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SB-1423 Worker classification.(2019-2020)

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Date Published: 05/06/2020 09:00 PM
SB1423:v98#DOCUMENT

Amended  IN  Senate  May 06, 2020

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Senate Bill
No. 1423

Introduced by Senator Galgiani

February 21, 2020

An act to amend Section 17078.54 of the Education Code, relating to school facilities. add Section 2750.4 to the Labor Code, relating to worker classification.


LEGISLATIVE COUNSEL'S DIGEST


SB 1423, as amended, Galgiani. School facilities: charter schools. Worker classification.
Existing law requires a 3-part test, commonly known as the “ABC” test, to determine if workers are employees or independent contractors for purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission. Under the ABC test, a person providing labor or services for remuneration is considered an employee rather than an independent contractor unless the hiring entity demonstrates that the person is free from the control and direction of the hiring entity in connection with the performance of the work, the person performs work that is outside the usual course of the hiring entity’s business, and the person is customarily engaged in an independently established trade, occupation, or business. Existing law charges the Labor Commissioner with the enforcement of labor laws, including worker classification.
Existing law exempts specified occupations and business relationships from the application of the ABC test described above. Existing law, instead, provides that these exempt relationships are governed by the multifactor test previously established in the case of S.G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341.
This bill would establish an alternative test for determining whether an individual having a contractual relationship with a contracting entity or through a platform is an employee or an independent contractor. The bill would provide that an individual or sole proprietor providing labor or services for remuneration who meets specified conditions shall be considered an independent contractor rather than an employee with respect to the individual’s relationship with a contracting entity or platform. These conditions would include, among others, that the services to be provided by the individual be set forth in a written contract of limited duration, that the individual sets their own schedule and can decline any offer for remuneration from a contracting entity or through a platform without penalty, that the equivalent hourly rate paid to the independent contractor meet or exceed the applicable minimum wage, and that the contract must address meal and rest breaks if it requires the independent contractor to work multiple consecutive hours and must include a premium rate of pay for any hours in excess of 8 that the contract requires the individual to work in a day. The bill would specify that this provision does not preclude a contract from limiting the number of hours that an independent contractor can perform work under the contract in a single day.
The bill would require the independent contractor to be covered by a policy for occupational accidents that insures the independent contractor for medical expenses and lost income resulting from injuries suffered while the independent contractor is performing services, in accordance with specified policy requirements, including medical coverage in excess of the independent contractor’s own medical insurance, death and survivor payments, and disability payments. The bill would also provide that independent contractors who satisfy the conditions of the bill are eligible for state disability insurance and paid family leave benefits offered through the Employment Development Department and State Disability Insurance Program.
The bill would require the contracting entity or platform to maintain a policy against the discrimination against an independent contractor on the basis of race, color, ancestry, and various other protected classes recognized under existing law. The bill would specify that as of April 1, 2021, the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission do not apply to the independent contractor relationships under the bill’s provisions, except as expressly set forth in the bill. The bill would also specify that the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission do not apply to work performed on or before March 31, 2021, provided that the then-effective contract between a contracting entity or a platform and an individual substantially complied with specified provisions of the bill or the equivalent hourly rate earned by an individual or sole proprietor met or exceeded the then-applicable minimum wage for the time necessary to complete the service, excluding commute time. The bill would also define various terms.

The Leroy F. Greene School Facilities Act of 1998 (Greene Act) requires the State Allocation Board to adopt rules, regulations, and procedures, under the administration of the Director of General Services, for the allocation of state funds by the board for the construction and modernization of public school facilities. Existing law establishes the Charter Schools Facilities Program within the Greene Act to provide funding to qualifying entities for the purpose of establishing school facilities for charter school pupils. Existing law places various duties on the California School Finance Authority for purposes of administering the program. Existing law requires that a 50% matching share be provided by charter schools applying for facilities funding under this program.

This bill would provide that the 50% local share obligation referenced above could be reduced and the funding grant increased for charter schools meeting specified conditions that indicate financial hardship. The bill would require the California School Finance Authority, in consultation with the board, to adopt regulations establishing uniform terms and conditions to implement the intent of the Legislature in enacting a financial hardship assistance process for charter school facilities funding, as provided.

