By: Colin Nystrom

Pixar’s Wall-E gives an example of the effect AB 1133 could have on the California beer landscape. Everywhere you look in the film, the walls and screens are covered with global monopoly Buy n Large’s branding. With so much marketing, the population begin to mindlessly consume the corporation’s products and ultimately loses the ability to make their own decisions. The opportunity afforded by AB 1133 is analogous, albeit on a much smaller scale; beer manufacturers have the opportunity to flood each and every retailer throughout California with branded glassware, an opportunity that easily favors “Big Beer” – companies like AB InBev and MillerCoors. That’s because, more than likely, a majority of the glassware will be provided by these entities. It is clear to see how beer consumers will be subject to an even greater level of marketing on behalf of the massive corporations which dominate the beer manufacturing market.

Just over a year ago, Professor Dan Croxall published, “The Glassware Bill is Dead: Good News for California Independent Craft Beer” regarding Governor Brown’s veto of AB 2573. California craft beer dodged a bullet. In Governor Brown’s veto letter to the California Legislature, he indicated a two-fold concern over the proposed law: (1) it would allow manufacturers to influence the decision making of retailers and (2) it created an economic disadvantage for small beer manufacturers who cannot utilize the opportunity like a large manufacturer can. Large manufacturers have tremendous marketing budgets and wide-spread distribution; both of which far exceed the even the most successful independent brewers. It takes no stretch of the imagination to be concerned about the impact that a flood of their branded glassware in retailers would have throughout the state. In the following legislative session, a nearly identical bill was introduced by Assemblymember Low. Neither of Governor Brown’s concerns were addressed in AB 1133, yet the bill still easily garnered the support it needed in both houses of the California Legislature and was ultimately signed into law by Governor Newsom on October 8, 2019.

The most significant impact will be seen in local bars and taprooms where a direct-to -consumer marketing opportunity presents itself. Given the focus on bottom-line profits for many of these retailers, it is easy to see why they are excited to have a bit of overhead costs covered by manufacturers.  But slim margins for small, independent breweries are what will prevent many craft brewers from providing glassware to their favorite retailers. The combination could have a catastrophic effect on independent beer’s place in the retail marketplace. It is easy to understand how a particular supplier’s “willingness” to provide something of value—in the form of free glassware or abnormally large tips when a sales rep comes in for lunch—could leave a retailer feeling indebted to that supplier, leading the retailer to reserve a number of taps for the manufacturers who provide them direct value. Over time, every tap in that bar could be occupied by the various brands of a single, large manufacturer. This would mark a return to the tied houses which dominated the market before prohibition.

As a result, we see how easily the California market could be saturated with Big Beer’s branding and products. This will have direct impact on access to retail opportunities for our local brewers and make it all that much harder for consumers to support them and for these small businesses to survive. Only time will tell how this plays out, but due to the extensive efforts of Big Beer, a potential return to the decades of a one-note beer market does not seem farfetched.

McGeorge Adjunct Professor Chris Micheli

Every bill in the California Legislature has four keys, which are all determined by the Office of Legislative Counsel. Keys are a feature of every California bill, same as a title, a bill number, and enacting clause. The four keys to a bill – which can be found at the end of the Legislative Counsel’s Digest are: vote, appropriation, fiscal committee, and local program.

Vote

The vote key specifies the vote threshold the bill has to clear in order to pass. Most bills in the California Legislature require a simple majority vote to pass – 21 votes in the Senate or 41 votes in the Assembly – but some require a 2/3 vote, or in rare instances a 4/5 vote, to pass.

Appropriation

This key provides the answer to the question “Does this bill appropriate funds?” If the bill results in an appropriation from the state’s General Fund or any Special Fund, the appropriation key will read yes. If the bill does not appropriate funds, it will be keyed no.

