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Thursday, September 05, 2019   Opinions


Richard Markuson

The Interesting Elements of Assembly Bill 5

Many of you San Diego-area folks remember Assembly Member Lorena Gonzalez from her tenure as head of the San Diego-Imperial Counties Labor Council (AFL-CIO). She left that post in 2013 when Assemblyman Ben Hueso was elected to the State Senate. She then decided to bring her style of political activism to Sacramento by winning Hueso's 80th Assembly District.
She is a prolific author - usually having multiple pieces of legislation on the CalChamber "Job Killer" list. One bill that is NOT on the list - but certainly qualifies as a job killer - is AB 5, which will codify the State Supreme Court decision in the Dynamex case that changed the treatment of independent contractors (we cover some recent amendments to that bill elsewhere). The reason I suggest it is a job killer is because its primary targets are the gig economy workers who accepted employment under the old rules - for any number of reasons - and now will become employees of their contracting entity - whether they want to be an employee or not. Uber - by far the largest of the gig employers (and who recently lost $5 billion in the last quarter) has suggested that 300,000 of their contractors will be terminated if AB 5 goes into effect as currently drafted. And the votes are probably here to pass the bill, and Governor Newsom has signaled he is prepared to sign it.
But this is not about the gig economy or AB 5, but rather, this is an interesting "side-bar" that is taking place around the bill and efforts to provide some degree of flexibility to gig workers - or as some have described it - a "third" status of employment (the other two being employee and independent contractor).
There seemed to be some degree of interest in this concept among the Democrats in Sacramento who don't necessarily want to be seen as executioner of the gig economy as we know it (which includes paper boys, who would become employees of the few remaining printed papers in California). Uber, Lyft, DoorDash and some of the other employers have offered wage floors, collective bargaining (industry-wide as opposed to employer by employer) and other protections without these folks becoming statutory employees.
The author seemed reluctant to go down this road and preferred to hand out industry exemption on a case-by-case basis - always with the approval of organized labor. But lo and behold, the loudest opponent to this was none other than Mr. Robbie Hunter. You may recall the last column, which listed Mr. Hunter of the State Building and Construction Trades Council as the fifth most influential power figure in Sacramento.
At about this same time, Governor Newsom announced members of his Future of Work Commission.
The executive order establishing the Commission states, "The Future of Work Commission's primary mission shall be to study, understand, analyze, and make recommendations regarding the kinds of jobs Californians could have in the decades to come; the impact of technology on work, workers, employers, jobs and society; methods of promoting better job quality, wages, and working conditions through technology; modernizing worker safety net protections; and the best way to preserve good jobs, ready the workforce for the jobs of the future through lifelong learning, and ensure shared prosperity for all." The Commission is replete with union officials, Obama appointees, and left-leaning academics along with a few token business representatives but missing from the list was good ol' # 5 - Robbie Hunter.
It seems Hunter was prepped to serve but things went a little sideways when the trades went a little postal on the "third status of employment."
As CalMatters reported the "disinvitation," Gov. Gavin Newsom's administration revoked the appointment of one of California's top labor leaders to a soon-to-be announced Future of Work Commission on Tuesday, in an escalating dispute over how to treat gig employees. Robbie Hunter, head of the State Building & Construction Trades Council of California, is insisting that gig employees, including construction workers who get jobs through Handy, be treated as employees, not independent contractors. Hunter and Newsom's chief of staff, Ann O'Leary, argued over the issue earlier this month, leading Hunter to conclude the administration would make concessions to companies such as Uber, Lyft and Handy. On Tuesday night, a top aide to Newsom called Cesar Diaz, the building trades' chief lobbyist, to say Hunter's appointment was revoked-this after the administration emailed a draft press release to Hunter on Friday afternoon announcing his appointment.
And in a curious and possibly unrelated dis-appointment, Newsom also has dumped Nikki Noushkam, his recent appointment to the South Coast Air Quality Management District.
Noushkam worked at ExxonMobil from 1997 to 2001 and Northrop Grumman from 2004 to 2015. Most recently, she served as chief engineer for Aerospace Corp. since 2015. Newsom appointed her last month but apparently had second thoughts. "While the governor was impressed by the technical and engineering expertise of the nominee, the governor is withdrawing his previous nomination to the South Coast Air Quality Management District," Newsom spokesperson Nathan Click said in a statement. "Given the air quality challenges faced by families in Southern California, the governor believes his appointee should have both a strong understanding of public health and the trust of local communities."
So, how does one connect those dots? CalMatters noted: "The decision to pull the nomination of Negar "Nikki" Noushkam coincided with the Newsom administration's decision to revoke the offer to Robbie Hunter, head of the State Building & Construction Trades Council of California, to serve on the Future of Work Commission." And "... the building trades council represents unionized oil refinery workers, has an alliance with oil companies, and supported Noushkam's appointment." Connection? Maybe. But the trades have stepped up their lobbying against a gig fix - and dispatched about 100 construction workers (paid for with industry advancement money, undoubtedly) today to the Capitol to remind Democrats (and Republicans) who is calling the shots.
We'll know how this resolves by Monday - the start of the marathon last week of session when the deadline for amending bills before Friday's adjournment has passed.

