Businesses Brace for Flurry of Bills Now on Governor's Desk

Staff Reporter

Besides workers' compensation reform and employer-provided health care, numerous other measures coming out of the just-completed legislative session could affect California employers.

Several bills now awaiting the signature of Gov. Gray Davis would expand the rights of workers to sue their employers for everything from alleged sexual harassment to retaliatory firings. Another bill that passed would require garment makers that contract with the state to pay their workers a living wage.

In addition, legislators passed a major piece of environmental legislation that would place fees on makers of video display terminals to set up a computer waste recycling program.

"Employers will see a lot more lawsuits if Gov. Davis signs these bills," said Fred Main, senior vice president of the California Chamber of Commerce, an opponent of virtually all of them.

Davis has until Oct. 12 to sign or veto this legislation. It is generally believed he will sign most of them to shore up support from the Democratic Party base of labor unions and trial attorneys in advance of the recall election scheduled for Oct. 7. (As of late last week, a 9th Circuit Court of Appeals panel's ruling placing the recall election left its final date up in the air.)

Proponents of the recall didn't intend to produce a legislative boon for the Democrats, but they inadvertently did: Democrats rushed through a wish list of legislation to ensure the bills would reach the Democratic governor, rather than face the prospect of vetoes should he be replaced by a Republican.

Decision for governor

Now that the bills are on Davis' desk, he is coming under pressure from his labor union and trial lawyer supporters to sign them. Business groups, meanwhile, are urging Davis to veto many of the measures, citing a weak economy and the cumulative impact of rising costs on businesses.

"Bills such as the employer health care mandate and the ones giving employees more rights to sue will heap billions of dollars in new costs on employers," said Jack Stewart, president of the California Manufacturers and Technology Association.

Business-related interests did manage to stop a few key bills in the final hours of the legislative session. Among them: a measure that would have restricted developers from building near "sacred" Indian sites and a bill that would have expanded the ability of people to file lawsuits alleging unfair business practices by companies.

But several bills opposed by business got through, including a series of measures expanding employees' ability to bring lawsuits against employers. The biggest one: SB 796, by Sen. Joseph Dunn, D-Santa Ana, which would allow employees to file suit against their employers even if their complaints are not acted upon by state enforcement agencies.

Traditionally, when a wage and hour violation is alleged, the employee files a complaint with the Labor Commissioner or another state agency. Then the state takes action against the employer, which usually involves levying a penalty.

Dunn's bill would allow the employee to bring his or her own lawsuit against the employer if the state does not impose a fine.

"This is a way for trial lawyers to file even more lawsuits," said Michael Shaw, assistant state director for the California chapter of the National Federation of Independent Business.

Employee-arbitration bill

Another bill, AB 1715, by Ellen Corbett, D-San Leandro, would prohibit employers from requiring employees to sign pre-dispute binding arbitration agreements as a condition of employment.

Corbett also authored AB 76, which would hold employers liable for sexual harassment of a worker by a third party, such as a customer or client.

"These and other bills were extremely important from the standpoint of pro-consumer legislation," said Ray Boucher, vice president of the Consumer Attorneys of California and a partner in the L.A. law firm of Kiesel Boucher & Larson LLP.

Labor unions registered significant victories in the just-concluded session. Among their key bills was SB 578, by Sen. Richard Alarcon, D-Van Nuys, which would require all garment manufacturers with state contracts to pay their workers a living wage and prohibit them from imposing mandatory overtime.

Another labor bill was AB 274, by Assemblyman Paul Koretz, D-West Hollywood, which places a higher standard of proof on employers when employees allege they have been victims of retaliation.

"This is going to make it awfully difficult for an employer to fire somebody, even if they do believe they have just cause," Shaw said. "It's just another in a long list of impediments to employers who want to do business in California."

Law of Unintended Consequences: Recall gave boost to Democratic bills that now await Davis' signature.

Bill (Author) Description

SB 2 (Burton/Speier) Requires many employers to provide health care or pay into a state fund.

SB 796 (Dunn) Gives employees the right to sue their employers for wage and hour violations.

AB 274 (Koretz) Sets higher standard of proof for employers in lawsuits brought by employees

who allege they have been victims of retaliation.

AB 76 (Corbett) Allows employees to sue their employers for alleged sexual harassment

committed by a third party.

AB 1715 (Corbett) Bans mandatory arbitration agreements in employment contracts.

SB 578 (Alarcon) Requires garment makers who contract with the state to pay their workers a

living wage.

SB 20 (Sher) Imposes fee on computer makers to set up computer monitor recycling program.

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