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 2750.4 is added to the Labor Code, to read:

2750.4.
 (a) An individual or sole proprietor providing labor or services for remuneration shall be considered an independent contractor rather than an employee with respect to the individual’s relationship with a contracting entity or platform if the following conditions are met:
(1) The services to be provided by the individual are set forth in a written contract.
(2) The services to be performed by the individual pursuant to the written contract are either:
(A) Within the scope of the contracting entity’s usual course of business.
(B) Are services provided through a platform that connects individuals with third parties requesting services through the platform.
(3) The individual sets their own schedule by having the ability to accept or not accept an offer for remuneration from a contracting entity or through a platform.
(4) The individual may decline any offer for remuneration from a contracting entity or through a platform without penalty from the contracting entity or platform. This paragraph does not apply if the individual accepts an offer for remuneration in a written contract and then fails to fulfill any of the individual’s contractual obligations.
(5) The written contract meets the specifications set forth in subdivision (b).
(6) The services to be performed by the individual pursuant to the written contract are finite and limited by time or project.
(7) The individual is free to perform services to, through, or on behalf of any other contracting entity, platform, employer, or other entity, including services that are provided through a competing contracting entity or platform.
(8) The individual is free to accept tips or gratuities without the contracting entity or platform deducting those tips or gratuities from the individual’s remuneration.
(b) (1) The contract between an independent contractor and the contracting entity or platform shall be in writing and specify all of the following:
(A) The services to be performed.
(B) The remuneration offered and whether the rate is a flat amount or variable amount. If a variable amount, the contract shall specify how the variable amount will be calculated upon completion of the services performed.
(C) The estimated equivalent hourly rate for the services performed after any estimated expenses included in the contract.
(2) To the extent the contract expressly requires the independent contractor to perform services for multiple consecutive hours, the contract shall address meal and rest breaks.
(3) To the extent the contract expressly requires the independent contractor to work in excess of eight hours in a day, the contract shall include the premium rate of pay for hours worked after eight hours. Nothing shall preclude the contract from specifying a reasonable cap on the number of work hours to be performed under the contract or in a single day.
(c) (1) The estimated equivalent hourly rate specified in the written contract shall meet or exceed the current applicable minimum wage for the time that is reasonable and necessary to perform the service, excluding commute to the location where the services are to be performed.
(2) The independent contractor shall bear their own expenses unless otherwise specified in the written contract.
(3) Tips and gratuities are excluded from earnings for purposes of meeting the minimum wage requirements of this subdivision.
(d) The independent contractor shall be covered by a policy for occupational accidents that insures the independent contractor for medical expenses and lost income resulting from injuries suffered while the independent contractor is performing services pursuant to a contract with a contracting entity or platform in accordance with the following policy requirements:
(1) Coverage for the first to occur of either one million dollars ($1,000,000) in medical expense payments incurred or two years of coverage from the date of accident or injury. This coverage is in excess of the independent contractor’s own medical insurance, if any, for injuries suffered.
(2) A fifty-thousand-dollar ($50,000) death payment resulting from the death of an independent contractor while performing the services.
(3) A one-hundred-fifty-thousand-dollar ($150,000) survivor payment resulting from the death of an independent contractor while performing the services.
(4) Disability payments for injuries suffered by an independent contractor while performing the services equal to 66 percent of the independent contractor’s average weekly earnings for the 28-day period prior to the injury for services performed for the contracting entity as of the date of injury, with minimum and maximum weekly payment rates ranging from fifty dollars ($50) to five hundred dollars ($500) per week lasting no longer than two years from the date of injury.
(e) The independent contractor shall be eligible for state disability insurance and paid family leave benefits offered through the California Employment Development Department and State Disability Insurance Program.
(f) The contracting entity or platform shall maintain a written policy against the discrimination of an independent contractor on the basis of race, color, ancestry, national origin, religion, creed, age, disability, sex, gender, sexual orientation, gender identity, gender expression, medical condition, genetic information, military status, military or veteran status or any other protected class recognized by California law.
(g) For purposes of this section, the following definitions apply:
(1) “Contracting entity” means any business entity formed as a sole proprietorship, partnership, limited liability company, limited liability partnership, or corporation, not-for-profit corporation, or any public entity as defined in Section 811.2 of the Government Code, that contracts with independent contractors to provide services to, on behalf of, or through the contracting entity on a freelance or per-gig basis, which services are within the normal course of the contracting entity’s business. Contracting entities do not include marketplace companies that contract with independent contractors in exchange for the independent contractor’s access to and use of a platform.
(2) “Platform” refers to a multisided virtual platform that utilizes software and similar technology, including, but not limited to, websites and mobile applications, that enable third parties, including independent contractors, to transact with one another for services, or through which independent contractors can market, promote, or advertise their services to third parties.
(3) “Premium rate of pay” refers to higher wages paid for hours in excess of eight that the contract expressly requires the independent contractor to work in a day as compared to the regular estimated equivalent hourly rate for eight or fewer hours worked in a day.
(4) “Marketplace company” means any business entity formed as a sole proprietorship, partnership, limited liability company, limited liability partnership, or corporation, not-for-profit corporation, or any public entity as defined in Section 811.2 of the Government Code, that operates as or maintains a platform.
(h) As of April 1, 2021, the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission shall not apply to the independent contractor relationships under this section, except as expressly set forth herein. The Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission shall not apply to work performed on or before March 31, 2021, provided that: (1) the then-effective contract between a contracting entity or a platform, and, an individual or a sole proprietor, substantially complied with subdivision (b); or (2) the equivalent hourly rate earned by an individual or sole proprietor met or exceeded the then-applicable minimum wage for the time necessary to complete the service, excluding commute time.

