BILL ANALYSIS Ó
AB 2437
Page 1
Date of Hearing: April 19, 2016
ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
Rudy Salas, Chair
AB 2437
(Ting) - As Amended March 31, 2016
NOTE: This bill is double referred, and if passed by this
Committee, it will be referred to the Assembly Committee on
Labor and Employment.
SUBJECT: Nail care establishments: training: wage violations.
SUMMARY: Prohibits the Board of Barbering and Cosmetology (BBC)
from issuing a renewal licensed to an establishment that is
operating in violation of specified Labor Code (LC) provisions;
requires the BBC to verify with the Labor Commissioner about
establishments operating in violation of specified LC
violations, and prohibits the BBC from renewing a license of an
establishment unless all employees have received specified
training; requires the Labor Commissioner to notify the BBC if a
licensed establishment is conducting business in violation of
specified LC provisions; requires an establishment to register
with the Division of Labor Standards and Enforcement (Division);
requires the Division to establish and provide a training
program to establishments and licensees pertaining to specified
workplace rights and wage and hour laws; permits an authorized
non-profit agency to provide that training; and, authorizes the
Division to charge a fee to the establishments for the training.
AB 2437
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EXISTING LAW:
1)Establishes the BBC which provides for the licensure and
regulation of Barbers; Barber Apprentices; Cosmetology
Apprentices; Cosmetologists; Electrologists; Estheticians;
Manicurists; Establishments; and, Mobile Units, within the
Department of Consumer Affairs (DCA) to administer and enforce
the Barbering and Cosmetology Act (Act). (Business and
Professions Code (BPC) Section 7301, et seq.)
2)Defines an "establishment" as any premises, building, or part
of a building where any BBC-licensed activity is practiced.
(BPC Section 7346(a))
3)Specifies that an establishment also includes any premises,
building, or part of a building where natural hair styling is
practiced for compensation. (BPC Section 7346(b))
4)Requires any person, firm, or corporation desiring to operate
an establishment to make an application to the BBC, which must
include whether the person, firm, or corporation is operating
a new establishment or obtaining ownership of an existing
establishment, as specified. (BPC Section 7347)
5)States that an applicant, whether an individual, or each
officer, director, partner, if the applicant is not an
individual, may not have committed acts or crimes which are
grounds for denial of licensure in effect at the time the new
application is submitted, as specified. (BPC Section 7374)
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6)Prohibits operation of the establishment at any other location
unless a license for the new location has been obtained, as
specified. (BPC Section 7347)
7)Requires the BBC's EO and authorized representatives, as
specified, to have access to, for the purpose of required
inspections, any establishment or mobile unit during business
hours or at any time in which barbering and cosmetology are
being performed. (BPC Section 7313)
8)Requires, within 90 days after issuance of the establishment
license, an inspection of the establishment for compliance
with the applicable rules and regulations of the BBC. (BPC
Section 7353 (a)(1))
9)Requires the BBC to maintain a program of random and targeted
inspections of establishments, as specified, and prohibits the
BBC from reducing the number of employees assigned to perform
random inspections, targeted inspections, and investigations
related to field operations below the level funded, as
specified. (BPC Section 7353(b)(d))
10)Prohibits the practice of barbering, cosmetology, or
electrolysis for compensation without a valid, unexpired
provider license or in an establishment or mobile unit unless
licensed by the BBC. (BPC Section 7317)
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11)Permits the practice of barbering and cosmetology outside of
a licensed establishment when necessary due to illness or
other physical or mental incapacitation of the recipient of
the service when performed by an individual licensed by the
BBC. (BPC Section 7318)
12)States that if a final judgement against an employer arising
from the employer's nonpayment of wages for work performed in
this state remains unsatisfied after a period of 30 days after
the time to appeal has expired and no appeal is pending, the
employer may not continue to conduct business in this state,
including conducting business using the labor of another
business, contractor, or subcontractor instead of the labor of
an employee, unless the employer has obtained a bond from a
surety company admitted to do business in this state and has
filed a copy of that bond with the Labor Commissioner. (Labor
Code (LC) Section 238(a))
13)Requires the surety bond to be effective and maintained until
satisfaction of all judgements for nonpayment of wages, as
specified. (LC Section 238(a))
THIS BILL:
1)Prohibits the BBC from renewing an establishment license that
provides nail care services if it conducting business in
violation of specified provisions of the LC.
