BILL ANALYSIS Ó AB 1978 Page A Date of Hearing: April 20, 2016 ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT Roger Hernández, Chair AB 1978 (Gonzalez) - As Amended April 13, 2016 SUBJECT: Employment: property service workers SUMMARY: Enacts a number of requirements related to the janitorial industry. Specifically, this bill: 1)Defines "covered worker" to mean a janitor, including any individual working, whether as an employee, independent contractor, or a franchisee, as a janitor. If an individual's work duties are predominantly those of a janitor, that person shall be deemed as janitor for purposes of this bill. 2)Defines "employer" to mean any person or entity that employs at least one employee and one or more covered workers and that enters into contracts, subcontracts, or franchise agreements to provide janitorial services. Workplace Sexual Violence and Sexual Harassment 3)Requires the Department of Industrial Relations (DIR), no later than July 1, 2017, to do all of the following: AB 1978 Page B a) Develop worker and supervisor agendas, handouts, facilitation guides, and other materials for a four-hour training regarding sexual harassment, sexual violence, and human trafficking that are appropriate for the janitorial industry and the languages and literacy levels of covered workers, as specified. DIR shall provide these materials in all languages that are the language spoken at home of at least 500 janitors who reside in the state, and shall update these materials on or before July 1 of each year b) Establish requirements that employers shall require all covered workers and supervisors, to at least annually, receive comprehensive, accurate and appropriate in-person training lasting at least four hours regarding sexual harassment and sexual assault that provides an opportunity for interactive questions and answers, as specified. c) Establish minimum qualification standards for trainers who may deliver such training, including but not limited to, a minimum of five (5) years of experience conducting adult education with the demographics of the janitorial workforce. The collective bargaining agent that represents the employer's covered workers or the designee of the collective bargaining agent may deliver such trainings. d) Establish requirements for employers to maintain accurate records of training, as specified. e) Establish a toll-free hotline for the reporting of complaints and incidents of workplace sexual harassment, assault, and human trafficking. AB 1978 Page C f) Require employers to post and display prominently a notice that informs covered workers of their rights under the sexual harassment and human trafficking laws, contain examples of illegal employer conduct, provide the hotline number and provide the contact information for local resources to assist those who have experienced sexual harassment and human trafficking. g) Appoint an advisory group of stakeholders, including representatives from a non-profit organization that advocates for standards to protect workers in the janitorial industry from workplace sexual harassment and assault and from a labor organization that represents covered workers. h) Issue such regulations as are necessary to carry out this bill. 4)Requires the Occupational Safety and Health Standards Board (Standards Board), no later than July 1, 2017, to adopt standards that require an employer to adopt a workplace sexual violence and sexual harassment prevention plan, as a part of its injury and illness prevention plan, to protect covered workers from sexual violence and harassment, and that includes specified elements. 5)Provides that this bill shall not be interpreted to preclude the Standards Board from adopting standards that require other employers to adopt plans to protect employees from workplace violence or harassment, nor shall it be interpreted to preclude the Standards Board from adopting standards that AB 1978 Page D require an employer subject to this bill, or any other employer, to adopt a workplace violence or harassment prevention plan that includes elements or requirements additional to, or broader in scope than, those described in this bill. Registration of Janitorial Contractors 6)Provides that on and after January 1, 2018, no employer may conduct any janitorial business without a valid registration and all employers must be registered with DIR. 7)Provides that, in order to qualify for a certificate of registration or renewal, an employer shall: a) Beginning July 1, 2017, register with DIR and pay an initial application fee of $1,000 and an annual renewal fee of $1,000. b) Execute a written application, sworn to by the employer under penalty of perjury, that contains specified information. c) Provide evidence, disclosures under penalty of perjury, or releases as are necessary to establish specified information. d) Designate a qualifying individual to take a written examination that demonstrates an essential degree of AB 1978 Page E knowledge of the current state laws and regulations that apply to employers, as specified. To successfully complete the examination, the qualifying individual must correctly answer at least 85 percent of the questions, and the examination may only be taken a maximum of three times per calendar year. 8)Establishes specified posting and recordkeeping requirements for covered employers. 