Assembly Standing Committee on Judiciary

Good morning, everyone. Welcome to the Assembly Judiciary Committee. Just a note, that item 11, SB 42 Umberg on the consent calendar has been pulled from today's hearing. The rules for witness testimony are that each side will be allowed two main witnesses. Each witness will have approximately two minutes to testify in support of our opposition to the bill.

Additional witnesses should state their names, organization, if any, and their position. As we proceed with witness and public comment, I want to make sure everyone understands that the committee has rules to ensure we maintain order to run a fair and efficient hearing.

I will elaborate on that if it is necessary, and I hope that won't be necessary today. And so we don't have quorum at the moment, so we will proceed as a subcommittee so we can begin hearing bills. And we do have a Senate author here with us today for file item one, SB 278. Senator Dodd, whenever you're ready.

Mister chair and members, I'm presenting SB 278 pertaining to elder financial abuse. SB 278 is about protecting seniors from financial scams, plain and simple. SB 278 is about updating current law, excuse me, to make clear what financial institutions who are mandated reporters of elder abuse need to do to protect elders when there is reasonable suspicion, that a senior is likely being scammed. And SB 278 is also about providing banks, credit unions, and others liability protection when they do the right thing to protect elderly people and their customers. Elder financial abuse is everywhere. Losses exceed $23 billion annually. Once a senior falls prey to financial fraud, they may never recover.

As mandated reporters, banks and credit unions are well positioned to detect when an elder may be the victim of a scam or other financial abuse and take action to protect elders from devastating losses of their life savings.

Unfortunately, our current financial elder abuse statute is not as clear as it should be on what steps a bank or credit union should take to protect against senior scams. SB 278 will help protect seniors by enabling a comprehensive, upfront scam prevention policy for California banks and credit unions.

Mister Chair, your committee analysis focuses on proposed amendments pertaining to the enforcement of SB 278, a Bill that we've worked on for the last 18 months. My staff and sponsors work closely with your consultant to craft what I think is a fair, tiered and narrow enforcement mechanism, which limits the levying of serious penalties to really, really bad behavior, which is a very high standard to prove. I want to extend my thanks to your consultant.

She worked tirelessly with my staff to listen to all stakeholders and help us draft what I consider is a reasonable compromise. With me today is Ave Williams, the daughter of two victims of elder financial fraud and Kirsten Fish with Consumer Attorneys of California.

Good morning, Mister chair and members. My name is Ave Williams from San Diego, California, and I'm here to urge your support of SB 278. My parents, Ave and William Bortz, are now 80 years old. They became victims of elder financial abuse through an Amazon fraud scam.

The scammers contacted them, pretended to be Amazon refund center employees, and conned them into giving them access to their desktop computers. The scammers then bullied, harassed, and pressured them into sending wire transfers to Hong Kong to facilitate the Amazon refund. The result of this was the draining of their bank account.

In eight days, they lost just under $700,000. We contacted the sheriff's Department, the FBI, Adult Protective Services of San Diego, county, and the Secret Service for help with the criminal side of this matter. But they were unable to bring the scammers to justice. There is also an important banking side of the equation.

Even though my elderly parents had never sent an international wire transfer in their life, they were allowed to set their bank processed four large wire transfers to different bank accounts in Hong Kong in eight days with no questions asked. The first three wire transfers were for just under $200,000 each.

The final and fourth transfer was for $97,500, which fully drained their bank account. Their bank did nothing to protect my parents from what is been officially declared financial elder abuse by Adult Protective Services. In fact, when we reported this elder abuse to the bank, their representative blamed my parents for the scam, calling them willing participants in the scam.

When my parents tried to hold the bank accountable, their case was dismissed in federal court because California law is unclear as to what banks must do to protect the elderly customers from these well-known scams. This did not need to happen to my parents.

The stress and trauma caused by this financial abuse accelerated my mother's deterioration with advanced Alzheimer's. My parents now live in an assisted living facility, and this money was meant to provide for their needs. The money stolen from them came from the sale of our family home they'd owned for 50 years.

Instead, our family now worries about how we must fill the gap. The fact that this was preventable haunts me to this day. Banks are the financial experts and the ones with the knowledge of their customers, banking patterns, the dangers of the fraud, and the skill levels of the scammers. They are the guardians at the gate.

SB 278 is a vital first step to helping prevent financial abuse, because without clear guidelines and accountability, seniors like my parents will continue to be left without justice and protection. I urge your support for SB 278. Thank you, thank you.

Good morning, Mister chair and members. My name is Kirsten Fish, and I am here on behalf of the bill's co-sponsor, Consumer Attorneys of California. As a former law professor and an attorney, I have spent the last 20 years of my career focusing on representing elders who are victims of financial and physical abuse.

And over the years, I've received many heartbreaking calls from elders exactly like Miss Williams' parents who have been swindled out of their entire life savings by scammers. I've met victims who have become homeless and who've had to rely on family or public assistance once their life savings are gone.

And we all have a role to play in preventing financial elder abuse. And financial institutions who are mandated reporters of such abuse have a pivotal role to play in preventing this type of abuse from happening.

SB 278 is a narrow Bill that follows the research and the advice of experts, including the FBI, the American Bankers Association, the CFPB, and AARP, on how to best stop elders from losing their life savings to scammers. It provides a clear roadmap for financial institutions to follow to protect their older customers from financial ruin.

It requires they establish an emergency contact program and take specific action to intervene when they reasonably suspect financial elder abuse is occurring in connection with transactions of $5,000 or more and to encourage vigilance in identifying financial abuse. It also provides liability protections for banks who delay a transaction or who make a disclosure to a joint account holder or a designated financial contact.

And the tiered enforcement approach here is also meant to incentivize compliance with the law by enacting a civil penalty of up to $5,000 for noncompliance and any further liability would only attach for failing to contact a trusted contact or placing the three-day hold if there's a reasonable suspicion of financial abuse.

By encouraging banks and financial institutions and credit unions to put a hold on transactions that they suspect are abusive. We can add a strong layer of protection to prevent seniors like Miss Williams parents from being financially abused. I respectfully request your support. Thank you.

Thank you. Is there anyone else here in support of SB 278?

Deb Roth, Disability Rights California in support thank you.

Good morning, chair and members, Marie Lopez with the California Nurses Association in support.

Thank you.

Art Persico, California Alliance for Retired Americans in support.

Thank you.

Brandon App on behalf of the co-sponsor, the California Low Income Consumer Coalition, as well as follows. Bet Tzedek Legal Services, Centro Legal De La Raza, Community Legal Services of East Palo Alto, Contra Costa Senior Legal Services, Elder Law and Advocacy, Legal Aid of Marin, Legal Aid Society of San Bernardino, Legal Assistance of the Elderly, Legal Assistance for Seniors, Open Door Legal, Public Counsel, Public Law Center, Riverside Legal Aid, Santa Clara University Law Center and Watsonville Law Center. Thank you.

Thank you. Is there anyone here in opposition to SB 278?

Thank you, Mister chair and members of the committee, I'm Jason Lane with the California Bankers Association and I want to thank the author for his continued effort to work on this.

We spent, the industry spent 18 months trying to figure out a proposal that would strike a balance between protecting seniors from scams but also not causing an overreaction by the financial services industry that would deny vital funds to seniors because of the liability attached to the bill.

We were pleased as an association to remove opposition to the Bill and the Banking Committee. But we did warn in the committee that the bill has unintended consequences, and those unintended consequences are the result of the provision of the bill that requires institutions to hold transactions of $5,000 or more.

And we warned that in some cases, some institutions will just default to holding the transaction entirely. We're a heavily regulated industry and the industry is all about risk mitigation.

And so my members will always try and find the straightest path to compliance and in some cases that will be just to hold a transaction rather than injecting subjectivity into a decision as to whether or not there is a reasonable suspicion of fraud.

Unfortunately, we also warned in the committee that a PRA, depending upon how it's drafted, probably magnifies those unintended consequences tenfold. And unfortunately, the amendments that the committee that the committee is considering has CBA back in opposition to the bill. It is a PRA, but it is also statutory damages for a technical violation.

And while Senator Dodd has said that it's only for the worst of the worst actors, unfortunately, we don't believe that's true. Troubled damages, non-economic damages, pain and suffering, and there doesn't have to be any direct cause of financial harm to the senior, and we have asked for that.

If there is a PRA, we believe the plaintiffs must have to prove that the actions of the institution directly resulted in financial loss to the senior. And unfortunately, it is not in the provisions that the committee is considering. Additionally, employees are still held civilly liable under the amendments that the committee is considering. We must respectfully oppose the bill.

Good morning, chair and members. Robert Wilson, California Credit Union League. First, I'd like to acknowledge the Senator. He's done a lot of work on this issue over the last 18 months and trying to bring all parties together. We truly appreciate it. You know, the issue of elder financial abuse is something that credit unions take extremely seriously.

As everyone has indicated, we are mandated reporters under current law. You know, what happens when we end up reporting that instance of when we suspect elder financial abuse is probably a story for another day. But it is our strong belief that the bill in print, the bill that came out of Banking Committee, is something that will prevent fraud.

It is something with the emergency financial contact system that our institutions will be able to contact someone's daughter, son, whoever may be friend or family, saying, hey, look, we think your folks are undergoing a scam, and then they can hopefully talk them out of that scam.

We also believe that the hold is going to cause some consternation among seniors saying, hey, look, you can't have your money you want today. But in instances where they reasonably suspect elder financial abuse, it's probably a good thing. As my colleague with the banker said, you know, this bill is going to create some friction.

And how much friction the bill creates really boils down to the potential enforcement mechanism in the bill. You know, as my colleague said, we believe it goes a little too far in this instance.

And we think there's a possibility that credit unions will overcorrect and will start holding more transactions than they should, which will lead to seniors not accessing their funds, which is not something anyone wants. I also want to highlight the issue of personal liability. My membership takes great issue with that.

You know, we're in the business in California State Legislator protecting workers of all classifications. It remains a mystery to me why we are going to go after supervisors of financial institutions. We appreciate it not being on the tellers, but the supervisors are still generally young, working their way through school, and could really ruin a 20 something year old's life. And we don't want to see that. So thank you for your time today. And.

Thank you. Is there anyone else here in opposition to SB 278?

Good morning. Lindsay Gullahorn with Capitol Advocacy on behalf of the California Community Banking Network. Respectfully opposed.

Thank you. Bring it back to the committee. Any questions? Assemblymember Pacheco.

Thank you to the author. Thank you for this important legislation. It is important to protect our elderly individuals given the fraud. And I'm just curious to know with respect to opposition. I know they removed their opposition in banking. I'm curious to know why we're amending this bill to add the PRA. I mean, this is to the author.

Well, we're going to Judiciary Committee and these are the, these are the amendments that were worked out with the chair and the consultant. Certainly, there has to be enforcement on a bill. And I will point out most of the banks and credit unions in the State of California do an awesome job.

I myself went in, and I am a senior, went in for a wire transfer to wire some money somewhere. And my bank asked me three or four questions about the transaction. Do you know where this money is going? Do you have a relationship there?

Do you have an account, you know, ask those questions that are the very basis of, you know, of our bill. So I was quite thrilled about that, frankly. But unfortunately, we do not write legislation for all the good actors. We're writing legislation for those actors that don't comply, that don't, with the, with just the basic standards.

I think that should, that other banks certainly recognize and are doing on their own. So I talked to the chair. We're working together on this. I don't believe that what I've heard from the opposition today about a customer must have damages. That makes sense to me. We'll have those discussions going forward. We've worked with them for 18 months on this. I certainly don't think that this should be a hold-up on this Bill today, hopefully. But if you have any further questions.

