BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 327| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- UNFINISHED BUSINESS Bill No: SB 327 Author: Hernandez (D), et al. Amended: 9/9/15 Vote: 27 - Urgency PRIOR VOTES NOT RELEVANT ASSEMBLY FLOOR: Not available SUBJECT: Industrial Welfare Commission: wage orders: meal periods SOURCE: United Nurses Associations of California/Union of Health Care Professionals DIGEST: This bill clarifies that health care employee meal period waiver provisions in existing Industrial Welfare Commission wage orders have been valid and enforceable since October 1, 2000. Assembly Amendments gut and amend the previous contents of this bill relating to alcoholic beverages in order to address the meal period waiver provisions issue. ANALYSIS: Existing law: 1)Prohibits an employer from requiring an employee to work more than five hours per day without providing a meal period of not less than 30 minutes, except that if the total workday is no more than six hours, the meal period may be waived by mutual consent of both the employer and employee. SB 327 Page 2 2)Prohibits an employer from requiring an employee to work more than 10 hours per day without providing a second meal period of not less than 30 minutes, except that if the total hours worked is no more than 12 hours, the second meal period may be waived by mutual consent only if the first meal period was not waived. 3)Exempts specified employees covered by a valid collective bargaining agreement that expressly provides for the wages, hours of work, and working conditions of employees, as specified. 4)Establishes the Industrial Welfare Commission (IWC) to regulate wages, hours and working conditions of employees in California and authorizes the Commission to adopt a working condition order permitting a meal period to commence after six hours of work if the commission determines that the order is consistent with the health and welfare of the affected employees. [Labor Code §512 (b)] This bill: 1)Provides that, notwithstanding any other law, the healthcare employee meal period waiver provisions of specified Wage Orders of the IWC were valid and enforceable on and after October 1, 2000, and continue to be valid and enforceable. 2)Provides that this provision is declarative of and clarifies existing law. 3)Makes related legislative findings and declarations. 4)Contains an urgency clause. Background The Industrial Welfare Commission: Existing law requires the IWC to ascertain the wages paid to all employees in this state, to SB 327 Page 3 ascertain the hours and conditions of labor and employment in the various occupations, trades, and industries in which employees are employed in this state, and to investigate the health, safety, and welfare of those employees. Existing law, except as provided in that described meal period provision, authorizes the Commission to adopt or amend working condition orders with respect to break periods, meal periods, and days of rest for any workers in California consistent with the health and welfare of those workers. The Division of Labor Standards Enforcement, within the Department of Industrial Relations, is responsible for the enforcement of labor laws, including orders of the Commission. IWC wage orders must be posted by all employers in an area frequented by employees, where they may be easily read during the workday. Gerard v. Orange Coast Memorial Medical Center: This bill responds to a recent decision by the California Court of Appeal regarding the provision of meal periods for employees in the health care industry. In Gerard v. Orange Coast Memorial Medical Center, 234 Cal. App. 4th 285 (2015), the California Court of Appeal concluded that certain language contained in a Wage Order of the Industrial Welfare Commission was invalid to the extent it conflicts with Labor Code Section 512. Specifically, Labor Code Section 512 prohibits waiver of the second meal period when an employee works more than 12 hours. Wage Orders 4 and 5, section 11(d) has allowed such waivers for employees in the healthcare industry since 1993. The Court also concluded that its ruling should be applied retroactively. The court resolved this conflict in favor of the statutory provisions, stating: "[T]here is a conflict between section 11(D) and section 512(a). As our Supreme Court recognized?section 11(D) permits health care workers to waive their second meal periods, even on shifts in excess of 12 hours, and thus section 11(D) 'conflicts' with section 512(a), which limits second meal period waivers to shifts of 12 hours or less? ?