Do you ever wonder what sets legislators’ hearts aflutter? Is it a desire to pander to where the most votes are? Do they really believe that passing more laws and mandates will improve the lot of the masses? Do they ever consider that their constant attempts to “help” will actually backfire and hurt those who are supposed to be helped the most? Do they really believe that force—backed by the heavy hand of government—will make this a more civil society?
The latest attempt by California State Assembly Members to tell California employers how to run their businesses is AB-5, the Opportunity to Work Act, which was introduced in Sacramento on December 5, 2016. This latest in an unending series of laws to micromanage the relations between employees and employers would require all California employers of 10 or more to offer additional hours of work to an existing nonexempt employee (by law must be paid overtime) before hiring an additional employee or subcontractor. Of course there’s more: the employer would be required to post a notice of employee “rights” and also the requirement of additional documentation proving compliance.
Needless to say, this latest intrusion in the hiring process will do little to improve relations between employees and employers, but it will help to increase labor costs in California and be one more reason to set up shop elsewhere. First of all, the law assumes that employers are silly enough to incur unnecessary (and not insignificant) recruitment costs by looking for green pastures outside the company when they have more qualified workers in-house. This doesn’t make much sense, especially since in the “real” world, most employers are looking to keep costs low so they can lower their prices to their customers to be competitive. The only reason they would look to the outside is because they don’t have in-house employees with the necessary skills or expertise to get the job done. In an increasingly specialized workplace, it is unrealistic to assume that all jobs are easily interchangeable. It is also unrealistic to think that government bureaucrats—many of whom have never worked outside of government—would have knowledge enough of the particulars of a business to make a judgement call as to who would be the best person to get the job done.
Secondly the law would add to the already contentious environment that California businesses face by encouraging the not-the-cream-of-the-crop employees in their organizations to run to the government, file complaints against the hands that feed them with the Division of Labor Standards Enforcement Police in the Department of Industrial Relations, or bring civil lawsuits against their employers. What business is it of the employees to dictate who, what when, or why their employer hires other employees? They were hired to do a particular job at a voluntarily agreed upon rate of pay dictating the pay, benefits, hours, and working conditions, and if something changes within the organization that rubs the employee the wrong way, they should just move on. Encouraging busybodyism, as this bill does, is not one of the proper functions of government.
Yet another aspect of this outrageous bill is, “An employer shall use a transparent and nondiscriminatory process to distribute the additional hours of work among existing employees.” They make it sound like who’s going to take out the trash this week. In the real world, skills and effort really do count, so of course it would be perfectly logical to “discriminate” and “distribute” additional hours to your best employees, not everyone equally. If some urgent orders come in unexpectedly and someone’s going to need to work extra hours to get them out, of course you’re going to choose your best employees to work extra, not your marginal employees. You would be wasting company money if you did otherwise. By trying to force employers to act as if all workers were created equal—that’s a slap in the face to those employees who produce the most.
Lastly there are the additional posting of signs and paperwork burden that accompany AB-5. OK, the signs won’t cost that much—and nobody will read them anyway—but the real problems are the soft costs of complying with this proposed law. Per Section 559 (e), “An employer shall retain all of the following:
(1) For any new hire of an employee or subcontractor, documentation that the employer offered additional hours of work to existing employees prior to hiring the new employee or subcontractor
(2) Work schedules of all employees
(3) If applicable, the written statement of an employee pursuant to subdivision (k) (welfare-to-work person can opt out)
(4) Any other records or documents that the division requires the employer to maintain to demonstrate compliance with this section.”
So every time an employee or subcontractor is hired, an employer must document that the company offered the additional work to be done to the current employees. This sounds to us like the existing employees must “sign off” that it’s OK to hire from the outside—they grant their employer “permission.” Suppose the employee does not agree to hire a new employee and requests the additional work him/herself. This would create disruption in the workplace as the employee’s skills may not be a good fit for the job functions required. Indeed the employee may be getting in over his/her head and may be doomed for failure—a situation that makes everyone worse off.
Again we marvel at how those in Sacramento feel they know better how to micromanage all businesses in the state (with 10 or more employees) simply by passing a law. This particular bit of top-down legislation is yet another feel-good attempt to pander to employees (and not always the best ones) to “help” them. The better way to “help” would be to loosen up regulations so employees unhappy with their employers can start a business of their own, rather than setting them up for failure with their current employers. Also since busybody politicians are always interested in “creating” more jobs, we find this bill to be particularly hypocritical since it would make it harder to hire new employees. But then again it’s apparent that the politicians have no consistent agenda to increase individual liberty, but rather just pass laws with nice-sounding names that make it worse for everyone. We hope Busybody Bill AB-5 dies a deserving death in committee in Sacramento.