NFIB California Main Street Minute, May 27-31

From your small-business-advocacy team in Sacramento

Welcome to the May 27-31 Memorial Day edition of the Main Street Minute. NFIB California yesterday joined our fellow Americans in honoring all those who suited up for service to our nation and never made it back. Your sacrifice will never be forgotten and forever honored.

Huge Legislative Deadline Passes

• Last week was the Legislature’s busiest of the year, as bills that failed to advance out of their house of origin – Assembly or Senate – are pretty much finished for the year.

• The May 24 house-of-origin deadline follows the previous week’s judgment on bills held in the suspense files of the Senate and Assembly appropriations committees. In the wake of both, first, the good news. All but completely defeated for the year were measures:
  • creating a single-payer, health-care system
  • legally allowing employees to disconnect from communication from their employers
  • prohibiting single-use drinking vessels in restaurants
  • changing benefits and contributions formulas in the unemployment insurance system
  • punishing employers for considering some criminal history information on choosing job-applicants.

• Now, the bad news …

• Surviving suspense files and house-of-origin deadlines were bills:
  • extending unemployment benefits to striking workers
  • allowing accrued paid sick days to carry over from year to year
  • fattening PAGA awards
  • prohibiting employers from requiring employees to attend employer-sponsored meetings.
  • making more employers jointly liable for the wages of another employer’s employees

• The above good and bad bills are just to name a few. The other ones NFIB has designated for support or defeat can be read in this updated bill list that contains a sentence or two of information on each, along with a hyperlink to the bill.

Minimum Wage Increase Delayed One Month

• So, what on earth does a bill calling on the Dept. of Corrections to issue a report on its vocational training program have to do with the new minimum-wage rate for some health-care workers?

• Nothing!

• Except that the original Senate Bill 828 mentioned above had passed all its legislative deadlines, so it could be hijacked under the Legislature’s gut-and-amend tactic for use as a new minimum-wage bill cleaning up the mess and bad timing of Senate Bill 525, the state’s new minimum-wage rate of $25 an hour for health-care workers that was supposed to take effect this coming Saturday, June 1.

• Since Gov. Gavin Newsom signed SB 525 into law last October, a severe state budget deficit reared its ugly head.

• Newsom quickly asked for a deal minimizing the effects of SB 525 on the budget deficit. Reported CalMatters on May 17, “Gov. Gavin Newsom is cutting it close. He signed a law last fall that phases in a $25 minimum wage for California’s lowest-paid health care workers beginning June 1. Then, he said he wanted to delay it because of its potential to exacerbate the severe state budget shortfall. But two weeks before the deadline for employers to start paying more to their employees, many health workers are still waiting to hear whether they will in fact see a raise.”

• They now have their answer.

• “According to documents obtained by KCRA 3 on Monday, the lawmaker who wrote the law, State Sen. Maria Elena Durazo, submitted paperwork for legislation that would delay the increase to July 1,” reports that station’s Ashley Zavala, who first broke the story. “SB 828 moves the start date of the health care minimum wage by one month to July 1, 2024,” the report quotes Durazo as saying. “This aligns SB 525 with the budget year and allows the Legislature to continue discussions with the Administration and technical changes to ensure health care workers get their raises.”

• So, why does this matter at all to small business?

• SB 525 not only boosted the minimum-wage rate on those traditionally thought of as providing some form of health care but also cast its net widely to include a “janitor, housekeeping staff person, groundskeeper, guard, clerical worker, nonmanagerial administrative worker, food service worker, gift shop worker, technical and ancillary services worker, medical coding and medical billing personnel, scheduler, call center and warehouse worker, and laundry worker, regardless of formal job title.”

• SB 525/SB 828 was another ham-fisted tinkering with the minimum wage. The immediate shock caused by the new $20 an hour minimum wage rate for fast-food workers that took place April 1 seems to be settling into its predicted and expected groove. Franchisees are cutting back hiring, reducing hours, speeding up automation, such as greater use of kiosks and AI—anything and everything to keep from hiring and retaining another human being.