Senator Dodd, if I can elaborate, banking didn't, it left banking without an enforcement mechanism. And so I think there was understanding, certainly from the banking committee that judiciary was in the best position to actually add the enforcement mechanism. I don't think that was lost on all parties, although I understand why there may be concerns.

And quite frankly, there's been really good communication with opposition. This is not, and that's going to continue. The original version that our committee put forth in terms of enforcement mechanism was a much broader private right of action.

It's been narrowed and I think tailored to the point where the significant damages would only apply if there's really repeated offenses or reckless disregard. That's proven, and that's a very, very high standard.

And I don't believe, quite frankly, that we would actually see that happen often, if at all, given the fact that the banks have worked closely with Senator Dodd in creating the criteria that would be required before that would be triggered.

And so I think that is, I think that what our committee has put forth in terms of amendments for enforcement is very fair. I don't think it's overreaching. I don't think it's harsh. I think, it also exempts non-supervisory employees. When we met with the banks, they had concerns with the tellers being liable. We added that in there at the request of the banks.

And now I guess the line's moving to supervisory employees, which is, you know, but at the end of the day, where you are really trying to listen to what some of the concerns are and have a fair and balanced enforcement mechanism because, without an enforcement mechanism, it's just a piece of paper.

And actually, I would like to hear from opposition as to this amendment.

Thank you for the question. From the discussions that we had with members of the Banking Committee leading up to the hearing, we. It is true, the Banking Committee assumed there would be an enforcement mechanism, didn't necessarily assume it would be a private right of action.

There are other enforcement mechanisms, and it certainly, I don't think anybody contemplated that the PRA would be as sort of draconian as it is being contemplated by the Committee. There are ways to do a PRA that show that hold a financial institution accountable when there's actual direct harm that's caused by the institution's actions. That's not what this is.

So is there an enforcement mechanism that can be established that doesn't include a PRA?

We have submitted language that we think could work that is actually a PRA, but it is crafted in a way that ensures that there is causation, there's a direct harm to the consumer.

And we unfortunately did not have success in having this bill put over to next week and have not received an answer from the sponsors as to whether or not they're amenable to it. It also doesn't make sense for us to have statutory damages and a PRA. Those two things don't really go together.

A statutory damage is like a pay-per violation that you pay the government for an error. It doesn't belong. If you're going to have a PRA, you don't need statutory damages.

And if I can elaborate on that, the reason why there's statutory damages is for the more De minimis violations, not to open that up to a PRA. The private right of action is in situations where there's more egregious conduct. And so the initial draft of committee amendments was a PRA for any kind of violation.

We actually pulled that back and had a simple statutory per violation penalty because we felt it would be more fair to not treat every single incident the same way with the PRA, but rather only those with either repeated offenses with reckless disregard, again, which is a pretty high bar. And so I don't think that this PRA in any way is egregious or does anything but I think hold even those that have more reckless behavior account to account.

And so, and to be fair, the opposition did provide some potential amendments yesterday, and our committee is committed to continue to work with opposition and with the author as well as the sponsors going forward. A lot of this is moving forward pretty quickly. We have a lot of bills next week as well.

So we wanted to get this moving forward with an enforcement mechanism, but it doesn't mean conversation will stop. Madam Vice Chair. Sorry. I'm sorry.

One more question to the author. Are you committed to working with opposition to do some more cleanup language on this bill?

Absolutely. Absolutely. I'm in receipt of the same document that the chair is, and we're working on that.

Okay. Absolutely. I will be supporting this bill today, but I would like to see the conversations continue to happen so that way we can fine-tune this bill because I think it is important to protect our elderly individuals. So thank you very much to the Senator for all the work that you do in this area, and thank you for always being open to working with opposition.

Thank you.

Thank you, Mister chair. Well, those were many of my questions, but just to reiterate, I think we all agree we're so close, but yet so far we agree that we need to help the seniors be protected from those abusive, illegal transactions.

But I am concerned that this came, I'm in the Banking Committee and I thought we were all good to go. And then now we have this PRA amendment and it's concerning to me. So I don't know if it's not even a hammer. It's kind of a giant barbell on the banking institution.

So I guess I'll just echo what's been said, I hope. How does this happen to work through the amendments? Now it's not coming back to this committee, so we'll go the next time we see this bill will be on the floor.

Well, as is oftentimes the case when bills go through committees, it doesn't mean that the committee process stops in the sense that if there are changes made, they usually consult back, just as we have with the Banking Committee staff.

They'll continue to work with Banking Committee staff and our staff, as conversations continue, just to ensure that everybody is okay with any changes that are made going forward. So it doesn't, our committee of Staff continues to work even when bills leave the committee, and that will be the case here, too.

But then we'll see it in its hopefully revised form on the floor.

When it comes to the floor, you will have an update as to whether there have been changes made and if there are what those changes are, and that update will be provided by committee staff.

Because I think it's really so profoundly important that we've got a great bill. And thank you, Senator, for recognizing this need. And we're not probably talking even about the bad operators, and there are those in all industries, but we could talk about millions of millions of infractions or problems here.

And so I'm just concerned about the effect on the banking industry. So I applaud what you're doing. You've been working hard on this for 18 months. And I, and when it came to banking, I thought that was, we've reached a good conclusion, but now it's kind of thrown a wrench. So I'll be withholding support. I'll be opposing this because I believe to send a message that this needs to get resolved.

It's such an important bill, and we cannot be putting these intense penalties on our banking, our financial institutions, who will be, who are in the business of helping their consumers and to make them reticent to step in and observe transactions in the subjective, use the word subjective. That's really what a lot of this is, is subjective.

And to compromise a teller or a supervisor who's on the floor making these profound decisions and having to be subjective about it, I just think there's, this is the area where we really need to sort through the fuzziness here. And I'll look forward to the amendment that everyone can agree on enthusiastically to help seniors to avoid these problems. So I'll be voting no, but with confidence that when I see it again on the Assembly floor, we could all agree that this is the right solution. So thank you very much.

Thank you, Assembly Member Mckinnor, really quick.

And I know that I'm late, and I'm sorry for that, but the same questions that the two Assemblywomen have. I'd like to see you guys continue to work with the banks.

I think the enforcement has to be a little bit fine-tuned to make sure that, like you're saying, the tellers at the, at the window are not trying to make the decision. And so I'd just like to see you continue to work with the opposition. Love the bill. Love to protect seniors, hate this is happening to them. But I'll give you an aye vote today. Thank you.

Well, thank you all for your comments. And I would just say that, look, we removed personal liability for non-supervisory employees like tellers, but at the end of the day, the tellers are the ones that are usually having that first contact with our seniors and with all customers.

And so the protocols that are put in place, much of which was worked on together with Senator Dodd and the sponsors and the opposition, I think are really good kind of guardrails that are in place. And so I commend all parties for getting to that place.

At the end of the day, we have to remember why we're here and why this bill is here. I care for my father, who's also 80. He gets anywhere from 10 to a dozen, if not more messages through email and texts every single day of people trying to defraud them. It is rampant.

And I applaud the banking industry for recognizing that and want to be part of the solution. I applaud Senator Dodd and the sponsors for taking this so seriously. I think everyone's taking it seriously and I don't want to imply otherwise. I do think that we need an enforcement mechanism.

I think that we'll continue to certainly, you know, look, look more closely and what was offered by the opposition. I think what we put forward is very fair and it really only allows for more serious damages, for more egregious behavior.

Otherwise, it's a pretty, all things considered, minor slap on the wrist for typical violations of a teller or somebody else making a mistake. And that was intended. We don't want to punish banks because someone made a mistake. We don't want to overly punish them for that behavior. So I appreciate our staff for coming forward with what I believe is a thoughtful enforcement mechanism and look forward to continued conversations.

I just want to clarify who's the bad operator here? It's not the banking and the financial institutions. It's the people. Who are the people that are doing that to you? All the seniors, your father, everyone else. How do we go out? That's where the enforcement action should take place.

And those are the ones that you come after with criminal act. You come after criminal laws as well as civil laws and go after them. But in the situation where someone's in Hong Kong defrauding, at the end of the day, at the end of the day, it's not about who's more at fault.

At the end of the day, who's in the best position to prevent that fraud? Is it our seniors, our elderly? Or do the banks have some role in which they can step in and say, you know what, there's something fishy going on here? So it's not saying they're equally bad. That's never been the question.

That's never, that's certainly not the case. It's just that oftentimes those that are doing the defrauding, we're not going to get them. These are international folks. And so how do we prevent our seniors and elders from being defrauded?

I think the best position we can put ourselves in is to work with our bank industry to make sure we have these guardrails in place which they've worked very closely with Senator Dodd to put in place. And let's figure out the finality of the enforcement mechanism and move forward. I think we can get there. Senator Dodd, would you like to close?

Yeah. There is going to be some enforcement and I appreciate working with the opposition here, but when it comes back to you on the floor, most certainly there is going to be enforcement and there needs to be enforcement.

We heard from our testimony today that where you have victims that have never wired, there are telltale signs banks do this today already. Unfortunately, they're all not required to do it because they're not all required to do it. We have situations like this so there will be enforcement.

I've taken seriously the concerns that they have on what we have to date and I'm looking forward to those conversations as we move forward. Thank you. Respectfully ask for your aye vote.

And before ash, if we can have quorum established and then we can move forward.

[Roll Call]

All right, we have quorum and do we have a motion? We have a motion. We have a motion and a second.

Motion's do pass as amended. [Roll Call]

Right, that bill is out. Thank you, Senator Dodd.

Thank you, Mister chair.

Thank you, everybody.

I don't know. I don't know. If we can have a motion on consent. All right, motion a second. Take roll call and consent, please.

Consent includes SB 73, Seyarto, to appropriations, SB 899 Skinner, to appropriations, SB 963 Ashby, to appropriations, SB 989, Ashby, to appropriations, SB 1106, Rubio, SB 1146, Wilk, SB 1340, 1384 Dodd, to appropriations.

Kalra? Aye. Kalra, aye. Dixon? Aye. Dixon, aye. Bauer-Kahan? Bauer-Kahan, aye. Bryan? Connolly? Haney? Haney, aye. Maienschein. Maienschein, aye. McKinnor? McKinnor, aye. Pacheco? Aye. Pacheco, aye. Patterson? Reyes? Aye. Reyes, aye. Sanchez?

All right, consent calendar is out. Senator Umberg was here a moment ago. Hopefully he's out in the hallway.

Okay.

She did it. All right. Good work. I like that hustle. Yes. We have two bills from Senator Eggman starting in file item eight, SB 1184. Feel free to catch your breath before you begin.

Talking points, catch the breath. Okay, we're starting with 1184, correct? Okay, great. Thank you very much. And good afternoon. Is it good morning? It's still good morning. Good morning, everybody. I'm happy to be here with you today, running from Committee to Committee, like all of you.

And I want to begin by thanking the Chair and the staff for working on this bill. We had a great idea, a problem we're trying to fix, and we think your help with it really allows us to actually address the problem and kind of assess if there's a bigger issue going on which may need more legislative fixes down the road.

So SB 1184 will allow a medication order to remain in effect until a subsequent hold period under exigent--hard word, my staff gave me very hard word--circumstance. It also requires data collection and reporting timelines of the Riese hearings, which will inform public policy.

So right now, if somebody goes in on a 5150 hold, let's say, and they find them unable to accept medication voluntarily, go before a judge, get a Riese hearing where medication can be given.

Oftentimes, though, if somebody is going from a three-day hold to a week hold to a two-week hold to a month hold, oftentimes they have not regained capacity. As soon as they regain capacity, by law, you can no longer force medication or give medication without consent.

But this will allow, if a Riese hearing can't be scheduled before, while the other hold starts, that that medication order will be able to continue until the next hearing can be heard so that patient doesn't slide back while they're still in the hospital, creating chaos for both themselves as well as the other clients and staff.

