BILL ANALYSIS                                                                                                                                                                                                    





          SENATE COMMITTEE ON LABOR AND INDUSTRIAL RELATIONS
                             Senator Tony Mendoza, Chair
                                2015 - 2016  Regular 

          Bill No:               AB 67        Hearing Date:    June 8,  
          2016
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          |Author:    |Gonzalez                                             |
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          |Version:   |May 19, 2016                                         |
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          |Urgency:   |No                     |Fiscal:    |Yes              |
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          |Consultant:|Alma Perez-Schwab                                    |
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                   Subject:  Double Pay on the Holiday Act of 2016


          KEY ISSUES
          
          Should the Legislature require retail and grocery store  
          establishments of 500 or more employees to pay their employees  
          at twice the regular rate of pay for working on Thanksgiving  
          Day? 

          Should the double pay for work on Thanksgiving Day requirement  
          exclude restaurants, except for restaurants that are located  
          within retail or grocery store establishments?  
          

          ANALYSIS
          
           Existing law:  
           
              1)   Defines a full workday as 8 hours of labor, and 40 hours  
               as a workweek. Any additional hours worked must be  
               compensated with the payment of overtime wage rates. 
          (Labor Code 510)

             2)   Requires the payment of overtime compensation as  
               follows:








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                           Work in excess of 8 hours a day, and over 40  
                    hours in a workweek, and the first 8 hours worked on  
                    the 7th day of a workweek shall be compensated at the  
                    rate of no less than 1  times the regular rate of  
                    pay;

                           Work in excess of 12 hours in one day shall be  
                    compensated at the rate of no less than twice the  
                    regular rate of pay for an employee; 

                           Work in excess of 8 hours on any 7th day of a  
                    workweek shall be compensated at the rate of no less  
                    than twice the regular rate of pay of an employee.

             1)   Provides that the overtime compensation requirements do  
               not apply to certain executive, administrative and  
               professional employees that meet specified criteria for  
               exemption.

             2)   Any person who violates these overtime wage provisions  
               is guilty of a misdemeanor. 

           This Bill  would enact the Double Pay on the Holiday Act of 2016  
          that would require an employer to pay at least two times the  
          regular rate of pay to an employee for work on a family holiday,  
          as defined.
          Specifically, this bill: 


             1)   Requires any work performed at a retail or grocery store  
               establishment on a family holiday to be compensated at no  
               less than twice the employee's regular rate of pay.


             2)   Defines "family holiday" as the fourth Thursday of  
               November of each year.


             3)   Defines "retail store establishment" as a physical store  
               within the state with more than 50 percent of its revenue  
               generated from merchandise subject to the state's sales and  
               use taxes, including, but not limited to, electronics,  
               appliances, clothing, furniture, sporting goods, health and  
               personal products, or a limited line of food products for  
               onsite consumption.  A "retail store establishment" does  







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               not include a store located in a hotel, amusement park,  
               movie theater, or a new motor vehicle dealer, as defined. 


             4)   Defines "grocery store establishment" as a physical  
               store within the state that sells primarily household  
               foodstuffs for offsite consumption, including, but not  
               limited to, the sale of fresh produce, meats, poultry,  
               fish, deli products, dairy products, canned foods, dry  
               foods, beverages, and baked or prepared foods. Other  
               household supplies or products are secondary to the primary  
               purpose of food sales.  A "grocery store establishment"  
               does not include a store that occupies 5,000 square feet or  
               less of floor space and that sells transportation fuels in  
               conjunction with, and at the same physical location as,  
               household foodstuffs for offsite consumption.


             5)   Provides that "employee" does not include the following:  



                  a.        An employee covered by a valid collective  
                    bargaining agreement that meets specified criteria,  
                    including the payment of holiday premium pay and a  
                    regular hourly rate of pay of not less than 30 percent  
                    more than the state minimum wage.


                  b.        An employee who is exempt from the payment of  
                    overtime under the executive, administrative, and  
                    professional employee exemption under current law. 


                  c.        An employee who is employed by an employer  
                    with 500 or fewer employees


             6)   Specifies that these provisions do not apply to  
               restaurants, except for restaurants that are located within  
               retail or grocery store establishments.



