Governor Signs Legislation on Worker Protections for Hairstyles 

Taking action to protect diversity and inclusion, Governor Gavin Newsom signed Senate Bill 188 to make California the first state in the nation to ban racial discrimination based on natural hair. The Creating a Respectful and Open Workplace for Natural hair (CROWN) Act was authored by Senator Holly Mitchell (D-Los Angeles) and will address unfair grooming policies that have a disparate impact on women and persons of color. 

The new law amends the Fair Employment and Housing Act and the Education Code to prohibit employers and schools from enforcing purportedly “race-neutral” grooming policies that disproportionately impact persons of color. Under this bill, employers would still be able to make and enforce certain policies, so long as they are valid and nondiscriminatory, and have no disparate impact; for example, employers can still require employees to secure their hair for safety or hygienic reasons. 

“In California, we celebrate the contributions of everyone – no matter where they are from, who they love, what language they speak, and, thanks to Senator Mitchell, no matter how they wear their hair,” said Governor Newsom. 

“The CROWN Act is about inclusion, pride, and choice,” said Senator Mitchell. “This law protects the right of Black Californians to choose to wear their hair in its natural form, without pressure to conform to Eurocentric norms. I am so excited to see the culture change that will ensue from the law.” 

While California will be the first state in the nation to protect employees from racial discrimination based on hairstyle, similar legislation has been proposed in New York and New Jersey. New York City banned hair discrimination in February this year.

New AB 5 Amendments Emerge

Assembly Bill 5 (Gonzalez), the Dynamex codification bill backed by organized labor, heads to its second policy committee hearing this week sporting new construction industry and business-to-business (B2B) amendments that provide additional flexibility. Since its introduction stakeholders have been working with the sponsors of the bill and committee consultants on ways the bill might be structured to provide more flexibility for industries reliant on contractors for work. 

Amendments that have been circulated for input would add two additional exemptions to the Dynamex ABC Test. The proposed construction industry amendment would specifically be exempt from AB 5 and the Dynamex decision the relationship between a contractor and an individual performing work pursuant to a subcontract in the construction industry. The proposed language would instead provide the employment relationship shall be governed by the test adopted by the California Supreme Court in the case of S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341, if the contractor demonstrates that specified criteria are satisfied, and should alleviate most of the concerns relative to the construction industry as it returns the determination of whether a person hired is an employee or an independent contractor to the Borello standard, which has been used in California for decades. 

The second set of amendments are designed to allow for B2B relationships and contracts between business entities to share work, specifying the Dynamex decision does not apply to the relationship between a business entity and an individual performing work pursuant to contract with another business entity to provide services to the contracting business. Instead, the employment relationship shall be governed by the Borello standard, if the contracting business entity demonstrates that all the following criteria are satisfied.

The common thread in both of these proposals is exempting these situations from the Dynamex decision eliminates the B prong of the ABC Test, which is the most troublesome for most industries and businesses. Under the B Test in Dynamex, the hiring entity must prove the person employed performs work that is outside the usual course of the hiring entity’s business in order to claim that the person hired is an independent contractor as opposed to an employee. 

AB 5 is scheduled to be heard in the Senate Labor, Public Employment and Retirement Committee on Wednesday, July 10. It is expected that whatever the content, once it passes this committee, the bill will continue to be subject to continuing negotiations through the Legislature’s summer recess beginning July 12 through August 12.

Attorney General Joins Other States Criticizing Harmful Changes to Joint Employment Standards

California Attorney General Xavier Becerra joined a multi-state coalition opposing the Trump Administration’s proposed rule which would severely narrow joint employer liability under the Federal Labor Standards Act (FLSA). In a comment letter, the Attorneys General argue that the U.S. Department of Labor’s (DOL) proposed rule would make labor law enforcement more difficult and could result in less accountability for indirect employers who nevertheless control working conditions affecting millions of workers across the country. 

DOL’s proposed rule would significantly narrow the circumstances in which an entity that exercised economic, contractual, or other types of control over workers could be held legally accountable for federal labor law violations. Selectively drawing from the Ninth Circuit court decision in Bonnette v. Cal. Health and Welfare Agency, DOL’s proposed rule would utilize just four factors for determining when an entity has responsibilities as a joint employer. The Attorney General’s office claimed that unlike the Bonnette decision, which offers the factors as guidelines as part of a broader inquiry considering the “circumstance of the whole activity,” the proposed rule would apply these factors rigidly to determine joint employment in all cases. 

