California Business Roundtable

Governor Newsom,

The California business community is doing all that it can to survive this current public health and economic crisis. We are working to support your leadership on the measures that will help protect all

Californians in the critical month(s) ahead. Your issuance of Executive Order N-40-20, issued

March 30, will help provide much-needed tax relief to small businesses. However, in order to maintain incomes for as many employees as possible, many businesses were required to shift to telework and work-from-home options without an internal structure in place and with little to no guidance from the state about how to adhere to the more than 1,100 pages of the state’s intricate employment laws.

Employers want to keep their employees working, but the state’s current laws related to workplace wage and hour violations and associated litigation threaten to do unnecessary harm and deepen the unemployment and economic crisis.

The goal of every business right now, both large and small, is to retain as many workers as possible, facilitate telework options when available and provide their workers with as much flexibility and certainty possible during these uncertain times. Unfortunately, the California Labor Code is a major hindrance to providing these options for workers, especially with the specter of frivolous Private Attorneys General Act (PAGA) lawsuits looming overhead. High-wage jobs are already exempted from many of these requirements and therefore face less of a termination threat; low-wage, hourly jobs are most at risk if nothing is done to address these urgent issues.

For most businesses, both the labor code and PAGA threats have deliberately kept them from creating telework options and policies for their employees, creating even more risk now that telework has become the only option. Since the president has extended the national emergency until at least April 30 and you have indicated California’s shelter-in-place may extend beyond that, businesses are increasingly worried that temporary, well-intentioned solutions to keep people working will not be sustainable in the weeks and months ahead, both during the current emergency and as employers struggle to resume normal operations in the recovery period.

In order to provide businesses and employees certainty they need during these periods, we are asking for the following workplace flexibility for businesses instituting telework for their employees:

4. Flexibility on the 8-hour workday mandate. With many workers also dealing with children whose schools are closed, flexibility in the workday is critical. Many parents are now trying to juggle two full-time jobs, teleworking and supervising an educational school day for their children. Relaxing these rules so that businesses and their employees can come to an agreement about when and how work is completed will alleviate pressure on parents who must dedicate a large portion of their day to their children’s education and allow businesses more leeway in providing a flexible schedule. We are not requesting a suspension of overtime rules or payments, but rather the ability for each company to create individualized work plans for their employees.
5. Flexibility on meal and rest break mandate. Businesses able to keep their employees working have a difficult time regulating and enforcing mandated meal and rest breaks while workers are at home. Violations of this mandate are one of the most cited in PAGA threat letters and litigation. Companies should not be forced to lay off workers simply because of California’s outdated and inflexible labor laws. Again, allowing businesses to create individualized work plans with their employees will provide both with the flexibility and certainty needed during this time.
6. Clear standards for workers compensation claims. Labor Code section 3600 states that an employer is liable “for any injury sustained by his or her employees arising out of and in the course of the employment.” There is no distinction between work done in an office setting or work done remotely from home, and the courts have consistently given broad interpretation of this statute to the benefit of an injured worker. With hundreds of thousands of employees teleworking, “workplace” injuries must be addressed. OSHA does not do in-home evaluations of workplace environments, nor would they be able to given the volume of teleworkers right now. Business and employees need clear guidance and standards on what can be claimed as a workplace injury. For example, in a 2010 incident, a fireman on call from his home was granted workers compensation for falling off a ladder trimming a wisteria plant on his own property simply because he was on-call at the time of his injury^[1]. Businesses should not be held liable for a teleworker who steps on a child’s toy or similar incidents such as this during regular business hours.
7. Litigation relief and a suspension of PAGA. Well-intentioned businesses should not be under constant threat of frivolous litigation from enterprising trial lawyers. PAGA has been a barrier to advancing work-from-home options for more than a decade, and now that businesses are forced to move to this work requirement to maintain worker incomes to the extent possible, they are being left vulnerable to a slew of frivolous lawsuits. Businesses are growing increasingly concerned that the threat of PAGA lawsuits will force them to have to lay off employees rather than face the threat of a multi-million-dollar lawsuit at a time of such significant economic uncertainty. This is especially critical for small and medium-sized businesses since a California Appellate Court has ruled that owners can also be held personally liable for violations. Everyone is struggling and trying to do the best they can under the circumstances. Allowing trial lawyers to hold small business owners personally liable for no-fault violations will only further cripple our economic recovery. Alleged labor violations should be required to go through the regular ministerial process that existed before PAGA was enacted. The state has the ability to enforce and adjudicate labor and wage violations and should continue to so during the declared state of emergency. By suspending PAGA during this time, the state will also ensure that workers whose rights are violated will be justly and directly compensated for their lost wages. Under PAGA, trial lawyers often get the bulk of the settlement money; when Uber settled a PAGA claim with its drivers, each driver received $1.08, while the attorneys received $2.3 million^[2].

We know these are not easy issues to tackle and will take a collective effort to implement. Therefore, we are asking for the following:

1. Executive Order issuing an immediate suspension of PAGA and written notice and voting requirements to allow for individualized work plans addressing 8-hour workdays and meal and rest periods.
2. Issue immediate guidelines clarifying that employees who are being paid all or part of their hourly wages but not working are not classified as employees for the purpose of wage/hour and workers compensation laws.
3. Require the Workers Compensation Appeals Board to issue temporary regulations that require workers show any injury sustained while teleworking is directly connected to the actions/duties being performed by the employee and not as a result of actions taken by the employee outside their regular work duties.

Worker protection laws are critical to providing a safe and healthy work environment, even in the midst of a global health pandemic. But these same laws should not be a weapon against wellintentioned businesses that have committed to paying their employees and are working to find new, innovative solutions to a months-long shelter-in-place order. These businesses and their employees are helping keep the economy going during a time of unprecedented uncertainty. They should have the right to do that without daily threats of lawsuits that could close even more businesses and exacerbate the economic crisis even further. No company wants to lay off employees if they can help it; but faced with multi-million-dollar lawsuits and personal liability claims, companies may be forced to do so.

As with everything in this crisis, we are asking for balance over the next two to six months. With more than 1 million claims already submitted to the state’s Unemployment Insurance fund, we are working throughout the state on these issues that will help all businesses from having to lay off more employees in order to survive.

We look forward to your immediate reply on this important issue and stand ready to engage in discussions with your staff so that the state can help businesses create the appropriate work environment for their employees.

Sincerely,

Associated General Contractors
BOMA California
California Building Industry Association
California Business Properties Association
California Business Roundtable
California Manufacturers and Technology Association
California Retailers Association
Central Valley Business Federation
El Dorado County Chamber of Commerce
El Dorado Hills Chamber of Commerce
Elk Grove Chamber of Commerce
Folsom Chamber of Commerce
Greater Sacramento Economic Council
Inland Empire Economic Partnership
International Council of Shopping Centers
Los Angeles County Business Federation
NAIOP—Commercial Real Estate Development Association, California
National Federation of Independent Business, California
North Bay Leadership Council
Orange County Business Council
Rancho Cordova Chamber of Commerce
Roseville Chamber of Commerce
San Gabriel Valley Economic Partnership
Santa Cruz County Chamber of Commerce
UCAN—United Chamber Advocacy Network
Yuba-Sutter Chamber of Commerce