Fiscal Committee

The Joint Rules of the Assembly and Senate, specifically Joint Rule 10.5, help guide the Legislative Counsel when keying for fiscal committee. If the bill is keyed yes in fiscal committee, then the measure is supposed to be sent to the fiscal committee in each house, which in both houses is the Appropriations Committee. If it is not keyed fiscal the bill is generally referred to a policy committee or two for hearings. There are four reasons in Joint Rule 10.5 that guide whether a bill is keyed fiscal:

  • The bill appropriates money,
  • The bill results in a substantial expenditure of state money,
  • The bill results in a substantial increase or loss of revenue for the state, or
  • The bill results in a substantial reduction in expenditures of state money by reducing, transferring, or eliminating any existing responsibilities of any state agency, program, or function.
Local Program

California’s Constitution requires the state to reimburse local agencies and school districts for certain costs that are mandated by the state. As a result, if the state’s Commission on State Mandates determines that the bill contains costs that are mandated by the state of California, then reimbursement of those costs must be made pursuant to California’s Government Code. The most common example of a state-mandated local program is when a bill expands the definition of a crime. Obviously, a bill that imposes a state-mandated local program would be keyed yes.

You can find the full transcript of today’s podcast here.

McGeorge Adjunct Professor Chris Micheli

Just like in 2019, because of the enactment of Senate Bill 3 in 2016, California’s minimum wage went up again. On January 1st, the state’s minimum was increased for all sizes of business and small employers saw their third wage hike in recent years.

Under this state law the minimum wage for all industries is increasing from $10 an hour on January 1, 2016, all the way to $15 per hour. Pursuant to SB 3, the minimum wage for all industries will be increased to $15 per hour by January 1, 2022 if it’s for a business that employs 26 or more employees. That amount of $15 will be delayed until January 1, 2023 for businesses employing 25 or fewer employees. These are generally referred to as small employers.

Currently, it’s $12 per hour, except for small employers for whom it is $11 per hour. Now, the law does provide that the scheduled increases may be temporarily suspended by the Governor based upon him or her making certain determinations. Additionally, the law requires the Director of Finance, after the last scheduled minimum wage increase, to annually adjust the minimum wage under a specified formula. In the meantime, the wage amount will go up incrementally each year.

Note that there has been concern with increasing the minimum wage because of its impact elsewhere. With the enactment of SB 3, there will be an increase of over $15,000 in wages per exempt employee in just a few short years. In addition, businesses will likely see their worker compensation premiums go up, as well as increased cost for things like uniform or tool reimbursement, and overtime.

While the California business community had argued that SB 3 should contain a regional minimum wage, this proposal was rejected by the Legislature. Some can appreciate that certain cities and counties in California may be able to afford an increased minimum wage, whereas other cities and counties are still struggling with high levels of unemployment. Employers in these areas will find it much more difficult to sustain such an increase in their labor costs.

The break is finally over. The podcast is back. We’re also switching to an every-other-week release instead of every week, which should help smooth things out and keep us in your podcast feed on a more regular basis. And now with the housekeeping taken care of, let’s get on to today’s show about shoplifting shakedown letters and one effort to away with them.

On today’s episode, I talked with Ryan Sullivan, a Professor of Law at the University of Nebraska, Lincoln. He led a successful effort to repeal a state law in Nebraska that allowed retailers like Wal Mart and Target to send what were essentially shakedown letters to people accused of shoplifting. It’s not a law unique to Nebraska either. Up until the repeal, it was on the books in all fifty states. When the law was proposed it appeared to be well-intentioned enough. The original proponents asked state legislatures to essentially decriminalize shoplifting by letting them handle shoplifting claims civilly in house, as opposed to bringing people into the criminal justice system. There was even a provision that stated that there was no need for a criminal conviction to pursue the civil claim. Instead of going to court, a shoplifter – successful or not – would get pulled in to a loss prevention office and give the company their name, phone number, address, etc. and they’d receive a letter from a law office demanding somewhere between $200 and $500, on average, and that would be that.

The problem was that the law was widely abused. That provision that said there did not need to be criminal charges to pursue the financial claim? That was abused in two ways. One, is that people would get the letter demanding they pay up, or else, and also get an order to appear in court for violating a criminal statute for shoplifting. While that isn’t technically double jeopardy for shoplifting because the accused isn’t being criminally prosecuted twice for one crime, or attempted crime, it’s still a double punishment for it, which doesn’t jive morally. Worse is that the provision was also used to haul completely innocent people into loss prevention offices to get information that could be used to send a demand letter. Those were minors, young adults, and people of color who might not have even been trying to shoplift. They could’ve simply picked up a loaf of bread in the grocery section, walked over to the garden section, and because they looked like someone who would steal something, got pulled into this scheme.

