$16 Billion Budget Deficit Takes ‘Top’ Ink This Week

Friday, May 18, 2012

Also In This Update

• Campaign Words Can Haunt
  • Cal/OSHA Kicks Off 2012 Heat Illness Campaign

 Governor Jerry Brown released the May Revision to his 2012-13 Proposed Budget  this week, which updates revenue projections and estimated expenditures for both the current and upcoming budget years. Most of the solutions proposed in the May Revision are carried forward from the Governor’s proposed January budget.

With revenues falling below expectations, the Governor needed to address a revised $15.7 billion shortfall by outlining $4.1 billion in additional cuts from January’s proposal. His proposal calls for additional spending cuts to health and welfare programs, as well as a 5 percent pay cut for state workers. While K-14 schools will receive a slight increase in Prop 98 funding this year, there would be a $38 million decrease for the University of California systems in the Governor’s proposal, probably prompting an increase in student fees.

Additional proposed cuts to education would occur if voters reject the Governor’s initiative appearing on the November ballot. The Legislature now has its work cut out in order to present the Governor with a balanced budget by the June 15 deadline.  This will be interesting to see how this plays out!  Moving on to campaign promises………

Jerry Brown‘s Campaign Words Haunt Him

Candidate Jerry Brown told voters he was different — that only he, a septuagenarian government veteran with no aspirations to higher office, could fix the cycle of swelling budget deficits that has plagued California for more than a decade.

But the release of Brown’s updated budget plan Monday shows that he is being trapped by the same partisanship and dysfunction that hobbled his predecessors when they tried to repair the state’s finances.

“No governor, under the system we have in California, really has the ability to deal with the mess we’ve created,” said Mark Paul, a former deputy state treasurer and the coauthor of a book about the state’s financial quandary. “This is the third governor in a row who has run up against the same problem.”

Brown is stuck between Republicans who refuse tax hikes, Democrats who resist cuts and a tangle of special interests and voter-mandated budget requirements that make it politically easier to push the problem down the road. That’s what Brown has started to do.

Last year, after being unable to persuade Republicans to help raise taxes, Brown signed a budget that made some deep cuts but dodged others by assuming a $4-billion revenue windfall that never arrived. In January, he remained optimistic that the rebounding economy would fill state coffers. Now he has acknowledged that the money hasn’t come in and the deficit has nearly doubled to almost $16 billion.

To close that gap, Brown pins most of his hopes on voters approving $8.5 billion in tax hikes in November. He would make up the difference with spending reductions, a raid on unused dedicated funds and the type of one-time savings he once derided as typical Sacramento trickery.

Brown defended recent decisions to defer some permanent cuts in hope of an economic turnaround.

“When I have to cut and people lose their jobs, a mother loses her child care, I’m reluctant to do that if it doesn’t have to happen,” Brown said at a news conference Monday.

Still, in a familiar refrain, he also lambasted “more than a decade” of bad budget decisions and warned that there will be “a day of reckoning.”

It’s natural to want to avoid permanent pain, said Thad Kousser, a political scientist at UC San Diego. It’s easier, he said, “to convince everyone to take their medicine when they only have to do it for a little while.”

“No one thinks this is a permanent economic downturn,” he continued, “so no one … wants to make permanent choices. That includes the governor, the interest groups and the voters.”

Many experts pin the state’s perennial problems on ballot measures that constrain taxes — as Proposition 13 does — or require that the state devote specific amounts to certain services. Changing such requirements is considered politically impossible because the state’s voters cherish their sometimes contradictory mandates.

That limits government’s ability to adjust to economic downturns, like the ones that socked California after the dot-com and housing busts. Spending mandates don’t necessarily decline when revenue does, and there are few ways to raise money to close the gaps.

Cuts are no picnic either. Reducing parts of the budget that are not protected — the court system, employee pay, healthcare for the poor — is always difficult and takes a toll on politicians’ popularity, said Mike Genest, who was Schwarzenegger’s budget director.

“Every one of those things has very powerful special-interest groups organized against that stuff,” he said. “You’re left with gimmicks and things that don’t work, or things that will work but will only work once.”

Genest added that Brown’s accounting maneuvers and one-time cuts pale in comparison to the Schwarzenegger administration’s record. “We did a lot more of that kind of stuff than he’s doing so far,” he said.

Brown has packaged himself as a different sort of governor. The 74-year-old, who flies on Southwest Airlines and drives a Pontiac, has positioned himself as a truth-teller who will take the tough steps needed to tame the budget.

Among Brown’s first acts after taking office in January 2011 was ordering state workers to hand over tens of thousands of taxpayer-funded cellphones and halting the purchase of new state cars — cutbacks that barely dented the deficit but were symbolically potent.

The governor has long tied his frugality to his pitch that voters can trust him with more of their tax money. He reiterated that Monday when he announced his updated spending plan.

“I’m linking these serious budget reductions, a real austerity budget … with a plea to the voters: Please increase taxes temporarily,” Brown said.

In case the governor fails in his bid to hike sales taxes and income levies on top earners, his budget proposal contains a painful contingency plan: more than $6 billion in additional cuts, mostly from public education.

Brown is relying on more than taxes and cuts to balance the budget. He’s also reaching for quick, one-time revenue hits, such as leftover cash from defunct local redevelopment agencies; a national court settlement on mortgage wrongdoing; and a projected windfall from Facebook’s initial public offering.

Because those cash infusions won’t return in subsequent years, they are considered less reliable than permanent cuts. Gabriel Petek, an analyst at the ratings agency Standard & Poor’s, noted that 75% of the reductions in Brown’s budget proposal last year were permanent. This year that proportion is 50%.

Even if the governor’s proposed tax measure passes, analysts say, it won’t be enough to stave off another round of cuts in 2013. And the taxes would start to expire after four years.

