BILL ANALYSIS Ó
AB 2217
Page A
Date of Hearing: April 18, 2012
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Sandre Swanson, Chair
AB 2217 (Pan) - As Proposed to be Amended: April 18, 2012
SUBJECT : Call centers: relocation.
SUMMARY : Enacts various provisions of law related to telephone
call centers. Specifically, this bill :
1)Defines an "employer" as a person that employs at least 50
employees, excluding part-time employees, at one or more call
centers.
2)Defines a "call center" as a building, facility or operation
where customer service is provided by telephone.
3)Requires a customer service representative who receives or
makes a telephone call to a customer who resides in California
to identify to the customer the location of the call center
from which the customer service representative is calling.
4)Requires the customer service representative, upon request of
the customer, to transfer the customer to a call center
located within the United States.
5)Amends existing law requiring 60 days' notice to employees of
mass layoffs or other events to include call centers that
employ, or have employed within the previous 12 months, 50 or
more employees.
EXISTING LAW prohibits employers from ordering a mass layoff,
relocation, or termination without first giving 60 days' notice
to affected employees and specified governmental agencies.
FISCAL EFFECT : Unknown
COMMENTS : The author refers to this bill as the "Save the
California Call Centers Jobs Act of 2012" and states that it is
intended to take a step forward in stopping the relocation of
call centers out of the State of California and protecting
consumers who do not want their personal information going
overseas.
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Existing Mass Layoff Notification Requirements Under Federal and
State Law
Existing federal law requires 60 days' notice of a mass layoff
at certain workplaces, pursuant to the Worker Adjustment and
Retraining Notification (WARN) Act. In 2003, California enacted
a state law version of the WARN Act that applies to a broader
category of employers. Under the California law, an employer
must give 60 days' written notice of a mass layoff, relocation
or termination to employees, the Employment Development
Department (EDD), the local workforce investment board, and the
chief elected official of each affected city and county
government. The state law specifies that this requirement
applies to any industrial or commercial facility that employs 75
or more people. A mass layoff includes any layoff of 50 or more
persons during a 30-day period.
This bill amends the state WARN Act to include call centers that
employ, or have employed during the previous 12 months, 50 or
more employees.
RELATED FEDERAL LEGISLATION AND LEGISLATION IN OTHER STATES :
In December 2011, federal legislation known as the "United
States Call Center Worker and Consumer Protection Act" was
introduced in Congress as H.R. 3596.
H.R. 3596 requires the federal Department of Labor to maintain
and make publicly available a list of all employers that
relocated all or a significant portion of the call center or
customer service work overseas. Companies on the list would be
ineligible for federal grants or guaranteed loans for up to five
years. In addition, H.R. 3596 requires a call center agent to
disclose the name and the physical location of their call
center. The proposed legislation also provides that the
customer has the right to request the call be transferred to a
representative that is physically located within the United
States.
Similar state legislative proposals are pending in Arizona,
Florida and New Jersey.
ARGUMENTS IN SUPPORT :
This bill is sponsored by the Communications Workers of America
(CWA).
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CWA argues that, despite high local unemployment, some employers
persist in conducting call center operations out-of-state or
even overseas. They contend that these jobs should be rooted in
the communities that the call centers and customer service
centers are meant to serve. We need strong state laws that
ensure that we preserve good jobs here in California. This bill
will enable the tracking of trends in call center employment and
the identification of employers that are moving jobs out of the
state.
CWA contends that these jobs are meaningful for large segments
of the population that are already suffering in this bad
economy. They state that approximately 40 percent of call
center workers are people of color and over 60 percent of women
- demographic groups that have been hit hard during the current
recession.
In addition, CWA argues that California consumers face great
risk of identity theft and stolen personal funds due to the lack
of proper security in overseas call centers. In support of this
argument, CWA submitted to the Committee a March 2012 report<1>
it prepared entitled, "Why Shipping Call Center Jobs Overseas
Hurt Us Back Home." Among other things, the report discussed a
series of incidents at overseas call centers that CWA argues has
exposed security breaches that put California consumers at risk.
Therefore, every step should be taken to ensure the protection
and security of California citizens' identity, data and rights.
CWA argues that discouraging the offshoring and movement of call
center work outside of California will take a tremendous step
forward in protecting them.