The quickest way to get somebody in a full restraint, which nobody wants to do, is to have somebody under treatment, but in a facility, but not properly medicated or anybody able to work with them. Safety issue for everybody. Again, we don't think this is a massive problem, but you'll hear from Dr. Cheung that it is a problem.

And so we feel like this fixes it. And the Committee's work on this, providing reporting aspects, we think we'll really be able to demonstrate what we're trying to do. With me today is Dr. Erick Cheung with the California State Association of Psychiatrists, as well as Randall Hagar.

Thank you.

Good morning. Thank you, Assembly Committee Members. As mentioned, my name is Dr. Erick Cheung. I'm the Chief Medical Officer of UCLA's neuropsychiatric hospital. I'm speaking as a member of the California State Association of Psychiatrists and as an ER and inpatient psychiatrist for the past 17 years.

SB 1184 fixes what I call the Riese gap, which is a significant disruption in the medical care of patients and causes treatment to be stopped in a patient who has already been evaluated to lack decision-making capacity. And this happens simply because they're moving from one phase of a hold to another.

These medication stoppages typically last between one to four days as the patient and hospital staff waits for the capacity re-hearing. The Riese gap impacts the most seriously ill patients all across California, and I'll give you this illustration: a young man with schizophrenia was admitted to our hospital on hold after having suffered multiple skull fractures.

His core psychotic symptom was a delusion that he needed to save humanity by falling backwards and striking his head on the ground. He did this multiple times a day. Sadly, he did not understand and believe that he had schizophrenia, and he refused medications. The Riese petition was granted on his 14 day hold.

The patient started medication and he began to improve. Then, upon filing his 30-day hold and a new Riese petition as required, he fell into the Riese gap and his medication was stopped as he waited three days for his capacity hearing.

His family and our hospital staff watched as he slid backwards, his psychosis worsened. His attempts to fall backwards and strike his head were more severe. He had volatile mood, nausea, headaches from stopping the medication and disrupted sleep.

So when the Riese was reinitiated, we resumed the medication, but it was clear to everybody, the family, and us that he was starting over in his treatment. The Riese gap causes undue medical harm to patients by worsening their illness, exposing exposing them to risks of sudden discontinuation of medicine and safety risks from agitated behaviors. I ask for your support in SB 1184.

Thank you.

Mister Chairman, Members of the Committee. Randall Hagar, representing the Psychiatric Physicians Alliance of California. And we would say much the same thing. We did survey our members from San Diego to Sacramento, San Francisco, Orange County, LA, you name it. We have doctors who have experienced the rebound effect.

When somebody goes through a process of becoming stabilized in a hospital and then for administrative reasons, because the hearing cannot be timely, they get worse. And the rebound effect that Dr. Cheung refers to can be quite severe.

They can experience symptoms that are worse than those that they presented when they were first admitted to the hospital, and that means their treatment has to start all over again and restabilization needs to be attempted. They stay in the hospital longer, they may have more holes put on them.

And I think it's an outcome that we, none of us, want to see. So we, as psychiatrists representing psychiatrists, we recommend this bill to you for those reasons. Thank you.

Thank you. Is there anyone else here in support of SB 1184?

Good morning. Lizzie Cootsona here on behalf of the California Academy of Child and Adolescent Psychiatry and the California Medical Association, in support. Thank you.

Good morning. Dylan Elliott, on behalf of the City and County of San Francisco, in support.

Thank you. Is there anyone here in opposition to SB 1184? Can you come to the table?

Thank you, Mister Chair, Committee Members. Deb Roth with Disability Rights California, in regretful opposition. We appreciate the stellar work of your Committee staff. The analysis provides a lot of important detail about the legal issues you are considering. It boils down to psychiatrists taking one view, while patients and civil rights attorneys have an opposing view.

I'd like to tell you about Eleanor Riese, the plaintiff in Riese v. St. Mary's, which is the landmark case cited extensively in the analysis, for the proposition that an involuntary detention does not take away your right to refuse medication. And it is a right, and it triggers a hearing if your doctor disagrees with your refusal.

Eleanor Riese had schizophrenia. Her psychotic episodes were controlled by powerful antipsychotic medication. But there was a price. She suffered seizures and long-term bladder dysfunction. She stopped taking her medication, but because she began experiencing psychotic symptoms again, she voluntarily sought treatment at a hospital, intending to take the medication again. Her symptoms improved, but the side effects return.

She began to refuse the medication. At that point, the hospital changed her status from voluntary to involuntary, and forcibly injected Eleanor with medications that harmed her. She won her case. But on the same day the California Supreme Court dismissed the hospital's appeal, Eleanor died.

She was 47 years old, and her death was due to renal failure attributed to the medication side effects. It's well accepted side effects can be fierce, fiercely awful and medications don't work for everyone. Metabolic syndrome with high cholesterol, weight gain and other symptoms leads to cardiovascular problems.

One study estimated patients taking antipsychotic meds die on average 10 years sooner than those who are not taking that medication. Thank you very much.

Thank you.

Hi. Good afternoon. My name's Clare Cortright. I'm an attorney, but I am not a civil rights activist. I'm a woman with a psychotic illness. And it is my constitutional rights and my body that are affected by this bill.

My community does not understand why we are here when the existing statute requires a court to hear a Riese no later than 72 hours after a doctor files it, no exceptions. If gaps are occurring, it's either courts or doctors who are to blame. Why should I lose rights?

Unfortunately, what is in the record to justify this bill is a few stories that if they are taken to be taken as representative of all 150,000 people each year placed on involuntary holds whose rights are affected can only be described as negatively stereotyping my community. Unfortunately, there is no data in the bill file to support this bill.

Also, currently there is a class of people who are winning their Riese hearings and this bill pushes that back three days. Those clients were found competent. This bill would subject them to involuntary medication while competent.

This is the correct forum for the impacted protected civil rights minority to request from each of you, our elected representatives, that you please explain to us your vote on this bill. Thank you.

Thank you. Is there anyone else here in opposition to SB 1184?

Danny Thirakul, on behalf of Mental Health America of California, in opposition.

Rachel Bhagwat on behalf of ACLU California Action, in opposition.

Mari Lopez with the California Nurses Association, in opposition.

All right, we'll bring it back to the committee for any questions, comments or motions.

We have a motion and a second. Assembly Member Reyes.

This was a difficult bill for me because it's so important to be able to protect the liberties of each individual. I think what makes a difference here is the author.

Quite frankly, knowing your background, knowing the fact that you have worked so hard to protect individuals and to work to make them better and to find ways to protect them, that made a difference. Now, one of the comments from the opposition is once a hearing is requested, it's 72 hours for a hearing. She talked about delays and what would cause delays. Can we address that?

I can address that. Take a scenario. The patient is being treated today with maybe twice daily medication, morning and night. If I file the Riese hearing request immediately this moment, it is very unlikely that it will be heard tomorrow because the court simply cannot keep up with that pace of a request.

So by tomorrow morning, the medication will be missed. In all likelihood, best case scenario, the Rees hearing will be heard two days from now.

And during that period of time when you're not able to provide the medication, tell us again what the effect is of that.

The typical effect is the worsening of the original condition. So when we commonly are treating conditions like schizophrenia, psychosis or bipolar disorder, the symptoms of that illness begin to get worse almost immediately.

There was also comment by the opposition that more and more of the patients who are asking or who are defending themselves in the Riese hearings are being found competent. Are you finding the same thing?

We don't find that in the cases that we bring forward to courts for requests for Riese. In the vast majority of cases, these are patients who are so profoundly ill that we have sought the Riese in the first place. They have had an initial Riese hearing on the 14-day hold. They have found a lack capacity.

They still actually have the right to file a writ on that Riese. And they can do that at any time. They could do that on day one or they could do that on day 13 or 14. So there actually is an important right that still is retained there.

We have to file the next Riese with the 30 day hold in this case, and that begins a new clock for the patient, and that's where the gap begins. They could still actually file a writ at that time through the chair.

I'd like to ask the opposition, you've heard the response, and I'd like to know your thoughts on it.

Sure. There are patients winning these hearings. There would be data for your patient rights offices showing that there are patients winning these hearings. What that Riese case held was that before a Doctor could involuntarily medicate you, you had to be found incompetent first. Now there, that changes, right? Competency can change. These medications are supposed to restore competency.

That's why our folks can win the second hearing. Restore competency. The Doctor is correct. A patient could file a writ. But that wasn't the finding of the Riese court. Right. The Riese court said you have to be adjudicated first before the Doctor can involuntarily medicate you. It's the Doctor's burden. It's the state's burden to do that.

For a patient to file a writ, they would have to know who to call, they would have to know that they have that right, and they would have to understand it correctly and employ it correctly and so repeatedly, both within voluntary holds and with Riese hearings. That's why the burden is on the state.

The state has to drive the process. The patient rights advocates has to go approach the patient and say, hey, you have this right. Do you want to exercise it?

So, I mean, and interestingly, you know, Riese, the basis of that right, that right to first be adjudicated incompetent before a doctor can make treatment decisions for you is one that y'all won. It's one that sane people won for themselves, and it's the same one that was extended to us in Riese.

So it's true that the patient does have writ options, but it's also true that these Riese hearings are mandated by the Riese case, and we do have folks that are winning them.

And when you pass this bill and you give doctors the ability to, to only give a court 8 hours notice to try to get that hearing done, and then they can invoke that as an exigent circumstance and continue to involuntarily medicate folks we know are winning these hearings for three days.

I mean, we think that's a serious issue. We would prefer to see this bill cut back to just the data reporting and figure out how big of an issue it is, because I do have respect for medical professionals. I do understand they care about their patients.

But also, we should absolutely not make public policy based on anecdotal evidence, especially with something that's important.

I will also add, if it helps, one of the other amendments that the fine staff provided for us that we're taking is that the physician can now apply for the Riese hearing early if they think someone's not going to, to hopefully also avoid that gap. The point is to try to avoid that gap.

And having someone, I mean, even any medication you take. Right. It says, don't just stop it without a Doctor's order. And again, these are powerful medications, although I will say different from the 1980s, from when this case was heard. Medications have a few side effects, but this will help provide the data.

This will help give us all a better understanding and hopefully provide seamless treatment for everybody. Thank you. Thank you.

Thank you, Senator, for your continued work in this space. As indicated by Senator Reyes, you've done tremendous work and great respect for you in this space. And I also, we all have to understand the constitutional rights of those that are coming before the court.

And the amendments really are designed to make it really, in the most cases, unnecessary. If physicians have now 48 hours to make that request, there can be a hearing that's done.

So the whole goal of the amendments, in addition to the data tracking and the sunsetting of the exigent circumstances portion, and I think the data tracking is going to be critical for us to come back and say, okay, is it working as intended?

But the amendments really are designed so that it will probably be rare because we've extended the amount of time that a physician can make that request for a hearing.

And so it's a difficult bill for me, certainly, but I think we've struck a good balance and the data will help us to see if that's the case or not, I think, or if there needs to be tweaks, what have you, and undoubtedly it will be challenged in court.

And so we'll allow that court process to go forward. But at the end of the day, you know, I do think that there's no doubt our courts, you know, are resource strapped. Being resource trapped by itself should not be a reasonable to impinge upon someone's constitutional rights.

But I think in this case, I think we've narrowed it enough to the, in the truly exigent circumstances, there's at least a tool that's there and the data will come back and let us know if that tool is being used effectively or if it's being abused. And we already have a motion. Senator, would you like to close?

I was going to check with my staff, but, yes, I would ask for your, I vote, and I believe this will be the last mental health bill you will be hearing from Senator Susan Eggman through is committee. So I appreciate your aye vote.