Professor Sullivan goes into more depth than I care to here. In particular, he talks about some reform efforts in other states that were also successful in stemming the tide of these shakedown letters. Be sure to listen to the podcast on Apple Podcasts, Spotify, Stitcher Radio, or on your favorite podcast app.

By: Arielle Percival

“Let’s talk about periods.” That statement is typically not heard at a dinner table, or in any social setting for that matter. And by periods, I’m not referring to punctuation; I am referring to a woman’s menstrual cycle. Not until 2015 (and even still today), the topic of menstruation was widely taboo. It was not discussed, and those who don’t menstruate probably prefer that it stays that way. I understand. Having a mature, appropriate conversation about a natural bodily function that affects nearly half the population can be difficult. But therein lies the problem. Since periods were never discussed, neither was the fact that California assessed a sales tax on these products, commonly referred to as the “tampon tax.” To clarify, the tampon tax is not an additional tax on tampons; it refers to the fact that there is no sales tax exemption for menstrual products.

The tampon tax is not isolated to California—over 35 states do not exempt menstrual products —which spurred a nationwide question: If nearly every state with a sales tax exempts “necessities” then why are women taxed on something they need to function in society for almost 40 years of their life? Are menstrual products not necessities? Adding fuel to the argument for eliminating the tampon tax, supporters looked at California’s and other states’ tax codes. They saw menstrual products were the only gender-specific item subject to sales tax on the books. Making matters worse, when trying to see if there were any items generally male-specific, the closest comparable was Viagra—which in California, as a prescription drug, is not subject to sales tax. There was clearly an inequity in the tax code, so California lawmakers moved to make things right.

Enter AB 31, the third iteration of legislation first proposed in 2015. California was one of the first states during the “Year of the Period” to introduce legislation to eliminate the tampon tax. It was nearly successful. However, Governor Jerry Brown vetoed the bill reasoning the exemption equated to new spending which needed to be discussed during budget-approval because the exemption would cost the General Fund $20 million. To put things in perspective, the Governor’s budget estimates the total revenue for the 2015-16 budget was $117.4 billion. Time passed, new iterations of the bill were proposed, and in 2019 AB 31 was introduced.

AB 31 created an exemption for menstrual products for five years. By creating a sales tax exemption for menstrual products—specifically tampons, pads, menstrual cups, and sponges—it eliminates the gender inequity in the tax code and provides consumers savings at the register. For some, these savings may be unnoticeable, but for others struggling to make ends meet, it could mean not having to sacrifice dinner for health and hygiene.

Fast forward to June 2019, the tampon tax was finally eliminated when the exemption was included as a budget trailer bill—SB 92. But there was some not-so-good news: the exemption is only for two years, not the five years initially proposed. After two years, the Legislature must decide whether to renew the exemption or allow it to sunset. While the journey of working towards exempting menstrual products comes to an end, it may only be temporary.

On the other hand, this could be the first step in a permanent exemption for menstrual products. The fate of the exemption will likely become more apparent when the Legislative Analysts’ Office (LAO) makes its recommendation to the Legislature in 2021. SB 92 requires the LAO to make a recommendation based on whether the exemption is meeting the bill’s goal of increasing access to menstrual products, the effect on the General Fund, and other factors. Overall, although one can be hopeful that there is finally an exemption and that it will ultimately be renewed, SB 92 seems more like a temporary veneer where the government is going to see how the exemption fits within the budget. Then if it likes it, decide to implement a permanent set. And if the Legislature decides not to extend the exemption then it’s back to square one.

You can listen to my full conversation about the tampon tax repeal with Thomas Gerhart on the In Session podcast, which is available on Apple Podcasts, Spotify, or wherever podcasts are downloaded.

 

McGeorge Adjunct Professor Chris Micheli

California is the home to over 200 state agencies, departments, boards, and commissions that can make public policy through their authority to adopt regulations. California’s Office of Administrative Law (OAL) has a list of the state agencies that have adopted regulations and also provides direct access to the California Code of Regulations (CCR). The CCR is organized under 28 different subject matter titles.

