Legislative Updates by Richard Markuson, CAPHCC Lobbyist


July 31, 2014

State Run Private Retirement

The Secure Choice Retirement Savings Investment Board met yesterday in Sacramento. The board was established by SB 1234 (deLéon), the bill passed in 2012 to study and recommend steps to establish a state-run retirement system for employees of private companies. You can learn more about the board and find meeting agendas, schedules and background information at http://www.treasurer.ca.gov/scib/index.asp

Yesterday, Cynthia Pollard, president of the Bakersfield Chamber of Commerce, was introduced as the Governor’s appointee to represent small business. The board has met six times since September 2013.

  1. The board is staffed by the State Treasurer’s Office under an inter-agency agreement. Private funds are being raised to pay staff and the vendors who will provide legal counsel and perform the market analysis and feasibility study required by SB 1234. The budget is $1 million and $311,000 has been raised thus far. Donors include the SEIU, AARP, Senator Ted Lieu and former Controller Steve Westly. The Arnold Foundation has committed matching funds, and the Ford Foundation has pledged $100,000 when $900,000 has been raised. Other prospective donors have indicated interest in making grants.
  2. Yesterday, the board authorized staff to reissue an RFP for legal counsel, which the board plans to hire at its September 29 meeting. There was only one responsive proposal submitted to the original RFP. The first job of legal counsel will be to finalize and approve an RFP for the market analysis and feasibility study. The job of legal counsel is viewed as critically important because ERISA and IRS issues must be addressed before the Secure Choice program can move forward.
  3. A draft of the RFP for the market analysis and feasibility study was released. Employer groups recommended the RFP be amended to require that vendors address: 1) Protections for employers from fiduciary responsibility for their employees’ investments and financial liabilities if the investment fund underperforms; 2) Potential problems with payment transmittals; 3) State and federal laws that might apply to Secure Choice; and 4) Educating employees about investment choices and that employers aren’t liable for employees’ investment choices.

Elections 2014

There is some question if Republicans can overcome their numerical disadvantage and ever win a statewide election. Republican strategist Tony Quinn has one take on the November prospects for one candidate.


“It may very well be impossible for any Republican to win a statewide office this fall. Jerry Brown may sweep all Democrats into office; the GOP brand may remain so toxic in California, especially to minorities, that winning is impossible. But given his likely newspaper support, and that all important ballot pamphlet statement, Pete Peterson has the best chance of anyone on the down ballot of breaking through to victory.”

The other Republican who some regard as having a shot is Ashley Swearengin who decided not to spend the $7,000 for a ballot statement. I think this an absolutely idiotic decision. For $7,000 having a statement in front of EVERY California voter?!?

Quinn goes on to explain why he thinks Peterson is the best hope:

“Peterson, on the other hand, is running against Democratic State Senator Alex Padilla, who is termed out of office this year and looking for a way to stay on the public payroll. Issues do count, and Peterson has very real issues to talk about. The Secretary of State’s office is a mess. The San Francisco Chronicle editorialized over how poorly it is run by current incumbent Debra Bowen (herself a former State Senator) noting that it is all but impossible to trace campaign contributions because of a poor and inadequate campaign finance portal. Getting election results now takes longer in California than in third world banana republics, and all through the long count in the Controller’s primary the Secretary of State’s office could not report an accurate figure on uncounted ballots. Peterson has zeroed in on these defects. That’s one reason why he was strongly supported by the Los Angeles Times in the primary.”

Proposition 49 – More Legislative Shenanigans

 Attorney Keith Bishop wrote last week that Governor Brown had allowed SB 1272 to become law without his signature.  Bishop notes “to say that SB 1272 became law is an hyperbole because, as Governor Brown observed, the bill ‘has no legal effect whatsoever.’”

The bill, authored by Senator Ted Lieu, calls for an advisory vote on whether the United States Congress and California Legislature should approve an amendment to the U.S. Constitution overturning the United States Supreme Court decision in Citizens United v. Federal Election Commission, 130 S.Ct. 876 (2010). SB 1272 will appear on the ballot as Proposition 49.

Bishop goes on “When a ballot measure is presented to the voters in California, the ballot pamphlet includes an argument in favor of the measure, an argument against the measure and rebuttals to those arguments.  On July 16, 2014, the Secretary of State’s office issued a press release inviting the submission of ballot arguments and rebuttals.  Upon examination, however, the Secretary of State’s invitation doesn’t appear to have been a serious attempt to elicit public submissions. First, the timing was outrageously short.  The Secretary of State fixed the deadline for submission of arguments at 5:00 p.m. on July 18, 2014.  When I called the Secretary of State’s press office, I was told that it did not issue the press release until after 5:00 p.m. on July 16, meaning that the general public was given less than 48 hours notice!  In any event, it is unclear why the Secretary of State’s office went through the charade of publicly inviting comments when it seemingly had decided to apply the Election Code provisions applicable to legislative measures.  Those statutes give members of the legislature the right to submit the arguments in the first instance and the public only has the opportunity to submit arguments when the members fail to do so.  Cal. Elec. Code §§ 9041, 9042 & 9044.  As it turns out, the ballot arguments were submitted by members of the legislature (and persons apparently appointed by those members).  The argument in favor is here and the argument against is here.