“At some point in time, you have to acknowledge there’s a permanent gap here,” said Christopher Thornberg, a principal at the Los Angeles firm Beacon Economics. “It’s temporary this, it’s temporary that…. We have to stop running our state like a used car.”

Cal/OSHA Kicks Off 2012 Heat Illness Campaign

Cal/OSHA launched its 2012 heat illness campaign aimed at preventing worker deaths and illnesses due to heat exposure at outdoor workplaces.

Cal/OSHA already started inspections in California to ensure compliance with the heat illness prevention standard, and will conduct coordinated inspections across the state throughout the summer.

Cal/OSHA will also team with employer and worker organizations to educate workers about heat illness prevention. Cal/OSHA will continue its ongoing outreach efforts and engage in an extensive multilingual media campaign to remind workers and employers of their obligations.

Cal/OSHA will also provide statewide heat illness prevention training. Training dates are available from May through September. For more information about Cal/OSHA training, visit Cal/OSHA’s Heat Illness web page which is located at: http://www.dir.ca.gov/DOSH/HeatIllnessInfo.html

In 2005, California became the first state in the nation to adopt heat illness regulations on an emergency basis. The regulations became permanent in 2006.

In 2010, the regulations were strengthened to include a high heat provision applicable to five industries:  agriculture, construction, landscaping, oil and gas extraction, and transportation/delivery of agricultural products.

The high heat provision applies whenever temperatures reach 95 degrees and includes observing employees, closely supervising new employees, and frequently reminding workers to drink water.

Sponsored Bill – AB 2021 Defining Disputed Amount – Sails Through 2nd Policy Committee

Wednesday, May 9, 2012

Also In This Update

• SB 1374 (Harman) – Good Faith Reliance on State Agencies’ Written Advice, Fails In Committee
• Phil Rides In Google’s Self-Driving Car

I am happy to report that one of our sponsored bills, AB 2021 (Wagner) which defines the term “disputed amount” in the prompt pay statutes, passed out of the Assembly Judiciary Committee yesterday on a 9-0 vote.  This was quite a relief, because the bill had been double referred meaning that it had to go through the Assembly Business and Professions last week where it also passed out on a 9-0 vote.  Often times a double referral can translate into a ‘death sentence’ for Republican-authored bills, but in anticipation of these potential problems, I had spent quite a considerable amount of time behind the scenes working the bill with the members of each of the respective committees.  It looks like my efforts paid off (at least thus far!).

As a brief reminder of what the bill does, the existing prompt pay statutes allow an owner to withhold 150% of a disputed amount from a contractor.  Unfortunately, the statute does not define “disputed amount” which has resulted in many owners ‘gaming’ the system.  This measure will define “disputed amount” with the hope and intent that owners will no longer be able to  ’game’ the system.

SB 1374 (Harman) – Good Faith Reliance on State Agencies’ Written Advice, Fails In Committee

Back in March, I reported that we were co-sponsoring with the California Chamber of Commerce and virtually every other business group, a common-sense bill which would provide that anyone, including employers, who relied in good faith upon the written advice of a state agency regarding how to comply with a state-mandated law or interpretation, would have the security to know that they could actually rely upon that information.  It would have also provided such citizens with legal protection if their actions were challenged in litigation and they could prove that their actions were based upon guidance received from a state agency.

Gee, a common sense bill like this, how could it not pass through the Legislature, right?  Well, there are folks who like the law just fine the way it is!  Take the Consumer Attorneys of California who argued in opposition that this bill “would insulate employers and other private individuals who rely on agency interpretations from liability, even if those interpretations are in direct conflict with relevant law.”

‘Ganging up’ with the attorneys in opposition was the California Labor Federation who argued:

“SB 1374 would eliminate all liability for employers if they asked for and relied upon a state agency’s interpretation of a regulation or statute.  This approach would make it harder to

protect workers’ rights and erode the incentive to comply with the law.  To begin with, if a worker is not paid wages owed, he or she suffers harm regardless of the employer’s rationale.

By eliminating liability, this bill would punish a worker for something he or she had no control over.  There is no good policy reason for letting an employer off the hook for not paying a worker the wages he or she has earned.”

So, when you have the aforementioned ‘deep pockets’ opposing a truly good bill, EVEN when their arguments are absolute BS, what do you get?  A 2-3 vote with the Republicans voting yes and the Democrats voting no.  It is unfortunate that the opposition was able to make untrue and misleading statements about the bill and get away with it!   As Republican Senator Sam Blakeslee (who is one of the members of the committee) said to the opposition during their testimony, “we must be reading two different bills…”

Phil Rides In Google’s Self-Driving Car

So, a couple of weeks ago I reported that I had testified in support of a bill, SB 1298 (Padilla), that would direct the California Highway Patrol to work with Google and other interested parties on developing standards to allow for the use of self-driving vehicles in California.  As I noted, Google has been using these self-driving cars they’ve developed (which are all Prius’) for several years without any problems.  They’ve literally driven millions of miles with a driver as backup (just in case) making sure that there are no problems with them.  The results have been so positive that Google wants to take the final step of working with the CHP to develop standards that will ensure the safe and widespread use (can you say, ubiquitous?) of these vehicles in the future.

I testified in support of the bill in recognition that this is truly the wave of the future.  Thankfully for me, Google was so happy and “impressed” with my testimony that they promised me a ride in one of their vehicles the next time they came to the Capitol, which just happened to be yesterday.

So, the driver sits in the driver’s seat and serves as the safety backup.  The passenger seat had a Google engineer who had a laptop that pictured exactly what the computer was seeing, which he held up to show me during the entire ride.  Pulling away from the Capitol, the laptop showed the street ahead in animation.  It showed a speed limit sign with the posting of 35 miles per hour, so the vehicle traveled at that speed.  It showed the green signal ahead and all pedestrians.  It even slowed down when a woman was standing on the corner contemplating  whether she might step out in front of the vehicle on a red light!