The authority of state agencies and departments to adopt public policy, that is their rulemaking process, is defined and restricted by the authorizing statute, which can be general or specific. Statutes usually prescribe each agency’s authority to adopt policy and it’s an established principle of administrative law that an agency cannot exceed its legally prescribed authority to regulate. However, many statutes confer broad powers to some state agencies regarding matters that directly affect the general public.

Interested parties have significant access to the rulemaking activities of state agencies by virtue of California’s Administrative Procedure Act (APA). For example, every state entity is required to annually adopt its rulemaking calendar, which is published on their websites. This is pursuant to state statute. Moreover, agencies establish interested parties’ mailing lists for notices of rulemaking activities by that particular agency or department.

There are four required documents during the preliminary activity stage which are needed to initiate the formal rulemaking process – the proposed text, the initial statement of reasons (aka ISOR), the fiscal impact statement and then the notice of proposed rulemaking.

Next begins the 45-day opportunity to submit written, faxed or email comments on all or any part of a proposed rulemaking when the notice of proposed rulemaking is published in the California Regulatory Notice Register. The notice of proposed rulemaking is also mailed to interested parties and it’s posted on the rulemaking agency’s website.

Under the APA an agency has an option as to whether it wishes to hold a public hearing on a proposed rulemaking. However, if an agency does not schedule a public hearing, and an interested party submits a written request for a public hearing within 15 days prior to the close of the written comments period, then the agency must hold that public hearing. Because of this requirement agencies usually schedule a public hearing at the outset of the rulemaking process.

I cover more of the rulemaking process in today’s podcast, and you can find a full transcript of the podcast here.

McGeorge Adjunct Professor Chris Micheli

The state budget process on paper is relatively similar to the legislative process itself. However, it can certainly be different in a number of practical terms. Some of those practical differences manifest themselves in the component parts of the budget and the budget timeline.

First, what are the parts of the budget? The main parts are the budget bill, the budget bill junior, trailer bills, and supplemental reports. The main budget bill contains all the appropriations – and is the only piece of legislation allowed to contain multiple appropriations – and relevant budget bill language (BBL).

The budget bill junior is the bill that amends the main budget bill and is enacted after the budget bill. Trailer bills make the necessary statutory changes to implement the provisions of the budget bill. Supplemental reports are separate reports by the Legislature that request specific actions from state agencies and departments. They are not in bill form and do not carry the force of law.

There are three major dates to keep in mind regarding the budget. The first is January 10, which is when California’s Constitution requires the Governor to propose the budget to the Legislature. The second constitutional deadline is June 15, which is the deadline for the Legislature to pass the budget. The third important date is July 1, which is the date of the start of California’s fiscal year. Some would argue that there should be a fourth date, the date when the Governor announces the May revise to the budget. That generally falls around May 15 after April tax receipts are known.

There are also distinct phases to the budget process, as laid out by Chris Woods who is the budget advisor to California’s Senate President Pro Tem. Those are:

  • Phase 1. The Study Phase. It runs from November to February.
  • Phase 2. Public Participation and Listening. March though mid-May.
  • Phase 3. Action Phase. Mid-May to the end of May.
  • Phase 4. Negotiation Phase. Early June, essential June 1-10.
  • Phase 5. Voting and Signing. Late June.
  • Phase 6. Follow-up and Cleanup. July 1 until the end of session.

McGeorge Adjunct Professor Chris Micheli

Grassroots lobbying is an important component of any successful lobbying campaign because it’s complementary to direct lobbying of elected officials and their staff, in an effort to influence their decisions.

Grassroots lobbying involves members of the general public, as opposed to those who are directly impacted by a particular bill or issue. In essence, those involved in grassroots lobbying are those who attempt to get the general public to contact their elected officials, so that members of the public are lobbying the decision makers directly. Those involved in grassroots lobbying intend to influence decision makers by cajoling the general public to get involved in the legislative or regulatory processes. This type of lobbying requires educating large groups of individuals, and then mobilizing them in a so-called call to action.

