VOLUME 37, NUMBER 26 ● AUGUST 26, 2011 ® Cost-Saving Workers’ Senate Fiscal Committee Comp Bills Await Passes Job Killer Mandate Senate Action The Senate cleaning-related or light building Two California Appropriations maintenance, window cleaning or food Chamber of Committee on cafeteria services, to retain employees Commerce- August 22 passed a of the former contractor for a minimum supported bills California of 60 days and thereafter offer continued that will help Chamber of employment unless the employees’ lower workers’ Commerce-opposed performance during that period was compensation costs bill that unfairly unsatisfactory. Support await action in the forces employers to hire Senate. a predecessor’s employees and ensures Forces Unionized Workforce ● AB 378 (Solorio; D-Anaheim) continued union representation, while CalChamber is opposed to this bill lowers pharmaceutical costs. undermining the at-will employment because it is designed to ensure that an ● AB 335 (Solorio; D-Anaheim) presumption in California, despite any incumbent union, elected as the bargain- lowers frictional costs in the workers’ change in employers. ing representative for the prior contractor, compensation system. AB 350 (Solorio; D-Anaheim), a will remain the bargaining representative “job killer” bill, inappropriately alters for the subsequent employer. Under the Pharmaceutical Costs the employment relationship by requiring “successor employer” doctrine, a subse- AB 378 lowers workers’ compensation any successor contractor for “property quent employer that: costs by removing incentives for services,” defined as licensed security, See Senate: Page 7 physicians to refer patients to pharmacies in which the physician or physician’s family has a financial interest, and establishes a temporary fee schedule to reimburse for compound drugs until the workers’ compensation administrative director can establish a formal one. Compound medication in the workers’ compensation system has been used primarily to assist injured workers who could not manage medication in its standard formulation. In the last several years, however, there has been a sharp increase in usage and costs of compound drugs. Payments for compound drugs, medical foods, and co-packs grew from 2.3% to 12% of total See Cost-Saving: Page 6 Inside Photo by Megan Wood Photo by Megan Congress May Consider CalChamber Policy Advocate Jennifer Barrera testifies against ‘job killer’ AB 350 (Solorio; Free Trade Pacts: Page 5 D-Anaheim) before the Senate Appropriations Committee passed the bill on August 22. At left is Matthew Hargrove of the California Business Properties Association. AUGUST 26, 2011 ● PAGE 2 CALIFORNIA CHAMBER OF COMMERCE Labor Law Corner State Law Does Not Require Employers to Give Reason for Termination Indeed, the “Notice to Employee as to If the position is filled relatively quickly, Change in Relationship” that is required the ex-employee might find out and by the Employment Development claim the layoff was a subterfuge and the Department does not have a mandatory termination was discriminatory in nature. section for an employer to note why it is terminating an employee. Disciplinary Warnings If you do give a reason, however, it is If an employer follows the progressive imperative that it is the truth and the real disciplinary path, most employees will reason. If your termination is challenged know why they are being let go. If they Dana Leisinger (i.e., a wrongful termination lawsuit), HR Adviser receive oral warnings, followed by you don’t want to be “back pedaling” and written warnings, and possibly even a changing your story. suspension, there will be ample evidence We are terminating a problem employee Termination Approaches supporting the decision to terminate in today. Do we have to give him/her a the event the decision is challenged. reason? There are different schools of thought A stated policy of progressive The simple answer: No. California as to how to handle a termination. Many discipline tends to erode into the at-will law does not require that you give an employers prefer to simply tell the relationship, since the courts have held employee a reason why he/she is being employee, “This isn’t working out,” and that a promise of progressive discipline terminated; it is part of the “at-will” not enter into an elaborate discussion guarantees the employee ample warnings policy in California. with the individual. before termination. However, the practice Other employers prefer to explain of progressive discipline supports the to the person the reason behind the employer. termination. There is no right or wrong If a termination of employment California Chamber Officers way to handle this situation—it may is a difficult decision to make, it is depend on the person being terminated. always wise to consult an employment S. Shariq Yosufzai Some individuals want to argue the law attorney to guide you through the Chair decision, and that is probably when it’s process. Timothy S. Dubois best to stay simple and explain it isn’t a First Vice Chair topic for a discussion, but it is a decision The Labor Law Helpline