State Updates
California Legislature Passes Data Reporting and Independent Contractors Bills
This week finds eight state legislatures actively meeting. We will however focus on California where the legislature passed two bills of interest last week before recessing for the year on Friday the 13th. Last Tuesday, the Senate voted unanimously (39 to 0) to pass a “labor market outcome data reporting” bill – AB 1340. The Assembly subsequently cleared the bill for Governor Gavin Newsom’s (D) signature by unanimously (75 to 0) concurring with Senate Amendments.
As previously reported, AB 1340 was originally drafted as a state gainful employment bill. While the adopted measure does not contain a debt-to-earning metric leading to potential enrollment limitations, it still requires cosmetology school and other institutions regulated by the Bureau for Private Postsecondary Education (BPPE) to report individual identifying information, the program the graduate was enrolled in, and specified student loan debt information. The bill would require the bureau to match the data reported by institutions pursuant to this provision with wage data from the Employment Development Department, as specified. The bill would also require the bureau to post online “relevant program-level and institution-level statistics presented line in terms of easily understood labor market measures and consistent with all pertinent state and federal privacy laws, regarding the earnings levels of graduates and the student debt information reported.”
Senate amendments clarify that the bill’s provisions pertain to a graduate completing a program at a private career schools after January 1, 2020. They also state that the provisions related to reporting, matching, and internet posting would not be operative until the Director of Consumer Affairs certifies that the bureau’s information technology system has been updated to process the data stipulated in the bill.
The Senate also adopted AB 5 by a vote of 29 to 11 last Tuesday. A day later the Assembly cleared the bill for Governor Newsom’s signature by voting 61 to 16 to concur with Senate amendments. The passed bill includes Senate language allowing specified beauty industry professionals – cosmetologists, barbers, electrologists, estheticians, natural hair braiders, and manicurists (until January 1, 2022) – to be an independent contractor if the following criteria are met:
“(I) Sets their own rates for services performed, provided the rate is equal to or greater than two times the minimum wages for hours worked and is paid directly by their clients.
(II) Sets their own hours of work and has sole discretion to decide which clients from who they will provide services.
(III) Has their own book of business and schedules their own appointments.
(IV) Maintains their own business license for the services offered to clients.
(V) If the individual is performing services at the location of the hiring entity, then the individual issues a Form 1099 to the salon or business owner from which they rent their business space.
(VI) This subdivision shall become inoperative, with respect licensed manicurists, on January 1, 2022.”
The bill will become effective January 1, 2020 if Governor Newsome signs the bill as expected.
The Senate Business, Professions and Economic Development Committee and the Assembly Business and Professions Committee have also begun their sunset review of California’s State Board of Barbering and Cosmetology. As I previously reported, a Joint Sunset Review Oversight Hearing was conducted before Labor Day. Representatives from the Board were the featured witnesses. Fred Jones from the Professional Beauty Federation of California and Wendy Cochran from California Esthetics Alliance also testified. Senator Steven Glazer, the Senate chair, indicated that a second hearing will likely be conducted this fall. California schools and others interested can view the hearing at this link.
Additionally, California bills to impose an 85-15 Rule and establish and revise incentive compensation prohibitions will carry over to 2020.
The text of the California bills mentioned in this update can be found in AACS’ Bill Tracking Portal
Please do not hesitate to contact me at bnewman@abingdonstrategies.com or by phone at 202-491-5254 with comments or questions.