Educating the general public can take multiple forms, including direct mailing, social media, paid or free media, press conferences, press releases, and other forms of indirect and direct communications. Outreach efforts are key to successful grassroots lobbying campaigns, and the media often play a critical role in that outreach effort, but it first begins with educational efforts so that the general public understands the issue or the bill or the regulation.

Now, mobilizing the general public is the effort to get the members of the public to act in the desired manner. Whether this results in making phone calls, or writing letters to elected officials, perhaps boycotting a business or demonstrating at the Capitol. There are multiple forms that grassroots lobbying can take. It depends largely on the audience, and what is intended to be accomplished that usually determines the outreach efforts to be conducted.

In addition to the news media, the use of social media has become more prevalent in grassroots lobbying efforts. The potential reach of the Internet and websites is much larger than the traditional forms of media. This is an easy communication tool that enables organizing and interacting with those on social media, and the ability to grow your potential group of supporters is greatly assisted by those who have a social media presence. It can also be a much less costly form of organizing your grassroots campaign.

You can find a full transcript of today’s podcast here.

McGeorge Adjunct Professor Chris Micheli

SB 142 requires an employer to provide a lactation room or location that includes proscribed features and would require an employer, among other things, to provide access to a sink and refrigerator in close proximity to the employee’s workspace.

The bill deems denial of reasonable break time or adequate space to express milk to be a failure to provide a rest period in accordance with state law. The bill prohibits an employer from discharging, or in any other manner discriminating or retaliating against an employee for exercising or attempting to exercise their rights under these provisions and establishes remedies that include filing a complaint with the Labor Commissioner’s Office.

Section 1 of the bill amends Labor Code Section 1030 to specify that every employer, both private and public, must provide a reasonable amount of break time to accommodate an employee desiring to express breast milk for the employee’s infant child each time that the employee has a need to express milk.

Section 2 of the bill amends Labor Code Section 1031 by first eliminating the requirement that an employer shall make reasonable efforts to provide an employee with a location to express milk in private. By striking the phrase “make reasonable efforts to” it’s now a mandate to provide. In addition, the bill eliminates the close proximity requirement. In other words, the bill struck the phrase “other than a bathroom in close proximity to the employee work area.”

Section 3 of the bill amends Labor Code Section 1033. This Section now provides that a denial of reasonable break time or adequate space to express milk shall be deemed a failure to comply with Labor Code Section 226.7, which subjects an employer to a penalty and thereafter the employee may file a complaint with the state’s Labor Commissioner. The employee may report a violation to the Labor Commissioner’s field office enforcement unit and the local commission may impose a civil penalty of $100 for each day the employee was denied reasonable break time or adequate space to express milk.

Section 4 of the bill amends Labor Code section 1034 to require an employer to develop and implement a policy regarding lactation accommodation. The policy must include specified information and the employer must provide the information in the employee handbook and shall distribute that policy to new employees.

You can find a full transcript of the podcast here.

McGeorge Adjunct Professor Chris Micheli

AB 749 by Assemblymember Mark Stone (D-Scotts Valley) was signed into law by Governor Newsom on October 12 as Chapter 808. The new law adds several new code sections as Chapter Three of Title XIV of Part Two of the California Code of Civil Procedure. The new section of the law is entitled Agreements Settling Employment Disputes.

It adds one section to the CCP, Section 1002.5. The bill prohibits any agreement to settle an employment dispute from containing a provision that prohibits, prevents, or otherwise restricts any settling party that is an aggrieved person from working for the employer against which the aggrieved person has filed a claim, or any parent company, subsidiary, division, affiliate or contractor of the employer.

This bill also clarifies that an employer and an aggrieved person are free to agree to end a current employment relationship or to prohibit or otherwise restrict the settling aggrieved person from obtaining future employment with the settling employer if the employer has made a good faith determination that the person engaged in sexual harassment or sexual assault. The bill further clarifies that an employer is not required to continue to employ or rehire a person if there’s a legitimate non-discriminatory or non-retaliatory reason for terminating the employment relationship or for refusing to rehire that person.

The bill provides that a provision in an agreement entered into on or after January 1, 2020, that violates this new rehire clause prohibition is void as a matter of law and against public policy. In addition, the bill defines three terms that are used in this new statute. The first is an aggrieved person. The second is sexual assault. And the third is sexual harassment.