2)Requires the BBC, prior to renewing the license of an
establishment that provides nail care services, to verify with
the Labor Commissioner whether the establishment is conducting
business in violation of specified provisions of the LC.
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3)Permits an establishment that provides nail care services to
demonstrate to the BBC that it is not conducting business in
violation of specified provisions of the LC, by providing
evidence to the BBC.
4)Prohibits the BBC from renewing an establishment license of an
establishment that provides nail care services, if the
establishment and its employees have not received specified
training.
5)Requires the Labor Commissioner to notify the BBC if an
establishment licensee is conducting business in violation of
specified provisions of the LC.
6)Defines "nail care services" to mean the practice of cutting,
trimming, polishing, coloring, tinting, cleansing, manicuring,
or pedicuring the nails of a person or massage, cleansing, or
beautifying from the elbow to the fingertips or the knee to
the toes of a person.
7)Defines the following for purposes of this bill:
a) "Division" to mean the Division of Labor Standards
Enforcement;
b) "Establishment" to mean a license issued by the BBC that
provides nail care services;
c) "License" to mean a licensed issued to an establishment
to perform nail care services, as specified; and,
d) "Nail care" to mean the practice of cutting, trimming,
polishing, coloring, tinting, cleansing, manicuring, or
AB 2437
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pedicuring the nails of a person or massaging, cleansing,
or beautifying from the elbow to the fingertips or the knee
to the toes.
8)Requires an establishment to register with the Division and
receive specified training once every license renewal period
and requires for the establishment to also arrange for
licensees employed at that establishment to receive required
training from either the Division, or from a nonprofit vendor,
as specified.
9)Requires, by June 1, 2017, the Division to provide training to
an establishment and licensees employed at that establishment
regarding laws pertaining to workplace rights and wage and
hour laws, and requires the training to include, but not
limited to the following:
a) Misclassification of an employee as a contractor;
b) Wage and hour laws, such as minimum wage, overtime
compensation, meal periods, and rest breaks;
c) Protection for retaliation;
d) Business expense reimbursement;
e) Tip or gratuity distribution; and,
f) How to report violations of the law.
10)Specifies that to the extent possible, the training must be
provided separately to an establishment and licensee.
11)Requires the training to be provided in a culturally
competent and linguistically appropriate manner for the
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demographic groups that work in the nail care industry.
12)Authorizes the Division to contract with an approved
nonprofit vendor to provide the required training.
13)Requires the Division to consider the following when
approving a nonprofit vendor to provide the required training:
a) The linguistic capabilities of the nonprofit vendor, who
must have language capacity to conduct the training in the
languages of the demographic groups that work in the nail
care industry, including, but not limited to Vietnamese;
b) The nonprofit vendor must have a demonstrated history of
providing culturally competent services to the demographic
groups that work in the nail care industry, including, but
not limited to, the Vietnamese community;
c) The nonprofit vendor must have familiarity with the laws
to be discussed in the training; the vendor may obtain this
legal experience through other services providers, such as
a nonprofit legal services agency; and,
d) Any other criteria deemed appropriate by the Division.
14)Authorizes the Division to charge a fee not to exceed the
reasonable regulatory cost for providing the training or for
contracting out with an approved nonprofit vendor to provide
the required training.
15)Establishes the Nail Care Establishment Training Fund, and
specifies that the fees are only to be used for the purposes
of providing the training required.
