BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 889 (Ammiano)
Hearing Date: 8/25/2011 Amended: 7/12/2011
Consultant: Bob Franzoia Policy Vote: L&IR 5-1
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BILL SUMMARY: AB 889 would regulate the wages, hours, and
working conditions of domestic work employees, provide a private
right of action for domestic work employees, including
liquidated damages, and would provide an overtime compensation
rate for domestic work employees. This bill would require
domestic work employers of persons engaged in household domestic
service to provide employees with information regarding their
wages either semimonthly or at the time of each wage payment,
and remove an exclusion for domestic work employers to secure
workers' compensation coverage for certain employees thereby
requiring all employers to secure the payment of workers'
compensation.
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Elimination of wage andEstimated $385 annually, costs could
beSpecial*
hour exemptions for significantly higher
domestic work employees
* Labor Enforcement and Compliance Fund
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STAFF COMMENTS: SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
This bill would enact the Domestic Work Employee Equality,
Fairness and Dignity Act to regulate the wages, hours, and
working conditions of domestic work employees. This bill would
establish specific employment rights for domestic work employees
including:
- Right to overtime compensation.
(Labor Code 510 provides that eight hours of labor constitutes a
day's work. Any work in excess of eight hours in one workday
AB 889 (Ammiano)
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and any work in excess of 40 hours in any one workweek and the
first eight hours worked on the seventh day of work in any one
workweek shall be compensated at the rate of no less than one
and one-half times the regular rate of pay for an employee. Any
work in excess of 12 hours in one day shall be compensated at
the rate of no less than twice the regular rate of pay for an
employee. In addition, any work in excess of eight hours on any
seventh day of a workweek shall be compensated at the rate of no
less than twice the regular rate of pay of an employee. Nothing
in this section requires an employer to combine more than one
rate of overtime compensation in order to calculate the amount
to be paid to an employee for any hour of overtime work.)
- Right to meal and rest periods.
- A domestic work employee required to be on duty for 24 hours
or more shall have a minimum of eight hours of uninterrupted
sleep except in an emergency.
- A live-in domestic work employee shall not be required to work
more than five days in any one workweek without a day off. Work
in excess of this schedule shall be compensated with the
appropriate overtime.
- A live-in domestic work employee who is not required to be on
duty for 24 hours shall have 12 hours free of duty, of which a
minimum of eight are for uninterrupted sleep.
- Live-in domestic work employees and those who work for more
than 24 hours shall be provided sleeping accommodations that are
adequate and sanitary.
An employer shall pay $50 to the employee for each day the
employer violates these provisions. This bill also provides the
domestic work employee the option of enforcing a violation by
bringing a civil action. Filing an administrative or civil
complaint may be done up to three years from the time of the
violation. Additionally, a domestic work employee who prevails
in a civil action shall be entitled to legal or equitable relief
including liquidated (punitive) damages. Staff notes that
providing for liquidated damage appears to be unique in Labor
Code provisions relating to employees.
A domestic work employer shall permit a domestic work employee
who works five hours or more to choose the food he or she eats
and to prepare his or her own meals. A domestic work employer
is required to permit a domestic work employee to use the job
site's kitchen facilities and appliances without charge or
deduction from pay.
AB 889 (Ammiano)
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By one estimate, there are 200,000 domestic work employees in
the state. How many employees are employed by the 2,000 home
care agencies in the state is unknown. Given the number of
domestic work employees whose wages, hours and benefits would be
governed by the provisions of this bill and the possible
violations, this analysis estimates there will be a major
increase in claims to the Division of Labor Standards
Enforcement (DLSE) in the Department of Industrial Relations.
Some information on possible number of claims can be found in
the report, Wage Theft and Workplace Violations in Los Angeles,
Institute for Research on Labor and Employment, UCLA 2010. The
report noted child care workers (highest at 74.9 percent),
garment workers (60.1 percent) and maids and housekeepers (35
percent) had high rates of minimum wage violations. Home health
care workers had a violation rate of 20.4 percent. As the
report noted, high rates are not surprising since flat weekly or
flat daily pay rates, by definition, do not vary with hours
worked. The reported noted high overtime, meal break and
off-the-clock violation rates (though it does not appear those
rates were separated by child care worker, maids and
housekeepers, and home health care workers).
Staff notes Industrial Welfare Commission Wage Order 15 applies
to Household Occupations which is defined as all services
related to the care of persons or maintenance of a private
household or its premises by an employee of a private
householder. Under Wage Order 15, personal attendants are
defined as including:
babysitters and means any person employed by a private
householder or by any third party employer recognized in the
health care industry to work in a private household, to
supervise, feed, or dress a child or person who by reason of
advanced age, physical disability, or mental deficiency needs
supervision.
Personal attendants are completely exempt from the general
overtime requirements, meal and rest break requirements and
other provisions of Wage Order 15. Therefore, personal
attendants are only required to be paid straight-time for all
hours worked, regardless of whether they work more than eight
hours in a day or 40 hours in a week.