In all, we drove several miles in mid-day traffic around downtown Sacramento.  If you didn’t know the driver wasn’t in actual control, you’d never guess that the car was driving itself.  The engineer stated that the computer is far safer than a normal driver since it sees everything whether in direct sunlight or in darkness and errs on the side of caution.  He went on to say that the cars will be commercially viable in about a year.  Indeed, I read in this morning’s paper that the State of Nevada has approved the use of three of these vehicles for further testing.

Regardless of whether you trust computers or not, the fact remains that these vehicles ARE the future.  For contractors with trucks for their employees, the future will be lower insurance rates because the vehicles will drive themselves rather than relying on an employee to drive.  So too, I see the end of commercial semi-trucks requiring drivers!

For “us” baby boomers, the future will be very bright in that when we are someday told that we cannot drive due to old age, the vehicles will drive for us!  Also as the engineer pictured, imagine you are running late for a meeting and cannot find a parking place.  In the not too distant future, the vehicle will drop you off in front of your destination and then find a parking place on its own and wait for your beckon call!  Furthermore, when we do reach the age when vehicles will drive themselves completely, we will be able to add 1/3 – 1/2 additional capacity on our roads because the vehicles will be able to queue up much closer.

Skeptical or not, the future is right around the corner and this is one technology  that will affect you significantly!  For me who has witnessed it first-hand, I cannot wait!

Problems With Enactment of Recent Law Pertaining To New Hires FINALLY Corrected

Wage Theft Protection Notice For Employees – Spanish

Wage Theft Protection Act of 2011 – Notice to Employees – Revised FAQ 5-3Wage Theft Protection Notice For Employees – EnglishThursday, May 3, 2012

Also In This Update

• DIR Launches Small Business Portal to Help California Businesses

Labor Commissioner Releases Updated Wage Notice and FAQ

As​ you may recall from an earlier update this past January, AB 469 (Chapter 655, Statutes of 2011)  known as the Wage Theft Protection Act of 2011 took effect on January 1, 2012 and immediately caused employers problems.  This new law added Labor Code section 2810.5 which requires that all employers must provide each new hire with a “Notice to Employee” and accompanying FAQs.  Unfortunately, both the Notice and FAQs were flawed and created problems for employers trying to comply.

I’m happy to report that through the efforts of my esteemed colleague, Bob Roginson, who is a partner in the law firm of Atkinson, Andelson, Loya, Ruud & Romo, the aforementioned problems have been addressed.

Following is the press release announcing the ‘fixes.’

(April 27, 2012) The California Division of Labor Standards Enforcement (DLSE) has released an updated version of the Labor Code section 2810.5 wage-and employment notice and a second update to its frequently asked questions (FAQs) on the notice.

The Wage Theft Protection Act of 2011 requires employers to provide nonexempt employees with a notice — Notice to Employee (Labor Code section 2810.5)—at the time of hire that lists specified wage information.

California employers struggled with putting the provisions of the initial template provided by the DLSE into effect. The DLSE revised its template on April 12.

The Labor Commissioner also has issued its second update to the FAQs about the wage-and-employment notice to help answer questions from employers. The second update to the FAQs, released on April 12, revises several of the previous FAQs and also contains five additional questions and answers.

For new hires made after April 12, 2012, the newer posted version of the template must be used. The DLSE will archive any earlier template on its website for informational purposes.

Employers are required to provide the notice at the time of hire in the language the employer normally uses to communicate employment-related information.

I am attaching the revised Wage and Employer Notices and the FAQs – which also can be found online at:

English Version of the Notice for New Hires - http://www.dir.ca.gov/dlse/LC_2810.5_Notice.pdf

Spanish Version of the Notice for New Hires – http://www.dir.ca.gov/dlse/LC_2810.5_NoticeSpanish.pdf

FAQs for Employers – http://www.dir.ca.gov/dlse/FAQs-NoticeToEmployee.html

DIR Launches Small Business Portal to Help California Businesses

Oakland — The California Department of Industrial Relations (DIR) announces the launch of the Small Business Portal – which can be found online at: http://www.dir.ca.gov/SmallBusiness/index.htm  to better help California small business owners ensure that they are in compliance and  up-to-date on current regulations and laws designed to protect employees.

“As we know, small businesses are vital to our economy and it is important to ensure that they have all the tools necessary to be successful in California” said DIR Director Christine Baker.  “We continue to move towards increased access for California small business owners to information they need to run their businesses efficiently.  This portal provides greater service to the public and increases access to the services DIR provides.”

The Small Business Portal contains information that is important to business owners that is brought together in one location. This portal provides essential information pertaining to starting a business—including registering a business name, obtaining an Employer Identification Number, and registering for state and local taxes. Also included is important information on hiring and administering employees, as well as ensuring that a workplace is in proper compliance with safety regulations.

In addition to information about the proper payment of wages, the web portal offers an important path to access Cal/OSHA’s free consultation services that assist small employers to ensure that they have a safe and healthful worksite. Additional information is available to help guide employers on what steps to take if an employee is injured on the job.

“Providing such a valuable resource to small business owners is vital as they are typically unable to have revenue available to hire consultants to address important business issues for them,” added Director Baker. “We need to ensure new business owners and established small businesses have the resources they need to thrive and be competitive in the current economy.”

Information found in the Small Business Portal was gathered from the Division of Labor Standards Enforcement (also known as the Labor Commissioner’s Office) website, the Division of Occupational Safety and Health (commonly known as Cal/OSHA) website, and the Governor’s Office of Business and Economic Development, or GO-Biz.

Employers can contact Cal/OSHA’s Consultation Unit at 1-800-963-9424 or email infocons@dir.ca.gov.   Employees with work-related questions or complaints can call the California Workers’ Information Hotline at 1-866-924-9757.