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FISCAL EFFECT: Unknown. This bill is keyed fiscal by the
Legislative Counsel.
COMMENTS:
Purpose. This bill requires nail care establishments licensed
under the BBC and their employee to receive training in
workplace rights and wage and hour laws; and further prohibits
the BBC from renewing an establishment license if the
establishment is in violation of specified labor laws and has
not complied with the training provisions. This bill is
sponsored by the Community Health for Asian Americans and Asian
Americans Advancing Justice . According to the author,
"Due to language and cultural barriers among nail salon owners
and employees, there remains persistent confusion about
workplace law. There are approximately 8,000 nail salons
operating in California with over 95,000 licensed nail salon
technicians, the majority of whom are women of color. An
estimated 80% of nail salon owners and employees throughout the
state are Vietnamese immigrant women who often have limited
English proficiency. Employees are commonly misclassified as
independent contractors and frequently earn less than minimum
wage while working long hours without overtime pay or regular
meal or rest breaks. Additionally, due to misclassification,
many nail salon employees and owners mistakenly believe they are
not entitled to worker's compensation, unemployment, disability
or social security benefits. If poor business practices continue
to be passed on from generation to generation, failure to
address this issue will perpetuate a cycle of misinformation and
negligence.
[This bill] supports the California nail salon industry by
requiring business owners of a nail salon to post a model notice
-- in the language its workers can understand -- regarding
worker's rights surrounding wages, misclassification of an
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employee as an independent contractor, overtime, tip
distribution, meal periods, rest breaks, protection from
retaliation, and where to report violations of the law. This
bill intends to educate business owners, employers, and
employees about existing labor laws given that many nail salons
appear to be in violation of these laws."
Background. The BBC is responsible for licensing and regulating
barbers, cosmetologists, estheticians, electrologists,
manicurists, apprentices and establishments. Establishment
licensees do not need to hold a separate professional license.
In order to obtain an establishment license, an individual must
submit an application to the BBC and pay the appropriate fee.
The application must contain information about the applicant,
whether it is a person, firm, or corporation that will be
operating the establishment, and specifically prohibits issuing
an establishment license if the individual, or each officer,
director, or partner has committed any acts or crimes, as
specified, which are grounds for denial. The types of
establishments that the BBC regulates, includes, but is not
limited to, nail salons, barbers, and hair salons. Current
licensing populations include approximately 90,000 manicurists;
approximately 250,000 cosmetologists; and approximately 41,000
establishments.
An establishment license is only valid for the address listed on
the license. If a licensed establishment owner moves to a new
location, he or she is required to apply for a new establishment
license. The BBC is required to maintain a program of random
and targeted inspections of establishments to ensure compliance
with applicable laws relating to health and safety. While the
BBC inspects establishments for compliance with applicable
health and safety requirements, it does not have jurisdiction
over the enforcement of labor laws.
Currently, the BBC does not differentiate between the types of
establishments it licenses. An establishment licensee may
operate a business to conduct any of the professional services
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for which a license is required under the Act, further
establishment owners (establishment licensees) do not need to
hold a separate professional license in order to own and operate
an establishment; however, BPC Section 7348 specifies that an
establishment must at all times be in the charge of a licensed
person. Fees for establishments are specified in BPC Section
7424. Currently, an initial establishment license is $50 and an
establishment renewal license is $40. Establishment licenses
are renewed biannually. This bill would specifically prohibit
the BBC from renewing an establishment license if that
establishment licensee is conducting business in violation of
the LC Section 238. LC Section 238 states that if a final
judgement arising from the nonpayment of wages for work
performed which remains unsatisfied after a period of 30 days
after the time an appeal has expired and no appeal is pending,
the employer may not continue to conduct business in this state
unless the employer has obtained a bond from a surety company,
as specified, and filed a copy of that bond with the LC. The
bond amount is determined by the amount of judgement. In order
for a BBC to renew an establishment license, they would be
required to verify with the Labor Commissioner whether that
establishment is conducting business in violation of the LC.