• When it comes to the minimum wage, to use a food metaphor, no state can make a better hash of it than California. Meanwhile, Idaho is still complaining about the influx of immigrants flooding in from California. It’s minimum-wage rate is pegged to the federal government’s rate and no city or county is allowed to establish its own rate. Workers there are also seeing record increases in wages and the state has not had an annual unemployment rate of over 4% since 2014. More here.

• “The market works!” Who shouted that? Say that in our State Capitol and the Senate and Assembly sergeant at arms will remove you immediately.

• This one page Talking Points Memorandum from NFIB California reminds everyone what the minimum wage is, who earns it, and what it does and does not do.

Speaking of the State Budget

• “Double the flavor, double the fun,” an old Wrigley’s Doublemint Gum commercial used to say. Take away the fun, and that was essentially the same message state Legislative Analyst Gabriel Petek delivered to legislators May 17 in presenting his office’s The 2024-25 Budget: Initial Comments on the Governor’s May Revision.

• “The Governor cites a budget problem of $27 billion. Under our estimates, the administration addressed a larger deficit than this—$55 billion.”

Awaiting a Couple of Big State Supreme Court Decisions

• “With a June 27 deadline to set the ballot for the November election, the court must rule soon about whether to allow the proposed measure, formally known as the Taxpayer Protection and Government Accountability Act, to proceed,” reported CalMatters.

• The case, Legislature of the State of California v. Weber, according to the Supreme Court’s website, “presents the following issues: (1) Does the Taxpayer Protection and Government Accountability Act constitute an impermissible attempted revision of the California Constitution by voter initiative? (2) Is this initiative measure subject to invalidation on the ground that, if adopted, it would impair essential government functions?”

• NFIB California has endorsed passage of the Taxpayer Protection Act. News release here.

Independent Contracting v. Union Control

• In another big case, the Supreme Court of California will also shortly rule on Castellanos v. State of California, which according to its website (same link as above), asks, “Does Business and Professions Code section 7451, which was enacted by Proposition 22 (the ‘Protect AppBased Drivers and Services Act’), conflict with article XIV, section 4 of the California Constitution and therefore require that Proposition 22, by its own terms, be deemed invalid in its entirety?”

• Reported Politico, “Labor unions and Silicon Valley giants like Uber have spent years vying over the status of app-dispatched workers who transport passengers and deliver food. It has been almost half a decade since California passed landmark Assembly Bill 5, which, depending on who you asked, promised to empower workers (labor) or demolish the gig industry (employers) by converting independent contractors into employees.

• “The latest round played out today [May 21] before the California Supreme Court as justices considered a challenge backed by the SEIU to Proposition 22, the industry’s 2020 initiative carving themselves out of AB 5.

• “At issue was the balance of power between the Legislature and the electorate. Prop 22’s foes in labor argue the initiative should be discarded in its entirety because it unconstitutionally stripped lawmakers of their authority over workers’ compensation.”

• NFIB California did not back Prop. 22, but wished the measure success. Instead, we directed our energies at stopping AB 5 from passing, because of the harm it did to all independent contractors, not just those in one industry. In the same spirit, NFIB wishes this segment of the gig economy well.

NFIB California in the News

• State Director John Kabateck interviewed for 45 minutes on the Ask Brien Show (KHTS-AM 1220) last Thursday (May 23) about NFIB, its agenda, and small-business issues. His remarks start at the 5:20-minute mark.

National

Highlights from NFIB Legislative Program Manager Caitlin Lanzara’s weekly report

• On May 21, NFIB sent a Key Vote letter in support of S.J. Res. 58, the Congressional Review Act (CRA) resolution to repeal the Department of Energy’s (DOE) final rule on gas furnace efficiency standards.

• On May 22, NFIB issued a statement of recommendations for Congress and the White House to ease inflation for small businesses.

• On May 20, Small Business Trends reported on NFIB’s support to repeal the Corporate Transparency Act.

Next Main Street Minute June 3.