SB 931 - A Labor Union Scheme That Would Hurt California's Workers, Employers, Economy

Monday, September 19, 2011

During the last minute rush of bills, the Legislature sent the Governor Senate Bill 931 (Evans-D, Santa Rosa), which allows employers to offer payroll cards as an alternative to paychecks only if the employers offering them ensure that essentially free banking services go along with them. The irony of the bill lies in the fact that if the governor signs it, the very workers it claims to protect will be the ones it hurts the most.

“SB 931 would force employers to pick up the costs of providing banking services if they want to offer their employees what had been a highly convenient and cost-effective means of receiving their wages,” said Senate Republican Leader Bob Dutton (Rancho Cucamonga). “The result of imposing these so-called employee protections is that it would make it too expensive for employers to offer payroll cards. For all intents and purposes, it is a ban.”

The bill’s sponsor, the California Labor Federation, seeks to protect “unbanked” people (those who for whatever reason choose not to use banks) by providing them not just a means of cashing their paychecks but by providing them employer-paid banking services, including overdraft protection.

“If employers can’t offer payroll cards, those “unbanked” employees, estimated by the Labor Federation to be about 1.5 million people, are hurt the most because they’re stuck with limited and more expensive options,” said Dutton.

A coalition of major employers with large workforces in California and trade organizations representing job-creating companies opposes SB 931. The coalition includes companies such as Costco, Radio Shack and Sephora, and groups such as the Silicon Valley Leadership Group, the Bay Area Council and the Hispanic Chamber of Commerce. They all point out that beyond amending California’s Labor Code and effectively denying employers the ability to offer their employees the choice of being paid by check or payroll card, the bill would further increase the cost of doing business in California by denying employers the opportunity to take advantage of the cost-savings provided by going to an electronic payroll. In 2005 the Federal Reserve Board of New York estimated the cost savings to be between 80 cents and $1.80 per employee, per payroll period.

“SB 931 was passed by legislative Democrats.  If signed, all employees lose a banking choice, employers lose potential cost-savings and Californians lose the jobs and economic growth that could have been created by those savings,” Dutton said. “This is just one more bill on a long list of overreaching legislation that labor groups are trying to jam through this year. Senate Republicans stand with California’s employees and employers to urge the governor to veto this bad bill.”