BILL ANALYSIS �
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THIRD READING
Bill No: AB 1855
Author: Torres (D), et al.
Amended: 8/16/12 in Senate
Vote: 21
SENATE LABOR & INDUSTRIAL RELATIONS COMM. : 5-0, 6/27/12
AYES: Lieu, DeSaulnier, Leno, Padilla, Yee
NO VOTE RECORDED: Wyland, Runner
ASSEMBLY FLOOR : 52-23, 5/31/12 - See last page for vote
SUBJECT : Employment: contractors: sufficient funds
SOURCE : California Labor Federation
California Teamsters Public Affairs Council
Warehouse Workers United
DIGEST : This bill extends provisions of current law
related to liability for financially-insufficient contracts
to the warehouse industry, in addition to the industries,
construction, farm labor, garment, janitorial, security
guard, already covered under existing law. This bill also
provides that, upon request of the Labor Commissioner, any
person or entity that enters into a contract or agreement
for labor or services shall provide a copy of the relevant
provisions of the contract or other documentation to the
Labor Commissioner, as specified.
Senate Floor Amendments of 8/16/12 specify that the
documents obtained by the Labor Commissioner, pursuant to
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the provisions of this bill, would be exempt from
disclosure under the California Public Records Act.
ANALYSIS : Existing law provides a framework of labor law
enforcement of, among other things, minimum standards for
wages, hours, conditions of employment, and occupational
safety and health by the Department of Industrial
Relations.
Existing law imposes various requirements on individuals
contracting for labor or services with construction, farm
labor, garment, janitorial, or security guard contractors.
Among other things, with regards to these contracts,
existing law:
1.Prohibits a person or entity from entering into a
contract or agreement for labor or services with these
industry contractors where the person or entity knows or
should know that the contract or agreement does not
include funds sufficient to allow the contractor to
comply with applicable laws governing the labor or
service to be provided.
2.Establishes a rebuttable presumption that there has been
no violation of the law where the contract or agreement
is in writing and meets specified conditions.
3.Authorizes an aggrieved employee to bring an action to
recover the greater of his or her actual damages or $250
per employee per violation for an initial violation and
$1,000 per employee for each subsequent violation, in
addition to recovering costs and reasonable attorney's
fees.
4.Provides that these provisions do not apply to a person
or entity who executes a collective bargaining agreement
covering the workers employed under the contract or
agreement, or to a person entering a contract or
agreement for labor or services to be performed on his or
her home residence, as specified.
This bill extends these existing provisions regarding
liability for financially-insufficient contracts to the
warehouse industry. Specifically, this bill:
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1.Extends provisions of current law related to liability
for financially-insufficient contracts to the warehouse
industry (in addition to the industries covered under
existing law).
2.Defines "warehouse" to mean a facility whose primary
operation is the storage or distribution of general
merchandise, refrigerated goods, or other products.
3.Provides that, upon request of the Labor Commissioner,
any person or entity that enters into a contract or
agreement for labor or services shall provide a copy of
the relevant provisions of the contract or other
documentation to the Labor Commissioner, as specified.
4.Specifies that the documents obtained by the Labor
Commissioner, pursuant to the provisions of this bill,
would be exempt from disclosure under the California
Public Records Act.
Background
SB 179 (Alarcon), Chapter 908, Statutes of 2003, enacted
Labor Code Section 2810, which prohibits a person or entity
from entering into a contract or agreement for labor or
services with a construction, farm labor, garment,
janitorial, or security guard contractor where the person
or entity knows or should know that the contract or
agreement does not include funds sufficient to allow the
contractor to comply with applicable laws governing the
labor or service to be provided. At the time, the author
and supporters of the bill argued that the legislation was
necessary to protect workers and law-abiding employers from
employers and contractors that knowingly enter into
contracts and agreements that are financially inadequate to
permit compliance with applicable laws. The purpose of
this bill was to establish state policy regarding
financially insufficient contracts in industries most
associated with the underground economy.
In recent years, some workers and worker advocates have
noticed an increase in the number of employers who are
moving away from a traditional employment model towards a
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business model that utilizes "subcontracted" or
"contingent" workers. Much recent attention has focused on
one industry in particular: the warehouse and logistics
industry, especially in the Inland Empire region of
Southern California.
State enforcement agencies have started to give these
issues a closer look as well. In October 2011, the
Division of Labor Standards Enforcement (DLSE) issued more
than $600,000 in penalties for alleged wage and hour
violations against a Riverside County warehousing
operation. Earlier, DLSE had issued citations of $499,000
to a temporary employment agency that provided workers at
the same warehouse. In response to worker complaints, the
Division of Occupational Safety and Health (Cal/OSHA) has
begun to target the Inland Empire warehouse industry with a
number of open investigations into workplace health and
safety conditions. Among other things, the complaints
allege exposure to dust, fumes and chemicals, no hand
protection, improperly maintained forklifts, and lack of
heat illness prevention programs. According to the
Director of the Department of Industrial Relations, "In the
warehouse industry, low-wage workers are particularly
vulnerable to unsafe working conditions where work is often
hidden from public view. Hazards include moving vehicles,
precariously stacked goods and unguarded equipment."
