Assembly bill will hurt farms and ranches is a post from: CA Job Killers

Editorial: In Sacramento, still talking about taxes is a post from: CA Job Killers

SB 754 (Evans; D-Santa Rosa) is a dramatic expansion of CEQA that increases the complexity and cost of CEQA compliance by:

• prohibiting a lead agency from asking a project proponent to draft an environmental impact report (EIR);
• forcing re-analysis of projects that are more than seven years old;
• creating a new cause of action to allow anyone to stop a project by alleging a mitigation measure has not been implemented; and removing limits on archeological resources mitigation fees.

The CalChamber believes the Legislature should be more appropriately focused on updating CEQA, now 43 years old, to address legitimate concerns about unnecessary litigation while reinforcing the existing statute’s core purpose of environmental protection and public participation.

Cost Concerns

Compliance with CEQA imposes considerable costs on project proponents. SB 754 will increase costs for all project proponents by changing the CEQA process and increasing litigation over CEQA projects.

• First, SB 754 requires a lead agency to choose between taking on the burden and staff time necessary to prepare an environmental impact analysis itself, or to rely on outside contractors to prepare the initial environmental impact analysis, which often includes increased overhead costs and contingency fees.
• Second, this bill will require that more projects have a full EIR prepared, even though the project complies with a plan that is timely and for which no circumstances have changed. These analyses can cost hundreds of thousands of dollars to perform, even if they aren’t litigated, meaning that the use of tiering provides a considerable savings for the state that would be undercut by SB 754.
• Finally, by creating a new, unnecessary private right of action, SB 754 ensures more projects will end up in court, costing project proponents tens of thousands of dollars per challenge.

Action Needed

SB 754 is scheduled for consideration by Senate Appropriations on May 20. Contact your senator and members of the committee and urge them to oppose SB 754.

Senate Legislation Creates Incentives for Increased Environmental Litigation is a post from: CA Job Killers

Costly Workplace Mandates

• AB 1138 (Chau; D-Alhambra) Massive Exposure to Civil Penalties and Liabilities  —Inappropriately increases civil cases and civil penalties on employers by permitting civil action against those employers who fail to conspicuously post a list of every employee covered under an employer’s workers’ compensation insurance policy and to retain this list for five years. Note: Amendments to the bill on April 16 led to removal of its “job killer” status, but the CalChamber still opposed the proposal.
• SB 626 (Beall; D-San Jose) Massive Workers’ Compensation Cost Increase—Unravels many of the employer cost-saving provisions in last year’s workers’ compensation reform package and results in employers paying nearly $1 billion in benefit increases to injured workers without an expectation that the increases will be fully offset by system savings.

Economic Development Barriers

• AB 59 (Bonta; D-Alameda) Split Roll Parcel Tax—Potentially increases the tax burden on businesses by permitting local agencies to assess a higher parcel tax on commercial property than residential property overturning an appellate decision that determined such taxes were unconstitutional.
• AB 823 (Eggman; D-Stockton) Infrastructure—Adds additional costs and hurdles to critically needed new infrastructure and development projects by imposing unreasonable mitigation requirements.

Expensive, Unnecessary Regulations

• SB 747 (DeSaulnier; D-Concord) Unnecessary New Regulatory Scheme—Establishes a new, duplicative, and burdensome program that requires the Department of Public Health to regulate manufacturers of consumer products that the department determines contribute to a significant public health epidemic (i.e., obesity, diabetes, cancer, heart disease) and allows the department to restrict or prohibit the sale of such products.

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AB 188 (Ammiano; D-San Francisco) unfairly targeted commercial property by redefining “change of ownership” so that such property is more frequently reassessed, which would have ultimately led to higher property taxes that will be passed on to tenants, consumers, and potentially employees.

Proposition 13

Currently, under Proposition 13, commercial property is reassessed only when there is an actual change of ownership in the entity that owns the property. That is, another entity or person has acquired at least 50% of the ownership interest of the entity that owns that property and therefore has a controlling interest in the property. This is the most common-sense interpretation of Proposition 13’s requirements. It creates a bright line to determine when property ownership has changed, and it is consistent with the underlying purpose of Proposition 13, which intended to provide property owners certainty and stability about the amount of property taxes due – on sale and thereafter.

‘Change of Ownership’

AB 188 would have drastically altered the definition of “change of ownership” under Proposition 13 by dictating that a “change of ownership” occurs whenever 100% of the ownership interests in the legal entity that owns the commercial property are sold within a three-year period, regardless of whether any person or entity actually obtains control through direct or indirect ownership of at least 50% of the voting stock or ownership interest in the entity owning the property.

This new definition, which merely focuses on ownership rather than control, would have subjected commercial property, especially property held by publicly traded corporations, to continuing reassessment that will at some point result in higher property taxes – the obvious intent of this legislation. However, given that a reassessment could be triggered under this definition on a daily, weekly, or even monthly basis, the anticipated revenue gain by AB 188 is vastly overstated, as the market value of commercial property does not change within such a short time frame. AB 188 would have provided a tool for harassing owners of commercial property with constant reassessments, and an overwhelming workload for county assessors.

Increases Property Taxes

Ultimately, increasing property taxes for commercial property will have detrimental impacts on the general public, including small businesses, apartment residents, employees, and consumers.

Any higher taxes imposed on companies that own commercial property will likely be passed on in the form of higher rents for the tenants of such property, including businesses as well as individuals who rent apartments in which to live. The increased costs could result in reduced employee benefits, workforce reductions, or even higher prices for consumers.

