CRA Winter Newsletter III

March 19, 2021 | CRA Winter Newsletter III: Political, Legislative, Regulatory and CRA Updates

Message from the President

Just when we thought we were moving past an unpredictable 2020, 2021 came roaring in. As Californians are fighting exhaustion at the one year mark of the COVID pandemic, this week supporters of the Recall Governor Newsom campaign submitted enough signatures, over 2 million, to call a special election to recall the Governor. Now Governor Newsom and the state of California is in full campaign mode which will last for several months. How this effects legislative and executive action is hard to say right now, but the CRA team is engaged to ensure our members have the most up to date intel on what is going on in the state and developments related to the recall.   NEWSOM STATE OF THE STATE ADDRESS   You could get a sense of how the next few months play out if you watched the Governor’s State of the State address last week. Per the California constitution, the Governor is required to provide an annual State of the State address. Typically, this is done from the Assembly Chambers and these speeches, in the past, outline the ambitious goals of the Administration and tout the Administration's policy achievements in the past year. Governor Newsom was able to give a “typical” state of the state in 2020 and focused his entire speech on combatting homelessness.   But this is 2021, all bets are off and with a recall looming, Newsom used the traditional state of the state address as the kickoff to fighting the recall. The State Capitol is out, Dodger Stadium is in. From the pitcher’s mound of Dodger Stadium, with screens of “zoom” squares, Newsom used this opportunity to tout what he accomplished over the past year, admit to some mistakes and vowed we are “seeing light at the end of the tunnel.” CLICK TO READ MORE

