STATE OF CALIFORNIA

DEPARTMENT OF INDUSTRIAL RELATIONS

INDUSTRIAL WELFARE COMMISSION

 

 

 

 

 

Public Hearing

 

 

 

 

 

 

September 21, 2000

San Diego State Building

1350 Front Street

San Diego, California

 

 

 

P A R T I C I P A N T S

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Industrial Welfare Commission

BILL DOMBROWSKI, Chair

BARRY BROAD

DOUG BOSCO

HAROLD ROSE

 

Staff

ANDREW R. BARON, Executive Officer

MARGUERITE C. STRICKLIN, Legal Counsel

MICHAEL MORENO, Principal Analyst

 

 

 

 

 

 

 

 

 

 

 

I N D E X

Page

Proceedings 7

Approval of Minutes 7

On-Site Construction, Drilling, Logging, and Mining 8

SCOTT WETCH, State Building and Construction 8

Trades Council

PAUL COHEN, Northern California Carpenters 23

PATRICIA GATES, Van Bourg, Weinberg, Roger & 27

Rosenfeld

ART PULASKI, California Labor Federation, AFL-CIO 36

GARY KARNOPP, Southern California-Nevada Regional 37

Council of Carpenters

MIKE MAGALLANES, Southern California-Nevada 38

Regional Council of Carpenters

JOHN SORENSON, International Brotherhood of 39

Electrical Workers, Local 569

KIRK CROSSWHITE, Southern California Plumbers & 39

Pipefitters

JOHNNY SIMPSON, International Brotherhood of 40

Electrical Workers

JOE MARTIN, construction worker 40

DANA LEVY, Plumbers & Pipefitters, San Diego 42

TOM KUNDE, International Brotherhood of Electrical 44

Workers, Local 569

JERRY HAFT, OP & CMIA Plasterers International 44

Association

TOM CASTLEMAN, Plasterers Local 200 46

CHARLEY FOUQUETTE, Ironworkers, San Diego and 47

Imperial Counties

INDEX (Continued) Page

JAMIE KAHN, Associated General Contractors 50

PETE SAUCEDO, Associated General Contractors 67

BRAD BARNUM, National Electric Contractors 72

Association

Minimum Wage 72

JON ROSS, Kahl Pownall Advocates, California 73

Restaurant Association

SUSIE BAUMAN, restaurant owner, Rubioís Restaurant 73

and Tom Hamís Lighthouse

FERNANDA MARSHALL, Rubioís Restaurant 76

PAUL NISHIAMA, Rubioís Restaurant 77

DANTE SERENA, Rubioís Restaurant 78

CECELIA MORENO-MEAD, restaurant owner, Crest Café 79

TOM PENN, restaurant owner, Sammyís Wood-Fired 83

Pizza

LEWIS BOARD, restaurant consultant, LB Spotter 85

Services

JOHN HAWKINS, Cloud Nine Shuttle 89

MILTON MORITZ, National Association of Theatre 93

Owners of California

STEPHEN ZOLEZZI, San Diego County Food and 95

Beverage Association

GINNY PINKERTON, California Association for 97

Health Services at Home

VICTORIA GOODMAN-BOLETTI, California Association 99

for Health Services at Home

Sheepherding Exemption 102

GEORGE SOARES, Western Range Association 102

DENNIS RICHARDS, Western Range Association 102

INDEX (Continued) Page

DANIEL ELGORRIAGA, sheep rancher 109

DOMINIC MINABERRIGARAI, sheep rancher 132

MARTIN ETCHAMENDY, sheep rancher 145

CHRIS SCHNEIDER, Central California Legal 147

Services

VICTOR FLORES, Sheepherders Union 150

MARK SCHACHT, California Rural Legal Assistance 154

Foundation

Minimum Wage (Continued) 162

ART PULASKI, California Federation of Labor, 162

AFL-CIO

SR. JUSTINCE CHURCH, Interfaith Committee for 168

Worker Justice

ROSA RIVERA, ACORN, garment worker 170

ANTONIA VEGA, former hotel employee 171

MARIBEL GARCIA, bank janitor 173

AARON NUPP, emergency medical technician, 175

American Medical Response

SUSAN MILLER-FRENCH, United Domestic Workers of 178

America, AFSCME

DELFINO CRESCENIO PALACIOS, farmworker 181

ELIZABETH MARTINEZ, Californians for Justice, 183

second-grade teacher

SUNDARI BARU, Ph.D., Center for Policy 184

Initiatives

JERRY BURKIEWICZ, San Diego-Imperial Counties 186

Labor Council

ART PULASKI, California Labor Federation, 188

AFL-CIO

INDEX (Continued) Page

KEN SEATON-MSEMAJI, United Domestic Workers of 190

America

MARY SIMMONS, homecare worker 190

KEN SEATON-MSEMAJI, United Domestic Workers of 197

America

NANCY WILLIAMS, San Diego Housing Committee 198

CATHY EVANS CALDERWOOD, San Diego Welfare 201

Warriors, Supportive Parents Information

Network

TINA VERDUGO 211

REV. CLARA DARVY, homecare worker, United 211

Domestic Workers of America

DONNA SMITH, homecare worker 214

Adjournment 217

Certificate of Transcriber 218

P R O C E E D I N G S

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(Time noted: 10:00 a.m.)

COMMISSIONER DOMBROWSKI: Iíll call the meeting to order. Let the record show Commissioners Dombrowski, Bosco, Rose, and Broad present. Commissioner Coleman is not going to make it.

The first item on the agenda is approval of the minutes. Do we have a motion?

COMMISSIONER BOSCO: So moved.

COMMISSIONER ROSE: Second.

COMMISSIONER DOMBROWSKI: All in favor, say "aye."

(Chorus of ayes)

COMMISSIONER BROAD: Mr. Chairman, Iíd like to make a motion with regard to the Statement of Basis and our orders -- wage orders reflecting implementation of AB 60.

I move that the Commission finds, in accordance with Labor Code Sections 1177, 1182.1, and 1183, that there has been publication of a Notice and Summary of Recent Actions taken by the Commission, which adequately informs the public, and that it would concur on the Statement as to the Basis for the amended orders; further, that the actions taken by the Commission, that is to say, the Statement of Basis and our orders, will reflect the fact that the governor just signed SB 88 yesterday, so modifications will have to be made.

COMMISSIONER DOMBROWSKI: Okay. Any objections?

(No response)

COMMISSIONER DOMBROWSKI: Assuming none, do I hear a second?

COMMISSIONER ROSE: Second.

COMMISSIONER DOMBROWSKI: All in favor, say "aye."

(Chorus of ayes)

COMMISSIONER DOMBROWSKI: The second item on the agenda, consideration and public comment on proposed regulations regarding on-site occupations in the construction, drilling, logging, and mining industries.

And letís start with the panel Scott Wetch has put together.

MR. WETCH: Mr. Chairman, Scott Wetch. Iím here today as a member of the construction, mining, logging, and drilling wage board, and also representing the 300,000 members of the State Building and Construction Trades Council.

For the purposes of the record, I just want to reiterate comments made at the last hearing regarding the wage board process. And I believe the record, both at the wage board as well as the testimony at last monthís hearing, bear out the fact that there was plenty of opportunity for all parties involved to make motions, make proposals, to debate the issues, and there was quite a bit of give-and-take and compromise that went on.

Iíd like to sort of address an issue -- I understand there was a letter submitted to the Commission last evening -- and I understand that there will be parties representing employers in the state that perhaps is going to propose later today a blanket exemption for construction in regards to daily overtime, and specifically collective bargaining agreements. And Iíd just like to remind the commissioners that the motion made by Commissioner Broad to establish this hearing on the recommendations explicitly excluded the recommendation that came out, on a narrow 9-8 vote, regarding a blanket exemption from being considered at these hearings.

What Iíd like to do now, Mr. Chairman, is just go through and make some comments and recommendations for some minor changes to the -- to the recommended wage order.

The first issue in regard Section 1, "Applicability of Order." We believe that it would be useful to have a clarification there to clarify that this wage order will not impact or apply to public works projects, because the -- Article 14, Section 2, of the State Constitution clearly states that workdays on public works project shall not exceed 8 hours. And I need to clarify that, that you should clarify that the "Hours of Work" section of the wage order does not apply to public works because of the constitutional preemption.

COMMISSIONER BROAD: So, in other words -- may I ask? -- so, what youíre saying is only excluding the overtime provision, because thereís a flat-out prohibition.

MR. WETCH: Right.

COMMISSIONER BROAD: So what we could say, then, in Section 3, the hours section, "except as provided by," you know, Article whatever-it-is of the Constitution and the sections of the Labor Code.

MR. WETCH: That would be the appropriate place there, correct.

Thereís a small -- Subsection (D) of the "Applicability of Order" section, thereís a typo in regard to the word "supersedes" that should be corrected.

On the "Definitions" section, thereís -- there was an oversight in drafting, whereby the term "building" -- the term "building" was excluded from the definition of construction occupations.

The wage board clearly voted to have the definition of construction occupations mirror the definitions, if you will, in the "Applicability" section, where, of course, "building" is included. But I believe, in the transcribing, that the word "building" is left out of the definition. That needs to be corrected.

Iíd just like to remind the Commission that, in regard to the "Definitions" section, there was a tremendous

amount of consensus and compromise in the wage board process, and that the employee side of the wage board was not completely satisfied with the definition, but given the employersí concerns, we acquiesced and defined it less broadly than we had intended.

Iíd also like to bring to your attention the importance of the definition of "outside salesperson" in the "Definitions" section that we feel very strongly about. And in order to protect our workers who are actually out performing construction and maintenance, requiring installation sort of work, and we wouldnít want to see them misclassified as outside salespeople merely because they may take an order while theyíre on the job site. Going out to somebodyís to fix a refrigerator, they may, in fact, take an order for a part, where, in fact, really theyíre there to repair the refrigerator. And we wouldnít want to see them misappropriately defined as an outside salesperson. So, we strongly support that definition and wanted to underscore that.

Iím going to, I think, if I could, just go through and raise a couple new issues, because I believe that, at our last hearing, we testified to the substance of the wage order.

Specifically, in regard to reporting time, reporting time pay, we feel strongly -- we know that there are some folks out there that are still concerned and upset with the reporting time pay provisions -- and we want to underscore the importance of that provision.

Specifically, the employer-mandated travel section, that is essential to protect a worker from being seesawed between job sites, which is often the case, where they may be told to report to a particular job site, and then, after performing particular work there, being told to go to a secondary job site, and as a result, not being paid for the employer-controlled travel in between. We want to, again, really underscore and stress the importance of that section.

In addition, Commissioner Broad, at the last hearing when we testified to our support for the wage board recommendations, you raised the issue of uniforms and equipment. And specifically, you asked us to look into the issue of -- it would be Subsection (B) of Section 9, which speaks to the employees being required to provide their own "hand tools and equipment customarily required by a trade or craft." After speaking with the IWC staff in regard to how that's been interpreted in the past, as well as looking at the Labor Code, specifically Labor Code Section 2802, we feel comfortable that the language within the wage order would provide sufficient protection to employees.

However, itís been brought to our attention by the Labor Commissioner that the section as itís currently drafted would actually violate Labor Code Section 2802. And so, with me today is Patricia Gates, who will be testifying next and can get into -- sheís prepared a brief for the Commission, and she can speak to that issue.

But we feel comfortable with the change recommended by the Labor Commissionerís Office, that this would be consistent to the IWCís interpretations, and that 2802, in combination, would provide adequate protection for employees.

We do have a concern in Subsection 8, the "Deductions from Pay, Including Cash Shortage and Breakage" section. There's some language in the second paragraph which reads:

"No employer shall make any deduction from the wage or require any reimbursement from an employee for any cash shortage, breakage, or loss of equipment, unless it can be shown that the shortage, breakage, or loss is caused by a dishonest or willful act, or by the gross negligence of the employee."

That was not part of the recommendation -- that was not included in the language made by the wage board. Apparently, it found its way into this -- into the group language that was presented at the last hearing inadvertently. But if you look back at the language in the record of the wage board, that language was not included. And, in fact, that language is in violation of the Labor Code, Section 200, et al., as well.

And so, we would ask that the Commission review that. In fact, I think the record will bear out the fact that that was not part of the recommendation made by the wage board, and it should be excluded.

COMMISSIONER BROAD: Mr. Chairman, maybe what we can do between now and the next hearing is have our counsel confer with the State Labor Commissioner, because there are provisions in our -- I mean, but that provision, if youíre correct that that provision violates a provision of the Labor Code, then it violates it in every single wage order, because itís in every single wage order. And obviously, you know, that would be a significant problem. So I think itís something that we should just sort of look at, a conflict there.

MR. WETCH: We believe that it definitely -- it should be review. But as to the fact that it wasnít included in the wage boardís recommendations, I think the significance is that was a section that was adopted by a two-thirds vote. And that language was not part of the language, and itís not in the record either. So it should

-- it should be excluded from that.

COMMISSIONER BROAD: In its entirety? I mean, what --

MR. WETCH: In its entirety. The second paragraph -- the second paragraph of that section was not part of the language adopted by the wage board.

COMMISSIONER BROAD: Youíre not saying that an employer should be able to require something --

MR. WETCH: No. Itís the provision -- the secondary provision which I just read which would actually, under some circumstances, allow the employer --

COMMISSIONER BROAD: Okay.

MR. WETCH: -- to remove money from an employeeís paycheck to cover breakage or other sorts of --

MS. STRICKLIN: Excuse me. Whatís the section, the title of the section?

MR. WETCH: "Deductions from Pay, Including Cash Shortage and Breakage."

MS. STRICKLIN: And thatís the second paragraph?

MR. WETCH: The second paragraph was not part of any -- if you pull your record from that, itís clear that it wasnít part of that.

Now, the first section, we -- Iíd like to underscore the importance of, and that is the section which prohibits the employer from charging an employee for cashing a payroll check. And that is increasingly becoming a problem in the construction industry, where agents of employers, employment agencies and so forth, are actually charging a significant sum to employees to receive their -- to cash their paycheck. In fact, theyíre even using ATM machines, where they give an employee a -- basically, an ATM card, and they can secure their check in cash simply by using -- utilizing the machine at the employerís office site, and then theyíre charged a substantial sum to -- in order to cash their own check.

That section, I want to underscore, is quite important.

COMMISSIONER BROAD: Mr. Wetch, I believe that the Labor Code has a provision in it saying that paychecks have to be cashed without deductions already. I mean, itís illegal to charge a fee.

MR. WETCH: I think what theyíre doing, and what I wanted to underscore here, is that theyíre claiming that the ATM is a sort of -- itís a service that theyíre providing, it is a separate business, that itís no different than a -- that theyíre, in fact, providing a direct deposit account that individuals set up, and that then theyíre allowing the individual to access their cash for a fee like we pay in an ATM machine. But rather than having it be an account set up through a financial institution, itís a -- basically an account thatís been set up by the employer.

And we would argue, I think, that thatís violating the Labor Code as well. But we thought that, being that itís becoming an issue, that we would underscore it by placing in there, in the wage order.

The next issue that Iíd like to speak to is -- the meal period provision is standard to other wage orders. And we feel itís vital that construction workers receive the same protection in regard to meal periods.

The rest period provision, at the last hearing we committed to continue to work with some employer groups to clarify this language and to clarify the flexibility we believe was provided in the original language. And to that, we would recommend an additional sentence be added.

Currently, the "Rest Periods" section reads:

"Every employer shall authorize and permit all employees to take rest periods, which insofar as practicable shall be in the middle of each work period."

We think it would be useful to add the following sentence:

"Nothing in this provision shall prevent an employer from staggering rest periods to avoid interruption in the flow of work and to maintain continuous operations."

This addresses Commissioner Broadís concern, or the issue that he raised at the last hearing, that certain types of work, be it cement -- certain types of equipment that canít be shut down very easily, that there needed to be some consideration given to those sorts of concerns.

And we believe that by clarifying that you can stagger the rest periods and schedule them not to interfere with that sort of continuous operations clarifies the flexibility that we intended in the wage order.

In addition, the subsection of the "Rest Periods" section dealing with collective bargaining agreements, we would suggest the following changes. The section currently reads:

"This subsection shall apply to any employee covered by a valid collective bargaining agreement unless the collective bargaining agreement expressly provides otherwise."

We would suggest the amendment to read:

"This subsection shall not apply to any employee covered by a valid collective bargaining agreement if the collective bargaining agreement provides equivalent protection of the employee against fatigue."

This is to address the issue -- oftentimes verbiage in the collective bargaining agreements may vary from one agreement to the next, and we want to make it clear that if the collective bargaining agreement provides for equivalent protection for a 10-minute rest period, but may call it or refer to it as something other than that, as long as it provides equivalent protection to the 10-minute rest period, that that would be the intended exemption within that subsection.

COMMISSIONER BOSCO: May I ask a question? Does this differ from other similar provisions? Because I know in other areas we accede to collective bargaining agreements without opening them up to determine whether they match standards that we might be setting. Wouldnít this be the camelís nose under the tent, that all of a sudden now weíre starting to look to see whether collective bargaining agreements meet the requirements of other standards?

COMMISSIONER BROAD: Well, the problem is, thereís a Supreme Court decision called Livadas, which came down maybe ten years ago, that says that the state canít discriminate against employees covered by collective bargaining agreements by allowing them to have less protection than nonunion employees, or vice versa.

And so, it brought into some lack of clarity the question of whether state agencies can -- that protect labor standards can describe collective bargaining contracts, irrespective of what they say. In other words, it would probably be unlawful for us to say that every worker in the State of California gets a rest break, but that a union contract can waive the requirement of rest breaks altogether and say you never get a rest break.

That, I think -- I think weíre already, I guess, in that business, in the fact that we -- under the Supreme Courtís decision.

COMMISSIONER BOSCO: My question maybe was a little more limited, though. I donít know of any other place -- and Iím not an expert in this -- but any other place where we sort of cross the curb, where -- such as the provisions Mr. Wetch is talking about, where we say, "Well, we have a standard out here, and if that contract doesnít meet that standard, then -- you know, then Ďxí happens," because that sort of opens up a lot of lawsuits, I think.

COMMISSIONER BROAD: Well, itís true. Thatís whatís in -- strictly about overtime, that a contract or collective bargaining agreement has to provide for a wage level thatís --

COMMISSIONER BOSCO: Yeah, but thatís -- thatís not subjective. This is subjective, you know, as to whether -- fatigue, you know, whether -- the language of it, Scott

-- Mr. Wetch pointed out -- is that whether provisions for fatigue, as I recall, that are similar to --

MR. WETCH: The language is, "provides equivalent protection of the employee against fatigue." I suppose, if you limit it to just "equivalent protection," I think that would meet the same standard that AB 60 provided for daily overtime itself.

COMMISSIONER BOSCO: Daily overtime is very easy to objectively ascertain. Fatigue is not. Thatís what Iím saying. I think we open it up to very subjective areas. And I donít object to the intent of it; I just think it opens up a whole new area of subjectivity we might not want to do.

MR. WETCH: I think that we would be willing to limit that language just to "equivalent protection." And then the standard is, you know, a 10-minute rest period is enough to have some "equivalent protection" to that, similarly to the standard set in AB 60 for a minimum wage being the standard for determining if daily overtime has to be --

COMMISSIONER BOSCO: Thatís the point Iím making, that it has to be objective standards so we can easily be sure. Thatís a --

MR. WETCH: We would amend our request, then, to the board and suggest that we just put "equivalent protection" and leave out the qualifier.

The last point that I want to raise on rest periods is the issue that -- itís wholly beyond the State Building Trades as to why the state would want to provide rest periods for all other workers in the State of California who are employed at positions that, it could be argued, are much less strenuous than the physical demands that are placed on a construction worker or somebody working in drilling, mining, or logging industries, and not provide it for those employees. And so we strongly, strongly support and urge the Commission to adopt the rest periods. Itís not only a matter of fairness and equity, but itís really a health and safety issue for our workers.

Lastly, the last point I want to raise is the issue regarding the "Penalties" section and the penalty for failure to provide meal periods or rest periods. And I just want to make sure the Commission understands that -- and I believe that it will be raised later by the economists -- that AB 2509 is on the governorís desk, which would actually put in the statute a penalty of one hourís pay for violation of meal periods or rest periods. We think it should be included in the wage order in the event that the bill is not signed, but I think that if the bill is signed, itís clearly an issue that is important.

COMMISSIONER DOMBROWSKI: Could we keep the conversations down? The buzz out there is kind of playing with the sound.

MR. WETCH: Thank you. With that, Iíll hand it over to the next in line.

MR. COHEN: Mr. Chairman and members, staff, hello again. Iím Paul Cohen, member of the wage board, representing the Northern California Carpenters.

I wanted to touch on a couple of issues. We covered some of this in testimony in front of the Commission, but I wanted to be sure that we get it on the record as part of these public hearings and your deliberations.

Thereís one issue, first of all -- I guess Iíll take these in order as they appear in the proposed wage order -- and the first one is really a technical clean-up that I would suggest your staff take a look at. This occurs in Section 3, Subsection (B), Paragraph 18, and it refers to the possibility of an alternate workweek schedule allowing for 12-hour days for offshore oil and gas.

Now, if you look at the record, the panel discussed this issue, clearly voted to support that exception. And Iím not looking to make any change that would change the intent of that. However, I read the paragraph and I went back and I read what we voted on, and what -- everything thatís in the record, and I simply could not make sense of it. It is a run-on sentence that repeats the word "compensation" multiple times. I have some specific amendments I could suggest, and Iím really open, but itís just sort of clarifying the -- getting it back into the English language. I think if you look at whatís there now, itís a -- itís a run-on sentence that stumbles over itself.

I would suggest -- and this is, again, Section 3, Subparagraph -- Subsection (B), Paragraph 18, starts:

"Notwithstanding Paragraphs (1), (4), and (5), for offshore oil and gas production, drilling, and servicing occupations, an alternative workweek schedule" --

-- I would suggest insertion of the word "may authorize" -- it currently says "an alternative workweek schedule authorizes" -- I would suggest it should say "may

authorize" --

" -- work by the affected employees of no longer than 12 hours per day within a 40-hour workweek without the" --

-- thereís a missing Ďtí there in that word --

" -- payment to the affected employees of an overtime rate of compensation."

Thereís no period. And thatís where sort of the run-on really begins.

COMMISSIONER DOMBROWSKI: Can you supply that? Just give it to us in writing?

MR. COHEN: I can give that to you in writing, yeah. And thereís some additional language that then makes it flow. Iíd be happy to submit that in writing.

COMMISSIONER DOMBROWSKI: Fine.

MR. COHEN: Okay.

Moving on, then, to some of the substantive issues that still seem to be at debate, first of all, with respect to Section 9, on "Uniforms and Equipment," I would refer to my testimony in front of the Commission about common practice in the construction industry, about the Carpenters master agreement for Northern California that refers explicitly to hand tools and excludes power tools and automotive equipment. In fact, if you look at the deliberations of the wage board, we explicitly discussed language that exists in collective bargaining agreements. And I believe Ms. Gates has some additional testimony to provide to that effect.

I think it -- my only concern is that it be clearly understood that this section, when it says employees provide tools, that we are limiting that to hand tools and not opening the door to power tools, automotive equipment, or, for that matter, safety equipment thatís required by OSHA to be provided by the employer.

And those are the concerns I have on that section.

With respect to Number 10, the "Meals and Lodging" -- excuse me, Iím sorry -- actually, I mean to talk about Number 11, "Meal Periods," the staff said that that was boilerplate, and it is, with one exception. And that is the exception, as Iíve previously testified to, about the requirement that employers provide the opportunity for construction workers to wash their hands. Most places of employment have a bathroom with working plumbing. Many construction sites do not. We were not able to get a two-thirds vote for the requirement than an employer provide potable water, soap or other suitable cleansing agent, and single-use paper towels so those construction workers can wash their hands before they eat lunch.

I would just refer you to a sign that I saw in the bathroom of a restaurant. You know, they all have the signs posted that say, "State law requires employees . . ." This one simply said, "State law and common decency require that you wash your hands before returning to work." I would suggest common decency would require that construction workers be permitted an opportunity to wash their hands before coming out of the dirt to eat their lunch.

Finally, with respect to rest periods, we had a lot of discussion about flexibility. Iíve had some discussions with Mr. Wetch. I personally think that the language that rest periods should, insofar as practicable, be in the middle of each work period is flexible as it stands. But I understand the testimony that was presented about the flow of work and continuous operation of certain heavy equipment. And I have no objection to the language offered by Mr. Wetch that says that, "Nothing in this provision shall prevent an employer from staggering rest periods," so that some of the crew is working and others take a break, and then you alternate, so that continuous work processes can, in fact, continue.

