BILL ANALYSIS �
-----------------------------------------------------------------------
|Hearing Date:July 2, 2012 |Bill No:AB |
| |2389 |
-----------------------------------------------------------------------
SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Curren D. Price, Jr., Chair
Bill No: AB 2389Author:Bonnie Lowenthal
As Amended:June 19, 2012 Fiscal: Yes
SUBJECT: Contractor disclosure requirements.
SUMMARY: Prohibits a contractor that provides services that require
entering the residence or place of lodging of a member of the public
from utilizing a uniform that bears the name or a logo of the
contracting entity, unless each uniform meets certain disclosure
requirements.
Existing law, the Business and Professions Code (BPC):
1)Specifies no person shall state, in an advertisement that he is a
producer, manufacturer, processor, wholesaler, or importer, or that
he owns or controls a factory or other source of supply goods when
such is not the fact. No person shall in any other manner
misrepresent the character, extent, volume, or type of his business.
(BPC � 17505)
2)Makes it unlawful for any person doing business in California and
advertising to consumers to make any false or misleading advertising
claims. Includes claims that purport to be based on factual,
objective, or clinical evidence; compare the product's effectiveness
or safety to that of other brands; or, purport to be based on any
fact. (BPC � 17508)
Existing law, the Labor Code (LC):
1)Authorizes an employer, without prohibition, to prescribe the
weight, color, quality, texture, style, form and make of uniforms
required to be worn by his or her employees.
(LC � 452)
AB 2389
Page 2
This bill:
1)Prohibits a contractor that provides services that require entering
the residence or place of lodging of a member of the public from
utilizing a uniform that bears the name or logo of the contracting
entity, as defined, unless each uniform meets certain disclosure
requirements.
a) The uniform or vehicle state the contractor's name and that it
is providing services on behalf of the contracting entity;
b) The uniform states the contractors name;
c) The uniform is clearly displayed in a conspicuous place, in
sharp contrast to the background, and in such a way that the
size, shape, and color is ready visible.
1)Creates the following definitions:
a) "Contracting entity" to mean any person, business, or public
entity contracting with another person or business to provide
services on its behalf.
b) "Contractor" to mean any person or business that contracts to
provide services on behalf of a contracting entity.
c) "Public entity" to mean the state or any political subdivision
thereof, including, but not limited to, a city, county, city and
county, or special district.
3)Specifies that these provisions shall not apply if a contracting
entity and a contractor are jointly and severally liable for any
claims arising out of work performed pursuant to a contractual
agreement.
4)Makes legislative findings and declarations related to public
communications on consumer awareness.
FISCAL EFFECT: The Assembly Appropriations Committee analysis, dated
May 16, 2012, cites:
On-going costs for the Contractors State License Board and the
Bureau of Security and Investigative Services, the two licensing
categories under DCA that might be affected by this bill, would
be minor and absorbable within existing resources.
AB 2389
Page 3
The majority of businesses likely affected by this bill,
emergency responders, cable companies, telephone companies, and
cleaning companies, for example, are not licensed by DCA and are
therefore not under its jurisdiction.
COMMENTS:
1.Purpose. This bill is co-sponsored by the California Labor
Federation and the California Professional Firefighters
(Co-Sponsor). The Co-Sponsors state, California and the nation have
experienced steady increases in contingent work. Workers are
routinely hired through third party intermediaries, such as
temporary agencies and subcontractors. This practice is occurring
in major corporations, as well as throughout the underground
economy.
"At times, workers are not even told who their real employer is. Hotel
workers are sometimes hired by the hotel, but paid by a
subcontractor who is the employer of record. Warehouse employees
are hired by temporary firms, but dispatched to multiple warehouses,
where they are supervised by entities that claim no employer status.
In this subcontracted economy, workers have little access to
information about their actual employer and few tools to ensure
their rights are not violated.
"In addition, the public knows little about these employment practices
and how they may be impacted. When workers enter a home or a hotel
room, the occupant has the right to know if this is a city employee,
or a known company employee, a temporary or contracted out employee,
or an independent contractor. Not only does that have repercussions
in terms of
training, supervision, and background check, but it can also change the
occupant's liability if that worker is injured on the job.
"One factor that adds to the confusion is that subcontracted workers
often wear the uniform of the contracting entity rather than the
actual company that employs them. Many also drive vehicles with
company logos that do not represent their actual employer. In some
cases, these vehicles even have local government logos, so the
public believes workers are public employees when they are actually
private contractors.
"This bill is simply about information and transparency. A company
that is proud of its employment practices should have nothing to
AB 2389
Page 4
hide. This bill has no costs to the state and only minimal costs to
private employers.
2.Background. Existing law prohibits false or misleading advertisement
and the impersonation of a licensed individual within the BPC.
While this bill is intended to protect consumers from individuals
who may unscrupulously hold themselves out as an emergency responder
or other professional to gain entry to a personal residence,
existing criminal law may take precedent in such instances.
3.Related legislation. AB 2373 (Norby) amends the definition of an
independent contractor. This bill would also amend various other
statutory codes to incorporate this definition of an independent
contractor. This measure has been referred to the Assembly Labor
and Employment Committee.
