BILL ANALYSIS                                                                                                                                                                                                    



          SENATE COMMITTEE ON
          BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT
                              Senator Jerry Hill, Chair
                                2015 - 2016  Regular 

          Bill No:            SB 1044         Hearing Date:    April 18,  
          2016
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          |Author:   |Nguyen                                                |
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          |Version:  |March 17, 2016                                        |
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          |Urgency:  |No                     |Fiscal:    |Yes              |
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          |Consultant|Sarah Mason                                           |
          |:         |                                                      |
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                         Subject:  Barbering and cosmetology


          SUMMARY: Directs BBC to clarify in regulations when both the owner and  
          individual licensee can be fined for the same violation and  
          authorizes BBC to establish a payment plan for citations that  
          exceed $500.

          Existing law:
          
          1) Provides for the licensure regulation of the practice of  
             barbering, cosmetology, and electrolysis under the Barbering  
             and Cosmetology Act (Act) by the Board of Barbering and  
             Cosmetology (BBC).

          2) Defines "establishment" as any premises, building, or part of  
             a building where any activity licensed under the Act is  
             practiced and sets forth requirements for licensure as an  
             establishment by BBC.  (BPC  7346-7352)

          3) Requires BBC to maintain a program of random and targeted  
             inspections of establishments to ensure compliance with  
             applicable laws relating to the public health and safety and  
             the conduct and operation of establishments.  (BPC  7353)

          4) Requires licensees to report to BBC upon renewal, including:   
             (BPC  7401)

             a)   License status, defined as either practicing full time  







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               in the state, practicing full time in another state,  
               practicing part-time in the state, not working in the  
               industry, retired or other practice that BBC defines.

             b)   Identification as either an employee, independent  
               contractor, booth renter or salon owner.

             c)   For establishments, whether a booth renter is operating  
               in the establishment or whether an independent contractor  
               is operating in the establishment.
               
          1) Establishes grounds for disciplinary action that include  
             failure to comply with the Act, failure to comply with health  
             and safety standards set forth by BBC, and failure to comply  
             with the BBC's rules for establishments and other offenses.  
          (BPC  7404)

          2) Authorizes BBC to assess administrative fines and issue  
             citations for violations of the Act.  (BPC  7406 and 7408)

          3) For a licensee's first violation in any three year period,  
             allows a licensee served with a citation to avoid paying the  
             associated fine by presenting written proof the BBC  
             determines is satisfactory that the violation has been  
             corrected.  (BPC  7409)

          4) Authorizes those issued a notice of violation or citation and  
             fine to appeal the citation to BBC's Disciplinary Review  
             Committee (DRC) within 30 days of receiving the citation.   
             Allows those appealing a citation or their representatives to  
             appear in person before the DRC.  (BPC 7410)

          5) Provides that persons who fail to pay administrative fines  
             that were not contested or were contested by the appeal and  
             have adjudicated shall not be issued a license or allowed to  
             renew any license until all fines and application fees are  
             paid.  
          (BPC  7414)

          6) Provides that the holder or holders of an establishment  
             license or a mobile unit license and the person in charge of  
             any such establishment or mobile unit are responsible for  
             implementing and maintaining the BBC health and safety rules  
             in such establishment or mobile unit individually and jointly  








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             with all persons in or employed by or working in or on the  
             premises of such establishment or mobile unit. Provides that  
             all licensed barbers, cosmetologists, estheticians,  
             manicurists, electrologists, instructors, or apprentices  
             shall be held individually responsible for implementation and  
             maintenance of BBC health and safety rules.  
          (Title 16, California Code of Regulations  904)
          
          This bill:

          1) Requires BBC to determine by regulation when a fine shall be  
             assessed to both the holder of the establishment license and  
             the individual licensee for the same violation.  

          2) 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.

          3) Requires BBC, in making the determinations above, to consider  
             the egregiousness of the violation of the health and safety  
             regulations and whether the violation is a repeated violating  
             by an individual licensee within the same establishment.
          

