BILL ANALYSIS Ó SENATE COMMITTEE ON LABOR AND INDUSTRIAL RELATIONS Senator Tony Mendoza, Chair 2015 - 2016 Regular Bill No: AB 202 Hearing Date: June 10, 2015 ----------------------------------------------------------------- |Author: |Gonzalez | |-----------+-----------------------------------------------------| |Version: |April 15, 2015 | ----------------------------------------------------------------- ----------------------------------------------------------------- |Urgency: |No |Fiscal: |Yes | ----------------------------------------------------------------- ----------------------------------------------------------------- |Consultant:|Gideon Baum | | | | ----------------------------------------------------------------- Subject: Professional sports teams: cheerleaders: employee status. KEY ISSUE Should the Legislature define professional cheerleaders as an employee for the purposes of California law? ANALYSIS Existing law provides specified timelines for final payment by an employer to an employee due to discharge, quitting employment, end of temporary employment assignment, or other industry-specific pay timelines. (Labor Code §§ 201, 201.3, 201.5, 202, & 205.5) Existing law sets a minimum wage for all employees in California, with limited exceptions, and prohibits employers, unless specified, from paying less than the state minimum wage. The current minimum wage is $9.00 per hour and will rise to $10.00 per hour on January 1, 2016. (Labor Code §1182.12) Existing law permits an individual to seek recovery through a civil suit of the unpaid balance of the minimum wage, including interest, attorney fees, and costs of the suit. AB 202 (Gonzalez) Page 2 of ? (Labor Code §1194) Existing law also requires that if an employee is found to have been paid less than the minimum wage, that employee must be paid liquidated damages in an amount that is equal to the wages unlawfully unpaid, plus interest. Existing Civil Code sets the interest rate at 10 percent. (Labor Code §1194.2 and Civil Code § 3289) Existing law provides that if an employer demonstrates to the satisfaction of the court that the failure to pay the minimum wage was in good faith and that the employer had reasonable grounds for believing that the act or omission was not a violation of minimum wage law or regulations, the court may, in its discretion, refuse to award liquidated damages or award a lesser amount of liquidated damages to the employee. (Labor Code §1194.2) Existing law provides that it is a violation of the law for any employer or employing unit to willfully fail or refuse to make any contributions which are due under the Unemployment Insurance or Disability Insurance programs. (Unemployment Insurance Code §2108) Existing law provides that any person or employer who, with or without intent to evade , fails to withhold or fails to pay over any personal income tax withheld, is guilty of a misdemeanor and, upon conviction, shall be fined an amount not to exceed one thousand dollars ($1,000), or imprisoned for not more than one year, or both the fine and imprisonment, at the discretion of the court. (Unemployment Insurance Code §2118) Existing law creates the Department of Fair Employment and Housing (DFEH) and declares its mission to protect and safeguard the right and opportunity of all persons to seek, obtain, and hold employment without discrimination or abridgment on account of race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, or military and veteran status. (Government Code §§ 12900 and 12920) This bill would: AB 202 (Gonzalez) Page 3 of ? 1) Provide that, notwithstanding any other law, for purposes of the provisions of state law that govern employment, a cheerleader that is utilized by a California-based professional sports team during its exhibitions or games shall be deemed to be an employee. 2) Define "cheerleader" to mean an individual who performs acrobatics, dance or gymnastics exercises on a recurring basis. However, the term does not include an individual who is not otherwise affiliated with the sports team and is utilized no more than one time in a calendar year. 3) Define "professional sports team" to mean a team at either a minor or major league level in the sport of baseball, basketball, football, ice hockey, or soccer. 4) Define "California-based team" to mean a team that plays a majority of its home games in California. 5) Provide that the professional sports team shall ensure that the cheerleader is classified and treated as an employee. COMMENTS 1. A General Discussion on Employee Misclassification in California: Employee misclassification occurs when employers illegally classify employees as independent contractors, rather employees. This allows employers to dodge tax payments, workers' compensation premiums, and workplace protections. Misclassification is a significant problem in California: in the Employment Development Department's (EDD) 2013 annual report, EDD reported $36,348,078 in payroll assessments and $9,131,000 in tax fraud assessments in 2012 alone. For most employees, the deciding factor on if a worker is either an employee or an independent contractor comes down to the level of control the employer has over the worker, a standard which dates back to English Common Law. While this is determined by a multi-factor test, key determinants include control over hours, equipment, and supervision. However, there are also a small number of employees which are statutorily classified as employees, irrespective of common law. AB 202 would define professional cheerleaders as employees for AB 202 (Gonzalez) Page 4 of ? the purposes of employment law, making a common law test for employment unnecessary. 2. The National Football League (NFL) and Cheerleader Misclassification: In 2014, the Oakland Raiders were sued by a group of current and former cheerleaders who alleged that the Raiders refused to pay minimum wage or overtime, made unlawful deductions, and also refused to provide meal and rest breaks. According to the filing, Raiderettes (the name of the cheerleading squad) were paid a flat rate of $125 per game, irrespective of hours worked. The filing also noted mandatory charity appearances for the Raiderettes, for which no payment at all was received by the cheerleaders. Similar lawsuits were filed against the Tampa Bay Buccaneers, the New York Jets, the Buffalo Bills, and the Cincinnati Bengals. During the Buffalo Bills lawsuit, a well-regarded sports website known as Deadspin published the Buffalo Bills cheerleader handbook. Reporting that the handbook was similar to other cheer handbooks around the league, Deadspin detailed the level of control the Buffalo Bills exerted over their cheerleading squad. Examples included: - Feminine hygiene; - Appropriate use of tampons; - Nail and hair grooming; - Eating etiquette; and - Stringent rules of what jewelry can and cannot be worn. Despite this level of control, the Buffalo Bills argued their cheerleaders were not employees, as did the other teams listed above. 3. Proponent Arguments : Supporters argue that this bill will would clarify that a professional cheerleader is provided the same rights and benefits of an employee under state law and is not improperly misclassified as an independent contractor. As a result, professional sport cheerleaders would be guaranteed a legal wage for attending and participating in team practices, rehearsals, preparations, meetings and required workouts. In addition, they would also be covered for all required AB 202 (Gonzalez) Page 5 of ? appearances at corporate, community and charity events. 3. Opponent Arguments : None on file. 4. Prior Legislation : AB 1309 (Perea), Chapter 653, Statutes of 2013, limited the right of out-of-state athletes to file workers' compensation claims in California. SUPPORT California Conference Board of the Amalgamated Transit Union California Conference of Machinists California Labor Federation, AFL-CIO California School Employees Association, AFL-CIO California Teamsters Public Affairs Council Consumer Attorneys of California Engineers & Scientists of California International Longshore & Warehouse Union Jockey's Guild Professional & Technical Engineers The South Bay AFL-CIO Labor Council UNITE-HERE, AFL-CIO Utility Workers Union of America OPPOSITION None on file. -- END --