BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     SB 950


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          SENATE THIRD READING


          SB  
          950 (Nielsen)


          As Amended  June 29, 2016


          Majority vote


          SENATE VOTE:  39-0


           ------------------------------------------------------------------ 
          |Committee       |Votes|Ayes                  |Noes                |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Public          |6-0  |Waldron, Cooley,      |                    |
          |Employees       |     |Cooper, Cristina      |                    |
          |                |     |Garcia, O'Donnell,    |                    |
          |                |     |Wagner                |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Judiciary       |10-0 |Mark Stone, Wagner,   |                    |
          |                |     |Alejo, Chau, Chiu,    |                    |
          |                |     |Gallagher,            |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |Cristina Garcia,      |                    |
          |                |     |Holden, Maienschein,  |                    |
          |                |     |Ting                  |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Appropriations  |20-0 |Gonzalez, Bigelow,    |                    |








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          |                |     |Bloom, Bonilla,       |                    |
          |                |     |Bonta, Calderon,      |                    |
          |                |     |Chang, Daly, Eggman,  |                    |
          |                |     |Gallagher, Eduardo    |                    |
          |                |     |Garcia, Holden,       |                    |
          |                |     |Jones, Obernolte,     |                    |
          |                |     |Quirk, Santiago,      |                    |
          |                |     |Wagner, Weber, Wood,  |                    |
          |                |     |McCarty               |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
           ------------------------------------------------------------------ 


          SUMMARY:  Establishes the Excluded Employee Arbitration Act  
          which would authorize binding arbitration on behalf of an  
          excluded state employee for alleged violations of working  
          conditions, as specified, whose grievance has not been resolved  
          after the fourth level of review.  Specifically, this bill:  


          1)Creates the Excluded Employee Arbitration Act which authorizes  
            an employee organization that represents an excluded employee  
            to request binding arbitration when the following conditions  
            are met:


             a)   The excluded employee has filed a grievance with the  
               California Department of Human Resources (CalHR) alleging a  
               violation of Title 2, California Code of Regulations.


             b)   The grievance has not been resolved satisfactorily at  
               the fourth level of review.


             c)   In cases where there is no fourth level of review, the  
               employee organization requests arbitration in writing to  
               CalHR within 21 days of a decision rendered at the third  








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               level of review.


          2)Defines arbitration as the binding ruling that resolves an  
            excluded employee grievance at the fifth level of the excluded  
            employee grievance process.


          3)Requires CalHR and the employee organization, following a  
            request for arbitration, to designate a standing panel of at  
            least 20 arbitrators to be made available for resolving  
            arbitrations authorized by this bill.


          4)Provides that if fewer than three arbitrators are available,  
            then the employee organization or the employer may obtain the  
            names of an additional five arbitrators from the California  
            State Mediation and Conciliation Service within the Department  
            of Industrial Relations.


          5)Sets forth a process whereby the employee organization and the  
            employer may consecutively strike any arbitrator from the  
            arbitration panel until the name of one arbitrator is agreed  
            upon, or, if no agreement is made, the last remaining person  
            on the panel shall be designated the arbitrator.  The name of  
            that arbitrator shall be submitted in writing to CalHR.


          6)Provides that if the employee organization does not submit its  
            choice of an arbitrator within 45 days after requesting  
            arbitration, the request for arbitration shall be considered  
            withdrawn.  A request that is withdrawn will not prevent the  
            employee from pursuing other grievance procedures available by  
            law.


          7)Specifies that a party to the arbitration has the right to  
            have a certified shorthand reporter transcribe the proceeding  








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            and the transcription will be the official record of the  
            proceeding.


          8)Requires the arbitrator to apply California law to the facts  
            and to issue a decision for each grievance heard during the  
            arbitration.  The decision shall be based solely on the  
            written record in the grievance, the grievance response, and  
            the oral presentations made at the arbitration.  


          9)Makes the arbitrator's decision legally binding.


          10)Requires the arbitrator to issue a written decision within 45  
            days of the conclusion of the hearing.


          11)Requires the arbitrator to order that the non-prevailing  
            party pay the cost of the arbitration, including the cost of a  
            certified shorthand reporter.  The arbitrator is prohibited  
            from ordering the excluded employee to pay the cost of  
            arbitration and specifies that the cost of arbitration cannot  
            be passed on to the excluded employee.


          12)Codifies the intent of the Legislature that:  a) state  
            excluded employees shall have the right to arbitration as a  
            fifth step to the excluded employee grievance procedure; b)  
            the present grievance procedure leaves too many grievances  
            unresolved; and c) this lack of resolution has caused more  
            cases to be filed in California's courts, which should have  
            been resolved at a lower level.


          EXISTING LAW:   


          1)Establishes the Ralph C. Dills Act (Dills Act) which sets  








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            forth a framework that governs labor relations between the  
            state and state employees.


          2)Excepts from the Dills Act's definition of state employee:  
            managerial employees, confidential employees, supervisory  
            employees, and other employees, as defined.


          3)Establishes the Bill of Rights for State Excluded Employees  
            which defines excluded employees as those employees excepted  
            from the Dills Act.


          4)Provides that the purpose of the Bill of Rights for State  
            Excluded Employees includes informing excluded employees of  
            their rights and terms and conditions of employment and also  
            serves to promote harmonious personnel relations among those  
            representing state management in the conduct of state affairs.


          5)Prohibits excluded employees from holding office in employee  
            organizations representing rank and file employees or  
            participating in any employee representational matters on  
            behalf of non-excluded employees.