          FISCAL  
          EFFECT:  Unknown.  This bill is keyed "fiscal" by Legislative  
          Counsel. 

          
          COMMENTS:
          
          1. Purpose.  The  Board of Barbering and Cosmetology  is the  
             Sponsor of this bill.  According to the Author, BBC is  
             required by regulation to hold establishment owners as well  
             as individual licensees accountable for all health and safety  
             violations found in an establishment.  For example, if an  
             individual is found with a dirty hair tool, the individual  
             will receive a citation with a fine and the establishment  
             owner will also receive a citation and fine.  BBC often hears  
             complaints from owners that they are receiving fines for  
             violations committed by an independent contractor or a booth  
             renter.  Often, the rental contract between independent  
             contractors or booth renters and establishment owners have a  
             requirement that the individual pay any fines that the owner  








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             receives if the individual was the cause of the violation  
             which results in an individual licensee having to pay a  
             double fine.

             The Author states that BBC also utilizes the citation and  
             fine as the main enforcement tool for licensees.  The Board  
             has an established administrative fine schedule for all  
             violations found in an establishment.  A maximum of $5,000 is  
             set in statute for each citation.  There are many times that  
             citations can add up to the maximum amount.  A license cannot  
             be renewed unless all fines have been paid.  The Board will  
             work with individuals on a case by case basis to try to set  
             up a payment plan for any outstanding fines, however, the  
             Board does not have statutory authority to establish this  
             type of payment plan.

          2. Background.  BBC is responsible for licensing and regulating  
             barbers, cosmetologists, estheticians, electrologists,  
             manicurists, apprentices, and establishments.  The BBC  
             licenses and regulates over 550,000 licensees, including over  
             52,000 establishments.  To ensure compliance with the BBC's  
             health and safety and licensing regulations, random and  
             targeted inspections of establishments are conducted.  The  
             inspectors provide the licensee with a copy of an inspection  
             report as a record of the inspection.  The original  
             inspection report, the photographs taken during the  
             inspection, and any inspector comments are then forwarded to  
             the BBC's home office.  The Cite and Fine Program reviews the  
             material for accuracy, issues a citation, and enters the  
             citation information into the BreEZe system.  
             
             Citations with egregious health and safety violations or  
             unlicensed activity are forwarded to the Enforcement Program  
             for further investigation.  

             BBC reported the following inspection and citation/fine  
             information to this Committee during the sunset review  
             oversight of BBC in 2014-15.  According to BBC, the most  
             common violations that result in a citation are related to  
             health and safety.  


           -------------------------------------------------------------------------------------------------------- 
          |                    |     FY 2011-12     |                    |     FY 2012-13     |     FY 2013-14     |








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           -------------------------------------------------------------------------------------------------------- 
          |------------+----------+-+------------+-----------|
          |Establishmen|  14,012  | |   11,580   |  11,979   |
          |     ts     |          | |            |           |
          | Inspected  |          | |            |           |
          |------------+----------+-+------------+-----------|
          | Citations  |  10,543  | |   8,977    |8,257      |
          | Issued to  |          | |            |           |
          |Establishmen|          | |            |           |
          |     ts     |          | |            |           |
          |------------+----------+-+------------+-----------|
          | Citations  |  7,683   | |   6,291    |   6,452   |
          | Issued to  |          | |            |           |
          |Individuals |          | |            |           |
          |------------+----------+-+------------+-----------|
          |   Total    |  18,234  | |   15,268   |  14,709   |
          | Citations  |          | |            |           |
          |   Issued   |          | |            |           |
          |------------+----------+-+------------+-----------|
          |Establishmen|  2,863   | |   2,051    |3,046      |
          | ts with No |          | |            |           |
          | Violations |          | |            |           |
          |   Cited    |          | |            |           |
           -------------------------------------------------- 


