BILL ANALYSIS Ó
SENATE COMMITTEE ON
BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT
Senator Jerry Hill, Chair
2015 - 2016 Regular
Bill No: SB 1125 Hearing Date: April 18,
2016
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|Author: |Nguyen |
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|Version: |March 28, 2016 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Sarah Mason |
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Subject: Employment relations: nail care salons: labor law
compliance
SUMMARY: Requires BBC, for an application for an establishment license,
if the establishment will offer nail care services, to include a
signed acknowledgement that an applicant understands their
responsibility to comply with any applicable state labor laws
and comply with the informational materials BBC selects or
develops related to basic labor laws.
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) Establishes nail care as a specialty branch in the practice
of cosmetology and defines nail care as the practice of
cutting, trimming, polishing, coloring, tinting, cleansing,
manicuring or pedicuring the nails of any person or massaging
or beautifying from the elbow to the fingertips or the knee
to the toes of any person. (BPC § 7316 (c) (2))
3) Provides for licensure of manicurists by BBC to practice nail
care and requires applicants to be over the age of 17,
complete 10th grade in public California school or
equivalent, not subject to a denial and have either completed
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a course in nail care from a BBC approved school or practiced
nail care in another state for a period of time equivalent to
the study and training of a BBC approved course or completed
an apprenticeship program in nail care. (BPC § 7326)
4) 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)
5) 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)
6) Establishes the Division of Labor Standards Enforcement
(DLSE) and grants the Chief of DLSE (Labor Commissioner) and
his or her employees free access to all places of labor.
States that any person, or agent or officer thereof, who
refuses admission to the Labor Commissioner or deputy or
agent or who, upon request, willfully neglects or refuses to
furnish them any statistics or information, pertaining to
their lawful duties is guilty of a misdemeanor, punishable by
a fine of not more than one thousand dollars ($1,000).
(Labor (LAB) Code §§ 83 and 90)
7) States the policy of this state to vigorously enforce minimum
labor standards in order to ensure employees are not required
or permitted to work under substandard unlawful conditions or
for employers that have not secured the payment of
compensation, and to protect employers who comply with the
law from those who attempt to gain a competitive advantage at
the expense of their workers by failing to comply with
minimum labor standards. Requires the Labor Commissioner to
adopt an enforcement plan for the field enforcement unit
which shall identify priorities for investigations to be
undertaken by the unit that ensure the available resources
will be concentrated in industries, occupations, and areas in
which employees are relatively low paid and unskilled, and
those in which there has been a history of violations and
those with high rates of noncompliance with the law. (LAB §
90.5)
8) Authorizes the Labor Commissioner, after investigation and
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upon determination that wages or monetary benefits are due
and unpaid to any worker in the State of California, to
collect such wages or benefits on behalf of the worker
without assignment of such wages or benefits to the
Commissioner. (LAB § 96.7)
9) Authorizes the Labor Commissioner to investigate employee
complaints and provide for a hearing in any action to recover
wages, penalties, and other demands for compensation. (LAB §
98)
10)Prohibits an employer or agent from collecting, taking, or
receiving any gratuity or a part thereof that is paid, given
to, or left for an employee by a patron, or deduct any amount
from wages due an employee on account of a gratuity, or
require an employee to credit the amount, or any part
thereof, of a gratuity against and as a part of the wages due
the employee from the employer. Provides that every gratuity
is hereby declared to be the sole property of the employee or
employees to whom it was paid, given, or left for. Requires
an employer that permits patrons to pay gratuities by credit
card to pay the employees the full amount of the gratuity
that the patron indicated on the credit card slip, without
any deductions for any credit card payment processing fees or
costs that may be charged to the employer by the credit card
company. Provides that payment of gratuities made by patrons
using credit cards shall be made to the employees not later
than the next regular payday following the date the patron
authorized the credit card payment. (LAB § 351)
11)Requires, at the time of hiring, an employer to provide each
employee a written notice, in the language the employer
normally uses to communicate employment-related information
to the employee, containing information about the rate or
rates of pay. (LAB § 2810.5)
This bill:
1) Requires BBC, for an application for an establishment
license, if the establishment will offer nail care services,
to include a signed acknowledgement that an applicant
understands their responsibility to comply with any
applicable state labor laws and the informational materials
selected or developed by BBC on "basic labor laws".
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Specifies that "basic labor laws" includes, but is not
limited to:
a) Key differences between legal rights, benefits and
obligations of an employee and an independent contractor;
b) Wage and hour rights for hourly employees;
c) Antidiscrimination laws relating to the use of a
particular language in the workplace;
d) Anti-retaliation laws relating to a worker's right to
file complaints with the Department of Industrial Relations
(DIR); and
e) How to obtain more information about labor law from DIR.