Licensed establishments are permitted to provide a broad range
of professional services and business models may vary. This
bill would require any establishment that offers nail care
services, in addition to any other service for which a
professional licensed is required, to be subject to the training
elements required by this bill. As currently drafted, this bill
would apply to all establishments that offer nail services,
including, but not limited to, days spas in hotel venues, nail
care only salons, sole proprietor businesses, establishments
offering both hair and nail care services, and homebased
businesses, among others.
BBC Enforcement. Existing law permits the BBC to take
enforcement actions against an establishment for issues mainly
pertaining to health and safety violations. Specifically
related to nail salons, pursuant to BPC Section 7403.2 if an
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inspection of an establishment finds that health and safety laws
related to manicure and pedicure equipment have been violated
and a citation is issued, the BBC may without advance hearing
temporarily suspend the license. In order to reinstate that
license, the licensee would have to comply with numerous
remediation requirements including an additional inspection and
pay all citations and fines as specified. In addition, BPC
7403.5 permits the BBC to, upon written notice, immediately
close an establishment which upon inspection, is found to have
health and safety violations of such a sever nature as to pose
immediate threat to public health and safety. BBC does not
currently have jurisdiction over labor issues or those
establishment employees that are not licensees of the BBC.
Joint Hearing on Labor Practices, Health, and Safety in
California Nail Salons. Labor concerns for nail technicians
were raised in a May 7, 2015, article from the New York Times,
"The Price of Nice Nails", in which it was reported: "The New
York Times interviewed more than 150 nail salon workers and
owners, in four languages, and found that a vast majority of
workers are paid below minimum wage; sometimes they are not even
paid. Workers endure all manner of humiliation, including
having their tips docked as punishment for minor transgressions,
constant video monitoring by owners, even physical abuse.
Employers are rarely punished for labor and other violations."
In August of 2015, the Assembly Select Committees on Women in
the Workplace, and Girls and Women of Color held a joint hearing
with the Assembly Committees on Health, Business and
Professions, and Labor and Employment, which focused on both the
health and safety of licensees regarding exposure to chemicals
and other ingredients, and concerns about labor practices in
nail salons. The purpose of that hearing was for state
agencies, advocates, and industry to obtain and share
information, address concerns, and discuss policy
recommendations regarding nail salon practices. As noted in
background information provided by those Committees, "The
jurisdiction for labor law compliance lies with California's
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Department of Industrial Relations (DIR) and Division of Labor
Standards Enforcement within DIR. Labor law violations which
occur in nail salons may not be as unique as the health concerns
for workers however outreach to workers and owners about product
safety is an avenue to improve education about employee rights
and the consequences of labor violations." This bill aims to
help address labor issues by requiring training for both
establishment owners and its employees. In addition, this bill
aims to prohibit establishments from operating their businesses
if they are found to be in violation of specified provisions of
the LC and requires both the Labor Commissioner and the BBC to
verify compliance.
Labor Issues and Training Requirements. In order to be a
licensed manicurists, an applicant must be at least 17 years of
age, completed the 10th grade or equivalent, and have satisfied
either 400 hours of training at a BBC-approved school or an
apprenticeship program, or practiced nail care for a period of
time equivalent to the study and training of a qualified person
who had completed a course in nail care. In addition, the
applicant must take and pass both a practical and written
examination. Applicants for a cosmetologist license are
required to be at least 17 years of age, completed the 10th
grade or its equivalent, completed either 1,600 hours of
training at a BBC-approved school or completed a 3,200 hour
apprenticeship program and 220 hours related training, hold a
barber license and complete a cosmetology crossover course, or
completed a barbering course and has taken a cosmetology
crossover course. In addition, an applicant is required to pass
both a written and practical examination. The BBC determines,
through regulation, the required curriculum, and depending on
the license type, the educational requirements vary. Required
curriculum for manicurists includes technical instruction and
practical instruction in nail care along with required
instruction in health and safety issues. Currently, curriculum
for licensed manicurists and cosmetologists does not include
information on basic labor laws, as required by this bill.
