Under existing law, the California Occupational Safety and Health Act of 1973, the Division of Occupational Safety and Health investigates complaints that a workplace is not safe and may issue orders necessary to ensure employee safety. Under existing law, certain violations of that act or a standard, order, or special order authorized by the act are a crime.

This bill would prohibit the division from commencing any enforcement action for any nonserious violation, as defined, against any employer where the employer is a small business or microbusiness, as defined, without first giving the employer written notice and providing the employer 30 days to correct the violation. The bill would authorize the division to assess a reasonable fee to cover its costs not to exceed $50.

Date of Hearing: April 19, 2017

ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT

Tony Thurmond, Chair

ABPCA Bill Id:AB 442 (

Author:Frazier) – As Introduced Ver:February 13, 2017

SUBJECT: Employer liability: small business and microbusiness

SUMMARY: This bill would prohibit the Division of Occupational Safety and Health (DOSH) from commencing any enforcement action for any non-serious violation against any employer where the employer is a small business or microbusiness, without first giving the employer written notice and providing the employer 30 days to correct the violation. Specifically, this bill:

1. Prohibits DOSH from commencing an enforcement action for any nonserious violation against an employer where the employer is a small business or microbusiness without:
   1. Providing written notice to the employer of the violation
   2. Providing 30 days for the employer to cure the violation
2. Defines “small business” as an independently owned and operated business that together with affiliates, has 100 or fewer employees, and average annual gross receipts of ten million dollars ($10,000,000) or less over the previous three years, or is a manufacturer with 100 or fewer employees
3. Defines “micro business” as a small business which, together with affiliates, has average annual gross receipts of two million five hundred thousand dollars ($2,500,000) or less over the previous three years, or is a manufacturer with 25 or fewer employees.
4. Defines “nonserious violation” as any violation that is not classified as a serious violation under Title 8 of the California Code of regulation.
5. Declares notice of a correctable nonserious violation shall not constitute a first violation supporting a subsequent finding of a repeat violation by an employer.
6. Authorizes DOSH to assess a reasonable fee to cover its costs not to exceed $50.

EXISTING LAW:

1. Authorizes DOSH to investigate complaints that a workplace is not safe and permits DOSH to issue orders necessary to ensure employee safety. Certain violations of that act or a standard, order, or special order authorized by the act are a crime.
2. Establishes a rebuttable presumption that a “serious violation” exists in a place of employment if DOSH demonstrates that there is a realistic possibility that death or serious physical harm could result from the actual hazard created by the violation.
3. Declares that DOSH demonstrating a violation is not sufficient enough by itself to establish that the violation is serious. For purposes of a serious violation, the “actual hazard” may consist of, among other things:
   1. Serious exposure exceeding an established permissible exposure limit;
   2. Unsafe or unhealthful practices, means, methods, operations, or processes that have been adopted or are in use.
4. Allows an employer to rebut the presumption that a violation is serious and establish that a violation is not serious by demonstrating that the employer did not know and could not, with the exercise of reasonable diligence, have known of the presence of the violation. To do this an employer must show both of the following:
   1. The employer took all the steps a reasonable and responsible employer in like circumstances should be expected to take, before the violation occurred, to anticipate and prevent the violation, taking into consideration the severity of the harm that could be expected to occur and the likelihood of that harm occurring in connection with the work activity during which the violation occurred.
   2. The employer took effective action to eliminate employee exposure to the hazard created by the violation as soon as the violation was discovered.
5. Establishes with regards to carcinogens a ‘serious violation is a violation of any standard, order, or special order respecting the use of a carcinogen. However, the violation shall not be considered serious if the employer can demonstrate that the employer did not, and could not with the exercise of reasonable diligence, know of the presence of the violation or the employer can demonstrate that the Division should have determined that the violation was minor and resulted in no substantial health hazard.

FISCAL EFFECT: Unknown

COMMENTS: The California Occupational Safety and Health Act of 1973(Cal/OSHA) was enacted by the Legislature to ensure safe and healthy conditions for working people in California. The Division of Occupational Safety and Health was created to enforce effective standards, assist and encourage safe and healthy working conditions, and to provide for research, information and training in the field of occupational safety and health.

DOSH maintains a Consultation Services Branch to help employers comply with California’s safety and health standards. If an employer is uncertain whether or not they are in compliance with Title 8 regulation, they can contact the Consultation Service Branch and have questions answered over the phone, in person, or via numerous publications tailored to specific industries. Additionally, an employer making a good faith effort to abate a general violation found by the Consultation Branch may have their entire fine waived.