          COMMENTS







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          1.  Background: Black Friday on Thanksgiving Day 

            Black Friday, the day following Thanksgiving Day in the United  
            States, and the sales that many stores offer to entice  
            customers has set the beginning of the holiday shopping season  
            in motion for many decades.  Black Friday has routinely been  
            the busiest shopping day of the year; with stores opening  
            their doors to customers as early as 4:00am.  However, in  
            recent years there has been a changing trend of starting the  
            Black Friday specials early - on Thanksgiving Day. Several  
            large retailers have started opening their doors as early as  
            5:00pm on Thanksgiving Day and staying open overnight in an  
            attempt to appeal to the sale seeking shoppers. 

            Although appealing to many, these retail practices come with  
            several consequences including that of making high demands on  
            staff who are needed in order to keep such long open hours,  
            and especially for those required to work on Thanksgiving Day.  
            Additionally, both customers and employees face health and  
            safety risks due to insufficient staff for the high number of  
            consumers walking in the door.  Even as many stores stretch  
            their hours into the holiday, there has been some push back  
            from several retailers who have decided to do the opposite and  
            close their stores completely on Thanksgiving Day giving their  
            employees the opportunity to spend the day with their families  
            and friends for the holiday. 

            For many minimum wage workers all hours of work are welcomed  
            to help provide for their families, including work on  
            federally recognized holidays. According to various news  
            accounts, workers who refuse to work on holidays often face  
            intimidation or fear the loss of their jobs.  This increasing  
            commercialization of the holiday season has generated  
            significant public backlash, including petitions asking  
            retailers not to open their stores on Thanksgiving Day, media  
            criticism and worker protests.

          2.  Need for the bill? 

            California law does not require that an employer provide its  
            employees with paid holidays, that it close its business on  
            any holiday, or that employees be given the day off for any  
            particular holiday. Hours worked on holidays, Saturdays, and  
            Sundays are treated like hours worked on any other day of the  







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            week.  Employers are free to create their own policies  
            regarding holidays and can choose to give their employees time  
            off from work with pay, but nothing in the law requires such a  
            practice. Additionally, there is nothing in the law mandating  
            that an employer pay an employee a special premium for work  
            performed on a holiday, Saturday, or Sunday, other than the  
            overtime premium required for work performed in excess of  
            eight hours in a workday or 40 hours in a workweek.  

            According to the author, the recent trend of Black Friday  
            shopping deals spreading into the Thanksgiving holiday is  
            forcing workers to miss out on celebrating the holiday and  
            spending time with their families in order to keep their jobs.  
            In some cases, this work has become mandatory and as such, the  
            author believes that employees should be fairly compensated  
            for the undue hardships associated with working on the  
            traditional family holiday. This bill would require retail and  
            grocery store employers to pay at least two times the regular  
            rate of pay to an employee for work on Thanksgiving Day. 

          3.  Work Restrictions in Other States: 

            Much like California, the federal Fair Labor Standards Act  
            (FLSA) does not require payment for time not worked, such as  
            vacations or holidays. These benefits are generally a matter  
            of agreement between an employer and an employee.  This bill  
            would appear to establish the first law in the nation that  
            would require double pay for working on specified holidays.  
            However, other state laws prohibit work from being performed  
            on specified holidays or restricts the types of work that may  
            be performed on certain days, usually Sundays.

            Currently three states (Massachusetts, Rhode Island, and  
            Maine) actually prohibit most retail stores, including grocery  
            stores, from opening on Thanksgiving and Christmas. In  
            Massachusetts, state law also prohibits stores from opening on  
            the mornings of Columbus Day and Veterans Day without state  
            permission.  Maine allows certain sporting goods stores to  
            remain open, an exemption that allows Maine-based outdoor  
            retailer L.L. Bean to operate on a year-round basis. 