And I think to clarify. I know you've made reference to the amendments, but clarify. You're accepting the amendments.

I am accepting the amendments.

Thank you, Madam Secretary, take roll call. Vote on SB 1184.

Motion is due. Pass as amended. Do pass as amended. [Roll Call]

That Bill is out.

Thank you.

And then we have SB 1491. Senator Eggman, whenever you're ready, you can begin on that one.

Thank you very much. This one, hopefully, is easier for everybody. Some of you, I don't know. 1491 is an important Bill designed to protect some of our most vulnerable folks. When you go off to college, it should be a great experience. Oftentimes, everybody's not feeling that.

Especially, we know women are way more likely to be assaulted on college campuses. I had a Member in another Committee ask why it wasn't for everybody, and I pointed out that women are much more likely to be assaulted than men are, especially in sexual ways, and especially true for lesbians and LGBTQ community.

For any student seeking higher education, should be a fun, safe place. Again, we know that women are three times more likely to be the victims of assault. More than one in four undergraduates have been the victim of rape, sexual assault through force. Not good statistics for someone with a 15 year old daughter thinking about heading to college.

23% of transgender, queer gender non-conforming college students have also been sexually assaulted. This is hopefully why we're painting a clear picture that there should be some kind of confidential place for people to go in colleges. They shouldn't just try to have to figure out after something bad has happened who they can talk to.

This is part of the package of bills the LGBTQ Caucus is putting forth this year to address, and this one specifically to address discrimination on college campuses.

This requires a couple things. The Student Aid Commission, to provide information to students that if they're going to a college that are exempt from the Higher Education act and or Title IX, informing that their institution is exempt from those leaving them little particular protection from issues around sexual harassment or gender based violence.

And requires that the CSU and community colleges we requested from them, some years back, there was a review done. One of the things that we asked was that there be an individual designated as a liaison for LGBTQ students. That was never done. Done pretty well at the UC, but not at all at the CSU and community college. So this just says you need to have a person.

That person should be confidential. And if you are a college that doesn't provide or doesn't fall under Title IX and other protections, that the financial aid folks let you know before you arrive on the campus thinking that you may have other kinds of protection. With me here today is Craig Pulsipher with Equality California. Thank you, Craig.

Thank you. Good morning, Chair Members. Craig Pulsipher, on behalf of Equality California, proud co-sponsor. SB 1491 builds on legislation that Equality California sponsored in 2016, which required colleges and universities to disclose if they permit discrimination against LGBTQ students.

Specifically, the legislation required schools that claim an exemption under either Title IX or California's Equity and Higher Education Act to disclose this information to the California Student Aid Commission, as well as to both current and prospective students and staff.

Today, at least nine institutions in California are exempt from Title IX, and at least twenty are exempt from the Equity and Higher Education Act. And students deserve to know which schools have a license to discriminate and ignore state and federal civil rights protections.

Unfortunately, many students continue to be unaware of these exemptions and what the consequences might be if their sexual orientation or gender identity does not align with the college or University's policies.

Students may also not be aware of their ability to report claims of discrimination to the US Department of Education Office for Civil Rights so the OCR can investigate and determine whether the student was discriminated against.

SB 1491 will build on existing law by requiring the Student Aid Commission to notify students of their rights to file a complaint with OCR, even if the institution has denied the claim due to a religious exemption.

That the Bill is an important measure to improve transparency and ensure that LGBTQ and all students can make informed decisions and protect themselves against discrimination. Respectfully urge your aye vote.

Thank you. Is there anyone else here in support of SB 1491?

Good morning, Chair, Committee. Karl Larson, on behalf of Lieutenant Governor Eleni Kounalakis, in support.

Thank you.

Hello again. Rachel Bhagwat, ACLU California Action, in support.

Thank you.

Anna Matthews of the Faculty Association of California Community Colleges, in strong support. Thank you.

Thank you. Is there anyone here in opposition to SB 1491? All right, bring back to Committee any questions, comments, motions? Second.

All right, we have a motion and a second. Senator, thank you so much for your service to this great state. I think this will probably be the last time they'll be before us, but in all. Well, in all sincerity, you've done such tremendous work, and this is one more example of that.

And so would you like to close?

I would just, thank you all for your service. I think together we make this state better, and I respectfully ask for your aye vote.

Madam Secretary, take roll call vote on SB 1491.

Motions do pass to appropriations. Kalra? Aye, Kalra, aye. Dixon? No. Dixon, no. Bauer-Kahan? Bryan? Connolly? Connolly, aye. Haney? Haney, aye. Maienschein? Mckinnor? Mckinnor, aye. Pacheco? Pacheco, aye. Patterson? Reyes? Reyes, aye. Sanchez?

All right, I will place that on call. Thank you. Thank you all very much.

Senator Padilla is SB 764.

Good morning, Mister Chairman and colleagues. I am happy to present SB 764, which is the Child Content Creator Rights Act.

Senate Bill 764 would require family content creators who are compensated for filming their minor children in more than 30% of their content to set aside a percentage of those earnings in a trust for the benefit of the minor when they reach the age of majority.

As many of you well know, in 1939, California enacted the Coogan Act to protect children from financial abuse and exploitation in the entertainment industry after famous child actor Jackie Coogan had his entirety of his earnings stolen by his guardians.

That law required 15% of the performers earnings to be placed in a trust for them to access when they were 18, protecting the funds while the actor was still a child. These protections have been expanded upon over the years and have even become a national standard for child performers.

However, as you know as well, the Coogan Act pertains to youth performers in that specific industry and who are under contract, as you know. Also, the rise of social media and family content creators has exploded in this state and around the country.

While many parents are filming and earning thousands, and sometimes more in revenue, sponsorships, and advertising. Some regularly include their children in this content, including filming intimate details of their personal lives for their audience of millions to see. Obviously, this also raises questions about the rights of the children who are basically drafted into this emerging entertainment landscape.

Videos include those about peak moments such as new homes, pregnancy, new babies. Those types of life development events also incentivize more viewers, but they also sacrifice the privacy of minors at critical points in their development and certainly raises the specter of the kinds of impacts it has on the wellbeing those minors.

As social media becomes even more integrated into our daily life and a growing share of this entertainment landscape, we need to update our hard fought protections and safeguard. This Bill would recognize that these children who are subject of this quote unquote vlogging deserve financial protection and compensation for being filmed.

This Bill has bipartisan support and has no opposition, and with me today, I have Kim Stone with Children's Advocacy Institute. Thank you.

Good morning, Chair and Members. Kim Stone of Stone Advocacy on behalf of the Children's Advocacy Institute of the University of San Diego Law School.

SB 796 is a critical step in extending existing uncontroversial protections to children who are performing in traditional media the same as if they were performing, excuse me, performing in social media the same as if they were performing in traditional media. Family vloggers have exploded in popularity. Many profit, by filming the lives of their children.

This Bill acknowledges the obvious. Children whose likeness is used by their parents for profit deserve similar kinds of financial protection and compensation as children in traditional media, such as television or films.

This Bill merely requires parents or guardians who are compensated for featuring minors in at least 30% of their content to set aside a proportionate percentage of their earnings in a trust account that the minor may access when they reach adulthood. We respectfully ask your aye vote.

Thank you. Is there anyone else here in support of SB 764?

Lizzie Cootsona here on behalf of Tech Net in support. Thank you.

Thank you. Is there anyone here in opposition to SB 764? All right, we'll bring it back to Committee. Are there any comments or motions? We have a motion and a second. Assemblymember McKinnor?

I'd like to thank the author for the Bill. This is really an incredible Bill for our youth. I have family members that went into child acting, and it was great that she was able to have her money after, because families, sometimes not even on purpose, they just mismanage the money.

And then the kid worked all their lives and they come out of this at 18-21 and they're broke and so thank you for doing this. This is a new media and I am just grateful for this Bill. Thank you, guys.

Thank you. Assemblymember Reyes?

I was going to say the same thing, although I don't have any family that are child actors, but on behalf of the children that are going to be acting, this is very good. This is what we're supposed to do. We're supposed to protect the children. So thank you for bringing this.

Thank you. Yeah, thank you, Senator, for bringing this forward. I think in social media, oftentimes, some seemingly pretty simple videos are actually pretty big productions and take a lot of time, including the time of the youth, the children, the toddlers, the babies that these influencers use to get more views.

And I think that needs to be recognized, just like we did that for child actors a long time ago. Would you like to close?

Thank you, Mister Chairman and Members. Thank you for your comments. I wholeheartedly agree. I think we're often challenged by the fact that the landscape is evolving and changing based on circumstance and technology, so rapidly that government finds itself a step behind.

And historically, California has always been a leader in this space, and I'm happy to be part of trying to make us continue to be so, and thank you. Thank you. Respectfully, ask for an aye vote.

Motions do pass to appropriations. Kalra? Aye. Kalra, aye. Dixon? Dixon, aye. Bauer-Kahan? Bryan? Connolly? Connolly, aye. Haney? Haney, aye. Maienschein? McKinnor? McKinnor, aye. Pacheco? Pacheco, aye. Patterson? Reyes? Reyes, aye. Sanchez? Sanchez, aye.

All right, that bill is out. Thank you. Senator Wiener. Item 5, SB 988. And as to whether Senator Wiener is entitled to compensation for his staff, puts him through on social media. Bill is silent on that.

One of these days. Thank you, Mister Chair. So, colleagues, I'm here to present Senate Bill 988, the Freelance Worker Protection Protection Act, to provide basic protections for freelance workers. Most freelancers lack basic worker protections, most notably the right to be paid for their work on time.

According to the Freelancers Union, 71% of freelancers experience late or nonpayment, 59% report living paycheck to paycheck, and only 25% report consistently having written contracts. SB 988 will address this issue by requiring mandatory written contracts, 30-day payment terms--unless the contract provides a different term--payment agreement protections, and so forth. This is a very basic bill, doesn't require that these freelancers become employees. It simply requires that they actually get paid in a timely manner. And I respectfully ask for your aye vote.

Thank you.

With me today is Shane Gusman from the Teamsters.

Thank you.

Good morning, Mister Chair and Members of the Committee. Shane Gusman on behalf of the Teamsters in strong support of this bill. We co-sponsored this bill because our union has a relationship with the National Writers Union, which, of course, has freelance writers in their organization.

Many of them go through periods of time where they perform the work--there's no complaint about the work, the articles they write, et cetera--but they don't get paid, sometimes for months, sometimes for years. And in many, many places, there's no protection. There have been a number of states that have enacted similar guardrails as this bill.

And Los Angeles County also, or City of Los Angeles, has a ordinance that's similar to this bill. It simply means, "Hey, there's got to be a contract, and you have to pay people when they perform the work." And with that, ask for your aye vote.

Thank you. Is there anyone else here in support of SB 988? Is there anyone here in opposition to SB 988? All right, we'll bring it back to Committee for any questions, comments or motions.

Second.

Move the bill.

We have a motion and a second. Senator, thank you for bringing this bill forward. Would you like to close?

I do want to note that there's no longer opposition to the bill. We worked that out. And I respectfully ask for an aye vote.

Thank you. Madam Secretary, if you could take a roll call vote on SB 988.

Motion's do pass to Appropriations. Kalra. Aye. Dixon. Bauer-Kahan. Bryan. Connelly. Aye. Haney. Maienschein. McKinnor. Aye. Pacheco. Aye. Patterson. Reyes. Aye. Sanchez.

Okay. We'll place that bill on call. Thank you.

Thank you very much, colleague.

Assemblymember Lowenthal, you have a Bill on concurrence AB 295? We have a motion and a second.

Okay, I'm gonna have to do that to adjourn.

Thank you, Madam Chair and Members very pleased to present AB 295, which makes a variety of technical changes to California's foreclosure laws, but also aims to protect Californians from individuals known as surplus chasers when going through foreclosure. The surplus fund is the money left over after a mortgage and fees are paid following a trustee's sale.