For regulatory, general and serious violations, those employers with fewer than 10 employees automatically have penalties reduced by 40 percent. This happens prior to other reductions available to employers regardless of size, including the 50 percent reduction for hazard abatement, the 30 percent reduction for employers with an effective safety program, and the 10% reduction for employers with few previous violations

These reductions all occur after mandatory reductions of 25 percent for hazards with low likelihood of causing an injury or illness, an additional 25 percent for hazards to which few employees are exposed, and another 25 percent for general violations likely to not cause a serious injury. Additionally, final penalty amounts are often further reduced as part of the settlement and appeals processes

The provisions of this bill would apply to a very significant number of California employers. According to 2015 data from the Employment Development Department’s Labor Market Information Division, 98% of employers employ fewer than 100 employees. The employees of these small and micro sized businesses account for 71% of the total workforce.

Arguments in Support

According to the author, California's dominance in many economic areas is based, in part, on the significant role small businesses play in the state's $2.46 trillion economy. Among other advantages, small businesses are crucial to the state's international competitiveness and are an important means for dispersing the positive economic impacts of trade within the California economy. According to a 2016 U.S. Small Business Administration report, California has more than 3.7 million small businesses, more than 1.3 million than any other state. The report also noted that California’s small businesses employ half of the state’s private workforce in 2013 (6.7 million employees). The author argues that while smaller size businesses often function as economic engines for the California economy, their size makes meeting regulatory requirements challenging.

The Family Business Association argues that AB 442 would give small business owners a chance to correct their non-serious violations before being fined amounts that can impact their ability to grow, hire new employees or potentially force their business into closure.

The Western Carwash Association argues that the 30 days to correct the violation will allow businesses ample time to ensure they bring themselves into compliance with state law, without facing costly penalties.

Arguments in Opposition

Consumer Attorneys of California (CAOC) argues that the bill would set a dangerous precedent by prohibiting DOSH from commencing any enforcement action for any nonserious violation, as defined, against any employer where the employer is a small business, without first giving the employer written notice and opportunity to cure the violation within 30 days.

CAOC continues, “Nonserious hazards would be all violations except those that meet the legal definition of ‘serious,’ a legal term of art that in no way means other violations are not serious. For example, the failure to report a fatality is not ‘serious,’ and neither would be the failure to report use of a carcinogen. Even technically serious violations often are not finally cited as such, for reasons ranging from a settlement agreement to an inspector simply not wanting to deal with the almost certain appeal following a serious citation. The bill even explicitly does not count such incidents toward the definition of ‘repeat’ violations, meaning that an employer could endanger workers over and over again with no financial penalty of any kind.”

The California Labor Federation argues that “this bill would clearly leave us less effective than minimum federal OSHA enforcement standards and at risk of having our state plan authority revoked.” The California Labor Federation cautions, “Just last year, federal OSHA threatened to take over enforcement of California’s construction standards in response to their belief that our fall protection standards were less effective than those at the federal level” and that if the measure is adopted as written, “we might lose Cal/OSHA entirely and cede control of worker health and safety issues to a federal agency.”

Previous Legislation

SB 1228 (Runner) of 2015. Would have required all state agencies to develop policy to provide for the reduction or waiver of civil penalties for a small business based on specified circumstances. This bill specifies a narrower scope and applies exclusively to Cal/OSHA citations that are non-serious. The measure died in Senate Appropriations.

REGISTERED SUPPORT / OPPOSITION:

Support

California Chamber of Commerce

California Family Winemakers of California

California Legislative Conference of the Plumbing, Heating and Piping Industry

California Manufacturers and Technology Association

California Professional Association of Specialty Contractors

California Travel Association

Family Business Association

National Electrical Contractors Association

National Federation of Independent Business/CA

Northern California Allied Trades

Official Police Garages of Los Angeles

United Contractors

Wall and Ceiling Alliance

Western Carwash Association

Opposition

California Conference Board of the Amalgamated Transit Union

California Conference of Machinists

California Labor Federation, AFL-CIO

California Nurses Association/National Nurses United

California Professional Firefighters

California Rural Legal Assistance Foundation

California Teamster Public Affairs Council

Consumer Attorneys of California

Engineers and Scientists of California

International Longshore and Warehouse Union

Professional & Technical Engineers, Local 21

SEIU California

UNITE HERE

Utility Workers Union of America, Local 132

Analysis Prepared by: Jennifer Richard / L. & E. /