Senate Standing Committee on Labor, Public Employment and Retirement

Senator Cortese. Senator Wilk. Present. Wilk, present. Senator Durazo. Durazo, here. Senator Laird. Laird, here. Senator Smallwood-Cuevas. We have a quorum.

Okay. Quorum has been confirmed. At this point, we will turn to our presentation from our great chairman of the Appropriations Committee, Senator Portantino.

Mr. Wilk and thank you, committee members. I'm pleased to be presenting SB 799, which would restore unemployment benefits to workers who are unemployed due to participation in a trade dispute after two weeks. This year, we've seen an unprecedented level of Californians striking, demonstrating the strength and unity among our working class and also illustrating significant unrest in the labor market. Wage disparities, worsening working conditions, health and safety concerns and the threat of AI displacing human labor people power are just some of the concerns that recently motivated workers to strike. Deciding to go on strike is not an easy one. More often than not, it's the last resort for many workers. And I have to say, folks have this romanticized vision of a strike. There's nothing romantic about it. It's hard on that individual and on that family. I still remember my mother-in-law talking about the impact when my father-in-law went on strike. What the impact of the family was a decade after the strike. I mean, it's an emotional toll that it takes on a family. Workers put their livelihood on the line and bills pile up. Rent and other things don't go away when somebody's on strike. So for me, it's critical that for the worker and the economy to have security and to have a seat at the table, to be able to advocate for themselves without having the fear of losing their home or not being able to send their kids to school. So SB 799 would provide a lifeline for California's workforce while preserving the economy and the right to lawfully strike for better working conditions. By the way, there's a whole host of small businesses in the Los Angeles area. There's a list that I could read of small businesses that support the strike because the impact isn't just on the individual family. It has a ripple effect to the small businesses in those neighborhoods as well. So there's significant support for this. It's not something new. New York and New Jersey also have passed similar laws and have seen it work and not be a negative impact to those states. And so with that, I respectfully ask for an aye vote. We have Meagan Subers from the Writers Guild here and Patrick Henning from the Treasurer's Office as expert witnesses. So, Mr. Chair.

Thank you, Senator. Please come on up and you'll have a couple of minutes each. Thank you.

Thank you, Mr. Chair and members. Megan Subers on behalf of the Writers Guild of America West. And I'd like to just read a couple of comments from the President of the Guild Meredith Theme. The Writers Guild of America West represents about 13,000 Members in California who write television shows, movies, news programs, documentaries and online programming. Since May 2, writers have been on strike, standing up and fighting back against the most comprehensive assault on compensation and working conditions that we've seen in this industry in a generation. This fight for sustainable jobs comes at a high cost to our members in California who must rely on strike loans, mutual aid, philanthropy, second and third jobs to pay for food, gas and rent. One studio Executive anonymously commented to a reporter in July that the companies were waiting until fall or winter to make a deal with us. The end game, they said, quote, "is to allow things to drag on until union members start losing their apartments and losing their houses," end quote. Meanwhile, access to unemployment insurance for striking workers is the law in New York and New Jersey and has been on the books in New York for decades. Our colleagues at our sister guild, Writers Guild of America East, rightfully have access to it and use the benefits which they contributed to, to fulfill basic human needs and sustain them throughout the strike. Workers in California should be able to exercise their right to strike without losing their homes or facing financial ruin. It's time for California to catch up and meet the demands of the time. The writers may be the current example of workers who need it, but they are also the voice for the workers going forward who will need this protection if they make the very difficult decision to strike. So for those reasons, we ask for your support of this bill today. Thank you.

Patrick Henning, on behalf of State Treasurer Fiona Ma. I want to thank the author for bringing this bill forward. The treasurer feels that this piece of legislation is reasonable, particularly in the sense of trying to help bring stability to our communities. The decision to go out on strike as the author points out, is not an easy one and is one taken at the place where an employee is trying to make a decision between making sure his family or her family has what they need to continue on and make sure that they can stay where they're at oftentimes. And this little bit of money will go a long way, hopefully, to keeping people in the communities that they come from, helping them stay and help them towards being where they're at and bringing stability to continued stability to the State of California. Sorry, it's been a long time since I've testified in front of the Senate. Appreciate you all.

Thank you. Is there anyone in the room here in 2200 who wishes to come forward and indicate name, affiliation and support? Please proceed.

Mr. Chair, members. Sara Flocks, California Labor Federation, proud co-sponsor of the measure. Thank you.