Thursday, September 05, 2019   State Legislation

The Senate Appropriations committee approved AB 5 (Gonzalez - D - San Diego) and the bill is now on the Senate floor. Gonzalez amended the bill for construction to establish that the holding in Dynamex does not apply to the relationship between a contractor and an individual performing work pursuant to a subcontract in the construction industry, and instead the determination of whether the individual is an employee of the contractor shall be governed by Section 2750.5 and the test adopted by the California Supreme Court in the case of S. G. Borello & Sons, Inc., if the contractor demonstrates that all of seven criteria are satisfied.
On the Senate floor is AB 403 (Kalra - D - San Jose) to the floor. This bill extends the time that a victim of workplace retaliation has to file a claim with the California Labor Commissioner from six months to two years and authorizes an attorneys' fee award to a worker who prevails on a whistleblower claim. AB 403 incentivizes litigation and provides for a one-sided provision of attorney's fees. California is already widely perceived as having a hostile litigation environment. One factor that contributes to this negative perception is the high award and threat of attorney's fees in civil litigation that often dwarfs the financial recovery the plaintiff actually receives.
The Senate passed AB 520 (Kalra) on a party-line vote. It is the building trades third attempt to define a public subsidy as "de minimis" for the purpose of paying the prevailing wage in public works projects if the subsidy is both less than $500,000 and less than 2% of the total project cost. The bill would specifically provide a public subsidy for a project that consists entirely of single-family dwellings is de minimis if it is less than 2% of the total project cost. CBIA has stated this narrow amendment is deceptive and an attempt to confuse Legislators (Squirrel!). These standards will apply for bids advertised or contracts awarded after July 1, 2020. AB 251 (Levine, 2015), was vetoed by Governor Brown; he stated in his veto message: "Longstanding practice has been to view [a] subsidy in context of the project and use 2% as a general threshold for determinations. There has been no showing that the current practice is unreasonable. While I remain a staunch supporter of prevailing wages I am concerned that this measure is too restrictive and may have unintended consequences."
Newson signed AB 595 (Medina - D - Riverside) that authorizes the use of an individual tax identification number for purposes of conducting background checks required by class or program for a student enrolled in a community college apprenticeship or internship training program who does not have a social security number.
The Senate passed Medina's AB 695 that extends the sunset on community college districts' (CCDs') authority to enter into design-build public works contracts and adopts the same "skilled and trained workforce" requirements applicable to the design-build authority of state agencies and local governments. The bill contains provisions that allow a contractor under a project labor agreement to be presumed to meet the requirements of using a skilled and trained workforce.
Newson signed AB 1019 (Frazier - D - Discovery Bay) that adds to the ex officio members of the Interagency Advisory Committee on Apprenticeship, the Director of Rehabilitation and the chair of the State Council on Developmental Disabilities. The bill would require the committee to create a subcommittee to address apprenticeship for the developmentally disabled community. The bill would add that it is the intent of the Legislature that the department will encourage greater participation for the developmentally disabled in apprenticeship and pre-apprenticeship programs.
Held on suspense was AB 1028 (Gonzalez) that would have required the California Energy Commission (CEC), in allocating grants to local educational agencies (LEAs) as part of the Proposition 39 - Clean Energy Job Creation Program to also give priority based on a LEA's utilization of apprentices from state-approved apprenticeship and pre-apprenticeship programs. The committee concluded "Cost pressure, potentially in the millions of dollars, to provide substantial funding for the purposes the California Clean Energy Jobs Act, as those purposes are modified by this bill."
Passed off of suspense was her AB 1066 that will permit striking workers to collect unemployment insurance (UI) benefits. The cursory analysis of the policy change indicated "annual ongoing costs to the Unemployment Insurance Trust Fund would likely be in the millions of dollars."
Awaiting action of the Governor is AB 1475 (Bauer-Kahan - D - Orinda) that authorizes regional transportation agencies (RTAs) to use the construction manager/general contractor (CM/GC) procurement method on any transportation project that is not on the state highway system.
The Senate passed AB 1558 (Ramos - D - Highland) that requires local school districts or schools planning college or career fairs to notify apprenticeship programs in their county utilizing contact information from the database of approved apprenticeship programs published by the Division of Apprenticeship Standards on its internet website.
Also on the floor is AB 1736 ( Daly - D - Anaheim) that will require departments and state agencies with an internet website, to post within 24 hours of awarding a construction contract, the name of the successful bidder, the amount of the successful bidder's bid, and the name of listed subcontractors and their subcontract amounts.
Part of the "housing solution" on the Assembly floor is SB 5 (Beall - D - San Jose) that establishes a mechanism that, when fully implemented, shifts up to $2 billion annually from local ERAFs to pay for projects approved under the Program for affordable housing, transit-oriented development, infill development, housing-related infrastructure, and other specified priorities. This indirectly requires the state to make annual GF adjustments to match any reductions in ERAF that would otherwise be used to support schools. While school funding is held harmless, the bill would reduce the amount of GF revenues available to support other state programs and services. The future is uncertain as the CFT and CTA are opposed to the ERAF shift.
Back in the Senate for concurrence is Beall's SB 128 that extends the existing best-value contracting pilot program until January 1, 2025. The bill also changes the date that a participating county must submit a report to the Legislature to March 1, 2024, and adds Santa Clara and Monterey counties to the existing pilot program.
The Assembly Appropriations Committee approved SB 524 (Stern - D - Canoga Park) Sponsored by California State Association of Electrical Workers, California State Pipe Trades Council, Western States Council Sheet Metal Workers, this bill requires the CPUC to ensure that work is performed by a skilled and trained workforce for projects receiving at least $50,000 in ratepayer-funded initiatives within a single facility. Undoubtedly because of her affection for anything union, Lorena Gonzalez is now a co-author. Stern claims "achievement of the state's energy and environmental goals through energy efficiency projects is jeopardized by use of unqualified workers to install these projects" but because he is a Democrat and the sponsors are construction unions - no proof is required.
Also on the Assembly floor is SB 530 (Galgiani- D - Stockton) that will require DLSE to develop recommendations for industry-specific harassment and discrimination prevention policy and training standard for use by employers in the construction industry. The bill will also require DIR to convene an advisory committee by March 1, 2020, consisting of specified representatives from the construction industry and state agencies to assist the division in developing the policy. Late amendments allow unionized construction industry employers to satisfy sexual harassment training and education requirements by verifying completion of specified training provided by a state-approved apprenticeship program, labor management training trust, or labor management cooperation committee.

