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Conveyor Currents                          October 23, 2015       
In This Issue
Legislative Report
CGFA Feed Manufacturing Study Group Meeting Notice
Ryan Will Accept Speakership on His Terms
EPA's Handling of RFS under OIG Probe
Group says Study Shows RFS Corn Ethanol Spending should be Directed at Advanced Biofuels
House Marks Up, Approves a Six-Year Highway Bill after Committee Fields 160 Amendments
Obama Announces More Companies Sign the "American Business Act Climate Change Pledge"
EPA Power Plant CO2 Final Rule Expected this Week
Senate Ag Hearing on Biotech Unveils Growing Consensus on Single Labeling Solution
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Legislative Report 

by: Dennis Albiani, Legislative Advocate
   

New Labor Laws Every Business Person Needs to Know

The first year of the legislative session is finished with Governor Brown addressing the 941 bills passed by the Legislature.  The Governor signed 808 bills and vetoed 133. Once again, labor issues became a major focus of attention by the legislature and Governor.  Below is a short synopsis of the major labor legislation enacted this year.  

Before we discuss the specifics, here are some general statistics about this year's bill signings. The veto rate was just over 14% which is slightly higher than the Governor's average veto rate (12.9%) during his current term (2011-15) which in turn is significantly higher than his veto rate during his first two terms (4.63%). If you look at all 13 years as Governor (1975-82 and 2011-15), Brown has considered 16,183 bills and vetoed 1,145 bills, or 7% of all bills considered. Below is a synopsis of the final few weeks of the Governor's actions on priority legislation.  

Labor Bills Signed by the Governor
AB 1513 (Williams) Piece Rate Legislation was a "gut and amend" to incorporate an agreement to reduce existing liability for employers who pay employees piece rate. The legislation, negotiated by large farmers, the Labor Agency and unionized labor is intended to provide clarity in the law regarding piece-rate compensation and reduce liability. Recent lawsuits imposed significant liability, both in back wages and fines, to employers throughout the state.  

This legislation would provide a voluntary "safe harbor" option for employers to settle pending and potential claims related to past alleged non payments to piece-rate workers. In addition, this legislation will clarify the law regarding piece-rate compensation and provide protection from potential future claims if the employer makes payment to its piece rate employees for non-productive time based on a reasonable and good faith estimate.  
Specifically the legislation:
  • Provides a voluntary "safe harbor" that allows employers to utilize an affirmative defense against claims for failure to timely pay compensation due for rest and recovery periods and non-productive time if the alleged failure occurred between July 1, 2012 and December 31, 2015.
  • Two ways to comply - pay actual wages or pay an amount equal to 4% of all piece-rate employees' gross earnings during that same time period by December 15, 2016.  
  • Provides a statutory definition of "non-productive" time. Non-productive time may be paid at least minimum wage.  
  • Requires compensation for rest and recovery periods at average piece rate.
Exemptions to safe harbor include: 
  • Claims filed prior to March 1, 2014 
  • Claims that include an allegation of the use of fictitious workers 
If your company engages in piece rate employment, then you should contact a labor law professional to discuss these changes and develop an appropriate path forward for you and your employees.  

AB 304 - Sick leave Law - Clean-up Bill. This bill amends the Health Workplaces, Healthy Families Act of 2014 (Paid Sick Leave) to provide clarification regarding which workers are covered, how the paid time off is accrued, and protections for employers that already provide paid sick leave. 

Clean up to the original law was needed in several areas, including a needed clarification that an employee must work for the same employer in California for at least 30 days to qualify.  The new law also ensures that an employer who uses an accrual method for providing sick leave to employees may use an accrual rate other than one hour for every 30 hours worked if employees will have at least 24 hours of accrued sick leave available by the 120th day of employment; (4) the addition of an exemption from the law for retired annuitants of a public entity; and (5) clarification that unlimited paid time off policies satisfy the requirements of the law. 