Legislative and Political Updates

Online Marketplaces Update SB 301 (Skinner) has been amended with substantive language on online marketplace transparency. Click here to view the amendments. In summary, the bill will now require online marketplaces to: Require specified contact information of their high-volume, third-party sellers, including business name, name of a responsible officer of the business, address, phone, email, and tax ID; Require high-volume, third-party sellers to provide this information within 24 hours of meeting the high-volume threshold (200 transactions and $5,000 in gross revenues in any continuous 12-month period during the last 24 months); Verify the above information within three days, and any subsequent changes to the information within three days; Maintain that information on a secured server for no less than 5 years; Notify sellers at least once per year of their duty to certify the above information with the marketplace; Suspend the accounts of sellers who fail to respond to the above notice within three days, or provide updates of any changes to information within three days; Provide the above contact information to either a retailer or law enforcement within 10 business days of the request; Display clearly and conspicuously on the website the procedures for retailers and law enforcement to make claims related to illegitimate products, as defined, and contact information for persons to make inquiries related to illegitimate products.  The bill provides for enforcement through the Attorney General, with civil penalties up to $10,000 per violation. A violation is any incorrect seller information provided to a retailer or law enforcement which was not verified in the prior year.   These requirements would become operative July 1, 2022. CRA will continue to stay directly engaged on this measure. As you review these amendments we welcome any feedback you have. Please email me at steve@calretailers.com.  In addition, we will have a discussion of SB 301 in our Legislative Committee, tentatively scheduled for next Wednesday, the 17th. Not on the committee and interested in joining? Please email cra@calretailers.com to be added to the list serve. Garment Manufacturing CRA sent a letter to the Senate Committee on Labor, Public Employment and Retirement opposing SB 62 (Durazo). The bill places enormous burdens on employers in the clothing industry, presumes that entities with no control over garment workers are liable for an employee’s entire wage claim and includes punitive enforcement measures- all without addressing the root cause of the problems that exist in the garment industry: the need for increased enforcement of existing laws and education of workers and employers about California’s labor laws.  SB 62 will put employers in this industry, who are already suffering from the financial crisis of this pandemic, out of business or force them to move operations outside of California. Click here to read the letter, also available on CRA's member portal. Toxic Air Contaminants CRA sent a letter to Assemblymember Rebecca Bauer-Kahan opposing her AB 426, a measure that would unnecessarily and fundamentally change the successful two-step identification and control process in the California Toxic Air Contaminant Act as implemented in the Diesel Risk Reduction Plan. The bill would also grant indirect source rule authority over existing sources in conflict with the Federal Clean Air Act, which applies such programs to new or modified sources only, and would duplicate existing facility-by-facility review and mitigation under the California Environmental Quality Act as well as the myriad regulatory and data collection efforts on mobile sources currently being implemented by CARB. Read the letter here, also available on CRA's member portal. PAGA Mutual Arbitration Waiver CRA sent a letter to Assemblymember Heath Flora in support of his AB 385 legislation, which will provide much-needed relief to businesses facing litigation during COVID-19 by amending the Labor Code Private Attorneys General Act (PAGA) so that an employee who files a civil claim that is subject to an arbitration agreement may not pursue a PAGA claim where the employer voluntarily chooses not to enforce the arbitration agreement. Read the letter here, also available on CRA's member portal. CRA Master Bill List Click here to view CRA's latest list of bills the association team is tracking and engaging on. Visit CRA's member portal to access the latest bill tracking list and legislative letters and contact Steve or Ryan with questions and feedback. Organized Retail Theft Statute CRA is sponsoring AB 331 (Jones-Sawyer) to remove the sunset on the organized retail theft statute, Section 490.4, enacted two years ago per AB 1065 (2018) and set to expire June 30, 2021. Given the scope of the ORC problem in California’s communities, CRA’s intent is to keep this statute in place to focus on ringleaders and conspirators in these criminal networks and not the low-level petty thief. The statute is having a positive impact on combatting ORC. Five individuals were charged recently with organized retail theft in what is estimated to have been a $50 million enterprise at the time of the bust. The organized crime rings are also operating by preying on young people, homeless, and others, recruiting them into criminal behavior. AB 331 will help California’s businesses continue to fight these professional crime rings.  The CRA team successfully secured amendments that include four-year sunset extensions for both the ORC task force and the statute. A coalition letter was also submitted to the Assembly Public Safety Committee in support of the legislation. Click here to read the letter, also available on CRA's member portal. Battery Recycling Update SB 289 (Newman) was amended this week to establish a comprehensive, extended producer responsibility program for all batteries and battery-embedded products. The bill requires the creation of a product stewardship council financed by producers, which includes manufacturers and importers, but may include retailers if there is no in-state manufacturer or importer. It requires that there be at least one collection site per 10,000 residents in each county.  It also requires retailers make “reasonable efforts” to serve as authorized collectors, and that retail chains provide an unspecified number of collection sites in counties with insufficient number of collection sites. After July 1, 2025, it prohibits the retailer from selling any product from a noncompliant producer as outlined on CalRecycle’s website. It also includes reporting requirements from retailers.  SB 289 poses substantial concerns for retailers in terms of the breadth of eligible products, impacts to employee safety, store operations, costs, and other issues. Please contact Steve if you would like to be part of CRA’s working group on SB 289. The CRA team also sent a letter of support to Senator Bob J. Archuleta and the Senate Environmental Quality Committee in support of the Senator's SB 244, which would address the increased incidence of lithium-ion fires at waste and recyclingfacilities and operations. Recently enacted legislation places an even higher priority on waste recycling and composting as a way to both protect the environment and respond to the adverse impacts of climate change. This places an even greater importance on the need to protect and grow the network of facilities, recycling operations, fleets, and programs and to protect this essential infrastructure. Visit CRA's member portal to access the latest bill tracking list and legislative letters. Sales and Use Tax for Online Retailers Senator Steve Glazer has introduced SB 792, which would require online retailers to submit information on the location of purchasers within California, either by zip code or city, to the Department of Tax and Fee Administration (CDTFA).  Last Session, Sen. Glazer had SB 531 to prohibit the use of sales tax rebates as an incentive for retailers to locate distribution centers in certain cities. Governor Newsom vetoed that measure. It appears this bill is an attempt to make the case for SB 531 at the expense of retailers.  A background sheet on the proposed legislation states: “Yet, there is no transparency and accountability for which cities and corporations have these agreements, and the amount of money other jurisdictions are losing in the aggregate.” Please contact Steve if you have any feedback, particularly with regard to how this bill would impact current company sales tax reports. Mandated Sick Leave CRA, along with more than 100 employer organizations, expressed our strong opposition to the Paid Leave bill by Senator Skinner (SB 95). This bill mandates the addition of up to 80 hours of employer paid COVID sick leave and it is retroactive to January 1, 2021. CRA is especially worried about the retroactive provisions and the fact any employee who requests retroactive payment must be paid upon request. In addition, the challenge for employers’ is the inability to question the request for a retroactive payment.  As a reminder, this bill applies to ALL employers with 25 or more employees, whether in the public or private sector.   Another concern is regarding employer liability, again tied to the retroactive mandate, which only opens the door for more litigation in the state.  We expect the Governor to sign the bill in the next few days.

