BILL ANALYSIS Ó
SENATE COMMITTEE ON LABOR AND INDUSTRIAL RELATIONS
Senator Tony Mendoza, Chair
2015 - 2016 Regular
Bill No: AB 67 Hearing Date: June 8,
2016
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|Author: |Gonzalez |
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|Version: |May 19, 2016 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Alma Perez-Schwab |
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Subject: Double Pay on the Holiday Act of 2016
KEY ISSUES
Should the Legislature require retail and grocery store
establishments of 500 or more employees to pay their employees
at twice the regular rate of pay for working on Thanksgiving
Day?
Should the double pay for work on Thanksgiving Day requirement
exclude restaurants, except for restaurants that are located
within retail or grocery store establishments?
ANALYSIS
Existing law:
1) Defines a full workday as 8 hours of labor, and 40 hours
as a workweek. Any additional hours worked must be
compensated with the payment of overtime wage rates.
(Labor Code §510)
2) Requires the payment of overtime compensation as
follows:
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Work in excess of 8 hours a day, and over 40
hours in a workweek, and the first 8 hours worked on
the 7th day of a workweek shall be compensated at the
rate of no less than 1 times the regular rate of
pay;
Work in excess of 12 hours in one day shall be
compensated at the rate of no less than twice the
regular rate of pay for an employee;
Work in excess of 8 hours on any 7th day of a
workweek shall be compensated at the rate of no less
than twice the regular rate of pay of an employee.
1) Provides that the overtime compensation requirements do
not apply to certain executive, administrative and
professional employees that meet specified criteria for
exemption.
2) Any person who violates these overtime wage provisions
is guilty of a misdemeanor.
This Bill would enact the Double Pay on the Holiday Act of 2016
that would require an employer to pay at least two times the
regular rate of pay to an employee for work on a family holiday,
as defined.
Specifically, this bill:
1) Requires any work performed at a retail or grocery store
establishment on a family holiday to be compensated at no
less than twice the employee's regular rate of pay.
2) Defines "family holiday" as the fourth Thursday of
November of each year.
3) Defines "retail store establishment" as a physical store
within the state with more than 50 percent of its revenue
generated from merchandise subject to the state's sales and
use taxes, including, but not limited to, electronics,
appliances, clothing, furniture, sporting goods, health and
personal products, or a limited line of food products for
onsite consumption. A "retail store establishment" does
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not include a store located in a hotel, amusement park,
movie theater, or a new motor vehicle dealer, as defined.
4) Defines "grocery store establishment" as a physical
store within the state that sells primarily household
foodstuffs for offsite consumption, including, but not
limited to, the sale of fresh produce, meats, poultry,
fish, deli products, dairy products, canned foods, dry
foods, beverages, and baked or prepared foods. Other
household supplies or products are secondary to the primary
purpose of food sales. A "grocery store establishment"
does not include a store that occupies 5,000 square feet or
less of floor space and that sells transportation fuels in
conjunction with, and at the same physical location as,
household foodstuffs for offsite consumption.
5) Provides that "employee" does not include the following:
a. An employee covered by a valid collective
bargaining agreement that meets specified criteria,
including the payment of holiday premium pay and a
regular hourly rate of pay of not less than 30 percent
more than the state minimum wage.
b. An employee who is exempt from the payment of
overtime under the executive, administrative, and
professional employee exemption under current law.
c. An employee who is employed by an employer
with 500 or fewer employees
6) Specifies that these provisions do not apply to
restaurants, except for restaurants that are located within
retail or grocery store establishments.
COMMENTS
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1. Background: Black Friday on Thanksgiving Day
Black Friday, the day following Thanksgiving Day in the United
States, and the sales that many stores offer to entice
customers has set the beginning of the holiday shopping season
in motion for many decades. Black Friday has routinely been
the busiest shopping day of the year; with stores opening
their doors to customers as early as 4:00am. However, in
recent years there has been a changing trend of starting the
Black Friday specials early - on Thanksgiving Day. Several
large retailers have started opening their doors as early as
5:00pm on Thanksgiving Day and staying open overnight in an
attempt to appeal to the sale seeking shoppers.
Although appealing to many, these retail practices come with
several consequences including that of making high demands on
staff who are needed in order to keep such long open hours,
and especially for those required to work on Thanksgiving Day.
Additionally, both customers and employees face health and
safety risks due to insufficient staff for the high number of
consumers walking in the door. Even as many stores stretch
their hours into the holiday, there has been some push back
from several retailers who have decided to do the opposite and
close their stores completely on Thanksgiving Day giving their
employees the opportunity to spend the day with their families
and friends for the holiday.
For many minimum wage workers all hours of work are welcomed
to help provide for their families, including work on
federally recognized holidays. According to various news
accounts, workers who refuse to work on holidays often face
intimidation or fear the loss of their jobs. This increasing
commercialization of the holiday season has generated
significant public backlash, including petitions asking
retailers not to open their stores on Thanksgiving Day, media
criticism and worker protests.