In January, Attorney General Becerra joined a similar multistate comment letter opposing a National Labor Relations Board proposal that would alter protections for millions of workers. Last month, the Attorney General led a multistate lawsuit against the Trump Administration’s final rule undermining collective bargaining rights for Medicaid in-home care workers nationwide. This spring, the California Department of Justice, as part of a multistate effort, entered into agreements with major fast food companies operating around the country prohibiting them from including provisions in contracts which make it more difficult for employees to seek better pay and benefits at competing franchises. 

The Attorney General, late last week, joined the Attorneys General of Massachusetts, New York, Pennsylvania, Connecticut, Delaware, District of Columbia, Illinois, Maryland, Minnesota, New Jersey, New Mexico, North Carolina, Oregon, Rhode Island, Vermont, Virginia, Washington, and Wisconsin.

Governor Newsom Signs Legislation

Governor Gavin Newsom announced on Monday, July 1, the signing of the following bills into law:

AB 91 (Burke) Income taxation: Loophole Closure and Small Business and Working Families Tax Relief Act of 2019.

AB 97 (Committee on Budget) Cannabis.

AB 212 (Bonta) Counties: recording fees.

AB 272 (Muratsuchi) Pupils: use of smartphones.

AB 327 (Maienschein) Estates and trusts: at-death transfers.

AB 597 (Levine) Probation and mandatory supervision: flash incarceration.

AB 851 (Cooper) Drug masking products.

AB 1043 (Irwin) Political Reform Act of 1974: campaign funds: cybersecurity.

AB 1336 (Smith) Child health and safety fund.

AB 1361 (Obernolte) Civil actions: satisfaction of money judgments.

AB 1533 (Eggman) Public contracts: local agencies: preferences.

AB 1537 (Cunningham) Juvenile records: inspection: prosecutorial discovery.

SB 75 (Committee on Budget and Fiscal Review) Education finance: education omnibus budget trailer bill.

SB 76 (Committee on Budget and Fiscal Review) Education finance: constitutional minimum funding obligation: inflation and cost-of-living adjustments.

SB 77 (Committee on Budget and Fiscal Review) Higher education trailer bill.

SB 96 (Committee on Budget and Fiscal Review) Emergency Telephone Users Surcharge Act.

SB 106 (Committee on Budget and Fiscal Review) Budget Act of 2019.

SB 308 (Jones) Estates and trusts: instrument.

SB 630 (Stern) Human trafficking

Legislative Update

Last week we celebrated America’s Independence. Although a lighter week on committee actions on legislation, many were active in working out details as we prepare for key deadlines next week. July 10 is the last day for policy committees to hear and report bills to fiscal committees, and July 12 is the last day for policy committees to hear and report all bills. The more substantive and contentious bills are to be heard next week. Here are the bills that moved this week you should be aware of.

Labor-related

AB 170 (Gonzalez) Creates joint liability for a client employer with a labor contractor for workplace harassment, as follows: if the labor contractor is liable for the workplace harassment, then the client employer is automatically liable for that workplace harassment as well. Recent action: Passed Senate Judiciary Committee, 7-2. Referred to the Senate Floor.

AB 171 (Gonzalez) Extends an existing law that prohibits an employer from discharging or in any manner discriminating or retaliating against an employee because of the employee’s status as a victim of domestic violence, sexual assault, or stalking so that the protection also applies to employees who are victims of sexual harassment. Recent action: Passed Senate Judiciary Committee, 7-2. Referred to Senate Labor, Public Employment and Retirement Committee to be heard on July 10.

AB 589 (Gonzalez) Requires an employer to verify, through examination of specified documents, whether or not an individual is authorized to work in the United States; prohibits anyone to knowingly destroy, conceal, remove, confiscate, or possess an actual or purported passport or other immigration document, or any other actual or purported government identification of another person in the course of committing or with intent to commit various crimes involving servitude, trafficking, and coercive labor practices. Recent action: Passed Senate Judiciary Committee, 7-2. Referred to Senate Appropriations Committee.

AB 1296 (Gonzalez) Establishes the Tax Recovery in the Underground Economy Criminal Enforcement Program (TRUE) in the Department of Justice to combat underground economic activities through a multiagency collaboration to protect workers, law-abiding businesses, and consumers by bringing justice to unscrupulous businesses operating in the State, and recover significant lost revenues. Recent action: Passed Senate Public Safety Committee, 7-0. Referred to Senate Governance and Finance Committee to be heard on July 10.

AB 1677 (Weber) Provides that any large customer service call center employer which intends to relocate from California to a foreign country must first notify the Labor Commissioner and forgo access to state grants, guaranteed loans, and tax credits for five years. Recent action: Passed Senate Judiciary Committee, 7-2. Referred to Senate Appropriations Committee.