These are funds that the borrower is entitled to. Unfortunately, there are individuals who take advantage of vulnerable borrowers by offering to collect these surplus funds on their behalf. Often, these surplus fund chasers charge exorbitant fees, sometimes up to 40% of the surplus funds, for services that are already provided for by law.

AB 295 will protect these borrowers, who are often already in vulnerable financial situations, by requiring surplus chasers to wait 90 days after the trustee's deed has been recorded before approaching the borrower seeking to collect their funds for them.

This will give trustees the time they need to find the appropriate borrower and send them their surplus funds without having to pay these surplus chasers. These changes will help ensure that the borrowers receive the full amount of money that they are entitled to and not be taken advantage of.

I'm very pleased to be joined by Mike Belote on behalf of the United Trustees Association, who is here to testify in support.

Madam Chair and Members. Mike Belote on behalf of the Trustees. I'll be very brief. This is another way that people get taken advantage of.

The trustees want to give you 100% of your money back, and sometimes by the time they can do that they're handed an assignment by the borrower in favor of a third party who's offered to help them get their money back.

It's like people who try to help you get money out of the Unclaimed Property Fund of the controller. It's just a way to take advantage of people. And so I'm happy to answer any questions about the technical aspects of the Bill, but I'd ask for an aye vote.

Thank you. Do we have any speakers in support? If you want to come forward, please? Any speakers in opposition? Seeing none, we'll bring it up here. Any comments, questions?

Well, in absence of anyone asking a question, I'll ask a question, or mainly just express my support, but also for the very reason that I'm so pleased that this reform is taking place, because it really brings forward when employers are heard, as well as. Oh, wait a minute, I'm on the wrong Bill.

I just realized it didn't make any sense. I apologize. All right, bring it up. Let's take a vote. Oh, you want to close please.

Respectfully ask for your aye vote.

All right, thank you.

Motion is to recommend concurrence. Kalra? Dixon? Aye. Dixon, aye. Bauer-Kahan? Bryan? Connolly? Connolly, aye. Haney? Maienschein? McKinnor? McKinnor, aye. Pacheco? Pacheco, aye. Patterson? Reyes? Reyes, aye. Sanchez? Sanchez, aye. It needs one more. It's on call.

All right, it will be on call. We just need one more person to come. Thank you. All right. Is miss Senator Umberg here, did I see? Very good. We saw you earlier and then you disappeared.

Yes. Apparently this is a busy time.

I think so. Everyone's running back and forth. All right, I think you have three bills.

All right. Which one would you like to begin with?

I do.

Why don't we start with SB 92?

Okay. All right. That's the one I was just going to talk about. All right.

All right. SB 92. SB 92 concerns the Private Attorneys General Act, which has been an issue of controversy for at least the last decade, if not more. I want to thank the Committee--in particular, Nick Liedtke--for your work on this. But even more importantly, the stakeholders, the stakeholders that have come together over the last several months to hammer out a compromise. Not an easy task, but one that is commendable for the diligence of all sides to strike a compromise.

Under existing law, PAGA, which is what the Private Attorneys General Act is known as, enables aggrieved employees to enforce the California labor code by pursuing lawsuits against employers to recover civil damages on behalf of themselves and other employees for violations of state law. They're often filed to address major labor code violations, enforce fundamental labor rights such as overtime, minimum wage, and sick leave.

In addition to limited public enforcement resources, the increased use of arbitration clauses has prevented aggrieved workers from filing individual cases or class action lawsuits in connection with their employees, instead requiring them to go through arbitration, which some believe has historically favors employers. Courts have ruled that workers cannot pursue individual wage adjudication claims through the Labor Commissioner if they have signed a forced arbitration clause.

Researchers estimate as high as 80% of private sector non-union workers are subject to these clauses, frequently leaving PAGA as their only option for recourse. Since its enactment, PAGA has served as a critical enforcement tool, reflecting the reality that states labor enforcement agencies often lack the resources to investigate and take action in terms of violations.

Some of PAGA's structure has unintentionally created certain abuses by some actors in this space. Its $100/$200 penalty structure applies no matter the severity or duration of the violation, and there are also no procedural guardrails that normally exist in civil litigation.

Also, violations under existing law cannot be cured. Aven if the employer quickly remedies the alleged violation, the same penalties apply. The Chair of this Committee, Assemblymember Kalra, is carrying another component, a companion component, of this compromise in AB 2288. In fact, he may be over in Senate Judiciary presenting it right now.

So what these bills represent is these bills, as I said at the outset, they represent a compromise. First, this bill creates a formal right to cure whatever deficiency may exist for small and mid-sized companies. So long as these companies cure a labor code violation to the satisfaction of Labor and Workforce Development Agency, then generally a PAGA lawsuit cannot be commenced.

Secondly, this measure affords all businesses, including those with more than 100 employees, the ability to seek an early evaluation conference shortly after the commencement of PAGA, of a PAGA lawsuit, to attempt to develop a plan for redressing labor code violations and setting matters without protracted litigation.

This critically important bill in compromise to protect workers and promote the early resolution of violations is supported by a broad coalition of business labor attorney groups, including the California Chamber of Commerce, the California Labor Federation and associated labor organizations, California Consumer Attorneys--well, the Consumer Attorneys of California--and California Employment Lawyers Association.

So today, with me is Miss Ashley Hoffman of the California Chamber of Commerce and Elmer Lizardi with the California Labor Federation. Here they are holding hands once again in front of this Committee. I know you're getting tired of labor and management coming together on all these measures, but here we go again.

An historic day. Please proceed. Who's going first?

Good morning. Ashley Hoffman on behalf of the California Chamber of Commerce, and we are very proud to support SB 92, which provides much needed reform to the Private Attorneys General Act. We'd like to thank the Administration for convening negotiations, as well as the California Labor Federation for working with us on this issue.

We'd also like to thank Senator Umberg, the Legislature, and particularly, the many Members of this Committee that took time over the last year or two to meet with your constituents and to hear the stories about small businesses, nonprofits, and the like that have suffered from some of the abuses of PAGA.

We have heard for many years from many of our large and small businesses about how unmeritorious PAGA lawsuits have plagued them and cost millions of dollars. I am reminded of an example from my own practice where an HR representative had done a slight miscalculation on overtime. It only cost, across the entire class, $80.

You know, a few pennies here, a dollar there. They ended up having to settle for hundreds of thousands of dollars. And under SB 92, they could now cure that overtime error, make the employees whole quickly, and not be subject to the large penalties under PAGA.

What was, once again, a well-intentioned law has unfortunately been manipulated at the expense of workers, businesses, and nonprofits that serve vulnerable Californians. But what's in this bill and its companion represent historic reform to address these concerns, but also ensuring California workers can feel confident that there is robust labor law enforcement.

This reform accomplishes those goals by creating the processes described by Senator Umberg, where large employers and small employers not covered by an agency process can seek an early evaluation conference, where small businesses can go through an agency cure process, where there are caps on penalties for good actors under the law. We also support the administration's efforts to help quickly staff up the labor agency, and we strongly urge you to support this historic, long overdue reform. Thank you.

Thank you. Next speaker, please.

Thank you, Vice Chair and Members. Good morning. Elmer Lizardi with the California Labor Federation. The California Labor Federation was the original co-sponsor of PAGA, along with the California Rural Legal Assistance Foundation. The law was enacted to address inadequate labor law enforcement for the most vulnerable workers, especially farm workers and other immigrant workers. The bills that have been negotiated preserve PAGA's unique enforcement tool while updating the bill to improve outcomes for workers and incentivize employer compliance.

PAGA, as mentioned, is the only way that one worker can sue on behalf of all impacted coworkers, and it is the only path to justice for workers who have been required to sign mandatory arbitration agreements. SB 92 enacts this new right to cure provisions under PAGA.

A cure means that within specified time periods, the employer has corrected any violations, is in compliance with the laws that they were violating, and the employer and workers have been paid the unpaid wages with interest and liquidated damages. Procedures in SB 92 will promote faster resolution for workers and employers alike.

Smaller employers can go to the labor agency with a proposed cure and follow a process to ensure fairness for both parties and larger employers can seek an evaluation conference and a state to attempt to cure violations and reach early settlements.

This bill is consistent with the original goals of the statute to provide additional enforcement tools that promote labor law compliance and hold bad actors accountable. Employers who seek to remedy violations and make workers whole in a timely manner have new options to do so. This will benefit both workers and employers alike. Thank you all. And SB 92 is an important part of this package to preserve and strengthen PAGA. So we ask for an aye vote. Thank you.

Thank you very much. We have some speakers here in support. Please.

Good morning. Matthew Allen, Western Growers Association. We're very pleased to support SB 92. Thank you.

Good morning, Madam Chair. Chris McKaley on behalf of the Los Angeles Area of Chamber of Commerce in support, as well as SHERM, the Society of Human Resource Managers in support. Thank you.

Good morning. Mike Robeson here on behalf of the American Staffing Association and the California Staffing Professionals. Thanks.

Good morning. Shane Gusman on behalf of the Teamsters, the California School Employees Association, the Machinist Union, Unite Here, the Amalgamated Transit Union and the Utility Workers Union of America, all in support.

Jackie Serna on behalf of the Consumer Attorneys of California, the California Employment Lawyers in support.

Good morning. Alberto Torrico on behalf of Airlines for America also in support. Thank you.

Good morning, Chair and Members. Skyler Wonnacott, with the California Business Properties Association in support.

Good morning, Chair and Members. Kenton Stanhope on behalf of the California New Car Dealers in strong support.

Kimberly Rosenberger on behalf of SEIU California and UFCW Western States Council in support.

Madam Chair and Members. Carlos Gutierrez, here, on behalf of the California Grocery Association, California Fresh Food Association and a number of agricultural commodities in support.

Good morning, Madam Chair and Members. Obed Franco, here, on behalf of the California Hotel and Lodging Association in support.

Thank you, Madam Chair and Members. Senator and Members, we are in strong support of this. Thank you. Matt Sutton with the California Restaurant Association.

Good morning. Ryan Allain, with the California Retailers Association in support. Thank you.

Lawrence Gayden, with the California Manufacturers Technology Association in support.

Good morning. Nick Chappie on behalf of the California Trucking Association in support. Thank you.

Indira McDonald on behalf of the California Mortgage Bankers Association in support.

And I'm apparently last. Mike Belote on behalf of the California Employment Law Council in support.

Very good. Now, I don't know if there'd be any opposition, but if there is an opposition witness, please come forward. Is there anyone to speak in opposition? No? Oh, no. Maybe? No. This is historic. All right, let's bring it up here. Assemblywoman.

Senator, I think I'm going to come and take--I'm a freshman, so I'm going to come take a class of building a coalition because this is what I love seeing. I love seeing business and labor working together to solve a problem. So thank you for that.

Very good.

Thank you. As an elected official, I'd like to take full credit for this, but I happen to just be on the bus. These folks, the group that you saw, has come together to strike this compromise. They actually drove the bus.

That's fantastic. Senate Member Connolly, please.

Nevertheless, we are going to thank and commend Senator Umberg for your great work on this, as well as the, the collective effort to get this across the finish line. I'd like to be added as a co-author.

Absolutely. Sure.

Any other speakers?

It may be--let me turn to staff and ask whether that's doable. Because this is a compromise and because we're on such a short timeline, it may be a challenge that changing a comma may create a challenge even, but Assemblymember Connolly, I'll keep that in mind.

Well, I do--if there's no other comments, I do want to speak. This is what I was starting to say before I got ahead of myself. But thank you, Senator, for being the front of the effort here to build this tremendous coalition of all business and labor forces. And I'm happy to support Senate Bill 92. And this measure is a product of your successful negotiating prowess, I think, to bring everybody together between the business community and the Legislature and the labor community.

