Fearsome Foursome: A Quartet of Problematic Bills Threatens Public Employers

It’s that time again when the Legislature gets to prove the wisdom Mark Twain’s famous comment: “No man’s life, liberty, or property are safe while the legislature is in session.”  Only, in the case of local public agencies, it might more properly be phrased, “no local treasury or services are safe from the lobbying efforts of organized labor at the end of the legislative term.”  Not catchy, I admit, but probably more true.  Folks with property can pay to protect it.  Local government can only argue in Sacramento for what is in the public interest — a tough sell without PACs on your side.  And, while Governor Brown was occasionally open to entreaties by fiscal-minded local government officials seeking vetoes, it is unclear whether our new Governor will have the same attitude while progressive ideals are under attack nationally.

As in previous years at this time, there are a number of major bills that local government employers should be watching.  Here’s the timing:

  • August 12: Legislature returns.
  • August 12-14: Bills that are currently sitting in Senate and Assembly Appropriations will either move to the suspense file (the vast majority) or will be voted on and passed to their respective floors for a vote.
  • August 29-30: Senate and Assembly suspense bills will either be held or make it out off of the Suspense file and will go to their respective legislative floors for a full vote.
  • September 3 – 13: Floor session only (meaning no more legislative committees will take place, unless granted by the Speaker or Pro-Tem); all bills must be passed to the Governor by Friday Sept 13.
  • September 13- October 13: Governor has from Friday, September 13 until Sunday, October 13 to take action on all pending measures. If he fails to take action on any measures (either sign or veto), the remaining bills will automatically become law—effective January 1, 2020 (unless there is a bill that has an urgency clause—requiring a 2/3 vote, or is an act relating to the budget, both become effective immediately upon Governor’s signature).

SB 266 (Leyva) CalPERS Disallowed Benefits.

Sponsored by the California Professional Firefighters (CPF), SB 266 will require CalPERS (PERS) contracted agencies to directly pay retirees and/or their beneficiaries, disallowed retirement benefits using general fund dollars. Disallowed benefits could be forms of special compensation such as specialty pay, education incentive pay or a uniform allowance. If CalPERS makes a determination that the incentive pay in question has been miscalculated, they must make the correction and reduce a retiree benefit to the lawful amount. SB 266 covers all CalPERS contracting agencies including the State of California, all local agencies and school employers.

As amended, SB 266 places 100 percent of the total liability for such overpayments on public agencies—abdicating all responsibility previously held by PERS to ensure that retirement benefits are calculated and administered correctly. The measure also gives full discretion to the retiree on demanding a lump sum payment of the calculated benefit amount, or to have a separate annuity. Capitol insiders believe this is something the author may amend out of the bill to appear to be amenable to the concerns of public agencies. But as it stands, this provision would make it incredibly difficult for local agencies to accurately prepare their budgets. PERS claims that continuing to pay a benefit that is considered unlawful would jeopardize its plan qualification status with the IRS—making public agencies the target of this measure. SB 266 is currently on the Assembly Appropriations Suspense file.

SB 266 will likely move to the Assembly Floor on August 30—needing a simple majority vote in the Assembly (41) and a majority concurrence vote in the Senate (21) before making its way to Governor Newsom.

This bill raises a bit of an existential question: what is the point of ascertaining overpayments if the employer is liable anyway?  The only difference is that now the employer will need to fork out money from its general fund, while before the cost of the mistake was amortized over many years.  This wins the award for the most offensive bill of the year.  It should be called the “Firefighters Bill of Wrongs Act of 2019.” Click edit button to change this text.

AB 418 (Kalra) Union-Agent Evidentiary Privilege.

This measure would provide for a new privilege to be established similar to attorney-client or doctor-patient to now include “union agent-employee” protections making all verbal and written communications between an employee and shop steward privilege communications. However, this measure exceeds the level of privilege currently afforded to attorneys and physicians as it specifically states, “a represented employee or represented former employee also has a privilege to prevent another from disclosing a confidential communication between the employee and a union agent that is privileged.”  This addition could conceivably permit the silencing of employees who wish to voluntarily report a workplace incident. This measure is co-sponsored by the American Federation of County and Municipal Employees (AFCME) as well as the California Faculty Association.

A similar measure was vetoed by Governor Brown in 2017. In part Brown’s veto message read:

“…I don’t believe it is appropriate to put communications with a union agent on equal footing with communications with one’s spouse, priest, physician or attorney. Moreover, this bill could compromise the ability of employers to conduct investigations into workplace safety, harassment and other allegations”.

Despite its potential to drive up litigation and fact-finding costs to state and local agencies, the measure was not flagged for any fiscal impacts—meaning that AB 418 bypassed the Senate Appropriations committee and is now eligible to be voted on by the Senate for a simple 21 vote majority.

AB 1066 (Gonzalez) Unemployment Insurance, Trade Disputes.

AB 1066 is opposed by both public and private employer groups and his been branded by the powerful California Chamber of Commerce (Cal Chamber) as a “Job Killer”. AB 1066 would provide a disincentive for good faith and timely labor negotiations by organized labor organizations by providing unemployment insurance (UI) to workers who have been on strike for 4 or more weeks.

The measure does not account for the nature of the labor dispute and allows for up to 26 weeks of Unemployment Insurance.  AB 1066 could potentially allow an entire municipal bargaining unit to draw UI—which is directly paid for by the employer.  Although it is rare to see a public sector strike last 4 weeks, having the incentive of UI for an entire bargaining unit after the 4-week mark may start a new trend of more divisive and aggressive labor negotiations.

AB 1066 is currently in the Senate Appropriations committee.

SB 542 (Stern) Workers’ Compensation Presumptions PTSD, First Responders. 

Although amended significantly to reduce its impact, SB 542 (Stern) is still a very problematic measure by adding another presumption for public safety personnel. Specifically, the measure would create a new presumption for post-traumatic stress disorder (PTSD).

The presumptions currently afforded to Safety allow them to gain an evidentiary advantage in proving industrial causation. One of the biggest challenges for employers for presumptions is that it takes cost-containment measures off of the table such as the ability to use apportionment in assessing the causation of the injury – especially when the use of ‘4850’ time (one year at full salary, tax free) is accounted for.

As noted, recent amendments taken in the Assembly Insurance committee eliminated some of the more concerning provisions such as its January 1, 2017 retroactivity and its inclusion of general anxiety disorder. Additionally, the bill now requires the Commission on Health and Safety and Workers’ Compensation (CHSWC) to conduct a study on the issue as well as a five-year sunset provision. Given the considerable amendments taken by the author to reduce the burden of compliance to state and local agencies, it is likely that this measure will land on the Governor’s desk—where he will almost assuredly sign SB 542 into law.

So there you have it – the four most problematic bills of the year for public employers.  Let’s hope reason will prevail.  From years in government, I’ve learned that it’s very easy for state government to pretend to be pro-labor by giving away other people’s money – in particular, local government’s money.  While the state is awash in surpluses, most local governments are increasingly on the edge.  I credit the new Governor with an improved awareness of this problem and can only ask that, as the legislature continues to look for expensive new burdens to impose of local government, it should be equally creative about devolving its surplus on local problems.

For further information, please contact:

Arthur Hartinger

Jon Holtzman, Founding Partner, Renne Public Law Group
jholtzman@publiclawgroup.com
415.848.7235

Jon Holtzman

Dane Hutchings, Legislative Director, Renne Public Policy Group
dhutchings@publicpolicygroup.com
916.230.6935

2019-08-14T13:46:37-08:00August 14th, 2019|