I am -- I share, I guess, Commissioner Boscoís concern about some of the other language. I really believe that construction workers are entitled to a rest period, as are most -- already under your orders, most other workers in the State of California. And Iím concerned about anything thatís going to make enforceability difficult for the Labor Commissionerís Office. So I think we should take a close look at the language weíre suggesting here so that we end up with a provision that clearly states that construction workers get a rest period of 10 minutes for each four hours of work and itís an enforceable provision.

And with that, I think I will conclude my testimony for today. I thank you for your indulgence and for allowing me to be part of this process.

MS. GATES: Hello. My name is Patricia Gates. Iím here today as counsel for the State Building Trades.

And I have to apologize, first, to the Commission. I appreciate the entire procedure that the Commission has followed in regards to this on-site wage order, and I admit that I only submitted my written testimony to you yesterday, but I knew that this was a three-part hearing, so I thought you might have opportunity to read it between now and October.

COMMISSIONER DOMBROWSKI: Why would you change it now?

(Laughter)

MS. GATES: Fair enough.

I would like to speak to a couple of things that Scott raised.

One is, just on the "Applicability of Order," this if a very technical change, but I noticed that itís -- at the very beginning, it says, "This order shall apply to all persons employed in the on-site occupations of construction, including, but not limited to," and then it lists a lot of construction occupations, and it says, "as defined in California Business and Professions Code Section 7095, et seq." That is actually the contractors state license law, and it doesnít really define those construction terms, like "alteration," "demolition," "building," and "excavating," "renovation." What that section of law does is it provides the law for when a contractorís license is required.

So, I would just offer a reference to that, after the word "repair work," to say "and work for which a contractorís license is required by" that same code section. I just think it could mislead someone who would go to that section looking for definitions of the operative words, "construction," "alteration," "demolition," "repair." So, thatís a technical amendment I would ask the Commission to consider.

And in Section (D), below, where you say, "This Order supersedes any industry order," this should read, "any industry or occupational order," because there are two types of orders. And since we specify one, I think itís necessary to specify the other.

The same exact reference to the contractors state license law under "Applicability," I would recommend in the "Definitions" section, referring to it the same way, "and work for which a contractorís license is required by," just to clarify that if someoneís looking to that law for that information.

There are some other technical problems where paragraphs were lost, I think, along the way, in Section 3. But I can submit those in writing; I donít have to testify about them.

I would suggest adding a paragraph at the end of the capital (B) section in Subsection 3, just before (C), that says, "In no case can an alternative workweek requiring more than 8 hours of work in a day be utilized on a public works project in violation of Labor Code Section 1815." I think I would handle it there because it would clarify that alternative workweeks could be applied on private jobs, but not on public jobs. And I think thatís the extent of the conflict with public works and prevailing wage law.

Now, the two things that I sent the brief to you about were things that I had promised at the August 17th meeting that I would provide this Commission with a legal brief on the subject. One is on the extent to which employers are allowed to deduct from pay. And I think that the law has been very clear on this. Itís -- in your proposed wage order, itís your Section 8, entitled "Deductions from Pay, Including Cash Shortage and Breakage." I would recommend that that section be what the wage board originally submitted to you, which is entitled, "Deductions from Pay," period. And the wage board, when it met -- it was a public hearing, and I was present -- I remember that the board, the wage board, referred to California Labor Code Section 220 through 226. Rather than adding that second sentence, which would confuse an employer, because the second sentence seems to say to an employer, "You can make deductions from the payroll check if you think somebody broke something of yours," but thatís not the law. The law on the subject of what you can deduct from a workerís paycheck is very specific and goes back to a 1959 U.S. Supreme Court case, Nidac. And itís a whole issue about garnishment of wages.

And I think that the wage order, as it looks right now, would confuse that. So I would suggest just removing that second sentence to avoid that conflict.

And the reference to Labor Code 224, which is the Labor Code provision that specifically tells employers what they may and may not deduct from the paycheck, is a better way to handle that.

Moving down to Number 9, "Uniforms and Equipment," this also has a corollary in state law. And thereís a basic principle that this board, this Commission, is subject to, and that is, if a state statute speaks on an issue, the statute trumps the regulation. And since these are regulations, these need to be in conformity with state Labor Code. If theyíre out of conformity, a contractor or an employer could read this and think that theyíre entitled to something that they may not be entitled to because of the state law.

So I think itís really important that, when thereís a state law on the same subject, that a reference to the Labor Code section or the Government Code section would be helpful.

And I would recommend that on this "Uniforms and Equipment," in Subsection (B), in the fourth line down, if you were just to cross out "be required to" and leave the words, "employee(s) whose wages are at least two times the minimum wage may provide hand tools and equipment customarily required by the trade or craft, in conformity with Labor Code Section 2802."

Thereís case law that has interpreted 2802. And in one case involving a machinist who left his tools at the job because it took a forklift to lift his toolbox -- and I briefed this case for you -- the employer had to pay when those tools were stolen, even though they were the personal possessions of the employee, because they were needed for his job. And under 2802, the court said that it was appropriate for the employer to pay in that circumstance.

And I wouldnít want this section to mislead any employer about their legal duty. So I would recommend that reference.

COMMISSIONER BROAD: Can I ask a question about that? What -- is Labor Code Section 2802 in direct conflict with the language in our wage order?

MS. GATES: I -- in my opinion, yes. As it -- as your wage orders now read, my -- my opinion about that is yes.

COMMISSIONER BROAD: Well, I mean, it says here, "An employer shall indemnify his employee for all that the employee necessarily expends or loses in direct consequence of the discharge of his duties." Is the regulation, in your opinion -- wouldnít Labor Code Section 2802 permit the employer to require employees to maintain and buy hand tools? I mean, whatís the -- Iím confused about whatís permissible under 2802. It looks like --

MS. GATES: I think an employee may bring -- if itís the custom in the trade, I think an employee may bring the tools to the work site. I think that -- I donít think, I know -- that under the machinistís case, if the employeeís tools are stolen from the workplace, the employer has a legal duty under 2802 to replace those. So thereís an indemnity requirement.

And I think that as -- if you would read Subsection (B) to mean that after tools got stolen, an employee might have to spend $8,000 again to replace those tools, I think that if the employer would require him to do that, that would be in violation of 2802.

COMMISSIONER BROAD: Okay. But you wouldnít see that thereís any conflict between the basic notion that in some circumstances, where itís customarily required in the trade or craft, that an employer can require an employee to purchase tools for use on the job?

MS. GATES: I would say that the employee might bring those tools to the workplace. Whether or not -- I think that the employee can bring the tools to the workplace and can maintain those tools, if that is the custom in the trade or craft.

COMMISSIONER BROAD: Could an employer, in your opinion, when someone comes to work for the first time, say, "Here is a list of tools that is customarily required in this trade; you know, by next week I want you to have this set of tools here so that you can do your job"?

MS. GATES: My understanding of how the Labor Commissioner has enforced that is if they can show a custom in the craft, and if that custom is demonstrated by the presence of a collective bargaining agreement, that tools can be brought to a job site. If there is not a custom thatís demonstrated by a collective bargaining agreement, any money that a worker expends in carrying out the work that is really the employer's work, under 2802, requires reimbursement.

I think we could ask for a clarification from either the Attorney General or from the Labor Commissioner on that. But itís my understanding that unless a custom is established by way of a collective bargaining agreement, Labor Code 2802 requires reimbursement to the worker for anything that the worker spends in carrying out his duties.

COMMISSIONER BROAD: It just seems to me that the language of our wage order is susceptible to lots of different interpretations of, like, what does "customarily" mean, what does "trade" mean, what does "craft" mean. For the purposes of our wage order, itís not entirely clear. And obviously, that language has been in the wage orders for many, many, many years. However, insofar as weíre now proposing to have a wage order specifically involving industries where people use -- everybody is using tools, and this is probably a frequent occurrence, it seems to me that before we reach a final decision on this language, we should have a -- some kind of a bright line as to whatís appropriate and whatís not. And I donít know -- it doesnít really talk -- it doesnít really speak to how much the tools can cost. Now, theoretically, if itís customarily required in the trade or craft, it could be $20,000 worth of tools or it could be $50 worth of tools. Who knows?

So, I would hope that over the next couple of hearings, that you folks would come to us with some sense of what the interplay is between the statutory requirement and our language that weíve proposed, which is, of course, common to all the wage orders, and which youíve sort of said seems agreeable to you, that it should just stay like that. But perhaps we need to clarify in our Statement of Basis some, you know, lines of demarcation between whatís legal and whatís not.

MS. GATES: I would recommend in the Statement of Basis that a clarification -- so that employers who are -- who are attempting to follow the law would understand what they are required to do. And I think that a clarification can be made, or some -- but I do think a reference to 2802, in either the Statement of Basis or in the code section itself, would be a good first step.

And finally, on the issue raised by Commissioner Bosco about opt-out language and opt-out provisions, I have provided a brief to the Commission. I wonít repeat whatís in that now. But it is possible to write a narrowly drawn opt-out from a state protection or regulation, so long as the employee enjoys either the protection of the state law or the protection of a collective bargaining provision. And I think that the language that Scott Wetch just agreed to would take care of that problem.

Thank you very much. Thatís the end of my testimony, unless thereís any questions.

MR. PULASKI: Mr. Chairman, members of the Commission, Art Pulaski, from the California Labor Federation. We represent two million workers in California.

And since I suspect that in public hearings, brevity and nonrepetition are the highest forms of grace, I will grace you with my comments.

The Federation supports the wage board recommendations, with the exception of language that has been recommended by this panel. Iíd just bring note that we are addressing some of the most challenging and dangerous jobs there are in the State of California. And those workers in construction, mining, logging, and drilling industries should receive the same basic protections, if not more, than those afforded to other workers. And so we vigorously support the recommendations of this panel.

Thank you very much.

MR. WETCH: Mr. Chairman, thereís a number of individuals, representatives of various organizations, that would like to come up and briefly state their support for the recommendations.

COMMISSIONER DOMBROWSKI: Okay. Let me just go through these names. And Iíll apologize in advance if I butcher some of these names.

Paul Cohen -- oh.

Gary Karnopp, Michael Magallanes, Dana Levy, Kirk Crosswhite, John Sorenson, Johnny Simpson, Thomas Kunde, Joe Martin, and Jerry Haft.

If you could all please come up and state your name, occupation, and your position, weíd appreciate it.

MR. KARNOPP: Thank you. Iím Gary Karnopp, and Iím an employee of the Southern California-Nevada Regional Council of Carpenters. And Iím here to stand up and support the recommendations in front of you for the construction wage orders.

In particular, I would like to comment on the right of an individual construction worker to be able to have a place to wash his hands prior to a meal period. Many of our construction sites deal with contaminated and dirty soils. They work in gutters, additions to sewer treatment plants, and so on and so forth. These individuals, not only do they not have regular bathroom facilities, they have portable facilities and they have no ways or means of being able to wash their hands prior to having a meal.

If you go back to your childhood days when you were growing up, you can probably remember what your mother always told you to do before you went to eat: wash your hands. Well, many of our construction workers donít have that opportunity. And so I rise in support of changing that for the construction wage board.

Thank you.

MR. MAGALLANES: Good morning. My name is Mike Magallanes, and Iím with the Southern California-Nevada Regional Council of Carpenters.

I support the proposed recommendations with the amendments being offered by the labor representatives today.

One specific point regarding the 10-minute rest period. As you know, construction is a strenuous and dangerous occupation. I feel that with a 10-minute rest period for construction workers, as is already afforded office workers, all construction sites would be much safer places.

Thanks.

MR. SORENSON: Yes. Good morning. My name is John Sorenson. Iím with the International Brotherhood of Electrical Workers, Local 569. I represent the Imperial Valley, where we all know temperatures range from 30 degrees below freezing -- or to freezing to 125 degrees. And itís an agricultural area with many airborne insecticides. We have the New River down there, which is one of the most polluted rivers in the world. We have the Salton Sea. Itís just a very, very nasty, hazardous environment to be working in.

I would like to support the facilities for washing hands and also the breaks during the day, because in the summertime when youíre out there working in 120 degrees, these 10 minutes can mean a lot.

Thank you very much.

MR. CROSSWHITE: Kirk Crosswhite. I represent the Plumbers and Pipefitters here in Southern California, San Diego. We represent 1,600.

And I just want to reinforce the position of our membership on washing their hands, to have a place to wash your hands. Itís common decency anyplace to do this.

On a construction crew, just think about the portable potties that are on construction job sites that go unattended from being serviced, and to have to go in there and do your business, and come out and not have a place to wash your hands. Itís common decency that we have a place to wash our hands with soap and towels to dry them off.

Thank you.

MR. SIMPSON: Iím Johnny Simpson. Iím with the International Brotherhood of Electrical Workers. I represent 2,000 construction electricians here in San Diego and Imperial Counties.

And I too would like to applaud the Commission for being able to bring this forward to us and stand in support of the ability to wash our hands. Itís just common decency.

Every doctor, every mother any of us has ever had, has said, "Wash your hands after you use the bathroom," "Wash your hands before you eat." We do not have that ability today, and weíd like to have it in the future.

I also would like to support the break out -- the break periods. Our jobs are hard, physical jobs. We need to have a break period. It would prevent some accidents on the job. If we can save one construction electricianís life because at least he got a 10-minute break, itís worth every dime.

Thank you.

MR. MARTIN: My name is Joe Martin. Iím a rank-and-file construction worker in the electrical industry. And I want to thank you for this opportunity to appear before you.

Very few construction workers, or any of the blue-collar workers, for that matter, often get this opportunity. By appearing here, some of them would actually lose their jobs.

Iíve been in the construction trade for 36 years. During that time, 20 percent of my apprentice class has been killed in industrial accidents. Thatís part of our job; weíll put up with that. Injuries and deaths aside, is it too much to ask for such basic rights as drinking water and breathable air on the job site? We also need supplies, as everybody said, to clean up and wash our hands.

These types of things have always been available to office workers and white-collar types. Because of us -- because those of us in the construction industry work in a difficult, dirty, and dangerous environment shouldnít mean that we have to work under a different set of rules.

I have personally worked on a job in a desert where the water was kept in the superintendentís air-conditioned trailer so that he could keep track of who was coming in and how much time they were spending working -- drinking water.

Just last month, a co-worker complained about silica dust in the air for concrete cutting. He was told if he didnít like the working conditions, he could find another place to work. It isnít the large contractors like Bechtel or Brown and Root that do this; it is the small, unscrupulous contractors who have no concern for workersí rights or dignity.

It is an ongoing, constant struggle to get laws to protect workers. It is also nearly impossible to get the laws and regulations that are in effect enforced. The state has over -- a backlog of over 50,000 complaints. These will never be investigated or corrected.

It is long past time that this injustice is corrected. This pattern of neglect and downright criminal behavior needs to be stopped. It is self-evident.

Thank you.

MR. LEVY: Good morning. My name is Dana Levy.

(Applause)

MR. LEVY: Good morning. My name is Dana Levy. Iím with the Plumbers and Pipefitters here in San Diego. Iíve been a plumber in San Diego for over thirty years.

When I first started in the trade, everything was going great. You had dignity. You could look to the rest of the community and be proud to say you were a plumber. Well, that has since degraded. And along with that have gone the protections of construction workers.

I progressed in my trade and got to the point where I could be an apprentice instructor. So, now my apprentice would ask me -- because theyíre brand new coming into the apprenticeship -- "How come people who work down at Nordstrom get a break, and Iím a constructor worker getting hot out there in all the different types of weather, getting cold, getting wet, and getting exposed to all the different things out there in our weather, but weíre not allowed to have a place to clean up, weíre not allowed to have a break in the middle, all we do is we get a quick half-hour lunch, and back we go?"

Our work is physically demanding in the construction trades, and I think it would be only fair that we include in construction the way it is in all other industries here in California, the ability to wash up before you eat, the ability to wash up before you want to do anything else, even getting a drink of water, and the ability to have an organized break where everyone can sit down and rest their body, because if youíre going to do this for thirty years, your body is going to wear out and it needs to take a toll on you.

So, I would like to thank the Commission for coming to San Diego. I would like to thank you for listening to all the things that happened here. Itís not only construction, but construction is a main issue here, where construction has always been excluded. Itís other places, but not in construction. I thank you for listening to the lawyers who were up here, who deal with the specifics, and I ask you to concur with the recommendations that are before this committee and go forward with them.

Thank you.

(Applause)

MR. KUNDE: Good morning. My name is Tom Kunde. Iím a IBEW Local 569 business agent, and Iíve been in construction electrician for 24 years.

I would just like to thank the Commission for bringing these changes forward. I fully support the changes that are in here. We all need a 10-minute break in the morning and a 10-minute break in the afternoon. We all need a place to wash our hands before we eat our lunch.

Thank you very much.

(Applause)

MR. HAFT: Good morning. My name is Jerry Haft, and Iím with the OP and CMIA Plasterers International Association.

Iím here to speak on the job conditions also and the break that we just need. We also do hard physical work. Iíve been in the industry for over 25 years. Iím also an apprenticeship instructor. And our main issues are health and safety. Weíve had very serious accidents occur to our membership over the years due to a lack of the safety concerns. A lot of it has come from the hard physical work without breaks involved.

I also would like to speak on another issue, of the reporting time pay that was approved by the Commission that is still up in the air. We currently have over 4,000 employees working on a job site at Disneyland. They are ordered to report to parking lot stations a half hour or 45 minutes before work, where they have to get a bus and then get bused onto the job site because there is no parking on the job site itself. And then they spend another 45 minutes to an hour every day waiting for the bus to take them back to work. They are not compensated for their time, and the employers are not paying them for this.

I think itís an injustice to have a man come to work, have to report an hour early and then stay an hour late, and not get paid for his travel pay back and forth to the job site to get the work done for the contractors. I would like to have you support this issue a little stronger and possibly make this a law, that the portable pay for -- travel pay for these guys going back and forth to work, when you look at the inner-city work thatís going on at the Padres ballpark downtown, all the ancillary work thatís going around, there is no parking downtown. These construction workers Ė and theyíre going to be by the thousands -- are going to have to park off-site and be bused into the job sites. Okay? This requires hours of travel pay for these people, and they should be compensated for their time.

Thank you very much for your concern. Thank you.

(Applause)

COMMISSIONER BOSCO: Mr. Chairman, as always, itís very helpful for us to hear from the people who are actually out on the job site, but I would like permission to bring my 10-year-old son to the next hearing so he can believe that there are actually adults begging to be able to wash their hands at work.

(Laughter)

COMMISSIONER DOMBROWSKI: Two more employees, Charlie Fouquette and Tom Castleman. At that point, Iím going to go to the employers on the issue.

MR. CASTLEMAN: Hello. My name is Tom Castleman. Iím a plasterer from Local 200, the Southern California area.

And my topic today is on the reporting time pay.

However, on the Article (A), or Subsection (A), that -- it states that we are to be compensated at "the employeeís regular rate of pay." That appears to eliminate premium time pay if that goes beyond the 8-hour pay, therefore making it noncompliant with Wage Order 2000 or AB 60. All I ask is that you change the employeeís regular rate of pay to comply with Wage Order 2000.

Thank you.

MR. FOUQUETTE: My name is Charles Fouquette. Iím the Ironworkers business agent, San Diego and Imperial Counties. And Iíve been involved in the last fourteen years negotiating statewide contracts, both safety and the monetary values of our contracts. I want to thank the Commission for coming down here and listening to us.

Weíve been real fortunate having a lot of work in California. Along with this work was the probability of extended hours, with the probability of accidents and incidents that happen. We would encourage you to embrace this 10-minute -- and I personally donít think itís long enough -- time period in four hours, to let a man psychologically and physically relax his body a little bit.

I had the unfortunate privilege here in this job to oftentimes go and explain to a wife or a husband or a child why their -- why their parents or part of their family is not coming home. And a lot of this were these 12-hour, 10-hour days, especially in the construction industry, you could probably eliminate with some proper fatigue-reducing rest periods.

I want to give you a little thought on something. Everybody thinks that we go to work -- if you mention construction workers, and they think itís the guy on the bridge or the guy walking over here carrying a shovel. You take a normal person and strap a belt of 35 pounds on him or her -- and this happens with the electricians, the carpenters, the plumbers, the ironworkers, the welders -- all wear safety belts, an additional amount of weight thatís even more fatiguing.

So this is something a lot of people donít think about. And we would encourage you to embrace these orders.

And thank you for coming down here. Thank you.

COMMISSIONER DOMBROWSKI: Thank you.

(Applause)

COMMISSIONER DOMBROWSKI: We were doing so well, but not any longer.

Jamie Kahn, Susan Ballin, Pete Saucedo, and Bradford Barnum.

COMMISSIONER BOSCO: While theyíre coming up, could I ask -- the previous witness had mentioned this question of -- and I think it refers to if someone were to be paid for travel, for instance, when they get over the 8-hour day, would they then be compensated overtime for that traveling? I think thatís --

MS. STRICKLIN: (Inaudible) what hours theyíre working. Thatíll be clear. It already says that in the Labor Code.

COMMISSIONER BOSCO: We should probably work on language to clear that up.

COMMISSIONER BROAD: Where is that?

MS. STRICKLIN: Section (A) of "Reporting Time Pay."

COMMISSIONER BROAD: Because isnít there separate issues here than just on travel time? It really comes under the issue of what is the definition of "hours worked" are and the Supreme Court -- the Supreme Court issue that

said --

MS. STRICKLIN: Right. Whether the employer controls it or not. Itís the employerís control, and thatís spelled out in the order.

COMMISSIONER BROAD: Right. And that was in the "hours worked" definition in this proposed wage order.

COMMISSIONER BOSCO: Well, I think that witness, though, indicated -- and Iím wondering if itís true or not

-- that our language seems to eliminate overtime for that period of time, or to not add it to the time that would otherwise be compensated by overtime. If itís -- I mean, if thatís true, we should square that away.

COMMISSIONER BROAD: I think thatís a good point. It should be that they could be paid overtime and -- if they have travel time beyond 8 hours.

COMMISSIONER BOSCO: Because this just indicates their "regular rate of pay." Now, does that include overtime as being a "regular rate of pay"?

MS. STRICKLIN: I donít think that the language clearly says that, and thatís why we may need to clarify it.

COMMISSIONER DOMBROWSKI: Go ahead.

MS. KAHN: Hi. Jamie Kahn, here today on behalf of the Associated General Contractors.

We have submitted our written comments. Iíd like to just highlight some of our concerns with the wage order.

COMMISSIONER DOMBROWSKI: Move a little closer to the microphone. There you go.

MS. KAHN: On Item 3, wage and hours, there are a couple of items there, the alternative workweek and the make-up time. We feel that those provisions donít provide enough flexibility for the contractor to deal with the unique conditions that face construction work. Specifically, you know, with the make-up time, when youíre talking about weather conditions and other employer type of requests and supplier provisions that go beyond the employerís control, thereís no time -- thereís no provision in the make-up time to make up for that time that is lost because of inclement weather or those other conditions.

On the alternative workweek, on public works contracts, force accounts, and various other requests for quotations, there may be requirements in there that apply for different schedules that are not accommodated in the alternative workweek provided in that particular provision. Public works contracts sometimes require that the contractor comply with motorists, traffic patterns, and things that are out of the control of the employer. And if the alternative workweek provision is only a 4-10, thatís kind of a difficult condition to meet.

As to the seventh day, that creates a problem for some of our union contractors who have a provision in their contracts that may have addressed that provision. And with this provision specifically in there, this may lead to a triple-time addition for payment. And weíre concerned that if we could have that exempted out, or have it placed under the collective bargaining exemption, that that would work better for us.

On reporting time, we also feel that on reporting time, the collective bargaining negotiations have addressed that issue, and if that also could be placed under kind of a more encompassing collective bargaining exemption, as opposed to the one that expressly requires that that particular provision be addressed. And weíre not really sure, when you say "expressly provided for," how closely we have to come to that particular issue in order to have that be exempted.

As to Item 6, the one having to do with licensed disabled workers, that particular issue was not brought up during the wage board discussions. And weíre concerned that that wouldnít fit within the construction wage order. Weíd like to see that one eliminated, if possible.

Item Number 11, the meal periods, the meal period and the rest period, the only problem that occurs there, if theyíre mandated that we, you know, provide them at a particular time, that that creates a problem for the work progress. If you have like a cement pour or various other activities that are occurring and you -- you know, itís very difficult to stop the work and say, you know, "At this particular time, you know, itís been four hours; we have to take a break," and, you know, interrupting that kind of a condition can cause a problem on the job. So, if there were some flexibility in those particular provisions, or an exemption in the rest periods that applies for -- that goes beyond just "expressed provided for," that condition.