SB 142 (Wiener) Requires the California Building Standards Commission to develop and propose for adoption building standards for the installation of lactation space for employees, specifies criteria for lactation rooms provided by employers, requires employers to develop and implement a lactation accommodation policy and instructs the Division of Labor Standards Enforcement to create a model lactation accommodation policy. Recent action: Passed Assembly Business and Professions Committee, 14-2. Referred to Assembly Appropriations Committee.

SB 171 (Jackson) Requires a private employer with 100 or more employees and who is required to file an annual Employer Information Report (EEO-1 Report) under federal law, to submit a pay data report to the Department of Fair Employment and Housing that shall make the report available to the Division of Labor Standards Enforcement; requires pay data report be broken down by specified job categories and include the number of employees by race, ethnicity, and sex with annual earnings separated in pay bands used by the United States Bureau of Labor Statistics. Recent action: Passed Assembly Judiciary Committee, 9-3. Referred to Assembly Appropriations Committee.

Business-related

AB 1288 (Cooley) Requires the California Department of Food and Agriculture to ensure the California Cannabis Track-and-Trace system is fully integrated into the California Law Enforcement Telecommunications System by July 1, 2020. Recent action: Passed Senate Agriculture Committee, 5-0. Referred to Senate Appropriations Committee.

AB 1417 (Rubio) Requires any advertising and marketing by a cannabis licensee to include a license number; requires an operator of any online service that presents advertising or marketing for cannabis goods to present disclosure statements about the dangers of unlicensed cannabis goods; prohibits an operator of any online service that is used primarily to promote or share information about cannabis from displaying a cannabis advertisement without an appropriate license number; establishes a mechanism to assess and collect civil penalties for violations; and prohibits a technology platform from substituting a license number for an internal identification system. Recent action: Passed Senate Business, Professions and Economic Development Committee, 7-0. Referred to Senate Judiciary Committee to be heard on July 9.

SB 475 (Skinner) Authorizes a cannabis business licensee to designate cannabis or a cannabis product as a trade sample, which may then be given for no consideration to the licensee’s employee, or another licensee for purposes of conducting research and development, education, or targeted advertising to licensees about new or existing cannabis or cannabis products. Recent action: Passed Assembly Business and Professions Committee, 18-0. Referred to Assembly Appropriations Committee.

SB 581 (Caballero) Requires each cannabis licensing authority to post on its internet website or on the California Cannabis Portal information about each of its applicants or licensees, including information regarding prior criminal convictions, disciplinary actions, and labor law violations. Recent action: Passed Assembly Business and Professions Committee, 15-0. Referred to Assembly Appropriations Committee.

Environment-related

SB 200 (Monning) Creates the Safe and Affordable Drinking Water Fund to help water systems provide an adequate and affordable supply of safe drinking water in both the near and long-term. Recent action: Passed Assembly Environmental Safety and Toxic Materials Committee, 18-1. Referred to Assembly Floor.

Governance-related

AB 1486 (Ting) Expands Surplus Land Act requirements for local agencies, requires local governments to include specified information relating to surplus lands in their housing elements and annual progress reports, and requires the state Department of Housing and Community Development to establish a database of surplus lands. Recent action: Passed Senate Housing Committee, 8-3. Referred to Senate Governmental Organization Committee.

Privacy-related

AB 1130 (Levine) Expands this definition of personal information in the data breach notification statutes and Section 1798.81.5 to include an individual’s first name or first initial and last name in combination with specified data elements when either the name or the data elements are not encrypted (or redacted). Recent action: Passed Senate Judiciary Committee, 7-2. Referred to Senate Appropriations Committee.

AB 1132 (Gabriel) Subjects a caller who intentionally uses caller identification information with false government information for harmful purposes to a civil penalty of up to $10,000. Recent action: Passed Senate Judiciary Committee, 9-0. Referred to Senate Appropriations Committee.

AB 1202 (Chau) Requires data brokers, as defined, to register with, and pay a registration fee to, the Attorney General on an annual basis. Recent action: Passed Senate Judiciary Committee, 7-1. Referred to the Senate Floor.

AB 1281 (Chau) Requires a business in California that uses facial recognition technology to disclose the usage of facial recognition technology with a clear and conspicuous physical sign at the entrance of every location that uses the technology. Recent action: Passed Senate Judiciary Committee, 7-2. Referred to Senate Appropriations Committee.

Insurance-related

AB 1813 (Committee on Insurance) Makes various updates to the laws governing the business of insurance in the State and exempts information, documents, and copies obtained by, reported to, or provided to the California Insurance Commissioner during participation in a supervisory college from the disclosure requirements of the California Public Records Act and from subpoena or discovery in a private civil action. Recent action: Passed Senate Judiciary Committee, 9-0. Referred to Senate Appropriations Committee.

Health-related