          6)Provides that excluded employee organizations shall have the  
            right to represent their excluded members in their employment  
            relations, including grievances, with the State of California.


          7)Authorizes supervisory employees to form, join and participate  
            in the activities of supervisory organizations of their own  
            choosing for purposes of representation on all matters of  
            supervisory employee relations, as provided, or to refrain  
            from so doing.  They also have the right to represent  
            themselves individually in their employment relations with the  
            state employer.








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          8)Authorizes CalHR to adopt reasonable rules and regulations for  
            the administration of employer-employee relations.


          FISCAL EFFECT:  According to the Assembly Appropriations  
          Committee: 


          Unknown fiscal impact.  While the additional costs of this new  
          arbitration to CalHR are approximately $40,000 General Fund (GF)  
          per arbitration, there is considerable uncertainty about the  
          total cost to the state.  Specifically, the fiscal effect of  
          this bill is dependent on the following factors:


          1)Case outcomes.  The costs of arbitration would be offset in  
            instances when CalHR wins arbitration proceedings and is  
            therefore compensated for its costs.
          2)The impact of arbitration on other parts of the formal  
            grievance procedure.  The new arbitration process could create  
            competing incentives within the grievance process.  Currently,  
            CalHR processes an average 150 grievances per year for  
            excluded employees.  It can be assumed a number of these would  
            have been elevated to arbitration if such an option were  
            available to employees, since arbitration is perceived as  
            producing better outcomes for workers.  Even a handful of  
            additional cases that are elevated to arbitration would result  
            in GF costs in excess of $150,000.  However, this bill may  
            also result in savings that are difficult to calculate in  
            advance.  The threat of arbitration could mean that an  
            agreement between the employee and employer is reached earlier  
            in the formal grievance process, thereby reducing  
            administrative costs.  Moreover, to the extent that  
            arbitration is pursued instead of taking a case to court,  
            CalHR could see significant reduction in litigation costs. 










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          COMMENTS:  Current law authorizes CalHR to adopt reasonable  
          rules and regulations for the administration of  
          employer-employee relations.  CalHR has adopted regulations that  
          set out a Grievance and Appeal Procedure for excluded employees.


          Under California Code of Regulations Title 2, Section 599.859,  
          supervisory employee organizations or individual supervisors may  
          pursue resolution of disagreements over issues with their  
          employer that fall within the jurisdiction of CalHR through a  
          grievance procedure that typically includes an informal review  
          and four formal levels of review by the employer according to  
          the following timeline:


            Informal Level:  Within five work days of the incident, an  
            informal discussion between the excluded employee and the  
            employee's supervisor or manager.


            Level 1:  If unsatisfied with the informal review, the  
            employee may file a formal grievance within 10 work days of  
            the incident and the employer's designee for the first level  
            of review must respond within 10 working days.


            Level 2:  The employee may appeal the employer's Level 1  
            decision within 10 work days of receipt of the employer's  
            response and the employer's designee for the second level of  
            review must respond within 15 work days.


            Level 3:  The employee may appeal the employer's Level 2  
            decision within 10 work days of receipt of the employer's  
            response and the employer's designee for the third level of  
            review must respond within 15 work days.


            Level 4:  The employee may appeal the employer's Level 3  








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            decision to CalHR within 10 work days of receipt of the  
            employer's response and CalHR's designee for the fourth level  
            of review must responds within 20 work days.


            Upon denial at the fourth level of review, the employee or the  
            employee organization representing the employee may pursue a  
            claim with the State Personnel Board, the Department of Fair  
            Employment and Housing, or the State Superior Court depending  
            on the issue in dispute.


          According to the sponsor, "This bill would improve the excluded  
          employee grievance process to make it effective.  Currently, the  
          excluded employee grievance system is virtually illusory for  
          excluded employees and is functioning at an unenforceable level.  
           Of all the grievances filed, 99% are denied because there is no  
          consequence for the state agency to not follow the rules, and  
          there is no objective oversight.  As it stands now, the state  
          agencies will deny all grievances because it's in their best  
          interest and there is nowhere for the excluded employee to go,  
          it is a closed system.  To combat this, excluded employee  
          organizations have been going to Superior Court of the State  
          Personnel Board.  This is very costly for the state and the  
          employee organizations and takes years to resolve.  This means  
          that a simple low-cost or no-cost grievance can and has cost the  
          stat thousands of dollars because they do not want to admit when  
          they are wrong."


          Prior/Related Legislation:


          AB 526 (Evans) of 2007 would have permitted an excluded employee  
          to request mediation after the fourth level of review.  The bill  
          was held on suspense in the Assembly Appropriations Committee.


          AB 1584 (Evans) of 2006 would have permitted an excluded  








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          employee to request mediation after the fourth level of review.   
          The bill was held in the Senate Appropriations Committee. 


          AB 1258 (Matthews) of 2003 would have established arbitration  
          procedures for supervisory employees of the Department of  
          Corrections and the Department of the Youth Authority.  The bill  
          died at the Assembly Desk without committee referral.


          AB 2802 (Strom-Martin) of 2002 would have established  
          arbitration procedures for supervisory employees of the  
          Department of Corrections and the Department of the Youth  
          Authority.  The bill was held on suspense in the Assembly  
          Appropriations Committee.       




          Analysis Prepared by:                                             
                          Karon Green / P.E.,R., & S.S. / (916) 319-3957    
                                                                    FN:  
          0003994