Again there, weíre not sure exactly what you meant by the idea that they be "expressly" -- a provision that "expressly addresses" that particular issue. Unless that is, you know, clarified for us, weíre a little concern that the rest period provision, if we have addressed that in a collective bargaining agreement, it may not be exempted because it doesnít meet the definition of the requirement set forth in this wage order.

On Items 13 and 14, "Mandatory Seating" and "Temperature Control," these are outdoor settings for construction, and itís very difficult for us to control temperature and to have the seating provisions --

COMMISSIONER BROAD: Let me ask you that question. Why is it always outdoor settings? I mean, if someone comes to do repair work in an office buildings, letís say a finish carpenter --

MS. KAHN: Well, the temperature would be out of our control because the building would already be --

COMMISSIONER BROAD: But you wouldnít -- you wouldnít have an objection, then, for them leaving the air conditioning on, right? I mean, itís controllable.

MS. KAHN: Itís out of our control. Itís not our building. Weíre the contractor, weíre not the one -- I mean, I donít know what youíre talking about. Are you talking about repair work? Are you talking about a building weíre building? Or what is it --

COMMISSIONER BROAD: Well, I mean, obviously, this wage order covers -- clearly, it says "temperature where practicable." There are other outdoor occupations that have been covered by our wage orders since 1918 that have these provisions, and itís never proved to be a problem. So, youíre making something out of -- you know, it isnít there.

Clearly -- clearly, in some -- right, we have -- itís in the agricultural wage order, itís in -- we have it in the mechanical wage order, Order 4, that covers all service people that go out and work outside, like telephone line persons. Theyíre obviously outside. And where you canít control the temperature, then it doesnít apply. So I donít know that thatís a big worry. But in some circumstances, these are not all outdoor occupations. Weíre talking about many occupations within the construction industry, some of which are indoor occupations, where youíre doing repair work.

MS. KAHN: Again, when theyíre doing repair work, theyíre doing repair work on a building that is being -- is occupied and owned by another entity, and not the particular general contractor whoís doing the job, you know. So the temperature would be controlled by the owner of the building, not necessarily the contractor whoís doing the repair work.

MR. SAUCEDO?: Also, the way the statute is written, it could be construed to apply to outdoor work as well, not just indoor repair work. I think itís a little vague and ambiguous as itís written. I understand what youíre saying.

COMMISSIONER BROAD: Except that weíve had this provision in there for about eighty years in our wage orders and itís not been an issue.

MS. KAHN: Itís never covered outside construction.

COMMISSIONER BROAD: Yes, but itís covered many, many occupations that are -- where the work is performed outside.

MS. KAHN: Well, these issues were not brought up during the wage board hearing, and they were not offered as issues that needed to be -- I mean, that were discussed at that time. So, Iím not really sure that, you know, weíre prepared to agree to those.

COMMISSIONER BROAD: Well, I mean, I think it makes sense. If you want some clarification that it doesnít apply to a situation where someoneís occupation is outside, where the temperature is beyond the employerís control, we can clarify that in the Statement of Basis. But it does seem to me, since weíre covering occupations, for example, in the oil -- the oil drilling occupations, which would include offshore oil platform, in which you have an indoor component to that. Employees on the outdoor -- on those oil platforms work inside at times, and sleep inside and work inside. And we -- when you sort of say we should just get rid of it, you have to remember that weíre covering four industries, and weíre covering -- there may be some occupations within those industries that are indoor occupations where it is appropriate to control the temperature, including mining, where temperature is a very significant issue.

COMMISSIONER BOSCO: So, Mr. Chairman, may I ask, if the wage board did not recommend language, where did it come from?

MR. BARON: In terms of the procedures, the Commission put forth its proposal in the areas that -- certainly in areas where there was not a two-thirds vote of the wage board, in putting together a wage board, the Commission is willing to cover -- as long as youíre not violating the law, any language you want. This particular area was part of -- was part of the proposal, different groups of proposal, presented to them at a public hearing, that the Commission did vote on, at its August hearing.

Thereís nothing that prevents areas as such as these, particularly where the wage board is silent, for the Commission to generate proposals in those areas.

COMMISSIONER DOMBROWSKI: And thatís directly out of other wage orders?

MR. BARON: This -- no. In general, the specific language weíre talking about here is found in language from other wage orders. And in many of these areas where the -- where the wage board was silent, these other areas such as temperature, are -- do fit now in all of the wage orders. So, as a matter of moving forward, weíll be taking the same boilerplate language and including it as part of the -- as part of this proposal, in terms of fleshing out an entire wage order.

COMMISSIONER BOSCO: Well, can we have some sort of a page where the issue appears to be more than a sentence -- where we flag it so weíre certain to at least address it in some hearing, because weíre going through an awful lot of issues here.

COMMISSIONER DOMBROWSKI: Well, what Iím going to do is take the existing proposal, just that bit -- thank you.

MS. KAHN: The elevators also is an issue that we think is already covered under Cal OSHA. And we donít really feel that we need to duplicate that issue in a wage order.

When it comes to the penalties, regarding Number 19, I think Scott Wetch mentioned the fact that there is legislation pending on the penalty issue. There are existing penalties on these issues, and weíre concerned about the compounding effect that this might have on the -- on these -- on these penalties. If you have them in a wage order and you have them in Labor Code sections, how does that work? And weíre not sure.

COMMISSIONER BROAD: Well, Iím confused. Is your question are we making bigger penalties than exist under law?

MS. KAHN: Yeah. Iím wondering if these are additional penalties, are these in lieu of other penalties, or are these the penalties?

COMMISSIONER BROAD: Theyíre the penalties

created --

MS. KAHN: And if there are other penalties in the Labor Code, do these supersede or do those supersede?

MS. STRICKLIN: These are additional penalties that came with AB 60. So, these are in additional.

MS. KAHN: Okay. So there would be a compounding effect. Okay.

COMMISSIONER BROAD: No.

COMMISSIONER DOMBROWSKI: No, no. She said that these are from AB 60.

MS. STRICKLIN: Yeah, from AB 60.

COMMISSIONER BROAD: The statute covers penalties. All youíre doing is informing employers and employees what the penalties are.

COMMISSIONER DOMBROWSKI: Theyíre in the statute, so itís -- thereís nothing --

MS. KAHN: But Iím saying that their penalties have increased -- I mean, theyíre currently --

COMMISSIONER DOMBROWSKI: But thatís -- I think what weíre -- what Marguerite is trying to say is whatever penalties were in existing law before AB 60 are still there, and then AB 60 included these. Thereís nothing -- thereís nothing we can do about that because itís in -- itís in statute. Itís not regulatory.

MS. KAHN: Okay. All Iím saying is that there are other penalties that also apply to the various provisions in the wage orders that are also -- I mean, that are increasing. And I guessed this would be a compounding effect on the employers, and it would be.

COMMISSIONER ROSE: I donít understand. Can you explain what you mean by a compounding effect?

MS. KAHN: Because there are penalties that are in Assembly Bill 2509 that deal with meals and rest period, and those are different from those that are in this particular provision in the wage order. And Iím just wondering if you would have -- youíd be subject to those penalties and you would be subject to these penalties. Would you have those penalties first take place and estimate how much those are, and then estimate how much these are, and then have them added together? Or does one supersede the other? Iím not

-- you know --

COMMISSIONER BROAD: But by not -- if I understand your question, if we were to remove that language from the wage order, the penalties would still be the same. Weíre not -- weíre not making monetary penalties that donít exist under California law.

MS. KAHN: Okay. So, I guess --

COMMISSIONER BROAD: Weíre not compounding anything on anybody.

MS. KAHN: Okay. Maybe these arenít compounding. Maybe the ones that are in 2509 would be compounding these. I donít know.

COMMISSIONER DOMBROWSKI: I think this question is more properly directed to probably the Department of Labor, for -- to clarify how they do it.

COMMISSIONER ROSE: Mr. Chairman?

Iíd ask, could you repeat your comment about the elevators?

MS. KAHN: The elevators, we feel that those provisions are covered currently under Cal OSHA. We already have Cal OSHA requirements, regulations, that apply to elevators, and the use of them and the need for them.

COMMISSIONER BROAD: Is that elevators on construction sites?

MS. KAHN: Yes.

COMMISSIONER BROAD: So, what about in mines and the oil facilities and in logging facilities?

MS. KAHN: I donít know. I only know about construction.

COMMISSIONER BROAD: Can I just ask a question? Iíll try to be -- because I donít want to compound anything here, but --

(Laughter)

COMMISSIONER BROAD: -- what about a provision in there where it says what Cal OSHA covers, basically the Cal OSHA regulations?

MS. STRICKLIN: Thatís in the statute.

COMMISSIONER BROAD: Thatís in the statute. So, I donít think that thereís a conflict there. Remember, keeping in mind that weíre covering both your industry and other industries.

COMMISSIONER ROSE: One other question.

Does Cal OSHA have more (inaudible) for an elevator (inaudible)?

MS. KAHN: Itís -- I think the Cal OSHA provision applies to -- I think itís 60 feet. I -- I canít say specifically. I think -- there may be a discrepancy, but Iím not certain about that. Iím just saying that I know that Cal OSHA addresses this issue, and this may address it differently. I donít know. I think that there may be a concern there.

COMMISSIONER BOSCO: Can I ask a question too?

And I donít mean to put you on the spot, but by -- I donít know whether you consciously omitted testimony on some of the subjects that were just -- we just heard, but rest periods, time to and from the job, and washing hands before meals. Is your lack of testimony on that, then, mean an assent to it, or a dissent, or you oppose, support it?

MR. SAUCEDO: Weíre not opposed to people washing their hands.

COMMISSIONER BOSCO: Are you opposed to having a facility or -- so, in other words, we can lay that to rest?

MS. KAHN: I think that we would also say, you know, our position on that would be the fact that that is a Cal OSHA issue again, and thatís something that Cal OSHA should, you know, have jurisdiction in. Itís a health and safety issue, and not necessarily working conditions.

COMMISSIONER BOSCO: Well, yes, but we also have jurisdiction over it, apparently. And so, the question Iím asking is, do you agree with the people that have testified here that we should require a means of washing oneís hands during the day or before a meal? Do you agree with the rest periods provisions? And do you agree with the pay for time to and from work? Or have you taken no position on those?

You can say anything you want. I just want to know what your position is.

MS. KAHN: I donít think that we have -- I donít think, in our written comments, we mentioned those particular issues.

In terms of washing hands, I know that we felt that there -- that issue was superseded by -- you know, because that is a Cal OSHA health -- we felt that itís a Cal OSHA issue because it dealt with health and safety. But I donít think that that would be something that we would, you know, make a big --

COMMISSIONER DOMBROWSKI: I think Iíd advise you to, you know, let that one go.

(Laughter)

COMMISSIONER BOSCO: Well, we wonít have to spend any more time on it now.

MS. KAHN: And on the rest periods, you know, we do believe that if the rest period issue has been addressed through a collective bargaining agreement, that thatís not something that we should have a duplicated effort at. So, if the rest period is something that had been worked out in a collective bargaining agreement, then that issue -- I mean that condition should apply, and not necessarily the duplication of a rest period and whatever was negotiated in the collective bargaining agreement.

Our concern is that those types of things have occurred in various provisions in this wage order. And thatís why we were looking for an exemption that was similar to the interim order exemption that applied.

COMMISSIONER BOSCO: That speaks to duplicity between the --

MS. KAHN: Right.

COMMISSIONER BOSCO: -- the contract and our -- but do you oppose or support, absent a contract, being able to have them?

MR. SAUCEDO: I believe itís already provided for in the current law, but I wouldnít be opposed to that.

MS. KAHN: A lot of our contractors believe that thatís current law. And the other thing is that, you know, the -- you know, the structured 10 minutes requirement is maybe a bit problematic, only in that you would have to shut down the job to do so. You know, in order to make sure that everybody took their 10-minute break, you know, you would have to make sure that everybody stopped work.

COMMISSIONER BROAD: Can I just ask a question about that, because we have many of these throughout -- the 10-minute break is in all the wage orders. And there are many 24-hour, seven-day-a-week industrial processes in manufacturing. Thereís, you know, bakeries that have perishable -- you know, stuff going constantly. Not everybody takes a break at the same time and shuts down the whole operation. You know, they just -- some people take their breaks and other people keep it going. I mean, the whole business worlds works Ė- every employer sector has breaks among employees. Are you under the impression --

(Applause)

COMMISSIONER BROAD: Are you under the impression that this regulation prohibits that? Because I donít -- if it -- because I donít think it does, or is intended to.

MS. KAHN: My understanding is that if the employer is required to guarantee or to at least account for that 10-minute break, that they would have to do it in such a way that they would know that the employees took that break. Otherwise, they would be subject to fines if the employee didnít take that time, because they would have to pay for that time. They would have to be compensated in some other way, or itís a violation, and they are subject to penalties.

So you have to make some Ė youíd have to have some assurance that that time is taken. In order to do that, youíd have to shut down the job, in order to make sure that everybody took their break.

COMMISSIONER DOMBROWSKI: Can you explain how -- can you explain how currently, on a site, how it happens?

MR. SAUCEDO: Not with absolute certainty. But I think it is staggered.

But I think this -- the way itís written encourages everybody to shut down at a certain time. I think there should be some flexibility. A 10-minute break is reasonable, but if you have to account for it on your payroll records, that encourages it to be done at the same time. And thatís what -- what if itís in the middle of a concrete pour and you shut down the job? Thatís where it could lead to problems.

But I agree what youíre saying. In a normal course of practice, itís not --

COMMISSIONER DOMBROWSKI: Well, youíre said youíre agreeing to a 10-minute break. Your problem is how do we phrase it that it works like in situations where theyíre pouring concrete.

MR. SAUCEDO: Exactly.

MS. KAHN: And that the employer is not held accountable for that time if that time is not taken. Thatís another --

COMMISSIONER DOMBROWSKI: Well, how can you do that?

MS. KAHN: Thatís my question.

COMMISSIONER BROAD: You mean if you donít give them a break?

COMMISSIONER DOMBROWSKI: Youíve got to give them the break.

MS. KAHN: Right. Weíre saying that -- we have to make sure that that break is taken. Otherwise, if the employee says, "Well, I didnít get my break," I mean, whoís responsible for making sure that that break is taken?

COMMISSIONER BROAD: You know, like maybe they have a sheet there that becomes part of the payroll record that says break and meal period. And the person says by their name, they put the time that they took their break. I mean, itís not --

COMMISSIONER DOMBROWSKI: Quiet down, please.

COMMISSIONER BROAD: You know, you guys can have issues with any of this stuff, except that some of it is so settled in the way workers perform everywhere in America that, you know, I donít want you raising issues that are sort of phantoms and save it for the stuff you really hate.

MS. KAHN: Weíre looking for some --

(Laughter)

MS. KAHN: Weíre looking for some flexibility on this particular issue. Weíre not saying that weíre opposed or we support. Weíre just looking for some flexibility on this one.

COMMISSIONER BOSCO: Okay.

MR. SAUCEDO: Before I start, Commissioner Broad, you look exactly like one of my law school professors, and just the sight of you frightens me. That guy really traumatized me, so Iím a little nervous because of you.

(Laughter)

COMMISSIONER BROAD: I suffered in law school myself.

MR. SAUCEDO: Okay.

My name is Pete Saucedo. I work for the Associated General Contractors, San Diego Chapter. Weíre an association of approximately 400 construction companies, building and highway, union and nonunion contractors.

Weíre concerned about the proposed regulations as written. And Iíll give you a few examples why.

One example would be the alternative workweek. For an example, letís say an awarding body mandated a 4-10 workweek to mitigate traffic congestion, and it takes a two-thirds approval of the employees in order to implement this. How can a contractor bid a job six months previous when he doesnít even have a complete workforce at that time, or the current workforce that starts is moved from one site to another? These are common practices, and it could lead to unforeseen costs. We think itís unfair to the contractors.

Another issue or example would be seating. The current proposal says that if the nature of the work requires standing -- excuse me -- seats must be placed in the work area. Can you imagine seats placed all over a construction site? In addition to the added cost, itís a safety hazard. It would be ridiculous to require that.

Weíve talked about temperature a little bit. One of the provisions requires, if the temperature is less than 60 degrees, a heated room shall be provided. Thatís -- an example, letís say a job site was in Oceanside, and itís in the middle of February and seven oíclock in the morning and itís 45 degrees, the windís blowing, and itís cold. How is a contractor -- these conditions are beyond their control -- how are they going to provide a heated room? This is nearly impossible to provide that and very costly. So we think itís an unreasonable provision that should be changed in regards to construction.

Another issue is regarding reporting time or show-up time, show-up pay. And the way it reads is that an employee must be paid a half dayís wage if they show up for work and are unable to work. What if thereís an example if itís pouring rain, itís been pouring all night long, and nobody shows up to the job site with the exception of one worker? He shows up, and under the current regulations, that contractor has to pay him a half dayís wage, when everybody should have known youíre not going to be working that day. This also leads to increased costs. Itís vague and ambiguous as itís written.

These are just a few examples of how the proposed regulations do not take into account the nature of the construction industry. We believe the intent of the Legislature and of this Commission is to protect the workers in California. As written, these regulations will substantially increase construction costs. That will decrease the amount of future projects, including power plants, which is a huge issue in California right now, particularly in San Diego. Itís going to eliminate a certain amount of jobs, and youíre going to hurt the very people youíre trying to protect.

Accordingly, we respectfully recommend that no order be implemented regarding construction until a study regarding the cost impact on this industry is conducted by this board.

Thank you.

COMMISSIONER BOSCO: Mr. Chairman, I want to get out of town before the IWC gets blamed for the utility rates down here.

(Laughter)

COMMISSIONER BOSCO: I think that testimony has a few things maybe we should concentrate on.

One, the seats and temperature, although I understand that there are norms in every industry, I do think itís a good point. And we should develop language that makes it clear that this is as far as practicable and relates to the nature of the work, the location, and I think we should do that.

Now, on this -- I thought the point that sometimes you have to work on projects that require traffic control or working odd hours -- Iím big on that. Does anybody have any thoughts on that? I mean, it would seem to me the bid documents should specify, you know, what youíre -- what type of work youíre supposed to be bidding on. But --

MR. SAUCEDO: And so, letís suppose it mandated a 4-10 workweek, but then, when the employees actually go onto the job site, they have that secret ballot vote and they do not approve it, but yet it was mandated, and the contractor bid based on the 4-10 workweek and no overtime, yet the workers voted it down. You have to pay overtime now.

COMMISSIONER BOSCO: Why donít we work on that? Letís have our staff work on that.

COMMISSIONER DOMBROWSKI: I think we have two more hearings. Letís see what we can do.

COMMISSIONER BOSCO: And then the showing up for work when everyone should know that they shouldnít show up for work, does that happen very often?

MR. SAUCEDO: I wouldnít think so, but the way itís currently written, it could lead to complaints and fines that are frivolous in nature. And thatís our intent, is to try and eliminate the complaints that are frivolous in nature.

Weíre not against whatís been testified today. Thatís reasonable in nature. Itís the attacks primarily against open shop contractors that we are against. But thatís another issue, and Iíll leave that alone.

COMMISSIONER BOSCO: Letís work on that together. I mean, there could be some language.

COMMISSIONER BROAD: We donít want it too wobbly.

COMMISSIONER DOMBROWSKI: Anything else?

COMMISSIONER BOSCO: I still might have to work on Columbus Day. And you donít know whether you really get it off or donít, right?

MR. SAUCEDO: Thatís the kind of thing.

MR. BARNUM: Hello, Mr. Chairman, members. My name is Brad Barnum, with the National Electrical Contractors Association. We represent 100 electrical contractors here in San Diego and Imperial Counties, and we employ nearly 2,000 highly skilled workers.

Iím here in support of your proposed regulations in the construction industry. Basically, in a nutshell, it levels the playing field.

And with respect to mandatory rest periods, we have no problem with whatís been discussed with that. Our contractors routinely give employees rest periods every day, depending on the scope of the schedule and all that. So thatís no problem.

Thank you.

(Applause)

COMMISSIONER DOMBROWSKI: Okay. Iíd like to go on to Item 3, consideration of minimum wage. Iíd like to call up Mr. Jon Ross, Susie Bauman -- Iíll let them all identify themselves.

Jon, if you could just squeeze through and have everyone --

Can we have a little quiet now, please? If you have conversations, take it outside.

MR. ROSS: Good morning. Iím Jon Ross, with Kahl Pownall Company, here today on behalf of the California Restaurant Association.

The Association has provided testimony to the Commission now on two occasions on our views on the current minimum wage proposal. You have that in writing. Iím not going to go into it again today. What weíve done is weíve put together a group of San Diego restaurateurs who will give you a taste or flavor of their experience currently. And if you have any questions, Iíd be happy to answer them.

First up is Susie Bauman. And the others will introduce themselves as they come up.

MS. BAUMAN: Good morning. My name is Susie Bauman, and I operate two restaurants in San Diego, the Bali Hai and Tom Hamís Lighthouse. Theyíre family-owned restaurants. I also serve as a member of the board of directors of the California Restaurant Association. The California Restaurant Association represents 13,000 food service businesses in California.

The restaurant industry is the largest retail employer in California. We employ almost 900,000 workers. We do $28.5 billion in annual sales. And we contribute $2.4 billion in sales tax for state and local governments.

For many Californians, their first job opportunity was in a restaurant. When you make your determination whether or not to increase the minimum wage, I know that you will consider all the economic studies, some provided to you by the California Restaurant Association, that relate to purchasing power and the adequacy of the minimum wage. Iím not an expert in that field. What I do know is how the minimum wage, how past increases have affected my businesses.

My restaurants have been around for a long time. One of them was established in 1953, and the other one in 1973. Weíve been around in good times and bad, and Iím not here to say that if you raise the minimum wage, that Iím going to go out of business. Right now, business is good. Sales are very good, but costs are very, very high. And as you know, this summer we increased -- a 300 percent increase in utility costs. For me, that equated in one month to $18,000 increase in utility bills for my two restaurants, in one month. We have not seen that drop. And, of course, we worry that the gas prices will affect us in the wintertime. We all cook with gas.

If there is an increase in the minimum wage, I will have to make some very serious business decisions, as I did in 1996 when the minimum wage went up 33 percent over an 18-month period. I did not feel at that time that I could pass that entire increase on to my customers, so I looked within my payroll costs. In 1996, prior to that minimum wage increase, I offered benefits, which included health insurance, to my employees that worked 20 hours a week or more.

When the minimum wage was increased, I increased that threshold to 30 hours a week or more. And actually, that eliminated about 40 percent of those that were covered by health insurance. It eliminated most of my servers, because they donít -- they donít work full-time. In fact, they donít even work half jobs. If the minimum wage goes up again, I would probably raise that threshold to 40 hours a week.

In 1996 when the minimum wage went into effect, I eliminated two full positions at each restaurant, and I did slash hours. So, the reality of that is today business is much better than it was in 1996, but I have fewer workers and I have less hours on my payroll than I did in 1996. This is not economic theory. This is what happened in my own business.

Further, the only employees that I have right now at the minimum wage are tipped employees. Yet these servers take home the highest hourly wage of any of my workers. So, once again, a minimum increase -- a minimum wage increase would not help those who need the help the most.

I am very proud that there have been a lot of success stories that have come out of my businesses -- employees that started at the minimum wage that find a -- found a career with me. And I have employees that have worked for me for fifteen and twenty years. I am proud that we as an industry take in unskilled workers, give them their first opportunity to get a job, and train them to move up to higher paying jobs within the restaurant industry.

I thank you for your time. There are some other people here to speak to you today, and I hope that youíll listen to them too.

Thank you.

MS. MARSHALL: Good morning. My name is Fernanda Marshall, and Iím a general manager in the Restaurant 39 in Rubioís.

The choice of working for the restaurant business came when I learned that I needed flexibility in my schedule in order to go to school, to college. And I came to Rubioís because of the flexibility and the movable schedule they offered me, along with 401K and health insurance, even for me that was a part-timer.

Now that I am in the position of hiring, I do offer the same to my future employees. The ones who start at minimum wage, they are unskilled, and theyíre always trained from ground zero. If I was forced to spend more money on these peopleís labor, I would be looking for more skilled and experienced workers. Training expenses will not be afforded, therefore leaving out the entry-level workers like students with minimal skills but eagerness to learn, like I once have had.

Thank you for listening.

MR. NISHIAMA: My name is Paul Nishiama. Iím currently a field training coordinator with Rubioís Restaurants. I started with the company basically -- basically since its inception. There were two stores when I started. And in the thirteen years that Iíve worked with the company, Iíve gotten to watch it grow from two stores to over a hundred units now.