            Many states and local jurisdictions have laws on the books  
            that restrict work (or certain types of work) from being  
            performed on Sundays.  These laws are generally referred to as  
            "blue laws."  For example, more than 30 counties in the South  







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            have "blue laws" restricting the hours stores can open on  
            Sundays.  For instance, Aiken, South Carolina has a "blue law"  
            that bans most stores from opening their doors before 1:30 on  
            Sunday afternoons. Maine was the last New England state to  
            repeal laws that prohibited department stores from opening on  
            Sundays, a law ended by referendum in 1990.  Recent efforts to  
            overturn the laws restricting automobile dealerships from  
            opening on Sunday have died in committee in the Maine  
            legislature. In addition in Maine, alcohol sales remain  
            restricted between the hours of 1 a.m. and 7 a.m. Monday -  
            Saturday and 1 a.m. and 9 a.m. on Sunday. 

            In the past, certain state "blue laws" have been challenged on  
            constitutional grounds.  However, in the 1961 case of McGowan  
            v. Maryland, 366 U.S. 420, the U.S. Supreme Court held that  
            Maryland's laws violated neither the Free Exercise Clause nor  
            the Establishment Clause of the First Amendment. It approved  
            the state's blue law restricting commercial activities on  
            Sunday, noting that while such laws originated to encourage  
            attendance at Christian churches, the contemporary Maryland  
            laws were intended to serve "to provide a uniform day of rest  
            for all citizens" on a secular basis and to promote the  
            secular values of "health, safety, recreation, and general  
            well-being" through a common day of rest.  That this day  
            coincides with the Christian Sabbath is not a bar to the  
            state's secular goals - it neither reduces its effectiveness  
            for secular purposes nor prevents adherents of other religions  
            from observing their own holy days.

          4.  Proponent Arguments  :
            
            According to proponents, in recent years, Black Friday  
            shopping deals have increasingly spread into the Thanksgiving  
            holiday, forcing workers to miss out on celebrating the  
            holiday with their families in order to keep their jobs. In  
            some cases this work has become mandatory, forcing workers to  
            give up their holiday or risk losing their jobs.  According to  
            the author, polling by consumer research advisors at Loyalty  
            One found that half of Americans think that it's a bad idea  
            for stores to be open on Thanksgiving, and despite talk about  
            consumer demand, data shows that opening earlier didn't  
            actually boost overall sales. 

            The author and proponents argue that this bill simply seeks to  
            provide employees with double pay in order to meet the  







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            increase in demand of consumers on Thanksgiving Day and  
            "pre"-Black Friday shopping.  It is no surprise that the  
            increasing commercialization of the holiday season has created  
            significant public backlash, including petitions, media  
            criticism and worker protests. Proponents believe this bill  
            would guarantee that employees are fairly compensated for the  
            undue hardships associated with working on the traditional  
            family holiday of Thanksgiving.  

          5.  Opponent Arguments  :

            A coalition of opponents argue that this bill unfairly targets  
            two classifications of employers, retail and grocery store  
            establishments, increases their costs, and creating a  
            competitive disadvantage by forcing them to recognize  
            Thanksgiving as a "family holiday" and compensate all  
            employees with double the regular rate of pay for work on that  
            day. Any other employer who opens on Thanksgiving can continue  
            to pay their employees minimum wage.  In fact, recent  
            amendments specifically exempt certain industries, something  
            they argue is discriminatory treatment intended to punish  
            retail and grocery stores, rather than compensate employees  
            for time away from their family on Thanksgiving.  

            Opponents also argue that this bill unilaterally increases the  
            cost of doing business only for those employers who have a  
            "physical store" in California, thereby automatically placing  
            them at a competitive disadvantage with online retailers and  
            out-of-state businesses not subject to this costly mandate.  
            Additionally, opponents argue that many of the "retail store  
            establishment" employers surveyed confirmed they voluntarily  
            pay their employees time and a half for work on Thanksgiving.  
            They also note that numerous grocery store establishments also  
            pay increased compensation on Thanksgiving, as negotiated  
            through the collective bargaining process, yet would still be  
            subject to the provisions of AB 67 as they do not qualify for  
            the collective bargaining exemption in the bill.  