Just a reminder, all employers must provide written notice to each employee about their rights under the new law. The notice should already have been given to all current employees. You must also provide the notice to all new employees when hired. There must also be a new poster added to your collection that details the rights and responsibilities under the Paid Sick Leave law. For more info, talk to you favorite HR advisor or legal consultant. You can also check out the Labor Commissioner's website for a brand new FAQs and other tools on how to best to comply with the law.  

Employer supported AB 1506, (Chapter 445, Statutes of 2015) is a new to aid employers to repair technical violations they might make on pay stubs before being subject to a lawsuit.

The Labor Code Private Attorneys General Act (PAGA), allows an employee to file a "representative action" against an employer for any violation of the Labor Code and subjects an employer to statutory penalties ranging from $100 per employee per pay period to $200 per employee per pay period, as well as attorney's fees. Under PAGA, an employee can immediately sue for the Labor Code violations listed in Labor Code Section 2699.5, which includes Labor Code Section 226 that sets forth the categories of information that must be included in an itemized wage statement. PAGA paystub lawsuits have proven to be a lucrative source of revenue for some attorneys in California. 

The new law, which went into immediate effect upon signing, permits employers, once within a 12 month, period, to "cure" unintentional, technical paystub violation, within 33 days of finding out about the problem.  

Be aware, however, if the employer does not or cannot cure the violation, then the employee would still be able file a PAGA civil action and obtain any unpaid wages, penalties and attorney's fees. 

SB 546 - Health Care: Large Employer Health Benefits: Public Review 
SB 546 requires insurance carriers to disclose the factors they use to establish and increase healthcare rates for large employers that have more than 50 employees. Under the new law, large group carriers will file all information relating to rate increase proposed for large employers to regulators at least 60 days prior to its implementation. The department then has to review the information in order to decide, within 60 days, whether the rate is reasonable. The carrier then has to file additional aggregate rate information that addresses whether the new rate is greater than average rate increases provided by the California Health Benefit Exchange, and annually thereafter. 

The new law also requires new annual public meetings regarding the large group rate changes.  This means large employers now face public scrutiny of the health benefit packages, cost sharing elements and other items they negotiated or purchased part of their health benefit offerings to their employees.

CGFA Feed Manufacturing Study Group Meeting Notice
Chairman John Austel and CGFA staff have scheduled the next meeting of the CGFA Feed Manufacturing Study Group for Thursday, October 29th from 9:30 am until approximately 12:00 noon.   The meeting will take place at the Clarion Hotel in the Vineyard  Room - 1612 Sisk Road, Modesto, CA 95350 (209) 521-1612.  The committee will be discussing Food Safety Modernization Act final rule "Current Good Manufacturing Practice and Hazard Analysis and Risk-Based Preventive Controls for Food for Animals"  as well as other issues and concerns facing the industry.   Please RSVP if you will be able to attend this meeting by Friday, October 23rd - by email or phone (916) 441-2272.

Ryan Will Accept Speakership on His Terms
Rep. Paul Ryan (R, WI), chair of the powerful House Ways & Means Committee, said this week he'll accept the GOP caucus nomination to become Speaker of the House, but only if the various conservative factions of the party - the Freedom Caucus, Republican Study Committee and the moderate Tuesday Group - agree to support him on his terms. He gave the groups until close of business Friday, October 23, to make their decisions. 

Ryan grudgingly bowed to pressure from across this party to take the Speaker's gavel, being surrendered at the end of this month by Rep. John Boehner (R, OH), as Ryan is seen as one of the few GOP House members with the gravitas and ability to pull the fractured party together. Ryan said in a press conference this week he'd only take the speakership if he can unify the party, the same message he delivered behind closed doors to the GOP conference that day. 

Ryan's four conditions under which he'll run for Speaker are that the Republicans move "from an opposition party to a proposition party;" that House rules be reworked to the benefit of all members; that the caucus comes together now, not after a bitter leadership battle, and he will not give up time with his family. 

Boehner immediately scheduled the GOP leadership election for October 28, and the full chamber election for October 29, just days before he leaves Washington, DC, for Ohio. 

