BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 1387
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          ASSEMBLY THIRD READING
          AB 1387 (Roger Hernández)
          As Amended  April 18, 2013
          Majority vote 

           LABOR & EMPLOYMENT       6-1    APPROPRIATIONS      12-5        
           
           ----------------------------------------------------------------- 
          |Ayes:|Roger Hernández, Alejo,   |Ayes:|Gatto, Bocanegra,         |
          |     |Chau, Gomez, Gorell,      |     |Bradford,                 |
          |     |Holden                    |     |Ian Calderon, Campos,     |
          |     |                          |     |Eggman, Gomez, Hall,      |
          |     |                          |     |Ammiano, Pan, Quirk,      |
          |     |                          |     |Weber                     |
          |     |                          |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |Nays:|Morrell                   |Nays:|Harkey, Bigelow,          |
          |     |                          |     |Donnelly, Linder, Wagner  |
          |     |                          |     |                          |
           ----------------------------------------------------------------- 
           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.

           FISCAL EFFECT  :  According to the Assembly Appropriations  
          Committee, this bill will result in no additional fiscal impact  
          to the Department of Industrial Relations (DIR) to repeal the  
          sunset of the carwash enforcement program.  The 2012 Budget Act  
          provided $197,000 in the Car Wash Worker Fund (registration and  
          fine revenue).  By continuing the enforcement program, the  
          collection of the one-time $250 fee and annual $50 fee will  
          continue as well.   








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           COMMENTS  :  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 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).  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.


          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  








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          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  
          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,  








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          the bond amount has not been sufficient to cover all the  
          outstanding judgments against this carwashes and needs to be  
          raised.

           
          Analysis Prepared by  :    Ben Ebbink / L. & E. / (916) 319-2091  
          FN: 0000767