BILL ANALYSIS Ó
AB 202
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Date of Hearing: April 8, 2015
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Roger Hernández, Chair
AB 202
(Gonzalez) - As Amended April 6, 2015
SUBJECT: Professional sports teams: cheerleaders: employee
status
SUMMARY: Provides that specified professional sports
"cheerleaders" shall be deemed to be employees for state
employment law purposes. Specifically, this bill:
1)Provides that, notwithstanding any other law, for purposes of
the provisions of state law that govern employment, a
cheerleader that is utilized by a California-based
professional sports team during its exhibitions or games shall
be deemed to be an employee.
2)Defines "cheerleader" to mean an individual who performs
acrobatics, dance or gymnastics exercises on a recurring
basis. However, the term does not include an individual who
is not otherwise affiliated with the sports team and is
utilized no more than one time in a calendar year.
3)Defines "professional sports team" to mean a team at either a
minor or major league level in the sport of baseball,
basketball, football, ice hockey, or soccer.
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4)Defines "California-based team" to mean a team that plays a
majority of its home games in California.
5)Provides that the professional sports team shall ensure that
the cheerleader is classified and treated as an employee.
FISCAL EFFECT: Unknown
COMMENTS: This bill addresses an issue that has garnered
significant media attention over the last year - the treatment
of professional sports cheerleaders. A number of lawsuits
(including one against the Oakland Raiders) have been filed
recently alleging violations of employment laws - including
minimum wage, overtime, meal and rest periods, and illegal
deductions - regarding professional sports cheerleaders. Other
claims have been made that such cheerleaders have been
misclassified as independent contractors rather than employees,
thereby depriving them of important employment law protections.
As mentioned above, a lawsuit was filed in January of last year
alleging a number of employment law violations against the
Oakland Raiders. Similar lawsuits have reportedly been filed
against the Tampa Bay Buccaneers, the New York Jets, the Buffalo
Bills, the Cincinnati Bengals, and the National Football League
itself.
Brief Background on Employment Misclassification
Employee misclassification has become a serious problem in the
United States, and particularly in California. When companies
misclassify workers as independent contractors instead of as
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employees, these workers do not receive worker protections,
including minimum wages, overtime pay, and health and vacation
benefits, to which they would otherwise be entitled. Standard
employee protections such as anti-discrimination laws and safety
regulations also do not apply to independent contractors.
Additionally, businesses do not deduct taxes, 401(k), Social
Security, or Medicare payments from the paychecks of independent
contractors, which results in a loss of state tax income from
the businesses as well as a potential loss of income from the
individual worker who may not properly report income. Because
employers do not pay unemployment taxes for independent
contractors, workers who are misclassified cannot obtain
unemployment benefits if they lose their jobs.
A number of reports in the last several years have chronicled
the societal consequences of and impacts upon American workers
of misclassification of workers as independent contractors
versus employees. The United States Government Accountability
Office conducted a study of misclassification of workers as
independent contractors and found that employee
misclassification cost the United States government $2.72
billion in revenue from Social Security, unemployment and income
taxes in 2006 alone. (GAO, Employee Misclassifications:
Improved Outreach Could Help Ensure Proper Worker
Classification, GAO-07-859T (May 8, 2007), pg. 1.)
Similarly, in California EDD reported that the number of
misclassified employees increased 54 percent from 2005 to 2007,
reaching 15,751 workers in 2007. During this 3-year period, the
EDD recovered a total of $111,956,556 in payroll tax
assessments, $18,537,894 in labor code citations, and
$40,348,667 in assessments on employment tax fraud cases. (See
California Employment Development Department, Annual Report:
Fraud Deterrence and Detection Activities, report to the
California Legislature (June 2008)) A Daily Journal article
reported on the recent increase in worker misclassification and
one person interviewed for the article noted that worker
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misclassification is attractive to employers because they can
cut their labor costs by up to 30 percent by moving to an
independent contractor model. (Ho, Independent Contractor
Status Raises IRS Eyebrows: Contractor Status is Cheaper for
Employers; Some Workers are Crying Foul, Daily Journal (May 17,
2010).)