FISCAL
EFFECT: Unknown. This bill is keyed "fiscal" by Legislative
Counsel.
COMMENTS:
1. Purpose. The Author is the Sponsor of this bill. The
Author's district includes the largest number of Vietnamese
residents outside of Vietnam. According to the Author, in
just three of the twelve cities in the district, there are
approximately 25,000 licensed cosmetologists. The Author
believes that it is important to be mindful of the cultural
sensitivity around the communication with nail salon workers
whether it be in English or Vietnamese and that sometimes
basic labor laws can be overlooked. The Author believes that
having an establishment licensee sign an acknowledgement form
will help with the overall understanding of California's
labor laws, thus helping to reinforce that all help reinforce
that all nail care establishments are on the same page
regarding state labor laws.
2. Nail Care in California. Nail care is a specialty branch in
the field of cosmetology. In California, a licensed
cosmetologist can practice nail care and BBC also licenses
manicurists as a separate license category. To become a
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licensed manicurist, an applicant must submit proof of
completion to BBC of 400 training hours training covering all
practices of a manicurist, according to the following:
300 hours of technical instruction and practical
training in nail care - 60 hours of technical
instruction in manicures and pedicures (water and oil
manicures including hand and arm massage, complete
pedicure including foot and ankle massage, application
of artificial nails including liquid, gel, and powder
brush-ons, nail tips, nail wraps and repairs, and nail
analysis); 60 hours of practical operations in manicures
and pedicures and 180 hours of nails
100 hours of technical instruction and practical
training in health and safety - 10 hours on laws and
regulations including the Act and BBC Rules and
Regulations; 25 hours on chemistry pertaining to the
practices of a manicurist including the chemical
composition and purpose of nail care preparations,
health and safety/hazardous substances, including
training in chemicals and health in establishments,
material safety data sheets, protection from hazardous
chemicals and preventing chemical injuries, health and
safety laws and agencies, ergonomics, and communicable
diseases, including HIV/AIDS and Hepatitis B; 20 hours
on disinfection and sanitation procedures to protect the
health and safety of the consumer as well as the
technician which entail disinfecting instruments and
equipment as specified with special attention given to
pedicure foot spa and basin disinfection procedures and;
10 hours in bacteriology, anatomy and physiology
BBC also recommends in its regulations that schools provide
training in communication skills that includes professional
ethics, salesmanship, decorum, record-keeping, client service
record cards, basic tax responsibilities related to
independent contractors, booth renters, employees, and
employers
BBC currently licenses 126,872 manicurists, 310,041
cosmetologists (who can also perform nail care services) and
52,785 establishments. BBC does not include information in
its establishment license data to differentiate between an
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establishment offering nail care services specifically or
those offering other personal beautification services.
3.Concerns About Nail Salons and Experiences of Nail Salon
Employees. Nail salons have been the focus of studies and
media reports in recent years stemming from health, safety and
labor concerns in these settings. In May 2015, the New York
Times (NYT) published two articles stemming from interviews
with more than 150 nail salon workers and owners that found
that a cast majority of workers are paid below minimum wage
and are sometimes not even paid. The articles found that
workers "endure all manner of humiliation, including having
their tips docked as punishment for minor transgressions,
constant video monitoring by owners, even physical abuse."
The NYT also found that employers are rarely punished for
labor and other violations and that in 2014, when the New York
State Labor Department conducted its first nail salon sweep,
investigators inspected 29 salons and found 116 wage
violations. While only about a quarter of the more than 100
workers said they were paid an amount equivalent to that
state's minimum hourly wage, all but three said they had wages
withheld in ways considered illegal, such as never getting
overtime and many were unaware that working unpaid was against
the law and their alarmingly low wages are also illegal.
A February 2016 follow up report in the NYT articles found
that 40 percent of the salons inspected, as part of the Labor
Department's increased efforts to inspect following the
original May articles, underpaid employees, including one
worker at a Manhattan salon who was paid $30 a day for 10-hour
shifts, a manicurist in Queens who was paid only $200 for a
50-hour workweek, manicurists at seven salons who were forced
to work for no pay or had to pay salon owners a fee,
ostensibly to learn the trade and several owners admitted to
submitting fake payroll records in an effort to fool
investigators. The article highlighted that employers are
often unfamiliar with the intricacies of state labor laws.