###

‘Show Time’ Hits Like a Ton Of Bricks!

Wednesday, April 25, 2012

Well, it was truly ‘show time’ this week at the Capitol for our bills.  As usual, everything hit at once which meant that 3 of our bills were ‘up’ at the same time, two in one committee and another 3 floors below.  Since there’s no way of knowing when each is going to be taken up by the respective committees, the stress levels are very high trying to coordinate being there for everything!

Indeed, to handle the juggling, I had the staff member from one of our authors text me with updates while I sat with witnesses who came up from LA to support another of our bills.  Unfortunately, cell phone reception comes and goes in different parts of the Capitol and you never know when things are not going to work correctly.

As fate would have it, I suddenly received a text from the staffer in the other hearing room telling me that Senator Leno was taking up our bill, immediately.  I sprinted out of the hearing room, dodging other lobbyists and visitors and made a ‘Bee line’ down 5 flights of stairs (the old and new sections of the Capitol don’t line up so 3 floor below in the ‘new’ Capitol is actually 5 flights of stairs) and then into the ‘new’ hearing room.  Another senator was on the dais presenting his testimony and neither Senator Leno nor his staff were anywhere around.

Walking around in a panic trying to find the senator and his staff, a fellow lobbyist came up to me and said, “Wow!, the senator presents your bill and you were not even there!”  He then laughed and said that even with me not there, the bill ‘sailed’ out of committee on a 13-0 vote!!  It turned out that the text sent to me was delayed and our bill truly went out without a spoken word from me.  Talk about the immaculate bill!

While it’s easy to chuckle (even Senator Leno and his staff laughed after the fact knowing that I was in another hearing many floors away and was clueless), I hope and pray that it never, ever happens again.  Phew!

With that lead in, here’s what happened to our bills, along with a brief description of each:

AB 1671 (Huffman) – In 2008, we sponsored SB 593 (Margett) which was signed into law.  This bill mandated zero percent retentions on all Cal Trans’ construction projects.  The law currently has a 2014 sunset date; however, because it has worked so well, this measure will extend the sunset date until January 1, 2020.  This measure passed today out of the Assembly Appropriations Committee on Consent and now heads to the Assembly Floor

AB 1920 (Berryhill) – Existing Section 7031 of the Business and Professions Code allows a property owner or prime contractor to bring a civil action to disgorge (require payback) 100 percent of any compensation previously paid to a person who was unlicensed or who is a previously licensed contractor who has allowed his or her license to lapse for a brief period during the performance of a contract.  This measure will eliminate the ability of either an owner or contractor from disgorging any compensation from a previously licensed contractor who re-instates his license to good standing with the Contractors’ License Board.

I had two witnesses support the need for this bill –  one is an actual board member of the Contractors’ License Board who was disgorged for $100,000 over this loophole and another who is an expert witness for the CSLB who was disgorged for $1 million.  Furthermore, I had every lobbyist for each of the myriad contractor associations get up and support the bill as well.  Unfortunately, the labor lobbyist for the Pipe Trades and Sheet Metal Workers opposed the bill stating that it was “wrong to allow scofflaws to falsely enrich themselves.”  All it took was that opposition to have the bill die on a 4-4 vote!  It’s absolutely amazing how the clout of labor can kill something so important to contractors.  I’m curious where they think the contractors and in-turn, jobs, will come from if there’s no one left?

AB 2021 (Wagner) – The existing prompt pay statutes allow an owner to withhold 150% of a disputed amount from a contractor.  Unfortunately, the statute does not define “disputed amount” which has resulted in many owners “gaming” the system.  This measure will define “disputed amount.”  This measure passed out of the same committee on a 10-0 vote!

SB 1516 (Leno) – Existing law encourages contractors bidding on public works contracts to submit a bid which utilizes an equal to or greater technique or product in lieu of that which has been specified in the original request for proposal by the public agency.  Unfortunately, current law allows public agencies to require the equal submittals prior to the actual bid day. This is a major disincentive to any contractor, because there is nothing preventing the agency from sharing the information with other competitors. Consequently, innovations and/or major cost savings that could be derived from these innovations are often withheld due to this requirement.  This bill would change the submittal of equals to bid day or within 35 days after bid day; thus, eliminating the concern that other competitors could utilize the information.

This is the immaculate bill that ‘sailed’ out of the Senate Governmental Organization Committee on a 13-0 vote.

Well, onward and upward it is!  And, I’ll be back with another version of the disgorgement bill, soon!!!  To use my motto in dealing with the state bureaucracy, “there’s more than one way to skin a bureaucrat!”

Stay tuned.

SB 1374 (Harmon)- GOOD FAITH RELIANCE ON STATE AGENCIES’ ADVICE

• Happy Tax Freedom Day!

SB 1374 (Harmon)

Have you ever received information from a state agency that turned out to be wrong?  If that is not bad enough, have you received wrong information and then had the agency go against you EVEN though it was their incorrect information that steered you astray to begin with?  If so, PLEASE send me by email (phil@pvgov.com) the facts about your case so that I can use it in my testimony supporting this measure.  Here’s more specifics about the bill:

SB 1374 (Harmon) would provide an affirmative defense in any administrative or legal action to any person or employer who can prove he or she relied in good faith on the opinions, interpretations, guidance, advice, or orders of any state agency with regard to the challenged act or omission.

California has numerous state agencies that are given the authority to interpret and enforce various laws. Residents of California are expected and encouraged to seek out information from these state agencies regarding how to comply with the law.  However, if a state agency’s interpretation or enforcement of a particular law is challenged in court and the court ultimately determines the state agency was wrong, the resident who relied upon the state agency’s advice is generally held liable, regardless of the fact that the resident was simply doing what the state instructed him or her to do.   There are several examples of this type of legal predicament in which residents can be caught:

1. Employers who rely upon the advice or written opinion of the various agencies within the Department of Industrial Relations regarding how to comply with laws concerning wage, hour, and working conditions are generally provided no benefit for relying upon what the state told them to do if litigation is filed, and the court disagrees with the state agency’s interpretation.