             Anyone issued a citation has the right to appeal any or all  
             of the violations cited.  In 2007, the fine schedule was  
             updated to reflect a single fine amount for each violation  
             regardless of how many times the licensee had been cited for  
             the same violation.  As a result of this, the BBC found that  
             it was modifying a large number of appealed fine amounts.  In  
             2011, the BBC reviewed and revised the fine schedule again  
             and returned to a sliding fine scale.  Fines are now assessed  
             according to how many times the licensee is cited for the  
             same violation within the last five years.  As a result of  
             the most recent revisions to the fine schedule, the BBC  
             reports that it is seeing a reduction in the average dollar  
             amount appealed per citation and an increase in the average  
             citation amount.  Between 2012 and 2014, the average fine per  
             citation before an appeal has decreased from $891 to $729,  
             and the average fine amount per citation after an appeal  
             decision by the DRC has increased from $372 to $565.









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             A sampling of BBC's fines established in regulation, are  
             below:


           ------------------------------------------------------------------- 
          |                                    |1st    |2nd    |3rd    |Waivab|
          |                                    |Violati|Violati|Violati|le    |
          |                                    |on     |on     |on     |      |
          |------------------------------------+-------+-------+-------+------|
          |Preventing access to an             |250    |500    |750    |No    |
          |establishment for inspection        |       |       |       |      |
          |------------------------------------+-------+-------+-------+------|
          |Operating an unlicensed             |500    |1,000  |1,000  |No    |
          |establishment                       |       |       |       |      |
          |------------------------------------+-------+-------+-------+------|
          |Unlicensed individual               |1,000  |1,000  |1,000  |No    |
          |------------------------------------+-------+-------+-------+------|
          |No licensee in charge of            |100    |150    |200    |No    |
          |establishment                       |       |       |       |      |
          |------------------------------------+-------+-------+-------+------|
          |Employing unlicensed persons        |1,000  |1,000  |1,000  |No    |
          |------------------------------------+-------+-------+-------+------|
          |Not posting consumer health and     |50     |100    |150    |No    |
          |safety information or posting       |       |       |       |      |
          |information in the incorrect size   |       |       |       |      |
          |------------------------------------+-------+-------+-------+------|
          |Improperly disinfecting of          |100    |250    |500    |No    |
          |non-electrical instruments          |       |       |       |      |
          |------------------------------------+-------+-------+-------+------|
          |Improperly storing and labeling     |50     |100    |150    |No    |
          |liquids, creams, powders, and       |       |       |       |      |
          |cosmetics                           |       |       |       |      |
           ------------------------------------------------------------------- 

             In 2004, authority was provided to BBC to increase the  
             maximum amount of a fine from $2,500 to $5,000.  Now, any  
             citations with fines totaling more than $5,000 are modified  
             so the fine total does not exceed $5,000.

          3. Booth Renters.  The owner(s) of a BBC licensed establishment  
             is responsible for his/her salon and will be issued a  
             citation for violations that exist in the salon as well as  
             for each individual in that salon found to be in violation of  
             the Act.  A BBC licensee who performs beautification services  








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             may own his or her own business or work for someone else at  
             their shop.  Licensees may be directly employed by an  
             establishment or may be an independent contractor.  The  
             industry designation for independent contractors in BBC  
             licensed establishments is "booth renter".
             
             "Booth renters" are licensed professionals who may not own an  
             establishment but rent space from an owner.  A booth renter,  
             or independent contractor, is a practitioner who qualifies as  
             an independent contractor under California tax law and who is  
             not under the control and direction of a licensed  
             establishment.  Booth renters or independent contractors pay  
             their own worker's compensation insurance and taxes, maintain  
             their own business license, establish their own work  
             schedules and have access to the establishment at any time.   
             The booth renter is considered a separate business entity  
             operating within the establishment.  

             BBC does not differentiate between independent contractors,  
             booth renters, or employees. The owner of the salon is still  
             considered responsible for the activities of all of the  
             people working in the salon. If a BBC inspector finds a  
             violation by an individual working at the shop, the inspector  
             will issue a citation to both the individual and the salon.   
             If the independent contractor, booth renter, or employee is  
             not present during the inspection and has violations at his  
             or her station, the owner of the salon will still be issued a  
             citation for these violations.  In most instances, an  
             establishment owner has some type of contractual agreement  
             with a booth renter that acknowledges that in the event an  
             establishment is fined for a violation of the licensee, the  
             licensee is responsible for paying the owner's fine.

