Cal Chamber

April 4, 2023
TO: Members, Senate Judiciary Committee
SUBJECT: SB 809 (SMALLWOOD-CUEVAS) CALIFORNIA FAIR EMPLOYMENT HOUSING ACT:
FAIR CHANCE ACT OF 2023: CONVICTION HISTORY
OPPOSE/JOB KILLER – AS INTRODUCED FEBRUARY 17, 2023
The California Chamber of Commerce and the organizations listed below are OPPOSED to SB 809
(Smallwood-Cuevas) which has been labeled a JOB KILLER. SB 809 undermines the years of
negotiations that culminated in the existing California Fair Chance Act, which struck a careful balance
between removing barriers to the workforce and the need to consider conviction history for certain job
positions. SB 809 would eliminate employers’ ability to consider conviction history unless they meet one of the narrow exceptions, even if that conviction history is voluntarily disclosed to them or widely publicized. Further, provisions causing delays in hiring and excessive penalties would exacerbate the rising costs of doing business in California and further impact affordability. While we appreciate the intent behind SB 809, the potential unintended consequences will have a significant impact on employees and customers.
SB 809 Dismantles Negotiations on AB 1008 (2017) – The California Fair Chance Act
California employers are anxious to hire qualified and willing residents, including job applicants exiting the justice system. In 2017, California enacted AB 1008 (McCarty)- the California Fair Chance Act. AB 1008 was the result of years long discussions between various stakeholders and legislators regarding the use of conviction history in employment decisions.
The California Fair Chance Act prohibits employers from inquiring about or relying on a job applicant’s conviction history in making a hiring determination until a conditional offer is made. Legislators led stakeholders in extensive negotiations regarding AB 1008 to ensure the law struck a careful balance between workplace safety and providing applicants who have a conviction history with a fair opportunity to participate in the workforce.
Just five years after AB 1008’s effective date, SB 809 repeals the California Fair Chance Act in its entirety. SB 809 would replace this carefully negotiated law with an untenable framework under which no employer may ever inquire about or rely on conviction history unless an existing law explicitly permits them to do so.
SB 809’s Unintended Consequences Negatively Impact the Workplace and Customers
While we agree with the importance of ensuring that applicants with a conviction history are provided with fair access to the job market, the potential unintended consequences of SB 809 are significant. The exceptions are extremely limited and tend to only cover heavily regulated industries (such as banking or healthcare) or jobs the government has perceived to be sensitive in nature (schools or security guards). But SB 809’s flaw is that many of the same rationales that served as the impetus for laws directing certain industries to conduct background checks, such as interacting with children or access to consumer financial information, apply to businesses not covered by those laws. For example, youth sports/organizations operated through a park & recreation league or school district qualify for an exception, but private youth sports organizations do not.
Under SB 809, companies would be prohibited from considering conviction history in the following scenarios:

Home delivery: there are many industries in which deliveries are made directly to a customer’s home address such as food delivery, furniture delivery, and more. Not only do delivery personnel have access to the customer’s personal address, but in some circumstances, they are entering customers’ homes or receiving payment from the customer at their home, leaving the customer in a vulnerable position.

Access to sensitive personal information: as technology improves and more transactions take place online or in software platforms, there are many positions in which employees have access to sensitive personal information. This is not limited to regulated industries like banks. For example, IT personnel often have access to a large breadth of private data within a company. An IT employee or contractor dealing with consumer-facing software will inevitably have access to consumer information in carrying out their duties and will also have access to sensitive company information that could be easily misappropriated. Consumers are relying on companies offering these services to keep their data secure and private. SB 809 is at odds with California’s strict laws related to data privacy because it removes a company’s ability to reject an applicant or employee who may pose a risk to that privacy.

Vulnerable populations: employers that manage accommodations open to the public often have employees who regularly interact with vulnerable populations, such as children or the elderly. It is critical for an employer to know if an employee has committed acts in the past against children or the elderly or has any tendencies towards violence.