1. Insurance companies that comply with the process to obtain an approved rate from the Insurance Commissioner (IC) can ultimately be held liable for charging the rate the IC determined them to charge if the rate is challenged and the court determines the rate is unfair, excessive, or discriminatory.  The insurance company receives no benefit from the fact that it was required to charge the rate determined by the Insurance Commissioner.

Residents of California should be able to rely upon the written advice and guidance they receive from state agencies that are created for the very purpose of interpreting and enforcing the laws of this state.  Residents should not be held liable and punished for believing and trusting what the state instructs them to do.

At the federal level, under the Portal-to-Portal Act, Title 29, Chapter 9, U.S.C sections 251-262, employers are provided with an affirmative defense if “the act or omission complained of was in good faith in conformity with and in reliance on any written administrative regulation, order, ruling, approval, or interpretation, of the agency of the United States.”  For purposes of the Fair Labor Standards Act, the agency at issue is the Administrator of the Wage and Hour Division of the Department of Labor.

California’s Revenue and Taxation Code, Section 21012 provides that, if a taxpayer can prove their failure to file a timely tax return was based upon their good faith reliance on the written advice or ruling of the chief counsel, the taxpayer may be relieved of the taxes assessed, interest, and penalties.

We are co-sponsoring this bill with the California Chamber of Commerce and myriad other business-related associations.

Again, please email me at phil@pvgov.com with any and all problems of this nature that you have experienced.

Happy Tax Freedom Day!

On April 20, working Californians can start earning money for themselves instead of giving it to government.  Known as Tax Freedom Day, taxpayers will have worked a whopping 110 days this year earning just enough to pay off their federal, state and local taxes.

The non-partisan Tax Foundation calculates Tax Freedom Day each year for the nation and each state.  According to the Foundation, Tax Freedom Day is a “calendar-based illustration of government’s cost, and it gives Americans an easy way to gauge the overall tax take.”

It assumes that the nation starts working on January 1, earning the same amount each day and spending nothing other than paying taxes.  Tax Freedom Day “arrives” when citizens have earned enough to pay all of their taxes.  Californians pay more taxes than the average American, given that our state Tax Freedom Day is three days later than the national day of April 17.

Supreme Court Issues Decision on Meal/Rest Periods

The California Supreme Court yesterday released its long-awaited decision in a case involving employers’ obligations relating to meal and rest breaks.

The most critical part of the unanimous ruling in Brinker Restaurant Corp. v. Superior Court is that employers do not have to ensure that employees take their meal breaks, but must merely make them available. The court also provided flexibility to employers with regard to the timing of meal and rest breaks.

Erika Frank, California Chamber of Commerce general counsel and vice president of legal affairs, commented on the ruling: “Employers have finally received some much-needed clarity in a common-sense decision from the California Supreme Court that will provide certainty and flexibility to employers and employees, allowing them to effectively manage their workload and serve their customers and clients.

“One of the most significant benefits of this ruling is that it will reduce employers’ exposure to costly and frivolous litigation.”

Court Decision

According to the court: “To summarize: An employer’s duty with respect to meal breaks under both section 512, subdivision (a) and Wage Order No. 5 is an obligation to provide a meal period to its employees.

“The employer satisfies this obligation if it relieves its employees of all duty, relinquishes control over their activities and permits them a reasonable opportunity to take an uninterrupted 30-minute break, and does not impede or discourage them from doing so.

“What will suffice may vary from industry to industry, and we cannot in the context of this class certification proceeding delineate the full range of approaches that in each instance might be sufficient to satisfy the law.”

More Analysis

A more detailed analysis of the opinion will be released soon via the HRCalifornia Extra e-newsletter. To sign up, visitwww.calchamber.com.

Webinar

CalChamber employment law experts will interpret the ruling during a 90-minute live webinar on April 17.Meal & Rest Breaks: What Does the Brinker Decision Mean for Your Workplace? will include a discussion of the decision’s impact on the workplace and meal and rest break requirements for nonexempt employees, as well as best practices and tips on complying.

Registration information is available at www.calchamber.com.

Decision on Meal and Rest Period Due April 12th

Also In This Update

• Employer Mistakes NOT To Do
• Revisions to Carl Moyer Program

Meal and Rest Decision Near

The California Supreme Court is expected to render a decision by April 12 on the Brinker meal and rest period case. The question of whether employers must ensure employees take breaks or must simply provide breaks has been a source of significant litigation in both federal and state courts.

In Brinker v. Superior Court, a California appeals court found that rest breaks only need to be provided, and that they do not always need to be taken in the middle of the four-hour work period. The Court also held that meal periods must be provided, rather than ensured. This decision, however, was appealed to the California Supreme Court.

Employers have anxiously waited for guidance from the California Supreme Court, whose final ruling is expected by the April 12th date.

Issues to be decided by the Court include:

*          Must employers simply make meal breaks available or must employers ensure the meal

break is taken?

*          What is the timing of the meal break? Are employers obligated to make a meal break

available for every five consecutive hours of work?

*          How many rest breaks are required during a shift?

*          When must employees take their rest breaks?

Stay tuned for breaking news in an update the minute the decision is rendered!

Top 10 Things Employers Do to Get Sued

There is no question that California has some of the most stringent and complex labor laws in the nation. The California Chamber of Commerce has released a, “The Top 10 Things Employers Do to Get Sued,” details some of the mistakes that could lead to employment lawsuits.