AB 2025 (Gonzalez) of the current legislative session requires,
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among other things, the BBC, as a condition of issuing an
establishment license, to ensure that the applicant has
knowledge of basic labor laws pertaining to the individuals who
work in establishments. In addition, that bill adds a
requirement for the BBC to require, as part of students'
curriculum, education about labor laws that pertain to the types
of licensees who may work in establishments. AB 2025 would be
applicable to all students, regardless of the type of
professional license they are seeking, while this bill would
apply only to those establishments that offer nail care
services. Essentially nail care establishment owners and those
licensed employees would be required to obtain additional
training developed by the Division.
Current Related Legislation. AB 2025 (Gonzalez) of the current
legislative session, requires the BBC, as a condition of issuing
an establishment license, to ensure that the applicant has
knowledge of basic labor laws pertaining to the individuals who
work in establishments, as specified; requires the BBC to
consult with the DIR in developing and adding questions on the
application for licensure; requires the BBC to consult with
stakeholders and the DIR to create informational materials on
basic labor laws; requires the BBC to translate all of its
written materials in English, Spanish, and Vietnamese; and,
beginning January 1, 2018, authorizes the BBC to collect
voluntary demographic information of its applicants for
licensure. STATUS: This bill is pending in the Assembly
Committee on Appropriations.
AB 2125 (Chiu), of the current legislative session, requires the
State Department of Public Health to, by January 1, 2018,
publish guidelines and best practices for cities and counties to
voluntarily implement local healthy nail salon recognition
programs. STATUS: This bill is currently pending in the
Assembly Committee on Appropriations.
SB 1044 (Nguyen), of the current legislative session, requires
the BBC to determine by regulation when a fine is required to be
assessed against both the holder of the establishment license
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and the individual licensee for the same violation, and requires
BBC to determine by regulation when a fine shall be assessed to
only the holder of the establishment license or to only an
individual licensee for the same violation, and further
authorizes the BBC to enter into a payment plan for citations
with administrative fines exceeding $500, as specified. STATUS:
This bill is currently pending in the Senate Committee on
Business, Professions and Economic Development.
ARGUMENTS IN SUPPORT:
The Asian Americans Advancing Justice and the Community Health
for Asian Americans write in support, "Asian Americans Advancing
Justice-California (Advancing Justice-CA) and Community Health
for Asian Americans are pleased to jointly sponsor Assembly Bill
2437 which ensures that nail salon owners and employees have
access to robust and meaningful education regarding wage and
hour laws through trainings provided by the Labor Commissioner's
office or an approved nonprofit organization with experience
providing culturally sensitive, in-language training to the
impacted communities."
ARGUMENTS IN OPPOSITION:
The Professional Beauty Federation of California writes in
opposition,"?The added layer of regulatory oversight called for
by [this bill] by the [DIR], as well as nonprofit training
organizations which will be paid by salons via a new fee, could
be the final straw that drives many salons underground. And
unlicensed and unregulated beauty services are the single
greatest threat to the professionalism of California's beauty
industry.
Beyond those general concerns, this legislation singles-out only
nail salons. Yet the [BBC] doesn't currently have the ability
to identify nail salons as distinct from skin/hair
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establishments (they only promulgated one "establishment
license" for all beauty related salons). In addition, it is our
understanding that the BBC lacks the technical expertise to
enforce the labor law provisions found in Section 1 of [this
bill]."