Hospitality: Employees in the hospitality industry regularly interact with customers, sometimes on a one-on-one basis. Consider a hotel, where employees have keys to rooms and may be regularly entering a guest’s room for food service or maintenance. Hotels would not be permitted to consider conviction history under SB 809.
Certain Convictions Are Relevant to Every Workplace
It is every employer’s goal to create a safe working environment for their workers and customers. Prohibiting an employer from becoming aware of or reacting to convictions for violent crimes, sex offenses, theft, or other serious crimes can undermine that goal. Not only does SB 809 prohibit most employers from conducting a background check, but proposed Government Code section 12954.2.02 also prohibits an employer from considering conviction history even if voluntarily disclosed to the employer, publicly available online, or otherwise made known to the employer. This puts an employer in an impossible position of knowing that an applicant or existing employee up for promotion has in fact committed a violent crime and not being able to consider it at all, potentially putting both fellow employees and customers at risk. Further, proposed sections 12954.2.02(a)(4)(A), 12954.2.04, and 12954.2.05 provide that an employer could not terminate an existing employee or contractor upon learning that they committed a violent crime or other serious offense that could undermine workplace safety. While we agree that one prior act is not conclusive that a person would commit a second offense, these are important considerations employer should be able to evaluate in light of the nature of the position.
Last year, this Legislature passed SB 731 (Durazo), which expanded automatic review and granting of record relief to felony arrest records and additional convictions. Due to similar concerns that were raised, an amendment was added excluding serious, violent, and sex felonies from automatic relief. Similar considerations must be given here, especially considering that an incident at the workplace could be preventable if the employer was allowed to know or react to a person’s past tendency towards serious or violent crime. This is why the existing California Fair Chance Act strikes the correct balance in our view: it allows employers to become aware of these prior offenses but puts guardrails on when they are permitted to know and when they can use such an offense as a reason to deny employment.
Proposed Section 12954.2.02(a)(10) Makes Compliance Impossible
For employers who are permitted to run background checks pursuant to 12954.2.02(b), section 12954.2.02(a)(10) provides that they cannot take an adverse action against someone on the basis of delay in obtaining or failure to obtain information regarding the person’s conviction history. An adverse action could include not hiring someone or denying a promotion.
This is impossible to comply with because delays or failures to complete background checks are out of an employer’s control. This is true now more than ever in light of the background check delays caused by All of Us or None of Us- Riverside Chapter v. Hamrick, 64 Cal. App. 5th 751 (2021). That case prohibited searching records by drivers’ license numbers or date of birth, which are necessary to filter records between people with the same name. It has become nearly impossible in certain counties to decipher which records pertain to the applicant and which pertain to a different person with the same name.1 Employers are experiencing delays of up to 8-12 weeks in hiring, with some background checks being returned as incomplete. Proposed section 12954.2.02(a)(10) essentially says that if there is a delay or the background check cannot be completed, that cannot be a basis on which to reject an applicant or promotion. Not only are these delays or incomplete checks out of the employer’s control, but this means that employers covered by the exceptions in subsection (b) would be required to disobey whichever statute or law is placing a
1 According to the 2010 Census Data, over 14 million people in the United States share the top ten most common last names.

restriction on who can be hired for a specific position. This section is therefore impossible to comply with and forces employers to violate other laws.
Proposed Section 12954.2.02 Will Cause Unnecessary Hiring Delays
Under current law, employers who are required to conduct background checks or to restrict employment based on criminal history need not wait until after a conditional offer to consider conviction history. This makes sense because if a law clearly states that someone who has been convicted of fraud may not work in a certain position, then the employer and applicant should know as soon as possible whether a prior conviction is disqualifying. Proposed Section 12954.2.02 instead would require the applicant to continue through the entire interview process just to discover that they are legally not allowed to hold that position. This will lead to delays in hiring and is not beneficial to the applicant seeking the job.
Several Provisions of the Individualized Assessment Portion of the Bill Are Not Feasible

Requiring all individualized assessments to be in writing: Under the existing California Fair Chance Act, the employer may, but is not required to, explain its reasoning for denying an applicant in writing. That portion of the statute was the result of stakeholder and legislator concerns regarding liability. SB 809 would require an explanation in writing, which could be used in litigation or enforcement actions. This is problematic, especially for smaller businesses with no legal counsel whose written statements will be picked apart by counsel in court.