Gubernatorial Recall Update Supporters of the recall targeting California Gov. Gavin Newsom said Wednesday they submitted 2,117,730 signatures by the day's deadline, a number that appears to comfortably exceed the required threshold even if some are invalid. The final submissions will keep 58 county elections officials busy verifying the signatures. Already, proponents have registered a validity rate approaching 84 percent, higher than normal for voter-driven campaigns. County registrars have until April 29 to verify that proponents have obtained nearly 1.5 million required signatures across the state. The following constitutes key deadlines for the recall process moving forward. April 19: final report from counties of the number of verified submitted April 29: last day for counties to certify the number of valid signatures submitted within 10 days of the number of certified signatures reaches 1,495,709, Secretary of State notifies all counties that a recall has been initiated, which begins a 30 business day period to allow any voter who signed the recall position to withdraw the signature, and then counties have 10 business days to report to the Secretary of State an updated valid signature total, and then the Secretary of State, if there are still sufficient signatures, notifies the Department of Finance to request a fiscal estimate in consultation with county elections officials of the cost of the recall election. DOF then submits the estimate to the Chairperson of the Joint Legislative Budget Committee, Governor, Lieutenant Governor and the Secretary of State the Joint Legislative Budget Committee has 30 days to review and comment on the fiscal estimate the Secretary of State then notifies the Governor and Lieutenant Governor that the petition to recall has significant valid signatures and an election shall be called the Lieutenant calls an election not less than 60 nor more than 80 days following the notification of qualification. The recall election could be held in early November of this year, approximately one year out from when Newsom is up for re-election.

