BILL ANALYSIS Ó
AB 1387
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Date of Hearing: April 24, 2013
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Roger Hernández, Chair
AB 1387 (Roger Hernández) - As Amended: April 18, 2013
SUBJECT : Car washes.
SUMMARY : Makes changes to existing law regulating the car
washing and polishing industry. Specifically, this bill :
1)Eliminates the sunset date on existing law regulating the car
washing and polishing industry, thereby making it a permanent
enforcement program under California law.
2)Increases the surety bond amount required from $15,000 to
$150,000.
3)Provides that the surety bond requirements do not apply to an
employer covered by a valid collective bargaining agreement if
the agreement expressly provides for wages, hours of work,
working conditions, and an expeditious process to resolve
disputes concerning nonpayment of wages.
EXISTING LAW :
1)Regulates the car washing and polishing industry by requiring
specific recordkeeping requirements of car wash employers on
employee wages, hours and working conditions.
2)Requires car wash employers to register with the Labor
Commissioner (LC) and post a wage surety bond of not less than
$15,000, as specified.
3)Establishes a car wash worker fund for which penalties and
registration fees are deposited for disbursement by the LC to
employees of car washing or polishing businesses found to be
in violation of current law.
4)States that charitable groups, rental car agencies,
self-service or automated car wash that have no more than two
full-time employees for cashiering and/or maintenance
purposes, and licensed vehicle dealers or automotive repair
businesses are exempted.
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5)Contains a January 1, 2014 sunset date on these requirements.
FISCAL EFFECT : Unknown
COMMENTS : California leads the nation in both the number of car
washes and number of employees employed by car washes. By some
estimates, there are more than 1600 car washes in California and
more than 22,000 employees employed therein.
Over the past decade, well-documented cases of abuse of car wash
workers has led to the enactment of a comprehensive statutory
enforcement program aimed at the car wash industry.
In 1999, SB 1097 (Hayden), which sought to regulate the car wash
industry, was vetoed by the Governor. In his veto message the
Governor said, in part: "I am vetoing this bill. I do not
believe that the need to register car washes with the LC has
been demonstrated. I am however asking the Director of
Industrial Relations (DIR) to review the activities of the car
washing industry and make any and all appropriate recommendation
to me by June 30, 2001."
In response to the Governor's veto directive, DIR filed an
internal report about labor law violations in the industry and
possible remedies, considering limited resources and widespread
violations that affect other industries in the state.
Additionally, in early 2003, DIR conducted a coordinated
enforcement sweep of the car washing and polishing industry in
the Los Angeles area, finding numerous labor law violations,
collecting back wages and penalties due totaling over $250,000.
As a result of proven violations in this industry AB 1688
(Goldberg) "The Car Wash Worker Bill" was signed into law and
took effect on January 1, 2004. AB 1688 contained a sunset date
of January 1, 2007. The final car wash regulations were
promulgated by DIR and finally adopted by the Office of
Administrative Law December 2005.
SB 1468 (Alarcon) of 2006 extended the sunset date relating to
the regulation of the car washing and polishing industry to
January 1, 2010, and required the LC to report to the
Legislature no later than December 31, 2008, on the status of
labor law violations and enforcement in the car washing and
polishing industry.
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In March 2008, the Los Angeles Times reported the results of an
investigation of the car wash industry finding that many owners
pay less than half of the required minimum wage and that
two-thirds of those inspected by the state since 2003 were out
of compliance with one or more labor laws. Some violations
included underpaying workers, hiring minors, operating without
workers' compensation insurance and denying workers their meal
and rest breaks.
The Division of Labor Standards Enforcement in the Department of
Industrial Relations released the mandated study of the car wash
and polishing industry in April of 2009. In the report, DLSE
said the number of registered firms increased from 2007 to 2008
and that the number of citations decreased in that period.
However, the report found that there continue to be hundreds of
violations of labor standards. Many firms had no workers'
compensation for their workers, and there were many other
violations of labor law (e.g., child labor violations, and
failure to pay minimum wages and overtime pay).
AB 236 (Swanson) of 2009 extended the sunset date to January 1,
2014.
