Senate Standing Committee on Business, Professions and Economic Development

All right. Senator Niello says it's been 30 seconds. We will gavel down and start the committee hearing for Senate Business Professions Economic Development. We are in room 2100 in the swing space. For any committee members or presenters, please make your way to this hearing room. Thank you to my colleagues who are here.

I don't think we have quite enough for a quorum. Might need one more, right? Two more. Two more, I think, for a quorum. But we will go ahead and get started if we have folks - do we have folks here who are ready to present?

Okay, so on the agenda today, we have two Senator Umberg items, I believe, being presented by another member of the committee. And then we have one Senator Weber Pierson item which we will lead off with if she is ready.

Senator Weber Pierson, we're still missing one person for a quorum, so I might interrupt you while you're presenting, if that's okay? If one person walks in to set up a quorum; otherwise, if you can make your presentation, that would be great, and we will move on. All right.

Of course, we're going to have the author who came the farthest distance present first. But before you start, we're going to take roll call, okay?

Sounds good.

[Roll Call].

Go ahead, and that's Senator Umberg here as well. We'll mark him present.

[Roll Call].

Great. Thank you. All right. Senator Weber Pierson, please. The floor is yours.

Thank you. Good morning, Chair and members, I am here to present SB 849, a bill that addresses physician sexual misconduct according to Business and Professions Code, Section 2001.1. "Protection of the public shall be the highest priority for the Medical Board of California in exercising its licensing, regulatory and disciplinary functions.

The physician patient relationship involves significant vulnerability and relies on ethical judgment and integrity. Patients place extraordinary trust in their physician. Any violation of that trust, especially when it is broken through sexual abuse or harassment, should be disciplined to the greatest extent. In 2022, AB 1636 removed the medical board's discretion to reinstate a physician or surgeon, who lost their license due to sexual misconduct with the patient.

At that time, the LA Times had reported instances where physicians committed acts of sexual misconduct against their patients. In all of the reported instances, the physician either had their license revoked or the physician surrendered their license but subsequently petitioned the Medical Board of California for license reinstatement.

For that reason, the bill removed the board's ability to reinstate the those individuals. More recently, articles about sexual misconduct within the medical industry brought forth this issue to the forefront once again. In those articles and discussion, we discovered that the original bill did not include explicit reference to license renewals.

AB 849 clarifies that a physician or surgeon who has committed specified sexual offenses against their patient cannot pet petition the board for license renewals. This ensures that every aspect of the licensure process is captured. Additionally, SB 849 requires automatic revocation of a person's physician or surgeon certificate.

If the license was surrendered due to sexual misconduct with the patient, the license was revoked based on a finding by the medical board that the person committed a specified sexual misconduct, act, or offense with the patient, the person was convicted of a court or offensive sexual misconduct with the patient, or the person was required to register as a sex offender based on an offense with a patient, and their license was subsequently reinstated by the board on or after January 1, 2020.

The original bill, 1836, went into effect in 2023. A few years before the implementation of that measure, the legislature spoke out against sexual abuse of all forms and granted victims additional rights, including extending the statute of limitation for sexual assault claims and prohibiting non disclosure agreements and settlements related to workplace sexual harassment.

This bill extends the victim's protection implemented by AB 1636 by retroactively applying these provisions to 2020, a time frame when the state legislature became more forceful in their discipline of sexual harassment and misconduct. I thank you for your time and respectfully ask for your aye vote.

All right. Thank you very much. We'll start with those in support of SB 849. Come on forward.

Morning. George Soares with the California Medical Association in support.

Thank you.

Ryan Spencer with the American College of OBGYN's District 9. They just approved a support position; in support. Thank you.

All right. Was there anybody else in support or that? That's it? All right. All right. Is there anybody in the room in opposition to SB 849? Seeing no one. We'll come back to the dais. Colleagues - yes. Senator Archuleta.

Thank you, Doctor, for bringing this forward. All of us who rely on you and those in the medical field to be licensed and have the education that you should have to treat the patients. But here we're talking about prohibiting petitioning and not allowing these people to come back into practice, and that closes the door finally.