is a service that has been made. Other individuals to California Chamber of Commerce Frederick E. Hitchcock preferred and executive members. For expert Second Vice Chair may benefit from a simple discussion of why they are being let go and accept it as explanations of labor laws and Cal/OSHA Anne Buettner closure. regulations, not legal counsel for specific Third Vice Chair situations, call (800) 348-2262, or submit It’s also best not to call a termination your question at www.hrcalifornia.com. Larree M. Renda a “layoff” when it’s truly a termination. Immediate Past Chair Allan Zaremberg President and Chief Executive Officer Seminars/Trade Shows Alert (ISSN 0882-0929) is published weekly CalChamber Calendar during legislative session with exceptions by More information at California Chamber of Commerce, 1215 K Street, Suite 1400, Sacramento, CA 95814- www.calchamber.com/events. Water Committee: 3918. Subscription price is $50 paid through Business Resources September 8, Rancho Palos Verdes membership dues. Periodicals Postage Paid at San Diego Water Tour. Water Education Board of Directors: Sacramento, CA. Foundation. September 8–9, San Diego. September 8–9, Rancho Palos Verdes POSTMASTER: Send address changes to Alert, (916) 444-6240. International Trade Breakfast: 1215 K Street, Suite 1400, Sacramento, CA Northern California Tour. Water September 9, Rancho Palos Verdes 95814-3918. Publisher: Allan Zaremberg. Executive Editor: Ann Amioka. Associate Editor: Education Foundation. October 12–14, CalChamber Fundraising Committee: Sara Espinosa. Art Director: Marcy Wacker. Sacramento. (916) 444-6240. September 9, Rancho Palos Verdes Capitol Correspondent: Christine Haddon. Licensing Executives Society Annual Taking Your Chamber’s PAC to the Next Photographer: Megan Wood. Meeting. Licensing Executives Society Level: October 14, Orange Permission granted to reprint articles if (USA and Canada). October 16–19, credit is given to the California Chamber of San Diego. (703) 836-3106. Commerce Alert, and reprint is mailed to Alert They won’t know unless you at address above. San Joaquin River Restoration Tour. Water Education Foundation. tell them. Write your legislator. E-mail: [email protected]. Home page: www.calchamber.com. November 2–3, Fresno. (916) 444-6240. See CalChamber-Sponsored: Page 7 calchambervotes.com CALIFORNIA CHAMBER OF COMMERCE AUGUST 26, 2011 ● PAGE 3 Boeing Vice President Recaps Challenges for Aerospace Industry in California Nan Bouchard, vice president of program management at The Boeing Company, testified before the Assembly Select Committee on Aerospace on August 16 about issues affecting the industry in California. Bouchard, also a member of the California Chamber of Commerce Board of Directors, was part of an aerospace industry panel that included representa- tives from Northrop Grumman, Aerojet and Lockheed Martin. Below are excerpts from Bouchard’s remarks to the committee. Boeing in California If we were to make a movie about the history of Boeing in California, the title could be, “Innovation.” The portfolio of history-making products designed and built here touches on every aspect of aero- space and aviation, spanning the first com- mercial telecommunications satellite, the Wood Photo by Megan venerable DC-10 commercial airplane and Nan Bouchard, vice president, program management and regional executive, Boeing Defense, Space the amazing Space Shuttle orbiter, which & Security, and a member of the CalChamber Board of Directors, testifies before the Assembly Select recently completed its final mission. Listed Committee on Aerospace on August 16. among the credits would be the names of our heritage companies, such as Hughes, McDonnell Douglas and Rockwell, built Space and Intelligence Systems, the com- delivered to date to our U.S. Air Force by creative pioneers who thrived and grew pany’s center for all intelligence, military customer, and our current focus is on in- in the hospitable climate. and commercial space systems. This busi- creasing international sales to keep the Today, Boeing continues to occupy a ness operates the world’s largest satellite production line going beyond 2014. diversified footprint spanning commercial design and manufacturing factory in El Other significant business areas in the aviation, military aircraft, network sys- Segundo, as well as Spectrolab, the Los Angeles region include our Boeing tems, satellite manufacturing, and new world’s largest manufacturer of solar cells Commercial Aviation Services team, also markets such as cybersecurity. The com- and a San Fernando Valley fixture for located in Long Beach, which provides pany’s direct and indirect economic foot- more than 50 years. engineering and related services to heri- print in California is substantial. Our Network and Tactical Systems tage commercial aircraft built at the for- Employees work at more than 50 loca- business unit is headquartered in mer Douglas plant that are still in service tions throughout the state, with the largest Huntington Beach and draws on the pow- as well as new designs like the 787. concentration in the Los Angeles area.