Presumption: Proposed section 12954.2.03(c)(1) provides that if the applicant is not currently incarcerated or has completed a sentence for the conviction, there is a presumption that there is no direct and adverse relationship between the applicant’s conviction and the applicant does not pose a risk to public safety. It is likely that this presumption would apply to most applicants. Therefore, this presumption effectively makes it impossible for an employer to disqualify an applicant for a position. This provision essentially renders the portion of the bill allowing for an individualized assessment meaningless. And as discussed above, someone with a conviction of a violent crime would be considered not to pose a risk to public safety under this provision.

Excusing failure to provide documentation: Proposed section 12954.2.03(e)(3) provides that if the applicant fails to provide any documentation or information in response to the preliminary decision, the employer cannot use that as a basis to disqualify the applicant from employment or promotion. In effect, this means that the applicant can dispute the decision with no supporting evidence and the employer must acquiesce. While in some circumstances we understand it may be difficult to obtain documentation, to excuse providing documentation in every instance means an employer has no ability to question the validity of the applicant’s response.
SB 809’s Penalty Structure is Unnecessarily Punitive
SB 809 provides for civil penalties for “each violation” of the proposed statute. The proposed statute is a myriad of complex requirements where it is easy for any employer to accidently misstep. To levy a penalty for every possible small violation could expose an employer to tens of thousands of dollars in penalties. Further, it is unclear whether a “second” violation penalty is triggered by two mistakes regarding the same applicant or a second applicant. The former would exacerbate liability quickly, resulting in exceptionally high penalties.
Further, proposed section 12954.2.09’s structure regarding when payments are due, the bond process, and judgments is overly prescriptive with infeasible timelines. A violation of one of those short timelines could result in the employer owing their assessed liability plus the cost of the required bond. This includes situations where they parties have entered into a settlement agreement, which often provide far more than ten days to issue payment due to the time it may take a company’s financial department to process and issue the required amounts.
For these and other reasons, we respectfully OPPOSE SB 809 as a JOB KILLER.

April 4, 2023
TO: Members, Senate Judiciary Committee
SUBJECT: SB 365 (WIENER) CIVIL PROCEDURE: ARBITRATION
OPPOSE/JOB KILLER – AS INTRODUCED FEBRUARY 8, 2023
The California Chamber of Commerce and the organizations listed below respectfully OPPOSE SB 365 (Wiener) which has been labeled as a JOB KILLER. It is clear that the true motive behind SB 365 is an attempt to eliminate the use of arbitration agreements altogether. SB 365 incorrectly assumes that all appeals related to arbitration are meritless. It also undermines the judicial principles embodied in Code of Civil Procedure section 916 and eliminates a trial court’s inherent right to stay its own proceedings. The motive behind SB 365 to deter arbitration and single out arbitration from other types of proceedings will result in a finding that it is preempted by the Federal Arbitration Act (FAA) as the Ninth Circuit recently did by striking down another attempt at limiting arbitration – AB 51 (Gonzalez) from 2019. SB 365 will only lead to additional litigation and more money in the pockets of trial attorneys, which will increase the cost of doing business in California and exacerbate the ongoing affordability crisis we are facing.