Thank you, Mr. Chair and senators. Doug Suburs on behalf of the California Professional Firefighters in support.

Good morning, Mr. Chair and senators. Alissa Yum on behalf of the CSU Employees Union in strong support.

Good morning, Mr. Chair and members. Louis Costa with the International Association of Sheet Metal, Air Rail and Transportation Workers Smart Transportation Division in support.

Good morning, Mr. Chair and members. Ignacio Hernandez on behalf of the Communication Workers of America, District Nine in support.

Good morning, chair and members. Janice O'Malley with the American Federation of State County Municipal Employees in strong support.

Good morning, Mr. Chair. Eduardo Martinez on behalf of the 51,000 members of Actors Equity in support.

Tiffany Mok on behalf of CFT, in support. Thank you.

Seth Bramble, speaking this morning on behalf. Of the California Teachers Association. We are in strong support.

Good morning, chair and members. Jessica Hay with the California School Employees Association in support.

Good morning. Shane Gussman on behalf of the Teamsters, SagAftra, the Machinists, Unite Here and Utility Workers Union of America in support.

Thank you. We're going to go to opposition witnesses. Do we have opposition lead witnesses in the room? Please come forward. You'll have a couple of minutes.

Thank you, Mr. Chair. Good morning, Mr. Chair and members. Robert Mutrie, California Chamber of Commerce. We are opposed to SB 799 as a job killer. I'll thank staff for the thorough analysis on the very short timeline that it had to be done. Four key concerns here. Fundamentally, this bill does something new to California, which is it is a state weighing in on one side of this, any labor dispute going on now and all future labor disputes by redirecting money that employers contribute to the UI Fund to workers. That is a profound change and is profoundly different from what most states do, what California has ever done. To be clear, we do not disagree with the federal right to strike. That is not what this is about. But striking is a negotiating tactic whereby you choose a hardship and impose a hardship on the employer in the hopes of getting better terms. It is a tactic, and that is, I think, a fundamental difference from being unemployed. Second, I do want to flag the issue with the UI Fund and the tax implications for business. As I'm sure many of you know, the UI Fund is $18 billion in debt, is expected to rise to $20 billion in debt over the next two years. That creates tax increases on all employers in the state, small to large, across all industries. We expect those to increase for the next 10 years. We expect this to add, based on estimates we've done, about $2 billion to that amount over the next 10 years, looking at present striking rates. Third, I want to flag a federal law issue. There's been mention of New York and New Jersey in an implication that that makes this compliant with federal law. And there's also been mention of a Supreme Court case in 1979. Important to note, since that Supreme Court case looked at the National Labor Relations Act and these policies in New York in 1979, federal law has changed. In 2012, federal law added the requirement that people on strike be able and available and looking for work. That was not the case when SCOTUS reviewed New York's law in 1979. So that's a change in law and appreciate analysis. Flagging that point. Next, I want to touch on EDD. I think we try hard not to bag on EDD. They've gone through a lot. They're in the present difficulties of a five-year overhaul known as EDD Next. That is because of, as we all know, great failures during the pandemic in terms of providing quick and accurate claims, processing and recovering funds that were distributed mistakenly, some fraud, some not. We have grave concerns about EDD's ability to set up an entirely new program for a new class of claimants, those on strike in the middle of that overhaul as a feasibility risk for them, and ultimately a cost to employers as we pay for EDD's mistakes in distributing funds and failing to recover them. For those reasons, we are opposed to SB 799 is a job killer and I'll pass to my colleague from the restaurants.

