Senate Standing Committee on Labor, Public Employment and Retirement

Good morning, Madam Chair and Senators. I'm proud to join Senator Umberg in authoring AB 224, which would extend the news carrier exemption from AB 5 until 2030. I am thankful for our former Assembly labor chair for his most recent efforts, which this measure is simply an extension of.

Newspapers fulfill a critical role in our democracy, and we cannot survive without a robust fourth estate. This role is amplified given the proliferation of myths and disinformation currently plaguing media. The communities that rely on print publications cannot afford to be overlooked at a time when our democracy lies in the balance.

This is especially relevant to me as my 84-year-old father gets his print subscription of La Opinion every single day. His personal access to news media is not unique, as countless community publications, often serving exclusively ethnic communities, would not survive without this extension.

The newspaper profession continues to face financial challenges resulting from of ad revenue to tech giants while transitioning to digital platforms and a decline in subscriptions. These reasons, compounded with the unique structure in which carriers' contract with multiple publishers, places stresses on the industry, which is not seen elsewhere, and that is why we are here today.

Despite this, the industry is making significant strides in transitioning completely to digital. Newspapers continue to provide critical information on issues ranging from local to international, and often they are the sole source of information for many of our communities, which is the case for my father.

By providing additional time for this transition, jobs for journalists, editors, and news production workers will be protected while simultaneously supporting the current age of news media. With me today, I have Brittney Barsotti on behalf of our sponsor, the California News Publishers Association, as well as Colleen Nelson, Executive Editor of the Sacramento Bee. Thank you.

Thank you, Miss Rubio. And before your witnesses come, we're going to establish a quorum while we can. Assistant, will you call the roll, please?

[Roll call] We have a quorum.

Thank you very much. So, witnesses, please step forward, or you can use the podium if you don't have enough seats here. You each have two minutes. Thank you. Please proceed.

Good morning, Madam Chair and Members of the Committee. I'm Colleen McCain Nelson, and I'm the Executive Editor of the Sacramento Bee and McClatchy's Regional Editor for our California newsrooms, including the Fresno Bee, the Modesto Bee, the San Luis Obispo Tribune, and the Merced Sun Star.

I'm also proud to serve as a Director for the California News Publishers Association. We take our responsibilities as the fourth estate very seriously, and my focus is serving our communities by providing fact-based journalism. So, appearing before you in support of legislation is extremely rare and underscores how critical this extension is to the future of local news.

McClatchy contracts with distribution companies that work with independent contractors to deliver our publications. Most of those carriers distribute multiple publications at the same time. Consider your legislative offices in the Capitol. Many of you received the Sacramento Bee, the San Francisco Chronicle, the LA Times, and your hometown papers.

One independent contract can deliver all of those publications, but which news outlet would employ them? Without an extension of the newspaper carrier exemption, they would be paid less to distribute a single publication as an employee. At McClatchy, print is not the future. Online readers now far outnumber print readers.

Our newsrooms are focused on creating a sustainable digital business model, but it's a work in progress. Our news organizations are in a critical period of transition. Printing newspapers has become cost-prohibitive, so we are focused on growing new revenue sources, including digital subscriptions, digital advertising, and philanthropic funding.

We've already reduced our print distribution and have moved to mail delivery in Fresno, Modesto, Merced, and San Luis Obispo. We can see the day when we will be completely digital on the horizon. But if we move too quickly, we risk losing the ability to make this transition in a way that is sustainable.

At a moment when newspapers are shutting down every week. This legislation will provide the runway to stand up a new long-term business model. This extension will ensure that local news organizations can complete our digital transformation while continuing to serve California communities with local news. I respectfully urge your aye vote on AB 224.

Thank you. You may proceed.

Good morning, Madam Chair, Members of the Committee. Brittney Barsotti. I serve as the General Counsel for the California News Publishers Association here today in support of AB 224. I believe Miss Nelson and Assembly Member Rubio did a great job of laying out where the industry is at.

That we are an appearance of transition, and as print has decreased, so have printing places. For example, in Fremont, in the Bay Area, there are 12 different dailies printed at one facility. And so you have distributors going to one stop to be able to get the multiple publications they deliver and then handling their distribution.

And with this overlap, it does create the concern of who you would be an employee of and makes the business model somewhat inconsistent with AB 5. And so, as we continue to see an increase in mail distribution and other options, the need for carriers will slowly dissipate.

And also, we are one of two categories of workers that were included in the original round of exemptions that have not had, that converted to a permanent exemption.