Regulatory Updates

Local Hazard Pay Ordinances Update More California local jurisdictions continue to pass Hazard Pay ordinances impacting retailers with increased costs in labor. Legal actions also continue to grow and three more Kroger stores recently closed in response in Los Angeles County, adding to two previous closures in Southern California. The following cities and counties have passed a Hero Pay ordinance that is either currently or will soon go into effect: Cities Berkeley Coachella Daly City Long Beach Los Angeles Montebello Oakland Pomona San Francisco San Jose San Leandro San Mateo Santa Ana Santa Monica South San Francisco West Hollywood Counties Los Angeles Santa Clara The following cities and counties are considering the pay increase: Cities Alameda Alhambra Antioch Belmont Buena Park Burbank Concord Costa Mesa Culver City El Monte Fresno Irvine Palm Springs Pasadena Redwood City San Carlos San Jose Santa Monica Counties San Diego San Mateo CRA continues to track these developments and is working with our members and partners including LA BizFed to fight these efforts. Visit CRA's member portal to access a shareable Hero Pay Local Ordinance Tracker including opposition letters sent, updated by our team in real time. CRA Working to Repeal Costly, Unnecessary Regulation on Portable Luminaires  CRA is working with the California Energy Commission to prioritize an update of appliance standards (Title 20) that would remove a requirement to include a high-efficiency light bulb with the retail sale of portable luminaires, such as floor lamps or table lamps.  Since 2010, this requirement has caused substantial supply-chain complications for suppliers and retailers, resulting in higher costs, limited choice for consumers and unnecessary waste. Now that incandescent specialty bulbs are banned entirely from stores in California, it is also needless.  CRA is compiling member data on how this mandate has affected consumers as part of a petition to the Energy Commission. If you would like to contribute to this effort, please contact Steve. Predictive Scheduling - City of San Diego The CRA team is watching a predictive scheduling proposal that is being discussed in the City of San Diego, but missed the timing. There is no specific proposal or timeline yet, but it is expected to be introduced soon. If so, it will mean that California’s two largest cities will be considering predictive scheduling ordinances this year – while the pandemic continues.  South Coast Air Quality Management District CRA helped promote an Important op-ed authored by the California Taxpayers Association and published in Southern California News Group publications that exposed the SCAQMD intent to prevent voters from weighing in on a proposed tax hike on essential businesses. "The South Coast Air Quality Management District doesn’t want voters to have a say on tax hike on essential businesses. SCAQMD is trying to suppress your right to vote on local taxes by pretending a major tax increase is simply a “fee,” but the law is not on the district’s side. There still is time for the agency to do the right thing and withdraw the proposal when it meets this Friday, or at the very least put it on the ballot as a special tax." Read the op-ed here. CRA sent a letter into the SCAQMD opposing the District's proposed Warehouse Indirect Source Rule (ISR). The draft ISR creates a complicated system of Warehouse Actions and Investments to Reduce Emissions (WAIRE) Points that must be earned by owners and operators of warehouses, via a “mitigation” fee on warehouse operators or by turnover of already regulated mobile sources. This rule is a costly and duplicative effort that fails to achieve demonstrable improvements in air quality in the South Coast basin. Read the letter here. Visit CRA's member portal to access CRA's latest regulatory letters. NACDS and CRA Urge California to Allow Increase in Pharmacy Technician-to-Pharmacist Ratio National Association of Chain Drug Stores (NACDS) President and CEO Steven C. Anderson and the California Retailers Association (CRA) President and CEO Rachel Michelin issued the following statement:   Pharmacies, pharmacists and pharmacy teams continue to play a critical role in the nation’s COVID-19 response and recovery efforts. Effectively leveraging the existing retail pharmacy network – where every individual lives within 5 miles of a retail store – can swiftly and efficiently accelerate the vaccination of priority populations and those in rural and underserved areas. This includes expanding equitable and convenient access to COVID-19 services – including screening, testing, and vaccinations – to communities and populations in every corner of California. Read the full statement here. State and Local Tax Reform for CA Business CRA joined a large coalition of diverse business groups across the state in submitting a letter to Governor Newsom and the State Legislature calling for "Parity for CA's Main Street Employers" and urging state leaders to enact needed reforms to State & Local Tax (SALT) policy this year. Click here to read the letter, also available on CRA's member portal.

CRA News and Activities

CRA and NACDS to Launch Campaign Regarding "Hero" Pay in California While the issue of Hero/Hazard Pay has not affected everyone, it has affected several CRA members. The CRA team is working on a collaboration with the National Association of Chain Drug stores on a statewide campaign to counter the narrative regarding, what we are calling "premium pay". While this may not affect you as of today, we are trying to get a head of the curve in case other retailers are included in the future as these local ordinances move forward. We are also organizing this effort to keep local governments from extending the pay increase mandates past the sunset outlined in the original ordinances.  We are excited to announce that very soon (by this week's end) the statewide campaign will officially launch. Our campaign is being spearheaded by Swing Strategies (who ran the successful NO on Prop 15 campaign). We are calling it "Californians for a Safe and Rapid Recovery" and our website will be PaychecksnotPolitics.

CRA Announces New Partnership with California Organized Retail Crimes Association The California Retailers Association (CRA) and the California Organized Retail Crimes Association (Cal-ORCA) announced today a new joint partnership to combat Organized Retail Crime (ORC) throughout California. “ORC is a growing problem not only for businesses, but our communities,” said Rachel Michelin, CRA President and CEO. “ORC fosters a host of illegal activity, including the recruitment of youth, homeless and others into theft crimes. These networks frequently use their proceeds to finance other illegal activity including drug smuggling and human trafficking.”

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CRA President and CEO Rachel Michelin Speaks with KTVU Channel 2 in Bay Area "One year later: How COVID killed small businesses" “At one point we were looking at 30% of particularly small business retailers not coming back. Asking for relief or modifications given California’s overwhelming number of rules, regulations, and fees, has proved and continues to prove to be an impossible task. There were opportunities, I think, that we advocated on, on how these stores could safely operate throughout the entire pandemic and that just didn’t happen."

