BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     AB 202


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          Date of Hearing:   April 21, 2015


           ASSEMBLY COMMITTEE ON ARTS, ENTERTAINMENT, SPORTS, TOURISM, AND  
                                   INTERNET MEDIA


                             Ian Charles Calderon, Chair


          AB 202  
          (Gonzalez) - As Amended April 15, 2015


          SUBJECT:  Professional sports teams:  cheerleaders:  employee  
          status.


          SUMMARY:  Would, for purposes of all of the provisions of state  
          law that govern employment, deem a cheerleader utilized by a  
          California-based professional sports team during its exhibitions  
          or games as an employee. The bill would also require the  
          professional sports team to ensure that the cheerleader is  
          classified and treated as an employee. Specifically, this bill:   



          1)Provides, notwithstanding any other law, for purposes of all  
            of the provisions of state law that govern employment,  
            including this code, the Unemployment Insurance Code, and the  
            California Fair Employment and Housing Act (Part 2.8  
            (commencing with Section 12900) of Division 3 of Title 2 of  
            the Government Code), a cheerleader who is utilized by a  
            California-based professional sports team during its  
            exhibitions or games, shall be deemed to be an employee.



          2)Further provides that the professional sports team shall  








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            ensure that the cheerleader is classified and treated as an  
            employee.



          3)Contains the following definitions:



             a)   "California-based team" means a team that plays a  
               majority of its home games in California.



             b)   "Cheerleader" means an individual who performs  
               acrobatics, dance, or gymnastics exercises on a recurring  
               basis. This term shall not include an individual who is not  
               otherwise affiliated with a California-based professional  
               sports team and is utilized during its exhibitions or games  
               no more than one time in a calendar year.



             c)   "Professional sports team" means a team at either a  
               minor or major league level in the sport of baseball,  
               basketball, football, ice hockey, or soccer.
          FISCAL EFFECT:  Unknown


          COMMENTS:  


          1)Author and supporter's statement of need for legislation.


            According to the author, "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  








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            team. 





            "Cheerleaders are required to attend and participate in  
            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  








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            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?





            "?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."





          2)Recent amendments.


            Last week AB 202 was heard in the Committee on Labor &  
            Employment, where issues arose as to the meaning of certain  
            provisions. The author agreed to make the following amendments  
            in order to provide greater clarity and specificity:





          (b) Notwithstanding any other law, for purposes of all of the  
          provisions of state law that govern employment, including this  
          code, the Unemployment Insurance Code, and the California Fair  
          Employment and Housing Act (Part 2.8 (commencing with Section  
          12900) of Division 3 of Title 2 of the Government Code), a  
          cheerleader who is utilized by a California-based professional  








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          sports team directly or through a labor contractor during its  
          exhibitions, events or games, shall be deemed to be an employee.





          (c) The professional sports team shall ensure that the  
          cheerleader is classified  and treated  as an employee.


          3)Origin of legislation: lawsuits filed by NFL cheerleaders.


            ESPN reports that the Oakland Raiders are being sued by  
            current and former cheerleaders claiming wage theft and other  
            unfair employment practices. According to the filing, Raiders  
            cheerleaders are paid $1,250 per season, which amounts to less  
            than $5 per hour for the time they spend rehearsing,  
            performing and appearing at events for which they are not  
            compensated. In the article, Lacy T., identified only by her  
            first name, in accordance with Raiderettes policy for security  
            reasons, was quoted as saying, "The club controls our  
            hairstyle and makeup, and we have to foot the bill," she said.  
            "We also have to pay the costs for traveling to all kinds of  
            events, including photo shoots...I love the Raiders and I love  
            being a Raiderette, but someone has to stand up for all of the  
            women of the NFL who work so hard for the fans and the teams."  
            An attorney representing the cheerleaders claims, "the Raiders  
            owe thousands of dollars in unpaid wages to women who worked  
            as Raiderettes in previous seasons, while owing thousands of  
            dollars in penalties to the women who worked this season."  
            Perhaps adding insult to injury, the cheerleader's lawyer says  
            NFL teams' male mascots are treated as paid employees with  
            benefits.


            (  http://espn.go.com/nfl/story/_/id/10334429/cheerleaders-file-s 
            uit-oakland-raiders-wage-theft-unfair-employment-practices  ,  








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            accessed April 8, 2015)


            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.


          4)Background: 


             a)   Misclassified employees. 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 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  








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          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, the California Employment Development Department  
               (EDD) reported that the number of misclassified employees  
               increased 54% 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  
               misclassification is attractive to employers because they  
               can cut their labor costs by up to 30% 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).)


             b)   Statutory employees. 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.


          5)Prior related legislation








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             a)   SB 459 (Corbett) Chapter 706, Statutes of 2011, which  
               established a scheme of regulatory enforcement and  
               significant civil penalties for the intentional  
               misclassification of employees.
             b)   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 the instant  
               measure, AB 202. Held on the Assembly Inactive File. 





             c)   SB 1583 (Corbett) of 2008, would have provided  
               employment consultant liability for advising unlawful  
               conduct through employee misclassification. Vetoed



             d)   SB 1490 (Padilla) of  2008, would have required the  
               Employment Development Department to create a form,  
               including factors used by EDD in determining independent  
               contractor status, to be distributed by employers to  
               workers. SB 1490 was held in the Senate Committee on  
               Appropriations.  



             e)   SB 622 (Padilla) of 2007, would have made it unlawful  
               for employers to willfully misclassify an employee as an  
               independent contractor. Vetoed
          REGISTERED SUPPORT / OPPOSITION:




          Support








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          CA Conference Board of the Amalgamated Transit Union


          CA Conference of Machinists


          California Labor Federation, AFL-CIO


          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


          South Bay Labor Council


          UNITE-HERE, AFL-CIO


          Utility Workers Union of America








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          Opposition


          There is no opposition on file.




          Analysis Prepared by:Dana Mitchell / A.,E.,S.,T., & I.M. / (916)  
          319-3450