             The barbering and cosmetology industry believes there are  
             issues of accountability in that establishment owners are  
             being forced to be accountable for the deficiencies and  
             subsequent violations of booth renters, and that it should be  
             the individual licensee, not the owner, who should have to  
             comply with regulations and deal with enforcement actions.   
             As reported during the prior sunset review of BBC,  
             establishment owners believe that they already have many laws  
             and regulations to comply with and that, if something is  
             cited at the station of a booth renter, the establishment  
             owner should not be forced to oversee that renter and  








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             potentially receive a citation and fine for that individual's  
             actions.  Owners do not want to be held liable for the  
             actions of individuals whom in their eyes are independent  
             contractors.   

             For several years, the BBC has discussed establishing a  
             "booth renter's license" which would identify licensees who  
             are independent contractors, as opposed to those who are  
             employees of salon owners.  The BBC specifies that the stated  
             purpose of a new license would be to clarify the  
             responsibility of the booth renter and that of the salon  
             owner, to alleviate confusion for inspectors in the field as  
             to who is responsible for violations, to clarify insurance  
             issues and to facilitate collections of potentially thousands  
             of dollars in tax revenue that is currently not collected.  

             However, this effort could potentially be perceived as owners  
             not wanting to maintain responsibility for individuals  
             operating at their place of business and it is unclear why a  
             responsible business owner would potentially want to ignore  
             violations in their establishment and not require all  
             individuals working closely with them to obey the law,  
             especially as consumers will most likely link services to the  
             establishment as well as the licensee providing services. 

          4. Prior Related Legislation.   AB 2449  (Correa, Chapter 316,  
             Statutes of 2002) required BBC licensees to provide certain,  
             specified information to when they renew their license and  
             requires the Bureau to report back to the Legislature on  the  
             information they collect pursuant to this measure, including  
             the provisions outlined in BPC  7401 above related to booth  
             renters.

              SB 1134  (Karnette) of 1999 would have established certain  
             contractual provisions to be entered into between  
             establishment owners and independent contractors (booth  
             renters) who were licensed by the then-Barbering and  
             Cosmetology Program and would have required the Program to  
             register all independent contractors and issue a certificate  
             of registration to be displayed where they work.  (  Status:    
             The bill was never heard in a policy committee of the  
             Assembly.)

              AB 1358  (Karnette) of 1993 would have specified that a booth  








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             renter in the cosmetology industry is an employee and not an  
             independent contractor for purposes of unemployment  
             insurance, state disability insurance, employment  training  
             and personal income tax purposes according to certain  
             conditions.  (  Status:   The bill was vetoed by Governor Wilson  
             who indicated in his veto message that given the complexity  
             in the possible arrangements between salon owners and  
             cosmetologists, a case-by-case determination would seem to  
             make more sense.  These are small businesses that should have  
             the right to determine what arrangements would make their  
             business most economically feasible.)
           
           5. Proposed Author's Technical Amendment.  The Author has  
             proposed a technical amendment to the bill at the request of  
             BBC.
             
             On page 3, in line 3, strike "an individual licensee" and  
             replace with "licensees"

             7407.1. The board shall determine by regulation when a fine  
             shall be assessed to both the holder of the establishment  
             license and the individual licensee for the same violation.  
             The board shall also 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. In making these determinations, the board shall  
             consider the egregiousness of the violation of the health and  
             safety regulations and whether the violation is a repeated  
             violation by  an individual licensee   licensees  within the same  
             establishment.

          
          SUPPORT AND OPPOSITION:
          
           Support:   None on file as of April 12, 2016.

           Opposition:  None on file as of April 12, 2016.


                                      -- END --
          











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