2. Need for the bill?
California law does not require that an employer provide its
employees with paid holidays, that it close its business on
any holiday, or that employees be given the day off for any
particular holiday. Hours worked on holidays, Saturdays, and
Sundays are treated like hours worked on any other day of the
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week. Employers are free to create their own policies
regarding holidays and can choose to give their employees time
off from work with pay, but nothing in the law requires such a
practice. Additionally, there is nothing in the law mandating
that an employer pay an employee a special premium for work
performed on a holiday, Saturday, or Sunday, other than the
overtime premium required for work performed in excess of
eight hours in a workday or 40 hours in a workweek.
According to the author, the recent trend of Black Friday
shopping deals spreading into the Thanksgiving holiday is
forcing workers to miss out on celebrating the holiday and
spending time with their families in order to keep their jobs.
In some cases, this work has become mandatory and as such, the
author believes that employees should be fairly compensated
for the undue hardships associated with working on the
traditional family holiday. This bill would require retail and
grocery store employers to pay at least two times the regular
rate of pay to an employee for work on Thanksgiving Day.
3. Work Restrictions in Other States:
Much like California, the federal Fair Labor Standards Act
(FLSA) does not require payment for time not worked, such as
vacations or holidays. These benefits are generally a matter
of agreement between an employer and an employee. This bill
would appear to establish the first law in the nation that
would require double pay for working on specified holidays.
However, other state laws prohibit work from being performed
on specified holidays or restricts the types of work that may
be performed on certain days, usually Sundays.
Currently three states (Massachusetts, Rhode Island, and
Maine) actually prohibit most retail stores, including grocery
stores, from opening on Thanksgiving and Christmas. In
Massachusetts, state law also prohibits stores from opening on
the mornings of Columbus Day and Veterans Day without state
permission. Maine allows certain sporting goods stores to
remain open, an exemption that allows Maine-based outdoor
retailer L.L. Bean to operate on a year-round basis.
Many states and local jurisdictions have laws on the books
that restrict work (or certain types of work) from being
performed on Sundays. These laws are generally referred to as
"blue laws." For example, more than 30 counties in the South
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have "blue laws" restricting the hours stores can open on
Sundays. For instance, Aiken, South Carolina has a "blue law"
that bans most stores from opening their doors before 1:30 on
Sunday afternoons. Maine was the last New England state to
repeal laws that prohibited department stores from opening on
Sundays, a law ended by referendum in 1990. Recent efforts to
overturn the laws restricting automobile dealerships from
opening on Sunday have died in committee in the Maine
legislature. In addition in Maine, alcohol sales remain
restricted between the hours of 1 a.m. and 7 a.m. Monday -
Saturday and 1 a.m. and 9 a.m. on Sunday.
In the past, certain state "blue laws" have been challenged on
constitutional grounds. However, in the 1961 case of McGowan
v. Maryland, 366 U.S. 420, the U.S. Supreme Court held that
Maryland's laws violated neither the Free Exercise Clause nor
the Establishment Clause of the First Amendment. It approved
the state's blue law restricting commercial activities on
Sunday, noting that while such laws originated to encourage
attendance at Christian churches, the contemporary Maryland
laws were intended to serve "to provide a uniform day of rest
for all citizens" on a secular basis and to promote the
secular values of "health, safety, recreation, and general
well-being" through a common day of rest. That this day
coincides with the Christian Sabbath is not a bar to the
state's secular goals - it neither reduces its effectiveness
for secular purposes nor prevents adherents of other religions
from observing their own holy days.
4. Proponent Arguments :
According to proponents, in recent years, Black Friday
shopping deals have increasingly spread into the Thanksgiving
holiday, forcing workers to miss out on celebrating the
holiday with their families in order to keep their jobs. In
some cases this work has become mandatory, forcing workers to
give up their holiday or risk losing their jobs. According to
the author, polling by consumer research advisors at Loyalty
One found that half of Americans think that it's a bad idea
for stores to be open on Thanksgiving, and despite talk about
consumer demand, data shows that opening earlier didn't
actually boost overall sales.
The author and proponents argue that this bill simply seeks to
provide employees with double pay in order to meet the
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increase in demand of consumers on Thanksgiving Day and
"pre"-Black Friday shopping. It is no surprise that the
increasing commercialization of the holiday season has created
significant public backlash, including petitions, media
criticism and worker protests. Proponents believe this bill
would guarantee that employees are fairly compensated for the
undue hardships associated with working on the traditional
family holiday of Thanksgiving.