CalChamber knows that one of the toughest tasks for an HR manager or business owner is managing risk to prevent lawsuits. Employers may unintentionally violate employment laws and never realize the risk they create for the company. Trying to provide some flexibility for an employee, saving money for the company, or just being nice are all ways that an act of kindness can become a business liability.

Although this list does not apply to all employers (regulations and collective bargaining agreements may override these general rules), these 10 HR examples can help employers better manage their risk:  Remember, these are things NOT to do!

1. Classify all employees as exempt, whether they are or not.
2.  Be nice to employees — let them work through lunch so they can take off early.
3. Make everyone an “independent contractor” because having employees is too much trouble.
4. Don’t bother providing training about harassment and discrimination to managers and supervisors. They won’t need the information.
5. Let employees decide which hours and how many they want to work each day.
6. Terminate any employee who takes a leave of absence, whatever the reason. It is too much trouble to administer leaves of absence, and who knows if the employee will return.
7. Don’t give employees their final check if they fail to return company property.
8. Provide loans to employees and deduct the money from their paycheck each pay period.
9. Use non-compete agreements to protect confidential information such as business secrets, customer lists and pricing information and prevent employees from working for the competition.
10. Implement a “use it or lose it” vacation policy and avoid paying out all the money at termination.

Update On CARB’s Carl Moyer Program

BACKGROUND:

Since 1998, the Carl Moyer Program has filled a critical niche in California’s strategy to achieve clean air.  The Carl Moyer Program provides grant funding for the incremental cost of cleaner-than-required engines, equipment, and emission reduction technologies.  The Carl Moyer Program complements California’s regulatory program by funding emission reductions that are surplus, i.e., early and/or in excess of what is required by regulation.  State law authorizes the Air Resources Board to revise the Carl Moyer Program Guidelines when necessary to improve the ability of the program to achieve its goals.  In particular, as required by statute, the Board updates the cost-effectiveness limit and capital recovery factors annually. If you have questions regarding these changes, please contact Nancy Jennerjohn, Air Pollution Specialist, at (626) 459-4495 or njennerj@arb.ca.gov.

Revisions

An approved revision to the 2011 Carl Moyer Program cost-effectiveness limit is now available.  Mail Out #MSC12-07 announces this change to Appendix G of the Program Guidelines.

http://www.arb.ca.gov/msprog/mailouts/mouts_12.htm (point your mouse and press control and left click)

The cost-effectiveness limit is updated to $17,080.  The capital recovery factors remains unchanged based on a discount rate of 2 percent.  The updated cost effectiveness limit can be used by air districts for contracts executed beginning April 1, 2012, and must be used for any contracts executed beginning July 1, 2012.

All approved revisions are incorporated into the latest 2011 Carl Moyer Program Guidelines and can be found at:

http://www.arb.ca.gov/msprog/moyer/guidelines/current.htm (point your mouse and press control and left click)

More Bills To Discuss

AB 2237 (Monning) Contractors: definition.

This bill would define the term “consultant” for purposes of the definition of a contractor to include a person who provides or oversees a bid, arranges for and sets up work schedules, or maintains oversight of a residential construction project .  The bill also included commercial and public works, but is being amended to only entail residential.

AB 2288 (Cedillo) Labor-related liabilities: original contractor.

Under current law, an action may be brought for nonpayment of wages, fringe benefits, or health and welfare or pension fund contributions. This bill would require a direct contractor (prime contractor) making or taking a contract in the state for the erection, construction, alteration, or repair of a building, structure, or other work, to assume, and be liable for, any debt owed to a wage claimant for labor incurred by a subcontractor or contractor acting under, by, or for the direct contractor in performing labor, construction, or other work included in the subject of the original contract. The bill would authorize civil actions to enforce this liability, as provided.

AB 2353 (Knight) Public contracts: subcontracting: substituting.

The Subletting and Subcontracting Fair Practices Act generally prohibits a prime contractor whose bid is accepted by an awarding authority from substituting a person as subcontractor in place of the subcontractor listed in the original bid, except that the awarding authority may consent to the substitution of another person as a subcontractor in specified situations. Current law requires the awarding authority, or its duly authorized officer, prior to approval of the prime contractor’s request for the substitution, to give notice in writing to the listed subcontractor of the prime contractor’ s request to substitute and of the reasons for the request.

This bill would require the awarding authority, or its duly authorized officer, to give that written notice within 5 working days of receiving notice from the prime contractor.

AB 2517 (Eng) Employment: payment of wages: liens.

Current law provides that specified persons, including laborers, as defined, who contribute labor, skill, or services to a work of improvement, shall have a mechanic’s lien upon the property so improved. This bill would declare the intent of the Legislature to enact legislation that would allow employees and workers to record a lien on the real or personal property of their employer if that employer refuses to pay their wages.

AB 2570 (Hill) Licensees: settlement agreements.

Current law provides that it is a cause for suspension, disbarment, or other discipline for an attorney to agree or seek agreement that the professional misconduct or the terms of a settlement of a claim for professional misconduct are not to be reported to the disciplinary agency, or to agree or seek agreement that the plaintiff shall withdraw a disciplinary complaint or not

cooperate with an investigation or prosecution conducted by the disciplinary agency.

This bill would prohibit a licensee who is regulated by the Department of Consumer Affairs or various boards, bureaus, or programs, or an entity or person acting as an authorized agent of a licensee, from including or permitting to be included a provision in an agreement to settle a civil dispute that prohibits the other party in that dispute from contacting, filing a complaint with, or cooperating with the department, board, bureau, or program, or that requires the other party to withdraw a complaint from the department, board, bureau, or program. A licensee in

violation of these provisions would be subject to disciplinary action by the board, bureau, or program. The bill would also prohibit a board, bureau, or program from requiring its licensees in a disciplinary action that is based on a complaint or report that has been settled in a civil action to pay additional moneys to the benefit of any plaintiff in the civil action.

