BILL ANALYSIS Ó SENATE COMMITTEE ON LABOR AND INDUSTRIAL RELATIONS Senator Tony Mendoza, Chair 2015 - 2016 Regular Bill No: AB 2897 Hearing Date: June 29, 2016 ----------------------------------------------------------------- |Author: |Committee on Labor and Employment | |-----------+-----------------------------------------------------| |Version: |March 1, 2016 | ----------------------------------------------------------------- ----------------------------------------------------------------- |Urgency: |No |Fiscal: |No | ----------------------------------------------------------------- ----------------------------------------------------------------- |Consultant:|Martha Gutierrez | | | | ----------------------------------------------------------------- Subject: Car washes KEY ISSUE Should the Legislature require a car wash employer to provide written notice to a successor employer regarding the requirements of existing law prior to the sale or other transfer of the business? ANALYSIS Existing law requires every employer to register annually with the Labor Commissioner and lists the following conditions for registration or renewal: 1) The employer must present proof of compliance with the local government's business licensing or regional regulatory requirements to the Labor Commissioner 2) 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 3) The employer has documented that a worker's compensation insurance policy is in effect and has paid necessary fees AB 2897 (Committee on Labor and Employment) Page 2 of ? (Labor Code §§2054 and 2055) Existing law regulates the car washing and polishing industry by requiring specific recordkeeping requirements of car wash employers on employee wages, hours and working conditions. (Labor Code §2052) Existing law establishes 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. (Labor Code §2065) Existing law states that 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. (Labor Code §2051) Existing law also provides that 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. (Labor Code §2066) This Bill would require a car wash employer to provide written notice to a successor employer regarding the above provisions, such as owed wages and penalties, prior to the sale or other transfer of the business. COMMENTS 1. Need for this 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. AB 2897 (Committee on Labor and Employment) Page 3 of ? This bill would require a car wash employer to notify a successor in writing of the requirement of the car wash registration law. According to the author this bill would provide important information about the law's requirements to a prospective purchaser and would ensure greater compliance. 2. Proponent Arguments : According to the author's office, this bill would require 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. 3. Opponent Arguments : None on file. 4. Prior Legislation : AB 2750 (Hernandez) of 2013 - would have required a car wash employer to provide written notice to a successor employers regarding the requirements of existing law prior to the sale or other transfer to the business. The bill was amended out of Labor Code and into Business and Professions Code. AB 1387 (Hernandez), Chapter 751, Statues of 2013 - eliminated the sunset date on existing law regulating the car washing and polishing industry. Also, AB 1387 increased the surety bond from $15,000 to $150,000 and provided a specified exemption for employers with a valid collective bargaining agreement. AB 236 (Swanson), Chapter 224, Statutes of 2009 - extended the sunset date of the licensing and registration program for car washes from January 1, 2010 to 2014. SB 1468 (Alarcon), Chapter 656, Statutes of 2006 - extended the sunset date of the licensing and registration program to January 1, 2010 and required the Labor Commissioner to report on the status of labor law violations and enforcement in the AB 2897 (Committee on Labor and Employment) Page 4 of ? car washing and polishing industry. AB 1688 (Goldberg), Chapter 825, Statutes of 2003 - enacted regulations for the car wash industry including registration and bonding requirements, as well as protections against 'successor' entities avoiding previous judgments for unpaid wages or penalties. SB 1097 (Hayden) of 1999 - would have required persons who employ others in car washing and polishing to register with the Labor Commissioner and would have required an employer who has violated specified labor laws to obtain a surety bond and meet other specified requirements. SB 1097 was vetoed by Governor Davis. SUPPORT None on file. OPPOSITION None on file. -- END --