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In 2010, there were 1,175 DLSE investigations completed and
decisions rendered. The Retaliation Complaint Unit has 15
investigators with an average caseload of 78 cases. An
investigator in the unit has a Deputy Labor Commissioner I
classification I ($4,357 - $5,631, total compensation $76,966
annually). In 2009, the Bureau of Field Enforcement reported
1,766 citations for workers compensation, 71 for minimum wage,
and 95 for overtime violations in a variety of industries. For
purposes of illustration, if one Deputy Labor Commissioner l
could handle 200 claims annually, just 1,000 claims would
require five new positions at a cost of $384,830 ($76,966 x 5).
Costs could be significantly higher. For example, if one
percent of domestic work employees filed a claim, estimated
costs would double.
As part of the state government trailer bill Chapter 12/2009 (AB
12x4, Evans), the Director of Industrial Relations would be
authorized to levy a separate surcharge upon all employers, as
defined, for the purposes of deposit in the newly created Labor
Enforcement and Compliance Fund. Chapter 12 requires that the
total amount of the surcharges be allocated between employers in
proportion to payroll respectively paid in the most recent year
for which payroll information is available. The surcharge
levied shall not exceed $37,000,000 in the 2009-10, adjusted for
as appropriate to reconcile any over/under assessments from
previous fiscal years, and shall not be adjusted each year
thereafter by more than the state-local government deflator*.
The cap of $37,000,000 represents the amount expended by the
DSLE in 2008-09 for the enforcement of wage and hour violations.
Given the potential enforcement costs associated with this
bill, it may become necessary to apply the deflator which, to
date, has not been applied.
Currently, employers of domestic work employees must carry
workers' compensation insurance. This bill would remove the
exemption from workers compensation for domestic work employees
who work less than 52 hours in a 90 day period provided by Labor
Code 3352 (h). Some employers (private residence employers) of
domestic work employees cover their workers' compensation
insurance obligation through homeowner insurance. It appears
all domestic work employers could continue to secure workers
compensation through homeowner insurance (Insurance Code 11590).
If the provisions of this bill required employers of domestic
work employees to purchase the workers compensation insurance
AB 889 (Ammiano)
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from a state approved workers compensation carrier, this may
result in many new policies being purchased at the minimum
policy rate. Additionally, all employers will be required to
provide specific written workers' compensation information to
all employees. It is unclear if employers who hire residential
domestic work employees for their household will be sufficiently
knowledgeable to provide the required information to avoid
penalty situations. (Existing law requires employers furnish
employees with an accurate itemized written statement at the
time of each payment of wages that shows, among other things,
the name of the employee, his or her gross and net wages earned,
the total hours worked, and all deductions. Pursuant to Labor
Code 226 (d), this requirement does not apply to any employer of
a person employed by the owner of a residential dwelling under
specified conditions including duties incidental to the
ownership of the dwelling and not in the course of the business
of the employer. This bill would remove that exemption and
require that an employer shall pay $50 to the employee for each
day the employer violates this section.)
The current State Compensation Insurance Fund (SCIF) rate for a
private residence employee classification is $2,050 (per
employee per year). This assumes minimum wage of $16,640
annually and no overtime. If a private residence employer
determines that the provisions of this bill make the hiring of
three full time employees as more cost effective and reduces or
eliminates potential violations for rest periods, meal periods,
etc., the private residence employer's workers' compensation
rate could increase to $6,150 for the private residence employee
classification. These rates for an employer of five full time
(minimum wage) employees would increase to $10,250.
If greater that minimum wage is paid, or overtime is paid, to
domestic work employee, there would be much greater divergence
between the private residence employee classification and the
other classifications. If the employer were to go to an
outsourcing agency for domestic help, the homemaker services
classification ($2,329 - $14.00 per $100 of payroll) or the
building operation classification ($3,204) would most likely
apply.
By one estimate, half of all domestic work employees are on duty
for 24 hours. While it is difficult to estimate how employer
may respond to the provisions of this bill, it would appear
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every such arrangement, where there is no sleep agreement, will
necessitate the hiring of a second employee. Employers may
determine that three eight hour employees is the appropriate
option, which may decrease wage compensation for some employees.
It may increase compensation for some employees. For a
homeowner with one employee (under this bill if that employee is
providing 24 hour care without a sleep agreement), that employee
could receive generally a minimum compensation of $8 for 8
hours, $12 for 4 hours and $16 for 12 hours for a total of $256,
an increase of $64 a day over straight minimum wage.
For all other employers, the impact is unclear. Would the
provisions of this bill, force employers (private residence
employers, home care agencies, etc.) "underground" or would the
existence of clear monetary penalties and potential civil action
increase compliance and reduce violations. Penalties could
alter the way employers schedule employee meal and sleep periods
and respond to emergency situations. If a homecare agency can
hire sufficient employees, the agency will have to balance
potentially lower employee compensation costs against
significant higher workers' compensation and unemployment
insurance costs and possible litigation costs.
The proposed amendments would:
- Exempt licensed child care providers from the bill.
- Make a non-substantive change to Labor Code 1454. This
amendment would clarify the intent of the bill that Labor Code
510 governs overtime, rather than Wage Order provisions that
exempt Personal Attendants and Live in workers from the usual
overtime rules.