(Department of Industrial Relations Press release,
"Cal/OSHA Issues $256,445 in Citations to Warehouse
Operators," January 18, 2012)
Prior Legislation
SB 179 (Alarcon), Chapter 908, Statutes of 2003, enacted
the provisions which this bill seeks to amend. SB 179
established that a person or entity may not enter into a
labor contract for construction, farm labor, garment,
janitorial, or security guard services when the person or
entity knows or should know that the contract does not
provide funds sufficient to allow the labor contractor to
comply with all applicable laws or regulations governing
the labor or services to be provided under the contract.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
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SUPPORT : (Verified 8/20/12)
California Labor Federation (co-source)
California Teamsters Public Affairs Council (co-source)
Warehouse Workers United (co-source)
California Catholic Conference
California Conference Board of the Amalgamated Transit
Union
California Conference of Machinists
California Employment Lawyers Association
California Immigrant Policy Center
California Rural Legal Assistance
Engineers and Scientists of California
International Longshore and Warehouse Union
Professional and Technical Engineers, Local 21
State Building and Construction Trades Council
United Food and Commercial Workers Union, Western States
Council
UNITEHERE
Utility Workers Union of America, Local 132
OPPOSITION : (Verified 8/20/12)
International Warehouse Logistics Association
Noble Distribution Systems
SP Express
ARGUMENTS IN SUPPORT : According to the author's office,
over the last decade the warehousing and logistics industry
has experienced a growing shift in the employment model it
uses to employ its workers, from the permanent employment
model to the temporary, or "contingent", employment model
in which workers are hired through labor contractors.
According to proponents, between 1990 and 2007, temporary
employment in the Inland Empire warehouses grew by 575%.
They point out that a recent study noted that a decade ago,
these warehouses had eighty percent direct employees and
twenty percent temps - today, they argue, it is just the
opposite.
The "temporary" workers, they argue, remain with a single
employer for years, but without any guarantee of steady or
ongoing work. According to the author and proponents,
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recent state investigations have found widespread
violations of basic wage and hour protections and health
and safety standards in these warehouses. Proponents
contend that these workers were denied breaks, paid less
than minimum wage, given fraudulent pay stubs, and
compensated by "group piece-rate" (paid by the load or
shipping container).
Proponents argue that the challenge the state faces is
enforcing basic labor laws in the face of these complex
levels of subcontracting - where a company contracts with a
warehouse operator that contracts with multiple temporary
agencies. According to proponents, the temporary agency is
the employer of record; however, these agencies are really
just an intermediary and not responsible for establishing
the conditions in this industry. They argue that unless
the companies actually setting the terms and conditions
within the warehouses are held accountable, the rights of
these workers will never be protected.
Overall, the author and proponents argue that the state
needs stronger incentives to promote responsible
contracting in the warehouse industry. This bill will
provide warehouse workers the same protections against
labor exploitation as are provided to workers in the
construction, farm labor, garment, janitorial and security
guard industries under current law.
ARGUMENTS IN OPPOSITION : The International Warehouse
Logistics Association (IWLA) argues that this legislation
is misguided in its purpose and if enacted, will fail to
improve the safety of workers or the financial stability of
companies that employ these workers. They argue that what
it will achieve is enormous and unnecessary harm to one of
the very few industries in California that effectively
addresses structural unemployment in the semi-skilled
population.
According to IWLA, although California's recession has
created double-digit unemployment, the logistics industry
has actually added jobs and continues to provide
much-needed paychecks to Californians throughout this
structural unemployment crisis. They argue that these
jobs, whether temporary-to-permanent or regular full-time
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jobs, provide career ladders and have been cited as a
proven entry-level profession that offers employees proven
professional-development opportunities (including office
and administrative staff programs) addressing the bilingual
and multicultural diversity of California.
IWLA argues that those who are shown to be guilty of abuses
should be prosecuted to the fullest extent of the law;
however, they contend that this legislation starts with the
supposition that all employers of warehouse workers, no
matter how clean their Cal-OSHA record might be, should be
presumed guilty. Lastly, they argue that unfortunately,
this bill singles out only non-union firms for this
hostility and believe that this calls into question
constitutional issues of equal protection.
ASSEMBLY FLOOR : 52-23, 5/31/12
AYES: Alejo, Allen, Ammiano, Atkins, Beall, Block,
Blumenfield, Bonilla, Bradford, Brownley, Buchanan,
Butler, Campos, Carter, Cedillo, Chesbro, Davis,
Dickinson, Eng, Feuer, Fong, Fuentes, Furutani, Galgiani,
Gatto, Gordon, Gorell, Hall, Hayashi, Roger Hern�ndez,
Hill, Huber, Hueso, Huffman, Lara, Bonnie Lowenthal, Ma,
Mitchell, Monning, Nestande, Pan, Perea, V. Manuel P�rez,
Portantino, Skinner, Solorio, Swanson, Torres,
Wieckowski, Williams, Yamada, John A. P�rez
NOES: Achadjian, Bill Berryhill, Conway, Donnelly,
Fletcher, Beth Gaines, Garrick, Grove, Hagman, Halderman,
Harkey, Jeffries, Jones, Knight, Logue, Miller, Morrell,
Nielsen, Norby, Olsen, Silva, Smyth, Wagner
NO VOTE RECORDED: Charles Calderon, Cook, Mansoor,
Mendoza, Valadao
PQ:n 8/20/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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