I'm pleased to see the language reforms to PAGA to ensure that workers still have the ability to bring forward labor claims and receive the compensation they deserve, while importantly, limiting the number of frivolous lawsuits that negatively impact our business community. The reality is, when employers are hurt by unnecessary lawsuits, Californians and our economy suffer.

This policy is a win for small business, which, as you know, small businesses are the backbone of our economy. There are over 4 million small businesses in California, and I think they're cheering Senator Umberg right now if this keeps moving forward.

Specifically, SB 92 protects small employers by providing a more robust right to care process through the Labor Department--or to cure process through the Labor Department--to reduce litigation and costs. This is definitely a step in the right direction for reducing regulations on businesses in California, which I'm a strong advocate. And so thank you, Senator, for bringing this forward. And do you want to have closing comments? Oh, I'm sorry. Please. Do you want to speak? Go right ahead.

Thank you, Madam Chair. I also want to thank the Senator and all the stakeholders who joined with you. I appreciate the comments from our Chair regarding all the details of this. This is a big--this is a great victory, quite frankly, to be able to bring all the parties together, making sure that we're protecting the workers and also protecting the small businesses.

We hear from both about making sure that we don't do--we don't change it so much that we're no longer protecting the workers and from our small businesses asking us to please do something to protect them, to help them. And I appreciate so much that you have worked in the middle of all of this with all the stakeholders to make sure that we have something that everybody agrees with, everybody speaks in favor of and there's no opposition to. So congratulations.

Thank you.

And do you have a close please?

Well, yes. Thank you for your kind words. Again, I'm not averse to taking credit. I think I did a press release this morning taking credit for the sun rising in the east, but really the credit belongs to all those who testified in support and the folks that are sitting at this table. It is a monument to how we can get things done when we spend time collaborating and negotiating. I do think this is a great improvement to--both for employees as well as employers.

And I'm, of course, proud to have my name on it, but I want to make sure that credit is accorded to those who are due that credit. So with that, I would urge an aye vote.

And success has many parents. We have a motion. Assemblywoman Sanchez and Mister--Reyes--or, everybody, okay. All right, let's vote.

Motion's do pass. Kalra. Dixon. Aye. Bauer-Kahan. Bryan. Connolly. Aye. Haney. Maienschein. Mckinnor. Aye. Pacheco. Aye. Patterson. Reyes. Aye. Sanchez. Aye. It needs one more. It's on call.

One more. It's on call. One more when they come. All right. Your next bill, which one would you like to do next?

Thank you. Why don't we do SB 919. Next. Concerning franchise sellers. All right, thank you once again, Madam Chair. Thank you, Madam Chair. Thank you to staff. Thank you, Mister Lydekke, for your help on this bill. I will take credit for this bill.

So along with others who have also come together to work out various compromises, what this bill concerns is it concerns the purchase and sale of franchise. California is that oftentimes someone who is interested in, for example, buying a franchise might go to a franchise seller under the mistaken impression that franchise seller has their interest at heart.

They may, they may not. But what this bill does is it simply adds transparency to the process. It requires an annual notice to be filed with the Commissioner. Similar notice filing requirements currently in place in New York and Washington state, which discloses to the prospective franchisee information about the franchise sellers professional experience.

This is a very large business in California. The purchase and sale of franchises, something that we want to encourage, but we want to encourage with transparency, so that the, for example, the purchaser has full knowledge of what the relationships are between the various parties. With me here is Mister Randy Pollack from the International Franchise Association.

And with that, thank you. I'll turn it back to you. Madam Chair.

Yes, please. Would you like to speak? Thank you.

Thank you, Madam Chair. Members of the Committee, Randy Pollock. On behalf of the International Franchise Association, we represent about 10,000 franchisees and about 1000 brands. This is another unique bill as highlighted in the analysis that we're bringing together the IFA and many franchisee associations together on working on this bill.

And mainly, as the center said, this is a consumer disclosure bill. Many times as you want to buy a franchise, you don't know the background of that franchise broker. You don't know what brands he's representing outside the ones he's presenting to you. You don't know whether he has any litigation in his past.

Also, this Bill would provide that. You have to provide what franchises he has sold in the past year. So you have the opportunity of reaching out to those people to see how it worked out. How has the business progressing? So we believe this is a very fair bill.

It requires people to register, but just gives a little bit more consumer disclosure to someone who may be spending not tens of thousands, but sometimes hundreds of thousands of dollars. With that, I would ask for an aye vote. Thank you.

Oh, okay. Now, were there some amendments?

Oh, we accept the committees amendments. Thank you very much. Yes. Okay.

Very good. All right. Any speakers in support?

I think we're it.

All right. Any opposition witness wants to come forward? Any opposition speakers want to come forward? Well then let's move it up here. Any Committee Members want to speak all right, we have a motion by Miss Reyes and second by Miss Pacheco. Would you like to close?

Urge and Aye vote. Thank you. All right, let's vote.

[Roll Call]

On call. Two votes needed. All right, your third and final yes.

Well, for today, yes, you're right. SB 900. SB 900 is the Homeowner Association Protection and Support Act. This bill is basically a product of an event that happened in Orange County, in the City of Orange, where a gas line broke within the confines of a homeowner's association.

And as a consequence of, basically, the inability to make decisions as to who and how the gas line was going to get repaired, there were 600 folks who were without gas for over two months.

And that meant that they had no ability to cook using their stoves, meant that they had no hot water, and meant a great deal of both. There were health challenges, as well as just challenges in terms of living.

And the issue that this bill addresses, the issue is basically to assign responsibility as to who is responsible for what.

What this does is it says that when there is that kind of an event where there's a utility line that breaks within the confines of the homeowner's association, that the homeowner's association board has 10 days by which to start repairs for the interruption, to resolve the interruption, and allows the management company to act swiftly to fix the utility if the board doesn't meet and requires repairs to have fair pricing, institutes reserve studies to ensure organized and transparent budgeting process, and allows the homeowners association to conduct electronic voting to achieve a quorum, all of which should facilitate the repair in an emergency situation.

At the outset, I thought this was sort of just a district bill, but apparently, this has happened a number of places throughout the State of California, including in Vacaville and here in Sacramento County, as well as in Lancaster. With that, I urge an aye vote, and I am it in terms of witnesses.

Do you accept the amendments?

I do accept the amendments.

Okay.

Should of said that in the outset. Thank you very much to Mister Leidecke once again. You're our go-to guy. Thank you.

Do we have speakers in support? And then do we have speakers in opposition?

Madam Vice Chair and Members of the Committee. My name is Tom Surh. I'm a Member of the Legislative Committee of the Center for California Homeowner Association Law, and I'm speaking today on behalf of the center. I believe I'm the, at this point, the only witness in opposition. Although the Center's President is here, if needed, we can call on her to join us. In the eight years as a Superior Court Commissioner at Alameda County, I was called on frequently to interpret case law and statutory law. This Bill in its present form creates confusion and needlessly invites litigation. Here are some of the reasons.

First off, the Bill appears to modify, unconstitutionally, the contract between the homeowner and the association as set forth in the declaration. I note that in the La Vita condo situation which gave rise to this legislation, the governing documents set forth that the utilities were responsible for repair and replacement of the utility lines in the common area, and yet the utilities did not step up and complete the repair in a timely manner.

Secondly, in seeking to address the problem of utility interruptions in the common areas of CIDs, it places the burden on the association, that is, the individual homeowners with poorly defined exceptions, and the burden is to act quickly and to shoulder the cost of the repairs. Third, boards under the current law have the authority to borrow funds.

This Bill mysteriously ties the lack of timely board action to a scheme for borrowing funds. The connection between a lack of action and the ability to borrow funds is unclear. Fourth, it violates the open meeting act by allowing board action without a meeting. Fifth, it embeds new costs for the maintenance of utility lines in the required annual, triannual, sorry, reserve study. This will increase assessments on homeowners substantially.

Fourth, it empowers the board of directors to impose an unlimited emergency assessment on entirely new grounds stated as 'threat to health or to another hazardous condition or circumstance', without providing any standards out of how such a determination is made or by whom. Our most basic criticism of this Bill is that it is a huge gift to utilities because it shifts substantial cost and liability burden away from utilities and onto individual homeowners for all utility services throughout the state. Add now the additional potential cost to homeowners that litigation that this Bill invites.

So finally, the problem of this Bill purportedly addresses is the harmful delay when there's an interruption of utility services. Rather than clearly defining how to address the problem promptly, this Bill simply places added burdens on the parties that have the least resources, the least expertise, and the least ability to react quickly, that is, on homeowners. And so we ask for a no vote.

Thank you very much. Any other speakers in opposition? Senator, do you want to address any of those comments?

Sure, if you like to I can address in my close.

Okay, well, I'll ask the Committee. Any comments from the Committee? Yes, Eloise. Miss Reyes.

Without a doubt, the utilities should be the ones that take care of this, but there has to be a responsibility by the Homeowners Association at some point to step in and say, okay, the utilities isn't responding, we need to take care of our residents, and then we're going to have to take action against the utility. Because my biggest concern when I read what happened at La Vita is everybody was waiting for somebody else to take the lead. In the meantime, the residents are the ones that are left wondering. Well, here's a battle between the utilities and the Homeowners Association. Their contract is with the Homeowners Association.

And so I agree with the Senator that the Association has a responsibility to its residents. And of course, whatever they spend, they should be, if it turns out it belonged to the utilities, utilities need to reimburse them, but somebody needs to step up and take care of those residents, because to be without gas for three months is inexcusable. That should never have happened. It doesn't mean that the Homeowners Association is responsible, but it just means somebody needs to step up.

May I?

And with that, I would move the Bill.

Okay. Do you have a response to that?

I do, yes, certainly, swift action is required. But what this Bill does is it gives the utility added ammunition for saying, it's not our problem. Look at the Bill, because it for the first time states the association shall be responsible for repair and so forth. If the Bill made it clear that the utility is the one that should respond quickly and do the repair, and then, of course, then you can spend the time to argue about who should be paying for it. That would be a solution. The Bill is not in itself a solution as it stands.

Any other comments from the Committee? Okay, Mister Senator, would you like to comment on your close and address those comments, please?

Thank you very much. We've been at this now for several months, and this is, I think, a misconception of the Bill and a misreading of the Bill. I think it was very clear from the outset that the utilities are responsible for the utilities portion of the line and that others are responsible, for example, the Homeowners Association responsible for the lines that are within the confines of the Homeowners Association area of responsibility.

But nevertheless, just to make it crystal clear, we added the following language on page one of the Bill. It says 'unless the utility service that failed is maintained, repaired, or replaced by a public, private, or other utility service provider otherwise provided in the declaration of common interest development. In other words, if you think of a Homeowners Association and development sort of as a square. Outside of that square outside what's called the line of demarcation, the utility is responsible. Inside that line of demarcation, the Homeowners Association is responsible. And inside the unit, the individual.

If something breaks in your home and it's your responsibility, it's your responsibility. If it breaks, for example, in the line from the street to the home, and it's utilities responsibility, it's utilities responsibility, this does not shift that at all. And I associate my comments with Assemblymember Gomez Reyes. Is that what this Bill does, is it simply assigns responsibility to get the job done. It in no way, in no way, let me emphasize this again, shifts responsibility for utilities to the Homeowners Association. So with that, I'll ask for an aye vote.

Very good. And we have a motion. Second. All right, let's vote.

Motion is due passed as amended. [Roll Call].

Thank you very much.

Thank you very much. Madam Chair.

It's on call. How many? One more. All right. Who is here to bring forward? Looks like Senator Bradford.