It’s Time To Start Working Bills

BY: Phil Vermeulen, ECA’s Legislative Advocate

Thursday, March 22, 2012

As you may recall from a previous Civics lesson, all new bills must be in print for a minimum of 30 days after they have been introduced before they can begin to be heard in a legislative policy committee.  Since the bill introduction deadline was February 24th, we are now nearing the 30 day requirement.  That means bills are starting to be “set” in their respective policy committee (or in some cases , like two of our bills,  two policy committees – which is known as being “double referred”).

Part of “working a bill” includes sending letters to authors (an author is a legislator who is introducing the bill) expressing support or opposition.  While I personally write many letters either in favor or against a certain bill, I often join forces with allies to “work” a bill.  These joined forces are called coalitions in Sacramento jargon:

Following are two coalition letters that contain our association’s name as being a member.  They give you a “flavor” of the issues and their importance to our interests.

The Honorable Tom Harman

California State Senate

State Capitol, Room 5094

Sacramento, CA 95814

SUBJECT:       SB 1374 (HARMAN) LIABILITY: GOOD FAITH RELIANCE ON STATE AGENCIES’ WRITTEN ADVICE

                        SUPPORT/SPONSOR

Dear Senator Harman:

The California Chamber of Commerce (CalChamber) and the below listed organizations are pleased to SPONSOR your SB 1374, as introduced February 24, 2012, which provides anyone, including employers, who relies in good faith upon the written advice of a state agency regarding how to comply with the law with some benefit when faced with costly litigation.

California has more than 500 agencies that are charged with the responsibility and authority to interpret and enforce laws.  Citizens of California are expected and encouraged to seek out guidance and information from these various agencies to determine how to comply with California’s numerous laws and regulations.  Ironically, however, if an individual or business seeks guidance from one of these agencies and relies upon the information they are provided, they are given no protection or benefit if litigation is ultimately filed to challenge the agencies’ advice.

For example, the California Department of Insurance (DOI) regulates and enforces insurance laws.  Insurance companies must seek written approval from the DOI regarding any rate that is charged to consumers.  In fact, the approved rate is the only rate an insurance company is allowed to charge.  Yet, if an insurance company charges the required rate and a consumer challenges the rate on the basis it is unfair or discriminatory, the insurance company is provided no benefit for the fact that it was specifically directed by a state agency to charge the rate at issue.

Similarly, the Division of Labor Standards Enforcement (DLSE) is a state agency that is charged with the responsibility and authority to enforce the wage, hour, and working condition labor laws.  As a part of its effort to fulfill this responsibility, the DLSE issues opinion letters on various wage, hour, and working condition topics, as well as an enforcement manual that sets forth the DLSE’s interpretation and position on these issues.  Currently, employers are encouraged to refer to the DLSE’s written materials for “guidance” on these topics when there is no published, on-point case available.  However, employers are provided with no certainty that they will be shielded from liability if they comply in good faith with the DLSE’s written opinions or interpretations.

SB 1374 eliminates this problem and provides citizens of California the security to know that if they seek out and receive written advice from state agencies regarding how to comply with the law, they can actually rely upon that information.

SB 1374 provides such citizens with legal protection if their actions are challenged in litigation and they can prove that their actions were based upon guidance received from a state agency.  This policy provides credibility to California’s state agencies charged with the responsibility to enforce such laws and will help to eradicate the negative public perception of state government.

Notably, there is already precedent in the law for giving individuals protection when they rely on the advice of government.  In California, a taxpayer may be relieved of all taxes, interest, and penalties if they can demonstrate that the taxpayer’s failure to remit taxes was based upon the taxpayer’s reasonable reliance upon the written advice of the chief counsel of the Franchise Tax Board.  Similarly, the federal government allows the same defense for employers who rely in good faith upon the advice, opinion letters, and guidance of the Department of Labor regarding the Fair Labor Standards Act.  See 29 U.S.C. sections 258-259.  In its findings and declaration of policy regarding the Portal-to-Portal Act, in which this affirmative defense is found, Congress recognized that “uncertainty on the part of industry,” as well as “the difficulties in the sound and orderly conduct of business and industry,” could negatively impact commerce.  Accordingly, Congress enacted the Portal-to-Portal Act, which included this affirmative defense for employers who rely upon the interpretations and opinions of the Wage and Hour Division of the Department of Labor.

Echoing the same concerns here, uncertainty for California citizens regarding the correct application of California’s numerous laws and regulations detrimentally impacts the state’s economy and is a significant burden for those trying to conduct business.  Providing certainty through SB 1374 will assist in relieving this burden on employers and every other citizen of California, thereby producing a better business environment, growth in the economy, and improve public perception of our government.

For these reasons, we are pleased to SPONSOR your SB 1374.

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TO:      The Honorable Mary Hayashi, Chair, Business, Professions and Consumer Protection

The Honorable Bill Berryhill, Vice Chair, Business, Professions and Consumer Protection

All Members, Assembly Business, Professions and Consumer Protection

FR:  Construction Industry Coalition

RE:  AB 1627 (Dickinson) – Oppose

The above listed organizations must inform you that we STRONGLY OPPOSE AB 1627. AB 1627 prohibits cities and counties from issuing building permits until and unless  the local building official determines that the building plans contain detailed standards that significantly reduce vehicle miles travelled (VMT) by the individual occupants of those buildings. The California Energy Commission (CEC) is charged with developing the transportation-related VMT standards.

We are opposed for the following reasons:

CEC Granted New Authority to Develop and Adopt Building Standards

AB 1627 gives authority to the CEC to develop green building standards – a directive that is in direct conflict with existing Health & Safety Code. These H&S Code sections give clear authority to HCD and the BSC to develop building standards, including green building standards, for residential and commercial buildings.

Are VMT Building Standards Even Feasible to Develop?