9)Provides that DIR shall not grant registration or renewal of registration to specified employers, including to any employer who has a record of serious, repeated, willful or pervasive violations of specified laws, including any covered successor employer, as defined. 10)Authorizes DIR to revoke, suspend, or place a registration on probation if specified requirements are met. 11)Requires DIR to establish a Property Services Compliance Unit to enforce the requirements of this bill. 12)Provides that whenever an employer has a record of serious, willful or pervasive violations of the laws or has violated the provisions of this bill, DIR may seek to negotiate and enter into a labor compliance agreement with the employer, including appropriate remedial measures, compliance assistance, and any steps to resolve issues to increase compliance with covered laws, as specified. Covered affected workers, collective bargaining agents, and labor-management cooperation committees shall have an opportunity to AB 1978 Page F participate in the development and monitoring of such labor compliance agreements. 13)Establishes specified civil penalties. 14)Authorizes the Labor Commissioner, as specified, to issue a stop order against an employer that is conducting business without a valid registration. 15)Requires DIR to maintain on its website an updated list of known janitorial employers, and to select employers as audit subjects for the purpose of determining compliance with this bill, as specified, and shall select each employer on this list at least once every five years. 16)Establishes specified criminal penalties for an employer that conducts any janitorial business after its registration has been suspended, revoked, or denied reissuance, and for an employer, director, officer, or managing agent who fails to observe a stop order. 17)Provides that, after January 1, 2018, any person or entity that hires an employer that does not have a valid registration shall share with that employer all civil responsibility and civil liability for all violations of specified laws dealing with employment discrimination, harassment, and other matters. AB 1978 Page G 18)Establishes specified whistleblower and anti-retaliation protections for individuals. 19)Establishes the State Janitorial Contractor Registration Fund (Fund), to be funded by registration fees and civil penalties. Moneys in the Fund shall only be used for administering the registration of janitorial contractors and the administration and enforcement of the requirements of this bill. 20)Requires DIR, by July 1, 2017, to develop standards and procedures for: a) The determination whether administrative determinations, arbitral awards or decisions, or civil or criminal judgments are for serious, repeated, willful or pervasive violations, as specified. b) A covered worker, a collective bargaining agent, or a labor-management cooperation committee to file a complaint regarding an employer's failure to comply with the requirements of this bill, and for DIR to investigate and issue a written determination regarding each complaint. c) Other specified matters. Online Posting of Janitorial Contractor Registry and Database AB 1978 Page H 21)Provides that, after February 1, 2018, DIR's website shall include a regularly updated, searchable database of registered covered employers. The database will have the capability to search all data for at least the past ten years, and will include specified information. 22)Provides that after July 1, 2018, DIR's website shall include a searchable database regarding its compliance and enforcement activities. The database will have the capability to search all data for at least the past ten years, and will include specified information. 23)Contains related legislative findings, declarations and statements of intent. FISCAL EFFECT: Unknown COMMENTS: This bill establishes various requirements for the janitorial industry, including a registration requirement and protections against workplace sexual violence and harassment. The bill contains a number of legislative findings and declarations that set forth the intent of the bill, including the following: "Workers are widely victimized by wage theft, sexual harassment and assault, failure to provide workers compensation insurance and other low road practices perpetrated by unscrupulous employers that fail to comply with existing labor standards laws." "While some high-road employers comply with labor standards laws and invest in training and retaining a more skilled workforce, these employers are undercut by low-road competitors in a continual race to the bottom." AB 1978 Page I "It is in the public interest that employers compete primarily on the basis of quality, efficiency and innovation, and not through a race to the bottom that perpetuates substandard working conditions and lack of compliance with labor standards laws." "Workers in janitorial occupations often work alone at night, making them vulnerable to sexual violence and harassment while on the job, a condition that is exacerbated by low pay, low job mobility and poor training. Adopting standards to protect workers from sexual violence and sexual harassment must be an obligation of all janitorial industry employers." According to the author, among the purpose of this bill is to lower instances of sexual harassment, sexual violence, and human trafficking in the property services industry, where it is particularly