State Chamber of Commerce and Allies Successfully Defeat 15 of 18 Job Killer Bills For The 2021-2022 Session

As you probably know, the California Legislature is one of the few full-time state legislatures in the United States and operates on a two-year cycle. The current 2021-22 session will end by midnight on August 31^st pursuant to the State Constitution. Governor Newsom will then have 30 days to sign or veto the bills which have been passed.

Over the past decade the Democrat Party in the State Legislature has steadily increased its margins so that it now has super majorities in both the State Senate and State Assembly. Prior to the change about a decade ago allowing the State Budget to be passed by a simple majority, it was required to be passed by a 2/3rd vote allowing the Minority Party to have significant influence as long as it maintained at least 1/3rd of the seats. However even when that changed, a 2/3rd vote was needed to raise taxes or put constitutional amendments on a State Ballot. Now that the Republican Party appears to be headed for an extended period of less than 1/3rd representation, any limits on tax increases, regulatory overreach or environmental extremism are centered on centrists in the Democrat majority.

One of the best ways to determine if this Democrat Super Majority is enacting measures which seriously impact business and economic development is to look at the State Chamber’s list of Job Killer bills which it publishes and works on every year. This provides insight into whether there is still some balance between unions, environmental groups and employers. You should note that in spite of the State’s almost $95 billion budget surplus, there were numerous tax increase proposals, some of which we outlined below.

This year the State Chamber of Commerce and its allies have been able to kill 15 of the 18 bills it identified as Job Killers.

2 Job Killer bills still alive between now and August 31^st are:

-State of Emergency SB 1044 (Durazo) Allows employees to leave work or refuse to show up to work if employee feels unsafe regardless of existing health and safety standards or whether employer has provided health and safety protections and subjects employers to costly Private Attorneys General Act (PAGA) lawsuits if they dispute the employee’s decision or need to have another employee take over any job duties.

-Publication of Pay Data SB 1162 (Limon) Encourages litigation against employers based on the publication of broad, unreliable data collected by the state. Undermines employers’ ability to hire, imposes burdensome administrative and record keeping requires and subjects employers to PAGA.

Among the key Job Killer Bills which have been defeated are:

-Unfair Denial of State Opportunities AB 2095 (Kaira) Would have required employers to provide annual reporting of wage and hour date and employee benefits on an employer’s entire US workforce. This information would be posted and ranked denying them state opportunities and opening them up to litigation.

-Wealth Tax AB 2289 ACA 8 (Lee). Increased taxes on all forms of personal property or wealth in spite of the fact that California has the highest income tax in the country. Could result in high-income earners and job creators leaving the state.

-Targeted Tax on Certain Home Sellers AB 1771 (Ward) Would impose a new tax, in addition to the capital gains tax on 25% on the profits from any home sold within 3 years after it is purchased. This tax increase would continue for an additional seven years with a reduced sliding scale. This would reduce housing affordability and further limit the housing supply.

-Increased Overtime Requirement AB 2932 (Low) Would have significantly increased labor costs by imposing overtime pay requirement after an employee worked 32 hours and imposed other requirements which employers believed were impossible to comply with and would expose the employers to litigation under the Private Attorneys General Act (PAGA)

-Expands CEQA and Hurts Housing AB 1001 (Garcia, Cristina) Created new highly subjective, non-quantifiable and ligation-bait standards in CEQA. Removed local government discretion regarding how to analyze and mitigate proposed project impacts, increasing project expenses, making them harder to build and increasing the potential for NIMBY lawsuits.

-Workers’ Compensation Presumption Hospital Employees. Expands Costly Presumption of Injury (Cortese) Would presume certain diseases and injuries in public and private hospitals are caused by the workplace and expanded presumptions into the private sectors. Would significantly increase workers compensation costs.

It is important to note that in spite of the partisan imbalance in the State Legislature the success in defeating Job Killer bills has been consistent. In the past 3 year the results have been:

-2021: 25 Job Killers identified, 2 sent to Governor Gavin Newsom, 1 signed, 1 vetoed

-2020: 19 Job Killers identified, 2 sent to Governor Newsom, 1 signed, 1 vetoed.

-2019: 31 Job Killers identified, 2 sent to Governor Newsom, 1 signed, 1 vetoed

On November 8 we will have our first statewide election under the new legislative districts created by the Citizens Reapportionment Commission after the 2020 census. California lost a congressional seat for the first time in its history and the boundaries of legislative and congressional districts were significantly altered. It appears that the new districts only strengthened the super Democrat majorities in the State Senate and State Assembly. The effect on the Congressional districts is more difficult to determine if the Republicans will keep the 4 seats they won back in 2020.

For the State Legislature, 20 of the 40 Senate Seats are up and all 80 of the State Assembly Seats will be contested. In the State Senate, 5 of the elections will be among two Democrats which includes a Republican majority seat where too many candidates split the vote in the Open Primary. Only one Senate seat appears competitive, with the slim possibility of one other seat. Almost certainly the Democrats will retainer super majority control of the Senate. Our local State Senate seat held by Republican Leader Scott Wilk is not up until 2024 and will be an open seat since Senator Wilk is termed out. In the Assembly 14 seats are among two Democrats and 2 seats among two Republicans. There are probably no more than 5 or 6 competitive Assembly seats which could change parties. One is our local new 40^th Assembly District where Assemblywoman Suzette Valladares has some new territory, in addition to the Santa Clarita Valley, which has increased the Democrat registration, although she showed strength in the Primary.

Statewide there appears no concern that Governor Newsom and the most of the other Democrat candidates will have serious challenges. There are two races to watch. The first is State Controller where Republican Lanhee Chen received the most votes in the Primary and received the LA Times endorsement which is extremely rare for a Republican. The second is Attorney General. Crime has become a potential major issue in this election and Democrat Attorney General Rob Bonta is an appointed incumbent with a relatively liberal criminal justice record. The Republican nominee Nicholas Hoffman is a former federal prosecutor and could potentially make this a competitive race.

In conclusion, there is no reason to expect that the partisan nature of the California Legislature will change in this election. However, the business community can take some comfort in the fact that the vast majority of efforts to pass additional taxes and regulations which would hurt their business have been able to be defeated.