Thursday, August 22, 2019   Opinions


Richard Markuson

Capitol Weekly's Top 100
Capitol Weekly is a publication of Open California, a 501(c)3 nonprofit organization founded in 2012 to inform, enlighten and educate Californians about public policy and state governance, and to provide a platform for engagement with public officials, advocates and political interests.
One of their more interesting projects is an annual listing of the top influencers in Sacramento. And no, dear reader, yours truly is not on the list.
Fittingly, at the top of the list is Ann O'Leary, Governor Gavin Newsom's chief of staff. Several other staff follow - but number five on the list, and the first "non-government" name - is Robbie Hunter.
Robbie Hunter, an ironworker and descendant of a guy who worked on the Titanic, is always high on this list, and deservedly so. His outfit - the State Building and Construction Trades Council, or BCTC - celebrated a major victory in November when they and their allies pushed hard to beat back Proposition 6, the attempt to repeal California's new gasoline tax increase that initially was backed by a narrow majority of voters. The $5 billion tax hike means money for big-ticket construction jobs for thousands of workers at the prevailing wage. BCTC is affiliated with 160 unions with 350,000 members - and that's right up Hunter's alley. Hunter was a go-to person for Jerry Brown on building support for infrastructure funding, and he likely will play a similar function for Newsom, with whom he is fast building a relationship. One veteran Capitol watcher we spoke to said BCTC has become the single most important labor force in California, above even the California Teachers Association and the SEIU. Maybe. But money, jobs and politics are a potent mix in Sacramento, and Hunter stirs the pot.
The only two other business folk in the top ten are Allen Zaremberg of the California Chamber of Commerce (8) and Bill Devine with AT&T (10).
Other notable influencers are:
Scott Wetch (#59): Organized labor is heavily represented on this list, and one of the reasons is Wetch, who represents union interests first, last and always. His clients include the Building and Construction Trades Council (see #5), State Pipe Trades Council and the International Brotherhood of Electrical Workers, among others. Wetch has earned a reputation as a notorious bill-killer if legislation coming out of the Capitol threatens his constituents' interests. He worked at the Capitol for over 12 years prior to teaming up with his now-retired lobbying partner Art Carter.
Cesar Diaz (#83): The longtime legislative and political director of the California Building and Construction Trades Council. The Council represents blue-collar workers ranging from boilermakers to bricklayers, and they stand to do well as those much-needed infrastructure repairs and new construction get underway. Diaz was formerly deputy legislative director of the Council and before that was senior policy consultant in the lieutenant governor's office. He works to maintain that McCarthy-style feistiness on behalf of those blue collars.
So what does it mean to be on the list? As Anthony York, the former editor of Capitol Weekly put it: "... these lists ... offer a mirror of our little world, filled with that intriguing stew of public service, ideological force and narcissistic drive. That is what makes our political community the frustrating and exhilarating amalgamation that it is." But for the merit-shop community, it is a cautionary note that the head of the State Building and Construction Trades Council is number five on the list - and the first person not in the Newsom administration (at least not officially). You can see the whole list  here.

Thursday, August 22, 2019   What We're Reading, Listening To, and Watching

7 trends making engineering, construction claims bigger and costlier A new report from Allianz Global Corporate & Specialty (AGCS) examined rising claims costs related to construction and engineering projects. The hope is that understanding the significant, steady increases in construction claims will enable insurers to better manage the associated risks. The report, Engineering and Construction Claims and Insurance Trends, outlines several trends contributing to these rising costs. 

California Clean California's clean energy efforts received a five-start review from E2, a coalition of business leaders that advocates for better environmental policies. The coalition released its 2019 Clean Jobs Report yesterday that found the Golden State is home to more than 500,000 clean energy workers - more than any other state. It also found that one out of every seven of the United States' clean energy jobs is located in California. The hundreds of thousands of workers are scattered throughout the state working in industries to advance energy efficiency, renewable energy and clean vehicle initiatives. "Year after year, clean energy provides immense value to the California economy - creating thousands of good-paying jobs, protecting the environment for future growth, and attracting billions in investments," said Andy Wunder, E2's Western states advocate. "California lawmakers have a responsibility to ensure those jobs, and the state's clean energy economy, continue to grow by strengthening and implementing forward-looking policies." Most of the jobs are located in the San Francisco, Los Angeles, and San Diego metros, although Central Valley and coastal counties also account for a significant portion of clean energy posts. The workforce is diverse, too. A quarter of the workers are employed by small businesses with fewer than five employees, 40 percent live outside major cities and close to 10 percent are military veterans. Despite its glowing report, E2 urges California to more aggressively work to reach its carbon reduction targets. "State lawmakers should advance policy that allows for full integration of the Western electric grid to open new markets for California's clean energy resources and reduce customer bills," the report noted. "They should also increase and ensure outgoing, stable funding for clean vehicle initiatives." 