SB 365 Will Increase Litigation to the Detriment of Consumers, Employees, and Companies
The motive behind SB 365 and its likely result is to increase civil litigation. The stakeholder that generally profits from civil litigation is the attorney, not the consumer or worker.1 For example, consumers and employees typically receive higher awards and have their claims resolved more quickly in arbitration than litigation.2 The same holds true when one looks at data from California’s own agencies regarding outcomes in litigation versus agency enforcement. In the case of the Private Attorneys General Act (PAGA), the current average payment that a worker receives from a PAGA case filed in court is $1,300, compared to $5,700 for cases adjudicated by the state’s enforcement agency. Attorneys on average recover a minimum of 33% of the workers’ total recovery, or $372,000 on average in litigation. In addition to receiving lower average recoveries in PAGA cases, workers also wait almost twice as long for their owed wages. Resolving disputes outside of litigation is better for all parties and ensures the consumer and worker are made whole more quickly rather than increasing fees and payments for trial attorneys.
SB 365 is Based on the False Assumption that All Appeals are Frivolous
SB 365 erroneously assumes that every single appeal of a denial to compel arbitration is meritless. According to the author the stated motive behind SB 365 is to “reign in” arbitration by allowing all trial court proceedings to continue during an appeal of “obviously invalid or inapplicable forced arbitration clauses”.3 In reality, SB 365 is not so limited. It does not simply apply to situations where there has been a determination that an appeal is frivolous or the arbitration clause is “obviously invalid”. Rather, it applies to every single appeal of a ruling denying a motion to compel arbitration.
To enact SB 365 is to assume that no trial court is ever wrong, which is simply untrue. Indeed, in a case currently pending before the United States Supreme Court on the very issue of whether proceedings should be stayed during appeal, both district courts that made the rulings at issue specifically acknowledged that they may be overturned on appeal. One stated “reasonable minds may differ” over the denial on the motion to compel arbitration and the other stated “I could see a different legal set of minds looking at this factual pattern and saying I was wrong” and that it was “really hesitating” because “if I’m wrong, then you’ll go forward in arbitration, but the parties will have spent a lot of time and money dealing with things that you would not have otherwise had to deal with if I’m wrong.”4 To appeal decisions like these is certainly not meritless. It does not make sense that SB 365’s complete ban on staying proceedings should apply in situations like these.
SB 365 Undermines the Intent of Code of Civil Procedure Section 916 and Divests Trial Courts of the Power to Grant Discretionary Stays
Under California Code of Civil Procedure section 916, if an appeal is filed it stays the trial court proceedings for all matters related to the appeal. To determine if section 916 applies, the court looks not only at whether the appeal would be rendered moot if trial court proceedings moved forward, but also whether continuing trial court proceedings would be “irreconcilable” with the appeal outcome. An example of this is where “the very purpose of the appeal is to avoid the need for the proceeding”. Varian Medical Systems, Inc. v. Delfino, 35 Cal. 4th 180, 190 (2005) (emphasis added). The purpose of section 916 “is to protect the appellate court's jurisdiction by preserving the status quo until the appeal is decided. The [automatic stay] prevents the trial court from rendering an appeal futile by altering the appealed judgment or order by conducting other proceedings that may affect it.” Id. at 189 (cleaned up) (emphasis added). In essence, trial proceedings should be stayed if the result on appeal may void the need to have the trial altogether. A stay
1 Coalition Letter on a Hearing Related to Arbitration in Financial Service Products | U.S. Chamber of Commerce (uschamber.com); Why the CFPB’s Anti-Arbitration Bias Is Bad for Consumers | U.S. Chamber of Commerce (uschamber.com)
2 FINAL-ndp-Consumer-and-Employment-Arbitration-Paper-2022.pdf (instituteforlegalreform.com)
3 Senator Wiener Introduces Legislation To Stop Corporate Arbitration Abuse | Senator Scott Wiener (ca.gov)
4 Joint Petition for a Writ of Certiorari in Coinbase, Inc. v. Bielski, available at: https://www.supremecourt.gov/DocketPDF/22/22-105/232231/20220729160525276_Coinbase%20Joint%20Cert%20Petition%207-29-22%20Final.pdf

