BILL ANALYSIS �
Senate Committee on Labor and Industrial Relations
William W. Monning, Chair
Date of Hearing: June 12, 2013 2013-2014 Regular
Session
Consultant: Alma Perez Fiscal:Yes
Urgency: No
Bill No: AB 285
Author: Brown
As Introduced/Amended: February 11, 2013
SUBJECT
Microenterprises: economic development
KEY ISSUE
Should the Legislature require that the California Workforce
Investment Board (CWIB) develop and distribute guidelines and
provide assistance to local workforce investment boards to help
them implement entrepreneurial and self-employment training
programs?
ANALYSIS
Following passage of the federal Workforce Investment Act of
1998 , the state established the California Workforce Investment
Board (CWIB) and charged the board with the responsibility of
developing a unified, strategic planning process to coordinate
various education, training, and employment programs into an
integrated workforce development system that supports economic
development. There are 49 Local Workforce Investment Boards that
plan and oversee the workforce investment system at the local
level. (Unemployment Insurance Code �14013)
Existing law also requires each WIB to establish at least one
full service one-stop career center in the local workforce
investment area. One-Stop centers prove jobseekers with
employment, education, training, and job search services, while
providing employers with access to career and labor market
information, job placement assistance, among others things.
Existing law requires the board, in collaboration with specified
state and local partners, and the local WIBs to develop a
strategic workforce plan, updated at least every 5 years, to
address the state's economic, demographic, and workplace needs.
Among other things, with regards to "microenterprises", existing
law :
1. Defines "microenterprise" as a sole proprietorship,
partnership, or corporation with fewer than five employees,
including the owner, and generally lacking access to
conventional loans, equity, or other banking services.
(Business and Professions Code �18000)
2. States that microenterprises are distinct from small
businesses or microbusinesses and include, but are not
limited to, businesses that provide child development
services, landscaping services, building maintenance,
personal and business services, specialty food products,
and home-based businesses.
3. Provides that "microenterprise development provider"
means a nonprofit or public agency that provides
self-employment training, technical assistance, and access
to microloans to individuals seeking to become
self-employed or expand their business.
Existing law provides that every city, county, and city and
county is encouraged to access microenterprise development in
order to create new jobs and income opportunities for
individuals of low and moderate income. (BPC �18001)
This Bill would require the California Workforce Investment
Board (CWIB) to make recommendations and provide assistance on
entrepreneurial training opportunities that could be made
available through local workforce investment boards.
Specifically, this bill would:
1) Update the definition of microenterprise and
microenterprise development organizations to more
Hearing Date: June 12, 2013 AB 285
Consultant: Alma Perez Page 2
Senate Committee on Labor and Industrial Relations
accurately reflect industry practices. Primarily,
providing that:
a) A "limited liability company" is included
in the definition of microenterprise.
b) A microenterprise has five or fewer
employees, including the owner.
2) Add findings and declarations relative to the importance
of entrepreneurs and home-based businesses and providing
individuals with the opportunity to learn skills needed to
pursue self-employment opportunities in order to provide
them with a stable income.
3) Require that the CWIB assist the Governor in recommending
policies on entrepreneurial training opportunities that
could be made available through programs of local WIBs.
4) Require that, by January 1, 2015, the CWIB develop, in
consultation with appropriate state agencies and small
business-related organization, guidelines and/or provide
assistance to local WIBs on how to implement
entrepreneurial and self-employment training programs.
COMMENTS
1. Background on the CA Workforce Investment Board:
Under federal law, Workforce Investment Act funds are
distributed to the states based on formulas that consider
unemployment rates and other economic and demographic factors.
California and its 49 Local WIBs receive WIA formula funding
from the U.S. Department of Labor through three revenue
streams - Adult, Youth, and Dislocated Workers.
The State WIB is charged with developing a unified, strategic
planning process to coordinate various education, training,
and employment programs into an integrated workforce
development system that supports economic development. All
Hearing Date: June 12, 2013 AB 285
Consultant: Alma Perez Page 3
Senate Committee on Labor and Industrial Relations
members of the CWIB are appointed by the Governor and
represent the many facets of workforce development - business,
labor, public education, higher education, economic
development, youth activities, employment and training, as
well as the Legislature. Through its broad membership, the
state board encourages collaboration among both state and
local public and private entities.
