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Newest Job Killers Target Grocery Workers, Tax Rates

By CalChamber - June 9, 2023


Bills expanding lawsuit conditions for grocery workers and increasing tax rates for successful California businesses have been added to the California Chamber of Commerce job killer list.

AB 647 (Holden; D-Pasadena) significantly expands the statute related to successor grocery employers, including disrupting the ability for independent small stores to join together; expands the number of workers covered under the law; and creates a significant new private right of action.

SB 220 (Senate Budget and Fiscal Review Committee) increases the tax rate of companies that shoulder the vast majority of corporate tax liability from 8.84% to 10.99% — amounting to a 24% higher tax bill.

AB 647: Grocery Workers AB 647 expands the list of eligible grocery workers covered by worker retention and private right of action conditions to include a newly defined “separated employee.”

The broad definition of “separated employee” includes any employee employed by a grocer impacted by a change in ownership who was employed for 6 months or more in the 12 months preceding the change in store control and whose most recent separation was due to change in control, lack of business, reduction in force, or transfer.

Employee separation occurs for many reasons, including by choice. Under AB 647, grocers will now have to reenlist “separated employees” within an arbitrary 15-mile radius of their residence, even if that employee separated by choice.

AB 647 also creates a rebuttable presumption that any employee’s termination within a year of change of ownership was due to non-disciplinary reasons. It then goes further by requiring the successor grocer to offer these employees right of refusal to return for employment. This requirement could force the successor grocer to rehire employees dismissed for cause.

Private Right of Action AB 647 creates a private right of action by granting employees, collective bargaining representatives and nonprofit corporations the right to bring action in superior court for violations of an employee’s right.

The bill has a broad list of remedies including hiring and reinstatement rights, front pay or back pay for each day during which the violation continues, the value of the benefits the employee would have received under any benefit plans, and attorney fees and costs to any employee or employee representative.

AB 647 passed the Assembly on May 30 and will be considered next by both the Senate Labor, Public Employment and Retirement Committee and the Senate Judiciary Committee.

SB 220: Corporate Tax Hike SB 220 punishes successful California companies with higher taxes in a misguided attempt to reverse the federal Tax Cuts and Jobs Act and address fiscal shortfalls.

SB 220 is being referred to as a tax break for California businesses, but that’s simply not the case. The bill would decrease the corporate tax rate to 6.63% for employers making up to $1.5 million in taxable income and these taxpayers as a group pay just 12% of all corporate income taxes in California. Taxpayers who bear the vast majority of corporate income tax liability will see their tax bill increase.

“SB 220 unnecessarily risks damaging California’s economy at a time when the state needs businesses to grow,” said CalChamber Policy Advocate Preston Young. “Such a policy would hurt our state’s employers, employees and consumers by increasing the price of goods and services sold in California and forcing California-based companies to consider reducing in-state costs. The bill will depress business growth and employee wages in California and amplify the state’s budgetary issues.”

In a June 5 letter to members of the Senate Budget and Fiscal Review Committee, Young states: “Higher taxes influence a plethora of business decisions, such as where a business will locate, how many employees they will hire and what wages they can offer. For companies that are located or would otherwise expand in California, the higher taxes from doing business in the California market will force them to seek to reduce costs elsewhere, including their presence in the state.

“SB 220 would degrade California’s economic competitiveness against other states who notoriously compete to attract California’s companies with a friendlier and less costly investment climate. This bill would take the exact opposite approach and unnecessarily raise the cost of doing business in California.”

SB 220 awaits action by Senate Budget and Fiscal Review.


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