She's letting me go. Thank you.

Okay, Senator, SB 1109.

Yes. I'm gonna thank Senator Wahab for allowing me to jump in front of the line. I'm here to just present.

No, you did not Senator.

I'm sorry. I'm sorry, Menjivar. I'm sorry, Menjivarr. I surely didn't.

But you got.

I have to get back to public safety. That's why she was on my mind. So, anyway, I'm here to present this measure. It simply requires the Department of Cannabis and Control to collect and report demographic information of cannabis licensees. This information will be completely voluntarily.

Seven years ago, I passed SB 1294, which was the first social equity bill in cannabis, not only in the state, but in the nation, because we saw how badly this industry lacked diversity. In recent years, the Legislature has focused on ensuring that California cannabis market is inclusive and supportive of individuals impacted by the war on drugs for the last 40 years.

And as intended, that's what the voters intend intended, I should say, when we pass Proposition 64. Many of these individuals have experienced difficulty entering the market and contend that the market continues to lack diversity, despite again passing 1294. Today, the market stands at 85% percent white male-dominated.

We should all be concerned about that, the lack of women, veterans and minorities in this space. California has a responsibility to make sure our cannabis industry is equitable and fair to all. And this is what this measure does. And I respectfully ask for your aye vote.

Do we have? Thank you, Senator. Do we have any speakers in support? In opposition? Let's bring it to the dias.

Second.

All right, any comments? Do you want to close?

Thank you. I respectfully ask for your aye vote.

All right, thank you.

Motion is do pass to Appropriations. [Roll call]

Thank you.

Phone call. I apologize, Senator Menjivar.

Thank you.

It's on call.

We're going to have a Chair transition, Assembly Member Pacheco. I need to go to business and professions. They're down at the end of the line, so I've got to run over there. Do you want to continue as Chair? Please. Thank you. All right, see you in a minute, Senator.

Who's Chair?

I guess I'll be. Senator, you may proceed when your ready.

And just so it's on the record, I am Senator Menjivar. Just for clarity here. Madam Chair, Judic. Committee Members, there's a staggering statistic that has sat with me. A recent survey found that 86% of small businesses, small nonprofit, have often or sometimes felt displaced in our State of California.

Thank you so much.

That worries me a lot, because just like in my district, I'm pretty sure in your district, you see a large amount of mom-and-pops. They are the bread and butter. They are the backbone of our communities. In my district, these mom-and-pops look like my mom and pop.

They came with a dream to be entrepreneurs, saved up all their pennies to open up a small business. And we want to make sure with SB 1103, we keep them within their small business. We allow them to maintain their American dream, to continue selling their expertise, their items to our communities.

With SB 1103, we just want to remove some barriers that exist in them being successful. I'm not looking to change much of the status quo. I'm not looking to match 100% of the tenant protections that residential tenants have.

I just want to make sure that while the landlords can do and continue to do what they do, that there's just some transparency for our small business owners. I've, throughout the past couple of months, I've worked very, very hard, have taken a lot of amendments.

This bill in front of you, through the work of the Committee and Chair Kalra, has a trimmed-down version, but still is looking to bring down protections for three different kind of businesses.

The micro-enterprises that are made up of five or less employees, a restaurant that has less than 10 employees, and a nonprofit that has less than 20 employees. This bill will only apply to these qualified commercial tenants. Now, this is how it would work. I am looking for a location to rent.

I, after this bill, am about to enter into a lease. I'm going to tell the landlord I qualify. I'm a commercially qualified tenant. At that point, I have let the landlord know it is my burden is on me to tell the landlord.

The landlord would then, if I negotiated with that landlord in Spanish, put that negotiation in a Spanish contract and would do that for four other languages.

Now I've signed a contract and three months in, a landlord is going to increase my building cost, the building maintenance cost, and because I'm a qualified commercial tenant, I have the right to ask the landlord. Hey, I just want documentation to make sure that what you're charging me is accurate.

You're not just looking to pocket; you're just not looking to put on a mural because you want to put on a mural. This actually cost for maintenance fees. I will ask the landlord for that documentation, and we should assume that the landlord should have the documentation. These are very organized individuals.

These are business entrepreneurs that are tracking everything of what they charge. But they will provide that documentation to the tenant and the tenant will pay. My bill is not asking for a time to lapse before paying, it's just asking.

Hey, you give me documentation on the same day you're asking me to pay for more, I will have to pay it right on the spot. It's not limiting the amount of increased costs for the building maintenance fees whatsoever. Now proceed months later.

I've been there for over a year now and they want to now sell their building, which is within the right, do what they want to do, and they're going to evict me as a qualified commercial tenant. I'm just asking. I'm now going to be entitled for a 90-day notice.

I just want to make sure I have my numbers correctly here. A 60-day notice before I get evicted. Give me 60 days to find a new place. Don't evict me in the next day. I have to leave. This has been my life's long dream.

I need 60 days to find a new location so I can proceed, so I can go to my family and friends and say, hey, the new location I found is going to cost me a little bit more. I just need a little bit of help. I want to keep my dream.

The other thing it's asking is if you're going to increase my rent more than 10%, give me a 90 days notice so that again, I can go to my friends and family, hey, I don't have the money right now. I just need a loan. I want to stay in this place. I want to continue serving this community.

I just need some time before I come up with the increased rent. I'm not capping a rent. A landlord can still increase it. I just need some time to be able to put the money together. Now, all of these are just about transparency. If we protect our small tenants, landlords are protected as well.

Because the other scenario is that a landlord has a vacant spot for months on end. We're going to see graffiti in those locations. You can potentially see other risky behaviors on those areas if there's no pedestrian traffic.

Everybody wins if a tenant stays in their spot, a landlord continues to get their money and a tenant can still be able to come up with the money to pay if something changes. We've worked very hard to ensure that this only applies to the qualified commercial tenants. This is not a sweeping thing across California.

These are the smallest of the smallest. We do not believe this will hinder a landlord from renting to us a small tenant. Because, for example, if I'm a landlord and I have a 1500 square foot that I'm renting, I know I'm not going to get a restaurant with five people or small nonprofit, or five people.

I know I'm not going to get a qualified commercial tenant here because, well, the place that I'm renting is for a bigger business. These small landlords already know that they already only can only rent to small businesses. So, they're not going to be incentivized or de-incentivized to not rent them anymore.

We just want to add protections to our small tenants. And I'll end on this note and then like to turn to my two witnesses is if the cost of the translation is a barrier standing between your aye, between your no and your aye on this vote.

I'd like to share that this is potentially a one-time cost for the greater contract. The main language in there that would stay the same for every single contract moving forward. It's a one-time potential investment. And then you just have to translate the actual negotiated piece.

And we should weigh that approximately $1,500, because when you go on Google, you can legally translate these words, and a standard commercial contract is about 10,000 words. It comes out to $1,500. That weigh that against the displacements of the endless amount of small nonprofits, small businesses in California.

And I think that does not outweigh the protections we're looking to bring to make sure they maintain in those businesses, so they don't lose their business and then sometimes lose their home. So, with that, I'd like to turn Madam Chair to two witnesses here that I will have them introduced, because I will butcher their names anyway.

Giselle, I'll start with you first.

Readers. Hello. My name is Giselle Villanueva-Smith, and I am the proud owner of Stepping Out Performing Art Studio.

You have to talk into the mic.

Oh, I'm sorry. Do I start again? Hello. Sorry about that. Okay. Hello. My name is Giselle Villanueva Smith, and I am the proud owner of Stepping Out Performing Art Studio, located in the City of Santa Fe Springs. Stepping Out was founded in 1993 in Norwalk, California. Built from the ground up with passion and the support of my family.

Over the past 31 years, we have faced numerous challenges, including the 2008 Recession, a staggering 75% rent increase in 2018, and a forced relocation in 2019. It was very difficult to find a new location that was suitable for operating a dance studio, and the astronomical cost to start over really set us back.

Just as we prepared to celebrate the 2020 grand opening of our new studio in Santa Fe Springs, COVID-19 changed everything. Obviously. We quickly transitioned classes to an online platform, but still endured an 80% loss in memberships and revenue streams with virtually no enrollments for over a year.

Despite the moratorium protections, I received pay or quit notices twice, forcing me to seek free legal assistance from public counsel to keep our doors open. It has been a laborious undertaking to endure the pandemic crisis and fulfill the financial demands of back rents, the cost of inflation, another 31% increase in rents, and rising CAM fees.

Instead of planning to pass the baton on to my daughter and retire at 58 years old, I find myself working longer and harder than ever, juggling the most debt I've ever had. Small business owners are dedicated, hardworking individuals who deserve additional security to ensure our investment and livelihoods are not at constant risk.

SB 1103 is a crucial support system for small businesses by offering practical protections. This bill is vital for the survival of establishments like ours, which play an essential role in the community, the community's culture, and economy. Excuse me.

My business employs a handful of people, and the displacement of businesses like mine negatively impacts not only the business owner, but also the workforce and the local community, which relies on our services.

Thank you.

Thank you.

Appreciate.

Thank you, Chair Kalra, Chair Dixon, and Members and Senator Menjivar. My name is Bianca Blomquist. I'm the California Director for Small Business Majority. We empower America's diverse entrepreneurs to build and participate in a thriving economy.

I'm pleased to testify on SB 1103, legislation that empowers California's entrepreneurs and nonprofits to make informed decisions when entering into a commercial lease arrangement. The current commercial rental marketplace lacks transparency and fairness. The deck is stacked against very small business owners, often run by entrepreneurs of color or with immigrant backgrounds.

Very small business owners lack access to sophisticated legal resources or dedicated departments to help them navigate the complicated commercial legal marketplace. Today, we have an opportunity to increase transparency on costs and provide greater certainty for small business owners while leveling the playing field for those small landlords who are already doing the right thing.

Representing California's 4.1 million small businesses, small business majority proudly co-sponsors SB 1103. Despite amendments to address the commercial properties industry concerns, this bill is not rent control. It will be a lifeline for new entrepreneurs and growing businesses.

Our polling demonstrates that 78% of small business owners have struggled to afford rent at least once in the past few years. During COVID nearly half of all small business owners with under $100,000 in revenue were behind on rent. This bill provides language transparency for small business owners. When negotiated in languages other than English.

It gives small business owners more time to relocate and move their workforce when their lease is up and provides them with the certainty they need to run their business. This bill will generate a significant economic benefit for our most prolific job creators.

Local business owners keep money local through wages, benefits, purchasing, supporting community infrastructure like libraries and schools. Locally owned businesses consistently demonstrate this kind of economic need in our local communities. Imagine a California with fewer small businesses replaced with larger ones with robust and sophisticated resources.

Small business owners reinvest in their communities and our markets need this transparency, and our small business owners need this certainty. Thank you so much.

Thank you. Is there anyone else here in support of SB 1103?

Danica Rodarma on behalf of Ella Baker Center for Human Rights in support.

Thank you.

Jasmine Poyellen. On behalf of the Lawyers Committee for Civil Rights in San Francisco, Bay Area in support.

Thank you.

Good morning. Doug Smith with Inclusive Action for the City, proud co sponsor, strong support.

Thank you.

Christopher Sanchez, on behalf of our friends at the California Immigrant Policy Center in strong support.

Thank you.

Morning. My name is Faith Lee. I'm with Asian Americans Advancement Justice Southern California award support.

Thank you.

Hi, Carol Gonzalez on behalf of Aesthetic Legal Services, proud co sponsor and they couldn't be here, so doing their. Me too.

Thank you.

Jackie Gonzalez, policy Director at Immigrant Defense Advocates in support.

Thank you.

And Green Line.

Thank you. Is there anyone here in opposition to SB 1103? Can we. Yeah, if you can have one, come on up. We'll make space. Yeah, yeah. But we'll make space at the table.

