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, 2015 and pay a  
               registration fee to be set by DIR to support the ongoing  
               costs of the program.









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                 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  








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          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.