​Senate Fiscal Committee Passes Job Killer Mandate

(August 23, 2011) The Senate Appropriations Committee yesterday passed a California Chamber of Commerce-opposed bill that unfairly forces employers to hire a predecessor’s employees and ensures continued union representation, while undermining the at-will employment presumption in California, despite any change in employers.

AB 350 (Solorio; D-Anaheim), a “job killer” bill, inappropriately alters the employment relationship by requiring any successor contractor for “property services,” defined as licensed security, cleaning-related or light building maintenance, window cleaning or food cafeteria services, to retain employees of the former contractor for a minimum of 60 days and thereafter offer continued employment unless the employees’ performance during that period was unsatisfactory.

Forces Unionized Workforce

CalChamber is opposed to this bill because it is designed to ensure that an incumbent union, elected as the bargaining representative for the prior contractor, will remain the bargaining representative for the subsequent employer.  Under the “successor employer” doctrine, a subsequent employer that:

  1. hires the majority of its predecessor’s employees; and
  2. is generally in the same business, must recognize the incumbent union and bargain with it in good faith.

(left to right) Matthew Hargrove with the California Business Properties Association and CalChamber Policy Advocate Jennifer testify before the Senate Appropriations Committee against AB 350.

Since AB 350 mandates that subsequent employers hire the predecessor’s employees, it would allow the incumbent union to demand recognition of its status as the bargaining representative. CalChamber believes the decision of whether to have a union in the workplace should be left to the employers and employees, after following the proper procedures outlined by the National Labor Relations Act. Neither party should be forced into such a relationship.

Unemployment Rate Unaffected

AB 350 also will not reduce the current unemployment rate in California. Because AB 350 mandates that a subsequent contractor of property services must hire all the prior contractor’s employees, the subsequent contractor will be forced to either: 

  1. displace its existing workforce to take on the new employees; or 
  2. eliminate positions it would have opened to new applicants in the industry, as those positions will be filled by the prior contractor’s employees. Accordingly, AB 350 does not create any additional jobs.

AB 350 also does not provide general stability for employees in this industry. Rather, it provides stability only for those limited employees of the prior contractor. Existing employees of the subsequent contractor or other property service employees who would have received a job with the subsequent contractor, will face instability as a result of AB 350. Accordingly, AB 350 creates winners and losers amongst employees in the property services industry, something in which the government should not engage.

Eliminates Background Checks

Given that AB 350 essentially mandates a subsequent contractor to hire the prior contractor’s employees, AB 350 also precludes the subsequent contractor/employer from conducting any pre-hiring background checks or interviews to determine if the employees of the prior contractor/employer are individuals who meet the unique and specific criteria of the subsequent employer. As such, AB 350 basically eliminates any distinction from one contractor to the next regarding the type of workforce that contractor can deliver, thereby minimizing competition amongst contractors. In addition, by limiting a subsequent employer’s ability to properly conduct background checks of potential employees, AB 350 is setting up these subsequent employers for potential negligent hiring litigation.

Alters At-Will Presumption

Under AB 350, once employees of the prior contractor are hired, the subsequent employer is restricted from terminating them for 60 days, unless there is “cause.” In California, it is presumed that the employment relationship is at-will, unless the employer and employee have agreed otherwise. AB 350 alters that presumption, and provides these employees with a significantly higher protection from termination. After 60 days, an employer must offer continued employment to these individuals, unless the employer can identify objective incidents of unsatisfactory performance. Accordingly, these employees of the prior contractor are basically guaranteed continued employment as well as priority over any other employees in the industry.

Key Vote

AB 350 passed Senate Appropriations on August 22 5-3.

Ayes: Alquist (D-Santa Clara), Kehoe (D-San Diego), Lieu (D-Torrance), Price (D-Los Angeles), Steinberg (D-Sacramento).

Noes: Emmerson (R-Hemet), Runner (R-Antelope Valley), Walters (R-Laguna Nigel).

No Vote Recorded: Pavley (D-Agoura Hills).

The bill will be considered next by the entire Senate.

Staff Contact: Jennifer Barrera