By Dennis Albiani and Faith Lane Borges
Early in the morning of September 1, the 2018-19 legislative session was gaveled to a close. During the last month of session, the Legislature acted on over 1,000 measures, the majority of which made it to the Governor. All of the approved bills are on or heading to the Governor’s desk and he has until September 30 to sign or veto them. While Governor Brown is known for being fiscally moderate there could be some surprises this year given his lame-duck status.
At the end of this signing session, the Governor will have acted upon a total of 1,217 Assembly and Senate bills for the 2018 year. There are 2,739 bills that are dead, having failed to meet their respective legislative deadlines or vote thresholds. A breakdown of key issue areas and legislation for the Family Business Association of California is provided below.
Energy
The cost of energy in California remains a significant issue for businesses. However, California leaders maintain their enthusiasm over leading the world on greenhouse gas reduction legislation. FBA weighed in on several proposals and on the eve of the Governor’s Global Climate Summit he signed significant legislation.
SB 100 (De Leon) requires California to obtain 100% of its power from zero greenhouse gas emission sources by 2045. The bill has been debated by lawmakers for nearly two years as it faced cost and feasibility concerns. In addition to the 2045 target, SB 100 would also require electric utilities and other service providers to generate 60% of their power from renewable sources by 2030, up from the current 50% goal set for that date. CHAPTERED The Governor’s signing message for SB 100 can be found here.
Labor
FBA has been engaging in several labor legislative issues this year working with coalitions to oppose many and support a few such as PAGA reform.
AB 2841 (Gonzalez-Fletcher) would have mandated an increase in paid sick leave from 3 to 5 days per employee per year. The bill faced incredible opposition from the business community and ultimately died in Assembly Appropriations.
AB 3080 (Gonzalez-Fletcher) would have significantly expanded employment litigation and increased costs for employers and employees by banning settlement agreements for labor and employment claims as well as arbitration agreements made as a condition of employment. The bill died in Assembly Appropriations.
SB 1284 (Jackson) would have required California employers to submit pay data to the Department of Industrial Relations, subjecting employers to unfair public criticism, enforcement measures, and significant litigation costs. The bill died in Assembly Appropriations.
SB 1300 (Jackson) would significantly increase litigation by substantially lowering the standard for what constitutes standing to sue an employer for harassment or discrimination from “severe or pervasive” to “makes it more difficult to do the job.” This bill also bans the use of non-disparagement agreements and attempts to limit the ability to summarily adjudicate harassment claims forcing employment practices claims into court or costly settlements. These claims are very expensive to investigate and defend, even if there was no actual wrongdoing by the employer. The scope of this bill was significantly narrowed in the Assembly Appropriations Committee by removing language requiring employers to provide sexual harassment training, including bystander intervention training, as well as eliminating language that individuals could sue employers without having endured harassment or discrimination. The bill is on the Governor’s desk awaiting signature.
AB 2613 (Reyes) would have imposed another layer of Labor Code penalties for wage and hour violations in addition to the penalties already available under PAGA and imposed personal liability onto employees. Due to strong opposition, the author never brought the bill up for a vote.
Taxation
Tax policy continues to be a leading issue for FBA and area of major discussion at the Capitol. FBA led the fight against the estate tax earlier this year and maintained the fight on the measures that continued to receive attention all session.
SB 993 (Hertzberg) was another attempt to shift to a tax on services. The measure would have expanded the sales and use tax law to impose a tax on the purchase of services by businesses in California. The bill would have exempted certain types of services, including health care services, from the tax. In a twist over his previous legislation, Hertzberg directed the funds to be appropriated to provide tax relief to middle-income and low-income Californians. The bill was never brought up for a vote. Informational hearings were scheduled instead to research the issue further but never took place.
SCA 24 (Galgiani) would have created financial hardships for family businesses and farms that could have resulted in liquidation of the business and loss of jobs for the employees. SCA 24 would have limited the exclusion not deemed to be a “purchase” or “change in ownership” for the purchase or transfer of a principal residence from parents or grandparents to their children, and would have required it to continue as a principal residence of the transferee. The measure also would have deleted the exemption on the first $1 million of the full cash value of all other real property, including family businesses and farms, thereby requiring these properties to be reassessed upon a transfer to a child or grandchild. The bill was never voted on.
Water Tax Fails. Governor Brown tried and failed to secure a deal to provide safe drinking water funding for disadvantaged communities in California. After failing to win approval of a mandatory tax on water bills earlier this year, Senator Monning introduced SB 844and SB 845 in the last two weeks of the session that would have applied a voluntary levy on ratepayers of less than $1 per month and would have established a tax on dairies and fertilizer manufacturers. The bills were held in the Appropriations Committee but Assembly Speaker Rendon released a statement saying that they will work on this issue over the fall and be prepared to discuss the issue during the next legislative session.