And along with the companyís growth, I personally have been able to grow, through high school, college, and now into my career in the restaurant industry. And I think increased wages, as a small business, when we were a smaller company, would have stunted our growth as a small business. And the things that we currently provide for employees are things such as a -- a matching 401K, company-sponsored health insurance, paid vacation, profit-sharing. All of those benefits, I think, would be not available today if we had an increased minimum wage.

In the last thirteen years, Iíve seen Rubioís go from providing 40 jobs to over 40,000 -- or to over 4,000 jobs. And I think itís my belief that through this type of growth and prosperity that I personally had and been witness to several times throughout the history of the company, that -- and not a mandated minimum wage increase -- that higher wage jobs can be provided while still providing the gateway, as Fernanda said, to the entry-level and unskilled workers that typically work the minimum wage jobs.

Thank you.

COMMISSIONER DOMBROWSKI: As you finish your testimony, I think you can leave and then other people can take the microphone.

MR. SERENA: Hi. Hi. My name is Dante Serena, and I also work for Rubioís Restaurants.

Iím here to talk to you guys about the minimum wage. I started with Rubioís when I was an hourly employee. I was 17 years old. I had no experience. I got hired, I got trained, and now Iím a general manager. Iíve been with Rubioís for about four years. Now Iím at a salary wage.

If minimum wage goes up, I strongly believe that opportunities will be closed. What I mean by that is that the person with no experience, their first job, et cetera, will not get the opportunity to reach the manager level as easy and as -- as easy and as fast as I did, because companies will not hire to -- will not hire people that donít have experience. Instead, they will train -- they will hire people that are already experienced. And it will hurt the people that are coming in with no experience at all, or school people, people that are going to college, you know, people that are barely 17 years old, 18 years old. Instead of training from within, they will hire people that are more experienced.

Basically, I have four words to -- to this salary wage increase. Benefits will be out, they will be cut; Opportunities will be cut; unemployment; and inflation.

So, thank you.

COMMISSIONER DOMBROWSKI: Next.

MS. MORENO-MEAD: Hi. My name is Cecelia Moreno-Mead. And since 1982, I have owned, managed, and operated a small, full-service restaurant called The Crest Café, in Hillcrest. My father started out in the restaurant business in 1961 with Brewmaker, and Iíve been in the restaurant business pretty much all my life.

I waited tables at a coffee shop while I went to college, graduated from UC Irvine, and continued to work as a food server after graduation because I enjoyed a very good style of living.

My father, Luis Moreno, currently owns a Los Oso franchise, which is a fast-food operation, also in Hillcrest. Between the two of us, we have about 26 full-time employees.

The reality of the minimum wage for our establishments is that it isnít a reality. There is no one within the confines of our two locations that makes the starting minimum wage. On the average, I have seven food servers that work the front of the house. Theyíre directly tipped employees, and they make about $32,000 a year. We currently provide health insurance and individual retirement accounts.

After the last wage increase, basically what Iíve been forced to do in order to keep my costs in line and to continue to operate profitably is that I have to eliminate positions. For instance, now I do my own daily bookkeeping. Before, we had a full-time bookkeeper working for us. I host, I bus tables during the day, and basically every time there is an increase on that particular part of my financial statement, I have to eliminate a position.

Currently, the economic reality is that if you want to get qualified people, even entry-level people, you donít hire them at minimum wage. And if you do, you start them off, and within three months theyíre making more money than that because you want to keep the good employees. In good economic times, itís just not a reality within the City of San Diego to be hiring people at minimum wage.

The only time that I pay minimum wage is when Iím forced to. The incremental increases go to people out front that are making $32,000 a year. The wage increase causes me not to be able to give the raises to the people that work the dishwashing machines and work the line and the chef, who are really, I think, the people that youíre trying to help with the increase in minimum wage.

Iím a lifelong Democrat. You know, I --

(Applause)

MS. MORENO-MEAD: -- anyone in the audience?

COMMISSIONER ROSE: Itís a big camp.

(Laughter)

MS. MORENO-MEAD: My husband is a firefighter, so Iím -- in a sense, Iím a member of a union as well. So I see all sides of the issue.

And I think -- you know, Iím all for people that are disenfranchised and not being treated fairly in the workplace to be treated fairly in the workplace. But frankly, thatís not occurring in the restaurant industry, not from the people that I know, that I work with, and have had longtime businesses in the City of San Diego.

Right now, the timing of an increase in minimum wage is really going to hammer people, because we all know how much weíre all individually paying in electrical costs. Itís going to hit the rest of the state. Everyoneís going to have a big reality check. My electrical bill has tripled since March of this year. Thatís a fixed cost. We all are very interdependent on our electricity. It hurts business in a way that the people that normally could go out and have a meal can no longer do so, because of their home utility costs. So, weíre in a real economic crisis in the City of San Diego that I donít think the rest of the state has come to realize yet.

Thank you.

COMMISSIONER DOMBROWSKI: Thank you.

COMMISSIONER BROAD: I have a question.

Since this electrical cost issue in San Diego has been brought up frequently from the employer side, and the use of electricity is sort of an inelastic thing for

people --

MS. MORENO-MEAD: Exactly.

COMMISSIONER BROAD: -- itís really inelastic if youíre a minimum wage worker.

(Applause and cheering)

MS. MORENO-MEAD: (Inaudible).

COMMISSIONER DOMBROWSKI: Stop. Stop. We canít hear you when the--

MS. MORENO-MEAD: I was saying the cost is a fixed cost, Mr. Broad. Itís an economic hardship for anyone, whether theyíre making minimum wage or whether youíre making, you know --

COMMISSIONER BROAD: All Iím saying is that -- is that that argues as much for a minimum wage increase, or more so, than it argues against a minimum wage increase.

(Applause)

MS. MORENO-MEAD: I donít agree.

COMMISSIONER DOMBROWSKI: Thank you.

MS. MORENO-MEAD: Thank you.

MR. PENN: Hi. My name is Tom Penn. I operate a restaurant company called Sammyís Wood-Fired Pizza.

And I think Susie brings a good point in, that we have an advantage to not just talk about the theory, but we have a -- some history to this issue, and we know exactly what happened the last time in 1996 when it happened. And really, three things with our company happened.

One is, we had to re-evaluate our pricing and pass some of the increase to our customers. And a lot of our customers are minimum wage customers. So, again, those have passed to people that were trying to be helped by the minimum wage increase.

The second thing that happened was we had to eliminate positions as well, and therefore put people that were in that, that weíre trying to help, in an unemployed situations. Some restaurants did close, so again, that whole staff is now in an unemployed situation.

And the third thing that happened is we had to take a hard look at our benefits. And part of -- one of our large costs in benefits is a training -- is training costs, where we have educational assistance and seminars. And so, a lot of the people that started with our company as dishwashers or at a minimum wage position or close to it now are chefs in our company because of those educational assistance programs that are going to be cut potentially to address to this -- to the increase of minimum wage.

And again, I know it sounds a little bit redundant, but the -- this increase affects the people that are -- the only minimum wage employees that we have are our servers that are making over $30,000 a year. So, somehow there has to be a solution that helps the people that weíre intending to help that are being helped by some of the programs that are in jeopardy based on -- on this increase.

So, I donít know how we work together. I know youíre not totally ruling or dealing with the tip credit. But it seems like thatís the real issue, and to try to figure out a way to help the people that youíre intending to help instead of the people -- hurting the people indirectly by this minimum wage increase.

COMMISSIONER DOMBROWSKI: Iím sorry. I didnít get your name.

MR. PENN: Tom Penn.

COMMISSIONER DOMBROWSKI: Thank you.

MR. LEWIS: My name is Lewis Board. Iím the owner and operator of LB Spotter Services, which is a restaurant consulting firm, and thatís how I became involved with the California Restaurant Association. I also serve as the president on the board of directors of my wifeís business, which is a Montessori child development center.

Iíve got a written piece that Iíd like to submit, however I do that, because that will say a lot better what probably I wonít.

But one of the things Iíd like to talk about a little bit is, at our preschool, when the minimum wage goes up -- well, we -- all of our employees, their starting wage is $7.50. Now, weíve got a couple of teachers that have been with us -- oneís been with us for fourteen years -- the otherís got twenty yearsí experience -- they make $15.00 an hour. Now, the gals that make $7.50, when they come to us, they donít have to have any previous experience, but they have to be enrolled in early childhood education classes. So these are folks that are kind of making an effort to improve themselves and improve their situation, and they enjoy this type of work. I mean, you have to enjoy working with 60 three- to six-year-olds. Itís not -- you know, itís different.

And every time the minimum wage goes up, though, these folks take -- they take a pay cut, basically, of that amount. Now, we try -- in í96, we matched what the minimum wage went up. We just did it straight across the board to our people. But we canít always do that. Itís like this guy mentioned, with the utility bill. When our -- if our enrollment is low, we canít necessarily just carte blanche, you know, raise them up so that they donít take a pay cut.

And also, we -- we establish our tuition at the beginning of the year, and thatís -- we tell the parents that thatís what theyíre going to be paying. So, halfway through the year, if the minimum wage goes up, we canít turn to the parents and say, you know, "Hey, sorry, I know we told you it was Ďxí amount of dollars payable in monthly installments, but now itís got to be this because it went up."

And another area to look at too is like any parents that have their children in childcare, which is probably most of the folks out here, when the minimum wage goes up and we raise, for our teachers and our assistants, we pass that that cost right back on to the people, you know, who are benefiting, theoretically, from the minimum wage increase. So it goes right back out the door.

As a restaurant -- consultant for my restaurant consulting business, I employ eight people who assist me part-time. And if restaurants have less money for things like healthcare and hiring inexperienced people, theyíre certainly going to have less money for a consultant such as myself, which -- you know, less work for me just means no work for the eight people that help me part-time.

I grew up -- I just would like to say too, I grew up here in San Diego, and when I was seven my real father left and we lived on welfare for about three years, until my mother remarried a gentleman whoís my stepfather, whoís a postal worker and is involved highly in the postal union. And from that point on, we lived pretty much a middle-class life. But at seven, from seven to ten, we bought food on food stamps. And I visited the welfare office quite often. So I am familiar with that, you know.

And I got my first job, legal job -- really, I was washing cars and delivering papers as a youngster -- but at sixteen, I started washing dishes at a restaurant here on Bayside. Part of my ability to get that job was it was minimum wage. You know, I didnít have any experience, and I -- but then I got into busing tables. And at that point, tips come in. So now minimum wage is really -- it was supplemental. It was not what I was living on. And I spent the next -- over a decade working everything from bartending to room service waiter to cooking -- Iíve been to cooking schools. All -- and most of them, with the exception of cooking -- but theyíre mostly minimum wage positions, how youíre paid.

So -- and now I have a restaurant consulting business because of my years of experience. So I -- I think, just ultimately, I donít feel that the minimum wage

-- it just hurts everyone because we all have to raise the prices of the things we pay, especially in the childcare. Thatís my biggest point.

Thank you.

COMMISSIONER ROSE: Mr. Lewis (sic), one question. How many employees do have that earn minimum wage?

MR. BOARD: I donít. But --

COMMISSIONER ROSE: None.

MR. BOARD: -- $7.50 is our starting wage.

COMMISSIONER ROSE: So how does raising the minimum wage affect them?

MR. BOARD: Well, they take a pay cut when the minimum wage goes up, because theyíre making this much higher than the minimum wage. When you raise the minimum wage, if I canít match it, theyíve just -- theyíve lost that amount. I mean, theyíve taken a pay cut in a sense, because they were making $1.50 more than the minimum wage, or whatever it is theyíre making. Theyíre now making that much less because the minimum wage has caught up more to them.

COMMISSIONER ROSE: But it affects the persons making minimum wage.

MR. BOARD: Except that when they bring their child to our childcare, we raise the tuitions to cover that.

COMMISSIONER DOMBROWSKI: Thank you very much.

MR. BOARD: Thank you.

MS. MORENO-MEAD: Thank you.

COMMISSIONER DOMBROWSKI: John Hawkins, Milton Moritz, Ginny Pinkerton, and Stephen Zolezzi.

And then do I have any others from the employer community who want to speak on minimum wage?

Please identify yourselves for the transcript.

MR. HAWKINS: My name is John Hawkins. I represent Cloud Nine Shuttle, here in San Diego.

John Hawkins, and I represent Cloud Nine Shuttle here in San Diego.

We employ about 400 people, none of whom make minimum wage. They all make in excess of the minimum wage. We have health benefits, sick pay, flex time, paid vacation. We also have been honored as one of the best places to work, one of the best companies to work for, in San Diego.

I want to talk to you just for a moment about jobs in the transportation industry, and Iíd like to actually talk a little about and just go on the record saying I have no objection to an increase in minimum wage, for non-tipped employees. So I think we have an issue here -- you all have heard it a few times over. But let me explain to you how this works in our business, and maybe that will help you understand the chain of events, which is, I think, similar to the restaurant industry.

Our drivers are tipped employees whose wages are based on minimum wage, just as servers in a restaurant, but who earn anywhere between $12 and $15 an hour in reality, when you include gratuities. When minimum wages go up, weíre forced to raise prices because the customer -- weíre

-- our index goes up, and the customer is going to have to be charged our index, not the gratuity index. We have to do that to compensate for a profit margin which allows us to stay in business, reinvest in vehicles, reinvest in technology, grow, and create more jobs.

When we raise prices, we lose customers. And Iím not talking theory here at all. Over the last couple of years, wages have gone up, minimum wages have gone up, and weíve lost 40 vans. That, to us -- in our world, thereís three people who support every van that we deploy. The first one is the driver. And usually those are two shifts a day, so thatís kind of two people. But then you throw in reservationists, maintenance people, service center people, people that clean the vans, all of whom are making $7.50-plus an hour in wages, because theyíre non-gratuity-based positions -- dispatchers, cashiers, salespeople, et cetera.

If you do the math, 40 vans with the drivers and the support people, 120 people are no longer there. We have 80 vans now; we used to have 120. Weíve changed. We get it. People tell us, "Hey, you donít want us to hire employees? Well, then, okay; weíll change." And the employer has, you know, the ability to change. Itís either changing benefits, like the restaurant people have talked about -- in our case, we now have buses and we have limousines and sedans and cars, so weíve just changed because the ratio of income to the labor hour is different in those higher density or more premium products, so youíre selling more first-class seats.

We have fewer people. Theyíre making more dough. That hurts me because every one of our employees is a family member to me, and they had to go find another job, the ones that didnít qualify as a Class B driver to drive a limousine or a bus. Losers in the equation are people.

And actually, it extends a little bit further than that. There are people in San Diego that actually do need affordable transportation. And when we raise our prices based on the economics of minimum wage and/or fuel or anything else, thereís -- we actually eliminate the pool of customers that can afford our product. Now, some people can buy up into a limousine, and some people, unfortunately, just donít get to travel any more because the price of the ground transportation from, letís say, Vista, where thereís a retirement community, they just canít afford to drive down or hire us to drive them down, and theyíre retired. They might not have friends and family that can take care of this for them.

But weíve gotten those complaints, you know, "You guys have priced me out of the travel market." And, you know, we all know Southwest, here in the State of California, itís the "freedom" business, freedom to travel and visit and be with your friends and family. This has caused some of those people to not be able to do that any more.

My request is please, you know, adjust the law. We can have a gratuity credit. People that make $12, $15, and, you know, $20 and $30 an hour, that are the front, the lead frame, as you talk in the computer industry, if you increase it on those people, the trickle effect is to the mechanics, and the guys who wash the vans, who are making good wages and have good benefits, the reservationists, the cashiers. If we look to that as -- if we fix that core ingredient, then you can have lots of more better jobs, because those folks donít make minimum wage. Their incomes are simply based on minimum wage, and they make far in excess of that.

So, I would implore you to think about that, see if we can make some adjustments there. I donít think youíd get any -- any resistance from non-gratuity -- or, pardon me -- from gratuity-based employees. The non-gratuity-based employees, the people that serve hamburgers at McDonaldís, Iím 100 percent in your court; raise the minimum wage there, because they need it. Theyíre not gratuity-based, and, God bless them, theyíre working hard to get ahead in the world, and help them out.

Thank you.

MR. MORITZ: Iím Milton Moritz. Iím president of the National Association of Theatre Owners of California. I have written testimony here, and I would just go over some salient points.

Mr. Chairman, members of the Commission, I would like to speak for today about the impact the proposed increase in the minimum wage will have on my industry and the entry-level employees who work in theaters throughout California. As you may know, the theater industry is currently undergoing some very serious financial turmoil. Despite a booming economy, several major theater chains have filed for bankruptcy protection this year. Others have closed theaters to reduce costs.

There are many reasons for the financial strains in our industry. The simple fact is: theaters do not currently have the earnings that allow them to pay additional wages without making other severe cutbacks in service, benefits, or hours. If theaters are required to increase the wages of entry-level employees by $1.00 per hour, the additional costs will be the final burden that forces more theaters to close their doors.

Well, what about those theaters that donít close their doors? How will the additional costs of increasing the wages of thousands of theater workers in California be absorbed? In the same manner all costs are absorbed, through higher prices, which will adversely impact one of the least expensive forms of entertainment available to large numbers of Californians, reduced hours of operations, reduced benefits for its employees. None of these consequences will benefit those entry-level workers who you wish to help with this proposal.

California theaters provide jobs and opportunities to large numbers of entry-level workers. For many, the training and experience we provide to virtually anyone who wants a job is a lasting benefit that serves them well for the rest of their lives. Teenagers and young adults gain their exposure to the world of work from entry-level theater jobs. If we are forced to reduce hours or employment levels, some of these teenagers and young adults will not be able to find their first positive experience with work in theaters.

Theaters also have increasingly become places for seniors to earn additional money to augment their retirement incomes. The flexible schedules and abundance of part-time work provide ideal settings for seniors.

Theaters also provide the flexibility to accommodate workers who are attending high school, raising children, or who have other demands on their time. Again, if theater owners are forced to increase entry-level wages, especially during these very difficult financial times for theaters, the result will be fewer opportunities for these workers.

Personally, I was one of those entry-level workers. My first job was taking tickets at my local theater. I was young, had no idea what I wanted to do, and wasnít particularly motivated at the time. Because of the flexibility in work schedules, I was able to finish my education and continue to work. Opportunities for advancement came quickly, and I moved up the management chain.

Iím asking this Commission to consider with care the proposal to increase the California minimum wage.

Thank you very much.

MR. ZOLEZZI: My name is Stephen Zolezzi. I represent the San Diego County Food and Beverage Association. Weíre a trade association in San Diego County that represents restaurants, bars, and clubs, and we represent over 800 businesses in San Diego County.

Itís important to realize that as it relates to minimum wage and welfare reform, the game has changed tremendously over the last twenty years. Youíre looking to the business community to hire and train an entire new workforce, including many people who have never worked before. Youíre contemplating a mandated wage hike at a time when the success or failure of our businesses, and even the welfare reform system, is hanging in the balance. The game has changed.

Many people are arriving at our doors having fewer and fewer marketable skills. Theyíre short on the basic skills, reading, writing, performing arithmetic operations, listening and speaking -- very important in our industry -- making decisions, solving problems, understanding the need to show up on time, to be prepared, and to function as part of a team. In this value-driven economy that weíre operating in today, with little inflation, we have to make a decision: do we raise prices to cover those costs, or make adjustments in our labor force?

In our competitive service-sector economy, price increases are just not a realistic option for us. People arenít paid on the basis of what they need; theyíre paid in a market that assigns certain values to skills. You canít get away from the fact that wage rates are based on skill levels. The public refuses to pay for more -- for something that they think isnít worth what theyíre paying for. We call that value.

In our competitive service economy, the customer is paying the wages and deciding how much he or she is willing to pay. With the enactment of welfare reform, much more responsibility for supporting those on welfare has been shifted from the society in general and placed squarely on the shoulders of employers in the State of California. That responsibility is being carried primarily by entry-level employees.

The best anti-poverty tool is still a job. And I would also say that though there is strain on people who are making minimum wage, thereís even more strain on that person who doesnít have a job. Letís not make it any harder to create that job by thinking that increasing the minimum wage helps.

Thank you.

AUDIENCE MEMBER: (Not using microphone) Bullshit!

COMMISSIONER BROAD: Please, thatís not acceptable.

MS. PINKERTON: My name is Ginny Pinkerton. I represent the California Association for Health Services at Home. I sit on their board of directors. I also have a homecare company. The California Association for Health Services at Home represents over 600 homecare companies. We particularly provide non-medical, custodial homecare services.

Weíre here primarily to listen. We are going to prepare some testimony for future hearings.

Our concern is not so much that the minimum wage issue is being raised here, because most of industry do pay minimum wage or above, primarily above. In my company, we donít pay anyone the minimum wage; they all come in at a higher rate.

Our concern primarily is that there will an erosion of the wage order under which we operate, which is Wage Order 15. This wage order was initially developed to help -- because of the nature of homecare, itís continuous care that we provide for our elderly folks in their home. And they have the benefit of having an agency hire, train, and supervise people in their homes. And our concern is that any -- that in this process, that there might be an erosion of the ability to provide that level of care in the home. We attract workers who are looking for part-time and flexible work, which weíre able to provide. Weíre also able to provide good, safe homecare for seniors.

So thatís primarily our purpose in being here today, is just to express our concern about any potential erosion of that wage order.

Thank you.

MS. GOODMAN-BONETTI: My name is Victoria Bonetti, and I own a homecare company. Iím here with Ms. Pinkerton.

And in addition to her concerns about the erosion of the exemption that our personal attendants fall under and the effect it would have on our seniors, we too pay above the minimum wage for our industry, but what the minimum wage increases have done to our industry, we normally take people with some experience. A lot of them are middle-aged people, their children are grown and they need to make money. You know, many are divorced, they have no income, they have no skills. And so theyíve raised a family, so they have the ability to care for somebody at home, but they need training. So we have implemented a program to train people with no experience. And we are giving them minimum wage for the three months while weíre training them. Of course, we raise them up. But as they raise the minimum wage, this program is getting prohibitive, because for $1.50 more, I can hire someone with five or ten yearsí experience. And I just canít afford to train these people that are coming into the workforce after twenty years of raising a family, needing to work. We canít do it as the minimum wage increases. We canít -- definitely canít pass that on to our clients because, you know, seniors are already on limited budgets.

What itís doing, as they raise the minimum wage, itís driving more and more of our seniors to not hire an agency to supervise, screen, train their caregivers. Theyíre all hiring people under the table, without paying taxes or workersí comp or unemployment or disability, because that way, they can afford it. They canít afford the agencies because weíre driven by all these new requirements that force us to raise our prices and not be able to hire entry-level people and train them and do things like that. So the people who are affected are people who are on these fixed budgets, as much as -- even less so than somebody -- minimum wage people, because you know what Social Security is like. And thatís what these folks live on.

And as we raise the parameters and raise the minimum wage and raise the requirements, theyíre the folks that have to pay more. And so, weíre concerned about the effect that overriding the exemption to afford minimum wage to people who are normally exempt under something like -- now Wage Order 15, as well as, you know, overall eliminating the ability to train people. We just think if you want to make it -- we know itís negatively going to affect both the economic and personal care of the largest growing segment of our population, is the seniors.

So, when you think about changing the laws and think about the exemptions that exist now, for reasons that make a lot of sense, you have to really consider the impact. And thatís why weíre here today, so that you think about Wage Order 15, not just with respect to the minimum wage, but with respect to other things that may come up along the line, because too often itís forgotten.

COMMISSIONER DOMBROWSKI: Mr. Bosco?

COMMISSIONER BOSCO: Mr. Chairman, could I ask about our scheduling and make a recommendation? I know that we want to go on now and hear from other people about the minimum wage, and I have to get on a plane at about 2:30. I was wondering -- and also, there is a small group of people here that -- some of whom are from out of state, that want to address the sheepherding issue. And having made that motion, Iíd like to hear testimony from them.

I was wondering if maybe we could go on for maybe -- say the next -- say till one oíclock, the next 35 minutes, on the minimum wage, then talk a half an hour to hear the sheepherding, and then go back.

COMMISSIONER BROAD: Okay. Why donít we take -- why donít we get the others up here?

(Pause)

COMMISSIONER BOSCO: It might give the people that are here on the minimum wage a chance to have something to eat for lunch. I guess weíre not going to take a break, even 10 minutes.

(Pause)

COMMISSIONER DOMBROWSKI: Identify yourself.

Quiet down, please.

MR. SOARES: Mr. Chairman, George Soares. We have a question.

I donít plan to testify, but I just wanted to explain that we have two witnesses here, and then weíll have two more thatíll come up after these two speak, if thatís all right with all of you.

