By Michael Belote, Esq, California Advocates, UTA California Lobbyist

Michael Belote, Esq,

There is an old saying that if you remember the 1960s, you weren’t there. Through the fog (haze? smoke?) of time, though, some UTA members may recall Herman’s Hermits, Peter Noone and “I’m Henry VIII”, where the second stanza is identical to the first.  For those born later, there is this thing called Google.

Heading into the second year of the current 2019-2020 two-year session of the California Legislature, there is a strong feeling that big issues from this year have not been closed out, and will be back for the 2020 legislative year, commencing in Sacramento on January 6. In no particular order, those issues include privacy, Dynamex, housing, wildfires and energy, and taxation.  Several of these issues could have significant impacts on UTA.

Privacy is the issue that may never go away, as we are squarely in the age of data.  As this column is written, implementation of the California Consumer Privacy Act (CCPA) is just over a month away, and there are strong indications that not all businesses will be ready to comply with the incredible complexity of the new law.  To briefly “top-line” the issue, the CCPA was enacted by the legislature last year with AB 375/SB 1121.  The law was delayed until January 1, 2020, to provide time for refinements, corrections, etc. of the complicated law.  Changes were made this year in AB 25 and other bills, which also go into effect on January 1.

That is hardly the end of the story, unfortunately.  The California Attorney General just released draft regulations implementing the CCPA, and recently, a wealthy San Francisco developer whose proposed initiative last year led to the CCPA, announced an intention to qualify another CCPA initiative for the November 2020 ballot.  Talk about a moving target!

Some UTA member companies will be covered directly by the CCPA, those with $25 million or more in annual revenues.  But even those not covered directly will be impacted, because an entity directly covered can turn to its “third party service providers” (say, a trustee doing work for a lender) and demand that they comply with a consumer’s CCPA requests.

The point is, privacy mania is here, it is not going away, it could change again in California and it will spread to other states and Congress, and UTA members need to understand the new law.

The second major issue is independent contractor classification issues under Dynamex v. Superior Court.  While the issue goes right to the heart of the “future of work”, with potentially devastating effects on the gig economy, few businesses in California will be completely unaffected by the decision. To top-line this issue, in order to safely classify the worker as an independent contractor, businesses must be prepared to prove that they are in compliance with the decision’s “ABC” test.  It is the “B” prong of the ABC test which is the most problematic: in order to be an IC, the worker must be performing tasks outside of the usual course of business of the hiring entity.  For UTA members using independent contractors, then, the question is whether the workers are performing tasks outside of the usual course of trustee business.

This year, AB 5 both codified and provided exemptions from the Dynamex ruling.   Just like privacy, however, that is hardly the end of the story.  There is broad agreement that more exemptions will be granted by the legislature in 2020; beyond that, big IC players such as Uber, Lyft, Doordash and others have announced an intention to place a Dynamex initiative on the November 2020 ballot.  If the legislature continues to address Dynamex on an occupation by occupation basis, we will be working on independent contractor issues for many, many years.

Housing is the next issue on which the legislature’s grade is “incomplete”. California is woefully behind on its goals for housing construction, and there is determination from Governor Newsom on down to create more housing. At the same time, the legislature enacted a statewide rent cap law this year, and a statewide rent control initiative may appear on the ballot next year.  Governor Newsom has announced an intention to work on evictions and foreclosures, although details are sketchy.  How might UTA be affected?

Finally, wildfires and energy:  Governor Gray Davis did not create the last energy crisis (we can credit Enron for that) but he surely paid dearly for the problem.  This time, it is PG&E and the concept of “PSPS” (public safety power shutoffs).  Turning the power off is designed to prevent wildfires, which in turn are causing problems of escalating homeowner’s insurance premiums and even insurance availability challenges.  Increases in foreclosures could occur.

Believe it or not, all is not gloom and doom in Sacramento.  Tax revenues remain strong and unemployment is low. But 2020 could look a lot like 2019 in Sacramento.  Let’s all resolve to remember these days in 40-50 years!