BILL NUMBER: AB 2099	AMENDED
	BILL TEXT

	AMENDED IN SENATE  AUGUST 24, 2012

INTRODUCED BY   Assembly Member Cedillo

                        FEBRUARY 23, 2012

    An act to amend Section 1199 of the Labor Code, relating
to employment.   An act to add and repeal Section 770.4
of the Insurance Code, relating to public employees. 


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2099, as amended, Cedillo.  Employment: wage and hour
violations.   Public employees: annuities and mutual
fund custodial accounts.  
   Existing law prohibits state and local agencies from negotiating
life and disability insurance or requiring the placing of that
insurance through particular agents, brokers, or companies, except to
the extent that the state has a direct financial interest in the
subject of the insurance, as specified. Existing law excepts from
these provisions a tax-sheltered annuity under an annuity plan that
meets the requirements of Section 403(b) of the Internal Revenue Code
to be placed or purchased for an employee, as specified. Existing
law requires an annuity contract and custodial account as described
in Section 403(b) of the Internal Revenue Code to be offered to all
employees of any state agency who are members of the State Teachers'
Retirement Plan, any employee of a local public agency or political
subdivision of the state that employs persons to perform creditable
service subject to coverage by the plan, and eligible state employees
of a state employer under the uniform state payroll system,
excluding the California State University System. The Teachers'
Retirement Law provides a registration process for information
relating to tax-deferred retirement investment products.  
   This bill, until January 1, 2018, would authorize a pilot project
that would allow the Los Angeles Unified School District and the Los
Angeles Community College District to select specific 403(b) products
offered by 4 or more vendors of tax-deferred retirement investment
products described in Section 403(b) of the Internal Revenue Code or
establish a list of preferred vendors that are recommended to
employees, through a due diligence and competitive review process, as
specified. The bill would make a related statement of legislative
intent.  
   Under existing law, every employer or other person acting either
individually or as an officer, agent, or employee of another person,
who requires or causes an employee to work for longer hours than
those fixed or to work under conditions of labor prohibited by an
order of the Industrial Welfare Commission, who pays or causes to be
paid to an employee a wage less than minimum wage fixed by an order
of the commission, or who violates or refuses or neglects to comply
with any specified provision of the Labor Code or any order or ruling
of the commission is guilty of a misdemeanor, punishable by a fine
of not less than $100 or by imprisonment for not less than 30 days,
or both.  
   This bill would increase the fine for a violation of this
provision from not less than $100 to not less than $250. The bill
would also make technical, nonsubstantive changes. 
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

   SECTION 1.    It is the intent of the Legislature to
allow, as a pilot project, the Los Angeles Unified School District
and the Los Angeles Community College District flexibility in their
403(b) programs to do the following:  
   (a) Fully comply with 403(b) regulations and other applicable
regulatory guidelines.  
   (b) Enhance retirement savings opportunities for plan
participants.  
   (c) Include coordinated communication and education programs
designed to support education of school employees regarding the
benefits of participation in 403(b) plans.  
   (d) Emphasize transparency and disclosure of any potential
conflicts of interest in 403(b) plan design and operation to
participants and plan sponsors.  
   (e) Include high-quality investment options with the lowest costs
to participants and their employer. 
   SEC. 2.    Section 770.4 is added to the  
Insurance Code   , to read:  
   770.4.  (a) For the purposes of this section, the following
definitions shall apply:
   (1) "403(b) product" or "403(b) products" means payroll-deducted,
tax-deferred retirement investment products, as described in Section
403(b) of the Internal Revenue Code, that comply with applicable
state insurance laws, and federal and state securities laws and rules
as applied by appropriate regulatory entities.
   (2) "School employer" means the Los Angeles Unified School
District or the Los Angeles Community College District.
   (b) Notwithstanding Section 770.3 and any other law, a school
employer may, in the exclusive interests of the plan participants, do
one of the following through a due diligence and competitive review
process:
   (1) Select specific 403(b) products offered by four or more
vendors of 403(b) products.
   (2) Select specific 403(b) products offered by four or more
vendors of 403(b) products and continue to make contributions to a
403(b) product not selected if the school employee purchased or
entered into the product before the effective date of the first
contract entered into by his or her school employer and the employee
has been continuously employed by that same school employer since the
employee purchased or entered into that product.
   (3) Establish a list of preferred vendors of 403(b) products and
communicate that list to school employees as vendors that are
recommended to the employees by the joint committee and adopted by
the school employer.
   (c) The decision whether a school employer elects to exercise its
authority pursuant to paragraph (1), (2), or (3) of subdivision (b),
and the process by which vendors are selected, shall be specified in
collective bargaining agreements.
   (d) A joint committee made up of exclusive bargaining unit members
and management shall be established to make a recommendation to the
governing body of a school employer regarding the vendors and the
products to be selected if the school employer elects to exercise its
authority pursuant to paragraph (1) or (2) of subdivision (b), or to
select the preferred vendors if the school employer elects to
exercise its authority pursuant to paragraph (3) of subdivision (b).
At least 50 percent of the committee shall consist of bargaining unit
members selected by the exclusive representatives of the employees
and 50 percent shall consist of administrators selected by
management.
   (e) The competitive process by which vendors are selected shall
include the following requirements:
   (1) That prospective vendors shall not communicate with any member
of the governing body of the school employer or the committee
specified in subdivision (d), except in an official meeting of the
governing body or the committee with respect to the competitive
review process being undertaken pursuant to this section. A violation
of this paragraph shall result in disqualification of the
prospective vendor from selection.
   (2) That prospective vendors shall not provide any financial
payment to any member of the governing body of the school employer or
the committee specified in subdivision (d) for the period of time
beginning with the start of the competitive review process and ending
when the contract or preferred vendor list expires. A violation of
this paragraph shall result in disqualification of the prospective
vendor from selection.
   (3) That vendors shall adhere to any policy adopted by the school
employer or the committee specified in subdivision (d) regarding
communications and marketing of financial products to employees of
the school employer.
   (4) A violation of any of the policies specified in this
subdivision by a vendor shall result in termination of the contract
with the school employer or removal from the preferred vendor list,
as applicable.
   (f) A school employer that elects to exercise its authority
pursuant to subdivision (b) shall report to the Legislature on or
before January 1, 2017, the following information, as of September 1,
2012, and as of September 1, 2016:
   (1) The percentage of school employees participating in a 403(b)
product.
   (2) The weighted average fee being charged to school employees
participating in a 403(b) product.
   (3) The school employer's administrative costs and workload
associated with offering 403(b) products.
   (g) This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date.  
  SECTION 1.    Section 1199 of the Labor Code is
amended to read:
   1199.  Every employer or other person acting either individually
or as an officer, agent, or employee of another person is guilty of a
misdemeanor, punishable by a fine of not less than two hundred fifty
dollars ($250) or by imprisonment for not less than 30 days, or by
both, who does any of the following:
   (a) Requires or causes any employee to work for longer hours than
those fixed, or under conditions of labor prohibited by an order of
the commission.
   (b) Pays or causes to be paid to any employee a wage less than the
minimum fixed by an order of the commission.
   (c) Violates or refuses or neglects to comply with any provision
of this chapter or any order or ruling of the commission.