The bottom line is that the Secretary of State’s office either wittingly or unwittingly tried to create the appearance of inviting public participation but the reality is that the public had no reasonable opportunity of submitting arguments.  When I submitted written questions to the Secretary of State’s office about this patently unfair process, I was told that it will ‘refrain’ from ‘discussing related details outside of court’ due to pending litigation concerning the measure.  That litigation is Howard Jarvis Taxpayers Association et al. v. Bowen, as Secretary of State, etc. which was filed on July 23, 2014 directly in the Third District Court of Appeal (Case Number C076928).”


The Legislature is on a four-week summer recess and I am enjoying the time away from our elected officials. They’ll be back, as I will be, in August.

Labor Law Update

Micro Units

From WECA supported Coalition for a Democratic Workplace (CDW): Yesterday, the National Labor Relations Board decided 5-0 to reject the union’s proposed bargaining unit of women’s shoe sales associates at Bergdorf Goodman in Manhattan. (Please see CDW’s amicus brief here). The women’s shoes sales associates are located in two separate departments within Bergdorf’s women’s store – the Contemporary Sportswear Department (the shoes sales associates comprise only a portion of the sales staff in this department) and the Salon Department (which is comprised solely of shoes sales staff). The Board found the employees from these two different departments did not share sufficient community of interest to form one unit. 

 While the decision is a positive development, the Board’s Democratic majority made clear they nonetheless will continue to approve micro-unions as long as the proposed units track “administrative or operational lines drawn by the Employer… such [as units based on] departments, job classifications, or supervision.” Thus, while the Board’s Democrats refused to approve the unit here that combined the shoes sales associates from two different departments, according to their reasoning they would have approved two smaller units, one for the Salon Department and a separate unit for the shoes sales staff in the Contemporary Sportswear Department because those tracked the employer’s operational lines. Moreover, the three Democrats on the Board said they might have approved the proposed unit even though it consisted of employees from two different departments if the employees had shared supervision and/or there was greater interchange between the two departments.

 Earlier the Board ruled just the opposite.

In a 3-1 decision in Macy’s Inc., the NLRB applied its controversial Specialty Healthcare decision in holding that an appropriate bargaining unit consists of employees in the cosmetics and fragrances department at a Boston-area Macy’s store, one of 11 store departments, and excludes all other sales employees at the store. This is the first case in which the NLRB has applied the Specialty Healthcare standard to a retail employer. The NLRB’s decision is unwelcome news for employers, particularly in the retail industry, as it provides support for unions’ increasing efforts in seeking to organize “micro-units” consisting of small, discrete subsets of employees.

Under this logic, the NLRB could rule that VDV employees are a “distinct” unit from high-voltage and permit an organizing drive. As always – be aware of changes in the landscape and keep you supervisors and superintendents aware of new legal interpretations.

EO 11246 now Protects Sexual Orientation and Gender Identity

On July 21, President Obama signed an Executive Order adding sexual orientation and gender identity to the list of protected categories included in Executive Order 11246, originally issued by President Johnson in 1965. E.O. 11246 now prohibits federal contractors from discriminating against employees or applicants for employment on the basis of race, color, religion, sex, national origin, sexual orientation or gender identity.

The Executive Order retains the exemption added by President George W. Bush for religiously affiliated contractors, permitting them to favor individuals of a particular religion when making employment decisions.

E.O. 11246 applies to federal contractors and federally-assisted construction contractors and subcontractors who do over $10,000 in Government business in one year. Contractors with over $50,000 in annual federal contracts, and at least fifty (50) employees, are obligated to maintain an active Affirmative Action Program (AAP) and to commit to extensive diversity initiatives, analyses and obligations. The U.S. Department of Labor’s Office of Federal Contract Compliance Programs is tasked with enforcing the E.O. According to the White House, most federal contractors already have non-discrimination policies in place that include sexual orientation and gender identity. Those federal contractors who do not have such policies in place, and companies who are considering becoming federal contractors, should review their non-discrimination policies and employee training to ensure compliance with E.O. 11246.

You may read the Executive Order amending E.O. 11246 here and the White House Fact Sheet on the Executive Order here.