The goal of the Ryan camp goal is to get a positive vote of as close to 247 - the Republican majority - as he can to demonstrate support and party solidarity. However, some of the most conservative House members aren't happy with Ryan and past policy positions, including his support for comprehensive immigration reform and trade promotion authority (TPA) for President Obama. 

He met with the super-conservative House Freedom Caucus this week to talk about the speaker's job and his conditions. The Caucus rules say 80% of members must be agreed before the caucus will take a stand on an issue. The caucus voted on October 21, and Ryan collected just over 70% of the votes, enough for him to declare victory and move forward. 

As to Ryan's successor at the helm of the powerful Ways & Means Committee, the front runner appears to be third-ranking Republican Rep. Kevin Brady (R, TX). Rep. Devin Nunes (R, CA) has also been talked about as chair, but it's believed Brady, being more in lockstep with Ryan's committee goals and philosophy, will ultimately take the chair.

EPA's Handling of RFS Under OIG Probe
The EPA Office of Inspector General (OIG), the agency's internal investigator, posted to it website late last week a letter stating it will "begin preliminary research" into whether the agency has accurately accounted for the greenhouse gas emissions of biofuels as part their qualification to be part of the Renewable Fuel Standard (RFS).

Critics have contended various biofuels - particularly corn ethanol - have a heavier carbon footprint than conventional fuels. Industry groups have contested the allegation, and the Renewable Fuels Assn. (RFA) said in reaction to the OIG letter that it's been asking for this information for years. RFA said the review is welcomed as it will "give the pubic a clearer picture of the climate benefits of ethanol today." 

One target of the OIG investigation will be whether EPA used the most contemporary data in its lifecycle analysis of carbon emissions based on a 2011 National Academy of Sciences (NAS) study. Under the original 2007 authorizing law which created the RFS, corn ethanol, for instance, must demonstrate it reduces greenhouse gas emissions by at least 20%, with the agency required to look at both the ethanol refining process, as well as indirect land use changes (ILUC). 

RFA said lifecycle analyses conducted by the Department of Energy (DOE) show corn ethanol cuts greenhouse gas emissions by 30% compared with fossil fuels when land use emissions are factored in.

While there's no timetable for completing the probe -- the OIG told one news service the preliminary review is expected to take about 90 days - investigators have asked EPA to provide reports provided to Congress every three years on "resource conservation impacts of the RFS program," as well as EPA's response to the 2011 NAS study and any program changes recommended for future action.
 
Group Says Study Shows RFS Corn Ethanol Spending Should be Directed at Advanced Biofuels 

Just as the EPA inspector general begins an investigation of how the agency handled its calculation of greenhouse gas emissions from biofuels under the Renewable Fuel Standard (RFS), comes a report saying the RFS and its heavy emphasis on corn ethanol in the formula for gasoline blending has created a decade of environmental problems, including unmet targets for cutting air pollution, water contamination and soil erosion. 


Commissioned by the American Council for Capital Formation (ACCF), a member of the Smarter Fuel Future coalition, the study done by two scientists at the University of Tennessee Institute of Agriculture says that from an environmental and energy security viewpoint, government resources, including tax assistance and the RFS mandates for corn ethanol, would have been better directed at advanced biofuels, which include biodiesel, renewable diesel and cellulosic ethanol. 

Dr. Daniel G. De La Torre Ugarte and Dr. Burton C. English said that corn ethanol has received nearly $50 billion in federal and market subsidies over 10 years, which they say is evidence the industry cannot survive without federal help. The singular focus of the RFS program on corn ethanol is a mistake when advanced biofuels "represent a significantly more diverse portfolio of fuel feedstocks that can be sourced from a variety of regional and environments around the country."
 
House Marks Up, Approves a Six-Year Highway Bill after Committee Fields 160 Amendments
The House Transportation & Infrastructure Committee this week marked up its version of a six-year federal highway program reauthorization, with committee Chair Bill Schuster (R, PA) deftly persuading committee members to talk about, but not offer more than 150 amendments brought to the markup table. Ultimately, the panel approved a manager's amendment that included few tweaks to the bill as unveiled earlier this week. 