Good morning, Katie Davy with the California Restaurant Association. We are respectfully opposed to SB 799. Between March and April of 2020, over 1 million restaurant employees were laid off to comply with public health orders that closed restaurants to stop the spread of COVID-19. The impact of the pandemic has left California's UI Fund facing an unprecedented $18 billion deficit, roughly twice the size of the deficit from the Great Recession. Many restaurants, like Ambrosia and Pizza Rock across California, shut down and never reopened. Those that managed to survive are dealing with significant debt. UI taxes are assessed on a per-employee basis because restaurants employ a lot of Californians compared to other industries, including a lot of part-time and seasonal jobs. We are getting hit particularly hard by these tax increases, and we'll get hit even harder as they increase over the next decade to pay down the deficit. I remember in 2017, when we were repaying a much smaller UI debt after the Great Recession, our government affairs team was flooded with calls from independent restaurants asking, what is this federal tax bill I just received? I don't have $30,000 in savings to cover this bill. Restaurants are often payroll to payroll and we don't have significant savings. So this kind of tax is a big deal to us. For restaurants and many others who are closed due to public orders, this is a fundamental issue of fairness. We are now left holding the bag when it comes to repaying the deficit in the form of tax increases over the next decade. During the pandemic years, the state enjoyed massive budget surpluses, and yet none of those funds were put towards repaying the UI debt. Despite proposals in last year's budget to provide some help, they were stripped this year and no help has been provided. My members do not see it as fair to now ask neighborhood restaurants to subsidize striking workers when we are presently paying increased taxes for the pandemic-driven UI debt. Employers who are not presently having a strike or who have never had a prolonged strike are going to be paying increased taxes under this bill. This is fundamentally unfair to neighborhood restaurants across California who will be paying more because of a labor dispute they have no involvement in. For these reasons, we are respectfully opposed to SB 799. Thank you.

All right, thank you for being here. Others who wish to come up with name affiliation and opposed positions.

Good morning, Mr. Chair and members. Chris McCauly on behalf of the Los Angeles Area Chamber of Commerce in respectful opposition.

Good morning, Mr. Chair. Ryan Allain on behalf of the California Retailers Association in opposition. Thank you.

Good morning, Mr. Chair and members. Matthew Allen with Western Growers Association. Also respectfully opposed. Thank you.

Good morning, chair and members. Nick Chiappe on behalf of the California Trucking Association, in respectful opposition. Thank you.

Good morning, Mr. Chair and members. Tricia Geringer with Agricultural Council of California. Respectfully opposed.

Nico Molina on behalf of the California Forestry Association and Silicon Valley Leadership Group and respectful opposition.

Good morning, chair and members. Katie Pettibone on behalf of Govern for California and respectful opposition.

Morning, Mr. Chair and members of the committee. Louis Brown, here today on behalf of the American Council of Engineering Companies, California Grocers Association and the California Fresh Fruit Association, in opposition.

Good morning, Mr. Chair and members. Sara Noceto on behalf of UCAN, which is a coalition of 11 regional Chambers of Commerce, in respectful opposition. Thank you.

Good morning, Mr. Chair and members of committee. Chris Walker on behalf of California's Union Sheet Metal Contractors in opposition. Thank you.

Felipe Fuentes on behalf of the Associated General Contractors of California, the California chapters, in opposition.

Faith Borges on behalf of the Family Business Association of California and the California Association of Joint Powers Authorities. Respectfully opposed.

Good morning. Dorothy Johnson, on behalf of the Association of California School Administrators, in respectful opposition.

Good morning. Bryan Little, California Farm Bureau in opposition. Thank you.

Good morning, Mr. Chair and members. Aaron Avery with the California Special Districts Association. Respectfully opposed. Thank you.

Good morning. Lawrence Gayden with the California Manufacturers and Technology Association. Respectfully opposed. Thank you.

Good morning. Sabrina Demayo Lockhart with the California Attractions and Parks Association, in respectful opposition. Thank you.

Good morning. Alex Torres, on behalf of the Bay Area Council, also here on behalf of the Los Angeles County Business Federation, in opposition.

Good morning. Obed Franco, on behalf of the California Hotel and Lodging Association, respectfully in opposition.

Good morning. Sarah Dukett on behalf of the Rural County Representatives of California and the Urban Counties of California, in respectful opposition.

Good morning. Alyssa Silhi, on behalf of the California Association of Recreation and Park Districts, and also on behalf of my colleagues at the California State Association of Counties, in respectful opposition.

Michael Miller of California Association of Wine Grape Growers in respectful opposition. Thank you.

All right, thank you all for being here. We'll go to the teleconference line now and ask the moderator to please prompt individuals waiting to testify in support or opposition of SB 799. And let's go ahead and begin.

Thank you. For in support or opposition, you may press one, then zero. We will go to line 15. Your line is open.

Good morning, Mr. Chair and members. Silvia Solis Shaw here on behalf of the City of West Hollywood and also on behalf of the California Faculty Association, in support of the bill. Thank you.

Thank you. Line 16. Your line is open.

Mr. Chair and members, Pat Moran with Aaron Regan Associates, representing the California Association of Professional Scientists in support. Thank you.

Thank you. We'll go to line 18. Your line is open.