These concerns led to the passage of SB 459 (Corbett) from 2011,
which established significant civil penalties for the
intentional misclassification
"Statutory Employees" and Previous Legislation
As discussed above, in general, most individuals are determined
to be employees under common law, which involves evaluating a
number of specific factors. However, a "statutory employee" is
defined as an employee by law under a specific statute.
For example, Unemployment Insurance Code Section 621 deems
certain groups of workers to be employees for purposes of
certain employment tax purposes. These "statutory employees"
include corporate officers, specified agent/commission drivers,
traveling salespersons, certain home workers, and certain
artists and authors.
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AB 950 (John A. Pérez) of 2011 would have deemed port drayage
drivers to be employees for employment law purposes, similar to
the approach taken by this bill. AB 950 was moved to the
Inactive File on the Assembly floor.
Stated Need For The Bill
According to the author, the widespread practice of worker
misclassification has resulted in a failure to justly compensate
cheerleaders. This bill will ensure that professional
cheerleaders will no longer be misrepresented as independent
contractors by statutorily defining them as "employees" entitled
to the same legal rights and benefits as employees.
The author states:
"It takes a lot of time and hard work to be a cheerleader,
including an initial financial investment along with a
commitment to practice just in order to have an opportunity to
professionally dance and cheer for a sports team.
Cheerleaders are required to attend and participate in
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practices, mandatory rehearsals, fittings, preparations,
drills, photo sessions, meetings, and workouts. Cheerleaders
are required to finance their business expenditures, including
travel and investment in their physical appearance by
purchasing required cosmetics, in the normal course of their
cheerleading duties.
During a sporting event, professional cheerleaders are
performing and cheering. It is a product of hours upon hours
of rehearsing dance routines, gymnastics and stunts. Cheer
athletes practice their routines at least 2 to 5 times a week.
They must get physically fit in order to carry out intense
dance routines and stunts in cheerleading. On game days, a
cheerleader's performance can consist of motivating players
along with a combination of dance and music, gymnastics and
acrobatics. As frontline team ambassadors, they're valuable
contributors that add significant value to the entertainment
product and fan experience.
Cheerleaders are featured prominently in advertising and
game-day coverage, especially leading in and out of every
commercial break on the nationally broadcasted television
programs. Prior to each sports season, selected cheerleaders
have training camps and practice, photo shoots and swimsuit
calendars obligations. Throughout the year, they have non-game
day annual responsibilities, such as guest appearances at
schools, charity events, or conferences. These are all
employee obligations imposed by an employer?
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?After examining numerous factors, it's clear that a
cheerleader's position constitutes an employee status. For
instance, once cheerleaders are selected to work for a sports
franchise, the control over their work time ends. The
organization's management directs the set work hours, payment
schedules, dress codes and standards for behavior, among other
work conditions."
This bill would establish statutory employment status for
covered cheerleaders. This would not impact the application of
protections that apply to cheerleaders prior to the passage of
the bill nor impact prior claims or settlements under existing
law or existing theories of liability.
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ARGUMENTS IN SUPPORT
Supporters argue that this bill will would clarify that a
professional cheerleader is provided the same rights and
benefits of an employee under state law and is not improperly
misclassified as an independent contractor. As a result,
professional sport cheerleaders would be guaranteed a legal wage
for attending and participating in team practices, rehearsals,
preparations, meetings and required workouts. In addition, they
would also be covered for all required appearances at corporate,
community and charity events.
REGISTERED SUPPORT / OPPOSITION:
Support
CA Conference Board of the Amalgamated Transit Union
CA Conference of Machinists
California Employment Lawyers Association
California Labor Federation, AFL-CIO
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California School Employees Association
California Teamsters Public Affairs Council
Consumer Attorneys of California
Engineers & Scientists of California
International Longshore & Warehouse Union
Jockeys' Guild
Professional & Technical Engineers
UNITE-HERE
Opposition
None on file.
Analysis Prepared by:Ben Ebbink / L. & E. / (916) 319-2091
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