Schuster said the bill will be on the floor next week or the week after, depending on when he and Ways & Means Committee Chair Paul Ryan can work out how to pay for at least the first three years of the bill, similar to how the Senate handled its bill. Schuster says it's a bad idea to go to the floor without a spending title, and acknowledged several of the "pay-for's" in the bill will similar if not identical to those in the Senate bill. 

While the mark up clears the way for floor action, the House is faced with having to approve yet another short-term continuation of current funding, which expires October 29. That extension is expected to run through mid-December to give the House time to approve a highway package, reconcile it with the Senate's approved bill and let both chambers approve the conference report before it can go to President Obama's desk. 

Conference with the Senate bill will be complicated by the highway package's status as a "trains that's moving," a bill onto which a lot of unrelated policy amendments will try to be attached. Rep. Kevin Brady (R, TX), the likely successor to Rep. Paul Ryan as chair of the Ways & Means Committee, will try and convince conferees to include his move to make permanent the federal research and development tax break. In the battle of how to pay for at least the first three years of the package, Ryan's hope of using a one-time repatriation of U.S. companies stashed overseas will also likely be in play, particularly as Ryan continues to negotiate with Sen. Chuck Schumer (D, NY) over not only how to pay for the reauthorized programs, but how much will the bill will ultimately dedicate to highway programs. 

The bill as unveiled by the committee leadership last week does not increase spending on federal highway, bridge or urban commuter system construction and repair, but authorizes the Department of Transportation to spend $325 billion that adjust for inflation. Of the total, about $260 billion is directed to highway and bridge projects, with about $55 billion going to transit projects, and the rest dedicated to bus and truck safety programs at the National Highway Traffic Safety Administration (NHTSA).

As in the Senate, Democrats are not happy with the effective freeze in highway program spending; similarly, only the first three years of the bill are paid for - as in the Senate - meaning the next Congress will again have to wrestle with how to pay for the highway programs. The committee expects the Way& Means Committee to come up with the offsets to pay for the bill, and it's expected those "pay-for's" will track what's in the Senate's approved bill. 

The bill includes efficiencies to be imposed on DOT, including consolidation or elimination of five or six offices within the department, making environmental reviews and permitting faster and more targeted, and creating a Nationally Significant Freight & Projects Program. 

Not included in the bill is language that would allow for heavier or longer trucks on interstate highways. Committee member Rep. Reid Ribble (R,WI) who has introduced HR 3488 to permit states to allow trucks weighing up to 91,000 pounds with six axles to operate on interstate highways within their borders, as do Maine and Vermont now. Ribble opted not to bring his bill into the markup out of deference to committee Chair Bill Schuster's (R, PA) desire to move the bill quickly through full committee. Ribble, however, will offer his heavy truck language as an amendment on the House floor. Ribble was successful in getting language into the bill allowing emergency vehicles which exceed the current 80,000-pound federal highway weight limit - unchanged since 1982 - to operate legally on interstate highways. 

The bill does include an extension of the December 31, deadline for railroads to install positive train control (PTC) technology allowing trains to be controlled remotely.

Obama Announces More Companies Sign the "American Business Act Climate Change Pledge"
House Transportation & Infrastructure Committee Chair Bill Schuster (R, PA) this week announced his panel will finally begin markup on October 22 of the House's version of a multi-year reauthorization of federal highway, bridge and commuter system programs.   Short-term funding for highway programs expires October 29. The count is now up to 81 companies which have signed on to the White House "American Business Act Climate Pledge," and among the multinational firms committing are Abengoa Bioenergy US, Hershey's, Kellogg's, Mars, McDonalds Corporation, Monsanto, Nestle, Cargill, Coca-Cola, General Mills and Walmart.

The companies are committing to a White House request they demonstrate their support for action on climate change and a successful conclusion and climate change agreement leading to a "low-carbon, sustainable future" at a global summit set for Paris later this year.