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CRA President and CEO Rachel Michelin Responds to COVID-19 Cases in the Workplace CRA President and CEO Rachel Michelin spoke with the Sacramento Business Journal in response to COVID-19 cases in the workplace. "While retailers have been “on the forefront of safety including face covering protocols, retailers have faced challenges like other industries when it comes to transmission outside of the workplace. Without good contact tracing abilities, it’s difficult to know if people were exposed inside the workplace, or elsewhere. Just like in any industry, you can only do so much, and some of it comes down to personal responsibility."

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CRA’s VP of Government and Regulatory Affairs Steve McCarthy Responds to Santa Ana and Costa Mesa Mandating Hazard Pay for Grocery Clerks

Critics, like the California Grocers Association, say it unfairly singles out grocery stores while leaving out other businesses who employ essential workers.  Others say the wage increases will raise prices in stores.  “A mandated pay increase beyond what retail employers can tolerate without raising prices or cutting workforce hours will hurt both consumers and our hardworking employees,” wrote California Retailers Association Vice President Steve McCarthy, in a previous letter to the Santa Ana City Council.

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CRA Holds First Retail Roundtable of 2021

Thank you to the CRA members who were able to attend our first Retail Roundtable with Senator Andres Borgeas. The CRA team appreciates the Senator's time to listen to our members' concerns and engage in thoughtful discussion regarding past, current and future legislative actions that can support California's retail industry, especially as we reach one full year of the pandemic.    We plan on hosting more of these forums. Please email cra@calretailers.com for any requests on future retail roundtables including legislative representatives you and your company wish to meet with in a smaller, more intimate group setting.    These virtual forums are similar to the in-person meetings with individual state legislators CRA held prior to the pandemic as part of CRA's first-ever retail advocacy day.    Click here to view Senator Borgeas bio and list of committees.

CRA President and CEO Rachel Michelin Joins Los Angeles County and Central Valley Business Federations' First Sacramento Week forum on Pandemic Economic Relief Rachel Michelin, President & CEO of the California Retailers Association and Executive Committee Member of LA BizFed led an incredibly substantive and open conversation with Senator Andreas Borgeas, Senator Anna Cabellero, and Assemblymember Cottie Petrie-Norris around the devastating effect of the COVID-19 pandemic on the economy, the importance of assisting and protecting the economy and the need for a reliable and statewide vaccination plan.

CRA 2021 Policy Calls  The remainder of CRA's 2021 monthly policy calls covering this year's legislative session is listed below (dates are subject to change). For CRA members' designated contacts who are not regularly receiving these policy call reminders and calendar invites, please email cra@calretailers.com to be added moving forward. Policy calls are held on Fridays at 10:00am PT. March 12 (held this morning) April 16 May 21 June 18 July 9 August 20 September 10

CRA Member Highlights

To celebrate Women's History Month the CRA team is sharing highlights of our members' commitment to gender parity and supporting women in the retail industry. CRA's President and CEO Rachel Michelin also authored an op-ed published in Capitol Weekly that addressed the 'Shecession', a term that encapsulates how the pandemic has disproportionately impacted women.

COVID-19 Resources and Updates

The CRA team continues to send updates to our members with the latest information and resources related to COVID-19 including city, county and statewide executive orders and guidance, status of color-coded county tier system, latest sector updates and more. This information is also compiled on CRA's COVID-19 Resources and Updates web page. To receive this proprietary information, members can send an email to cra@calretailers.com.

CLICK HERE TO ACCESS RESOURCES FOR MEMBERS

CRA Member Portal

CRA members get access to CRA's exclusive online member portal, which contains coalition letters, floor alerts, regulatory comments and testimony that California Retailers Association authored or signed on to during previous Legislative sessions as well as the latest updates on the 2021-2022 legislative session. The portal also contains newsletter, news alert archives and important association governance documents for your reference. If you have not yet received your login credentials and access instructions please email cra@calretailers.com. We are also available to answer any questions you may have regarding portal navigation.

California Retailers Association https://calretailers.com/

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