Killer Bills!

SB 104 (Steinberg) Card Check
This bill attempts to limit employees’ ability to independently and privately vote for unionization in the workplace, by essentially eliminating a secret ballot election and replacing it with the submission of representation cards signed by over 50% of the employees. Although this bill is focused on the agricultural industry, its precedent-setting provisions will chill business development in California.

Unlike the current process, which guarantees that employees ultimately express their true sentiments about unionization in the tightly controlled setting of a supervised secret ballot election, this new procedure provides no safeguards to ensure the representation cards really

indicate the employees’ free, uncoerced and current choice.  Additionally, nothing in SB 104 prohibits a union from completing a card for an employee and then pressuring the employee to sign it. In fact, SB 104 specifically provides that it is lawful for the union to complete the card for the employee and just have the employee sign.

Finally, SB 104 creates a huge disparity in the remedies provided for unfair labor practices committed by an employer versus unfair labor practices committed by a union. An employer’s violation results in a “priority” case, taking precedence over any other case filed in the Agricultural Labor Relations Board office. Thereafter, the ALRB can issue a statutory civil penalty against the employer in an amount of up to $20,000 per future violation. No such penalties are imposed on a Union found in violation of labor laws. This proposed treatment of an unfair labor charge against an employer is significant as it is not only one-sided, but it violates the nature of remedies which are designed to make the employee whole, not to penalize the employer and/or create a windfall for the employee.

AB 350 (Solorio) – Costly Employee Retention Mandate
This bill unfairly forces employers to hire a predecessor’s employees, undermines the at-will employment presumption in California, and ensures continued union representation, despite any change in employers.  The bill further incentivizes job loss either through automation in other areas (to mitigate the costly new mandate) and the displacement of a contractor’s existing workforce because it is forced to take on the new employees. AB 350 basically eliminates any distinction from one contractor to the next regarding the type of workforce that contractor can deliver, thereby minimizing competition amongst contractors. Additionally, by limiting a subsequent employer’s ability to properly conduct background checks of potential employees, it is setting up these subsequent employers for potential negligent hiring litigation.

This bill will not add or save any jobs in California, but will act as another cumbersome regulatory layer on employers.

AB 448(Ammiano) – Split Roll Property Tax
This bill would trigger more frequent reassessments of property owned by legal entities. The bill redefines change in ownership, so that reassessment of property occurs at fair market value when, cumulatively, 100% of ownership interests transfer in a rolling three year period. The bill defines a ‘single transaction’ as not just a single transaction – but would include cumulative transactions in a three year period. As an example: just one share transferred as many times as the number of shares, will trigger a change of ownership under this bill. And the provisions don’t just apply to stock churning. AB 448′s three year rolling average applies to interests in partnerships, LLCs, and other legal entities.

This bill seriously undermines the ability of a business based in California to have certainty in its business expenses and would chill future business investment.  With this legislation, the state is providing a destructive economic weapon to be used against business.

SB 237(Wolk) Climate Change Tax Increase
This bill steps beyond the boundaries of the burdensome AB 32 Climate Change Law by taking an unspecified percentage of funds from “market-based compliance mechanisms” (i.e.; Cap-and-Trade) for purposes that are not in the AB 32 scoping plan and that do not meet the criteria of AB 32 by funding grants to the agriculture sector for research and demonstration projects, technical assistance, financial incentives, and more purposes related to greenhouse gas reductions.

At this time the AB 32 scoping plan is in the midst of legal challenges, the Cap-and-Trade regulation is incomplete and there is a legal question about whether an auction is a tax. All these factors add to the uncertainty about the future of the program yet SB 237 seeks to create criteria that will not benefit the program or reduce the incredible costs of compliance.

SBX1 23 (Steinberg) Multiple Tax Increases
This bill would dramatically alter California’s tax structure by extending to 58 counties, over 70 community college districts, and over 1,000 school districts, subject to voter approval, the authority to impose and/or increase a local tax on all products and services.  Rather than helping to solve California’s budget problems, this bill would create long-term economic and compliance challenges as businesses are forced to comply with multiple different tax jurisdictions. It would effectively eliminate a business’ ability to plan out long-term costs, since businesses would be forced to reckon with 58 tax jurisdictions, each of which may impose taxes that have different applications, regulations, and rates.

Currently, California has the highest sales and use tax in the country, with a state rate of 8.25 percent and the ability of local government to add up to 2 percent.  Excessive tax rates on sales and use of tangible property will put the state at a competitive disadvantage.

AB 400  (Ma) Paid Sick Leave Mandate
This bill mandates that all employers, except those with collective bargaining agreements, provide any employee who has worked in California for seven days with paid sick leave, the accrual rate at one hour for every thirty hours worked. After the 90th day of employment, employees would be allowed to utilize their paid sick leave to care for themselves or a family member. Any unused sick leave accrued in the preceding year could be carried over to the next year, which is a significant change in existing law.

The costs for these mandates alone will overwhelm businesses in California that are already struggling to survive in this economy. As recently reported in the February 2011 Institute for Women’s Policy Research on the effect of the paid sick leave program in San Francisco, 15.2% of the employees surveyed were laid off or had their hours reduced after the program was implemented; 14.1% of the employees surveyed received fewer bonuses or had their benefits reduced; and 21.7% of the employees had increased work demands. Out of the industries surveyed, businesses with 24 employees or less were the most negatively impacted by the paid sick leave program.

In addition to the increased business expenses AB 400 will also dramatically increase an employer’s risk for legal fees and costs. Not only does AB 400 create a private right of action for employees to sue for any alleged violation, but it also creates a rebuttable presumption of retaliation. California was recently rated one of the top ten litigious states in the nation. AB 400 will certainly emphasize that point with the various vehicles for litigation it creates.

AB 638 (Skinner) Increased Transportation Costs
AB 638 would require a draconian reduction in petroleum fuel consumption and a costly, unrealistic increase in alternative fuel consumption in the near future.  In order to achieve the reductions required, measures such as higher gasoline taxes, pay-at-the-pump auto insurance, a tax on vehicle miles traveled and a punitive tax on the purchase of certain vehicles would need to be imposed.  A particularly troubling provision of AB 638 would give the State Energy Resources Conservation and Development Commission and CARB open-ended authority to adopt such measures, in clear violation of the constitutional requirement for a two-thirds vote to increase taxes.

Concurrent with these higher costs, businesses and consumers would be burdened with the cost of purchasing alternative fuel vehicles, which are more expensive than conventional vehicles and are unlikely to be sufficiently available or reliable to meet their needs. This will be compounded as in-state supplies of conventional fuels are reduced and insufficient supplies of affordable, reliable alternatives are available. The difference will have to be made up by increased imports, the transport of which will result in higher costs and in higher emissions from the ships and trucks which deliver them from outside our borders.

California’s environmental goals are lofty and laudable, but they should not come at the expense of an affordable and functional quality of life.