Is that correct?

Yes.

Okay. So with that, we're finding that we're doing the right thing, I think the general public is looking to close that door. There's people that are practicing that they shouldn't because of being found guilty. And besides the patients, I think our most precious thing are the children, the patients themselves that they oversee and take care of.

So I think it's a great bill, and I'm glad you brought it forward. And I will be moving the bill at the appropriate time, and I support it 150%. Thank you.

We do have a quorum, so we'll take that as a motion. Seeing no other comments, would you like an opportunity to close, Senator?

Yes. Thank you, Chair. I want to thank the committee and the Chair for allowing me to present this bill and respectfully request an aye vote.

All right, thank you very much. We will do a roll call on SB 849 now.

Motion is do pass to Appropriations. [Roll Call].

All right, that's 8 to 0 for now, but we're going to place it on call for the colleagues who are not quite here yet. Again, we're in room 2100.

We have just one author left with two bills, so if you are a member of the Senate Business, Professions and Economic Development Committee, you might want to make your way down to the hearing room. All right. Senator Umberg, are you ready, sir?

I am. Thank you very much.

Would you like to start with SB96, the Streaming Services Bill?

Yes. Thank you.

All right, when you're ready.

SB96 was inspired by a young person named Samantha Keller. Samantha was awakened while her parents' young baby. While her parents were watching. I think it was a particular streaming service because the amplification of the ads, which was multiples of what the ambient sort of volume was for, for the streaming service, awakened her. Anyone's got a baby.

You know how important it is to keep that baby asleep. And so the original Comm Act was passed that dealt with, in essence, TV. This deals with, for example, podcasts and the like. And what it does, it simply says that you have to keep the. Basically, the advertisements at the ambient level of the other, other content.

And I urge an aye vote to testify with me is me. So.

All right, is there anyone in the room in support of SB96 who would like to be heard today? Seeing no one. Is there anyone in opposition to SB 96? If so, please come forward. All right. Seeing no one, we'll come back to the dais. Colleagues, any comments? All right. So moved. Okay. Senator Choi.

Yeah. I wonder. I think we heard your Bill prior year, last year as well. I wonder if I set up my TV volume. Isn't that the static the same? This advertisement comes on and the volume jumps up. Is that really common? I haven't had any experience.

Well, you're unique, Senator Choi, because I've had that experience where both with streaming services and other, for example, podcasts, where I have heard dramatic amplification of advertisements.

So it does happen frequently. I see. So is that because of the extreme service advertising volume level set up differently rather than my physical television setup volume?

It is designed to increase amplification, so you pay attention so, yes.

Babies.

Babies. That's exactly right. Okay. Right.

Thank you.

With that, I urge an aye vote.

All right. Okay. Yes. Senator Weber Pearson.

Thank you so much, Chair. Thank you, Senator Umberg, for this Bill. I think we all get frustrated with the constant turning up and turning down on when we're looking at these streaming services.

So how do you envision this working just in California, since many of these platforms work throughout, you know, the whole country?

Yeah. Well, if this actually requires that the publishers of this content actually have to modulate around the country, I won't lose sleep over that. So.

So the thought process, or the hope would be that since they'd have to change it for California, it would just. It's something that.

Well, that may be the impact. Right. It's obviously we in California can't dictate what happens in Mississippi. Right. Would that we could, but we can't, so. Yes, it may become the standard practice.

Okay, thank you.

Any other comments from colleagues? All right, then we have closing comments already made and a motion on the table from Senator Archuleta. We'll call the roll.

[Roll Call]

All right, 9-0. We'll leave that on call as well. Thank you, Senator Umberg. Let's move to file item two, which is SB342.

Thank you. Thank you, Madam Chair and members. Thank you, Madam Chair and Ms. Mason, for your work on this bill. SB 342, denominated as the Contractor's Licensure Fairness Act provides a balanced approach to contractor licensing by allowing partial payment recovery in instances of licensure lapse.