prevalent. The author argues that, most janitors and security officers work alone in empty buildings at night. This isolation is a major risk factor for sexual harassment and assault. Employers in the property services industry typically service a large number of worksites. As a result, janitors and security officers generally do not have day-to-day contact with anyone representing the employer, other than the supervisor who may be harassing them. Being isolated from co-workers and the public reduces the likelihood that anyone will intervene or serve as witnesses and allows supervisors to exert greater control over workers. The author cites a survey which reported that 85 percent of workers who were raped in the workplace reported AB 1978 Page J working alone. Background on Workplace Violence Prevalence Among the Contracted & Subcontracted Property Services Workforce According to worker advocates, few employers in the low-wage economy are equipped to prevent or stop harassment. Sexual harassment policies are not in place or are inadequate or unenforced. Workers may not know to whom they can report harassment, even if they know harassment is illegal. Supervisors are often not trained on how to respond and end up doing nothing. Other employers dismiss claims as problems that should be handled by the criminal justice system. Even worse, workers are frequently retaliated against after reporting harassment; almost half of women who complain of sexual harassment are retaliated against in some way The top concern of many Latina workers is "keeping their jobs, even at the expense of their health or accepting unfair treatment at work"; the threat of retaliation keeps workers from reporting and increases the harassers' confidence that they will not be caught. A recent UC Berkeley Labor Center report<1>, titled "Race to the Bottom: How Low-Road Subcontracting Affects Working Conditions in California's Property Services Industry," reported on the conditions faced by property service workers and shows that workers in this industry face distinct challenges. Issues of wage theft, misclassification, sexual harassment and sexual violence are just some of the challenges facing these workers. Much of this is driven by the fact that this is a subcontracted --------------------------- <1> UC Berkeley Labor Center report, March 2016. http://laborcenter.berkeley.edu/pdf/2016/Race-to-the-Bottom.pdf AB 1978 Page K industry with a high percentage of labor costs, which creates an incentive to cut corners in order to win contracts. The report noted a survey which found that 32 percent of workers in the property services industry were paid less than minimum wage, and 80 percent were not paid the legally required overtime when they worked more than 40 hours a week. The same survey also found that Janitors and security officers are disproportionately workers of color and immigrants; more than 70 percent of contracted janitors were born outside the U.S. The report cited specific conditions in the property services industry which make workers more vulnerable to sexual harassment, sexual violence, and wage theft. Among those factors, isolation in particular increases the vulnerability to sexual assault. Additionally, the report found that other factors such as gender, ethnicity, and immigration status all make workers in the property services industry particularly vulnerable. The threat of retaliation makes it less likely that a worker would report sexual harassment, sexual assault, wage theft, or other workplace misconduct. "A boom in companies trying to cut costs by contracting out janitorial and security jobs has led to large pay disparities between workers doing the same jobs," according to the UC Berkeley report as cited by the Los Angeles Times<2>? "Many contractors, especially smaller companies, also do not pay overtime or even minimum wage, Sara Hinkley, the report's coauthor said. They often misclassify workers as independent contractors, thereby avoiding making Social Security contributions and sometimes even pocketing taxes that would normally be deducted from paychecks." "Janitors who work for California contractors earn on average --------------------------- <2> http://www.latimes.com/business/la-fi-contract-janitors-story.htm l AB 1978 Page L $10.31 an hour, or 20% less than janitors who work directly for a company that uses their services", according to the report, prepared by the university's Center for Labor Research and Education In June of 2015, Reveal News wrote an investigative piece<3> titled, "Under cover of darkness female janitors face rape and assault." The piece states that, "In Massachusetts, seven female janitors cleaning universities and office buildings for a company called UGL Unicco sued their employer after they said their supervisor touched and harassed them. The case settled in 2002 for $1 million; the company did not admit wrongdoing. Janitors have sued the company five times in federal courts since then. In Minnesota, a janitor filed a lawsuit in 2009 that claimed she was raped repeatedly by her boss while on the clock cleaning a shopping mall. When it got notice of her complaint, cleaning company Service Management Systems asked the accused manager to gather evidence for the case. The company settled the case and later said this was against its protocol. The janitor now works uneventfully for ABM." The piece