Good morning, Mr. Chair and members. Tom Henske, on behalf of the United Auto Workers Region Six, in strong support of the bill. Thank you.

Thank you. Next, we'll go to line 12. Your line is open.

Good morning, chair and members. Jassy Grewel with UFCW Western State Council in strong support. Thanks.

Thank you. Line 10. Your line is open.

Good morning. Johnnie Pina with the League of California Cities in respectful opposition. Thank you.

Thank you. Line 22. Your line is open.

Thank you, Mr. Chair. Jack Yanos on behalf of the California Fuels and Convenience Alliance in respectful opposition.

Thank you. Next, we'll go to line 14. Your line is open.

Mr. Chair and members. Beau Biller on behalf of the Association of Western Employers in opposition. Thank you.

Thank you. And Mr. Chair, we have no further support or opposition in queue.

All right, excellent. Thank you. Moderator we'll bring it back to the committee and look to senators for comments here. Senator Laird.

I have a question, but let me make a few comments frst. And I listened closely to the testimony and authored the bill on EDD Recession Plan and planning and I think there's a process in place to actually look at this and take care in a way that there is planning for this. And the restaurant Ambrosia was mentioned as appearing to be a casualty of unemployment rights, but I think it was as much a casualty of some rather despicable and expensive vandalism that I think is the real reason that it went out of business. And on the policy, I'm good with the policy, but the money has been raised and the money is not in front of this committee and may well be in front of another committee. But my question is the numbers in the analysis are rather big about what the debt is. Do you have a comment on scale, like on, if you look at New Jersey or New York, what the participation is as opposed to what the scale might be of something like this if it's enacted compared to the overall debt?

I think that is the actual key question. The relative number of folks impacted relative to the total number of Californians, it's very small. First of all, there are only two strikes in recent time that have gone beyond two weeks. So, of course, that's the first thing. You have to be on strike at least two weeks to be eligible. Second of all, it's my understanding that we get about 150,000 unemployment claims a month just in general, and this in its totality, it's estimated to be about 150,000 over a period of time. So the scale is very small. Now, I would argue that the impact on the individual is far more important than the overall scale. The other piece I would talk about, the overall solvency of the fund. I think the second thing that this bill is doing, in addition to providing a safety net for those on strike, is it's providing us, I believe, the impetus to look at the fund itself. And I think that's something I'm committed to do next year, is to look at all of the way we can address the deficit and address the solvency of the Fund going forward. And I think this, in one respect, forces us to do that where before, I think we were just sort of watching it happen. And I don't think that's the right thing to do. We should engage in that conversation as well, and I think this helps us get there.

Okay, thank you for your answer. And I would just make one quick comment on it, which is I think the testimony really went at the solvency of the fund and not necessarily acknowledging the benefit on the other side to the individuals that are involved. So that's why I thought it was important to draw out the scale with regard to the fund. And I appreciate your answer.

And if I could, Mr. Chair, the benefit to those small businesses in that person's neighborhood. I mean, the strike doesn't just affect the individual, it affects the total universe of the economy and around. And so having the ability to still function, I think, helps the economy as well. So thank you.

Thank you, Mr. Chair.

Thank you, Senator. Anyone else? Senator Durazo.

Thank you. Thank you to the author. A couple of things here. I understand there were some issues raised about the well-being of the UI Fund being an issue. Now, we're not settling it with this bill, but I do think that we then ought to make sure that we bring up the issue of the wage base. How California is amongst the lowest in the nation as far as that is concerned. We only pay on $7,000. The Max is $7,000, along with Tennessee and Arizona and Louisiana. How can we have the strongest UI Fund when the tax is the lowest, some of the lowest in the whole country? So let's talk about all the issues, not just pretend that a strike or a couple of strikes might somehow have this horrible impact on the UI Fund. And I just want to say, in terms of my own personal experience in my life in labor, there were probably a handful in all those decades, a handful of strikes. And the majority of those strikes had to do with employers wanting to take away, wanting to lower wages, wanting to take away health benefits, wanting the workers to pay more in their health benefits or taking away a pension plan. These are some real essential issues that I don't think those workers ought to be left on their own to try and battle it out. It's hard enough. And the maximum or what they would be allowed to receive in actual benefits is so small. As you said, who knows? Maybe that buys the food for the week. So let's not pretend that somehow people are going to get rich out of this or that the UI Fund is going to fall apart. That's not the case. That's not the reality. Let's not try to spook ourselves into something that doesn't exist. So I appreciate your work, senator, and of course, will support.