under section 916 should be granted even if the trial court judge believes the appeal will fail. See Daly v. San Bernadino County Board of Supervisors, 11 Cal. 5th 1030, 1051 (2021).
Courts have repeatedly held that an appeal from a denial of a motion to compel arbitration falls squarely within the exact issue that section 916 was enacted to address: that allowing trial to move forward would be irreconcilable with an outcome on appeal if the trial court is reversed. Id. at 190; Prudential-Bache Securities, Inc. v. Superior Court, 201 Cal. App. 3d 925 (1988). If the appeal is successful, the parties and court will have wasted tremendous costs and resources on a proceeding that should never have happened in the first place. SB 365 discriminates against arbitration by saying that section 916 should never apply with regard to appeals related to a motion to compel.
It should also be noted that SB 365 goes one step further in its undermining of existing procedure. Not only does it remove arbitration from the purview of section 916, it also eliminates the trial court’s discretion to stay proceedings. Presently, trial courts have the inherent power to grant a discretionary stay if it serves the interests of justice and judicial efficiency. See OTO, LLC v. Kho, 8 Cal. 5th 111, 141 (“the power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants”) (internal citations omitted). SB 365 completely divests the trial court of this power when it comes to arbitration.
SB 365 is Likely Preempted by the Federal Arbitration Act (FAA):
The United States Supreme Court has consistently and unequivocally declared a national policy favoring arbitration of claims. As the Ninth Circuit recently noted when striking down yet another California arbitration law:
The Court has “repeatedly described the Act as ‘embod[ying] [a] national policy favoring arbitration,’ and ‘a liberal federal policy favoring arbitration agreements, notwithstanding any state substantive or procedural policies to the contrary.’” Id. at 346, 131 S.Ct. 1740 (citations omitted). In enacting the FAA, Congress intended to combat the longstanding “hostility towards arbitration” that “had manifested itself in a great variety of devices and formulas declaring arbitration against public policy.” Id. at 342, 131 S.Ct. 1740 (citation and quotation marks omitted). We have gone further, stating that “the FAA's purpose is to give preference (instead of mere equality) to arbitration provisions.” Mortensen v. Bresnan Commc'ns, LLC, 722 F.3d 1151, 1160 (9th Cir. 2013).
Chamber of Commerce of the United States of America v. Bonta, 2023 WL 2013326 at *6 (9th Cir. 2023) (holding AB 51 (Gonzalez) (2019) is preempted by the FAA).
Based on the purpose of the FAA, the Supreme Court has established an “equal-treatment principle”, which requires arbitration agreements to be on equal footing with all other contracts. Id. A state law will be struck down if it discriminates against arbitration on its face, has a disproportionate impact on arbitration agreements, stands as an obstacle to the objectives of the FAA, or disfavors arbitration agreements. Id. at *6-*7; AT&T v. Concepcion, 563 U.S. 333, 352 (2011). Courts have consistently invalidated California laws relating to arbitration as preempted by the FAA for these reasons and many others have been vetoed. See Chamber of Commerce, 2023 WL 2013326 at *2-*3 (citing examples).
By requiring litigation to continue in every case during the appeal of a denial of a motion to compel, SB 365 undercuts the benefits of arbitration in providing a speedier, less costly forum in which to resolve disputes. Similar to the Ninth Circuit’s analysis of AB 51, it is clear that the intent behind SB 365 and its impact of forcing litigation in every case where an appeal is pending is to have a deterrent effect on a company’s willingness to enter into arbitration agreements.5 That is “antithetical” to the “liberal federal policy favoring
5 See Press Release on introduction of SB 365: “Forced arbitration clauses have become a common feature of consumer transactions and employment relationships. More than half of America’s workforce has been bound by arbitration agreements.” Id. at *10 (citations omitted). A state law “evincing hostility toward arbitration” is in
direct conflict with the equal-treatment principle. Id. (citations omitted).
Further, SB 365 “singles out arbitration provisions as an exception” to the law. It does so by removing
appeals related to the denial of a motion to compel arbitration from the purview of Code of Civil Procedure
Section 916 as well as eliminating a trial court’s inherent power to grant a discretionary stay in that
circumstance only. Id. at *10. SB 365 is clearly preempted by the FAA.
If Enacted, SB 365 Would Be a Significant Departure from Federal Procedure
The United States Supreme Court is set to rule this year in Coinbase, Inc. v. Bielski. The issue in Coinbase
is for the Court to settle a circuit split regarding whether an appeal of a denial of a motion to compel
arbitration ousts a district court’s jurisdiction to proceed with litigation pending appeal. Most circuits have
said “yes,” requiring district court proceedings to be stayed while the appeal is pending. Other circuits,
including the Ninth Circuit, have held that the district court has discretion over whether to stay the
proceedings pending appeal.
With either outcome, SB 365 would represent a significant departure from federal procedure on this issue.
SB 365 prohibits any stay whatsoever, even if the trial court thinks it prudent, while federally either the
district court would be mandated to stay proceedings or would at least have the discretion to do so. Further,
if SB 365 is enacted, many parties may choose to have FAA procedure apply to their arbitration agreements
and therefore instead follow the result reached in Coinbase. The California Supreme Court has held that
parties to an arbitration agreement can contract to require that FAA procedure apply. See Cronus
Investments, Inc. v. Concierge Services, 35 Cal. 4th 376 (2005).
For these reasons and more, we are OPPOSED to your SB 365 as a JOB KILLER.
Sincerely,
Ashley Hoffman
Policy Advocate
California Chamber of Commerce

