GSBE Weekly Update 08/23/2017
Legislature Returns from Summer Recess to Consider Remaining Bills
The California State Assembly and Senate returned August 21st from their month-long summer recess and will consider the remaining bills over the next several weeks.
The next significant deadline for the bills is September 1, the date by which fiscal committees must send the bills along for consideration by the entire Senate or Assembly.
In addition, nine tax-related bills remain alive because they were not subject to the July 21 deadline for bills to pass policy committees and move to fiscal committees. Although they still are eligible for consideration, they are not set for hearings at this time.
SB 33 (Dodd; D-Napa) Discrimination Against Arbitration Agreements — Unfairly discriminates against arbitration agreements contained in consumer contracts for goods or services with a financial institution, as broadly defined, which is likely preempted by the Federal Arbitration Act and will lead to confusion and unnecessary litigation.
AB 1209 (Gonzalez Fletcher; D-San Diego) Public Shaming of Employers — Imposes new data collection mandate on California employers to collect and report data to the Secretary of State regarding the mean and median salaries of men and women in the same job title and job description, determine which employees perform “substantially similar” work, and then have that report posted on a publicly accessible website, where such employers will receive undue scrutiny and criticism for wage disparity that is not unlawful and justified by a bona fide factor.
SB 63 (Jackson; D-Santa Barbara) Imposes New Maternity and Paternity Leave Mandate — Unduly burdens and increases costs of small employers with as few as 20 employees by requiring 12 weeks of protected employee leave for child bonding and exposes them to the threat of costly litigation.
SB 49 (de León; D-Los Angeles) Creates Uncertainty and Increases Potential Litigation Regarding Environmental Standards — Creates Uncertainty and Increases Potential Litigation Regarding Environmental Standards. Creates uncertainty by giving broad and sweeping discretion to State agencies to adopt rules and regulations more stringent than the federal rules and regulations in effect on January 19, 2017 through an expedited administrative procedure without public participation or input, when the State agencies determine that federal action leads to less stringent laws and regulations than those in effect on January 19, 2017; and increases the potential for costly litigation by creating private rights of action under California law, which may be triggered when a State agency takes the foregoing discretionary action.
Tax Increases; Not Subject to Deadline
The following nine tax-related bills were not subject to the July 21 deadline. Although these bills aren’t moving in the Legislature, they could be taken up at any time before the end of the session.
- AB 43 (Thurmond; D-Richmond) Targeted Tax on Contractors — Unfairly targets one category of taxpayers to fund a benefit for all of the state by imposing a tax on contractors for the privilege of doing business with the Department of Corrections and Rehabilitation, and requires the contractor to absorb the cost while maintaining a price of lowest responsible bidder. Held on the Assembly Appropriations Committee Suspense File, 5/26/17.
- AB 479 (Gonzalez Fletcher: D-San Diego and C. Garcia; D-Bell Gardens) Targeted Tax on Alcohol — Unfairly imposes an additional targeted excise tax on manufacturers, importers, and wholesalers of distilled spirits and a floor tax, that will increase their costs and force them to reduce in other areas, including labor. Failed passage in Assembly Revenue and Taxation Committee, 5/8/17.
- AB 1003 (Bloom; D-Santa Monica) Targeted Tax on Sweetened Beverages — Unfairly imposes a targeted excise tax on distributors of sweetened beverages to fund health-related programs for all, which will force distributors to reduce costs through higher prices to consumers or limiting their workforce. In Assembly Rules; no hearing date set.
- AB 1356 (Eggman; D-Stockton) Targeted Tax on High Earners — Unfairly increases the personal income tax rate to 14.3%, the highest in the country, on one category of taxpayers (including sole proprietors), who already pay over half of the income tax revenue to the general fund, forcing them to mitigate costs through means including reducing workforce, in order to fund higher education that will benefit all of California. In Assembly Higher Education Committee; no hearing date set.