5. Opponent Arguments :
A coalition of opponents argue that this bill unfairly targets
two classifications of employers, retail and grocery store
establishments, increases their costs, and creating a
competitive disadvantage by forcing them to recognize
Thanksgiving as a "family holiday" and compensate all
employees with double the regular rate of pay for work on that
day. Any other employer who opens on Thanksgiving can continue
to pay their employees minimum wage. In fact, recent
amendments specifically exempt certain industries, something
they argue is discriminatory treatment intended to punish
retail and grocery stores, rather than compensate employees
for time away from their family on Thanksgiving.
Opponents also argue that this bill unilaterally increases the
cost of doing business only for those employers who have a
"physical store" in California, thereby automatically placing
them at a competitive disadvantage with online retailers and
out-of-state businesses not subject to this costly mandate.
Additionally, opponents argue that many of the "retail store
establishment" employers surveyed confirmed they voluntarily
pay their employees time and a half for work on Thanksgiving.
They also note that numerous grocery store establishments also
pay increased compensation on Thanksgiving, as negotiated
through the collective bargaining process, yet would still be
subject to the provisions of AB 67 as they do not qualify for
the collective bargaining exemption in the bill.
Also of concern to opponents is the requirement that employers
pay double the employee's "regular rate" of pay rather than
double the "hourly rate," a significant different, they argue,
as the determination of the regular rate of pay requires a
detailed calculation that goes beyond just an employee's
hourly pay. They argue that good faith errors made in
calculating the regular rate of pay or failure to comply with
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other provisions of AB 67 would be subject to Private
Attorneys General Act (PAGA) and add another threat of
litigation against California employers. Lastly, opponents
argue that this bill provides preferential treatment for one
day out of the year that not all recognize as a family holiday
and may be offensive to those that believe other days within
the year deserve that same recognition.
A restaurant specific point of opposition comes from the
California Restaurant Association which argues that recent
amendments, although exempting a share of the restaurant
community, leave many subject to the double-pay requirements
based on the mere fact that they operate within a retail or
grocery establishment. They argue that these restaurants are
separate, independent from the stores they are located within.
Furthermore, they argue that these restaurants will face
unfair competition as they will be forced to pay double hourly
pay to its employees while locations not located within a
retail or grocery store, but in the same shopping center or
across the street do not.
SUPPORT
United Food & Commercial Workers, Western States Council -
Sponsor
California Conference Board of the Amalgamated Transit Union
California Conference of Machinists
California Employment Lawyers Association
California Immigrant Policy Center
California Labor Federation, AFL-CIO
California Nurses Association
California School Employees Association
California State Association of Electrical Workers
California State Pipe Trades Council
California Teamsters Public Affairs Council
Communication Workers of America, District 9
Engineers & Scientists of California
Professional & Technical Engineers
UNITE HERE, AFL-CIO
International Longshore & Warehouse Union
United Farm Workers
Utility Workers Union of America
Western States Council of Sheet Metal Workers
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OPPOSITION
Agricultural Council of California
Air Conditioning Trade Association
Alhambra Chamber of Commerce
American Petroleum and Convenience Store Association
Brea Chamber of Commerce
California Association of Bed and Breakfast Inns
California Chamber of Commerce
California Employment Law Council
California Farm Bureau Association
California Grocers Association
California Hotel & Lodging Association
California League of Food Processors
California Pool & Spa Association
California Restaurants Association
California Retailers Association
California Travel Association
Camarillo Chamber of Commerce
CAWA - Representing the Automotive Parts Industry
Cerritos Regional Chamber of Commerce
Chambers of Commerce Alliance of Ventura and Santa Barbara
Counties
Computing Technology Industry Association - CompTIA
Culver City Chamber of Commerce
Desert Hot Springs Chamber of Commerce and Visitors Center
East Valley Legislative Advocacy Council
El Dorado County Chamber of Commerce
El Dorado Hills Chamber of Commerce & California Welcome Center
Gateway Chambers Alliance
Goleta Valley Chamber of Commerce
Greater Conejo Valley Chamber of Commerce
Greater Riverside Chambers of Commerce
Greater San Fernando Valley Chamber of Commerce
Lake Tahoe South Shore Chamber of Commerce
Long Beach Area Chamber of Commerce
Maxim Healthcare Services
North Lake Tahoe Chamber of Commerce
North Orange County Chamber
Orange County Business Council
Oxnard Chamber of Commerce
Plumbing-Heating-Cooling Contractors Association of California
Rancho Cordova Chamber of Commerce
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Redondo Beach Chamber of Commerce & Visitors Bureau
San Diego Regional Chamber of Commerce
San Jose Silicon Valley Chamber of Commerce
Santa Clara Chamber of Commerce & Convention-Visitors Bureau
Santa Maria Valley Chamber of Commerce Visitor & Convention
Bureau
Simi Valley Chamber of Commerce
Southwest California Legislative Council
Torrance Chamber of Commerce
Valley Industry and Commerce Association
Western Electrical Contractors Association
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