            Also of concern to opponents is the requirement that employers  
            pay double the employee's "regular rate" of pay rather than  
            double the "hourly rate," a significant different, they argue,  
            as the determination of the regular rate of pay requires a  
            detailed calculation that goes beyond just an employee's  
            hourly pay. They argue that good faith errors made in  
            calculating the regular rate of pay or failure to comply with  







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            other provisions of AB 67 would be subject to Private  
            Attorneys General Act (PAGA) and add another threat of  
            litigation against California employers. Lastly, opponents  
            argue that this bill provides preferential treatment for one  
            day out of the year that not all recognize as a family holiday  
            and may be offensive to those that believe other days within  
            the year deserve that same recognition.  

            A restaurant specific point of opposition comes from the  
            California Restaurant Association which argues that recent  
            amendments, although exempting a share of the restaurant  
            community, leave many subject to the double-pay requirements  
            based on the mere fact that they operate within a retail or  
            grocery establishment.  They argue that these restaurants are  
            separate, independent from the stores they are located within.  
            Furthermore, they argue that these restaurants will face  
            unfair competition as they will be forced to pay double hourly  
            pay to its employees while locations not located within a  
            retail or grocery store, but in the same shopping center or  
            across the street do not.  
              


          SUPPORT
          
          United Food & Commercial Workers, Western States Council -  
          Sponsor 
          California Conference Board of the Amalgamated Transit Union
          California Conference of Machinists
          California Employment Lawyers Association
          California Immigrant Policy Center
          California Labor Federation, AFL-CIO
          California Nurses Association
          California School Employees Association
          California State Association of Electrical Workers
          California State Pipe Trades Council
          California Teamsters Public Affairs Council
          Communication Workers of America, District 9
          Engineers & Scientists of California
          Professional & Technical Engineers
          UNITE HERE, AFL-CIO
          International Longshore & Warehouse Union
          United Farm Workers
          Utility Workers Union of America
          Western States Council of Sheet Metal Workers







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          OPPOSITION
          
          Agricultural Council of California
          Air Conditioning Trade Association
          Alhambra Chamber of Commerce
          American Petroleum and Convenience Store Association
          Brea Chamber of Commerce
          California Association of Bed and Breakfast Inns
          California Chamber of Commerce
          California Employment Law Council
          California Farm Bureau Association 
          California Grocers Association
          California Hotel & Lodging Association
          California League of Food Processors
          California Pool & Spa Association
          California Restaurants Association 
          California Retailers Association  
          California Travel Association 
          Camarillo Chamber of Commerce
          CAWA - Representing the Automotive Parts Industry
          Cerritos Regional Chamber of Commerce
          Chambers of Commerce Alliance of Ventura and Santa Barbara  
          Counties
          Computing Technology Industry Association - CompTIA
          Culver City Chamber of Commerce
          Desert Hot Springs Chamber of Commerce and Visitors Center
          East Valley Legislative Advocacy Council
          El Dorado County Chamber of Commerce
          El Dorado Hills Chamber of Commerce & California Welcome Center
          Gateway Chambers Alliance
          Goleta Valley Chamber of Commerce
          Greater Conejo Valley Chamber of Commerce
          Greater Riverside Chambers of Commerce
          Greater San Fernando Valley Chamber of Commerce
          Lake Tahoe South Shore Chamber of Commerce
          Long Beach Area Chamber of Commerce
          Maxim Healthcare Services
          North Lake Tahoe Chamber of Commerce
          North Orange County Chamber
          Orange County Business Council 
          Oxnard Chamber of Commerce
          Plumbing-Heating-Cooling Contractors Association of California
          Rancho Cordova Chamber of Commerce







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          Redondo Beach Chamber of Commerce & Visitors Bureau
          San Diego Regional Chamber of Commerce
          San Jose Silicon Valley Chamber of Commerce
          Santa Clara Chamber of Commerce & Convention-Visitors Bureau
          Santa Maria Valley Chamber of Commerce Visitor & Convention  
          Bureau
          Simi Valley Chamber of Commerce
          Southwest California Legislative Council
          Torrance Chamber of Commerce
          Valley Industry and Commerce Association 
          Western Electrical Contractors Association



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