Some of the firms have committed to reducing emissions by 50%, and reducing water use by as much as 80%. Others commit to achieving "zero-waste-to-landfill" programs, buying 100% renewable energy and pursing "zero net deforestation" in their supply chains.

EPA Power Plant CO2 Final Rule Expected this Week
EPA is expected to publish in the Federal Register this week its final rule designed to curb CO2 emissions from existing and new power plants, and almost before the ink dries, states, industry and individuals will file federal court actions to stop the rule, and the Senate will move to legislative derail the regulation.

The rule, which requires power plants to reduce CO2 emissions 32% by 2030, is a pillar of President Obama's Clean Power Plan, but is viewed by Senate Majority Leader Mitch McConnell (R, KY) as Obama's declaration of a "war on coal." McConnell will join Sen. Shelley Moore Capito (R, WV) when she introduces a resolution under the Congressional Review Act to overturn the regulation.

Also expected is a suit to be filed by 15 states in the U.S. Court of Appeals for Washington, DC, challenging the rule. A separate federal action is expected from 20 states. The National Mining Assn. (NMA) is also expected to file the first of several industry suits against the rule.

EPA says its rule will withstand court challenges, and 15 states and a number of environmental groups are expected to line up with the agency in defending the rule. The Natural Resources Defense Council (NRDC) says opponents have tried eight times to overturn CO2 control rules, and have failed in every case.
 
Senate Ag Hearing on Biotech Unveils Growing Consensus on Single Labeling Solution

The first hearing held in the Senate Agriculture Committee on federal regulation of agriculture biotechnology in 10 years yielded about what expected, affirming the safety of plants produced through biotechnology, but generating a surprising bipartisan consensus on the need for a single federal solution to the question of whether foods produced through genetic engineering should be labeled.

While the hearing was billed as an overview of biotech regulation, it quickly became a forum to debate whether foods produced with genetically modified (GM) ingredients should be labeled. The Coalition for Safe & Affordable Food, an ad hoc group of associations and companies from across agricultural production, processing and retailing, said the hearing was major step forward in getting legislation enacted that would make USDA the arbiter of food labeling when it came to GM ingredients, preempting state and local efforts to impose labels. The group is also seeking creation at USDA of a voluntary certification program for companies which voluntarily label foods for the presence or absence of GM ingredients.

Sen. Pat Roberts (R, KS), chair of the committee, said biotech is a "valuable tool in ensuring the success of the American farmer in meeting the challenge of increasing yield in a more efficient, safe and responsible manner. He was joined by ranking member Sen. Debbie Stabenow (D, MI) who said, "I share the concern of doing business if 50 different states have 50 different standards, and quite frankly, it won't work." She said she's willing to work on a bipartisan bill that can be enacted before the end of the year.

Sen. John Hoeven (R, ND) is expected to introduce the Senate version of the House-approved bill setting federal labeling preemption. He's hoping to snag a Democrat cosponsor, but thus far, none have stepped up to join him.

Representatives of FDA, USDA and EPA reported on the extensive testing they've done over the last 25-30 years on both safety and equivalence of biotech plant food ingredients, knocking down activist critics who contend not enough is known about genetically engineered plant safety to say such ingredients are "safe" and equivalent to their conventional counterparts. Further, agencies explained the White House Office of Science & Technology Policy (OSTP) is currently working with the three departments to review and modernize the so-called "collective framework" on how and by which agency biotechnology should be regulated.

These same groups, including the Center for Food Safety, Food & Water Watch, sent a pre-hearing letter to Roberts and Stabenow complaining the hearing was a one-sided presentation because their groups had not been invited to testify.

A Vermont dairy producer explained to the committee how biotech feeds have helped her keep costs down, while food processors talked about not only the cost of labeling products containing genetically modified (GM) ingredients, but the logistical nightmare they face in trying to comply with the Vermont-passed law requiring such labels. That law is currently being challenged in federal court, and is set to go into effect July 1, 2016.