[T]he conflict between section 11(D) and section 512(a) creates an unauthorized additional exception to the general rule set out in section 512(a), beyond the express exception for waivers on SB 327 Page 4 shifts of no more than 12 hours? ?We see nothing in this legislative history to support hospital's argument the additional regulatory exception embodied in section 11(D) for shifts longer than 12 hours is consistent with the Legislature's intent. To the contrary, everything in this legislative history evidences the intent to prohibit the IWC from amending its wage orders in ways that conflict with meal period requirements in section 512, including the proviso second meal periods may be waived only if the total hours worked is less than 12 hours." In addition, the Court of Appeal held that the plaintiffs were entitled to seek premium pay under Labor Code Section 226.7 for any failure by the hospital to provide mandatory second meal periods before the decision that falls within the governing three-year statutory period. The Court noted, "There is no compelling reason of fairness or public policy that warrants an exception to the general rule of retroactivity for our decision partially invalidating section 11(D)." The California Supreme Court granted review on May 20, 2015. The Court stated the issues on review as follows: 1)Is the health care industry meal period waiver provision in section 11(D) of Industrial Welfare Commission Order No. 5-2001 invalid under Labor Code section 512, subdivision (a)? 2)Should the decision of the Court of Appeal partially invalidating the Wage Order be applied retroactively? Stated need for the bill: Section 11(D) of Wage Order 5-2001 first became effective on October 1, 2000. However, prior to that date, the Legislature passed and the Governor signed SB 88 (Sher, Chapter 492) enacting Labor Code Section 516, which reads as follows: "Except as provided in Section 512, the IWC may adopt or amend working condition orders with respect to break periods, meal periods, and days of rest for any workers in California consistent with the health and welfare of those workers." SB 327 Page 5 Therefore, the provisions of the statute and of the Wage Order appear to conflict on their face. The Wage Order language authorizes health care employees to waive their second meal period for any shift over eight hours. However, the language of the statute provides that the second meal period may be waived only if the total hours worked does not exceed 12 hours. Proponents of this bill argue the need for clarification in order to preserve the status quo preferred by both hospitals and their employees for over 20 years, as confirmed by the IWC in 2000. This bill provides that the health care employee meal period wavier provisions in the existing wage orders were valid and enforceable on and after October 1, 2000, and continue to be valid and enforceable. This bill states that it is declarative of, and clarifies, existing law. FISCAL EFFECT: Appropriation: No Fiscal Com.:NoLocal: No SUPPORT: (Verified9/11/15) United Nurses Association of California/Union of Health Care Professionals (source) Adventist Health AFSCME Anaheim Regional Medical Center Arroyo Grande Community Hospital Aurora Vista del Mar Hospital Avanti Hospitals Bakersfield Memorial Hospital Beverly Hospital California Children's Hospital Association California Employment Law Council California Hospital Association California Hospital Medical Center, Los Angeles California Labor Federation California Retailers Association Cedars-Sinai Medical Center Citrus Valley Health Partners City of Hope SB 327 Page 6 Civil Justice Association of California Community Hospital of San Bernardino Community Medical Centers Corona Regional Medical Center Delano Regional Medical Center Desert Valley Hospital Dignity Health Dominican Hospital, Santa Cruz El Camino Hospital Enloe Medical Center French Hospital Medical Center, San Luis Obispo Gardens Regional Hospital and Medical center Glendale Adventist Medical Center Glendale Memorial Hospital & Health Center, Glendale Glenn Medical Center Good Samaritan Hospital Hospital Corporation of America Keck Hospital of USC Kindred Hospital, Riverside/Ontario/Rancho Cucamonga Kindred Hospital, San Francisco Bay Area Lodi Memorial Health Loma Linda University Health Lompoc Valley Medical Center Long Beach and Community Hospital Long Beach Long Beach Memorial Los Robles Hospital & Medical Center Madera Community Hospital Mammoth Hospital Marian Region Medical Center, Santa Maria/West Santa Maria Marin General Hospital Marina Del Rey Hospital Mark Twain St. Joseph's Hospital, San Andreas Marshall Medical center Memorial Care Health System Mercy General, Sacramento Mercy Hospital, Folsom/Bakersfield Mercy Medical Center, Merced/Mt. Shasta/Redding Mercy San Juan Medical Center, Carmichael Mercy Southwest Hospital, Bakersfield Methodist Hospital of Sacramento Miller Children's and Women's Hospital Monterey Park Hospital SB 327 Page 7 Northridge