SECTION 1.Section 17078.54 of the Education Code, as amended by Section 20 of Chapter 32 of the Statutes of 2018, is amended to read:
17078.54.

(a)An eligible project under this article shall include funding, as permitted by this chapter, for new construction or rehabilitation of a school facility for charter school pupils, as set forth in this article. A project may include, but is not limited to, the cost of retrofitting an existing building for charter school purposes, purchasing a building, or retrofitting a building that has been purchased by the charter school, if those costs have not been previously funded under this chapter, but may not exceed the amounts set forth in subdivision (b). Existing school buildings made available by a school district that will be rehabilitated for the purposes of this article are not subject to Article 6 (commencing with Section 17073.10). An allocation of funds shall not be made for a school facility that is less than 15 years old.

(b)The maximum amount of the funding pursuant to this article shall be determined by calculating the charter school’s per-pupil grant amount plus other allowable costs as set forth in this chapter. Funding shall be provided by the authority for new facility construction or rehabilitation as set forth in Section 17078.58.

(c)To be funded under this article, a project shall comply with all of the following:

(1)It shall meet all the requirements regarding public school construction, plan approvals, toxic substance review, site selection, and site approval, as would any noncharter school project of a school district under this chapter, including, but not limited to, regulations adopted by the State Architect pursuant to Section 17280.5 relating to the retrofitting of existing buildings, as applicable.

(2)Notwithstanding any law to the contrary, including, but not limited to, paragraph (1), the board, after consulting with the relevant regulatory agencies, shall, to the extent feasible, adopt regulations establishing a process for projects to be subject to a streamlined method for obtaining regulatory approvals for all requirements described in paragraph (1), except for the requirements of the Field Act as defined in Section 17281, which shall be complied with in the same manner as any other project under this chapter.

(3)The board shall fund only new construction to be physically located within the geographical jurisdiction of a school district.

(d)Facilities funded pursuant to this article shall have a 50-percent local share matching obligation that may be paid by the applicant through lease payments in lieu of the matching share, or as otherwise set forth in this article, including, but not limited to, Section 17078.58. Notwithstanding any other provision of this article, the 50-percent local share matching obligation may be reduced and the funding grant increased for charter schools that meet the financial hardship classification included in subdivision (f).

(e)The authority may charge its administrative costs against the respective 2002, 2004, or 2006 Charter School Facilities Account, or the amount described in paragraph (2) of subdivision (a) of Section 101122, that shall be subject to the approval of the Department of Finance and which may not exceed 2.5 percent of the account or amount.

(f)(1)It is the intent of the Legislature to develop a financial hardship assistance process for charter schools seeking to participate in the Charter School Facilities Program.

(2)If the financial soundness review and determination carried out by the California School Finance Authority pursuant to paragraph (2) of subdivision (a) of Section 17078.57 finds that the charter school can substantially demonstrate financial soundness, but also finds any or all of the following, that charter school shall be eligible for financial hardship assistance:

(A)That program participation at approved funding levels could negatively impact the charter school’s ability to operate at least on a break-even basis in the future.

(B)That the charter school may not have the ability to make its proposed lump-sum payment if applicable.

(C)That the charter school’s financial condition is not consistent with its planned contributions to the project.

(D)That the charter school may not have the ability to pay the matching share at the interest rate prescribed in subparagraphs (D) and (E) of paragraph (1) of subdivision (a) of Section 17078.57 and achieve a minimum debt service coverage ratio determined by the authority to be sufficient.

(3)For charter schools that are eligible for financial hardship assistance, the authority shall recommend to the board reductions in the local share matching obligation with corresponding increases in the funding grant, as needed to allow charter schools to meet all of the financial soundness criteria included herein.