Contractors will be able to recover payment for work completed while licensed even if they were unlicensed for part of the project. Important to note that contractors will still not be able to recoup pay for any unlicensed days and will continue to be it will continue to be unlawful to begin work on a project if you were unlicensed.

In other words, if you don't have a license, you start a project, then you're out of luck as is currently existing law. With me here testify in support is Mr. Danny Curtin, on behalf of the California Conference of Carpenters and Mr. Robert Nida is here for technical assistance.

Testimony - excuse me. Thank you, Madam Chair and members. The key here is a proper license is required to enter into a construction contract period. A lot of legal protections exist in that area. SB 342 does not change any of those.

Current contractors license law requires total disgorgement of any payment of contractors that operate without a license during the time they work on a project. 342 limits that disgorgement to the amount of time they are without the license. There's no competitive advantage for a contractor to willfully allow a license to expire during the term of a project.

Without a license, a contractor legally cannot collect money owed and has to return money already received. No rational contractor does this on purpose, and I'm looking at a contractor withholding payments to contractors for a substantial period of time for any reason and, it does happen for other reasons, can seriously damage or bankrupt a contractor, particularly a small contractor.

All this can occur without actual harm to the consumer. It is a draconian penalty for a violation not based on damages. No damages are necessary and without consideration of intent. The perverse incentive an existing law is most likely again to harm small and new inexperienced contractors. The existing penalty based on procedures not performance.

The resultant can be a large that large owners can get projects, or significant parts of projects, built for free if they have smart legal support. 342 is more proportional penalty to the violation but still without harm to the consumer. It is a penalty that far exceeds the crime. No opposition as we see on the bill.

Right now, the concerns being raised are important but relatively speculative. Support comes from contractor associations representing responsible contractors. I want to tell you one thing: the carpenters are not weak on enforcement. All the housing bills we talk about, we're insisting as much as possible on our right to self enforcement for our labor management programs.

We are not looking to turn a blind eye. Thank you very much. We hope you support us.

I appreciate your testimony. Go ahead.

I don't have much to add, but I know that a number of questions were raised about whether the existing law provides substantiation for protection for the 90 days that the board can fix the problem. But that doesn't happen in reality.

But most of the time, and it doesn't happen because somebody sends in their renewal fee at the beginning of the year. They don't learn about a problem of an administrative gap in a license, often for years later when there's litigation between a contractor and an owner or a subcontractor and a contractor.

And so while there is a process in place, in reality, the 90 days that is provided to fix the problem with a license doesn't come up for two or three years and then that problem is expired.

This would solve that problem; would also allow, even if somebody was in violation for an administrative reason, for an owner not to get a windfall of effectively a free building or free work, or for a contractor to collect money from an owner and not give it to the small business, the small subcontractor, because they find a technical violation with the subcontractor's license.

It would allow for a punishment that fits the crime, is the easiest way of saying it. It would allow for proportionality for the period of unlicensed to not be paid for that, to be penalized for that under the existing law, but not be penalized beyond what would be reasonable. Thank you.

All right. Thank you for your comments. Are there others in support in the room? Please come forward. We're at the me-too portion of this hearing, so just your name and position on the bill.

Madam Chair and members, Happy New Year. I can do that. Mike Monagan, behalf of the State Building and Construction Trades. And we are in strong support.

Good morning, Senators. Richard Markuson for the Western Electrical Contractors Association; also in support.

Madam Chair, Todd Blumstein for the Southern California Contractors Association, as well as the Southern California Association of Scaffold Contractors, in support. Thank you.

All right, that's everyone in support in the room. Do we have opposition in the room to SB 342? Seeing none. We will come back to the dais. I also have comments. If you don't mind, I'd like to lead off and then go to my colleagues. I have a few concerns with the bill.

I'm prepared to support it today, as I told you. But I would like to share my concerns because this committee can be tricky since it's tough subject matter and there's a large business and professions code. And you, those of you who read the staff report on this may see that it wasn't overwhelmingly supportive.

And there's a reason for that. And the reason is that in existing law, contractors in this space right now, as it's laid out, get two months of notice when their license expires.