4.Wages and Tips. In 2008, the Ford Foundation sponsored a
survey of 4,387 workers in low-wage industries in the three
largest U.S. cities: Chicago, Los Angeles and New York City.
The report of that survey, titled Broken Laws, Unprotected
Workers: Violations of Employment and Labor Laws in America's
Cities, revealed that 26 percent of workers in the sample were
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paid less than the legally required minimum wage the prior
work week, and 60 percent of these workers were underpaid by
more than $1 per hour. In addition, 76 percent of the
respondents who worked overtime in the previous week were not
paid the legally required overtime rate by their employers.
The study also notes that minimum wage violation rates vary
significantly by industry, and occupation. For example, some
industries, such as apparel and textile manufacturing and
personal and repair services have minimum wage violation rates
that exceed 40 percent, while others, including restaurants,
and retail and grocery stores, have rates of 20 to 25 percent.
However, the study found that undocumented immigrant women
were at the greatest risk of minimum wage violations. The
study estimated that the workers in low-wage industries
Chicago, Los Angeles, and New York City lose more than $56.4
million per week due to labor law violations.
A follow-up study by the UCLA Institute for Research and Labor
and Employment was published in 2015, and that study utilized
the data from the 2008 survey, but focused specifically on Los
Angeles County. This study, titled Wage Theft and Workplace
Violations in Los Angeles: The Failure of Employment and Labor
Law for Low-Wage Workers focused on a survey results of 1,815
workers in Los Angeles County.
This study found similar results to the national survey:
almost 30 percent of the workers sampled were paid less than
the minimum wage in the prior work week, and 63.3 percent of
these workers were underpaid by more than $1 per hour.
Assuming a full-year work schedule, Los Angeles County survey
respondents lost an average of $2,070.00 annually out of total
earnings of $16,536.00. The study estimated that workers in
low-wage industries in Los Angeles County lose more than $26.2
million per week as a result of employment and labor law
violations.
Both of the studies make the same public policy
recommendations to address these issues, which included
strengthening government enforcement of existing employment
and labor laws and stiffening the penalties.
The low rate of collections of wages has also been evaluated.
According to a 2013 report published by the National
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Employment Law Project (NELP) and the UCLA Labor Center, only
17 percent of workers who prevailed in their wage claims
before the DLSE and won a judgment were able to receive any
payment between 2008 and 2011. Of those who did receive
payment between 2008 and 2011, workers were able to collect 15
percent of what was owed. In short, the vast majority of wage
theft victims received nothing, and those that received
anything received little of what they were legally due.
Tips withheld by nail salon employers was highlighted in the
New York Times series. According to the Internal Revenue
Service, tips are discretionary (optional or extra) payments
determined by a customer that employees receive from
customers. Tips include cash tips received directly from
customers, tips from customers who leave a tip through
electronic settlement or payment (including a credit card,
debit card, gift card, or any other electronic payment
method), the value of any noncash tips, such as tickets, or
other items of value and tip amounts received from other
employees paid out through tip pools or tip splitting, or
other formal or informal tip sharing arrangement. All cash
and non-cash tips an employee receives are income and are
subject to Federal income taxes. All cash tips received by an
employee in any calendar month are subject to social security
and Medicare taxes and must be reported to the employer,
unless the tips received by the employee during a single
calendar month while working for the employer total less than
$20. Cash tips include tips received from customers, charged
tips (e.g., credit and debit card charges) distributed to the
employee by his or her employer, and tips received from other
employees under any tip-sharing arrangement.
According to the United States Department of Labor (USDL),
tipped employees are those who customarily and regularly
receive more than $30 per month in tips. Tips are the property
of the employee. The employer is prohibited from using an
employee's tips for any reason other than as a credit against
its minimum wage obligation to the employee ("tip credit") or
in furtherance of a valid tip pool. Employers electing to use
the tip credit provision must be able to show that tipped
employees receive at least the minimum wage when direct (or
cash) wages and the tip credit amount are combined. If an
employee's tips combined with the employer's direct (or cash)
wages of at least $2.13 per hour do not equal the minimum
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hourly wage of $7.25 per hour, the employer must make up the
difference. USDL notes that a tip is the sole property of the
tipped employee regardless of whether the employer takes a tip
credit and that the Fair Labor Standards Act (FLSA) prohibits
any arrangement between the employer and the tipped employee
whereby any part of the tip received becomes the property of
the employer. For example, even where a tipped employee
receives at least $7.25 per hour in wages directly from the
employer, the employee may not be required to turn over his or
her tips to the employer.