And, you know, with the last example, we worked really closely with Assembly Member Kalra, who was then the chair of the Labor Committee, to ensure that the reporting requirements included what was important to the various labor stakeholders and have done our best to ensure that those reporting requirements are being fulfilled on an annual basis.

So, thank you, and I respectfully urge your aye vote on AB 224.

Thank you very much. Anyone else here wishing to speak in support of the bill, please step forward. State your name, affiliation and position. Okay, seeing none, we will move to opposition witnesses. Please step to the podium or have a seat wherever you want.

Thank you, Madam Chair, Members of the Committee. Sara Flocks, I'm from the California Labor Federation, and we're here in opposition to the bill. But what we do agree with is the importance of the news industry and preserving local news. That we can agree on.

We represent journalists, and we have fought for making sure that we get money into the industry to support this important role. But what we do oppose is propping up an industry on the backs of workers, especially the lowest-paid and most vulnerable workers. Newspaper delivery people, the people that you see in your neighborhood at 05:00 a.m. driving around, are not the cause of the decline in the news industry.

We can look at tech giants like Google, like Meta, like other huge entities that have contributed to the decline, yet they get to contribute pocket change to a fund that they get a tax deduction on and get out of any kind of taxes and regulations.

Yet the workers who are delivering newspapers, who are the backbone of getting this information into communities, we're exempting them from a law that requires that they be paid minimum wage, paid sick days, workers comp reimbursement for gas, repairs on their cars, everything that workers need, especially the lowest paid workers.

This was originally a temporary exemption from the law because the industry said they were transitioning. It's been, what, four years? Five years? They're asking for another five years to what I heard was replace delivery workers with a new form.

So basically, workers are going to be misclassified, not get the rights, the benefits, and the wages that they deserve until the industry decides to get rid of them or finds a way to be able to get rid of them.

The other thing is that they said that the business model doesn't work, even though they're exempted from AB 5, newspaper delivery is still under the Borrello Test, which is not as strong of a test, but it is a test for misclassification.

In the past 15 years, there's been a number of cases where these workers were found to be employees, even under the Borrello Test. So, for those reasons, we urge a no vote. Thank you.

Thank you very much. Anyone else here speaking in opposition of the bill, please state your name, affiliation and position.

Good morning. Navnit Puryear on behalf of the California School Employees Association, we're regretfully in opposition. Like many of our members, these employees are people of color. They're Low wage workers and they deserve to be protected from exploitation. Thank you.

Thank you. Anyone else? Seeing none, we'll move to the Members. Members?

Sure. I'll kick it off. First of all, I love newspapers. I know they're going to go away someday, but I'm very upset about that. And, you know, they talked about the model and the model is right. So, I get my community newspaper, and I get the LA Times. The same person delivers both of them.

That would double the cost of the newspaper company. Right? If they had to separate that. So, to me, it's just, you know, synergy, and it makes a whole lot of sense. And they're talking about, what are we going to do to protect these employers? The labor advocate. The labor advocate wants to put those employees out of business.

So, that just makes no sense to me. So happy to support your bill today, and I will move it. I guess it's appropriate now. I will move the bill.

Anyone else? So, thank you so much and thank you for your comments. You know, coming from labor, this is a tough bill for me, but I also spent years working in the newspaper industry. And to be quite frankly, this was always the worst job in the industry.

And I want to see us work on ways to have a just transition for these workers. Because the reason why I'm not in journalism today is because it keeps collapsing and collapsing and collapsing on top of the workers.

And there really isn't a strategy on how to raise standards and integrate into a long-term solution for these workers. You know, I understand that this is a time bound exemption, that it does have a sunset.

And we know there's so many bills in this building today that are focusing on ways to address the newspaper industry and to improve conditions and hopefully keep a free press. And I appreciated the fact-based journalism that we rely on and particularly in our ethnic communities where these are the papers that help keep our communities informed.

So, I want to say thank you for moving this forward and I hope that we can work together on a future bill that figures out a just transition. And so now I will. Would you like to close? And then I'll have the assistant call the roll.

Thank you. And I appreciate the comments. And I know this is a very difficult bill, it has always been, but to the point that I was trying to make earlier in regards to my father, a lot of the ethnic communities depend on the newspapers, and not just the ethnic communities, but the older population that is used to getting their print.

And unfortunately, you know, my father doesn't navigate Google or any of the other platforms to try and get their mail. And so, we are working with the newspaper industry to find a transition to this. And unfortunately for the newspaper companies, they're caught in between at the moment.