Similarly, the Consumer Federation of America writes that as
telephone call centers leave the state and country, consumers
are increasingly at risk for privacy invasions because state and
federal financial laws are not enforceable against transactions
that occur in other countries. This can lead to identify theft
and fraud. They contend that California has some of the
strongest privacy rights in the nation, but these rights are
undermined when a business can make telephone calls to a
---------------------------
<1> The report is available at
http://files.cwa-union.org/national/News/Misc/20111215-offshore-c
allcenter.pdf
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customer without disclosing basic information about the origin
of the calls. Customers deserve transparency in their
interactions with these companies and this bill will empower
consumers to make informed decisions as to with whom they will
do business.
ARGUMENTS IN OPPOSITION :
A coalition of employers opposes this measure and states that,
assuming the intent of this bill is to discourage call centers
from relocating outside of California, they do not believe that
public shaming is the proper method. Rather, legislation should
be directed at encouraging businesses to stay by alleviating
some of the burden that is forcing them to leave.
Opponents also contend that this bill's attempt "to regulate
activities in another state and even another country directly
impacts interstate commerce and therefore is likely
unconstitutional under the Commerce Clause. Specifically, "'with
few exceptions, a legislature may not by statute impose an undue
burden on interstate commerce.'" Heritage Marketing and
Insurance Services, Inc. v. Chrustawaka, 160 Cal.App.4th 754,762
(2008) (citations omitted). Interstate commerce is left to
Congress to regulate in order to promote harmony amongst the
states. If a statute on its face is discriminatory against
interstate or foreign commerce, it is per se invalid. See
Pacific Merchant Shipping Association v. Voss, 12 Cal.4th 503,
516 (1995). Given that Ýthis bill] not only impacts call
centers that relocate to another state, but also call centers
that relocate to a foreign country, it appears discriminatory on
its face and therefore is likely invalid."
Opponents argue that this bill also likely violates
international trade agreements as well. They state that both
multilateral trade policies established by the World Trade
Organization and bilateral, regional trade agreements such as
the North American Free Trade Agreement assure international
obligations to prevent impediments to global trade. Therefore,
they contend that the matter must be addressed at the federal
level and Congress appears poised to do just that. H.R 3596 (The
Unites States Call Center Worker and Consumer Protection Act)
addresses the concerns raised by the introduction of this bill
and requires the Department of Labor to publically post a list
of call centers that operate in foreign territories. In
addition, opponents note that H.R. 3596 grants consumers the
AB 2217
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right to request a call be transferred to a customer service
agent located in the U.S. Therefore, the contend that it is
imprudent for California to act alone and risk erecting a
barrier to international trade, particularly when the federal
government is already addressing the matter.
Finally, despite its stated intent to address data breaches in
foreign countries, opponents argue that this bill does nothing
to resolve this alleged problem. If data breaches truly are
occurring in other states or countries, forcing a company to (1)
notify California of its relocation or (2) transfer a call back
to a call center within the United States, will not fix this
issue. Opponents state that the data breaches occur because of
the lack of proper security, not because of the location of the
call center.
The California Bankers Association argues that this bill is
unnecessary because financial institutions are heavily regulated
by both federal and state regulators on their compliance with
safety and soundness involving an individual's non-public
personal information. Financial institutions are already
civilly liable for a breach, and therefore take this matter
seriously.
PRIOR LEGISLATION :
As introduced, AB 2690 (De La Torre) of 2010 would have required
customer call centers for a public utility, upon request, to
provide specified information to customers (including the
location of the call center and the entity that operates the
call center), and to transfer calls from outside the state or
country to a call center located in the state or country.
AB 2690 failed passage in the Assembly Committee on Utilities
and Commerce, but the bill was granted reconsideration. The
bill was subsequently amended to require telephone corporations
to post information on their Internet web sites that identifies
the location of each call center that receives calls from
California-based customers, and the number of calls received by
each call center from the telephone corporation's California
customers. However, the measure was not taken up for a vote on
reconsideration.
REGISTERED SUPPORT / OPPOSITION :
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Support
American Federation of State, County and Municipal Employees
California Labor Federation, AFL-CIO
Communication Workers of America (sponsor)
Consumer Federation of California
TURN
Opposition
California Association of Collectors, Inc.
California Bankers Association
California Chamber of Commerce
California Manufacturers & Technology Association
California Retailers Association
CTIA - The Wireless Association
Direct Marketing Association
Internet Alliance
TechAmerica
TechNet
Verizon
Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091