USDL advises that where tips are charged on a credit card and
the employer must pay the credit card company a percentage on
each sale, the employer may pay the employee the tip, less
that percentage. For example, where a credit card company
charges an employer 3 percent on all sales charged to its
credit service, the employer may pay the tipped employee 97
percent of the tips without violating the FLSA. However, this
charge on the tip may not reduce the employee's wage below the
required minimum wage. The amount due the employee must be
paid no later than the regular pay day and may not be held
while the employer is awaiting reimbursement from the credit
card company.
5.Related Legislation This Year. AB 1978 (Gonzalez) requires
Chief of the Division of Labor Standards Enforcement (Labor
Commissioner), to include information on the status of wage
claims and retaliation complaints, including the average
amount of time it takes for a wage claim to receive a
preliminary hearing and the current backlog of claims and
complaints in the annual report to the Legislature concerning
the effectiveness of the field enforcement unit. ( Status:
This bill is pending in the Assembly Committee on Labor and
Employment.)
AB 2025 (Gonzalez) requires BBC to make available and offer
all written materials provided to licensees and applicants in
English, Spanish, and Vietnamese. The bill also requires BBC
to include labor laws that pertain to the types of licensees
who may work in establishments as a required subject of
instruction. Additionally, the bill adds requirements to
licensure as an establishment, including knowledge of basic
labor laws that pertain to the types of licensees who may work
in the establishment (such as the differences between the
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legal rights, benefits, and obligations of an employee and an
independent contractor, wage and hour rights for hourly
employees, antidiscrimination laws relating to the use of a
particular language in the workplace, anti-retaliation laws
relating to a worker's right to file complaints with the
Department of Industrial Relations and how to obtain more
information about labor law from the Department of Industrial
Relations) and requires BBC to develop and add questions on
basic labor laws to the application, select or create
informational materials on basic labor laws in consultation
with stakeholders and require establishment applicants to sign
an acknowledgement that they understand that establishments
are responsible for obeying state labor laws and they
understand the BBC's basic labor law materials. ( Status: The
bill is pending in the Assembly Committee on Business and
Professions.)
AB 2125 (Chiu) requires the Department of Public Health (DPH)
to publish guidelines, including one or more model ordinances,
for cities, counties, and city and counties to voluntarily
implement local healthy nail salon recognition programs with
specified criteria for nail salons, including the use of less
toxic nail polishes and polish removers and improved
ventilation. ( Status: The bill is pending in the Assembly
Committee on Environmental Safety and Toxic Materials.)
AB 2437 (Ting) requires a nail care services establishment
licensed by BBC to register with the Division of Labor
Standards Enforcement within the Department of Industrial
Relations and receive specified training regarding workplace
rights and wage and hour laws including overtime compensation
and requires the establishment to arrange for the training to
be provided to its employees. The bill also requires BBC to
deny the renewal of an establishment license to an
establishment that provides nail care services if a final
judgment has been made against the employer for failing to pay
wages. ( Status: The bill is pending in the Assembly
Committee on Business and Professions.)
6.Prior Related Legislation. SB 549 (Correa) would have
authorized BBC to collect gender, language and ethnicity data
from new licensure applicants and renewal licenses and posted
certain information on the BBC's website. ( Status: The bill
was vetoed by Governor Schwarzenegger who wrote that "The
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stated intent of this bill is based on the belief that the
collection of statistics on the gender, ethnicity, and
language preference of the Board of Barbering and Cosmetology
(Board) licensees will lead to improved working conditions.
Since that connection is specious at best, I do not believe
this is an area that requires micromanagement of the Board".)
AB 2689 (Tran) of 2008 would have established the Vietnamese
Nail Worker Information Act which would require manufacturers
and certain other persons that sell or use professional
use-only nail care products to prepare, translate and provide
material safety data sheets (MSDS) in the Vietnamese language
to purchasers of the products as well as licensed professional
nail care employees upon request. ( Status: The bill was held
under submission in the Assembly Committee on Appropriations.)
7.BBC Is Not Able To Differentiate Between Establishment Types.
This bill applies specifically to establishments that offer
nail care services, however BBC does not currently classify
licensed establishments based on the types of services they
offer. BBC does not, for example, ask an applicant for an
establishment license to list the type of establishment or
whether the establishment will offer nail care services. If
the Author intends for nail salons to be the only type of BBC
licensed establishment where the applicant is required to
acknowledge understanding of and responsibility to comply with
state labor laws, the Author may wish to require BBC to
collect establishment data about type of services provided, to
then ensure that the provisions of the bill apply to
applications for nail care services establishments.
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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