BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Kevin de León, Chair SB 477 (Steinberg) - Foreign Labor Contractors: Registration Amended: January 6, 2014 Policy Vote: None Urgency: No Mandate: No Hearing Date: January 21, 2014 Consultant: Robert Ingenito This bill meets the criteria for referral to the Suspense File. Bill Summary: SB 477 would establish a new foreign labor contractor regulatory framework, including new registration and licensing requirements. Fiscal Impact: The Department of Industrial Relations (DIR) estimates that it would incur first-year costs of $892,000 (special funds) and $681,000 ongoing (special funds) to implement the provisions of the bill. The bill includes a filing fee of $10 and a registration fee to be set by DIR to support the ongoing costs of the program. Background: Foreign labor contractors are increasingly relied upon to facilitate the migration of labor from one country to another, and California is the leading destination state in the U.S. for temporary foreign workers. A subset of these contractors misuse visa programs to exploit workers, often charging exorbitant fees for their services, forcing workers into debt bondage, falsifying documents, and deceiving workers about the terms and conditions of proposed employment. Proposed Law: This bill, among other things, would do all of the following: Expand the definition of "employment services" provided by a foreign labor contractor to include visa applications and services provided outside of the United States. Require foreign labor contractors to register with the Labor Commissioner on or after July 1, 2005 and pay a registration fee to be set by DIR to support the ongoing costs of the program. SB 477 (Steinberg) Page 1 Require specified criteria to be satisfied, including the posting of surety bond between $25,000 and $75,000, before the Labor Commissioner can renew or register a foreign labor contractor. Require foreign labor contractors to disclose information to foreign workers, in a language they can comprehend, regarding terms and conditions of work in California. Prohibit a foreign labor contractor assessing fees for employment services or visa filing, or pay any costs or expenses not charged workers similarly situated. Specify that California-based employers would be required to use the services of only registered foreign labor contractors. Add a civil penalty to violations of the above provisions no less than $1,000 and no more than $25,000, and also allows an aggrieved person or Labor Commissioner to bring injunctive relief. Previous Legislation: SB 516 (Steinberg 2013) was identical to this measure, except that it specified a registration fee of $500. This registration fee was determined to be insufficient to fund the ongoing costs of the program; consequently, the bill was vetoed by the Governor. Staff Comments: The bill's registration program would be similar to the existing license program for farm labor contractors. Although the registration requirement would apply to all non-agricultural labor contractors, it is limited in scope to contractors who provide foreign labor in California. DIR estimates there to be 963 foreign labor contractors. Approximately 130,000 foreign workers are currently in the State. DIR estimates that it would incur first-year costs of $892,000 and $681,000 ongoing to implement the provisions of the bill, to both develop and administer the new registration program and promulgate regulations, and to develop, operate and maintain a database summarizing online applications and information SB 477 (Steinberg) Page 2 pertaining to registered foreign labor contractors. As noted previously, the bill permits DIR to develop a registration and a filing fee to cover the cost of the program. Initial estimates from the department indicate that a $900 registration fee and a $10 filing fee (similar to the filing fee collected from farm labor contract registrants) would fully fund the program. The bill makes reference to renewals, but does not indicate how frequently a registration must be renewed. To the extent that renewal fees are lower than initial registration fees, a funding gap could develop in the out years.