Each year, the California Chamber of Commerce (“Chamber”) identifies proposed state legislation that the Chamber believes “will decimate economic and job growth in California.” The Chamber refers to these bills as “Job Killers.” In March, the Chamber identified the first two Job Killers of 2019: AB 51 and SB 1. Both bills would negatively impact retailers in California. You can view the Chamber’s Job Killer site here.
AB 51: Ban on Settlement and Arbitration Agreements for Employment Claims
As originally drafted, AB 51 sought to prohibit employers from requiring an applicant or employee, as a condition of employment, continued employment, receipt of any employment-related benefit, or as a condition of entering into a contractual agreement, “to waive any right, forum, or procedure” for a violation of FEHA or the California Labor Code. In effect, this bill would prohibit employers and their employees from entering into settlement agreements or arbitration agreements related to employment claims. The California Chamber of Commerce criticized the bill for “expand[ing] litigation and increas[ing] costs for employers.” The Chamber also noted that the ban on arbitration agreements is likely preempted by the Federal Arbitration Act (“FAA”).
On March 26, 2019, AB 51 was amended to clarify that it does not apply to “postdispute settlement agreements or negotiated severance agreements,” and is not “intended to invalidate a written arbitration agreement that is otherwise enforceable” under the FAA. The amendments de-claw the bill, which, as amended, appears to prohibit only predispute waivers and non-negotiable severance agreements. The bill and its amendments can be found here.
SB 1: Agency Review of Changes to Federal Standards
SB 1 proposes that the California Occupational Safety and Health Standards Board (the “Board”) and California Department of Industrial Relations (the “Department”) be required to conduct quarterly reviews of proposed and final changes to certain federal laws, including the federal Fair Labor Standards Act of 1938 (“FLSA”) and the federal Occupational Safety and Health Act of 1970 (“OSHA”), and regulations established pursuant to those laws, to determine whether those changes make the laws and regulations more or less stringent than they were as of January 1, 2017 (the “baseline federal standard”). If the Board or Department determines that a change is less stringent than the baseline federal standard, it is required to consider whether it should adopt the baseline federal standard “in order to maintain the state’s protections.”
As the California Chamber of Commerce points out, the major problem with this bill is that it authorizes the Board and Department to enact these baseline federal standards without complying with the Administrative Procedure Act (“APA”), which governs the procedures administrative agencies must follow to propose and establish regulations. That means new regulations could take effect without public hearings or comment. Apart from these concerns, however, it is not clear whether this bill would have any practical effect on California’s regulations. For instance, California’s wage and hour laws are generally more stringent than the FLSA, so amendments relaxing the FLSA are unlikely to impact California’s requirements. You can view the full text of the bill here.
We will continue to monitor and provide updates on these bills, and other legislative developments, throughout the legislative session.