In other words, for two months, when their license is expired, the board is sending them messages saying, "Your license is expired, you need to do something about it." If in those two months they don't do anything, they have another 90 days, so another three months to fix their contract, which means they have five months.

A contractor has five months to go back and fix their license. And in current code, as it stands now, when they do that, their license is retroactively made whole. So it means during those five months, anytime that they fix it during those five months, then those five months they would show up as having been licensed.

Now, the folks in the room are telling you sometimes they don't note this until a couple years later and they're in litigation. So the question is, how did a contractor not figure out for five months that they were unlicensed while being notified for two months from the agency?

My only point here is that we don't do this for any other profession. We do not do retroactive licensure. We do not give five months of notice. That's already in the law. That's already done. You've already agreed to that. This committee has already voted on that.

That's in this giant book, if you'd like to see it, that Ms. Lamar has brought to the dais today. The piece of this bill that is new, that doesn't exist, aside from the two year piece, is it's all about litigation and how and when you can sue.

And one piece of this doesn't allow consumers then to sue for unlicensed work. And by the way, subcontractors, as you all know, already have the right to go after work done. We all know this. California took care of this a long time ago.

Subcontractors come in and a general contractor is unlicensed or for some reason removed from the job. The subcontractors still have a way through liens to go after being paid. So I just, I'm going to vote yes because it's a complicated, difficult body and it has two more stops.

One is Judiciary, where they can sort out a little bit. And I'm on that committee with the Chair, who is also the author might have a little more time to sort through some of the details there, and then it will go to Appropriations where we'll get another level of scrutiny.

I am putting these things on the record so that they can be discussed, so that the bill itself, as it moves forward, isn't a duplicate of existing law and doesn't create, I'm sure, unintentionally, a loophole that doesn't allow consumers to hold an unlicensed contractor accountable for their work. Those are my concerns.

Happy to take comments from the board. So, I saw Senators Archuleta and Grayson.

Thank you, Madam Chair, for your comments. And I am supporting this bill because I think the, the rank and file of the carpenters need to feel a sense of security as well. When they're signing on with a particular contractor, they want to know that contractor is, is above board, will apply every standard of the law.

And I think this is a good way not only to protect the contractors, the consumer, but the employees, the carpenters themselves. And I think we can't allow for those carpenters to be out to try in any way, shape or form. And that sense of trust and security is needed.

And we granted, will find the way in the various committees. But the rank and file has to feel strong that we're behind them because we appreciate the work they do. We're asking for housing to be built. We're asking for so many things to be built. We need to be on the same page.

So with that, I will move the bill and I thank you for bringing it forward, Senator.

Senator Grayson.

Thank you, Madam Chair, and thank you for your comments and expression of those concerns. I do also share some of those concerns and I'm sure it'll be ironed out. Having said that, with more life behind me than before me, I can now see better that circumstances could come where someone would find themselves with a lapsed license.

Now, I haven't had my license lapsed ever since January 28, 1999, and I find it very difficult to believe that a prudent contractor would go years without knowing their license was lapsed. However, I'm not sure if the communication with CSLB, and they're a great organization, great agency, fantastic agency to work with, but also have their challenges.

I'm not sure if the communication is as often or as much as needed, especially for a lapsed license, as should be in order for that contractor to find out.

So, what I'm saying is that there are occasions where I could see better today than maybe 20 years ago, house a certain circumstance. So, I do believe that this bill is not trying to create a loophole for a contractor that is trying to circumvent the law.

I think what this bill, the intention of this bill, is to really try to keep a contractor that is doing quality work or doing work well, ethically has done the job and satisfactorily to be able to recover where recovery is possible, but to also know that the incentive is you're not getting paid for the days that you didn't have a license active.

And so, there is still that incentive built in there, but there is also that protection for that contractor that has done the work and doesn't have to give away free work because of some, some ill circumstance that came his way. So, I think, possibly, there's room for some more conversation.

But definitely this is a very, very good bill that needs to be supported and in its best fashion, turn into statute. So thank you for your good work.

Senator Smallwood-Cuevas.