DOL Backs Up on Building Trades Decision: The department quickly reversed course last week on cancelling several apprenticeship contracts with labor and business groups after complaints from the North America's Building Trades Unions, a group that's been a Trump ally, Bloomberg Law's Ben Penn reports. "It appears to us a political decision has been made by a new regime at the Department of Labor," North America's Building Trades Unions chief of staff Mike Monroe told Penn of the initial cancellation. Recently installed acting Labor Secretary Patrick Pizzella, "who was not involved in the cancellation decisions, made the call to walk them back Aug. 15," according to Penn. This isn't the first time the Building Trades - which embraced Trump at the start of his presidency - recently has been at odds with the administration. The powerful union federation has "been at the brink of war" with DOL over its apprenticeship initiative, which it worries will undermine its own job-training programs, POLITICO's Ian Kullgren reported. The disagreement threatens to upset a key voting bloc that was essential to Trump in 2016. [Politico]

Central Valley lawmaker files initiative that would boost hydropower Assemblyman Adam Gray (D-Merced) has submitted a ballot initiative that would allow large hydropower projects to qualify for state renewable electricity targets, continuing a push by Central Valley lawmakers to boost the resource. Gray filed the initiative Friday with the Secretary of State that would count large-scale hydropower toward California's renewables portfolio standard for utilities. The target is currently set at 60 percent by 2030 by CA SB1000 (17R), but does not include hydropower projects above 30 megawatts because policymakers are trying to encourage development of wind and solar power. "For years, the people of the Northern San Joaquin Valley have been trying to get hydropower recognized for what it is: the original source of clean electricity," he wrote in a recent op-ed in CalMatters. "Our efforts have been stymied by people who feel entitled to decide what is, or isn't, green enough." Gray also introduced a constitutional amendment in the Legislature last month, CA ACA17 (19R), that would do the same thing. And Sen. Anna Caballero (D-Salinas) introduced CA SB386 (19R) earlier this session specifically to allow municipal utilities in her region, the Modesto and Turlock irrigation districts, to count electricity from Don Pedor Dam towards their renewables requirements. Gray also cited the financial burden on Merced, Modesto,  and Turlock in his op-ed, estimating that allowing Turlock to count hydropower would save its 100,000 customers $300 million. "Several environmental organizations and SB 100's author, former Senate President Pro Tem Kevin de León, went nuts" over Caballero's bill, Gray wrote. "The bill was halted even though the federal government and virtually every other state considers hydropower renewable." An environmentalist pointed out that large hydro would count towards the 2045 "zero-carbon" goal, also contained in SB 100. "It totally counts as a zero-carbon power source once we hit 2030," said Dan Jacobson of Environment California. "I just think we don't need to incentivize hydropower, and we need to continue to incentivize and encourage solar and wind development." [Politico]

Thursday, August 22, 2019   Washington, D.C., Labor Law, and NLRB

SECURE Retirement Legislation Passed in House, Pending in Senate The SECURE Act is still pending in the US Senate, but the legislation passed the House of Representatives with proposed changes that would increase access to defined contribution plans, promote lifetime income options, and affect retirement plan design and administration. Story
SEIU Challenges Secondary Boycott Ruling: The NLRB violated workers' First Amendment rights by ruling against janitors who demonstrated outside a building in San Francisco, SEIU argued in a federal court filing this week. The NLRB last year ruled that the janitors, who protested alleged sexual harassment by their boss outside of a building that they cleaned, weren't entitled to federal protection from retaliation. That's because they picketed outside a building where their employer, a contracted cleaning company, wasn't located (rather, the workers protested at the offices of a local radio station where they clean). According to the NLRB, the workers violated the law by directing their opposition at the radio station, a third party, instead of the employer itself - a "secondary boycott" in labor law parlance. But SEIU argues that the board's decision violates the workers' free speech rights, in part because they carried signs clarifying that they were "NOT calling for a boycott of this building." According to the union, the NLRB's reliance on a technicality - the use of the word "their" on a leaflet - to rule against the workers "contradicts the core First Amendment principles" and is "likely to chill protected speech."
NLRB Proposes New Election Rules This past week, the National Labor Relations Board proposed new election rules. These two rules, if passed, will ultimately further empower employees with the choice of whether they want union representation. As the proposed changes will impact both employers and unions, everyone involved in the bargaining process should be mindful of these proposals to avoid labor disputes. Story
San Francisco Employers May Have to Pay More in Paid Parental Leave Benefits in 2020 As Bay Area employers are well aware, San Francisco has several local employment-related ordinances that provide additional benefits to individuals performing work within the geographical boundaries of the City. One such benefit is paid parental leave.  Story 

Thursday, August 22, 2019   Have Project Labor Agreements Been Taken Too Far?

Content courtesy of WECA Industry Partner Cook Brown, LLP

By Dennis Cook and Steve McCutcheon of Cook Brown, LLP For more than a century the interplay between labor and antitrust law has been a difficult one. Congress has attempted to strike a balance between protection of worker rights and prohibitions of anticompetitive activities.

Environmental laws, such as the California Environmental Quality Act (CEQA), are increasingly used to force developers to enter into union-only Project Labor Agreements (PLA). Similarly, the use of antitrust, RICO, and the prohibitions of unlawful boycotts under the National Labor Relations Act (NLRA) to address abusive behavior, are coming back to the forefront. 

Antitrust Laws

When most people think of antitrust law, they think of the Sherman Antitrust Act that prohibits "contracts, combinations or conspiracies in restraint of trade." It was adopted in 1890 to outlaw monopolistic business practices. After the Sherman Antitrust Act was applied to various forms of union activity, such as boycotts and strikes, Congress adopted the Clayton Act and Norris-LaGuardia Act to restrict courts from intervening in labor disputes. In 1935 Congress passed the National Labor Relations Act (NLRA) to protect the rights of workers to bargain collectively, and engage in strikes, picketing, and other concerted activities.