March 1, 2023
TO: Members, Senate Labor, Public Employment & Retirement Committee
SUBJECT: SB 592 (NEWMAN) LABOR STANDARDS INFORMATION AND ENFORCEMENT
SUPPORT/SPONSOR/JOB CREATOR – AS INTRODUCED FEBRUARY 15, 2023
The California Chamber of Commerce, California Hispanic Chamber of Commerce, and CalAsian Chamber of Commerce are pleased to SUPPORT SB 592 (Newman), which has been labeled a JOB CREATOR. SB 592 will bolster labor law compliance by requiring the Department of Industrial Relations (DIR) to translate its website, in its entirety, into the languages most spoken by Californians. Further, it will prevent any employer who relies in good faith upon the written advice of the Division of Labor Standards Enforcement (DLSE) regarding how to comply with the law from being punished through the assessment of civil and criminal penalties, fines, and interest.
DLSE Guidance:
The DLSE is a state agency that is charged with enforcing the wage, hour and working condition labor laws. As a part of its effort to fulfill this responsibility, the DLSE issues opinion letters on various wage, hour and working condition topics, Frequently Asked Questions (FAQs) regarding new labor laws, as well as an enforcement manual that sets forth the DLSE’s interpretation and position on these issues. This guidance was critical, for example, during the COVID-19 pandemic due to the number of new laws and ever-changing regulations. Currently, employers must refer to the DLSE’s written materials for “guidance” on these topics when there is no published, on-point case available. The DLSE can levy penalties against an employer for failing to do so if an employee files a wage claim.
The Catch-22 is that employers are provided with no certainty that they will be shielded from penalties if they comply in good faith with the DLSE’s written opinions or interpretations. There have been numerous instances where courts have veered in a different direction from established DLSE guidance, resulting in employers owing not only back wages, but also penalties under the Private Attorneys General Act (PAGA), Labor Code Sections 203, 226, and more. Examples include:
• Troester v. Starbucks, Cal.5th 829 (2018): The California Supreme Court rejected the de minimis doctrine for wage and hour claims, which is used in federal law, contrary to guidance included in the DLSE enforcement manual that employers must follow.
• Ward v. Tilly’s, Inc., 31 Cal.App.5th 1167 (2019): A California court of appeals required employer to pay out reporting time pay prior to employee physically reporting to work, contrary to prior guidance issued by the DLSE.
• Mendiola v. CPS Security Solutions, Inc., 60 Cal. 4th 833 (2015): The California Supreme Court holds employer liable for failure to pay “sleep time” during 24-hour shifts contrary to MOU entered into between DLSE and employer providing that employer’s policy was valid.
SB 592 eliminates this problem and provides businesses in California with the security to know that, if they seek out and follow written advice from the DLSE regarding how to comply with the law, they can actually rely upon that information. Specifically, SB 592 prevents an employer from being financially penalized through the assessment of statutory civil and criminal penalties, fines and interest if the employer relies in good faith on written advice from the DLSE and a court ultimately determines the DLSE’s advice was wrong.
Further, while employers are expected to follow this guidance and can be penalized by the DLSE for failing to do so, the guidance is essentially unusable for non-English speaking employers. While some materials are available in Spanish under a separate index page, the guidance materials are not translated into other common languages spoken in California such as Chinese, Tagalog, and Vietnamese.
Helps Small Businesses:
California has complex, burdensome labor and employment laws that are unique to the rest of the country. Small businesses that lack the financial resources to hire a human resources department or outside counsel to advise them on how to comply with these labor and employment laws only have the DLSE for guidance. SB 592 helps such small businesses by encouraging them to seek out and rely upon the advice they receive from the DLSE regarding how to comply with the law. During these difficult economic times, small businesses need certainty and SB 592 provides that certainty when state government provides advice.