But I really appreciate the comments and definitely would like to work with you and others to see if we can figure out how to make our newspapers more sustainable. I have to tell you, I still like to the smell of the paper in the morning, and I know that our younger generation is not used to that.

With that, I respectfully ask for an aye vote.

Thank you. We have a motion from Senator Wilk. We will call the roll assistant.

On file item one, AB 224. The motion is do pass to the Committee on Appropriations. [Roll call]

Thank you.

Can you hear me? Okay, that bill is on call with a vote of four to zero. Okay. Yeah. What is that? Okay, next up, 1034. Assembly Member Grayson. Good morning. You may proceed.

Thank you so much. Good morning, Madam Chair and Senators. AB 1034 would extend the exemption sunset date for lawsuits originated under the Private Attorney General's Act we know as PAGA. For contractors in the building and construction trades that are party to a valid Collective Bargaining Agreement, also known as CBA.

Meeting specified criteria and having negotiated with their local union to include the waiver in their CBA. The statute does not alter a local union's ability to decide to include or not include the PAGA waiver in their CBA. Including the waiver would continue to be a subject of bargaining at the local level by each union.

When a labor union and an employer in the building and construction traits enter into a valid collective bargaining agreement, existing law provides that those employers shall be exempt from PAGA claims provided the CBA includes the following: premium wage rates for overtime, an hourly wage of not less than 30% more than the minimum wage, a grievance and binding arbitration procedure to redress violations, a clear waiver of the requirements of PAGA in unambiguous terms, authorization for the arbitrator to award any and all remedies available under PAGA. Section 203D of the Labor Management Relations Act affirms that resolving labor disputes through collective bargaining agreements is the desirable method for settling grievance disputes related to the application or the interpretation of an existing CBA.

So this Bill aligns with congressional intent by using the well established collective bargaining process to resolve disputes in lieu of PAGA. So AB 1034 will allow workers to continue to benefit from this important exemption by extending the current sunset in the law from 2028 to 2038. The measure is supported by the California Conference of Carpenters, Associated General Contractors, and the State Council of Laborers, among many others. I respectfully ask for an aye vote when the time comes.

Thank you so much. You may proceed. You have two minutes.

Thank you. Good morning, Madam Chair, Members of the Committee, Eddie Bernanke on behalf of the National Electrical Contractors Association, which represents 15 chapters throughout the state and over 2000 union signatory electrical contractors in California. The author did an eloquent job of going through the need for the Bill, but I do want to highlight a few things.

This is a simple sunset, but it's a critical importance to the signatory construction industry. This policy is so critically important to us because union signatory contractors need the efficiencies in our collective bargaining agreements that allow us to compete in the marketplace while also providing premium wages and robust health and pension benefits to our workers.

Conversely, without the waiver, like this PAGA waiver and other CBA efficiencies, union signatory contractors kind of face a double jeopardy as they must work through the CBA grievance procedure while also being subject to PAGA lawsuits at the same time, which places them at a disadvantage in the marketplace.

The CBA pocket waiver has worked well for both management and labor, as industry grievance procedures provide an expedited process to work through worker grievances that are typically resolved within days, with the worker receiving 100% of the restitution and then, as finally, as the Assemblymember mentioned, as in all construction CBA carve outs in state law, this measure does not alter a local union's ability to include or not include the carve out in their collective bargaining agreement. That decision would remain subject to collective bargaining at the local level. So for all of these reasons, we would urge your aye vote. Thank you.

Thank you very much. Do you have another witness? Yes.

Thank you, Assemblyman Grayson, for taking on this task. Senator Cortese as well. Madam Chairman, Members, as you heard, this is a simple Bill to extend to sunset. Senator, how are you? It does reflect nine decades of public policy when collective bargaining was actually made legal and encouraged. Collective bargaining is encouraged by the law of the land as of nine decades ago and still is today.

I'm going to keep this very brief, but I also want to add the national policy has been since 1935 to also encourage arbitration over litigation through collective bargaining, but arbitration under any circumstances, because it is a private sector approach to resolution of disputes. So we are in good hands in terms of public policy for almost 100 years.

I also want to just point out that this Bill is not a mandate. It's a private sector resolution through collective bargaining. No union is obligated to adopt this exemption if they do not wish to adopt this exemption. It's chosen to do it through the collective bargaining. It's not mandated. But I also want to emphasize today's economic conditions are tragically similar to what they were were almost 100 years ago. When we see people living in the streets, when collective bargaining became a mandate. I'm sorry, encouraged.