However, the pendulum had swung too far in the unions' favor. Congress recognized employers and individual workers needed protection from abusive and anti-competitive behavior, and passed the Labor Management Relations Act (LMRA) and Labor Management Reporting and Disclosure Act (LMRDA). These Acts prohibited unions from:
  • engaging in certain forms of boycotts,
  • threatening or coercing neutral employers from doing business with non-union companies, and
  • making "hot cargo agreements" (an agreement to not handle or deal with the products of anyone with whom the union has a dispute) except in the garment and construction industries.
Project Labor Agreements in Construction
Agreements between owners and unions that contain a commitment to use union-only Project Labor Agreements for all labor on a construction project appear to be among the types of anti-competitive behavior prohibited by the antitrust laws. However, exceptions to these laws are applicable to the construction industry. certain collective bargaining relationships have also opened the door to restrictive subcontracting clauses and the use of union-only PLAs.

Examples of Adopting PLAs

The use of PLAs is common in many parts of the country, and courts have provided guidance on how to avoid running afoul of the NLRA and the antitrust laws when adopting PLAs. For example, in Connell Construction Company v. Plumbers Local 100 the Supreme Court said coercive action by unions to obtain union-only agreements is exempt from antitrust only if the agreement is with an employer "in the construction industry and negotiated in the context of lawful collective bargaining agreements, or possibly to avoid jobsite friction from having union and non-union workers simultaneously on the jobsite." 

Similarly in Glens Falls Building and Construction Trades Council, et al., (Indeck Energy Services of Corinth, Inc.), unions used the threat of environmental opposition to a private project to coerce the private developer to execute a union-only PLA. After the unions withdrew their opposition, the developer filed an Unfair Labor Practice Charge with the National Labor Relations Board (NLRB) challenging the lawfulness of the union-only PLA.

The Board held that the agreement would be lawful only if the developer was considered "an employer in the construction industry" and the agreement was entered in the context of a bona fide collective bargaining relationship or had the purpose and effect of dealing with the "jobsite friction" issues of having union and non-union workers side by side. The Board found that the union's desire to acquire work for out of work members and achieve a labor monopoly, and the developer's desire to avoid union opposition to the project, were not related to avoiding "jobsite friction". 

PLA Challenges

Adherence to this guidance provided by the Connelland Indeck cases has been inconsistent and at times ignored. Sham environmental lawsuits, zoning and permitting challenges, and threats of boycotts against third parties used to coerce owners to enter into union-only PLAs, has exposed them to antitrust challenges. Agreements with owners and unions that contain a commitment to use a union-only PLA remain common in many parts of the country and are increasingly sought on publicly-owned projects.

Two suits recently filed by developers in Southern California may signal overreach in coercing developers to enter into PLAs, and increasing resistance to pressure to extract union-only agreements.

In Evans Hotels, LLC v. UNITE HERE! Local 30, San Diego County Building and Constructions Trades, et al., the developer, Evans Hotels, alleges that the unions are following a "playbook" to eliminate development of any hotels in San Diego that will not commit to using union labor to build and staff the hotels. When Evans Hotels refused to enter into agreements to use only union contractors, and enter into a card check agreement to facilitate organizing of hotel staff by UNITE HERE!, Evans Hotels alleged the unions implemented their "playbook" of:
  1. making sham environmental and zoning challenges;
  2. pressuring city officials to condition approval of the project on Evans Hotels' agreement to union demands;
  3. pressuring city officials to slow the approval process; and
  4. pressure Evans Hotels' business partners to withdraw from agreements.
After the city's processing of Evans' Hotels' applications for the project ground to a halt, and its business partner backed out of a joint venture, Evans Hotels filed suit in U.S. District Court. The suit alleged an unlawful boycott under the NLRA, an attempt to create a monopoly in violation of the Sherman Act, extortion in violation of RICO statutes, and related claims. Evans Hotels seeks lost profits in excess of $100,000,000 and treble damages under the antitrust laws, as well as injunctive relief.

Similar conduct is challenged by the developer in The Icon at Panorama, LLC v. Southwest Regional Council of Carpenters, LiUNA Local 300, et al. This project to redevelop a property that has been vacant for nearly 20 years in a disadvantaged part of Los Angeles was targeted by the unions for a PLA. The developer resisted demands on the basis that the rents that could be charged from the developed property would not justify the expense of using all union contractors.
In response, the unions filed sham environmental challenged under CEQA at every step of the city's approval process. The developer also alleges a conspiracy with others, including environmental firms, to assist the unions with using frivolous challenges designed to achieve a monopoly on construction services in the area. The developer has filed suit in Federal Court alleging that the unions and their environmental consultants have engaged in a pattern of sham environmental litigation and violated:
  1. the Sherman Act by attempting to form a monopoly and directing a boycott;
  2. the Clayton Act by conspiring to enter into an exclusive dealing arrangement;
  3. the NLRA by using coercion to force the developer to sign a PLA when it cannot lawfully do so; and
  4. RICO statutes by engaging in extortion through sham environmental litigation and mail fraud.
While the use of PLAs remain common in many parts of the country, we are starting to see more pushback from employers on the tactics some unions are using to try and coerce developers to enter into these agreements. 

Connect with WECA Industry Partner Cook Brown LLP at https://www.cookbrown.com/.

