BILL ANALYSIS Ó
SB 477
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Date of Hearing: June 11, 2014
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Roger Hernández, Chair
SB 477 (Steinberg) - As Amended: May 1, 2014
SENATE VOTE : 35-0
SUBJECT : Foreign labor contractors: registration.
SUMMARY : Requires foreign labor contractors to register with
the Labor Commissioner, as well as follow additional contractual
and bonding requirements, as specified. Specifically, this
bill :
1)Requires, on and after July 1, 2016, any person acting as a
foreign labor contractor to register with the Labor
Commissioner.
2)Exempts from the definition of foreign labor contractor any
person licensed as a talent agency under existing law or
entities or persons that have obtained designation under
specified federal law related to work and study-based exchange
visitor programs.
3)Defines "foreign labor contracting activity" to mean
recruiting or soliciting for compensation with respect to a
foreign worker who resides outside of the United States in
furtherance of that worker's employment in California.
4)Specifies that "foreign labor contracting activity" does not
include the services of an employer, or employee or an
employer, if those services are provided directly to foreign
workers solely to find workers for the employer's own use.
5)Requires the Labor Commissioner (on and after August 1, 2016)
to post on its Web site the names and contact information for
all registered foreign labor contractors.
6)Provides that the Labor Commissioner may not register a person
to act as a foreign labor contractor, and may not renew a
registration, until all of the following conditions are
satisfied:
a) The person has executed a written application containing
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specified information.
b) The Labor Commissioner, after investigation, is
satisfied as to the character, competency, and
responsibility of the person.
c) The person has deposited a surety bond as follows:
i) For gross receipts up to $500,000, a $50,000 bond.
ii) For gross receipts of $500,000 to $2 million, a
$100,000 bond.
iii) For gross receipts over $2 million, a $150,000 bond.
d) The person has paid a registration fee and a filing fee
in a total amount the Labor Commissioner determines is
sufficient to support the ongoing costs of the program.
7)Provides that the Labor Commissioner may not register a person
as a foreign labor contractor if the person was found to have
violated specified provisions of state and federal law.
8)Requires, on and after July 1, 2016, a person who knows or
should have known it is using the services of a foreign labor
contractor to disclose specified information to the Labor
Commissioner.
9)Prohibits a person from knowingly entering into a contract for
the services of a foreign labor contractor that is not
registered.
10)Requires a foreign labor contractor to disclose in writing
specified information to each foreign worker who is recruited
for employment.
11)Prohibits a foreign labor contractor or a person using the
services of a foreign labor contractor from assessing any fee,
including, but not limited to, visa fees, processing fees,
transportation fees, legal expenses, placement fees, and other
costs, to a foreign worker for employment services.
12)Provides that a foreign worker may not be required to pay any
costs or expenses that are not customarily assessed against
all workers similarly employed, as specified.
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13)Provides that a person may not intimidate, threaten,
restrain, coerce, discharge, or in any manner discriminate
against a foreign worker or a member of his or her family in
retaliation for a foreign worker's exercise of any rights
under the law.
14)Provides that a person who violates any provision of these
requirements shall be subject to a civil penalty of not less
than $1,000 and not more than $25,000 per violation.
15)Provides that the Labor Commissioner or an aggrieved person
may bring enforcement actions, as specified.
16)Provides that a person shall not be jointly and severally
liable shall for any act or omission by a foreign labor
contractor engaged by the person provided the foreign labor
contractor was registered no later than the first day of such
engagement.
17)Authorizes the Labor Commissioner to adopt regulations or
policies and procedures to carry out or implement these
provisions.
18)Makes related and conforming changes.
19)Makes related legislative findings and declarations.
FISCAL EFFECT : According to the Senate Appropriations
Committee, the Department of Industrial Relations (DIR) would
incur first-year costs of $892,000 (special funds) and $681,000
ongoing (special funds) to implement the provisions of this
bill. The bill includes a filing fee and a registration fee to
be set by DIR to support the ongoing costs of the program.
COMMENTS : This bill proposes to protect vulnerable individuals
from abuse and human trafficking by requiring foreign labor
contractors to register with the Labor Commissioner, as well as
follow additional contractual and bonding requirements.
This bill is nearly identical to SB 516 (Steinberg) of 2013.
However, SB 516 specified a registration fee of $500. This
registration fee was determined to be insufficient to fund the
ongoing costs of the program and the bill was vetoed by Governor
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Brown. The Governor's veto message stated:
"This bill seeks to prevent the exploitation of foreign
workers - a worthy goal which I support. Unfortunately,
the registration and filing fees established by the bill
are insufficient to support the ongoing costs of the
proposed program. This funding shortfall would be
underwritten by the Labor Enforcement and Compliance Fund,
funded from an assessment on employers' workers'
compensation premiums. This shift in costs is inequitable
as it would result in all California employers paying a
share of the enforcement costs for the regulation of these
foreign labor contractors. I request that the Legislature
send me a bill in January where the fees generated are
sufficient to pay for the costs of the program proposed by
this measure."
Therefore, in order to address this issue, this bill specifies
that the Labor Commissioner may establish a registration fee and
filing fee in a total amount he or she determines is sufficient
to support the ongoing costs of the program. According to the
analysis prepared by the Senate Appropriations Committee,
"Initial estimates from [DIR] indicate that a $900 registration
fee and a $10 filing fee?would fully fund the program."
For a more thorough policy discussion of the proposal, please
see this Committee's analysis of SB 516 from last year.
ARGUMENTS IN SUPPORT :
Proponents argue that this bill takes a multi-prong approach to
preventing human trafficking in California by foreign labor
recruiters. First, proponents note that foreign labor
contractors will be required to provide full and fair
information to foreign workers and that employers using the
services of foreign labor contractors to obtain workers will be
required to report those activities. Proponents also note that
this bill prohibits any foreign labor contractor from soliciting
a foreign worker for a job in California in the absence of a
bona fide offer of employment. Finally proponents also note
that, under this bill, foreign labor contractors, and employers
using unregistered contractors, will be subject to civil and
criminal penalties for violations. Aggrieved workers will have
civil causes of action against both contractors and employers to
protect their rights and help prevent future cases of
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exploitation.
As discussed above, this bill defines "foreign labor contracting
activity" to mean recruiting or soliciting for compensation with
respect to a foreign worker who resides outside of the United
States in furtherance of that worker's employment in California.
However, the bill specifies that such activity does not include
the services of an employer (or an employee of an employer) if
those services are provided directly to foreign workers solely
to find workers for the employer's own use. According to the
author, "employer" in this context includes any subsidiary of a
parent company employer that provides services directly to
foreign workers solely to find workers for the parent company or
its subsidiaries' own use.
REGISTERED SUPPORT / OPPOSITION :
Support
Alliance to End Slavery and Trafficking
American Association of University Women - California
Coalition to Abolish Slavery and Trafficking (sponsor)
Food Chain Workers Alliance
International Justice Mission
International Labor Recruitment Working Group
National Council of Jewish Women - California
Office of the Attorney General Kamala Harris
San Francisco Department of the Status of Women
Opposition
None on file.
Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091