BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 67| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 67 Author: Gonzalez (D), et al. Amended: 8/3/16 in Senate Vote: 21 SENATE LABOR & IND. REL. COMMITTEE: 3-1, 6/8/16 AYES: Mendoza, Leno, Mitchell NOES: Stone NO VOTE RECORDED: Jackson SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8 ASSEMBLY FLOOR: 43-32, 1/27/16 - See last page for vote SUBJECT: Double Pay on the Holiday Act of 2016 SOURCE: United Food & Commercial Workers DIGEST: This bill enacts the Double Pay on the Holiday Act of 2016 requiring a grocery or retail store establishment employer to pay two times the regular rate of pay to an employee for work on Thanksgiving Day. This bill defines grocery store establishment and retail store establishment and, among other things, specifies that a retail store establishment does not include a retail store located in an amusement park. Senate Floor Amendments of 8/3/16 further clarify the exemption of amusement parks by specifying that "retail store establishment" does not include a retail store establishment located in an amusement park or in a retail, dining, and entertainment area under common control of the amusement park. AB 67 Page 2 ANALYSIS: Existing law: 1)Defines a full workday as eight 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: a) Work in excess of eight hours a day, and over 40 hours in a workweek, and the first eight hours worked on the seventh day of a workweek shall be compensated at the rate of no less than 1 times the regular pay rate. b) 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. c) Work in excess of eight hours on any seventh day of a workweek shall be compensated at the rate of no less than twice the regular pay rate. 3)Provides that the overtime compensation requirements do not apply to certain executive, administrative and professional employees that meet specified criteria for exemption. 4)States that any person who violates these overtime wage provisions is guilty of a misdemeanor. This bill: AB 67 Page 3 1)Enacts the Double Pay on the Holiday Act of 2016 requiring 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. A "retail store establishment" includes a retail food facility, if the retail food facility is located within a retail store establishment. A "retail store establishment" does not include a retail store establishment located in an amusement park, hotel, movie theater, a new motor vehicle dealer, as defined, or a ski resort. 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" includes a separate retail food facility that is located within a grocery store establishment and primarily sells food for onsite consumption. 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 AB 67 Page 4 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 a retail food facility unless it is a grocery store establishment, or is located within a retail store establishment, or is located within a grocery store establishment and primarily sells food for onsite consumption. 7)Specifies that "retail food facility" has the same meaning as in Section 113789 of the Health and Safety Code. Background 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 AB 67 Page 5 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. 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 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 requires retail and grocery store employers to pay at least two times the regular rate of pay to an employee for work on Thanksgiving Day. FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: Yes AB 67 Page 6 SUPPORT: (Verified8/4/16) United Food & Commercial Workers, Western States Council (source) California Conference Board of the Amalgamated Transit Union California Conference of Machinists California Employment Lawyers Association California Immigrant Policy Center California Labor Federation 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 OPPOSITION: (Verified8/4/16) Agricultural Council of California Alhambra Chamber of Commerce Brea Chamber of Commerce California Association of Bed and Breakfast Inns California Chamber of Commerce California Employment Law Council 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 AB 67 Page 7 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 Rancho Cordova Chamber of Commerce 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 ARGUMENTS IN SUPPORT: 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. The author and proponents argue that this bill simply seeks to provide employees with double pay in order to meet the increase in consumer demand on Thanksgiving Day and "pre"-Black Friday shopping. Proponents believe this bill would guarantee AB 67 Page 8 that employees are fairly compensated for the undue hardships associated with working on the traditional family holiday of Thanksgiving. ARGUMENTS IN OPPOSITION: 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. 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. 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 other provisions of AB 67 would be subject to Private Attorneys General Act 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 recognition. AB 67 Page 9 A restaurant specific point of opposition comes from the California Restaurant Association which argues that this bill, although exempting a share of the restaurant community, leaves many subject to the double-pay requirements based on the mere fact that they operate within retail or grocery establishments even though they are separate and independent. They argue that these restaurants will face unfair competition as they will be forced to pay double hourly pay to its employees while restaurants outside a retail or grocery store, but in the same shopping center or across the street, do not. ASSEMBLY FLOOR: 43-32, 1/27/16 AYES: Alejo, Bloom, Bonilla, Bonta, Brown, Burke, Calderon, Campos, Chau, Chiu, Chu, Eggman, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Roger Hernández, Holden, Jones-Sawyer, Levine, Lopez, Low, McCarty, Medina, Mullin, Nazarian, O'Donnell, Quirk, Rendon, Ridley-Thomas, Rodriguez, Santiago, Mark Stone, Thurmond, Ting, Weber, Williams, Wood, Atkins NOES: Achadjian, Travis Allen, Baker, Bigelow, Brough, Chang, Chávez, Cooley, Dababneh, Dahle, Dodd, Frazier, Beth Gaines, Gallagher, Grove, Hadley, Harper, Irwin, Jones, Kim, Lackey, Maienschein, Mathis, Mayes, Melendez, Obernolte, Olsen, Patterson, Steinorth, Wagner, Waldron, Wilk NO VOTE RECORDED: Cooper, Daly, Linder, Salas Prepared by:Alma Perez-Schwab / L. & I.R. / (916) 651-1556 8/5/16 11:08:23 **** END ****