COMMISSIONER DOMBROWSKI: What did you say? Iím sorry.

MR. SOARES: We have two witnesses to speak here, plus one of the families, and then weíll have two more witnesses as well. So, if we can put it that way, weíd appreciate it.

MR. RICHARDS: To the committee, I appreciate the opportunity of testifying today. My name is Dennis Richards. I am currently the president of the Western Range Association, and Iíve been, for the past fifteen months. Iíve been a member of the Western Range for approximately fifteen years.

The Western Range consists of the sheep growers in the ten western states, which include California, Idaho, Nevada, Colorado, Washington, Oregon, Montana, Arizona, Wyoming, and Utah. Presently there are 78 members in the State of California. There are approximately 300 sheepherders. Thereís a total of about 950 sheepherders, with a membership of around 250, in all of the states.

The sheep industry, as you probably know, over the past few years has been in drastic straits, and it is declining because of economics. In 1988, there was a total members in the Western Range of 280; today, in 200, thereís 227, minus the 53. In 1988, there was 1,453 sheepherders; today thereís 965, minus 468. Now, these sheepherders that we have are mostly legal aliens brought in from Peru, Chile, we are bringing some in from Mongolia now. These people come and are all on contract. They come on a signed contract to herd our sheep in this area.

I am a fourth-generation sheep rancher. I live in the State of Utah. And the sheep numbers in my state are going down also.

Iíd like you to know that I support the current exemption for the sheepherders from the IWC Order 14-80. It exists because there is a federal system in place that works. The H-2A program establishes compensation levels in each state based on the prevailing wage of domestic sheepherders. We have never had a problem in any of the states that I know of with the federal orders that are in place.

Applying a minimum wage to this category of employees is the equivalent of trying to put a square peg in a round hole. The job description is 24 hours per day, seven days a week, for set periods of time. And all of these employees are aware of this as they come into the country on these contracts. And most of them like to come back on two and three contracts, so they have been happy with their work.

I presently have one man that has been with me fourteen years, another one close to ten years, and one that just went home last fall, nine years. So these people are happy with the wage that theyíre getting and the working conditions.

If the minimum wage is put on this, it will bankrupt the industry. We would have hoped that the Commission would have investigated the reasons behind the exemption before taking this action, because it is very expensive for all of us to have to be here today. But now we are here and subject to the process, we intend to provide to you in future hearings economic analysis of the industry, testimony of those who live it every day, and opinions from communities of interest that would be affected by the repeal of the exemption.

Iím here to tell you that the system is not broken. It has worked for years. And we intend to challenge the unfounded comments to the contrary. A few people have been making a lot of noise, making unsupported claims. There is an industry at stake, and we canít afford to let others play fast and loose with our reality.

I would entertain any questions if anyone has any.

COMMISSIONER ROSE: Mr. Chairman, I have a question.

Could you tell us how long the contract is?

MR. RICHARDS: Three years. They are one-year contracts, renewable every year, for a total of three years.

COMMISSIONER ROSE: Okay. And could explain H-2A?

MR. RICHARDS: H-2A was formed in the early Ď50ís to bring legal aliens into the country to herd sheep. There are a lot of H-2A programs, some berry pickers, some apple pickers, but we are the sheepherders part of it.

COMMISSIONER ROSE: So itís H-2A that has the sheepherders in it?

MR. RICHARDS: Yes.

COMMISSIONER ROSE: Thank you.

COMMISSIONER BROAD: I have a question. The last hearing, the figure was stated, there were 250 sheepherders in California. Itís now --

MR. RICHARDS: This is the busy time, are there is approximately around 300 right now. This is their lambing time.

COMMISSIONER BROAD: Who are the 965?

MR. RICHARDS: The nine hundred would be the total for the states, all the states, the ten states.

COMMISSIONER BROAD: Oh, the whole western area.

MR. RICHARDS: Yes, the whole ten western states.

COMMISSIONER BROAD: Okay. So let me follow Commissioner Roseís questions.

So, they work seven days a week, 24 hours a day, for three years?

MR. RICHARDS: Yes. Well, they have two weeks every year for vacation.

But these people are aware of this. They only might work two to three hours a day. They could be sleeping or doing whatever the rest of the time. But they have to be on call. This is possibly the reason most of the domestic people donít want the job any more. We canít find domestic people to do it. But from the South American countries where they donít have a lot, theyíre more than willing to do this to provide a living for their family.

COMMISSIONER BROAD: Okay. Could you explain what kind of daily -- what sheepherders do every day? I mean, you say they may work two hours a day, and then theyíre on call for the rest of the day. What -- in the rest of the time, in the 24-hour period, what are they doing? What are they responding to? You know, if a wolf shows up or --

(Laughter)

COMMISSIONER BROAD: No, I mean, really, this is a very -- this is a very --

MR. RICHARDS: Itís unique.

COMMISSIONER BROAD: -- unique area, and we need to educate ourselves in terms of what in fact occurs.

MR. RICHARDS: Each state is a little bit differently. Now, in the state that Iím from, itís totally -- youíre out on the range. These guys will get up early in the morning, turn their sheep to where the feed is and maybe turn them down to water. The sheep will stay on the water or in the shade in the summertime, until three or four oíclock in the afternoon. They will go out ahead, turn them up to the bed ground and make that everythingís okay. Then they will go back again.

So, most of the time, they donít have a lot to do. But in the lambing time, then they put in a lot more hours.

COMMISSIONER BROAD: Okay. So, when you say theyíre on call now, what are they responding to?

MR. RICHARDS: They are in a sheep camp or a tent or whatever the situation might be, with the beds, their food, and horses and dogs, or whatever. They just have to be there 24 hours a day because theyíre a long ways -- some of them -- from civilization, in my case.

COMMISSIONER BROAD: Okay. So, how, then -- what is their -- tell us about their housing situation. And how do they get their food, and how is it paid for?

MR. RICHARDS: Their food is paid for by me. They get room and board, along with their wage, along with -- well, the insurance. I deliver the food to them once a week. They fill out an order, and I take the food to them once a week.

My people are all in camps with stoves and whatever they need. And some of them have to stay in tents because there are no roads into the country that theyíre -- theyíre living in.

COMMISSIONER BROAD: Is it common practice that theyíre given free room and board?

MR. RICHARDS: Yes. Thatís part of the contract.

COMMISSIONER BROAD: Itís a legal requirement?

MR. RICHARDS: Yes. Yes, it is.

COMMISSIONER BROAD: And is the housing to any standard at all?

MR. RICHARDS: Yes. That is inspected by Job Service in each state.

COMMISSIONER BROAD: Job Service being a federal agency, an agency of the Department of Labor? Who is that?

MR. RICHARDS: I think itís the Department of Labor. Itís done through the state agency, I know. They come out once a year and inspect the houses.

COMMISSIONER BROAD: Thank you.

MR. ELGORRIAGA: Gentlemen, my name is --

COMMISSIONER ROSE: Wait a second. I do have one more question.

Can you tell me how much they get paid?

MR. RICHARDS: It all depends on the state. Each state has a different wage that is set by Job Service and prevailing wage surveys. Now, in my state, itís $750 plus room and board.

COMMISSIONER ROSE: A month?

MR. RICHARDS: A month, yes.

COMMISSIONER DOMBROWSKI: What is it in California?

MR. RICHARDS: California is now to $900.

COMMISSIONER ROSE: And what state are you from?

MR. RICHARDS: Utah.

MR. ELGORRIAGA: Gentlemen, my name is Dan Elgorriaga. My family and I have a 3,000-head sheep operation in the Central Valley. Weíve been in business for over twenty years.

Iím here today with my entire family, not to scare you or to think that everybodyís going to talk thatís at this table, but to show you that there are some real faces and some real people, some real families behind the sheep business in California and to present to you another side of the story than what, on the surface, looks like something else.

At the risk of being a little boring, Iím going to try to answer the question that was asked about why herders need to stay 24 hours a day on the job site.

We produce lamb and wool. We move our sheep from pasture to pasture. We do this in the summer and the fall. We feel the fields of the Central Valley of California. We keep our sheep under what is now electric fence, portable electric fence. The herders build that fence. An ordinary field can be fenced in two to four hours, and itíll last anywhere from four to five days. Thatís why youíll find -- Dennis explained that theyíre not working all the time. They are on call. They are on call because theyíre next to a public road. Thereís a public liability. Thereís predators that do need to -- that do get through the fence if itís broken. Someone has to be there on a 24-hour basis to take care of the tule fog thatís a big danger if we have sheep get out on a railroad or a road in the tule fog. Thereís a tremendous amount of liability there.

During the fall lambing season -- and by the way, weíve just entered into it -- itís 97 degrees today in Madera, where we come from. The other three herders that I have working for me are there today dunking newborn lambs in buckets of water to keep them alive. Itís a very labor- and management-intensive time for us. Itís a period of about 60 days when these herders that work for us will work up to 12 hours a day, three or four herders working together in a field to try and save and create a lamb crop for us.

This period is sensitive not only because of the weather, but because the lambing industry, the sheep industry is very unique. If a ewe doesnít have enough milk, these men are responsible for trading that lamb and putting it another ewe that does. If they donít, the lambís dead. If the lamb is not dunked in a bucket of water, the lambís dead. If thereís a predator problem, if a fence is not fixed, the lamb is dead. Itís a one-shot -- we wait 12 months for our check, and these men help us get that check.

I did make a mistake by not introducing the people at the table with me, and I want to take a minute just to do that now.

At the very end of the table is Mico Elcombidano. Mico is here from Chile. Heís here on a three-year contract with us, with Western Range Association, under the H-2A program that was described to you, under the auspices of the Department of Labor. Mico came to us three years ago, started working with us, and he accumulated enough money when he left early this summer to go back to Chile -- by the way, he comes from Coijaique -- itís Region 11 in Chile -- itís close to Tierra del Fuego -- and he saved enough money to buy a 600-acre ranch back there. His goal is to buy the sheep, the 600 head of sheep that will stock that ranch, with his next contract. Heíll be able to do that.

I can tell you three other stories about the three other fellows who worked for us, very similar. They come over here with a very goal-oriented idea about sheepherding. They accept the fact that theyíre going to be out by themselves herding sheep. They accept the fact that they are not covered under minimum wage, because theyíre here with one idea, and thatís to earn some money, save it, go back to their home and create a life standard that they could never achieve there on such a short time period.

Thatís Mico.

My motherís here, representing the first of four generations. My wife is here with -- with myself. Weíve been in business for twenty years. My daughter-in-law and my son are here. Theyíre the third generation. And the one you canít see, on the floor here, the little gal, sheís the fourth generation. I hope she marries someone else, other than a sheepherder, though.

(Laughter)

MR. ELGORRIAGA: And Paul is here.

Iím sorry, Paul.

Anyway, I didnít make -- I wanted to make that introduction.

COMMISSIONER DOMBROWSKI: Who is Paul?

MR. ELGORRIAGA: Paul, raise your hand.

MRS. ELGORRIAGA: His son, my grandson.

COMMISSIONER DOMBROWSKI: Okay.

MR. ELGORRIAGA: Anyway, as I said, I donít want this to bore you or think that everybodyís going to talk, but this is the face of us.

Now, I want to continue.

When we get done lambing, when we get done through this period, we go to the coast ranges of the Central Valley, things -- the country around -- along Interstate 5, where you donít see much but tumbleweeds and some short grass. And hopefully, there will be some grass this year. But that -- thatís where we operate.

These same men, Mico, for example, when he gets done lambing, will go out there. Heíll work -- heíll be there for about six months. Heíll work two to four hours a day.

What does he do when heís out there? Heíll go in the morning and heís going to direct his sheep to a virgin piece of feed, where the lambs will gain the best. If they need water during the day, heís going to put them on water. Well, what does he do after that? Well, about nine oíclock in the morning, heíll be back at his camp eating breakfast, listening to his stereo, and maybe watching his TV -- although I think he watches TV at night.

We have some environmental concerns, which I know doesnít affect you, but it does affect the reason heís here. We have to make sure these sheep donít over-graze, because of a non-point pollution -- this non-point source of pollution for water. We canít -- we canít water our sheep in the same area for the same time. Itís his duty, itís his responsibility, to make sure that the sheep are moved so we protect those environmental concerns.

As I said, weíll move on. Thatís not an important deal to you, I know. It is part of the reason why heís here.

He also takes care of our guard dogs. Our guard dogs are great, big hundred-pound white Pyrenees dogs that protect the sheep. Now, there was a question about 24-hour duty. Are the men on duty 24 hours? Yes, they are. Are they working 24 hours? No, theyíre not. Why arenít they? Theyíre not because -- part of the reason is because of these guard dogs. These guard dogs enable them to put more responsibility for the guarding of the sheep at night. And I think thatís all that needs to be said about that.

The men, for the most part, during their six-month period, Mico will be working in a very remote area. If it rains, itíll be very hard to get to. We prepare all our men for that with first aid kits, which, by the way, are mandated by the EDD, the Department of Labor. We prepare them with additional canned goods, telling them, "Make sure you have plenty of water if we canít reach you in time; make sure you have drinking water until we can get there."

The area they work in is very, very remote. Even if they -- if this proposal thatís before you now goes through, I still canít figure out how Iím going to get this man, if itís raining on a Saturday night, to town or let -- or how heís going to get off the mountain on a Sunday morning to take his mandatory rest period. I havenít figured that out yet. I donít know how that would work. But that is part of the proposal thatís before you.

COMMISSIONER BROAD: Well, let me clarify that.

MR. ELGORRIAGA: Sure.

COMMISSIONER BROAD: The only thing thatís part of the proposal, it will be that they be paid the minimum wage.

MR. ELGORRIAGA: Okay.

COMMISSIONER BROAD: Itís not -- thatís all thatís before us.

MR. ELGORRIAGA: If thatís the case, I misunderstood. I thought the minimum wage and the 40-hour workweek went hand in hand.

COMMISSIONER BROAD: No.

MR. ELGORRIAGA: Okay. Okay.

All right. Let me continue and see if I can get through this so we donít delay you much further.

All these factors, the remoteness, the vulnerability of the crop, the fact that the crop is very hard to -- Iím talking about the lamb crop -- the fact that itís very hard to raise this crop, the lack of fencing, the liability to the public, and also the environmental concerns, make having him work for us on a 24-hour basis imperative. We have to have that. Otherwise, we canít address those concerns.

I want to say a word about Western Range. Dennis spoke to you about Western Range a few minutes ago. Western Range was started over fifty years ago to administer the program that -- that involves this salary today, this $900

-- by the way, weíre at $900 in California today, which also represents a 25 percent increase in wages over the last two years.

Anyway, Western Range was started fifty years ago by former sheepherders and their families, one of which was my father. It employs the H-2A herders -- the H-2A herders, under the auspices of the DOL. And itís an organization which has helped not only us, the producers, but has helped people like Mico and Hernando and Roberto and the other people we have working for us, because these people have used this opportunity to better their lives. Theyíve made their money. Yes, theyíve sacrificed, and, yes, theyíve saved, but theyíve used this money to go back and do something with themselves. So, itís been a benefit for both he and us.

In addition to that, part of the members of the same association that is being -- Iíd like to call it "crucified" here -- not by you folks, but some of -- the other advocates of eliminating this exemption -- is -- have members in them who are former sheepherders. These are men who came over here as sheepherders. Theyíre hiring sheepherders today to continue what theyíve been doing. These are men who understand the conditions and hire these people today.

Thereís -- thereís some question about what happens if the man is not happy, if he changes his mind or heís been misled. Thereís a question about that. Herders not only have a right, but theyíre obliged to let Western Range Association know, "Look, my boss is not paying me fairly, this is not what I bargained for." If itís as simple as something, "I just donít get along with my boss, I donít like him," they have the opportunity to ask for a transfer. Thatís part of the same package thatís administered under the H-2A program. This is their prerogative. If they donít like it, they can move.

Now, Iíll say this. The best vote that any of these men could give you, or could give anybody, as far as thatís concerned, as to whether or not they agree with the program is the fact that they return. And over half of the fellows who come here on a first contract return for a second contract. And they do so after theyíve seen what the system is like. Itís not like theyíve come over here and donít know anything about it. Theyíve seen it, they work in it, and now they want a second chance to come back again.

So, Iím not going to tell you that this is going to put us out of business. I will tell you this, that if it goes through, my sheep are for sale. And if any of you would like to start in the sheep business, Iíd be happy to start and give you a hand doing it. But thatís -- I wonít

-- I wonít say that. Iíll just say that this -- our sheep will be for sale if this goes through. This is not a theatrical attempt to convince you; this is the reality of it.

This proposal is going to cost me anywhere from $3,000 to $4,000 a month per man. Right now, weíre at $900 with the current program, plus all the benefits the men get, which include travel, which include health as well as life insurance, as well as food and lodging. So that kind of increase we canít stand.

I wonít -- I wonít trouble you any more, except to leave you with this thought. The federal program that we have already in place has taken a look at these concerns you folks have, and theyíve come up with a prevailing wage for sheepherders. And this is what weíre governed by. Weíre governed by a federal program, federal mandates. Weíre very highly scrutinized, and weíre very proud of our program.

If we have some bad members, if we have some members who mistreat, who donít pay their men, who donít do their job, those members are terminated. I wonít say the same for the herders. If a herder is not satisfied, if a herder has some problems for one reason, he can ask for a transfer. And the association doesnít say, "No, youíre going back to Chile or Peru; we donít need you; we canít -- weíre not going to tolerate that kind of attitude." The herder is transferred. Thatís the reality of the situation.

But the minimum wage thatís here before you folks today, the exemption that we have from the minimum wage today is imperative because we are a unique industry, and itís the way we have to operate. Itís the only way we can operate today.

All I can say now is thank you. And if there are any questions, Iíd be happy to answer them, but I know weíve been up here quite a while.

COMMISSIONER BOSCO: Mr. Chairman, I have some questions.

First of all, thank you very much for being here. I know that it probably is a great personal sacrifice that youíre here.

As I understand it, these contracts are not with you individually, but with your association?

MR. ELGORRIAGA: Thatís not correct. They -- itís a three-party contract. The association signs on the contract, as well as ourselves, and as well as the herders.

COMMISSIONER BOSCO: And does the association assign the herder to you or -- how does that come about?

MR. ELGORRIAGA: The herder is assigned -- if I need a man, Iíll request a man from the association, and theyíll either -- if they donít have one here in this country thatís available, theyíll apply for one and bring him from either Chile -- primarily Chile, Peru, and Mexico.

COMMISSIONER BOSCO: Does the federal government set forth who is primarily liable to these people, whether itís the association or you, or are both of you equally liable?

MR. ELGORRIAGA: Itís a -- excuse me -- itís a joint -- itís a joint responsibility, and thatís part of the protection thatís been built into the program. In other words, if thereís an employer who is not living up to his responsibilities, the association steps in and covers that. If, for example, someone goes bankrupt or doesnít pay, the association is responsible for that.

COMMISSIONER BOSCO: But does the government require you to record or otherwise report the number of hours these people actually work? You mentioned, during the lambing season, they may work 12 hours a day, but in other parts of the year, they may work 3 or 4 hours a day. Do you ever record that, like the intensity of work, so to speak?

MR. ELGORRIAGA: We donít record it, although I -- I -- in the formula thatís used to establish the prevailing wage rate, that may be a factor. And Iím going to defer that to legal counsel, whoís more familiar with that than I am. But we do not, to answer your question.

COMMISSIONER BOSCO: And have you ever quantified the value of the non-monetary compensation, the room, board, health insurance, life insurance, and other things that you mentioned? What does that cost you a month?

MR. ELGORRIAGA: The -- as I said, weíre at $900 now on the base wage, and itís costing us anywhere from $1,500 to $1,600 with the additional -- with the additional perks. And I say $1,500 to $1,600. Itís not a firm figure, because it basically depends on how much a man eats. If he eats a little bit more, heíll be $100 difference in that $1,500 or $1,600.

COMMISSIONER BOSCO: Can you break that down, just to say, like what would you spend in food for the average sheepherder?

MR. ELGORRIAGA: We spend approximately $200 a month on food for -- on food for a month for our people, per man.

COMMISSIONER BOSCO: And then what about health insurance?

MR. ELGORRIAGA: Health -- well, the health insurance, the workmenís comp, the travel, and the association dues are all paid to the association, and at the rate of approximately $300 a month.

COMMISSIONER BOSCO: Okay. Then what else? You said $1,500 a month. Whereís the $500? What -- how do you get that?

MR. ELGORRIAGA: Well, the rest is the -- are the sheep camps. Weíre -- the housing, weíre regulated in all aspects of this. We have to maintain our housing. You know, weíre inspected every two years by the state, and we do a self -- self-cert every year. So, we have to maintain these camps. By the way, these sheep camps -- and not in all cases, but weíre talking -- in our particular case, are former travel trailers. These are travel trailers that families used to use to vacation in, before we got a hold of them. So -- so there is a maintenance cost there.

So, we start -- go ahead.

COMMISSIONER BOSCO: What would you say that is? Say for a house, what is that rough amount?

MR. ELGORRIAGA: Well, anywhere -- you know, thereís a -- anywhere from $100 to $150 a month, I would say, because, you know, in that is included also energy. Someone was here talking about energy earlier today. Well, we supply butane. Butane powers our sheep camps. And so, thereís an energy cost for us as well.

COMMISSIONER BOSCO: When you say "sheep camps," is there more than one sheepherder in a camp?

MR. ELGORRIAGA: Each herder, with the exception of lambing time, and this is at one camp, every herder has one camp. During lambing time, if thereís enough square footage in housing in a sheep camp, then the EDD will qualify us to put two men in a camp on a temporary basis. Otherwise, each herder has his own housing.

COMMISSIONER BOSCO: Well, when you say $1,500, did you include the $900 in pay?

MR. ELGORRIAGA: Yes.

COMMISSIONER BOSCO: Oh, okay. Iím sorry.

MR. ELGORRIAGA: Yes.

COMMISSIONER BOSCO: So, food, health insurance, and housing are the basic components of that.

MR. ELGORRIAGA: Thatís right.

COMMISSIONER BOSCO: Thank you.

COMMISSIONER BROAD: The health insurance, how does that work?

MR. ELGORRIAGA: Health insurance is provided, and itís something we as an association chose to do. Itís not mandated, but we provide that to the domestics as well as the foreign herders. And we provide that to them at no cost. We absorb that cost.

COMMISSIONER BROAD: So do they -- is it like a Kaiser plan? I mean, how do they actually obtain health benefits?

MR. ELGORRIAGA: When the -- when the herders come here, they sign -- they sign an agreement, an agreement, and a number of papers identifying who they are and what they are. But what they do is they -- they sign their names to an application, which is endorsed by the association, and which allows them the health coverage. If you want the name of the company, Iím sorry --

COMMISSIONER BROAD: And they go to -- if theyíre sick, what do they do? Do they go to a doctor? How do they get there?

MR. ELGORRIAGA: We take them. We take them. If the -- go ahead.

COMMISSIONER BROAD: Okay. So itís like -- actually, is it like you take them to Kaiser or you take them to --

MR. ELGORRIAGA: Well, our coverage allows us to take them to different places. No, we donít take them --

COMMISSIONER BROAD: Thatís fine.

MR. ELGORRIAGA: Okay.

COMMISSIONER BROAD: The next question I have, could you explain -- I understand it was mentioned in the last hearing that thereís a federal subsidy that sheepherders receive from the U.S. Congress in the form of cash payments. Could you explain about that program and how much money it provides, and what the difference is between this year and last year, whatís it for, you know, how -- that kind of thing?

MR. ELGORRIAGA: Well, okay, Iíll do that. I hope it -- I hope it doesnít bore you too much.

But anyway, the federal government has seen fit, due to the declining numbers of the industry and the infrastructure, to help us as an industry. So theyíve come in -- and this started last July, a year ago -- a year ago this July -- with a three-year program to establish tariffs and quotas on imported lamb coming into the United States from primarily New Zealand and Australia.

In that program, they are helping us with some direct payments. This year, for example, thereís a $2,500 offset for the purchase of better quality rams. Thereís another $2,500 offset for the improvement of our -- of our own infrastructures, of our equipment. Thereís some government purchases of meat, of lamb, also, which are involved in the program. But the primary objective of the program and what it -- where it seems to be helping the most is by placing tariffs and quotas on the imported lamb coming into the country. And if you want me to put a number on that, Iím sorry, I canít.

COMMISSIONER BROAD: So, each rancher applies for -- based on what their expenditures are, applies to the feds for a -- to the United States government, and theyíll send you a check? Is that what happens basically?

MR. ELGORRIAGA: The Farm Service Agency is the organization we apply through, Department of Agriculture. And, yes, after weíve given them all our material, all our receipts, theyíll go ahead and reimburse us.

