BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 1505|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
THIRD READING
Bill No: AB 1505
Author: Committee on Labor and Employment
Introduced:3/4/15
Vote: 21
SENATE LABOR & IND. REL. COMMITTEE: 5-0, 6/10/15
AYES: Mendoza, Stone, Jackson, Leno, Mitchell
ASSEMBLY FLOOR: 76-0, 5/14/15 - See last page for vote
SUBJECT: Car washes
SOURCE: Author
DIGEST: This bill requires a car wash employer to provide
written notice to a successor employer regarding the car wash
labor code provisions, such as owed wages and penalties, prior
to the sale or other transfer of the business.
ANALYSIS:
Existing law:
1)Requires, under Labor Code §§2054 and 2055, every employer to
register annually with the Labor Commissioner and lists the
following conditions for registration or renewal:
a) The employer must present proof of compliance with the
local government's business licensing or regional
regulatory requirements to the Labor Commissioner.
AB 1505
Page 2
b) The employer has obtained a surety bond with a principal
sum no less than $150,000 and file a copy of the bond with
the Labor Commissioner. The bond shall be payable to the
people of California for the benefit of any employee
damaged by his or her employer's failure to pay wages,
interest on wages, or fringe benefits.
c) The employer has documented that a workers' compensation
insurance policy is in effect and has paid necessary fees.
1)Regulates, under Labor Code §2052, the car washing and
polishing industry by requiring specific recordkeeping
requirements of car wash employers on employee wages, hours
and working conditions.
2)Establishes, under Labor Code §2065, a car wash worker fund
for which penalties and registration fees are deposited for
disbursement by the Labor Commissioner to employees of car
washing or polishing businesses found to be in violation of
current law.
3)States that, under Labor Code §2051, charitable groups, rental
car agencies, self-service or automated car wash that have no
more than two full-time employees for cashiering and/or
maintenance purposes, and licensed vehicle dealers or
automotive repair businesses are exempted.
4)Provides that, under Labor Code §2066, a successor to an
employer that owed wages and penalties to the predecessor's
employees is liable for those wages and penalties under
specified circumstances.
This bill requires a car wash employer to provide written notice
to a successor employer regarding the car wash labor code
provisions, such as owed wages and penalties, prior to the sale
or other transfer of the business.
Comments
1)Background on Legislative Efforts to Regulate the Car Wash
Industry
In 1999, SB 1097 (Hayden), which sought to regulate the car
AB 1505
Page 3
wash industry, was vetoed by the Governor. In his veto
message the Governor said, in part: "I am vetoing this bill.
I do not believe that the need to register car washes with the
Labor Commissioner has been demonstrated. I am however asking
the Director of Industrial Relations (DIR) to review the
activities of the car washing industry and make any and all
appropriate recommendation to me by June 30, 2001."
In response, DIR filed an internal report about labor law
violations in the industry and possible remedies, considering
limited resources and widespread violations that affect other
industries in the state. Additionally, in early 2003, DIR
conducted a coordinated enforcement sweep of the car washing
and polishing industry in the Los Angeles area, finding
numerous labor law violations, collecting back wages and
penalties due totaling over $250,000.
As a result of proven violations in this industry, AB 1688
(Goldberg, Chapter 825, Statutes of 2003), "The Car Wash
Worker Bill," was signed into law and took effect on January
1, 2004. AB 1688 contained a sunset date of January 1, 2007.
The final car wash regulations were promulgated by DIR and
finally adopted by the Office of Administrative Law on
December 2005.
SB 1468 (Alarcon, Chapter 656, Statutes of 2006) extended the
sunset date relating to the regulation of the car washing and
polishing industry to January 1, 2010, and required the Labor
Commissioner to report to the Legislature no later than
December 31, 2008, on the status of labor law violations and
enforcement in the car washing and polishing industry.
In March 2008, the Los Angeles Times reported the results of
an investigation of the car wash industry finding that many
owners pay less than half of the required minimum wage and
that two-thirds of those inspected by the state since 2003
were out of compliance with one or more labor laws -including
underpaying workers, hiring minors, operating without workers'
compensation insurance and denying workers their meal and rest
breaks.
The Division of Labor Standards Enforcement (DLSE) in the
Department of Industrial Relations released the mandated study
of the car wash and polishing industry in April of 2009. In
AB 1505
Page 4
the report, DLSE said the number of registered firms increased
from 2007 to 2008 and that the number of citations decreased
in that period. However, the report found that there
continued to be hundreds of violations of labor standards.
Many firms had no workers' compensation for their workers, and
there were many other violations of labor law (e.g., child
labor violations, and failure to pay minimum wages and
overtime pay).
In 2013, the Legislature passed and the Governor signed AB
1387 (Hernandez, Chapter 751) which eliminated the sunset date
on existing law regulating the car washing and polishing
industry. AB 1387 also increased the surety bond from $15,000
to $150,000 and provided a specified exemption for employers
with a valid collective bargaining agreement.
2)California Courts and Successorship Provisions
In People ex rel. Harris v. Sunset Care Wash, LLC (205 Cal.
App. 4th, 2012) the plaintiff filed an action against Sunset
Car Wash, LLC to recover unpaid wages and penalties owed by
the defendant Auto Spa Express, Inc. which had operated a
carwash at the same location before being evicted by the
property owner. The trial court denied a motion for summary
judgment filed by Sunset Carwash and ruled that because it
operated at the same location and performed the same services
it was considered a successor under Labor Code section 2066.
In its decision, the Court noted that the Legislature was
motivated to enact the Section 2066 provisions by its findings
that carwash operators sometimes employed practices that
resulted in state labor law violations.
3)Need for the bill
Existing law regulates the employment practices of car washes
and requires employers of car wash employees to register with
the Labor Commissioner and pay a specified registration fee or
be subject to a specified civil fine. Existing law also states
that a successor car wash employer may be liable for unpaid
wages and penalties incurred by a predecessor car wash
employer if certain conditions are met.
This bill requires a car wash employer to notify a successor
in writing of the requirement of the car wash registration
AB 1505
Page 5
law. According to the author, this bill provides important
information about the law's requirements to a prospective
purchaser and ensures greater compliance.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:NoLocal: No
SUPPORT: (Verified6/11/15)
None received
OPPOSITION: (Verified6/11/15)
None received
ARGUMENTS IN SUPPORT: According to the author's office, this
bill requires a car wash employer to notify a successor in
writing of the requirement of the car wash registration law,
including the potential for successor liability for unpaid
wages, prior to the sale or other transfer of the business.
Further, the author's office argues that requiring a person
selling their car wash business to inform a prospective
purchaser about the requirements of the law will ensure greater
awareness of and compliance with the law.
ASSEMBLY FLOOR: 76-0, 5/14/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,
Bonilla, Bonta, Brough, Brown, Burke, Calderon, Chang, Chau,
Chávez, Chiu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd,
Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo
Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove,
Hadley, Harper, Roger Hernández, Holden, Irwin, Jones,
Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low,
Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin,
Obernolte, O'Donnell, Olsen, Patterson, Perea, Quirk, Rendon,
Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark
Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams,
Wood, Atkins
NO VOTE RECORDED: Campos, Chu, Eggman, Nazarian
AB 1505
Page 6
Prepared by:Deanna Ping / L. & I.R. / (916) 651-1556
6/12/15 15:41:14
**** END ****