CBPA's California Legislative Update 01/31/2020
- NEWSFLASH: COURT HALTS CONTROVERSIAL ARBITRATION LAW
- LLC – BROKER BILL PASSES ASSEMBLY
- BALLOT MEASURE CHALLENGING AB 5 GAINS MOMENTUM
- HOUSING DENSITY BILL FAILS – TWICE
- COMMUNITY AIR PROTECTION PROGRAM INPUT SOUGHT
- CBPA 2020 CALENDAR
NEWSFLASH: COURT HALTS CONTROVERSIAL ARBITRATION LAW
Business groups today are hailing a ruling in the case against California’s new law banning employers from requiring arbitration agreements as a condition of employment.
In the case, United States District Court Judge Kimberly J. Mueller ruled: “having carefully considered all relevant briefing, including supplemental briefing, the court GRANTS plaintiffs' motion for a preliminary injunction in full. In the coming days the court will explain its reasoning in a detailed, written order.”
The California Chamber of Commerce hailed the ruling which halts the enforcement of and invalidating in full AB 51, a law that would have banned employers from, as a condition of employment, entering into arbitration agreements for claims brought under the Fair Employment and Housing Act and Labor code.
Our industry was part of a large coalition of employers led by the CalChamber that fought the bill in the Legislature, requested a veto which did not happen, and then challenged the law in court, arguing that AB 51 conflicted with federal law.
Of particular concern to employers were provisions of the law that placed the extraordinary burden of criminal penalties punishable by imprisonment and fines.
We are relieved at Judge Mueller’s decision granting plaintiffs’ motion for a preliminary injunction in full. And we thank the California Chamber of Commerce for once again standing up for employers.
Legal documents in Chamber of Commerce of the United States of America et al. v. Becerra et al. can be found here.
LLC – BROKER BILL PASSES ASSEMBLY
On a bipartisan 56-0 vote, AB 687 (Daly; D-Anaheim) passed the California State Assembly. This bill will allow real estate brokers to incorporate as a limited liability company (LLC), in addition to a C or S corporation.
This is a measure that our industry has been pursuing for years, and the Department of Real Estate notes there is pent-up demand for this change in law, estimating more than 30,000 brokers would seek to incorporate as an LLC, which has become commonplace since first being introduced.
AB 687 updates the statute to reflect that evolution in the industry and allow brokers to operate as an LLC. Enabling brokerage firms to form as an LLC will allow greater flexibility in management and operations which will be particularly helpful for smaller firms.
AB 687 also will enable a savings of both time and costs for these firms as operating as an LLC means more streamlined entity reporting and filing requirements than a corporation.
Finally, AB 687 will simplify taxation at the entity level as gains and losses are passed through and taxation occurs at the individual owner level. Although Subchapter S corporations do offer the same income tax pass-through feature, limitations on number and types of owners and other restrictions make the Subchapter S vehicle less readily available.
The realtors have expressed concerns with several portions of the measure and we hope to work with them to craft language that will allow the policy to move forward.
We thank Assemblymember Tom Daly from Anaheim for being our champion on this important policy change. The bill will next be heard in the Assembly Appropriations Committee next week.
BALLOT MEASURE CHALLENGING AB 5 GAINS MOMENTUM
California’s new law, AB 5, attempting to clarify the Dynamex Court ruling has been drawing lots of complaints for having a variety of unintended consequences. Our industry worked hard to clarify that Real Estate Brokers were not included in the law, however another major issue we had was that the bill was not clear in how it impacted business-to-business contracts between two incorporated entities and are seeking to clarify that issue further in clean up legislation this year.
However, there are many unincorporated contractors to which the bill applies, and they protested at the Capitol this week to highlight the impacts of the bill. The bill is having a particularly outsized impact on artists and musicians that are true independent operators.
Beyond that some of the major players in the “gig economy” are fighting back hard. A coalition of rideshare services as well as other app-based companies have vowed to spend upwards of $100 million to put a proposition on the ballot to overturn the law. This week they reported that have reached 25% of the signatures needed and are investing heavily in obtaining the needed signatures.
This issue shows the intersection of old-fashioned labor and new-fangled technology hitting square on.
On behalf of the commercial, retail, and industrial real estate industry we are in the middle of this battle and trying to protect your interests. However, as we have recently learned, even when the law is deemed “clarified” in statute there is a lot of confusion about how the law is applied in the Real World.
If there are questions about your own operations, we highly recommend consulting a labor law specialist that can provide technical advice and help keep you out of the crosshairs of a lawsuit.
In the meantime, for some basic information on the topic, click here.
HOUSING DENSITY BILL FAILS – TWICE
A measure that has made lots of headlines over the past year, that would set aside some local ordinances to clear the way for more dense housing near transit corridors, failed twice this week in two votes on the Senate Floor.
SB 50 (Weiner; D-San Francisco) attempts to help break the housing logjam in the state by overriding local zoning rules to encourage apartment construction in cities and counties. It needed 21 votes and only was able to muster 18, in the Democrat-dominated State Senate.
In the past several years our legislature has considered hundreds of bills meant to “fix” the housing crisis. SB 50 was one of the more promising – but also more controversial – as local government decried land use planning from Sacramento.
Although our industry liked many parts of the bill – and many others – we are disheartened that the number one issue to get more housing built in the state continues to be ignored. CEQA reform. It’s the “elephant in the room,” that is keeping housing costs high and supply much lower than demand, but powerful advocacy groups in the state won’t allow CEQA to be fixed, because it’s such a powerful tool to veto projects. So, we continue to look for other, more complicated and less effective ways to resolve the housing crisis.
Our housing crisis is of such a large proportion that SB 50’s failure even received national news coverage which you can read here.
COMMUNITY AIR PROTECTION PROGRAM INPUT SOUGHT
Assembly Bill 617 signed into law in 2017, directs the California Air Resources Board to establish the Community Air Protection Program. The program a community-focused action to reduce air pollution and improve public health in communities that experience disproportionate burdens from exposure to air pollutants.
On September 27, 2018, the Board selected ten communities for the first year of this program to implement community emissions reduction programs, community air monitoring, or both. At the same meeting, the Board also approved the “Community Air Protection Blueprint” (Blueprint), which contains detailed requirements for community emissions reduction programs, community air monitoring plans, and other elements of the Program.
CARB will conduct a public meeting in Fresno to consider the South Central Fresno Community Emissions Reduction Program. Businesses located in Fresno are sought to review the program, policies, and provide input to the board. Click here for more information.
CBPA 2020 CALENDAR
Wednesday, February 26
CBPA Winter Board Meeting
Cal Chamber, Sacramento
Thursday, April 2
CBPA Industrywide Legislative Meeting
Southern California
Tuesday-Wednesday, June 9-10
California Commercial Real Estate Summit
Cal Chamber, Sacramento
Thursday, November 5
CBPA Board Meeting & Industry Awards Dinner
The Renaissance Hotel, Newport Beach
