California Legislature Approves Senator Padilla’s Bill Closing Predatory Loopholes in Public Contracts
SACRAMENTO – Senate Bill 751, Senator Steve Padilla’s (D-San Diego) legislation closing predatory loopholes in franchise agreements between municipalities and waste haulers was passed today by the California Legislature.
In 2022, a waste hauler failed to reach an agreement with its workforce that ultimately lead to a strike, but in the franchise agreement with the cities of San Diego and Chula Vista, there was a provision that shielded the company from liability in the face of a strike or work stoppage. As workers called for better wages and the strike continued, the vendor halted trash pickup, leaving small businesses and residents to deal with the consequences. The clause shielded the company from liability as the trash piled up throughout the city. The predatory loophole that the vendor exploited resulted in a public health emergency.
This provision, known as force majeure, is typically intended to protect parties in the face of an uncontrollable circumstance – “an act of God.” These provisions usually define uncontrollable circumstances as a natural disaster or an insurrection and are meant to cover action outside of the control of both parties. The franchise agreement in question included labor disputes, which were entirely within a company’s ability to negotiate, not an uncontrollable circumstance.
Shielded by this loophole, the vendor had no incentive to come to an agreement with workers, all while trash piled up around the city. In the end, workers were forced to accept a contract they had already refused, in order to get back to work and be able to serve their community. San Diego and Chula Vista businesses, residents, and workers were left deeply impacted in the wake of this public health threat. However, these exclusive monopoly agreements are a statewide issue, not just a regional one.
“Private businesses cannot be allowed to abuse Act of God provisions to shield themselves from liability,” said Senator Padilla. “We need to close these loopholes so the public doesn’t become the victim of a business’s unwillingness to pay workers a fair wage.”
Senate Bill 751 will ensure no franchise contract, license, or permit for solid waste handling services that a local agency enters into or amends on or after January 1, 2024, can excuse the service provider from performing their duties in the event of a labor dispute. Stopping municipalities from entering into these predatory agreements helps California stop an emergent public health crisis before it begins and protect workers’ legal right to strike and collectively bargain while maintaining protections for circumstances that are outside of the control of both parties. California businesses and residents should not have to suffer for workers exercising their right to strike and companies should not be shielded from liability when workers are demanding better wages and safer working conditions.
“SB 751 by State Senator Steve Padilla will even the playing field between solid waste contractors and their employees should employees exercise their right to free speech,” said Jaime Vasquez, Secretary-Treasurer of Teamsters Local 542. “SB 751 will make sure that solid waste companies conduct themselves responsibly when entering into bargaining with their employees. For too long have companies extended strikes as a way to starve their employees forcing them into accepting a less than appropriate offer. This bill will now force companies to negotiate fairly and suffer the consequences should they not act as a responsible employer. We want to thank Senator Steve Padilla for putting sanitation workers in the forefront and allowing for their voice to finally be heard.”
The bill passed the Senate on a 28 to 10 vote and passed the California Assembly on a 48 to 17 vote on Wednesday, September 13. It now heads to Governor Newsom’s desk to be signed into law.
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Steve Padilla represents the 18th Senate District, which includes the communities of Chula Vista, the Coachella Valley, Imperial Beach, the Imperial Valley, National City, and San Diego. Prior to his election to the Senate in 2022, Senator Padilla was the first person of color ever elected to city office in Chula Vista, the first Latino Mayor, and the first openly LGBT person to serve or be elected to city office. Website of Senator Steve Padilla: https://sd18.senate.ca.gov/