Thursday, August 08, 2019   Opinions

Richard Markuson

Did IBEW Just Put a Nail Into the C-46 Coffin? In a meeting of the California State Labor Board Legislative Committee - one filled with charges of inexperienced and untrained workers involved with the installation of energy storage systems (ESS) - the Committee instructed staff (lucky them) to craft a proposal that would limit the heretofore unfettered ability of solar contractors to install ESS for only smaller residential projects, and then bring it back to the Committee. C-46, therefore, could install ESS if:
  • It is limited to a PV system up to 10kW on a single-family dwelling or duplex with a battery system that must not exceed a 5kW backup/20kWh energy.
  • The battery system is installed at same time as solar PV system.
  • No upgrade or alteration is made to the existing electrical system.
The hearing, which lasted more than five hours, was still standing room only despite the meeting having been moved to a large auditorium at the California Employment Development Department. What's more is that so many people watched the hearing online, that the Web server crashed several times.
Supporters of an outright ban on C-46 installing anyESS included IBEW, NECA, and - of course - a group of Democrat legislators who regularly feed at the IBEW trough, such as Diane Ravnik (the former head of the Division of Apprenticeship Standards and a former IBEW training director), California Apprenticeship Committee member Yvonne de la Peña, and the Sierra Club. Wait - don't they want more solar? Sorry, I am confused.
While the final outcome will take months (or years) to complete, two things this episode should remind merit-shop leaders of are:
  1. IBEW may not wait for the board to act and could amend a bill in the last month of session to accomplish this change (if so, the bill would go into effect January 1, 2020).
  2. The power of labor - and in particular IBEW - to decimate another contractor group is ignored at peril.
An excellent write up of the day is here.

Thursday, August 08, 2019   State Elections

Special Election in AD 01 (Northeast California) The same interests that got together to buoy Brian Dahle (R-Bieber) in the SD 01 special election earlier this year are now back together to push to fill his former Assembly seat with his wife, Megan Dahle. The California Realtors Association and the California Correctional Peace Officers Association have each kicked in $50,000 to a new independent expenditure effort for the August 23 special primary. While Dahle is the favorite, it's going to be tough for her to exceed 50 percent in the special primary. Democrat Elizabeth Betancourt will likely receive around 30 percent. That leaves 70 percent to split among five Republicans, making that majority very tough. The special general would be on November 5. [The Nooner]

2020 Primary in CD 50 Former San Diego councilman Carl DeMaio announced he's planning to challenge Republican Duncan Hunter, whose legal troubles make him a target in 2020. "If we don't change who the nominee is going into the 2020 election, I'm worried Republicans will lose yet another seat," DeMaio said in his announcement. Hunter goes on trial next month for alleged campaign finance violations. The proceedings could get ugly, with a judge authorizing testimony on Hunter allegedly spending campaign money on extramarital affairs. DeMaio isn't the only one to sense an opening, with multiple other Republicans already in the running. But the big wild card is former Rep. Darrell Issa, who gave up the adjacent CA-49 seat since claimed by Rep. Mike Levin. [Politico]

Thursday, August 08, 2019   What We're Reading, Listening To, and Watching

CalOSHA Adopts Emergency Smoke Regulations 
The California Occupational Safety and Health Standards Board has adopted an emergency regulation designed to protect workers from hazards associated with wildfire smoke. The regulation went into effect on July 29, 2019 and will be effective for 180 days. The regulation, however, may be extended if no permanent regulations are in place. It applies to workplaces where the current Air Quality Index for airborne particulate matter is 151 or greater, and where employers should reasonably anticipate that employees could be exposed to wildfire smoke. View the emergency regulations here. 

Building Trades warn Newsom, leaders against deal with Big Tech 
One of California's most powerful organized labor organizations is warning legislators against embracing a deal with tech companies over worker classification. Facing a California Supreme Court decision that could lead many workers to be reclassified as employees rather than independent contractors - and a bill that seeks to enshrine that decision in law - Silicon Valley businesses like Uber and Lyft are lobbying for a compromise that would offer their drivers some labor rights while preserving their contractor status. The prospect of such a deal has met pushback from critics who say it would sell workers short. The State Building and Construction Trades Council of California threw its weight behind that position Wednesday, warning against "allowing technology platform companies to exploit workers by treating them as independent contractors with substandard protections" in a letter to Gov. Gavin Newsom and legislative leaders. "Creating a third category of employment that would allow technology to dictate employment status is a dangerous precedent that would undermine the Building Trades' employment and apprenticeship model by forcing employers to convert in order to compete, causing severe disruption of our entire tax base and social safety net," the letter reads, warning that it would empower "tech platform companies that dispatch misclassified workers to perform construction work." The Teamsters also signed on to the letter, though the group has joined SEIU and the United Food and Commercial Workers in deep discussions with tech companies facilitated by the Newsom administration. The tech industry, meanwhile, hopes a California deal could set a national standard - a position outlined in 
a letter to Congress this week. [Subscriber content: Politico]

Orange County, longtime GOP stronghold, now has more registered Democrats than Republicans "The county that nurtured Ronald Reagan's conservatism and is the resting place of Richard Nixon is now home to 547,458 registered Democrats, compared with 547,369 Republicans, according to statistics released early Wednesday morning by the county Registrar of Voters. And the number of voters not aligned with a political party has surged in recent years, and now tops 440,770, or 27.4% of the county's voters. Democratic leaders attributed the shift to changing demographics, aggressive recruitment efforts and President Trump." [LA Times]

Workplace injuries drive rise in overdoses, suicides An injury serious enough to trigger at least one week off from work almost tripled the combined risk of suicide and overdose death among women and increased the risk by 50% among men, researchers said. Story [Construction Dive]

7 invoice mistakes that waste time, moneySubmitting an invoice for completed work and then getting paid is about as straightforward as the construction business gets. Or at least it should be. Getting paid on time is the lifeblood for contractors, but many consistently make the same mistakes over and over when handling this vital process. Story[Construction Dive]

Contract deal gives 10% raise or more to state safety and law enforcement employees "Pay for dispatchers, security officers, inspectors and other public safety and law enforcement employees at the state will go up at least 10 percent over the next four years in a tentative agreement their union reached with the state. Additional pay raises of up to 24 percent for specific job classifications will boost pay further for the majority of the California State Law Enforcement Association's members, according to a union summary of the agreement. The 7,300-member union is the second to reach an agreement with state negotiators this summer. The agreement includes a general salary increase of 2.75 percent starting this month, followed by annual increases of up to 2.5 percent through 2022, when members will receive either 2.25 percent or 3.75 percent depending on classification." [Sacramento Bee]

Thursday, August 08, 2019   Washington, D.C., Labor Law, NLRB, and Recent Court Decisions

Congress is now gone for six weeks, which means that, effectively, President Donald Trump has a megaphone all to himself. It's incredibly difficult for members of Congress to break through when they are outside of D.C.