Hospital Medical Center O'Connor Hospital Orange Coast Memorial Medical Center Palo Verde Hospital Palomar Health Parkview Community Hospital Medical Center Physicians for Healthy Hospitals Pioneers Memorial Healthcare District Providence Health & Services Redlands Community Hospital Saddleback Memorial Medical Center Saint Agnes Medical Center Saint Francis Memorial Hospital, San Francisco San Antonio Regional Hospital San Gorgonio Memorial Hospital San Joaquin Valley Rehabilitation Hospital Scripps Health SEIU United Healthcare Workers West Sequoia Hospital, Redwood City Seton Medical Center Sharp HealthCare Sidley Austin LLP Sierra Nevada Memorial Hospital, Grass Valley Southwest Healthcare System Murrieta & Wildomar St. Bernadine Medical Center, San Bernardino St. Elizabeth Community Hospital, Red Bluff St. John's Pleasant Valley Hospital, Camarillo St. John's Regional Medical Center, Oxnard St. Joseph's Behavioral Health Center, Stockton St. Joseph's Health, Orange St. Joseph's Medical Center, Stockton St. Jude Medical Center, Fullerton St. Mary Medical Center, Apple Valley St. Mary's Medical Center, Long Beach/ San Francisco Stanford Health Care Stanford Health Care - Valley Care Sutter Health Torrance Memorial Medical Center USC Norris Cancer Hospital USC Verdugo Hills Hospital Valley Children's Hospital, Madera Whittier Hospital Medical Center SB 327 Page 8 Woodland Healthcare, Woodland 14 individuals OPPOSITION: (Verified9/11/15) Consumer Attorneys of California ARGUMENTS IN SUPPORT: The California Hospital Association supports this bill, stating that this bill will clarify that employees in the healthcare industry can continue to waive one of their two meal periods pursuant to IWC Wage Orders 4 and 5, even when their shift exceeds 12 hours. Absent clarification that these wage orders have been valid since they were adopted in June 2000, hospitals will be liable for a missed meal period premium on any day an employee worked even one minute over the 12-hour mark. They argue that this could result in millions of dollars in liability, as well as scheduling changes throughout the hospital industry. Proponents further argue that while the California Supreme Court recently accepted review of the Gerard case, because it is unclear when and how the Supreme Court will resolve the case, hospitals are faced with the decision whether to immediately and significantly change their scheduling practices, which may include extending the shift to 13 hours to accommodate a second, off-duty meal period, reverting to eight-hour shifts or taking some other action to minimize potential liability moving forward. They argue that as the Supreme Court evaluates the legal issues raised in the Gerard case, clarification of the law by the legislature is extremely important to the Court's analysis. Proponents also argue the benefits of the flexibility of alternate work schedules, which allows for greater staffing flexibility and better patient care. Proponents further state SB 327 Page 9 that rather than risk overturning 22 years of settled regulation, they are asking for a legislative solution that would simply codify the existing regulation into law. ARGUMENTS IN OPPOSITION:The Consumer Attorneys of California (CAOC) opposes this bill unless it is amended to be prospective only, and argue that should this bill be enacted, it would impact pending litigation before the California Supreme Court, overturn a recent California Appellate Court decision, Gerard v. Orange Coast Memorial Medical Center 234 Cal. App. 4th 285 (2015), and affected workers could lose wages as a result of its passage. CAOC argues that it is simply against public policy to legislatively affect a consumer's existing legal right in a manner that retroactively guts a claim that was already filed, in good faith, with the law of the date of filing applicable. With regards to the pending litigation concern, CAOC argues that the proposed language would expressly make the invalidated wage order valid and would state that it is "declaratory of existing law." They argue that this bill is designed to impact this pending court case. Further, CAOC argues that the effect of this legislation granting hospitals retroactive relief from liability for unpaid wages, could be to deny workers past wages they have already earned. They argue that the Court has already decided to issue a ruling on these issues and they think it is best to wait for the Supreme Court to issue its ruling in Gerard. CAOC argues that these issues could be decided as early as next year and rather than introduce a later gut and amend, they feel that the best action would be to wait for the Supreme Court to issue its ruling. Prepared by:Alma Perez / L. & I.R. / (916) 651-1556 9/11/15 17:31:43 **** END **** SB 327 Page 10