In 2011 (the most recent year for which data is available), the
Bureau of Field Enforcement (BOFE) within DLSE inspected 626 car
washes and issued 468 citations. BOFE found wages due of
$210,092 and collected $282,603 (which included claims from
prior years). In addition, BOFE assessed civil penalties to car
washes in the amount of $3,086,892, of which $868,912 was
collected.
As stated above, the current law contains a January 1, 2014
sunset date. This bill would eliminate the sunset date, making
the program a permanent enforcement program under the law.
Existing law requires employers in the car washing and polishing
industry to obtain a surety bond of not less than $15,000.
Supporters of this bill state that a typical wage claim for an
individual employee in this industry is around $35,000.
However, if multiple workers file a wage claim, the amount of
wages owed can be much higher. Supporters of this bill have
provided the Committee with data on 23 prior or pending wage
claims which range from $23,000 (for an individual wage claim)
to approximately $2 million (for a class action lawsuit).
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Therefore, supporters contend that the current bond requirement
amount of $15,000 is insufficient and propose that the bond
requirement be increased to $150,000. Employers generally
purchase the bond from an insurance provider for a percentage of
the total coverage, generally between 1% and 10% of the total
bond amount.
This bill would also provide that the surety bond requirement
would not apply to an employer covered by a valid collective
bargaining agreement that contains, among other things, an
expeditious process to resolve disputes concerning nonpayment of
wages. In such situations, unpaid wage claims are generally
resolved through the grievance process under the collective
bargaining agreement, rather than seeking to collect against the
surety bond.
ARGUMENTS IN SUPPORT :
Supporters of this bill argue that carwash workers in Los
Angeles are overwhelmingly Latino immigrants and their work is
very labor intensive. On a typical weekday, a carwash may
service up to 500 cars. The workers must work at a fast pace
for long periods of time, often drenched in water and exposed to
high summer temperatures. In order to wash and clean such a
high number of vehicles, carwash employers routinely violate
basic labor laws such as those requiring rest breaks or
providing shade and clean drinking water. Workers have reported
kidney damage, respiratory problems and nerve damage due to
chemical exposure.
Because of the rampant violations of labor law, the Legislature
passed a law requiring car washes to register with the State and
post a bond in 2004. As that law has been implemented,
enforcement efforts in the underground economy have improved and
- for the first time- workers have had access to justice. This
registry has become a model of a way to bring an industry into
compliance.
Unfortunately, the car wash registry has a few shortcomings. It
has a sunset so that it is continually on the verge of being
eliminated. It has a surety bond amount that is too low to cover
the wages actually owed to workers. Lastly, it has no
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exceptions for upstanding employers who are doing right by their
workers and raising the bar for the industry.
Supporters content that this bill is the answer. It eliminates
the sunset date, preserving one of the most effective tools in
labor law enforcement. It raises the bond to cover stolen wages
to make sure workers are protected. It also creates an
exemption for employers who exceed state minimal standards to
reward the good actors.
The CLEAN Carwash Campaign supports this bill, and states that
it will help to continue to better regulate the carwash industry
in California that for too long has been part of the underground
economy in our state. Carwash workers in California have been
able to utilize this law in the past to assert their rights and
this should be the case permanently. Lifting the sunset clause
in this law will ensure that thousands of carwash workers in our
state can assert their rights. A 2009 study conducted by UCLA
found that 655,000 workers in Los Angeles alone experience
serious wage theft. Thirty percent receive less than minimum
wage, while a staggering 80% are denied lawful breaks. The sum
total of these violations amounts to $26.2 million in stolen
wages each year. One of the industries that this study focused
on was the carwash industry and these violations are
continuously happening. Because of the rampant violations of
labor law in this industry, the Legislature passed a law in 2004
requiring car washes to register with the State and post a bond.
As that law has been implemented, enforcement efforts in the
underground economy have improved and - for the first time-
workers have had access to justice. This registry has become a
model of a way to bring an industry into compliance. However,
the bond amount has not been sufficient to cover all the
outstanding judgments against this carwashes and needs to be
raised.
REGISTERED SUPPORT / OPPOSITION :
Support
Asian Pacific American Legal Center
California Labor Federation, AFL-CIO
California Rural Legal Assistance Foundation
CLEAN Carwash Campaign
United Steelworkers Local 675
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Wage Justice Center
Opposition
None on file.
Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091