Helps Non-English Speaking Employees and Employers:
While DIR must provide bilingual services, this has not included translation of their website. Because DIR’s website is only available in English, non-English speaking employers and workers are unable to utilize these resources at all. It is estimated that as many as 30% of immigrants in California speak little or no English and most speak another language at home. Even for those that do speak some English, it is difficult to utilize these resources due to the legal complexity of California’s labor laws. Employers may not know they are misinterpreting a law and employees cannot easily ensure that their rights are not being violated. By requiring DIR to translate its entire website into the four non-English languages most commonly spoken in California and protecting employers who rely on that guidance from penalties, SB 592 benefits both employers and employees.
Ensures Employees Receive Their Full Wages:
Although SB 592 prevents the assessment of any penalties, fines or interest against an employer who can prove their actions were based upon written guidance provided by the DLSE, it still requires the employer to pay all wages owed to an employee as well as any awarded attorneys fees or costs. In fact, SB 592 requires an employer who has asserted its good faith reliance on the DLSE as a defense to post a bond for the disputed amount of wages, thereby ensuring the employee is made whole.
Does Not Protect Bad Actors:
SB 592 requires the employer to prove that they are entitled to the good faith defense just as if it was asserting any other defense. This means that the burden of proof falls on the employer to demonstrate that it: (1) relied upon, and conformed to, the applicable opinion letter or enforcement policy published by the division; and (2) provided true and correct information to the division in seeking an opinion letter or enforcement policy, if applicable. The employer cannot succeed in asserting this defense if the facts and circumstances of the case did not align with the opinion letter or enforcement policy at issue. If the court is not satisfied with the employer’s evidence, it will reject the defense and assess penalties. A bad actor will not be able to satisfy these requirements. SB 592 solely protects the good actor who proactively seeks out guidance and conforms to it.
Notably, since 1947, the federal government has provided employers who rely in good faith upon the advice, opinion letters and guidance of the Department of Labor regarding the Fair Labor Standards Act with a complete defense against liability. See 29 U.S.C. Sections 258-259. This law, referenced as the Portal-to-Portal Act has been in existence for over 60 years. The California Fair Political Practices Commission as well as the California Rev & Tax Code regarding property taxpayers also contain good faith defenses.
Creates Certainty for Employers:
When the Portal-to-Portal Act was enacted, Congress set forth in its findings and declarations that “uncertainty on the part of industry,” as well as “the difficulties in the sound and orderly conduct of business and industry,” could negatively impact commerce. Accordingly, it included an affirmative defense for employers who rely upon the interpretations and opinions of the Wage and Hour Division of the Department of Labor.
Echoing the same concerns here, uncertainty for California employers regarding the correct application of California’s numerous labor and employment laws detrimentally impacts the state’s economy as well as employees. Providing certainty through SB 592 will assist all employers in their efforts to comply with the law, thereby producing a better business environment, growth in the economy, and an improved work environment for employees.
For these reasons, we are pleased to SUPPORT/SPONSOR SB 592 (Newman) as a JOB CREATOR.
Sincerely,
Ashley Hoffman
Policy Advocate
California Chamber of Commerce
Julian Canete
President and CEO
California Hispanic Chambers of Commerce
Pat Fong Kushida
President and CEO
Cal Asian Chamber of Commerce
cc: Legislative Affairs, Office of the Governor
Brandon Wong, Office of Senator Newman
Alma Perez, Senate Labor, Public Employment & Retirement Committee
Cory Botts, Senate Republican Caucus

