Assembly Appropriations Committee to Hear Job Killer Bill

The Assembly Appropriations Committee today will consider a California Chamber of Commerce-opposed job killer bill that subjects employers to costly fines and multiple avenues of litigation for technical violations that do not actually result in any harm to the employee, is inconsistent with existing law and will limit job opportunities for unemployed workers.

In addition, AB 5 will limit employers’ ability to effectively manage their workforce to address both consumer and employee requests.

Proposes Unnecessary Burdens on Small Employers

AB 5 mandates small employers with as few as 10 employees to offer all employees who have the skills and experience to perform additional hours of work that become available, prior to hiring a new employee, temporary employee or contractor.  This mandate creates a host of complications and concerns, including:

  1. If an employer has facilities in different parts of the state, AB 5 mandates the employer to offer additional hours of work to employees in facilities where the employee does not work.
  2. AB 5 mandates an employer to contact each employee who has the skills and responsibilities to perform the work required, even though that employee may have explicitly told the employer the employee is not interested in more hours of work, is unavailable at the time of the additional hours, or the additional hours will mean that employee works overtime, thus increasing the employer’s cost.
  3. AB 5 fails to indicate what an employer actually has to do to satisfy the “offer” requirement of additional hours.
  4. After contacting each employee whom the employer reasonably presumes can perform the work, AB 5 requires an employer to use a “transparent and nondiscriminatory process” to pick amongst numerous available employees who will ultimately receive the additional hours of work.  This requirement exposes an employer to threats of litigation, fines, and administrative complaints when one employee is given the additional time over the other.
  5. AB 5 also imposes an unreasonable document retention mandate on employers.  Under AB 5, an employer shall retain documentation regarding offers of additional hours of work, employee work schedules, and employee written statements.  There is no time limit on this document retention and, therefore, an employer essentially has to retain such documents indefinitely.

Imposes Multiple Layers of Enforcement and Lawsuits Against Small Employers

AB 5 additionally exposes small employers to multiple enforcement mechanisms for technical violations that do not even injure the employee. Under AB 5, an employee can either choose to file a complaint with the Division of Labor Standards Enforcement (DLSE) or civil litigation for any violation of the provisions in the bill.

AB 5 provides any employee with the right to sue for these paper violations, even if such document violations do not pertain to that specific employee or actually cause any harm or injury to an employee.

Moreover, due to the inclusion of this proposal under the Labor Code, an employee can also file a Labor Code Private Attorneys General Act (PAGA) lawsuit and receive $100 per employee, per pay period, for these violations, in addition to attorney’s fees.  Piling litigation costs on small employers for violations that do not actually harm or injure an employee is simply unnecessary and unfair, and it limits employers’ ability to expand and create jobs.

Creates a Conflict for Employers Between State and Federal Laws and Punishes Employers for Communicating Truthful Information

AB 5 also includes language regarding retaliation concerning the threat of reporting actual or suspected citizenship or immigration status to a federal, state or local agency that is already addressed in existing law.

Current law balances concern about retaliation against employees with employers’ concerns about complying with federal law. AB 5 does not have that same balance and will place employers in an unnecessary legal predicament between state and federal laws.

AB 5 further seeks to limit an employer’s freedom of speech by deeming any communication to another employer regarding an employee’s exercise of rights under this law as “retaliation.”  This expansive prohibition on the right to free speech is concerning given that it would limit an employer’s ability to communicate about public information such as civil litigation, as well as inform a successor employer of potential liabilities that the successor employer may assume.

It is unnecessary to penalize an employer for communicating truthful information.

Limits Opportunities for Other Workers

AB 5 mandates an employer to offer existing employees additional hours of work, rather than offering those hours to unemployed individuals, favoring one employee over another and potentially prolonging an individual’s unemployment status. Moreover, AB 5 may discourage employers from offering part-time employment opportunities at all due to this mandate and will encourage those employers to simply supplement a full-time workforce with contract employees when needed.

Similar Local Ordinances Are Significantly Narrower than AB 5

AB 5 appears to be modeled after San Jose and San Francisco ordinances requiring larger employers to provide part-time employees with additional hours of work. However, the San Francisco ordinance is applicable only to national employers with multiple locations and San Jose has a specific small employer exemption. Moreover, both ordinances require an employer to offer additional hours of work only to part-time employees, not full-time employees. AB 5 applies to all employers with only 10 employees, and does not limit the requirement to offer additional hours of work to only part-time employees, thereby exposing small employers throughout California to significant scheduling burdens and litigation that they are not capable of implementing or defending.

Action Needed

CalChamber is urging businesses to contact their Assembly representatives and ask them to oppose AB 5.

Staff Contact: Laura Curtis

Laura Curtis
Laura E. Curtis served as a CalChamber policy advocate from December 2017 to March 4, 2020. She specialized in labor and employment, workers’ compensation, and regulatory reform issues. Before joining the CalChamber policy team, she was a labor and employment attorney counseling clients on subjects including wage-and-hour disputes, harassment, discrimination, retaliation, Private Attorneys General Act (PAGA) claims, and administrative agency compliance. Curtis holds a B.A. in communications with a minor in political science from the University of California, San Diego. She earned a J.D. from Santa Clara University School of Law, where she worked on the International Law Journal.