4.Arguments in Support. The California Professional Firefighters and
the California Labor Federation , sponsors of the measure, write in
support stating, "AB 2389 would increase the awareness of California
consumers by requiring specified disclosures relating to services
that are rendered on a contractual basis to members of the public,
which require entering a residence or a place of lodging, as well as
those services provided on a contractual basis that relate to the
public's health and safety.
The California State Pipe Trades Council , the California State
Association of Electrical Workers and the Western States Council of
Sheet Metal Workers write in support stating, "When workers enter a
home or a hotel room, the occupant has the right to know if this is
a city employee, or a known company employee, a temporary or
contracted out employee, or an independent contractor. Not only
does that have repercussions in terms of training, supervision, and
background check, but it can also change the occupant's liability if
that worker is injured on the job.
"One factor that adds to the confusion is that subcontracted workers
often wear the uniform of the contracting entity rather than the
actual company that employs them. Independent contractors may also
drive vehicles with company logos that do not represent their actual
employer. In some cases, these vehicles even have local government
logos, so the public believes workers are public employees when they
are actually private contractors."
5.Arguments in Opposition. The California Chamber of Commerce writes
in opposition stating, "AB 2389 will create significant confusion
for the public. With two more competing company names on the
AB 2389
Page 5
uniform, a member of the public is likely to experience more
confusion as to which company is responsible for the service, rather
than less confusion. Moreover, the term "uniform" and accompanying
requirements in AB 2389 are not readily defined. For example, AB
2389 requires a "uniform" to display the name of the contractor and
contracting entity in "sharp contrast" to the background color and
displayed in a way that the "size, shape, and color is readily
visible."
"Finally, these additional "uniform" requirements would only apply
to business that utilize contractors as part of their business model
and therefore unfairly increase their operating cost. As recently
reported in a study conducted by Dr. Philip J. Romero in September
2011, titled "The Economic Benefits of Preserving Independent
Contracting," California's economic success is heavily dependent
upon small business and independent contractors. The study
references the fact that the use of independent contractors provides
a benefit to both parties: "the contractor earns great autonomy and
higher compensation because they are paid based only on
productivity; and the client gains higher productivity and more
long-term flexibility from reduced fixed costs." Accordingly, we
should not seek to impose any new burdens or penalties that
discourage the use of such businesses or independent contractors,
such as AB 2389.
Emergency Medical Services Administrator's Association of California
(EMSAAC) writes in opposition stating, "Lastly, the public is
adequately protected at the local level by county and local
emergency medical service (EMS) agency oversight of public and
private EMS providers and ambulance services. All EMS providers and
ambulance services are subject to the medical control of the local
EMS agency medical director who has the authority to set standards
for public and private EMS and ambulance personnel and provider
identification. Currently, it is the counties, through their local
EMS agencies, that actively ensure their integrity and transparency
of the provision of services within the EMS system. EMSAAC's
members, who cover all 58 counties in California, report no need for
this legislation and know of no unresolved issues this bill will
solve."
California Ambulance Association writes in opposition stating, "AB
2389 is redundant and conflicts with current statutes, EMS Authority
regulations and county Local EMS Authority oversight. California
ambulance companies are struggling to stay in business as Medi-Cal
reimbursements have been cut to debilitating lows. Uniform and
ambulance labeling regulations only deflect true issues ailing
AB 2389
Page 6
emergency service providers and we cannot afford further unnecessary
costly regulations."
American Medical Response writes in opposition stating, "The
California Professional Firefighters, a co-sponsor of the bill, fail
to provide any evidence that the current appearance of our workforce
uniforms or ambulances poses any threat to patient or public safety.
In fact, current use of county and city patches, badges and
vehicles are often, if not always, required under our current
contracts for the purpose of ensuring the public knows who we are
serving and identifying regional operations during a major disaster
or mutual aid request from public agencies. Our uniforms and
ambulances utilize our company logo and colors that clearly
distinguish us as a private company. It has not or ever will be our
intent to confuse our health care providers with firefighters.
"AB 2389 may also prevent us from establishing mutual aid agreements
with public agencies outside our areas of operation since there is
no exception for mutual aid agreements with public agencies outside
our areas of operation since their is currently no exception for
mutual aid response, which accounts for thousands of emergency calls
a year for private emergency ambulance providers.
SUPPORT AND OPPOSITION:
Support:
California Professional Firefighters (Co-Sponsor)
California Labor Federation (Co-Sponsor)
AFSCME
California Conference Board of the Amalgamated Transit Union
California Nurses Association
California Teamsters Public Affairs Council
Engineers and Scientist of California
International Longshore & Warehouse Union
Professional & Technical Engineers, Local 21
State Building and Construction Trades Council
UNITE HERE
United Food and Commercial Workers Union, Western States Council
Utility Workers Union of America, Local 132
Opposition:
American Medical Response
California Ambulance Association
AB 2389
Page 7
California Association of Bed & Breakfast Inns
California Chamber of Commerce
California Hotel & Lodging Association
California Retailers Association
Emergency Medical Services Administrator's Association of California
Messenger Courier Association of America
National Federation of Independence Business
True Blue
Consultant:Michael Lynch