Thursday, July 25, 2019   Opinions


Richard Markuson

House Approves Pension Bail-Out Bill: 
The US House of Representatives voted 264-169 on Wednesday to advance the Democrats' multiemployer pension bill, H.R. 397 (116), which would create a new Treasury agency to issue bond-backed loans to failing multiemployer pension plans.  [View summary of the bill as introduced here. View draft bill text here.] Of the roughly 1,350 U.S. multiemployer plans in 2017, about 770 - or 57 percent - were in the construction industry, says Ben Ablin, a consulting actuary with Horizon Actuarial Services LLC. Such plans, typically negotiated by a labor union with multiple businesses within a particular industry, ran into financial trouble with the decline of manufacturing, trucking, and coal mining. Without a legislative fix, the multiemployer pensions' insurer, the Pension Benefit Guaranty Corporation, is facing its own insolvency in 2025 - a threat that could eviscerate millions of Americans' retirement benefits. PBGC head Gordon Hartogensis issued a statement earlier Wednesday calling on Congress to enact "a long-term, sustainable solution taking into account fairness to retirees, workers, taxpayers, and employers," adding that "Only bipartisan compromises have a chance of succeeding." The legislation faces slim odds in the US Senate, where Republicans previously declined to support a similar bill, the Butch Lewis Act, which they deemed a government bailout. Sen. Sherrod Brown (D - Ohio) reintroduced that legislation in the Senate on Wednesday.
Back in 2017 the Society for Human Resource Management (SHRM) noted that "As many as 114 multiemployer pension plans covering nearly 1.3 million workers are severely underfunded and headed toward failure within the next 20 years." Horizon updated that recently to 130 plans in "critical and declining" condition including about 35 in construction, which cover 30,000 participants. According to SHRM "The troubled plans have total assets of $43.5 billion and liabilities of $79.9 billion, leaving unfunded liabilities-future benefit payouts promised to retirees and beneficiaries for which reserve funds have not been set aside-of $36.4 billion." Is it any wonder that unions are pushing PLAs that require contractors to pay into the union's pension plans?
Just three of the pension plans account for $22.8 billion-or more than 62.5 percent-of the $36.4 billion in unfunded liabilities of failing multiemployer plans. The Teamsters' Central States, Southeast and Southwest Areas Pension Plan has the most unfunded liabilities at $17.2 billion, followed by the Bakery and Confectionary Union's plan ($3.2 billion) and the United Mine Workers' ($2.4 billion).

Sponsors of single-employer plans shouldn't be overly concerned about a spillover threat to the PBGC's single-employer system. "The PBGC's own financial reports and projections indicate that its single-employer system is strong and sound," noted John Lowell, an Atlanta-based partner and actuary with October Three, a pension advisory firm.
Conservative economists maintain that the multiemployer pension crisis is more than 10 times larger than the $54 billion estimate, and that Congress would be wasting taxpayer money by lending money to struggling pension plans. Olivia S. Mitchell, an economist who has worked on pension and Social Security reform around the world for four decades and teaches at the Wharton School of the University of Pennsylvania, noted last month: "Because of flaws in the legislation structuring the multiemployer insurance program, these pension plans and the employers who sponsor them have been permitted to:
  • vastly understate retirement plan liabilities;
  • avoid contributing what should have been paid to keep the plans solvent;
  • pay far too little for the insurance premiums backing the plans in case of insolvency;
  • withdraw from the business without ponying up what was owed to the plans; and
  • invest in risky assets thus putting benefits in doubt.
These policies are tailor-made to create underfunded plans that would need to rely on the PBGC, while leaving the PBGC financially unable to back these plans.
Single-employer plans cannot follow such practices and are required to make higher contributions, address unfunded liabilities more rapidly, and pay higher premiums to the PBGC. Yet multis are permitted to take advantage of lower funding rules and continue making promises they cannot keep.
For instance, single employers that go out of business are required to cover pension promises out of company assets, while in the multiemployer system, a bankrupt employer's obligations are passed on to surviving firms.
Single-employer plans must use corporate bond rates to measure their liabilities, but multiemployer plans across the board have assumed much higher rates to cut "required" pension contribution rates.
But - with the house in control of the Democrats (or as some refer to them - the Labor Party) and with an election next year - passage in the House was a given.
So who will bail out the multis if the Democrats win the Senate and the Presidency next year? You and I and every other taxpayer in the USA.