(g)The authority, in consultation with the board, shall adopt regulations establishing uniform terms and conditions to implement the intent of the Legislature in enacting this financial hardship assistance process for charter school facilities funding.

SEC. 2.Section 17078.54 of the Education Code, as amended by Section 46 of Chapter 530 of the Statutes of 2019, is amended to read:
17078.54.

(a)An eligible project under this article shall include funding, as permitted by this chapter, for new construction or modernization of a school facility for classroom-based instruction of charter school pupils, as set forth in this article. A project may include, but is not limited to, the cost of retrofitting an existing building for charter school purposes, purchasing a building, or retrofitting a building that has been purchased by the charter school, if those costs have not been previously funded under this chapter, but may not exceed the amounts set forth in subdivision (b). Existing school buildings made available by a school district that will be rehabilitated for the purposes of this article are not subject to Article 6 (commencing with Section 17073.10). An allocation of funds shall not be made for a school facility that is less than 15 years old.

(b)The maximum amount of the funding pursuant to this article shall be determined by calculating the charter school’s per-pupil grant amount plus other allowable costs as set forth in this chapter. Funding shall be provided by the authority for new facility construction or modernization as set forth in Section 17078.58.

(c)To be funded under this article, a project shall comply with all of the following:

(1)It shall meet all the requirements regarding public school construction, plan approvals, toxic substance review, site selection, and site approval, as would any noncharter school project of a school district under this chapter, including, but not limited to, regulations adopted by the State Architect pursuant to Section 17280.5 relating to the retrofitting of existing buildings, as applicable.

(2)Notwithstanding any law to the contrary, including, but not limited to, paragraph (1), the board, after consulting with the relevant regulatory agencies, shall, to the extent feasible, adopt regulations establishing a process for projects to be subject to a streamlined method for obtaining regulatory approvals for all requirements described in paragraph (1), except for the requirements of the Field Act as defined in Section 17281, which shall be complied with in the same manner as any other project under this chapter.

(3)The board shall fund only new construction to be physically located within the geographical jurisdiction of a school district.

(d)(1)Facilities funded pursuant to this article shall have a 50-percent local share matching obligation that may be paid by the applicant through lease payments in lieu of the matching share, or as otherwise set forth in this article, including, but not limited to, Section 17078.58. Notwithstanding any other provision of this article, the 50-percent local share matching obligation may be reduced and the funding grant increased for charter schools that meet the financial hardship classification included in subdivision (f).

(2)Notwithstanding paragraph (1), the required local matching obligation shall be adjusted consistent with the revised local matching contributions for school districts pursuant to Section 17072.30 based upon the adjustment that would apply to the school district in which the charter school is physically located which serves the same grade levels as the facilities funded.

(e)The authority may charge its administrative costs against the respective 2002, 2004, or 2006 Charter School Facilities Account, or the amount described in paragraph (2) of subdivision (a) of Section 101122, that shall be subject to the approval of the Department of Finance and which may not exceed 2.5 percent of the account or amount.

(f)(1)It is the intent of the Legislature to develop a financial hardship assistance process for charter schools seeking to participate in the Charter School Facilities Program.

(2)If the financial soundness review and determination carried out by the California School Finance Authority pursuant to paragraph (2) of subdivision (a) of Section 17078.57 finds that the charter school can substantially demonstrate financial soundness, but also finds any or all of the following, that charter school shall be eligible for financial hardship assistance:

(A)That program participation at approved funding levels could negatively impact the charter school’s ability to operate at least on a break-even basis in the future.

(B)That the charter school may not have the ability to make its proposed lump-sum payment if applicable.

(C)That the charter school’s financial condition is not consistent with its planned contributions to the project.

(D)That the charter school may not have the ability to pay the matching share at the interest rate prescribed in subparagraphs (D) and (E) of paragraph (1) of subdivision (a) of Section 17078.57 and achieve a minimum debt service coverage ratio determined by the authority to be sufficient.

(3)For charter schools that are eligible for financial hardship assistance, the authority shall recommend to the board reductions in the local share matching obligation with corresponding increases in the funding grant, as needed to allow charter schools to meet all of the financial soundness criteria included herein.

(g)The authority, in consultation with the board, shall adopt regulations establishing uniform terms and conditions to implement the intent of the Legislature in enacting this financial hardship assistance process for charter school facilities funding.

SEC. 3.

Section 2 of this act shall become operative only if the Public Preschool, K–12, and College Health and Safety Bond Act of 2020 is approved by the voters at the March 3, 2020, statewide primary election, in which case Section 1 of this act shall not become operative.