Well, I think Senator Grayson said much of what I wanted to say, and that is, you know, I think this is a bill that represents both the consumer protection and also the worker protection.

Because at the end of the day, and we know we work with a lot of red tape, there are moments when things lapse, and there are moments when it might be five months, but you know what, who knows, it could be six, and there could be some window where there is a lapse.

I think this is an opportunity to say if you're doing the right thing, you get paid. If you didn't do the right thing, you won't.

And I think it's a, a strong case to be made that it's important for us to protect both the workers who are working for those contractors, because when the contractor doesn't get paid, it means the workers don't get paid. And we know what a snowball effect that can be on our economy.

I did have one question and I wanted to ask this, and this is something that we do on the labor enforcement side, which is presumption.

And, you know, oftentimes it seems like a lot of the onus, when you do maybe have a problematic contractor who, for whatever reason, doesn't have their license, the onus is on the consumer to figure that out. Where and how do - is presumption a part of this, where we can put some of that onus on the contractor?

So the bill does not currently have any presumption of validity, invalidity, the contractor has a license, does not have a license. The burden exists as it currently exists in law. If you, for example, if the allegation is you're unlicensed, then the burden shifts to you to demonstrate that you have a license.

Senator Small-

That's helpful. Well, I'm happy to move the bill when the time is right.

Can I just, Senator Smallwood-Cuevas, can I just add one point? The staffs would tend actually to agree more with your earlier statement. So, maybe I'll pose this as a request of the Judiciary Chair to make sure that what you just said to her is accurate.

Because actually my reading of this is that the burden shifts onto the consumer that they have to show that when the license was valid and wasn't valid in order to make the complaint that your license wasn't valid.

I don't think that a consume - that the contractor then would have to show that their license - I don't think that burden belongs to the contractor if you're the one bringing suit.

So I guess I would say I think that's a Judiciary question and maybe one that I would ask you to look at to make sure that what you just stated to her is correct; that you haven't just shifted the burden of proof of licensure to the consumer rather than the contractor.

So.

Well, in other words, you're asserting an affirmative defense. And she's right. I think she's right.

Let me, let me call on Mr. Nida.

Well, I think it's a Judiciary issue more than it's a BPEd issue. But if you'd like, if, if Senator Small Cuevas wants to hear your answer, that's fine. I'm more making a request of Senator Umberg.

I'll be very brief. Thank you very much. The shift doesn't, the burden doesn't shift. Under 7031 of the BMP code, it's very clear that the contractor has the burden to both plead and prove that they have a licensure. So now, they have to plead and prove it for the various periods of time versus all of the time.

But that doesn't shift the burden. And as far as the consumer is concerned, the consumer still has all the protection the law currently has. It just doesn't get to get a windfall for a period of unlicenseure, or licensure versus unlicensedure. It doesn't get to get the whole when it's only unlicensed for a part of it.

So it's still, the consumer is completely protected under law. Then as far as enforcement, the board still has the right to enforce. If you're fully unlicensed, you know, it's a crime under 7028 and there's still mechanisms both administratively, criminally, and civilly to deal with somebody who's wholly unlicensed.

Then the last comment I'd like to make very briefly is, you know, when you speak of the two months at the beginning of a license renewal, sometimes these issues, in fact more often than not they come up in the middle of the license period. So you don't know about them.

They then you send in your next renewal at the end of the year and you don't know about them for years. Now should people. Sure, people should check every day and know their license. That would be the ideal world. But the reality is that doesn't happen.

And sometimes there's some technical reason why there's a short period of unlicensed or during the middle of a license period and they don't know to repair it within the 90 days. Thank you very much. Appreciate you listening to me.

Just one comment.

Sure.

I have no intent to do what you're concerned about. So we really will work on this bill to make sure that doesn't happen. I can tell you I found out I my license, driver's license expired when I went to rent a car.

Yeah.

And if I hadn't had that, it could have been years.

The point is that if the cause of action for the suit is that you have to prove to bring the suit that somebody was unlicensed, you have shift the burden. But again, I think that's a Judiciary issue; I have every faith in them.