Thursday, July 25, 2019   State Legislation

California First State to Clarify Definition of Race Discrimination to Include Hair Style. Governor Gavin Newsom signed  SB 188 into law on July 3, 2019. SB 188, also known as the CROWN ACT, "Create a Respectful and Open Workplace for Natural Hair," clarifies the definition of race for the workplace and educational institutions to include hair texture and protective hairstyles and defines protective hairstyles. While certain states have proposed legislation, California is likely the first state to protect employees from racial discrimination based on hairstyle. New York City banned hair discrimination earlier this year. Story [Jackson|Lewis]

California Extends Paid Family Leave from 6 Weeks to 8 Weeks Beginning on July 1, 2020, California will extend the maximum duration of Paid Family Leave (PFL) benefits from six weeks to eight weeks. Individuals may receive benefits from California's state disability insurance (SDI) program:
  • To care for a seriously ill child, spouse, parent, grandparent, grandchild, sibling, or domestic partner.
  • To bond with a minor child within one year of the birth or placement of the child through foster care or adoption.
Governor Gavin Newsom signed into law these most recent changes in Senate Bill 83, on June 27, 2019. Senate Bill 83 was part of a larger state budget package for the new fiscal year that starts July 1 and is a move toward the governor's goal of ultimately expanding paid family leave to six months (for two parents if leave is taken consecutively). Story [Jackson|Lewis]

State Regulations Cal/OSHA Appeals Board Proposes Revisions to Procedural Rules. The Cal/OSHA Appeals Board has proposed to revise its rules of practice and procedure in a number of ways. Most significantly, the Board seeks to remove the requirement that the California Division of Occupational Safety and Health (DOSH) automatically produce its inspection file and other relevant documents within 30 days. Instead, appellant employers will be required to seek this information through the ordinary course of discovery. This change, which the Board is accepting comments on until August 22, 2019, comes at a time when the California Department of Industrial Relations is seeking to enhance workplace safety enforcement efforts and simultaneously streamline its appeals process to reduce a backlog of the Board's dockets.
Story [Reed Smith]

Thursday, July 25, 2019   Labor Law, NLRB, and Recent Court Decisions

Ninth Circuit Reinstates California Off-The-Clock Work Claims Related to Post-Shift Security Checks In a unanimous decision in Rodriguez v. Nike Retail Srvs., the Ninth Circuit overturned a California district court's ruling in a wage and hour class action under the California Labor Code that granted Nike's motion for summary judgement after applying the federal de minimis doctrine.  Story [Hunton Andrews Kurth]

NLRB Explains When Granting Benefits to Nonunion Employees and Withholding the Same From Union Workers Can Be Lawful On May 7, 2019, the National Labor Relations Board issued a decision that will be welcomed by employers desiring to maintain differences in the benefits provided to their union and nonunion employees. In Merck, Sharp & Dohme Corp., the Board held that a company's decision to grant nonunion employees an additional paid day off while requiring union employees to work the same day was lawful under the National Labor Relations Act (NLRA). The analysis offered in the majority's opinion may assist employers in understanding how they can comply with the NLRA when, for legitimate business reasons, they decide to grant a benefit to non-represented employees while withholding the same benefit from employees who are represented by a union. Story [Ogletree Deakins]

Thursday, July 25, 2019   What We're Reading, Listening To, and Watching

Why Rent Control is Ridiculous New York's rent control laws are truly bizarre and now a man who checked into a hotel and as a result claimed to own the hotel has even managed to get a housing court to agree. Story 

Sacramento City Council rejects Union Greenmail Attempt The Sacramento City Council quickly dismissed an appeal of approvals for downtown project 10K Tuesday night, rejecting environmental concerns raised by a labor union.  Story [Business Journal]

Contractor relationship major cause of San Francisco Subway issues The San Francisco Municipal Transportation Agency's (SFMTA) $1.6 billion Central Subway project will start service 428 days later than the deadline in its Federal Transit Administration (FTA) Full Funding Grant Agreement, according to a federal monitor's report. With approximately 85% of major work complete at the end of April, outstanding claims of $102 million for changes will exceed available contingency funds of $47.6 million, the report from the FTA's Project Management Oversight Committee (PMOC) said. Story [Construction Dive]

More Labor Unrest in Sanders Campaign:An unfair labor practice charge was filed against Sanders' 2020 presidential campaign Monday, alleging that employees have faced retaliation for participating in protected union activities, among other things. The details of the allegations won't be revealed until the NLRB conducts an investigation, but the charge states that the campaign illegally disciplined and discharged a worker and modified the campaign's contract with the union. The charge, first reported by Labor Union Report, comes after The Washington Post reported last week that unionized employees were demanding annual salaries that would be equivalent to a $15 hourly wage, a rate Sanders says should be the federal minimum wage. [Politico]

Home Sales Update: June 2019 Home sales can be a good indicator of the health of the state's economy and housing markets. Home sales have been relatively weak in recent months. This continued in June, which had an estimated 25,900 non-distressed (not resulting from mortgage delinquency or foreclosure) home sales statewide in May. This (is) below the 28,000 sales in June 2018 and the long-term historical average of 31,400 sales per month. (This data is "seasonally-adjusted" because some months are predictably higher or lower than others.)

Senate Won't Act on Cadillac Tax Before Recess The US Senate has started the process for bringing directly to the floor the House bill to repeal Obamacare's "Cadillac tax" but the vote won't happen until after the August recess, according to POLITICO sources. The House last week easily passed legislation to repeal the tax on high-cost employer-provided health insurance that was supposed to help pay for the Affordable Care Act.  Story [ASCE]

Recruitment Struggles Latinos, Asian Americans and women are underrepresented among applicants for the California commission that draws congressional districts, and some advocacy organizations are asking for a deadline extension to address the disparities. Since the application period for the California Citizens Redistricting Commission opened June 10 this year, just over 7,500 people have applied with just over two weeks to go before the deadline. But about two thirds of the applicants are white, though less than 40 percent of the state's population is white. Six percent are Asian American or Pacific Islander, compared to nearly 16 percent of the general population. Less than 13 percent of applicants are Latino, the state's largest ethnic group at 39 percent of the population. Women make up just under 39 percent of applicants. A coalition of organizations sent a letter on Tuesday to state auditor Elanie Howle, who oversees the commission, asking her to extend the deadline to September 20. The state auditor's office hasn't yet had a chance to thoroughly review the request but plans to do so, said spokeswoman Margarita Fernandez. For now, the deadline to apply for the commission is August 9. [Sacramento BEE]