BILL ANALYSIS Ó
AB 1387
Page 1
ASSEMBLY THIRD READING
AB 1387 (Roger Hernández)
As Amended April 18, 2013
Majority vote
LABOR & EMPLOYMENT 6-1 APPROPRIATIONS 12-5
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|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 |
| | | | |
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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