Senator Smallwood-Cuevas.

And I appreciate the comments of my colleagues and the author for bringing this bill. And I want to express my concern for the long-term unemployment scenario. That's where I feel like we are investing and having to over-invest in our unemployment system because so few of our folks, particularly when we look at marginalized communities, folks with barriers to employment, are on unemployment because they can't get access to good jobs in their own communities. I think I have worked with workers who have been unemployed for 24 months, and this has nothing to do with strikes. These are workers who are trained and skilled and can't find good jobs in their communities. And we don't have a system to deal with the long-term unemployed so that we prevent things like homelessness. And those are the workers I think we should be talking about. How do we extend and address the deeper ways in which the ends are not meeting for workers when it comes to Unemployment Insurance, there are so few workers who are even unionized and even less who are actually going on strike. And I agree with my colleagues that this is an opportunity for California to not be behind the curve, but start to lead in ways of being creative about how do we provide real safety net, and particularly for the workers in our communities who need strong unemployment benefits. And this is a way of short-term safety net and then thinking about ways to build in for long-term. So I want to say I appreciate this coming before us that we are providing a safety net, but we have to do a longer conversation about Unemployment Insurance in this state and where we're making those investments. So I'm happy to support the bill when the time is right.

Thank you, Senator. I see no one else wishing to be recognized. Let me make a couple of quick comments. I am supportive of the bill. I think the author knows that. I think the best point that was made in the entire presentation, at least the part that I didn't miss today, was the idea that these dollars go directly into cash registers. These dollars go directly into local communities. These aren't folks that are going to take their Unemployment Insurance check and go open up a certificate of deposit or invest in Wall Street. This money is going right back into the very business community that to some degrees, expressed concern about doing this. I think the concern about the debt is well-placed. We all know that. Great opportunity, I think, because you elevated this issue with the bill. Senator Portantino gave folks an opportunity to raise this older issue of the debt and bring it back up again. I, for one, believe that we ought to be looking at opportunities for non-traditional general fund sources like assets that the state's been liquidating and so forth to provide some one-time relief to the business community. Because I think that too, goes to keeping the economy churning, to keeping people working. So we need both. And but I'll give folks a feather in the calf for being clever enough to bring that up during a hearing on a bill that really isn't addressing that particular point. So thank you for moving this quickly forward, I suppose in terms of everyone involved, including Committee staff that has to jump on these things and work on them and do analysis in short order, I can sort of apologize on behalf of the entire Legislature for the suddenness of some of these issues that are brought forward. But it's just the way things are done around here. It isn't pertinent to this particular bill or specific to this particular bill. So with that, again, thank you, senator, for bringing it forward. And I think we can ask you to close and then move to a vote.

Thank you, Mr. Chairman. Thank you for your comments. And I think that's the key piece. There is a relationship between a well paid workforce and the health of the economy. I mean, people who have money are consumers. Consumers drive the overall health of the economy. And what we're trying to do is find that balance, find that proper relationship and help folks. And this is a point in time where there's significant unrest in the workforce because business models are changing. And I think it's appropriate for that conversation to happen. And I see that's where you see if you drive around, certainly Los Angeles, you see whether it's the writers, the hotel workers, the frontline medical staff, the county and city workers, I mean, there's concern. And I think it's appropriate that we have that conversation. I do want to give a shout out to Senator Durazo is not just a supporter. She's a joint author of the Bill, as is Assemblymember Holden and certainly the Labor Federation for bringing this forward this year. At this point in time, I think this is the right time to have that conversation. And I appreciate all of that effort and all of the folks who are here on both sides expressing themselves. And with that, respectfully ask for an aye vote.

All right, thank you again. We'll go to the assistant to call the role. Oh, we do need a motion. Did anyone offer one? Senator Dorazo. Thank you.

File item number one SB 799. The motion is that the assembly amendments be concurred in Senator Cortese. Aye. Cortese, aye. Senator Wilk. No. Wilk, no. Senator Durazo. Durazo, Aye. Senator Laird. Laird, aye. Senator Smallwood-Cuevas. Smallwood-Cuevas, aye. Those amendments are concurred in four to one.

All right. The amendments are concurred in four to one. And with that, thank you, everyone, for being here. This committee hearing is adjourned.