Notably, AB 1627 does not impose a requirement that the VMT building standards be technologically capable of being developed. Why? Because currently there is no known transportation model capable of computing the fine-grain VMT activity envisioned by AB 1627 — of a single individual at a single building site.

Mission Creep:  CEC Has No Land Use / Transportation Expertise

The statutory role of the CEC is to, generally, promote energy efficiency, conduct energy research and license power plants.  The CEC has no expertise in land use / transportation related matters, in divining VMT standards or in determining transportation enforcement criteria.

Conflict with Comprehensive Legislation Adopted in 2008 – SB 375:  AB 1627 is in direct conflict with SB 375.  SB 375 was designed as a bottom up approach to better link California’s land use planning, housing law, and regional transportation activities to reduced greenhouse gas (GhG) emissions.  AB 1627 seeks to impose a top-down process – without the benefit of any implementation incentives or input from the localities.

Erosion of local land use authority

1627 prohibits a city or county from issuing a building permit until it can be verified that the project meets the minimum standards of VMT reduction. This is a direct mandate against local control.

Litigation magnet

Care was taken in the drafting of SB 375 to minimize the opportunity to create opportunities for litigation. Even so, the adoption of a regional Sustainable Community Strategies (SCS) has spawned litigation (See litigation filed by the Center for Biological Diversity against SANDAG over the adoption of its SCS).  AB 1627 creates exponentially more opportunities for litigation.

For the reasons stated above, and others, we must OPPOSE AB 1627.

I’ll keep you posted on these bills and many others in the coming months.

Contractors Who “Cheat to Compete” Face Stiff Penalties New partnership targets offenders in the multi-billion dollar underground economy

Driverless Vehicles Soon To Be Sharing the Road With You?

I was contacted this week by Senator Alex Padilla’s office asking if I would support their SB 1298.  AS you may know, Google has been operating vehicles for several years that drive themselves.  It is not a matter of if, but when!  Following are the highlights of the bill.

SB 1298 – PADILLA –

This bill directs the California Highway Patrol to develop standards and performance requirements for the safe testing and operation of autonomous vehicles in the state of California.

Since the dawn of automobile sales in the 1890’s there have been continuous efforts to enhance vehicle safety. Improvements including seat belts, air bags, tempered glass and body design were added to protect us during an accident.  Still, more than 120 years later automobile accidents remain a leading cause of death.

The Centers for Disease Control and Prevention reports that motor vehicle crashes are the leading cause of death among those age 5-34. More than 2.3 million adult drivers and passengers were treated in emergency departments as the result of being injured in motor vehicle crashes in 2009. According to the National Highway Traffic Safety Administration, in 2010 a total of 32,885 people died in the United States in car accidents. More than 2,700 of these traffic fatalities took place in California. Car accidents result in a significant economic impact; a 2005 CDC report found that the lifetime costs of crash-related deaths and injuries among drivers and passengers were $70 billion.

The vast majority of traffic fatalities and injuries are due to human error. A 2006 study sponsored by the U.S. Department of Transportation found that some form of driver error occurred in nearly 80% of car accidents.

In an effort to reduce human error, automobile manufacturers have introduced a variety of semi-autonomous features that seek to help drivers avoid accidents by anticipating, alerting and responding to potential hazards.  Backup cameras, adaptive cruise control, lane departure warning systems and pre-collision braking are all semi-autonomous technologies that seek to assist drivers. Self-parking technology available on some models is autonomous technology.  The car actually parks itself.

Autonomous vehicles are the logical next step in automotive development. Through the use of computers, sensors and other systems, an autonomous vehicle can analyze the driving environment more quickly and operate the vehicle more safely without the active control of a human operator.

Autonomous vehicle technology has the potential to significantly reduce traffic fatalities and injuries. It also has the potential to increase fuel efficiency, reduce traffic congestion, and increase highway capacity.

Last year, the Governor of Nevada signed into law AB 511 requiring the Nevada Department of Motor vehicles to adopt regulations for the testing and operation of autonomous vehicles. Similar legislation has been introduced in Florida, Hawaii, Oklahoma and Arizona.

A global technology leader, California is uniquely

positioned to be the leader in the deployment of autonomous technology and the manufacture of autonomous vehicles.

• Division 12 of the California Vehicle Code provides for the safety standards and operation of a car’s equipment.

• Current California law is silent on autonomous vehicle technology.

• Finds that California desires to encourage the current and future development, testing, and operation of autonomous vehicles on public roads in a safe manner.

• Defines an autonomous vehicle as a motor vehicle that uses computers, sensors, and other technology and devices that enable the vehicle to safely operate without the active control and continuous monitoring of a human operator.

• Directs the California Highway Patrol to develop standards and performance requirements for the safe testing and operation of autonomous vehicles in the state of California.

So what do you think?  Send me your thoughts and comments to: phil@pvgov.com

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While I’m on the issue of vehicles, here’s an interesting application you may want to download onto your smartphone.  I did.  I’ll report back on how it works!

Here’s a Nifty Application For Your Smart Phone that Helps Direct You Around Traffic Jambs – Waze

What is Waze? That’s what you are probably wondering. Well it’s an application for the iPhone, Blackberry, Android, and other smart phones that helps you stay on top of what is happening in traffic. I despise getting caught in a traffic jam, especially if it is avoidable.  Now I have the tool to make sure that I can avoid them all the time.

I would suggest that you start your visit to the site by clicking on Guided Tour at the top of the page. The tour explains how the application works, how it collects data, what safety measures it provides to prevent people from trying to use their phone (typing) while driving, and what you can do as a Waze user to help make the product more accurate.

If you have decided that this sounds like an application that you’d use head on over to the Download section. Then select the type of phone you have so that you can download the version of the application that will work on your phone.

This is a handy application that will help you avoid traffic jams around town!

http://www.waze.com/