On behalf of the California.

You can either way, if you want to speak from there. Yeah, up to you. That's fine. Oh, okay. That was a, that was a me too opposition. Okay. And so you already have backup before you start.

Thank you. Good morning, Mister Chair Members, Skylar Wanicott here with the California Business Properties Association and our Members Boma California and NAEP California in respectful opposition to SB 1103. While we appreciate the Committee and Senator staff for their engagement and amendments, we remain opposed to the bill.

SB 1103, though well intentioned, poses significant risks to California's commercial real estate sector. SB 1103 applies residential tenant protections to commercial leases, ignoring crucial differences. The requirement for tenants to self attest as a qualified commercial tenant at signing is problematic, especially for new businesses.

Initially lacking employees, ambiguity about employee count and including independent contractors or subtenants broadens the statute's reach, creating confusion and unfair burdens on property owners. Moreover, restricting changes in the formula for calculating operating expenses is unreasonable. For example, changes in water and sewer billing in Folsom now charge property owners instead of tenants.

Proportional shares also shift when tenant uses change, such as retail space. Converting to a restaurant. Increasing water and trash costs. Such preventing reallocation of these expenses unfairly shifts these payments solely onto the property owner. Additionally, requiring advance information before collecting payments is impartial, leading to potential violations if tenants request documents later.

These constraints limit property owners ability to manage properties effectively. The provision for preventative damages, attorney fees and treble damages disproportionately impacts small property owners, who are less likely to use professional services for leasing drafting while larger entities remain unaffected. Given these considerations, we respectfully urge and no vote on SB 1103.

Thank you. Is there anyone else here in opposition to SB 1103?

Hi, Indira Mcdonald. On behalf of the California Mortgage Bankers Association, we would align our comments with those of the California Business Properties Association. Association. Thank you.

Thank you.

Christopher Rodriguez. On behalf of the California Chamber of Commerce in Opposition, thank you.

Thank you.

Good morning, Mister Chair and Members. Kareem Driesy. On behalf of the California Association of Realtors, in opposition, thank you.

Thank you.

Audrey Ratajczak. On behalf of the California Building Industry, in opposition. Thank you.

Thank you.

Natalie Ballast. On behalf of the California Business Roundtable in opposition.

Thank you.

Lawrence Gaydon. On behalf of the California Manufacturers and Technology Association, in opposition, Thank you.

Thank you

Sean Topaking. On behalf of the California Downtown Association, in opposition, thank you.

Okay, we'll bring it back to Committee for any questions, comments or motions. No questions. No comment. Assembly Member Reyes.

I absolutely understand what we're trying to do here and making sure we have greater protections for the qualified commercial tenants. I did have a question as I was reading the analysis is it sounds like itself, attestation, if that's the correct word. There were some comments by opposition.

How do you address those to make sure that somebody who comes in and says, I am a qualified commercial tenant, how can that be verified? What guardrails do we have.

Right now? As some remember, it's just self attestation. And our goal is with the sponsors across California to educate as many of the qualified commercial tenants as possible. And they will have to submit an annual written notice under penalty of perjury if they lie. So that language is there.

So just like we have, if a landlord violates the procedures under qualified commercial tenants, the same thing for a small business or a non profit, if they're lying in their self attestation. And I don't know if there's any additional guard rolls. Mister chair, while I have, I had two witnesses. I have one for x for technical assistance.

If I can turn to her for any additional, that's fine.

Hi, I'm with public counsel, one of the co sponsors. Yeah. So what the Senator said is exactly right, that the self attestation will be under penalty of perjury. And it is a. A form of documentation that a lot of different programs use that apply widely throughout the state. To us, it was the most easily implementable form.

It does not require landlords to look through all sorts of documentation that can be burdensome to review. And again, as you can see in the bill, a lot of the burden is on the tenant. Right.

So the tenant has to take the has to know their rights and has to feel comfortable to voice up and say, hey, I'm a qualified commercial tenant, and sign under penalty of perjury, that they qualify and that they have the number of employees that are needed to fit under this definition.

And it'd be up to them to do that every single. Every single year.

It seemed that you're trying to find something between a regular tenant and then the large commercial tenants to protect the smaller businesses.

Yes. You know, originally, a previous version of this bill had the language translation for every single business, and we're trying to trim down as much as possible. And I know the opposition, you know, talked about that, you know, excluding the larger companies.

I'd be more than happy to bring that back into the bill, but I don't think I'd get out of Committee if I did that. So we've trimmed down as much as possible just to protect the most, most smallest businesses as possible and trim down the amount of landlords that have to adhere to this bill, should it pass.

So on that. So if it's negotiated, say, in Spanish? Yes. Then the contract, everything else has to be in Spanish? Yes.

I have to tell you that I'm a qualified commercial tenant, even if it's negotiated in Spanish. And I don't tell you I'm a qualified commercial tenant. You do not have to provide me.

The contract in Spanish because you're negotiated in English.

No, even if it was negotiated in Spanish. If I did not tell you that I'm a qualified commercial tenant, then you don't have to provide the contract in a different language.

So I would imagine that most of the owners would now negotiate everything in English. And if they negotiated in English and you bring in a translator, how does that. How does it come into play here?

Well, then that means it was negotiating a different. Even the translator is negotiating in a different language. Right.

But if it's a negotiation, is with the tenant in English, and the tenant has brought in their own translator. So just something to think about, because there was a case where it was for an auto sale of auto, where they brought the child to translate for the parents in Spanish, and that was.

There was a case that came as a result of that. So those details obviously need to something that.

That's a great question, Samir. I haven't been asked that question yet, so I don't have that answer for you. I can definitely get that answer for you. I don't think we have.

Yeah, I feel like there's something. So this extension of this protection to commercial leases this already exists, right? For residential leases and for consumer contracts. There's something in that law that talks about interpretation. I have to re review it and we can get back to you. But we don't have an answer at this moment.

What are the times now? If a tenant is going to be, if the rent is going to be increased? Yeah. What kind of notice needs to be given?

So the only notices in the bill are for rent increases larger than 10% or evictions when it comes to. Yeah. So let's stick to that. And then I'll mention one other thing. So if my rent is gonna be increased by more than 10%, I need. A 60 day, it's 90 days notice. Switch that.

It's a 90 days notice if it's more than 10%.

Okay, what is it now? 30 days. Okay.

If I'm getting evicted, we're asking for 30 days more. Right now it's 30 days. Yes, and I'm asking for 30 days more. So if I'm getting evicted, I'm asking for 60 days notice to get evicted. You can still evict me, just give me 30 more days.

And the other one, I'm asking for 60 more days for the building operating cost. There is no time frame. However, if I am a landlord and I present to you tenant, hey, your building operating costs are going to increase and in that moment, I'm not giving you documentation. Then the lieutenant can say, hey, I want documentation.

And the landlord has up to 30 days to provide that documentation. I, as a tenant, if this bill passes, do not have to pay the increase in building costs until I am provided documentation.

If I am asked to pay more in my building cost, and I do not ask for documentation, then the landlord does not have to provide me documentation. Again, the burden is on the tenant to ask each way, each check point and remind the landlord, hey, I'm a qualified tenant, hey, I would like documentation.

It's up to the tenant to bring that up. So if I bring it up, I want documentation. The landlord has up to 30 days. They don't have to take the full 30 days. They can say, oh, here you go. Tomorrow then I have to pay it right then.

And there is something the opposition talked about specifically regarding the utility. If I may, Mister chair. There were. A number of problems regarding how that was, how that was gathered, and I'm sorry. I'm going to ask you to tell us again specifically on utilities. Yes.

As currently written in the bill. Right now, landlords, right now we do an estimate of what our operating costs will be that is sewer, water, you name it. We actually cannot predict into the future what could potentially change that. Real world example from the City of Folsom, water and trash used to be billed directly to the tenant.

That is now actually being billed to the property owner. So we would have to reevaluate those operating costs. And as currently written in the bill right now, we would not be able to reallocate and increase those operating costs to the tenant. So those payments would then be solely placed onto the property owner.

So if it's written as an estimate, if the request is an estimate, then that would, that's something you'd be able to do?

An estimate, yes, but not actual costs. And how it's currently written in the Bill right now, it's supposed to be actual cost.

That's something that can easily be easy.

Because that's not my intent. My intent is anything the landlord has to pay, that is for the tenants to maintain the building, the tenant should still pay that. We just want documentation of what it's being used for.

I think the example I gave is we just want to make sure that the building operating costs aren't just being applied to the tenant willy nilly, like these are actually for maintenance costs that it's going into what it's intended to. Because remember, building operating costs, no one should be making a profit off of this.

This is only to maintain a building. So if it's solely to maintain a building, we want documentation that specifically says that. So if the landlord gets imposed additional fees for sewer water or anything, that should, with my Bill, still go to the tenant.

And if we need to clarify that language, I can always clarify that language because that's the intent of my bill.

If I could just through the chair permission, that would be actual costs. So that would be after the costs were incrued. So your Bill is stating that we need to in advance give the tenant what those costs are. That would be after the billing period. Does that make sense?

No. No, sorry.

So say we say the operating costs change, then we get a bill. We actually, at the beginning of the lease, over a 12 month period, we estimate what the operation costs will be.

Then at the end of the year, if there is a discrepancy, we look at the totals between what the tenant paid and what the actuals were, and then we'll either give a refund to the tenant or the tenant would then pay us for the additional costs in the operating expenses. That's the way it is now.

That's the way it is now. Because you just cannot foresee in advance what our operational costs are going to be. If something changes. Right. Water usage goes up, city or local agency changes how they bill those, then that discrepancy would be taken care of later on down the line.

It is impossible for us to in advance give actual costs of what operational costs are.

Chair? May I respond? Okay. I understand what you're saying, but at the same time, the estimates are coming from somewhere, you know, like it's based on some knowledge of how much it may cost.

And so what our bill says is that we need some documentation to show where the costs are coming from, whether it's an invoice, a statement, a quote, something.

And so I hear what you're saying, but what we're finding in practice with small business owners that we're representing is that they're being billed for charges, not being given documentation, and they're not seeing those things being done.

You know, the landlord's telling them you're paying for security, you're paying for landscaping maintenance, and they're seeing that none of those things are being provided. So that's where there's discrepancy. And, you know, people are feeling like they're paying for things that aren't really, you know, that the landlord's not paying for.

I certainly understand what the Senator's trying to do with this. I think there are some areas that still need to be addressed. Does it go to probes from here?

Yeah. Oh, no.

It's as do passes amended, the opposition will test that. We've been working very closely on this, and if there needs to be clarifying language on this and I can come, I can continue to work with the Committee. But we thought we addressed as many of the issues as possible, and I.

Would say I think a lot of the issues are addressed. I think some of these can be worked out, like, in terms of making sure actual costs are realized. And I think we continue to. There's been a lot of language through Committee amendments to help clarify, and there's been really good author amendments to clarify.

These are really small businesses that we're talking about. 10 employees or less, 20 or less if it's a nonprofit. So we always talk about what we were doing to protect small businesses. This is our chance to do it. I think there are some things that can be clarified a little bit more or tightened up.

We certainly don't want the landlords to be out money because they estimated wrong. I think those are things that we can work on and our staff will continue to work with you on that.

But I think overall I think it has pretty, it has good protections for qualified and it puts a lot of the burden on the business owner to make the asks to ensure under penalty purge you to say that they're qualified to make the asks for transparency and what have you allows 30 days of notice that the building costs are going to go up and provide documentation.

I think that's fair. I think that one of the areas that we have to rectify is that if actual costs were different by no fault of the landlord or the business, there should be some way to realize those expenses to the employer.

And I think that's something that I hope the author will continue to work on with the opposition to try to clarify some of those details.