- AB 1512 (McCarty; D-Sacramento) Targeted Tax on Opioids — Unfairly imposes an excise tax on opioid distributors in California, which will increase their costs and force them to adopt measures that include reducing workforce and increasing drug prices for ill patients who need these medications the most, in order to fund drug prevention and rehabilitation programs that will benefit all of California. In Assembly Revenue and Taxation Committee; no hearing date set.
- ACA 4 (Aguiar-Curry; D-Winters) Lowers Vote Requirement for New Tax Increases — Adds complexity and uncertainty to the current tax structure and pressure to increase taxes on real property by giving local governments new authority to enact special taxes, including parcel taxes, to fund construction, reconstruction, rehabilitation, or replacement of public infrastructure or affordable housing, or the acquisition or lease of real property for public infrastructure or affordable housing, and lowering the vote threshold to impose such new taxes from two-thirds to 55%. Referred to both the Assembly Local Government Committee and Assembly Appropriations Committee; no hearing dates set.
- ACA 11 (Caballero; D-Salinas) Targeted Retail Industry Tax Increase — Exposes the retail industry to increased taxes by imposing a quarter-cent sales tax increase to fund affordable housing and homeless shelters, without creating greatly needed market rate housing. Referred to both the Assembly Housing and Community Development Committee and the Assembly Revenue and Taxation Committee; no hearing date set.
- SB 567 (Lara; D-Bell Gardens) Multiple Tax Increases on California Employers — Proposes multiple tax increases on California employers, including requiring payment of capital gains on the inheritance of a family business as well as eliminating a deduction for corporations with regard to CEO compensation, when California already has the highest personal income tax and sales tax rates in the country, as well as one of the highest corporate tax rates, which will discourage job growth in California. Senate Floor; Inactive File, 6/1/17.
- SCA 6 (Wiener; D-San Francisco) Lowers Vote Requirement for Tax Increases — Adds complexity and uncertainty to the current tax structure and pressure to increase taxes on commercial, industrial and residential property owners by giving local governments new authority to enact special taxes, including parcel taxes, by lowering the vote threshold from two-thirds to 55%. Held under submission in Senate Appropriations Committee Suspense File, 5/25/17; no hearing date scheduled.
Single Use of Racial Slur Sufficient to Assert Harassment Claim
In a recent decision, the U.S. Court of Appeals for the Third Circuit held that a single use of a derogatory term can sustain a workplace harassment claim. In Castleberry v. STI Group and Chesapeake Energy Corporation, the parties disputed whether or not a single use of a racial slur could be “severe” enough to support the plaintiff’s claim of harassment and survive a motion to dismiss.
The plaintiffs, two African-American employees, brought claims for harassment, discrimination, and retaliation after they were terminated for reporting that a supervisor told them they would be fired if they “n***er-rigged” a fence they were working on. The employer filed a motion to dismiss and argued that a single, isolated incident could not support the plaintiffs’ claims. The U.S. District Court for the Middle District of Pennsylvania granted the employers’ motion to dismiss and concluded that the plaintiffs were required to show their treatment was “pervasive and regular.” On appeal, the plaintiffs argued the appropriate standard was “severe or pervasive” and that a single use of the racial slur met that standard.
The Third Circuit agreed with the plaintiffs. It acknowledged the muddled precedent in its jurisdiction: some courts relied on “severe and pervasive,” while others relied on “pervasive and regular” or “severe or pervasive.” It clarified that the correct standard in these types of cases is, in fact, “severe and pervasive,” and rejected the lower court’s holding that the harassment must be regular to state a viable claim. The Third Circuit relied on the “severe or pervasive” standard and U.S. Supreme Court decisions abandoning the “regular” requirement. Under the “severe or pervasive” standard, the single use of a racial slur is sufficient to sustain a claim for harassment at the motion to dismiss phase.
This case and many others from various jurisdictions tend to show that employers need to consider protecting themselves by having clearly defined policies, ensure that their workforces undergo continual training, and even consider additional training for managers and supervisors. By putting these appropriate safeguards in place, employers may decrease the likelihood of liability and lawsuits.