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Tucked inside Gov. Arnold Schwarzenegger’s voluminous $143 billion budget proposal is a single-line spending provision that could mean big changes for California’s employment laws. The governor’s plan allocates slightly less than $500,000 to revive the Industrial Welfare Commission, the five-member body that regulates workers’ wages, conditions and hours. The Legislature defunded � and effectively deactivated � the commission in 2004 amid complaints that it failed to consider a minimum wage hike. The proposed budget offers no specific reason for re-funding the board and, unlike many of the governor’s other spending proposals, was not announced with any fanfare. Jehan Flagg, a spokeswoman for the Labor and Workforce Development Agency, says the governor budgeted the money only as “a safeguard” should an issue unexpectedly come before the commission. Flagg notes that the commission doesn’t meet regularly now and has “nothing coming up.” But plaintiff attorneys and labor groups fear that Schwarzenegger wants to restore the commission in order to pursue business-friendly changes to existing rules that govern overtime, meal breaks and other workplace practices that have formed the basis for large class actions. “The concern would be that they’re trying to accomplish things through the IWC that they can’t through the Legislature,” says Steven Zieff, an employment law specialist with Rudy, Exelrod & Zieff in San Francisco. “You can assume that there are a lot of people who’ve contributed to the governor’s campaign who are putting pressure on him to make these changes.” Legislative Democrats allied with labor and trial lawyers have deterred efforts by Schwarzenegger and business interests to weaken some of the most restrictive workplace laws in the nation. Labor unions have rallied public support to thwart other attempts to impose a business-friendly agenda on employment law. In 2005 Schwarzenegger officials tried unsuccessfully to relax rules guaranteeing workers a time-specific lunch break, first through an emergency regulation and then by a proposed rule subject to public vetting. Employers were particularly vexed by a three-year statute of limitations on claims against meal break violations. But the governor dropped the proposals in early 2006 in the wake of heavy criticism from labor interests and Democrats. One month earlier an Oakland jury had slapped Wal-Mart with a $172 million judgment for denying lunch breaks to workers. “We’re concerned, frankly, about what the agenda of an Arnold Schwarzenegger [Industrial Welfare] Commission would be,” says Caitlin Vega, a legislative advocate with the California Labor Federation. Schwarzenegger turned to the dormant commission last summer during a spat with legislative Democrats over increasing the minimum wage. Lawmakers wanted the minimum wage hiked and then automatically boosted in future years based on an annual inflation index. The governor wanted to increase the minimum wage without the indexing. Before the commission could actually consider Schwarzenegger’s plan, Democrats reached a compromise on a one-time $1.25-an-hour increase. “We saw with the minimum wage that the issue was dealt with and dealt with well in the Legislature,” says Vega. The budget line-item for the IWC includes 2.8 new jobs. “But that’s on paper,” says Flagg. “It’s my understanding that we’re not going to go out and hire anyone or spend any money unless something happens.” Lawmakers seemed surprised by the governor’s IWC item and had little to say about it. Assemblyman Sandre Swanson, D-Oakland, the incoming chairman of the Committee on Labor and Employment, said through a spokeswoman that he was still reviewing the budget and would issue an analysis at a later time. Cheryl Miller is a Sacramento-based reporter for The Recorder, which publishes California Employment Law magazine.

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