There is -- if I might add, there is an additional program to help the sheep industry here in California, and itís been established by the California Sheep Commission. Theyíre deducting from us 6 cents a pound for every pound of wool we produce. This, once again, is an effort to promote our product here in California and to make us more competitive. Two different programs.

COMMISSIONER ROSE: Two questions. The first is, how do you communicate if, say, a herder gets hurt? How does he communicate? Do you have some kind of radio?

MR. ELGORRIAGA: We donít have that. We see the herders on a regular basis. And by that, I mean daily. Now, if thereís a problem with weather and we canít get to them, thereís a chance we may not be able to see them for two or three days. Otherwise, someone is there every day. And if the herder has a problem -- by the way, these camps do have some -- do have first aid kits and that type of thing. But aside from that, if heís got an appendicitis attack or something of that nature, you know, we -- we have a good rapport with our herders. And theyíll establish -- say, "Iím not feeling well today." "Do you want to go to the doctor?" Most of the time, theyíll say no. But if itís serious enough or if they donít want to go and we feel they need to go, weíll take them.

COMMISSIONER ROSE: The other question I have is curiosity. Is there any external subsidy on wool?

MR. ELGORRIAGA: There isnít yet, but if you ask me that next month, there may be. There may be a --

COMMISSIONER ROSE: (Inaudible).

MR. ELGORRIAGA: Iím sorry.

COMMISSIONER ROSE: There was one before, and itís been eliminated?

MR. ELGORRIAGA: And itís been eliminated. There may be a 20-cent subsidy for this coming year on the wool we produce this year, and it may be out as soon as October. Itís not there yet.

COMMISSIONER BOSCO: Let me ask one more question. Some of the complaints that have been leveled against this particular practice have to do with isolation of people and not being able to do ordinary things, such as watch TV, talk on the telephone, you know -- it sounds like something youíd do with teenagers -- but do you -- say if -- putting aside the question of wages, if we just put that aside, are there things that should be required to lessen the isolation? For instance, in most of the areas where these folks operate, are they accessible by a cell phone, for instance, that people may be required to provide some communication system if somebody, you know, needs, in emergency, to get in --

MR. ELGORRIAGA: Iím sorry my family and my -- Iím glad my daughters arenít here to answer that, because theyíd say cell phones are imperative, they couldnít live without them any more.

To answer your question, we donít feel they are important. We donít feel they are necessary. Our business is very intensive. We need to be there on a daily basis, weather permitting. We need to be there on a daily basis to make sure our crop is being raised. In spite of the fact that weíre very proud of our men who are working for us, it is a very labor- and management-intensive business. Weíre there every day.

If they need to communicate, we take their letters. If they want to use a phone, weíll take them to a phone or let them use the cell phone on the pickup. Thatís available to them. Most of us have cell phones now. Is there a cell phone in the camp to be used by them at will? To answer your question, no. Is it necessary? No. Will it be abused? Yes.

COMMISSIONER BOSCO: Well, I would say, just as a guess, from looking at you and your family, youíre probably about the best operators there are. What about the other extreme? I mean, how do we protect the ones that donít provide any transportation or donít provide any communication?

MR. ELGORRIAGA: There is a mechanism already in place, and itís mandated by the federal government. Thereís a mechanism where, if these herders are not satisfied, if thereís a problem, they can require -- they can ask for a transfer. As Iíve said, when it comes to compensation, they have an obligation to make sure that theyíre not being treated fairly. They can go ahead and ask for a transfer. If itís as simple as something, "I just donít like the guy, I canít get along with him," we donít -- we donít seek -- they can ask for a transfer. And, you know, Iím not saying the association is going to grant all transfers, Iím not saying that at all, but theyíre going to look at the situation and theyíre going to go from there. The opportunity is there for them to leave and move on to a different employer.

COMMISSIONER BOSCO: Do you know what percentage of them do ask for transfers?

MR. ELGORRIAGA: I canít answer that. But once again, Iíll defer that to -- to counsel later on. Iím sure they can come up with that number for you.

COMMISSIONER BROAD: With regard to the $900 in pay, how is that paid to them?

MR. ELGORRIAGA: Thatís paid to them twice a month, if they so choose. Most herders receive a check once a month after theyíve signed a release saying they donít want to be paid twice a month.

COMMISSIONER BROAD: And so they get a check themselves?

MR. ELGORRIAGA: Yes.

COMMISSIONER BROAD: Okay. So -- and then you -- someone drives them to a bank?

MR. ELGORRIAGA: No. Generally what happens is that we open a bank account for them, and then we deposit the checks for them, unless they want the money directly sent home, and they do that generally now bank to bank, because thereís a problem of transporting -- getting money safely to some of these foreign countries. So we do that for them, either in the form of a savings account or a bank-to-bank transfer to their home.

COMMISSIONER BROAD: Now, if someone, an employer here, did not pay their worker, what is their recourse? Can they go to state court to enforce that?

MR. ELGORRIAGA: They donít need to.

COMMISSIONER BROAD: I mean, can they, though?

MR. ELGORRIAGA: Iím sure they can. Their recourse is very simple. The association automatically becomes liable for that herderís pay. We -- the association and myself are joint employers.

COMMISSIONER BROAD: Oh, we finally found someplace in agriculture where thereís joint liability.

(Laughter)

MR. ELGORRIAGA: Weíre not so sure we like where we are.

COMMISSIONER ROSE: What deductions are made to their paychecks?

MR. ELGORRIAGA: Deductions that are made are -- thereís a $13 deduction -- honey, why donít you help me out here? What are we deducting?

MRS. ELGORRIAGA: The Western Range charges them $13 -- I think $13 a month out of this as SDI.

COMMISSIONER ROSE: As what?

MRS. ELGORRIAGA: State disability insurance. Thatís all I take out.

COMMISSIONER ROSE: No taxes?

MRS. ELGORRIAGA: No.

COMMISSIONER BROAD: The $13 is for what?

MRS. ELGORRIAGA: From Western Range.

MR. ELGORRIAGA: Itís -- the fees cover part of the administrative expense to get these herders here. Thatís basically what it is. And --

COMMISSIONER BROAD: And theyíre underwriting this from their pay?

MR. ELGORRIAGA: A part of it, not -- not all of it. But they are -- the $13 is their -- is their part of it. Theyíre required to get visas, and the visa --

MRS. ELGORRIAGA: We pay for it up front. We pay for all that up front.

MR. ELGORRIAGA: Itís their participation in this program. The $13 is their participation. Ours is a $300 participation.

COMMISSIONER BROAD: Itís still thirty dollars a month.

MR. ELGORRIAGA: Yes.

MR. MINABERRIGARAI: If I may address the Commission, I think --

COMMISSIONER DOMBROWSKI: Use the mike.

MR. MINABERRIGARAI: My name is Dominic Minaberrigarai, from Bakersfield.

COMMISSIONER DOMBROWSKI: Could you get by a microphone, please?

MR. MINABERRIGARAI: Iím Dominic Minaberrigarai. Iím from Bakersfield, California.

And the $13 that Mr. Elgorriaga is referring to is their healthcare issue. Itís not administrative cost. Itís $13 that they put towards their healthcare plan, which is matched in an equal amount by the employer. Thatís what the $13 -- thatís what that $13 is, is their healthcare plan.

COMMISSIONER ROSE: Thatís all thatís deducted?

MR. MINABERRIGARAI: And then the federal and the state income withholding is taken out of their check. They donít make Social Security tax, they donít pay Medicare tax. They are exempt from that under the federal program. So, from $900, they actually net every month $812.70. That goes straight to their savings account, or, if they choose to send it home. At yearís end, thatís $9,000-some -- I have it here -- that they make net, after paying all their taxes and everything.

That -- and much of what they do pay in income tax comes back to them in the form of a refund at the end of the year, because they donít meet certain tax law thresholds. So, after withholding, they do receive a good portion of that back in their check -- in their tax refund at the end of the year.

COMMISSIONER ROSE: State and federal?

MR. MINABERRIGARAI: Both, yes.

COMMISSIONER ROSE: Who pays for their incidentals, shaving equipment?

MR. ELGORRIAGA: The incidentals, they pay themselves. If they want to buy a radio, television, that sort of thing, they pay. We even -- we even serve them hygiene products, such as laundry, tissue, toilet paper, that sort of thing, but any other, whatever kind of shampoo they want, or whatever they want, they make a list. They tell us, "This is what I want," and they pay for those incidentals.

COMMISSIONER BROAD: Let me ask you a question. How regulated is their supply of food? I mean, in other words, can an employer say, "Hereís, you know, a 20-pound sack of beans; have a good time"? I mean --

MR. ELGORRIAGA: I canít --

COMMISSIONER BROAD: I mean, Iím serious, you know. I mean, you could save a lot of money if you feed somebody a really lousy diet.

MR. ELGORRIAGA: I canít speak -- I havenít looked at the regulations which do speak to the groceries. I can tell you as to what we do in our own operation. We pretty much provide whatever they ask for, within reason. I mean, weíre not going to get them pâté from France.

(Laughter)

COMMISSIONER ROSE: No, but they do get lamp chops?

MR. ELGORRIAGA: We do feed them lamb. We give them ranch-bred lamb, and we give them chicken, beef, pork, whatever they desire. We give them lettuce when they want it, fresh fruit when they want it. Some donít want fresh fruit; they want canned fruit. We give them canned fruit, rice, pastas -- I mean, Costco loves us -- we put in a lot of money into Costco, and itís across the board.

COMMISSIONER BROAD: Is that something that each rancher determines in a sort of side relationship with an individual sheepherder, or is that -- is there some requirement that a healthy and reasonable diet is provided?

MR. ELGORRIAGA: Maybe you can take that. I donít know the regulations on that.

MR. MINABERRIGARAI: There is -- there is no regulation. However, itís the same -- weíre talking about the same thing we talked about when a herder is not satisfied with where heís working before. If heís not satisfied with the conditions, he can leave. He can ask for a transfer.

(Pause)

MR. MINIBERRI-GARAI: Well, since Iím already here, I have a brief statement that I wanted to make.

My name is Dominic Minaberrigarai, again, for the record. Iím from Bakersfield, California. Iím going to speak to you --

COMMISSIONER BOSCO: Thank you very much.

COMMISSIONER DOMBROWSKI: Thank you.

COMMISSIONER BROAD: Thank you very much.

MR. RICHARDS: Thank you.

MR. MINABERRIGARAI: Iíd like to address the Commission on three different issues today. First Iím going to give you a history of our company to show you that we are sympathetic to the herdersí welfare and needs, and that there are regulations in place which we believe need to be enforced in order to take care of herders. Then Iím just going to talk to you about what these -- the lack of this exemption would do to our company, should you decide to go with the wage order as proposed.

My father, Sebastian Minaberri, whoís not here today because weíre shearing sheep, immigrated to the United States from France in 1952 at the age of 19 as a sheepherder. Upon arrival in the United States, he was driven to the Mojave Desert and given a bedroll, a mule, a dog, and a herd of sheep. For three years, he slept outside without a tent all year long, rain or shine. From these beginnings, my father began a dream of someday owning his own sheep.

Contrary to recent press stories published, my fatherís salary was not paid in ewes so that he could start his own ranch. In fact, no Basque sheep rancher that I know had his salary paid in ewes while herding sheep. When my father started working as a herder, he was paid $85 a month. Fifteen years later, he was a ranch foreman overseeing 20,000 ewes throughout four states and earning $300 a month.

However, unlike todayís sheepherders, he was not protected by federal and state regulations and he was not paid appropriately. He went sometimes years without receiving a paycheck from his employer. This situation was not unique to my father. At that time, many herders throughout the western United States were treated in the same manner as my father was. I mention this to you to show you that we know firsthand what itís like to be a sheepherder out there, sleeping under the rain. We understand the situations, and we are very happy with the regulations that are in place now protecting herdersí welfare. They needed to be done, and theyíre there, and we think theyíre great. We donít think they should be tinkered with by California.

After marrying, my father and mother decided they would fare better and started their own sheep ranch. In 1966, they purchased 674 ewe lambs with the money my father had saved in fifteen years as a sheepherder. Diamond Sheep was born.

Today our family runs approximately 8,000 head of sheep and about 900 head of cattle in California. We have become an important part of the agriculture business in our community. I want to state that our company spends a lot of money in business expenditures in our community. We purchase goods and services -- excuse me -- we lease or purchase goods and services from our community, which include hay, alfalfa pasture, corn, and other crops produced by local farmers, grazing land owned by local, state, and federal agencies, as well as private individuals, fuel, tires, automobile parts, and other items sold by local merchants. We support the work of blue-collar services provided by auto mechanics, welders, water pumpers, brake mechanics, sheep shearers, big rig truck drivers, and others who help us in our business. We also support professional services provided by accountants, attorneys, veterinarians, bankers, insurance agencies, and others. We also purchase farming supplies, which include grain, feed, horse saddles, hardware, tools, veterinary and animal health products sold by local hardware, feed, and veterinary suppliers. And of course, we buy animals from purebred breeders.

Weíre a very important part of our community. And the reason I bring this up is, these regulations here, or the proposed work order, could very well put us out of business. But it doesnít only affect us, it affects our community, and it will affect the workers that are working for us.

In 1999, Diamond Sheep Company employed an average of 15 people a month. The total monetary salary paid to our H-2A herders totals nearly $105,000. Although our family business has survived for 35 years --

COMMISSIONER DOMBROWSKI: Quiet in the audience, please.

MR. MINABERRIGARAI: -- the last five to ten years have dramatically hurt our company, to the point where the very survival of our company is in question. We have been operating our sheep business at a loss for the last three years. Were it not for the cattle and the farming that we do, we would be out of business today.

We continue to be in the sheep business on the hope that someday the market will rebound and we will once again be a successful enterprise. The reasons for the dire straits of our business is that the market for live lamb has been extremely volatile in recent years, with some very pronounced lows in the market. Weíve sold our lambs at a loss, as they say. The wool market is nonexistent. We have wool stockpiled at our ranch from the last three years because there was no one to buy our wool. It costs us more to put it on a truck and send it somewhere than it did to keep it at our ranch, not to mention the fact that we couldnít even cover our shearing costs.

While the price of lamb and wool has not improved, the cost of production has increased dramatically in recent years. One example is the increase in salary which we just had here, imposed by the federal government, putting the herder salary to $900. Thatís been an increase of about $35,000 annually that weíve already had to increase in salary. In the last ten years, herder salaries have increased 44 percent under the federal program. The federal regulators will come in, assess the prevailing wage, and make -- raising them in the last ten years up to 44 percent.

So, it does work. There is a program in place to ensure that the salary reflects todayís reality.

An increase in herder salary is unnecessary because the herderís current income includes much more than his $900 cash salary. Itís already been mentioned briefly, but we have free groceries of their choice. We also give them housing, which -- in Kern County -- and I canít speak for other areas -- but the Kern County Housing Administration, under their HUD program, estimates that a one-bedroom apartment in Kern County, including utilities, would be $410 a month.

Each herder also receives free transportation to and from their home country. And as I discussed already, they do not pay any income tax -- excuse me -- any Social Security or Medicare tax on their holdings, so they can save up to $9,752 a year, straight to the bank.

They also get two weeksí paid vacation, which some of them choose to take. At our company, we have a very flexible policy. If our guy comes up to us and says he wants vacation in the summertime when thereís not a lot of work, if he wants two weeks, weíll give him two weeks, if he wants three weeks, four weeks, whatever. If he comes back, heís a good guy. He would come back to work for us and we give him pretty much free time, not all of it paid, but we do pay the first two weeks.

They have a healthcare plan. Under that healthcare plan, they can go to any doctor of their choice, the way it works. Itís the insurance program through the Western Range, from my understanding -- maybe someone would want to correct me. But we are not limited on the doctors we can go see. We had a guy recently who had stomach problems. It was bacterial, and we took him to one doctor, who referred him to a radiologist, who referred him to -- I donít remember -- maybe three or four different places. No problem. We went to all of them, and there is no limit on the doctors they can see.

And as Mr. Elgorriaga already referred to, they are free to transfer any time they want. If they are unhappy with us, they can seek employment at another company.

After completion of a voluntary, three-year contract, the typical sheepherder returns home with tens of thousands of dollars in savings. Once home, the sheepherder typically buys livestock and a new ranch or home for his family and dramatically improves the lives of his impoverished family and community. Many sheepherders voluntarily renew their labor contracts and bring their family members to work for them here in the United States. Currently, our company has a father who has been working with us for twenty years, he -- we have two of his sons who have worked for us ten years, heís brought a third son previously whoís returned to Peru. We have another father whoís brought his son and his son-in-law. So, we have family units working for us. And if we go out of business, these are whole families that are going back to Peru without any money. I mean, I can understand the intent of the Commission, is you want to protect the welfare of these people. But if these people go back, they have nothing to go back to, basically. And theyíre coming here to try to better their lives.

I would just like to address for a moment the issue of isolation. I canít speak for all operations, but I know in our operations, our men are not isolated with a tree and a dog. They frequently visit with their family members, they frequently visit with neighboring sheepherders that might be in the area. I donít know how they do it, but a lot of them go to town. They buy the phone cards to call home to Peru. They have purchased televisions, they have purchased radios. Theyíre not out there in the middle of nowhere. Itís a misnomer to say that.

And we do operate in areas where they are isolated, and we actually have herders fighting to try to get to the most remote areas because itís nice and cool up there, and they like it. Itís an ideal life. I mean, all of us are trying to get out of the rat race. Well, thatís where they want to go. A lot of them volunteer and then plead with us to please send them up to the higher Sierra country.

As I stated earlier -- Iíll just wrap up now -- our company understands the need for regulations protecting herdersí welfare. We also understand that any abuse of herdersí welfare should be immediately rectified. However, we do not believe raising herdersí wages to a level that will bankrupt our company is a proper way to deal with any injustices that are occurring in the industry.

The proposed regulations this Commission is considering today will likely drive us out of the sheep business. Such an action will not only harm my family and the 35 years of work we have put in this business, it will harm the communities in which we do business. Most importantly, such an action will harm the herders you seek to protect, as they will be unemployed and will not be able to better the lives of their families and communities.

Thank you. If you have any questions, Iíll be happy to address them.

COMMISSIONER ROSE: The first question is, can you tell me if all the camps have running water and electricity?

MR. MINABERRIGARAI: Running water? No, they do not have running water. What we do is we provide water from our ranch in tanks, and we take that out there. Itís -- depends on the size of the tank, 200-, 500-gallon tanks. It is feasibly impossible to put running water where they are at. Some of them, when theyíre in the higher country, drink from the fresh springs coming out of the pure rocks of the mountain. And they -- electricity, we do not provide electricity. We do provide propane -- excuse me -- and the propane is their source of light and refrigeration. So they do have refrigeration, they do have lighting, they do have

-- a lot of them, as I said earlier, we provide some of them with car batteries so they can hook up their TV and radio to that. So, even though they donít have electricity, they do have amenities.

COMMISSIONER ROSE: One other question is, the way youíre talking, not all of the herders take a two-week vacation. Are they compensated --

MR. MINABERRIGARAI: Yes.

COMMISSIONER ROSE: -- if they donít take it?

MR. MINABERRIGARAI: Well, we pay them double, in effect. We pay them for the work, and then we also pay them the two weeksí vacation, as is, I think, federal law -- state law, at least, to do so.

COMMISSIONER ROSE: Just checking.

MR. MINABERRIGARAI: Yeah.

COMMISSIONER DOMBROWSKI: Next speaker, please.

MR. ETCHAMENDY: My name is Martin Etchamendy, and Iím a sheep operator from Kern County. Iím living proof of a sheepherder lifestyle. I came from the Pyrenees Mountains, on French soil, in 1961, and started herding sheep in the deserts of Arizona. I herded sheep more than nine years, a little less than ten years.

In those days, we didnít have any sheep camps. Of course, we were on horseback and we had a couple pack burros or mules or whatever. Thatís the way I spent nine or ten years of my life out there, saving any money. I started working at $180 a month, then six months later, I was paid $200 a month. Out of that money, I bought my own outfit and run approximately 3,500 sheep right now and do some dry farming in Kern County.

Our relations between employee-employers are excellent in our ranch. Thatís why I brought one of my employees here. This is the second time heís with me, the second contract. Thatís my -- heís our family. Four brothers have been with me. Out of four, three of them are on their second contract, and two of them left after two contracts. One of them sent his two sons. One of them was 18, and the other one was, I think -- I think 18, one year later. They came to work at the same outfit here on our ranch. Those guys are excellent employees, and we respect them as excellent employees.

Now, a lot of questions have been asked about how often they can go to town or anything else. We provide pickups, not to each one of them, but there is always one pickup truck around wherever they are herding sheep. Between maybe two or three sheepherders, theyíd have one. And these particular herders are very religious. They like to go to church on Sunday. They do not go every Sunday, but they attend whenever they can. They get along very good between themselves --

AUDIENCE MEMBER: (Not using microphone) Come on!

MR. ETCHAMENDY: -- maybe two of them can go, two of them --

COMMISSIONER DOMBROWSKI: Quiet!

AUDIENCE MEMBER: (Not using microphone) Weíve got people that need to go and take care of people in their homes!

COMMISSIONER DOMBROWSKI: Quiet!

AUDIENCE MEMBER: (Not using microphone) We take care of people that are going to bite themselves.

MR. ETCHAMENDY: My sheepherder here is present to ask him any questions, if anybody wants to. They work whenever they desire work, of course. When there is not too much work, they take it easier. I donít have anything extra to say. Iím just a regular sheep man, and with my employees, like you personally.

COMMISSIONER DOMBROWSKI: Thank you.

MR. ETCHAMENDY: Thank you.

MR. MINABERRIGARAI: If I can just address one more thing -- I forgot. On the federal program for helping the industry, there are certain limits on that, and itís for very particular things. And the limits are under $3,000, and you have to meet certain criteria. So, itís not a handout to the industry. I just wanted to make that point.

Thank you.

(Pause)

MR. SCHNEIDER: Good morning. My name is Chris Schneider. Iím executive director of the Central California Legal Services.

This, to a sheepherder, is a bathroom. This is the "amenity" that the sheepherders have for a bathroom. Theyíre given a shovel. Not in all, but in most cases, theyíre given a shovel to bury their excrement.

When theyíre out in the middle of an alfalfa field along Highway 99 in the Central Valley, right across the street, perhaps, or a few miles from grape vineyards that have portable toilets in there when other farmworkers are there, the sheepherder has to be out there with this amenity.

And thatís the housing that they get that weíre told is worth $350 or $450 a month.

Iíve been dealing with sheepherders for the past ten years. And the first time I had a worker come to my office and tell me about the conditions and how he had been fired, I thought, "Iíve got a disgruntled worker whoís sort of exaggerating." So I asked him to take me out to some sheep camps. And I went out to the sheep camps and found conditions that were very difficult to believe. And whatís been described this morning by the growers that have been present, I must say that they definitely -- it definitely indicates to me that they are some of the best employers in the sheep industry, because the conditions they described are much better at their company than what I have found at many other companies.

In March of this year, Central California Legal Services released a study called "Suffering in the Pastures of Plenty: Experiences of H-2A Sheepherders in Californiaís Central Valley." Iíd like to share a copy with each of you.

And Iím, of course, not going to read the whole report to you, but I am going to hit some highlights and also tell you that today -- we intend to be at all three hearings, and weíll give a brief overview today. And in San Francisco, weíre going to talk about some of the legal issues, and then, at Stockton, weíre going to put a face to the sheepherders and have a number of sheepherders testify.

With me today is Victor Flores, who is president of the Sheepherders Union, and he will speak briefly of his experiences as a sheepherder. And then Mark Schacht, from CRLA Foundation, will also add a few comments.

But if you look at this report, on Page 5, thereís a chart, "Number of Days Rest per Year." We interviewed 41 sheepherders. And out of those 41, 37 didnít have a single day off in a year.

On Page 6, thereís a chart on "Nonwork Activities." Of the -- Iím not going to read all of them -- and obviously, we didnít talk to all the sheepherders, but 41 is a good sampling for an industry that has this many workers -- 38 had never had a chance to watch a video, 40 had never had a chance to go to a park, 40 had never had a chance to go to a party, none had been able to go to church, none had been able to go to a library.

On Page 11, "Job-Related Injury and Illness," 46 percent reported job injuries or illness. And 67.6 percent of those told us that they were not allowed to get medical treatment.

Page 12, thereís a chart on "Amenities." Itís very hot in the Central Valley and in the desert. None of the 41 had air conditioners, 39 had no toilet. Two said that they did, and I interviewed one of the persons who said that he did, and he pointed to his trailer. And yes, there was a toilet, but it wasnít connected to anything, so he couldnít use it. But technically, he had a toilet, so he said yes, he had a toilet. 39 have no bathing -- 39 of the 41 had no bathing facilities.