2. Microenterprises and Need for this bill?
The term "microenterprise" has become a commonly used term in
the economic development community over the past decade to
describe the type of self-employment that has helped many
succeed. The federal Small Business Administration's (SBA)
"microenterprise" definition generally refers to a business
that will have fewer than 5 employees, requires less than
$35,000 in startup capital and which does not have access to
the traditional commercial banking sector. California
distinguishes microenterprises from small businesses by
including, but not limited to, mainly home-based businesses
like child development services, landscaping, building
maintenance, personal, business services, and specialty food
products.
Microenterprise development is the process of providing
training, technical assistance and microloans to the smallest
business owners. Programs are generally operated by
nonprofit organizations that target individuals with
obstacles to successful business growth such as a limited
access to credit, lack of business management experience and
language barriers. Financial support for microenterprise
development organizations is a complex mix of funding from
federal, state and local government, plus private dollars
from foundations, corporations, and faith-based
organizations.
Unfortunately, many of the non-profit organizations that
provide these services are in critical need to build their
capacity and be able to serve potential entrepreneurs. This
bill would provide this much needed assistance by requiring
that the California Workforce Investment Board make
recommendations and provide assistance on entrepreneurial
Hearing Date: June 12, 2013 AB 285
Consultant: Alma Perez Page 4
Senate Committee on Labor and Industrial Relations
training opportunities that could be made available through
local workforce investment boards.
3. Proponent Arguments :
According to the Author, there are currently many job training
programs, but limited entrepreneurial training for established
businesses. The author states that by requiring the CWIB to
develop guidelines to ensure that entrepreneurial training and
technical assistance are available through local workforce
investment boards, a currently underserved group of
prospective entrepreneurs, as well as unemployed individuals,
will have better access to quality training and the
opportunity to learn skills needed to pursue self-employment.
The author states that there are over three million
microenterprises in California that employ over four million
people and that continuing the growth of California's smallest
businesses is essential to solving the state's unemployment
problem. According to the sponsors of the measure,
micro-entrepreneurs who have gone through training programs
and receive business technical assistance and training have an
80 percent success rate and create an average of two jobs, in
addition to their own, over three to five years. This bill
would require the State Workforce Investment Board to develop
and distribute guidelines and provide technical assistance to
local workforces investment boards by January 1, 2015.
4. Opponent Arguments :
None received.
5. Double Referral :
This bill was double referred. It was previously heard and
passed by the Senate Business, Professions & Economic
Development Committee.
6. Prior or Related Legislation :
AB 674 (Quirk-Silva) of 2013: Assembly Jobs, Economic
Hearing Date: June 12, 2013 AB 285
Consultant: Alma Perez Page 5
Senate Committee on Labor and Industrial Relations
Development and the Economy
AB 674 would expand the definition of microenterprise to
include those entities that have fewer than 10 employees,
including the owner, as prescribed.
AB 2998 (Carter) of 2008 and AB 165 (Carter) of 2009 were very
similar to this bill. Those measures would have made
technical modifications to the definition of microenterprise,
added legislative intent on the importance of Californians
having access to training related to self-employment
entrepreneurship and required the CWIB to develop guidelines
for entrepreneurial training by January 1, 2010. AB 2998 was
held in the Senate Committee on Appropriations and AB 165 was
held in the Assembly Committee on Appropriations.
SUPPORT
California Association for Micro Enterprise Opportunity (CAMEO)
- Sponsor
3CORE
AnewAmerica Community Corporation
Central Valley Business Incubator
Coalition of California Welfare Rights Organizations, Inc.
Community Action Partnership of Sonoma County
Renaissance Entrepreneurship Center
OPPOSITION
None received
Hearing Date: June 12, 2013 AB 285
Consultant: Alma Perez Page 6
Senate Committee on Labor and Industrial Relations