POLICY AND IMPLEMENTATION ISSUES FOR CONSIDERATION:
1)As currently drafted, this bill is only applicable to nail
care establishments; however, the BBC does not issue an
establishment license based on the types of service each
establishment offers. An establishment license would permit
the establishment licensee to offer any of the professional
services for which a license is required under BPC Sections
7301, et seq. For example, a licensed establishment may
provide hair care (cosmetologist), skin care (esthetician),
and nail care (manicurist) under one license. It is unclear
if the author's intent is to make this bill applicable to all
establishments that provide a broad range of services
including nail care services or just to those establishments
that only provide nail care.
2)This bill is applicable to licensed manicurists and those
establishments that employ them. If a licensed cosmetologist
provides nail care services, they would be folded into the
training requirements established by this bill. Currently,
the BBC licenses and regulates barbers, cosmetologists,
estheticians, electrologists, and manicurists. It is unclear
why only one segment of BBC's licensing population should be
required to obtain additional training.
3)This bill prohibits the BBC from renewing an establishment
license if that business does not comply with specified
training pertaining to workplace rights and wage and hour
laws. However, this bill does not specify the training
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requirements including the length of the training course (one
hour or eight hours), whether training will be onsite or
offsite, or the location of training providers.
4)This bill applies to establishments offering nail care
services which may include those establishments owned by one
individual with no other employees or independent contractors.
Sole proprietors would be required to register with the
Division, pay the fee and obtain the required training each
renewal cycle.
5)This bill prohibits the BBC from renewing an establishment
license if the establishment is operating in violation of
specified provisions of the LC. The bill requires the BBC to
request information from the Labor Commissioner regarding
businesses in violation of LC Section 238, but also requires
the Labor Commissioner to provide information to the BBC on
businesses in violation of LC Section 238. This may be a
duplicative process.
6)This bill authorizes an establishment owner to demonstrate to
the BBC that it is not conducting business in violation of LC
Section 238. Making a determination about whether or not a
labor violation or violations has or has not occurred may be
outside the BBC's current jurisdiction and authority, which
focuses on health and safety. It may be more appropriate to
allow those businesses to demonstrate to the Labor
Commissioner that they are not operating in violation of
specified provisions of the LC.
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7)This bill prohibits the BBC from renewing an establishment
license if the establishment and its employees have not
received the training established by the Division. However,
as currently drafted, this bill does not specify how often a
training program will be offered in order for new employees or
other employees to comply with the requirements of this bill.
8)This bill requires the Division's training to be developed for
establishments and its employees to have taken the training by
June 1, 2017. This would give the Division and those
establishments very little time to comply with the provisions
of this bill. It may be appropriate to provide six months for
the Division to establish the training, and provide an
additional six months for the establishments to comply.
In order to address the issues raised above, it is recommended
that the author consider amending the bill to require the Labor
Commissioner to develop a model notice pertaining to workplace
rights and hour laws for employees of establishments licensed
under the Board of Barbering and Cosmetology. The notice should
include information on misclassification of an employee as an
independent contractor; wage and hour laws; including, but not
limited to, minimum wage; overtime compensation; meal periods;
and rest periods; tip or gratuity distribution; how to report
violations of the law; business expense reimbursement; and,
protection from retaliation.
Licensed establishments under the Board of Barbering and
Cosmetology must post the model notice and the Board of
Barbering and Cosmetology must include compliance with the
posting notification as part of its inspection process.
REGISTERED SUPPORT:
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Asian Americans Advancing Justice (co-sponsor)
Community Health for Asian Americans (co-sponsor)
A Place of Her Own
Asian Immigrant Women Advocates
Asian Pacific Islander Legal Outreach
Asian Women Artists Association
Community Schools and Student Services
Filipino Migrant Center
National Employment Law Project
Nepali Association of Northern California
Santa Clara County Wage Theft Coalition
Street Level Health Project
The Spot Youth Center
REGISTERED OPPOSITION:
Professional Beauty Federation of California
Analysis Prepared by:Elissa Silva / B. & P. / (916) 319-3301
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