State Legislative - Week of March 12, 2010

 

Social Networking Internet Web Sites.  Senate Bill 1361 (Corbett) would prohibit a social networking Internet website from displaying the home address or phone number of a registered user who is under the age of eighteen.  The bill as written is unenforceable and will most likely be opposed by many parties in the business arena.  With the cable industry constantly expanding the services they offer, and because there is not yet a clear definition of “Social Networking,” CCTA will oppose this bill.  This bill is scheduled to be heard in Senate Judiciary Committee on Tuesday, March 23, 2010. 
 
Assembly Informational Hearing on Workforce Development.  The Assembly Utilities and Commerce Committee held an informational hearing on Monday, March 8, 2010.  This hearing was titled “Workforce Development in the Telecommunications and the Electricity Sectors.”

 

In his opening comments, Committee Chair Felipe Fuentes (D-Los Angeles) explained that the legislature’s top priority is to find ways to create and retain jobs in California. He also noted that the Assembly Utilities and Commerce Committee has passed several pieces of legislation in the recent past aimed at creating new jobs, including the Digital Infrastructure and Video Competition Act of 2006 (DIVCA) and the California Advanced Services Fund (CASF) Program.  In addition, the federal government established the American Recovery and Reinvestment Act of 2009 (ARRA) which allocated billions of dollars for the deployment of broadband and energy efficiency programs to immediately create new jobs. The purpose of this informational hearing was to examine the successes of DIVCA, CASF and ARRA in creating new jobs.

Much of the hearing focused on the impact DIVCA has had on the telecommunications industry with testimony from the California Public Utilities Commission (CPUC), the California Emerging Technology Fund, Office of the Chief Information Officer, AT&T, Verizon, and the Communications Workers of America (CW). CCTA President, Carolyn McIntyre, testified that the California cable industry has invested well over $20 billion in infrastructure and technology in California since 1996. CCTA also testified that even in these times of economic uncertainty, overall, the California cable industry has maintain its workforce, contributing significantly to the state’s economy.

 

Assembly Member Joan Buchanan (D-San Ramon) asked the CPUC’s Michael Morris, if the Commission’s DIVCA employment data included just video jobs or if the data also included Internet and telephone jobs. Although uncertain, the CPUC responded that the data was most likely only video jobs. Chair Fuentes responded that given the uncertainty and the potential for inconsistent data collection, it may be appropriate at this time to reopen the DIVCA legislation and clarify what type of employment information the telecommunication and cable industries need to report.

 

Assembly Member Sandré Swanson (D-Oakland) praised union labor and asked the CWA representatives what are the negative impacts of using non-union labor. The CWA representatives responded that the quality of service suffers with non-union labor. CWA also used the opportunity to express their frustration with Verizon and AT&T, noting that rather than gaining additional jobs with DIVCA, both companies have dramatically reduced the number of jobs in California, especially call center jobs. Chair Fuentes noted that he has a family member who lost his job with AT&T. This family member will now be moving in with the Chair in Sacramento to save money while looking for a new job. Fuentes further commented that customers recognize when they speak with a call center representative who is not from the state.  There were no new future policy objectives identified in the hearing.

 

Budget Update. Last week, CCTA reported that the Legislature adopted legislation (ABX8 2) that included $4 billion in current year budget reductions.  Centerpiece to that proposal was the elimination of the state’s gasoline sales tax and replacing it with an excise tax.  Although this action will produce the same amount of revenue, it grants the state more flexibility on how the funds may be spent.  Other actions included reducing the state worker payroll, the suspension of several local programs, and cuts to the state prison system. On Monday, this week, Governor Schwarzenegger vetoed the proposal saying that “it does not actually implement spending reductions and make progress to close our budget gap.”

On Tuesday, March 11th 2010, the Legislature officially adjourned the Eight Extraordinary Session which focused on the current year fiscal crisis.  The Legislature and Governor did very little to reduce the state’s $20 billion budget deficit. With the end of the special budget session, one of the Democrat’s major tax bills (ABX8 8) died.  This proposal would have included an expansion of sales tax for Internet sales; the suspension of professional licenses for taxpayers with delinquent taxes owed; requirement for financial institutions to match their account holders with a Franchise Tax Board list of delinquent taxpayers; and expansion of the “abusive tax avoidance transactions” definition with increase penalties and no judicial review.

 

Ninth Circuit Court Decision – Lojack Case.  In Rutti v. Lojack Corporation, the United States Court of Appeals for the Ninth Circuit looked at several issues related to how the company compensates certain nonexempt employees that use company vehicles. Specifically, the court examined whether an employee, Mike Rutti, should be paid for his commute time and the time spent at home using a company computer under California law. Mr. Rutti installs car alarms at either Lojack customers’ homes or their work place, so he takes the company vehicle home at night and drives to his first alarm install job in the morning, completing work data entries once he returns home. In this decision, the court decided that, under California law, employees who drive their employers’ vehicles to and from work should be paid for their commute time if they are under their employers’ control. However, since the decision did not establish what constitutes employer control, the decision now creates serious uncertainty. The practice of service employees commuting to and from work in company-owned vehicles is common. In a discussion with the California Chamber of Commerce, it is their assessment that the Ninth Circuit Court has kicked this back to the trial court to “undertake an analysis of employer control.” The Chamber is monitoring this proceeding.