And workers are given the right to collectively bargain. I'm not sure we're in the same exact position, but you can see the changes. Until we have a fairer economic approach and a way to solve problems, we're going to be in trouble. So I encourage you to support this. I also want to say thank you to Assemblymember Blanca Rubio, who was the original author about eight years ago on this Bill, and it's a simple extension of a sunset. Appreciate it.

Thank you very much. Anyone else here in support of the Bill, please step forward. State your name, affiliation, and position.

Madam Chair. Joe Cruz, on behalf of the California State Council of Laborers, representing 80,000 hardworking men and women in the construction industry. A few of those in the room today were in orange and outside, who are stressing the importance of this. I want to thank the author for bringing this forward. We want to align our comments with those from our industry partners are very supportive. It's been a great process to resolve resolutions both for the employer and the employee. We respectfully urge your aye vote.

Thank you, Madam Chairman.

Want to remind, name, affiliation, and position.

Matt Kremens, California Nevada Conference of Operating Engineers. Strong support. Thank you.

Good morning, Madam Chair. Doyle Radford Jr., Laborers Local 185. I'm the Business Manager of the men and women here in the construction industry in Orange. We are in strong support of AB 1034. Thank you for your consideration.

Good morning, madam, Members. My name is Adrian Esparza. I'm the business manager for Laborers International Union of North America Local 652 in Orange County, Southern California. And we are in strong support of AB 1034. We wish an aye vote on this matter. Thank you.

Madam Chair, Members. Paul Gladfelty on behalf of the Associated General Contractors, we are also in strong support. Thank you.

Thank you, Madam Chair. Todd Bloomstein for the Southern California Contractors Association in support of AB 1034 Thank you, Assemblyman, for carrying this.

Good morning, Madam Chair, Committee Members. Rick Smiles with the Southern California District Council of Laborers here in strong support of AB 1034.

Thank you for your consideration, Madam Chair Members Brett Barrow with United Contractors and the Western Line Constructors here today in strong support of 1034. Thank you.

Good morning, Madam Chair and Members. On behalf of the laborers from the Central Coast and the Central Valley we're here in support of AB 1034. Thank you.

Good morning, Madam Chair and Members. My name is Nick Santos and I'm with Laborers Local 1309 covering Long Beach and south LA County area. We're here to echo that we're also in strong support. Thank you.

Good morning, Madam Chair, Members of Committee. Chris Walker. On behalf of the California Sheet Metal and Air Conditioning contractors, in support of the Bill. Thank you.

Madam Chair and Member. Scott Govenar on behalf of Construction Employers Association, in support.

Good morning. Dan Branton with the NorCal Carpenters Union. I'm a senior representative. My brothers and sisters out here all wanted to do 'Me Toos', but they've elected me to kind of bring forth the message. We're in strong support. Thank you.

Good morning. Voleck Taing, with the American Council of Engineering Companies in support.

Good morning, Madam Chair. My name is Thomas Ruiz, representative for labor's local 783 down in San Bernardino County, Southern California. We're in full support of 1034. Thank you.

Thank you. More support. Okay.

Thank you. Keith Dunn on behalf of the District Council of Iron Workers. In support.

Hey, it looks like that's it for support. We will move to opposition. Is there anyone speaking in opposition on this Bill? Please come have a seat at the table. Seeing none. Any 'Me Toos' in opposition of the Bill. Okay, looks like none. We'll come to the dais. Any comments from Members? Do we have a.

Whenever somebody says it's a very simple Bill, I usually reread it three times to make sure. Especially when it's Mister ..., I would move the Bill.

We have a motion from the good Senator Laird. Do you like to close first, Mister Grayson.

I respectfully ask for an aye vote.

So, we have a motion from Senator Laird. Assistant please call the roll.

On AB 1034. The motion is due passed to the Committee on Appropriations. [Roll Call].

This Bill has a vote of four to zero. It is on call. Thank you so much, Mister Grayson. Okay, assistant, let's open the roll. Let's see. We have. Let me get my list out. AB 224 by Assemblymember Rubio. We had a vote of four to zero. Please call the roll on AB 224.

On AB 224. The motion is due passed to the Committee on Appropriations. [Roll Call].

Okay, with a vote of five to zero, that Bill is out. Next, we have file item number two, AB 1034. Assemblymember Grayson, that was a four to zero vote.

On file item two, the motion is do passed the Committee on Appropriations. [Roll Call].

Okay, Bill, a vote of five to zero. That Bill is out. That concludes our agenda for today. The Committee on Labor, Public Employment and Retirement is adjourned.