We asked about their availability to transportation, Page 15. 97 percent had no transportation available to them.

Over the next couple of hearings, weíre going to be bringing some more sheepherders in to talk about their experiences. But we wanted Victor Flores to give a brief overview of his experience.

MR. FLORES: (Through Mr. Schneider, Interpreting) My name is Victor Flores. Iím Peruvian, ex-sheepherder in Kern County, in Bakersfield, California.

I first have to tell you what we have lived in our own flesh and blood. I came in 1991 for a boss who was named Arturo Fernando Sheep Company -- Antero. Heís one of the companies that more or less doesnít have his workers in very good conditions. Heís a "more or less" employer; we suffer psychological abuse for having asked for better food, because theyíd only give us two cans of milk per week, they give us five pounds of potatoes per week, they give us canned beans, all expired dates. They gave us contaminated water that they took from the irrigation wells. They didnít give us clean water. And as a result, many of the sheepherders, Peruvians, Chilenos, Mexican, Spanish, suffer from stomach illnesses.

Weíve been exploited, been used as drivers in addition to sheepherders. Weíre sent to drive without having licenses, running the risk of accidents on the freeway. We have to drive to bring the water 10 to 12 miles to give the water to the sheep.

During the lambing season, which begins today, the time of the production, most production, for the sheepherder, we start about three in the morning and work till about nine or ten at night. And besides that, during the night, we have to be alert to guard the sheep, like a guard for the sheep.

During this time, we canít eat well or rest well because we have to make the fences to keep the sheep in. We have to carry the rolls of fence wire that weigh between 100 and 200 pounds. We have to carry ten to twelve metal posts on our shoulders, and we injure our shoulders because weíre not given any protection. And when we complain that our shoulder hurts, they tell us, "Youíre lazy; youíre complaining because you donít want to work." And we say, "We canít, it hurts." And they say, "Well, what have you come for if, in your country, people are dying of hunger? If you donít agree, you can go back to your country."

I call the Western Range Association. I -- the grower says, "I can call the Western Range Association; theyíll bring me three or four workers." And we the workers, because of these repercussions, these discriminations, we have to put up with it and not say anything, and not renounce it in front of the authorities, because the Western Range keeps our visa and our I- -- the I-94 form, which is our papers that show weíre here legally. And because we donít have our papers to show that weíre here legally, the officials wonít take our complaints.

We have many workers who are injured, back injuries. And whenever thereís an injury or an illness, the growers or the Western Range respond that we came sick from Peru. Right now, I know of two sheepherders that are between life and death with Valley fever because the grower didnít take them to the doctor in time.

The sheepherders have suffered much and the growers have forgotten what we have given to them. We have sacrificed very much for them. There are sheep ranchers that, in addition to the sheep, have thousands of cows. And they take the sheepherders to go build the fences for the cows, to round up the cattle, for the same wage that theyíre paying us to do the sheepherding, which used to be $750, which was 86 cents an hour.

COMMISSIONER BROAD: Excuse me. Can I just ask a question? Are they permitted to do work under the federal law?

MR. SCHNEIDER: No.

COMMISSIONER BROAD: So they would have California state claims.

MR. SCHNEIDER: If they had a way to make the phone call or -- you know, theyíre out in these camps without any phones, without a form of communication. If they want to call somewhere, as you heard, they have to ask the grower to take them to the phone booth. And most workers arenít going to ask the boss if theyíll give them a ride so they can go call the Labor Commissioner to make a claim.

(Laughter)

MR. FLORES: (Through Interpreter) There are also growers who have cotton, alfalfa, and other crops, and theyíll use the sheepherders as tractor drivers, for the sheepherderís wage, working at night, during the winter. During the winter, the sheepherder will work four to seven hours. During the warm season, they have to be watching all the time so that they wonít go into danger.

We donít have water to bathe ourselves. We bathe ourselves in the water that we bring for the sheep to drink, contaminated with pesticides and microbes. During the cold periods, we donít have any heating. We donít have air conditioning to help us get through the hot times. We donít have a toilet to be able to go and do what is necessary. And when we complain, the grower calls the Western Range Association and says, "This worker complains too much; we donít want him any more."

We ask the Commission to have the compassion to analyze this situation, the suffering of the sheepherders that are exploited like slaves of centuries past. In future hearings, weíll have injured workers to talk about what they have suffered.

MR. SCHACHT: Mr. Chairman and members, Mark Schacht. Iím deputy director of the CRLA Foundation. In an earlier incarnation, I worked on the House Judiciary Committee when the H-2A program was last amended, in 1986. And although I donít profess to be an expert about the program, I have continued to work helping to represent CRLAís farmworker and sheepherder clients in this area.

And I thought it would be helpful to briefly put into the record some documents related to the Western Range Association petition for H-2A workers, as well as the prevailing wage survey conducted by the Department of Labor, used as the basis for setting the wage of these workers.

I just want to -- unfortunately, I only have enough copies for the members and Andy, and I apologize for not have any for counsel and the rest of the staff. But while theyíre being passed out, let me just briefly say that this program has existed for roughly half a century, and among worker advocates, trade unionists, and others who have had to fight its spread in their industries, and itís come to be known as a means of employers to dip into foreign labor markets and secure, essentially, cheap foreign labor.

And the system, in the case of sheepherders, is about the most exploitative in the country. Just from the bare facts of the case before you, I think youíll agree. These two documents will, I think, help to reveal some of the dimensions of the exploitation that are going on.

The top document that you have is the Agricultural and Food Processing clearance letter. And I just want to refer you to two items. One is the flat rate of $700 per month. This is the period that expired June 30th of this year, so the rate has gone up, as the witnesses mentioned, to $900. But note that the work is for eleven and a half months. And then go over to Item 10, and just figure out the work -- notice that the Department of Labor has typed in, "Sundays and holidays included." And as for the normal hours of work per day, "On call 24 hours."

Weíre going to be putting on witnesses in the course of the next hearings that will amplify the amount of hours of work on a seasonal basis and give the Commission a better basis on which to decide how many hours, if not the entire 24, are compensable.

The second document is the prevailing wage survey done by the Department of Labor to determine a wage rate to be set in this industry. And just -- just very briefly, the H-2A program is designed to protect domestic workers from displacement or the depressant effects of the use of foreign workers. So, to determine that the program doesnít have these depressive effects, the Department of Labor does a survey of the prevailing wages paid to domestic workers in the industry. Now, on Page 2 of this report, youíll see, at the -- down towards the bottom -- the number of domestic hired workers in the sample. Youíll see that thereís roughly a total of 30 workers, U.S. workers, that were surveyed. And this is a time period in which the rate being paid, I believe, was $800 a month.

I just want to note that the high rate in the wage rate being paid -- and by the way, this includes the housing and meals -- is roughly $1,500 being paid to 10 percent of the U.S. workers, $1,100 being paid to another 10 percent, $1,000 being paid to 20 percent. So, I think the point is made that this survey allows the Department of Labor and this process essentially to set the wage far below what a large number of domestic workers are being paid in the industry.

Those are presumably operations that are not going bankrupt paying those higher wages, and presumably higher this year still. So, as the hearings proceed, weíre going to try to suggest an approach for the Commission thatís fair to workers and fair to the industry but does result in more just compensation being paid to these workers.

COMMISSIONER BROAD: A couple of questions, Mr. Schacht. One of the things that astounds me about this discussion -- Iíd have to note -- like the electrical problems in San Diego --

(Laughter)

COMMISSIONER BROAD: The state is trying to save money, obviously.

(Laughter)

COMMISSIONER BROAD: I am -- and Iím not really confounded by the difference in the pay --

COMMISSIONER DOMBROWSKI: Move away from the switch. Thereís not anyplace in the room to stand.

Move!

COMMISSIONER BROAD: I donít have a problem -- I mean, I understand the difference in the way the industry views itself and the way worker advocates and workers may see the industry, because, obviously, the industry is going to come here and put its best face forward. And I understand that -- and with its best employers -- and that makes a lot of sense. That doesnít surprise us.

What confounds me about this whole thing is weíve got a very small number of workers here employed by -- it says here in the survey 206 contract foreign workers, and then another 30 -- 240 workers, 103 employers. So weíre talking about two per employer. This is a very -- itís not labor-intensive in the sense that it requires large numbers of workers performing this activity. There are relatively few workers and very small labor costs as a percentage, it seems to me, of the whole operation. Two -- one or two sheepherders, and thatís it. $900 a month is the whole labor cost, plus whatever these incidentals are. And so perhaps -- and Iíll ask this at the next hearing of the employers -- but whatís the problem here with the economics? I mean, why -- if we give these workers a raise, and in the end, thatís what this comes down to, thatís the only issue at stake -- are they going to be paid more than $900 as a result of covering them under the minimum wage or some formula that changes their compensation? And if we pay them more, is the world going to come to an end for the sheep and wool business in California?

And Iím just confounded by the -- that that can possibly happen with so few workers spread over so many employers.

MR. SCHACHT: Well, I guess the industry is taking the position that the proposal before the Commission right now would require them to pay 24 hours a day, which is how they come with the figure of $3,000 to $4,000 per worker per month in addition. I think weíre going to present next week some of the legal arguments about why documents such as the clearance order, that state that the workers can be working Sundays and holidays and on call 24 hours a day, make them similar to other workers in California, like firefighters, who do -- are entitled to be paid for that entire period.

But I think, realistically, the workers -- and I donít want to speak for the union, but I think the industry and the workers could probably find some accommodation that falls short of 24 hours of compensation. And we would welcome the chance to have the opportunity to involve maybe members of the Commission meeting with the industry and representatives of the workers to try and come to some resolution.

$900 is fairly an outrageous number for -- for workers in California. And $1,500, as we showed, is already being paid to a significant number of workers. So, clearly, thereís room to move. The question is, you know, whatís the proper balancing point and, you know, can we get it to a comfort level that most of the industry and the Commission is happy with. And weíd like to try.

COMMISSIONER BROAD: Well, I, for one, appreciate your reasonableness on this effort to reach out, you know, for some kind of accommodation with the industry. Personally, this Commission very much appreciated when parties have gotten together and worked out some of these more thorny issues. And I -- I know Iíve said this to Mr. Soares in other conversation -- I think I would encourage you to sit down and get together. There was a point at which commissioners here have, at times -- we -- some of us have participated in some of these negotiations between the parties on issues, frankly, that are far more complex than this one, which is simply the question of how much of a raise you would get above $900.

So, I, for one, would like to see that sort of discussion occur. I think that there is -- that there is room for some kind of an agreement, that you folks would come back to us.

COMMISSIONER DOMBROWSKI: I would like to --

COMMISSIONER BOSCO: I agree with that too. I think everyone presented very good testimony. And I would be one commissioner that would be willing to work with these folks to see if we couldnít come up with something thatís fair to both sides.

COMMISSIONER DOMBROWSKI: Youíre drafted.

COMMISSIONER BOSCO: If I could only go somewhere without a cell phone.

COMMISSIONER BROAD: I think theyíll find you a place with no cell phones.

COMMISSIONER ROSE: A request of the chair. Could we request that, get a copy to the commissioners, of the H-2A, what the employer provides.

COMMISSIONER DOMBROWSKI: Thank you.

MR. SCHNEIDER: Thank you very much.

(Applause)

COMMISSIONER BROAD: I know all of you have waited all day here to talk about the minimum wage, and I -- Iíve been on this Commission over a year, and Iíve never missed a meeting, any of these hearings at all. I, for one, would apologize to you, but I have to go. I have a childcare problem in Sacramento, which many of you can understand. I simply have to get back to Sacramento before my childcare situation ends, because my wife is leaving town.

So, I apologize to you in advance, but I am the least of your problems.

(Laughter)

COMMISSIONER BROAD: Thank you.

COMMISSIONER DOMBROWSKI: Mr. Pulaski. Mr. Pulaski, youíre up.

Let the record show Commissioner Bosco and Commissioner Broad have left.

Art, before you begin, I want to apologize. Once again, if you could be brief and leave some people -- some time for the next speaker. I do apologize.

MR. PULASKI: Chairman, members of the Commission, I donít know if Commissioner Bosco has left yet, but maybe his and my flight both is not leaving until 3:45, if heís going to San Francisco.

Let me also say, Mr. Chairman, if you would allow me, that in the future, I want -- first, I want to acknowledge the low-wage workers that are here in this room with us today. I want to particularly acknowledge many members of ACORN who I think have stayed today.

(Applause)

MR. PULASKI: And I should say that it is hardship for low-wage workers to take a couple of hours off to come to participate, to hear what their employers have to say about their work, to hear what others have to say, and in some cases, the opportunity to speak for themselves. Itís hard for them to take a couple of hours off of work to participate in such a hearing, but itís nearly impossible for them to take the whole day off. And so, I would hope that, in the future, the IWC could calculate some mechanism whereby people have a time that they can come and participate and still work.

COMMISSIONER DOMBROWSKI: And youíre absolutely right. Weíre going to try to figure out some way to do this, because, you know, as you saw this morning, we had construction and we went way overtime and people got on my case. Weíve got to come up with something.

MR. PULASKI: If you would indulge me for one more moment so that I can simply observe that I listened with shock over the past hour. I thought the days of company towns had long since passed in America. And what we witnessed today were workers who have no freedom of speech, but who have fear of speech. Workers should never suffer the control of their employers for their communication, for their transportation, for their housing, for their food, and for their healthcare. And we have learned today that there are still people in America and still people in our state who suffer that and whose -- in some cases, at least, it appears whose papers are held by their employers. I remember seeing that the Nazis did that some two generations ago, but I didnít know we did that in America.

So I would suggest that we examine not just the conditions of minimum wage, but the overall conditions of work and of life for those workers and have some commitment to improve it.

(Applause)

MR. PULASKI: So, now, if I may, Iíd like to recognize the members of the panel. They are in two stages.

If I neglected, my name is Art Pulaski, from the California Labor Federation. I have with me Sister Justine Church, Rosa Rivera, Antonia Vega, Maribel Garcia, and Aaron Nupp. And then, after that, weíll have four others come up. And Iíll open with a few comments. I will try to keep it brief, given the hour of the day, but do have some observations that I need to make.

We will hear from some of these panelists who are low-wage workers, minimum wage workers themselves. And Iíd bring your attention to several recent studies, all of them which got some significant amount of press and coverage. And the first is a study from August, from the Federal Reserve Bank in San Francisco. And this study -- and I believe we have made available to the Commission all of these -- this study examines the income gap inequality, how it is not widening as much in most of the country; however, except in California, where that income gap continues to widen at an even greater, more significant pace. It -- it examines how the higher income scales have gained ground, yet working families who are low wage scales are losing more and more all the time and their condition is getting worse. That from the Federal Reserve Bank.

The next is from the California Budget Project, a respected organization in this state, that acknowledges that a higher percentage of workers in California are living in poverty as compared to most other states. And it looked at something that I think is very important, and it looked at the job growth for the future, especially in southern California, and found that the job growth in the future is not in the industrial work of the past, but in service industry.

And what we find in service industry, that is where the low-wage workers are. And we see that industry growing, and we see a trend, that low wage is expanding more and more in this state. And we will find the crisis of low wage covering more and more and a higher and higher percentage of the workers of this state, particularly in southern California.

When we look at the Federal Reserve Bank study, it shows that prosperity isnít being diminished in this state. Prosperity is growing. Thereís no less wealth, thereís no less money. It is merely that that money is more concentrated in the hands of a few.

The next study that is very important to consider is a study from the Los Angeles Alliance of a New Economy. Itís called "The Other Los Angeles: The Working Poor in the City of the 21st Century." And it shows that one in four workers are working within the conditions where theyíre eligible for some kind of poverty assistance and support from the government. And three quarters of those workers are Latino workers. These are very dramatic discussions about the impact.

Finally, the Legislative -- the Office of the Legislative Analyst, from August of 2000, suggests that this growing disparity of poverty in this state will likely lead to other social problems as well. And these problems will broaden beyond the poverty that we see more and more people and more and more families suffering in California.

So, these are, in short, the conditions that we face.

Let me say that we heard earlier the argument from some employers that suggested such things as the fact they propose that minimum wage workers are protected by keeping the cost of their pizza lower. We submit to you that the arguments against minimum wage so they can keep the pizza lower, so the minimum wage workers can afford to have a pizza, doesnít address the real issues that weíre required to address when we examine the question of the minimum wage in California.

Let me also say that we heard from restaurant employers and restaurant owners that suggested that it would affect their business and that it would affect employment. I remind you that we heard that in 1996, and weíve heard that ever since the days that we initially discussed, some generations ago, the concept of minimum wage. They suggested that it would affect business, it would affect employment, that they would have to lay people off. Remember back to 1996, the last time they argued that case? And then we raised the minimum wage, not because of the IWC at the time, but because we had to resort to a ballot measure where the populace of this state voted to support it. And then afterward, in í98, the Senate Committee on Industrial Relations did a study, and the study that they released showed that, in fact, it wasnít true. The claims by the restaurant industry and the claims by the low-wage employers that there would be a cutback on jobs were not truthful. In fact, jobs were not cut back. Many and many studies continue to show that we donít lose jobs because we increase the minimum wage, but that we, in fact, increase the conditions of life which are so important to people.

Iím going to hold off there because of time and next ask the next speaker to address you.

And I -- and I go to Sister.

Please.

SR. CHURCH: Hello. My name is Sister Justine Church. Iím a medical mission sister, and Iím here to represent the Interfaith Committee for Worker Justice in San Diego. Weíre a group of about 125 congregations and communities who are very much interested in the issues of worker justice, and especially in minimum wage.

Now, the Book of -- the Book of Genesis relates Godís special relation for his creation of man and woman. When he made us, he saw that we were good, and he gave us the care of the earth and the care of one another. Thus, from the very beginning, we humans have been given a dignity by God and are expected to work, not only as individuals, but as members of the human family.

Todayís wage levels simply cannot ignore this God-given dignity of workers, nor the needs of their families and the larger community. We are not here today to ask that you make millionaires, or even middle-class citizens, of the working poor, but to promote social justice by increasing the minimum wage of the working poor. It is a great fallacy to think that if the working poor were better managers of their meager salaries, they would not need welfare assistance in the form of food stamps, school lunch programs, rent subsidies, and emergency room treatments.

Even with an increase of a dollar an hour to $6.75 per hour, minimum wage workers will still be poor. A minimum wage is not a living wage. According to the Center for Policy Initiatives, $17.30 per hour for a family of four in San Diego is whatís called a sustainable wage here in San Diego, where the costs of rents, gas, and milk are among the highest in the nation, and now we have utilities, which are even the worst in the nation.

We pray to God that you will honor the contributions of the working poor to the common good by increasing the minimum wage. This action will also decrease the welfare subsidies paid to corporations when their pay scales do not provide for the essentials of their workers, food and clothing, housing and health. San Diego and U.S. taxpayers, including the most poorly paid, must foot the bill. Such tax subsidies are another form of injustice against the working poor, whose low wages already subsidize corporate profits.

So, in the name of the Interfaith for Worker Justice, I thank you for listening to the cries of the poor. May you do justice for the citizens of San Diego, especially the working poor.

Thank you.

(Applause)

COMMISSIONER DOMBROWSKI: Let the record show that Commissioner Bosco is back.

MR. PULASKI: Thank you.

Next we have Rosa Rivera, who is a member of ACORN and a minimum wage -- minimum wage garment worker from southern California.

MS. RIVERA: (Through Interpreter) Members of the Commission, fellow workers, my name is Rosa Rivera. Iím a member of California ACORN and a Los Angeles resident.

Iím also a low-wage worker in a clothing factory. I work ten hours per day and receive minimum wage. Iím married and support six children. My husband makes very little. Although we have two incomes, we frequently have trouble paying all the bills as well as buying clothes for the kids. Weíre almost never able to pay for extra things. For example, Iíve lived in Los Angeles for more than twenty years and Iíve never been able to visit Universal Studios or other amusement parks.

Although I work more than full time, I still qualify for food stamps and cash aid each month. I wanted to come to speak in favor of a substantial raise in the minimum wage along the lines of what has been proposed by the California Labor Federation, ACORN, and others. We all know that raising the minimum wage to $8.00 in the next few years is an important start, and indexing that wage is even more important.

When I look around at my community, I donít see any sign of the economic boom that is touted in the media. Most of my neighbors are working two or three jobs to make it, and without health insurance or a pension.

(Applause)

MS. RIVERA: (Through Interpreter) By passing a strong proposal, our community can also share in that prosperity, for the minimum wage must increase beyond $6.75 over two years. Too modest an increase wonít regain the ground that has been lost for working people in the past years.

(Applause)

MS. RIVERA: (Through Interpreter) Californians donít need modesty or compromise today; they need a raise.

Thank you.

(Applause)

MR. PULASKI: Gracias.

Mr. Chairman, Antonia Vega.

MS. VEGA: My name is Antonia Vega, and Iím here

-- Iím here because -- for the same reason. Minimum wage is not enough money for one person, because Iím by myself. Between the car payment -- because I have to pay transportation -- and pay rent, itís not enough, the minimum wage. Sometimes itís not enough to have food at home. We cannot think to have a vacation. We cannot think to buy a house. Even sometimes, itís hard to think of going -- there are places in Montana where there is a sheep place, because minimum wage is nothing, nothing.

For San Diego, everything is so expensive. We donít have enough money.

Iím sorry. Thank you.

And I -- like you say, you know, Iím here because of the same reason too, you know, to tell about government or whoever is responsible for this problem. We need somebody who can listen to us, because thereís a lot of poor people to be living in these conditions. Sometimes we have to share rent. Like me, I was working at the Hilton. I was fired because I got injured and I wasnít able to perform my regular job. So they fired me. And right now, I donít have money, I donít have a job. I have to go live with my co-workers, whoever wants to take me. But even when I was working, it was very hard to live on minimum wage.

So we have a lot of problems, and we need somebody to listen to us, to do something about -- see if we can get, you know -- we can get a raise, you know. Just -- itís hard for the poor people to live on $5.75. And a lots of people have children, and they donít have enough food, because itís hard for one person. And itís hard for people who have two or three or four children, on minimum wage.

So, for me, I wish I can say lots of things. I feel so emotional. I donít want to cry.

(Pause)

MS. VEGA: I think thatís it.

(Applause)

MR. PULASKI: Thank you, Antonia.

Maribel Garcia.

MS. GARCIA: (Through Interpreter) Good afternoon. My name is Maribel Garcia. I work here in San Diego County. Iíve worked two and a half years with -- for two and a half years with First National Bank.

Iíve been working for two and a half years in the bank as a janitor, and I earn $7.50 an hour, and this is not enough for me to maintain my family. I have a family of four people: my husband, and my two children. Between myself and my husband, per month we earn $2,400 a month. This is not enough for our family because we have to pay for the rent and the food. We have to pay for the telephone and the electricity bills as well. We also have to pay personal things for people in the family. But again, this money that we earn is not sufficient for us.

Our rent is $650; as a result, we are paying $1,550 a month. The electricity and the insurance for the car, weíre talking about $400 more a month.

I would like to be able to obtain insurance, medical insurance for my children, but I canít do so with the money that we earn. My work doesnít have medical insurance. Itís very, very expensive.

Imagine how difficult it is for me, at $7.50 an hour. Think about those people that earn $5.75 an hour. How do they survive? To survive, they need to share their

-- they need to share the cost of rent, they need to share food, they need to share the cost of all their bills. Thatís the only way to survive.

I agree that itís important to raise the minimum wage, but it needs to be an honest and just raise for all of the people here in San Diego. We have to be able to give our children what they need. Think again, when a husband and a wife both have to work, oftentimes children have to be left alone at home. Sometimes when a wife is not able to work, her husband has to work up to 100 hours more so that they can be able to pay for these things that the family needs.

I believe that if we were able to achieve a reasonable salary, a salary above $8.00 an hour, that the people of San Diego would be able to live more or less reasonably.

Thank you very much for listening to me.

COMMISSIONER DOMBROWSKI: Thank you.

(Applause)

COMMISSIONER ROSE: I have a question of the witness, if youíll interpret for me, please.

INTERPRETER: I will do my best.

COMMISSIONER ROSE: Do you believe that if the minimum wage goes up, say a dollar in a year, your wage will go up because you make more than the minimum wage?

MS. GARCIA: (Through Interpreter) Yes, I think so.

COMMISSIONER ROSE: Thatís all. Thank you.

MR. NUPP: Good afternoon. My name is Aaron Nupp. Iím an emergency medical technician with American Medical Response. Iíve been with American Medical Response for five years. Iíve been in this industry for a little over fifteen years and in this field for approximately nine years.