March 14, 2023
The Honorable Roger Niello
California State Senate
1021 O Street, Suite 7110
Sacramento, CA 95814
SUBJECT: SB 703 (NIELLO) EMPLOYMENT: WORK HOURS: FLEXIBLE WORK SCHEDULES
SUPPORT/JOB CREATOR – AS INTRODUCED FEBRUARY 16, 2023

Dear Senator Niello:
The California Chamber of Commerce and the organizations listed below are pleased to SUPPORT your SB 703 as a JOB CREATOR. SB 703 will allow employee-selected flexible work schedules.
California is one of the only states that requires employers to pay daily overtime after eight hours of work in addition to weekly overtime after 40 hours of work. Even other states that impose daily overtime requirements allow the employer and employee to essentially waive the daily eight-hour overtime requirement through a written agreement. California, however, provides no such common-sense alternative. Rather, California requires employers to navigate through a multi-step process to have employees elect an alternative workweek schedule that, once adopted, must be “regularly” scheduled. This process is filled with potential traps that could lead to costly litigation, as one misstep may render the entire alternative workweek schedule invalid and leave the employer on the hook for claims of unpaid overtime wages.
Currently, there are 44,837 reported alternative workweek schedules with the Division of Labor Standards Enforcement. According to the Employment Development Department, California has about 1.6 million employers. Therefore, about less than 3% of California employers utilize the alternative workweek schedule option. Further, more realistically, given that the information in the database is according to work unit instead of employer, it is likely that less than 1% of employers in California are utilizing this process.
Employees want flexibility in their work schedules. In a recent poll conducted by the California Chamber of Commerce, 88% of voters agreed (49% of them strongly) that the state’s overtime laws should be changed to make it easier for employees to work alternative schedules, such as four 10-hour days. A survey by the Society for Human Resource Management revealed that 91% of Human Resources professionals agree that flexible work arrangements positively influence employee engagement, job satisfaction, and retention. According to Corporate Voices for Working Families and WFD Consulting, an in-depth study of five organizations that allow their non-exempt employees to have flexibility in their schedules found that employee commitment was 55% higher and burnout and stress decreased by 57%. Women and low-income workers have suffered the most from the inability to have flexible schedules, feeling pressured to abandon career goals to care for children and fulfill household obligations. That pressure has been exacerbated by the COVID-19 pandemic. An article by NPR estimated that close to 900,000 women left the workforce in 2020 to keep up with the demands of childcare and household obligations. That rate is four times higher than men.
As our economy recovers from the pandemic, we should be doing everything possible to maximize opportunities for employers. California should allow employees to set hours that work for an employees’ personal and family obligations rather than continuously trying to impose new mandates on employers, which burden their ability to afford to hire. This way, workers can continue to be employed and support themselves and their families.
SB 703 would provide employees more flexibility because the employee could request an alternative workweek schedule on an individualized basis. It would also relieve employers of the administrative cost and burden of adopting an alternative workweek schedule per division. Pursuant to SB 703, at the request of the employee, an employer would be able to implement a flexible work schedule that allows the employee to work up to ten hours in a day or 40 hours in a week, without the payment of overtime. Employers should be able to provide their employees more flexibility and negotiate through a written agreement, revocable by either party, a daily/weekly schedule that satisfies the needs of both the employee(s) and the employer.
Promoting flexible policies that allow employees to continue to be employed and earn income is needed now more than ever.
For these and other reasons, we are pleased to SUPPORT your SB 703 as a JOB CREATOR.

Sincerely,
Ashley Hoffman
Policy Advocate
California Chamber of Commerce
Acclamation Insurance Management Services (AIMS)
Allied Managed Care (AMC)
Anaheim Chamber of Commerce
Building Owners and Managers Association
California Association of Health Facilities
California Association for Health Services at Home
California Beer and Beverage Distributors
California Building Industry Association
California Business Property Association
California Cattlemen’s Association
California Farm Bureau
California New Car Dealers Association
California Restaurant Association
California League of Food Producers
California Trucking Association
California Lodging Industry Association
Carlsbad Chamber of Commerce
Chino Valley Chamber of Commerce
Citrus Heights Chamber of Commerce
Coalition of Small and Disabled Veteran Businesses
Commercial Real Estate Development Association (NAIOP)
Danville Area Chamber of Commerce
Family Business Association of California
Flasher Barricade Association (FBA)
Fresno Chamber of Commerce
Gilroy Chamber of Commerce
Greater High Desert Chamber of Commerce
Greater San Fernando Valley Chamber of Commerce
Half Moon Bay Coastside Chamber of Commerce
Hollywood Chamber of Commerce
Independent Lodging Industry Association
Industry Business Council
La Cañada Flintridge Chamber of Commerce
Laguna Niguel Chamber of Commerce
Lake Elsinore Valley Chamber of Commerce
Los Angeles Area Chamber of Commerce
Mammoth Lakes Chamber of Commerce
Manteca Chamber of Commerce
Mariposa County Chamber of Commerce
Mission Viejo Chamber of Commerce
Murrieta Wildomar Chamber of Commerce
National Federation of Independent Business
Oceanside Chamber of Commerce
Official Police Garages Association of Los Angeles
Orange County Business Council
Pacific Grove Chamber of Commerce
Palos Verdes Peninsula Chamber of Commerce
Plumbing-Heating-Cooling Contractors Association of California (CAPHCC)
Rancho Cordova Area Chamber