continues and tells several deeply troubling stories of pervasive workplace fear and violence. "Operations like these do the thankless work of keeping everyone's office space clean and humming. The very fact that their workers are supposed to remain unseen in an industry that takes all comers mean that when it comes to sexual violence on the job, almost everything that could go wrong does." Arguments in Support --------------------------- <3> https://www.revealnews.org/article/under-cover-of-darkness-female -janitors-face-rape-and-assault/ AB 1978 Page M This bill is sponsored by SEIU California. They and other supporters of the bill argue that a recent report by the UC Berkeley Labor Center reported on the conditions in the property services industry. The report noted a survey which found that 32 percent of workers in the property services industry were paid less than minimum wage, and 80 percent were not paid the legally required overtime when they worked more than 40 hours a week. The same survey also found that janitors and security officers are disproportionately workers of color and immigrants; more than 70 percent of contracted janitors were born outside the U.S. The report also cited specific conditions in the property services industry which make workers more vulnerable to sexual harassment, sexual violence, and wage theft. Among those factors, isolation in particular increases the vulnerability to sexual assault. Supporters state that it is clear that the property services industry is in need of regulation in order to protect vulnerable workers. In fact, there are five main industries in California operate almost exclusively through contracting and subcontracting, including construction, garment manufacturing, farm labor, long-term care, and property services. Not coincidentally, basic labor violations plague these industries; labor scholars and enforcement agencies continually observe that contracted labor frustrates wage enforcement. Contracting disrupts the direct relationship between employers and employees. Workers hired by contractors and subcontractors are often ignorant of the identity of, or have little access to, their true employer. Among these five industries, all have a registry or licensing, except for property services. And the laws regulating farm labor contractors require mandatory sexual harassment training for both employees and supervisors. In addition to these industries, the car wash industry also requires employers to AB 1978 Page N register with the state and pay a bond. They argue that the state has acted to regulate other industries with similar risk factors, similar worker populations, and similar contracted labor. They believe the time has come to similarly regulate the property services industry. Arguments in Opposition The California Chamber of Commerce (CalChamber) opposes this bill unless amended. They state that the business community has repeatedly participated in efforts to address the underground economy. Employers who intentionally disregard the law not only hurt employees, but other businesses in the industry who are trying to comply with the myriad of California labor and employment laws, tax laws, licensing requirements, etc. However, they state that this bill proposes unprecedented standards that simply far exceed the need to address issues in the underground economy. They are concerned that some of the provisions in this bill are so extreme, it will either: (1) limit the participation of good acting businesses in the industry; or, (2) encourage those unlawful actors to continue to operate in the underground economy, as the cost of compliance is too high. They express particular concern that the provision providing for joint liability for certain provisions of the law related to discrimination and harassment are unprecedented and inappropriate. They contend that there is no basis as to why a business that contracts for janitorial services should be deemed statutorily liable for all protections listed in this section of the Government Code when there is absolutely no way in which that contractor can engage or force the janitorial company to AB 1978 Page O comply with provisions of the law. Moreover, they argue that this statutory mandate ignores and disrupts current law that already provides liability for a business who is acting as a "joint employer." CalChamber also argues that the enforcement mechanism and penalties proposed in this bill are overly punitive and unprecedented. While they appreciate the intent of this bill to create a disincentive for unlawful behavior, such a list of penalties and enforcement will likely have the opposite impact of discouraging good actor businesses from engaging in the industry and drive bad actor businesses further into the underground economy. This list of proposed penalties and enforcement is also entirely unprecedented for any other industry engaged in the underground economy. Finally, CalChamber argues that several of the other provisions of this bill are overbroad, unprecedented, and too onerous. REGISTERED SUPPORT / OPPOSITION: Support CLEAN Carwash Campaign Koreatown Immigrant Workers Alliance Maintenance Cooperation Trust Fund SEIU California (sponsor) AB 1978 Page P UFCW Western States Council Wage Justice Center Opposition California Chamber of Commerce Analysis Prepared by:Taylor Jackson/Ben Ebbink / L. & E. / (916) 319-2091