Moreover, the proposed definition of “change of ownership” under AB 188 would have triggered reporting requirements for multiple “owners” of these entities. Despite the percentage of ownership acquired, an individual or entity would have been required to report this change in ownership or face a penalty of up to 20% of the assessed fair market value of the commercial property. A penalty for failure to file a statement was imposed even if the county assessor ultimately determined no “change of ownership” had occurred. This duplicative and onerous reporting requirement that AB 188 sought to impose would have created a potentially unfair monetary trap for a minority owner in a company who is unaware that a 100% change of ownership has even taken place within the previous three years.

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AB 880 (Gomez; D-Los Angeles) increases health care costs and increases discrimination litigation by assessing large employers a penalty if any of their employees who work as little as eight hours per week enroll in California’s Medi-Cal program and by expanding the Labor Code to include a protected classification for any person who is enrolled in California’s Medi-Cal program or in the California Health Benefit Exchange.

Alliance for a Healthy California

The CalChamber is part of a large coalition including nearly every major industry in the state opposing AB 880.

Organizations opposing AB 880 include: California Restaurant Association, California Retailers Association, Western Growers, Nisei Farmers League, Latin Business Association, UniteAg, California Trucking Association, California Grocers Association, California Manufacturers and Technology Association, California Business Properties Association, California Lodging Industry Association and Orange County Hispanic Chamber of Commerce, to name a few.

New, Costly Employer Mandate

Specifically, AB 880 will force larger employers to pay an estimated additional penalty between $6,000-$15,000 to the state for any employee who works eight hours or more a week and chooses to use Medi-Cal. The additional penalty is on top of another penalty that the federal health care program already requires. The additional penalty will go to the Medi-Cal program, with 10 percent used to fund state bureaucracy. These penalties shift costs of funding public health programs from government to employers.

Other key components include:

• Penalizes companies, non-profits, and other organizations (with 500 employees or more) that have employee(s) including part-time, temporary, or seasonal employees enrolled in Medi-Cal. The penalty is 110 percent of the average cost of health care including both the employer and employee share of the premium.
• No penalty exemptions for the use of temporary or seasonal employees, which is common in industries such as tourism, trucking, agriculture, manufacturing and construction and many other vital industries.
• Penalizes employers who offer health care insurance to employees even if an employee refuses the benefit and opts to use Medi-Cal.
• Harms businesses’ ability to manage their workforce by penalizing companies, non-profits, and other organizations with an additional penalty of 200 percent of the average cost of health care if they discharge, demote, or suspend an employee who is using a public health benefit. Yet there is no provision that allows an employer to know whether the employee is using a public health benefit and to determine whether the employer’s actions were linked to reducing health care costs.

Reduces Part-Time Workers

AB 880 goes well beyond the requirements of the federal Patient Protection and Affordable Care Act (PPACA) in two ways:

1. Under the PPACA, the formula for assessing a penalty on employers who do not offer affordable health care coverage when their employee receives subsidized care is $2,000 annually times the number of full-time employees minus 30. In contrast, the formula for assessing a penalty under AB 880 is based on the cost of health insurance premiums for the employee and the employer, which far exceeds $2,000. Indeed, according to the Kaiser Family Foundation, the national average cost for health care in 2012 was $5,615 for individual coverage and $15,745 for family coverage. It is unclear whether AB 880 sets the penalty level at the individual or family level of health care coverage.
2. AB 880 applies its provisions to part-time as well as full-time employees. The CalChamber understands the goals of supporting employer coverage for full-time employees, since this has been a common and expected practice for decades; the “employer responsibility” provisions of the PPACA reflected that. This bill, however, goes far beyond common practice and the PPACA by applying the penalty to employers whose part-time employees receive Medi-Cal benefits.

Protected Classification

Creating such a broad protected classification as proposed under AB 880 will encompass a large portion of employees and will significantly hamper an employer’s ability to manage its workforce.

Specifically, under AB 880, an employer will potentially be subject to costly litigation for alleged discrimination or retaliation each time it makes an adverse employment decision that has an impact on an employee who has enrolled in a public health benefit program.

California employers are already overwhelmed with employment litigation. There were approximately 19,500 discrimination claims filed in 2010 with the Department of Fair Employment and Housing (DFEH) under the Fair Employment and Housing Act (FEHA), which was 1,000 complaints more than in 2009. Notably, more than 4,000 of these complaints were dismissed due to lack of evidence of any violation. Adding this new expansive classification will only cause such cases to dramatically increase and burden California employers with costly litigation.

Equally concerning is AB 880’s extension of the Labor Code Private Attorney General Act (PAGA) to include retaliation/discrimination claims that generally are pursued through FEHA and subject to the exhaustion of administrative remedies. The CalChamber believes discrimination and retaliation claims that are based on a protected class should be mandated to comply with the administrative process of first submitting such claims to the DFEH for review.

Finally, determining the status of a person as an independent contractor versus an employee is a daunting task for many businesses because of the subjective nature of the factors utilized in the analysis. Even state agencies admittedly do not agree on who qualifies as an independent contractor. Without clarification, AB 880 would expose employers to additional litigation. The bill should apply only to employers who purposefully and/or specifically intend to misclassify an individual as an independent contractor in order to avoid the law.

Most large California employers provide health care coverage to their employees and do their best to make it affordable, although health care costs are beyond employer control. Although the CalChamber understands the concern that some employers may attempt to avoid the rising costs of health care coverage, AB 880 goes far beyond any reasonable response to that concern.

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