Retailers Association
California Travel Association
Commercial Real Estate Development Association, NAIOP of
California
Construction Industry Legislative Council
International Council of Shopping Centers
Orange County Business Council
Painting & Decorating Contractors of California
Promising Futures, Inc.
Rental Housing Association of Northern Alameda County
San Diego County Apartment Association
San Francisco Association of REALTORS
San Joaquin County Rental Property Association
Santa Barbara Rental Property Association
South Bay Association of Chambers of Commerce
Western Electrical Contractors Association
Hearing Date: June 29, 2011 AB 350
Consultant: Alma Perez Page 10
Senate Committee on Labor and Industrial Relations
Hearing Date: June 29, 2011 AB 350
Consultant: Alma Perez Page 11
Senate Committee on Labor and Industrial Relations