We agree with that because we will be bringing suits. Trust me.

Yes, understood. All right. Very good, Senator Choi, thank you.

I want to clarify my understanding. I thought your bill was to make sure that the contractors will have their license renewed when it's due, rather than ignoring and continue working. And that period is five months. So I have a question.

Whether the license notice renewal notice is given by mail or email or any other means, why would they ignore to begin with if they are serious contractors. Upon receipt of the renewal notice, just like a driver's license, it is common sense for them to go there renew. So is that my understanding correctly?

Is your question why would a contractor ignore it? I don't know.

Yeah, why do they ignore for five months? And the other one, so what kind of notification methods are used? Let them know.

That presupposes that the contractor has actual knowledge that the license has expired. If they have actual knowledge, obviously it's prudent for them to renew the license. What this bill simply says is if, for example, there's a period of time, five year contract, they're out of licensure beyond the recovery period for 30 days.

They don't get paid for the 30 days, but they don't forfeit the five years of work that they've already performed.

So your intent of the bill is for them to renew on time?

Well, the intent of the bill is to not work an unfair situation to the contractor, and I suppose secondarily to the employees where you've got, let's say you've got a five year contract for a million dollars. Right. There's a period where you're unlicensed for 30 days.

It would be unfair to simply say, you know what, the owner reaps the benefit of that 30 day lapse. And so they get, as was already presented, a million dollar benefit because that 30 day lapse and this eliminates that windfall.

So, so 30 days, period when the contractors was unlicensed?

They don't get paid for that period. That's correct.

And the consumer can claim, "I cannot pay."

Well, let me, let me go back to the question asked by the Chair: so when you're suing, for example, a contractor is suing to enforce the contract, contractor must allege that they have a license. It's part of the proof. They don't allege it and they don't prove it. They don't allege it, lawsuit's thrown out.

If they don't prove it, then there's a, basically a judgment on the pleadings or a judgment after the plaintiff presents their portion of the trial. I think the question that Chair is getting to is, if they have alleged that and the consumer says as an affirmative defense, they weren't licensed.

So burden was on me, on the consumer, that I need to find out for 10 months that the guy was not licensed.

Senator Choi, let him, let him finish.

So at that point in time, once the contractor has gone forward and provided the license, and at least the contractor has the burden of proof, of showing the license, they've shown the license and the consumer or the other party says, "Oh no, you didn't have a license, you did not have a license. I don't believe that's a fake license," or whatever it may be, and they allege as an affirmative defense that you weren't, that you were not licensed, the burden of proving an affirmative defense falls to the party who's alleging that affirmative defense.

But this doesn't change existing law in terms of burdens of proof or persuasion or burden of going forward.

Thank you.

Okay. All right. Take that as your closing statement, you already have a motion. We will call the roll. Yeah.

Okay, the motion is do pass to Judiciary Committee. [Roll Call].

All right, that is nine to zero. And I actually don't think we have any other members coming, so I'm going to say that bill is out.

Thank you.

And it is on to Judiciary and then we'll go to Appropriations. I think we just have one Bill, which is Senator Weber Pearson's, where we have one outstanding Member. If you would call file item 3, SB849. Okay, the absent Members, please.

[Roll Call]

All right, that Bill is out as well. And file item two. SB 342 is also out at 9-0. That is going to Appropriations. Close the roll on all three bills. That's it. And for me, this is my last opportunity to chair Business, Professions and Economic Development. Let's just make sure we've closed the roll entirely.

On file item three, no, one, SB 96.

[Roll Call]

All right, we're done. That Bill is out. I just want to thank the staff of the Business, Professions and Economic Development Committee for helping me over the last year and a half, or however long I've been here chairing. This is an excellent Committee that does incredible work for the state of California.

And on behalf of the Senate, thank you for everything that you guys do. It's been an honor to serve in this position and I've really enjoyed all my time working on economic development and licensure issues. Really, really important work for the State of California and a top notch staff. So thank you so much.

That's it for business, professions and economic development.