AMR, along with other smaller, privately owned companies, the starting pay for most EMTs is minimum wage. When you consider this with the type of job we do, along with the training that weíre required to do the job, the wage is not satisfactory. Weíre talking about a job where peopleís lives are at stake day in and day out, no questions asked. And now when you count the 400,000 -- approximately 400,000 calls we ran last year by EMS agencies, of those, 80 percent were run by the private companies.

One problem with the minimum wage as it stands now is the high turnover rate, especially with private EMS companies. Low wages mean less people to fill the spots. Currently, there are (inaudible) where I work. Thereís -- in Los Angeles County and L.A. metro, there are numerous open spots on a daily basis. And we just flat out canít fill the shifts. Itís hard to tell somebody coming in to work in this field that, "Sorry, we can only start you out on minimum wage."

High turnover also results in inexperience, in a field where youíd want experience and experience should count for something. Too often, you have the crew that shows up on scene with two brand-new people as staff in that ambulance. Yes, they know how to do the job, but you want to have them working on you or would you want that crew thatís been there five years, whoís making a decent wage, who wants to stay with that company?

The cost of living in Los Angeles County is one of the highest. We cannot survive with minimum wage. Eight of our employees work secondary jobs to supplement their income. This worker puts in 60 hours plus in addition to a secondary job. Many of our employees have families. Trying to support their families on the wages being paid to learn the job isnít sustainable.

An increase -- a minimum wage increase to $8.00 an hour is not unattainable, but is reasonable. In a job field where quality counts, minimum wage should supplement that.

Thank you.

(Applause)

COMMISSIONER BOSCO: I just had just a couple questions. You know, first of all, as I understand, AMR is owned by Laidlaw, I think, and it isnít really a small operation.

MR. NUPP: Correct.

COMMISSIONER BOSCO: Itís a huge operation. And are you saying that the people that get hired to drive ambulances and otherwise show up on the scene are paid minimum wage? Are you paid minimum wage?

MR. NUPP: Right. The starting pay for American Medical Response is minimum wage.

COMMISSIONER BOSCO: Because the testimony this morning was more or less, from the restaurant people, that, you know, you started out as a busboy in a restaurant, and thatís how you get your start. But it doesnít seem to me like youíd want to get your start, you know, in an ambulance. That seems to take much more training.

MR. NUPP: And this is -- this is one of the problems with the minimum wage standard as it is now. Most of the people in the field right now, I hate to say it, donít do the things they do because they like the job. Theyíre there to support their family. Unfortunately, the wage that theyíre paying now deters most people from going into the EMS field, especially in private industry.

COMMISSIONER BOSCO: How long is it likely that you would stay at the minimum wage if you were to start with AMR here in San Diego?

MR. NUPP: At least a year, if not longer.

COMMISSIONER BOSCO: Thank you.

MS. MILLER-FRENCH: Good afternoon. My name is Susan Miller-French. Iím a member of the United Domestic Workers of America and AFSCME, and I am currently employed as an in-home care independent provider in the IHSS, In-Home Supportive Services. And I currently earn $5.75 per hour, with absolutely no benefits. I have been awarded 283 hours per month to care for my brother, and that is only the share -- I started receiving wages under IHSS in October of 1994, considering the fact that my brother has resided with me since 1982 and has the same disabilities that heís had since then.

My brother was born with disabilities. Weíre native Californians. My brother was born in San Francisco in 1946 with cerebral palsy, epilepsy, asthma, developmental disabilities. Both of my parents were World War II veterans who came to California to work. I was born in 1949 in Palo Alto, a ritzy area today. My father was ill from the time he was in World War II and tried for twenty years to get benefits on behalf of my brother and himself. My father died at age 48, when I was 17.

I helped care for him. And I certainly take exception on behalf of all in-home care providers, that we are unskilled, untrained people, and that the entry-level wage is strictly for people -- the minimum wage is strictly for entry-level work. I have been performing work in my familyís home, in other peopleís homes, since I was a little girl. Five years old, my father began to train me at five to take over because he knew he was terminally ill.

My mother, whom I care for today -- and right now, sheís at home -- without someone to help me -- sheís terminally ill from smoking-related illness. Sheís 79 years old. My mother suffers from mental and emotional disabilities, so she could not provide as most mothers would.

Iím here today on behalf of raising the minimum wage. I have worked nearly all of my life, most of that time for my brother without any wage. I did it for love, I did it for compassion, but I paid what I consider a very high price. I have no children of my own because I could not be both. My brother was alive, heís a human being, and he deserves to be treated with dignity, as all elderly and disabled do. And I do not think that we value them enough in our society for giving us the opportunity to know them and to reach out to elderly and disabled and what they give to us.

People who perform work, some of the most tedious and yet life-sustaining work, which we will all need some day, is in-home care. I cannot replace myself, although I am trained to do other work. I cannot replace myself at $5.75 an hour, and I donít -- I think not at $6.25 an hour. Anyone who would come into my home would demand higher wages than that. And so, I have a choice. I take care of my mother and I take care of my brother.

All of us need a higher standard of -- we want a higher standard of living. We cannot survive in the State of California -- and Iíve been here for 51 years -- trying to do just that on minimum wage. Anyone coming into the state from any other country, they deserve a higher wage as well. It does not matter where you come from. If you have to live in California, expenses are high. We have a choice. We can leave the State of California, which most of us donít choose to do -- we tend to want to stay here once we arrive -- or are born here and wish to stay.

We deserve to be treated with respect for the work we do. And I really take exception to the people who think that we do not perform a valuable service. I believe that all of us, sooner or later, are going to need the services of in-home care providers, every person here.

(Applause)

MS. MILLER-FRENCH: When we are born, when we are old, if we become disabled, who is going to provide that care at minimum wage? Is that what you want for your family?

I sit here, and I hope you see me today, on behalf of many people. I am a daughter, I am a wife, Iím a mother, Iím a stepgrandmother. I represent many faces to all of you. And for any of you who have children, is this what you would want for your daughter, your wife, your aunt, your grandmother? Would you like to see your family members trying to care of other family members at minimum wage and absolutely no benefits?

So, I ask on behalf of everyone who does this work out of compassion, they do it for love, for care of humanity, caring for human life, that we raise the minimum wage, not just $6.25, to $8.00 or higher.

And I thank you today for listening to my story, and on behalf of all in-home care providers.

(Applause and cheering)

MR. PALACIOS: (Through Interpreter) Good afternoon. My name is Delfino Crescencio Palacios. I want to thank you all for allowing me to come and speak to you today regarding the minimum wage in California.

I am married and I have four children. My family and I live in a two-bedroom apartment that we rent for about $740 a month in Oceanside, California. I am a farmworker, and until now Iíve been employed with a greenhouse in Bonsall, California.

Ever since I entered the United States, Iíve earned the minimum wage. Iíve been working for the same greenhouse since 1991. My first salary with the company was $4.25 an hour. And then I was promoted to supervisor and getting a raise to $6.50 an hour. We work six days a week, and we work between eight and ten hours daily.

At the end of one month, I have earned about $1,500. Because my wife is also working, we spend $200 a month on childcare for our children. We also spend about $300 a month on diapers for our two little ones. We are also spending about $500 a month on food for the family. I know many workers who are working at the minimum wage, and they are not able to survive at that wage. They end up going hungry. Oftentimes they canít pay for many other things, extras, for example, the insurance on their car.

The life of the farmworker is very difficult. We work long hours and we earn very little money for our work. An increase in the minimum wage to $6.75 an hour would not be enough to help farmworkers. With an increase to $8.00 an hour, the people who are farmworkers might begin to see some justice in the State of California.

Please remember the sheepherders. They too are farmworkers and they need the minimum wage.

Thank you very much for your time.

(Applause)

MS. MARTINEZ: Hi. My name is Elizabeth Martinez. Iím a member of Californians for Justice and a second-grade teacher at Stevens Elementary School in the Long Beach District. My school is year-round, so Iím off right now.

Stevens Elementary School is located in area with one of the largest concentrations of poverty in California. Iím here to give you testimony on how my students are affected by the low wages their parents earn. And I just have two short examples of what I live every day within my classroom with my students.

All of my students are required to read at home daily as part of their homework. I have parents come into the class concerned because they donít have books at home for their children to read. For a person that earns the minimum wage, food, clothing, and daycare expenses are necessities that must come first. Parents cannot afford to buy books or materials for their children to use at home. Therefore, these students donít get the practice and begin to fall behind in class.

Some parents are also forced to work long hours or two jobs to support their families. A couple of my students have to leave their homes early and arrive late to accommodate their parentsí schedule. In the classroom, they are sleepy and tired, which makes learning difficult.

Our students deserve a stable home. They deserve to have their basic needs met so that they can get a good education.

Thank you.

(Applause)

MS. BARU: Good afternoon. My name is Sundari Baru. Iím an economist and research director at the Center for Policy Initiatives in San Diego.

We all know now that the minimum wage in California is $5.75 an hour, and it is the lowest minimum wage in the west coast of the United States. As much as Alan Greenspan would like to control inflation, he hasnít been able to do it. And since last year, the value of the minimum wage has dropped by 2.4 percent, and since í98, the value of the minimum wage has dropped by 27 cents in todayís dollars.

A mere job is not the best anti-poverty measure. Itís a job that pays more than a minimum wage that is the best anti-poverty measure.

The federal government has guidelines that determine the eligibility for its various programs such as food stamps and Medicare and housing subsidies. In the year 2000, the guideline for a family of four to keep its head above poverty, which it says is a conservative measure, is $17,050 a year, which is equivalent to $8.20 per hour, assuming 52 weeks of paid work. And this implies that a family of four has to have two adults working in order to get above the poverty line, or if itís just one worker working, itís the equivalent of 2,600 hours a year to put his family above the poverty line.

In California, who wants the minimum wage? The poverty rate for families has been increasing in California in the last decade. It went up from 13.1 percent in 1988-89 to 16 percent in 1999. And itís been declining in the rest of the United States. In 1999, 28.7 percent of jobs in California paid less than poverty-level wages. And in San Diego County, 12 percent of workers live below the federal poverty guidelines.

Out of the seven most expensive home-buying markets in the United States, four are in California. The fair market rent in San Diego County is $729 a month. And a worker at the current minimum wage of $5.75 an hour has to work 127 hours a month in order just to pay the rent.

The country and the State of California and San Diego are enjoying unprecedented growth. Even since the last minimum wage increase two years ago, the number of jobs that have been created have increased by thousands. But the unemployment rate in California was 5 percent in August of this year, and 3.3 percent in San Diego. There are more millionaires in the country today than ever before. And with the economy this good, itís only right that we should help the people who are doing everything right to help their families but are still not being able to pay enough to live a life of dignity and self-sufficiency.

Thank you.

(Applause)

MR. BURKIEWICZ: My name is Jerry Burkiewicz. Iím the secretary with the San Diego-Imperial Counties Labor Council.

I just wanted to kind of tell the rest of the story of some of our employers that actually came this morning and testified in front of the Commission.

The first one Iíd like to talk about was the lady who owns Balai Hai and Tom Hamís Lighthouse. The truth about Tom Hamís Lighthouse is -- she said that your last increase in your minimum wage, people only had to have 20 hours of healthcare to have insurance, but the truth -- in 1996. But the truth of that is, every employee at Tom Hamís Lighthouse used to have health insurance. When she bought Tom Hamís Lighthouse in 1983, she busted the Hotel and Restaurant Workers Union. There was a contract they had that every single worker at that restaurant used to have healthcare. When she took over, she cut it to 20.

It just amazes me that they would come in and threaten the Commission today, saying, you know, "It was 20 hours, but if you do this, itís going to be 30 hours, and if you do this, itís going to be 40 hours." So, basically, what theyíre saying to you is, if you vote for this, youíre going to cut health insurance on workers in California. I would think that they could come up with a better issue than to come in front of you and tell you that your vote is going to take away healthcare from people. But so be it.

I do think the lady who spoke, who I know, from the Crest Café in the Hillcrest, she made some very good points. I really -- I told her afterwards, "I really respected your presentation; it was a very honest presentation." The point is, weíre looking at a bigger picture. When she says those things, the healthcare workers are sitting there, and they are making minimum wage. And thereís a lot of people that are. Unfortunately, 80 percent of the people that are are adults. Theyíre not kids. They want you to believe that it is kids coming out of high school that are washing dishes. But the truth is, thatís not the case -- 80 percent of them.

So, Iím sure thereís no cookie-cutter program that works across the board for everything. So, you look at the big picture and you see 80 percent of them are adults. I would agree with some of her points, but weíve got to look at the bigger picture.

You hear the person that threatened you that if you vote for this increase, that weíre going to have a huge flux of underground senior care, the person who had the childcare center. I mean, you know, to threaten that theyíre going to go underground and not pay the proper taxes that theyíre supposed to pay and be good law-abiding citizens in the State of California, I would think that as an employer, I might try to come to you with a different avenue than that threat.

(Laughter)

MR. BURKIEWICZ: I just want to close by talking to you about the economy of San Diego. You know, they bring up the utility bill. Thereís no doubt; you and I all know Susan Davis and E.B. Elder passed a bill. We had relief on that. We need FERC to deal with the utility bills, the Federal Emergency Regulatory Commission. We donít need you to deal with that. What we need you to deal with is the people in San Diego and the State of California who canít afford to live on the wage theyíre getting right now.

Thank you very much.

(Applause)

MR. PULASKI: Chairman, members of the Commission, a few final words from me, if I may.

There are a million -- I think somebody may have said it -- there are a million minimum wage workers in California. The vast majority of them are not kids at 16 years of age. Theyíre the wage earners for their families. I hope thatís begun to become clearer today.

Last night I was watching the NBC affiliate in San Francisco before I went to bed, and this morning it was verified in the paper, in the San Francisco Chronicle, that people earning minimum wage cannot afford a modest two-bedroom apartment. Andrew Cuomo, the Federal Housing and Urban Development Secretary, verified a report by the National Low-Income Housing Coalition that said in San Francisco and San Mateo and Marin, it requires a worker to earn, in order to pay for a modest two-bedroom apartment, it requires a worker to earn $28.06 an hour. In San Jose and Santa Clara, it requires them to earn $25.15 an hour. On the average in California, it requires $15.22 an hour.

The minimum wage was intended to keep people out of the poverty level. We are debating today at what level under the poverty guidelines should we allow people to earn. I have to tell you that when I said to our convention that we were proposing eight dollars and some cents per hour, I had a strong negative reaction, saying that we, as the Federation, were not proposing enough, because that is not enough, eight dollars plus an hour, for people to live.

This nearly verifies that, in the news today.

And so, I think that you have a very tough challenge as the members of this Commission, five individuals, have a very heavy burden on your shoulders. And that is, what do you define as a living wage, as an opportunity for people to rise to the upper levels of the poverty level, to rise as we intended this to be, beyond and above the poverty level, and even -- we canít survive on $5.75, and we canít survive on $6.75. And now itís becoming apparent to me that our proposals at eight dollars plus an hour arenít enough.

So, we ask you to be bold, to be courageous, and make the tough decision you find. Do it well.

(Applause)

COMMISSIONER DOMBROWSKI: Charlie Williams, Nancy Williams, Ken Msemaji, Cathy Evans Calderwood.

MR. SEATON-MSEMAJI: Mr. Chairman, I would like to defer my time to my colleagues from SEIU.

COMMISSIONER DOMBROWSKI: Who are you?

MR. SEATON-MSEMAJI: Ken Msemaji. They came all the way from L.A. and San Bernardino. Iíd like to give them my time.

COMMISSIONER DOMBROWSKI: Okay.

MS. SIMMONS: Hello. My name is Mary Simmons. Iím from Long Beach, California. Iím (inaudible), but Iím here as a (inaudible).

And it is very hard -- itís a shame to me, but I would say this is a -- this is a perverse generation, and thatís what I believe. I believe the truth -- by the way, the word (inaudible). And it seems like when you go (inaudible), but when you live with elderly people and wipe their butts and clean them, you earn a poverty wage.

I also think what the world is going to, you know -- and we are people, we are human beings, and we want to be treated as such.

We have children, we were born that way. I was born to have a child. Men canít have babies; I can. We want to take care of our loved ones.

And when our kids -- just like the teacher was saying -- our kids deserve an education. We canít like give our child -- children education on a poverty wage. When the man said he had to go to his daycare center, I couldnít even put my child in a daycare center. Sheís never seen a daycare, ever, never. Last week she went to kindergarten for the first time. Sheíll be five November the 12th. Sheís never seen a daycare center, because I could not afford one. I canít even afford to buy her lunch. So, because of my income, she gets a free lunch. Thank God for a free lunch.

Sheís never been to a theater, I canít take her places. Itís terrible to live at a poverty wage. When you have children, you will understand the concerns of a mother, and a mother to their kids.

And we -- this world we live in, we have to work. We deserve a better way of living. Where I live at, drive-by shootings all the time. One girl was shot and she fell at my door. And all I do is pray, "Donít let her die." Right in front of my door, blood everywhere, police cameras. Thatís not -- my baby had to see that. It is very hard. Crime is increasing.

We canít pay our rent. The bills are increasing. This is -- a gentleman -- I sat back there and I listened to him -- he says like prices are going up -- prices -- I donít know where heís been. Iíve been right here, living in Long Beach, for -- since I was nine years old. Iím 43 now. Prices have been going on up me forever, and Iím still at a poverty wage. We canít afford nothing. It is very afford.

If I asked anyone in the audience right here to stand up if you stress and get gray hair over how youíre going to pay your rent, Iím pretty sure everyone back there will stand up.

We stress every month.

(Applause)

MS. SIMMONS: Thank you much. Thank you all for respecting us.

(Applause)

MS. SIMMONS: We stress every month. Iím looking at some gray hair, and Iím too young to get gray hair. To me, I feel like Iím too young. You all are as young as you think you are. And I think Iím young -- me, personally, I think I -- I mean, I shouldnít have all these gray hairs with all this stress all these years of living in this poverty-stricken world.

So Iím asking you -- whatís his name, Barry? -- he said that he knows what weíre going to say. I donít know heís going to know if -- if he didnít --

COMMISSIONER DOMBROWSKI: He said heís the least of your problems. Mr. Broad is the union -- one of the union representatives on the Commission. So, please -- I think he is the least of your problem.

MS. SIMMONS: Well, I think -- I would hope that since he knows --

COMMISSIONER ROSE: You donít want to lose his vote.

(Laughter)

MS. SIMMONS: I donít know anybody -- I donít know.

I just wanted to say that if he knows, please, you all right now, and get with it and you have to do something about this poverty wage. Please, we owe it to our loved ones and our families.

Thank you.

(Applause)

COMMISSIONER BOSCO: I just had a real quick question. I didnít -- I donít know whether you said it or didnít, but where do you work now?

MS. SIMMONS: Iím in Long Beach and Iím a homecare worker.

COMMISSIONER BOSCO: Homecare worker? And you make the minimum wage?

MS. SIMMONS: Yes. Yes.

COMMISSIONER BOSCO: How many hours a week do you work?

AUDIENCE MEMBER: (Not using microphone) Every homecare worker (inaudible).

MS. SIMMONS: (Inaudible).

(Applause)

COMMISSIONER DOMBROWSKI: Wait. Theyíre clapping. Wait. Donít answer, because we canít -- we canít hear you to catch it in the transcript.

COMMISSIONER BOSCO: 62 hours a month?

MS. SIMMONS: 62 hours.

COMMISSIONER BOSCO: Do you work for an organization or on --

MS. SIMMONS: We -- people in-home care workers, our clients choose us. Theyíre like our boss. And what we do is we do any -- well, to answer the phone for disabled, paralyzed, (inaudible) in their own homes. They shouldnít have to go -- just because youíre old, you shouldnít have to go to a facility. So we make them able to live in their own home.

COMMISSIONER BOSCO: So, do your people pay you directly out of their own pocket, or is it --

MS. SIMMONS: No, itís the state.

COMMISSIONER BOSCO: Pardon?

MS. SIMMONS: The state.

COMMISSIONER BOSCO: The state pays you for it. So the state pays you, in fact, the minimum wage?

MS. SIMMONS: Right. And we donít get overtime, we have no paid vacation. We never can leave our people. We canít leave people because our people -- some of our people are bedridden, strictly bedridden, and we just canít up and leave our people. Not only that, but we bond with our people. We love them, we bond with them. Sometimes we do a lot of overtime without getting paid at all.

COMMISSIONER BOSCO: So, even though the state benefits from you taking care of people who otherwise wouldnít have anyone to care for them, the state -- then the state doesnít pay you directly, obviously; the state pays the people that hire you.

MS. SIMMONS: No, they pay us directly.

COMMISSIONER BOSCO: You get a check directly?

MS. SIMMONS: Right, yes.

COMMISSIONER BOSCO: And thatís the minimum wage?

MS. SIMMONS: Yes. And itís hard work.

AUDIENCE MEMBER: (Not using microphone) And not (inaudible).

COMMISSIONER BOSCO: Thank you very much.

COMMISSIONER DOMBROWSKI: You said you work overtime?

MS. SIMMONS: Yes.

COMMISSIONER DOMBROWSKI: And you donít get paid for it?

MS. SIMMONS: We arenít allowed to work because we donít get paid extra.

COMMISSIONER BOSCO: Are a lot of the people here from homecare?

(Applause and cheering)

COMMISSIONER DOMBROWSKI: Thank you.

MS. SIMMONS: Thank you.

MR. BARON: Can I just ask a question relative to In-Home Supportive Services? I understand that -- I guess it was just this year that the Governor signed in legislation that, I guess, raised the wage of those with in-home supportive services that are part of a public authority. Is that affecting -- do you see that as affecting you? What numbers of you do you see that helping?

MR. MSEMAJI: Mr. Commissioner, that is accurate; however, thatís discretionary.

COMMISSIONER DOMBROWSKI: Identify yourself for the record.

MR. SEATON-MSEMAJI: Ken Msemaji, with the United Domestic Workers, AFSCME. And weíre also in a partnership with SEIU on homecare.

(Applause)

MS. SEATON-MSEMAJI: The legislation did make available some additional monies. The counties had an option as to whether or not they were going to draw that down or not. And since they have to pay a small share of the costs, some will try not to.

But the minimum wage floor is important, even if some of the counties do implement the $7.00, because if we start from something halfway decent, we may get to $15.00 someday. And so thatís why itís very important to us.

MR. BARON: And whatís the story in this county?

MR. SEATON-MSEMAJI: This county hasnít decided yet. It will be making its decision over the next couple of months as to what level it may -- itís going to come in at.

(Applause)

COMMISSIONER BOSCO: All right. Letís -- Iíd really like to clear this up. So, in other words, a county has an opportunity, some sort of a matching fund opportunity, to pay you more than minimum wage, $5.75 an hour.

MR. SEATON-MSEMAJI: This fiscal year, they had the option to go up to $7.50.

COMMISSIONER BOSCO: And then does that increase automatically?

MR. SEATON-MSEMAJI: The Budget Act provides another dollar next year and a dollar the year after that.

COMMISSIONER BOSCO: So, this year it would be $7, next year $8 --

MR. SEATON-MSEMAJI: Yes.

COMMISSIONER BOSCO: -- and the following, $9. But the county has to enter into some sort of a matching funds --

MR. SEATON-MSEMAJI: Thatís right. Thatís right. And the premise by which the legislative budget committees and the Governorís Department of Finance used to calculate how far they were willing to go was based on where minimum wage is now. And had minimum wage been higher, we believe that that amount of money would have been on top of it, so you get toward a living wage.

But as long -- as long as the floor is low, then so will the incremental steps.

COMMISSIONER BOSCO: Thank you.

MS. WILLIAMS: Good afternoon, Mr. Chairman and --

(Applause)

MS. WILLIAMS: Good afternoon, Mr. Chairman and members of the Commission. My name is Nancy Williams, and Iím here today in my capacity as the policy manager of the San Diego Housing Commission. The Housing Commission was established in 1979 and our mission is to provide quality affordable housing opportunities to improve the lives of those in need. We celebrated our twentieth year anniversary in 1999, and I am pleased to report that we are helping 40,000 San Diegans each year in meeting their housing needs.

We are very proud of our ability to help so many people each year. However, the need for our assistance within the city far outstrips our resources and capacity. There are over 400,000 households within the City of San Diego. 40 percent are low-income, thereby earning 80 percent or less than the median area income of $54,000 for a family of four. Of the low-income population in our city, nearly 107,000 households, which is a number that equates to a quarter of all San Diego households, pay more than the federal standard of 30 percent of their income for housing. Moreover, nearly 57,000 households in San Diego pay more than 50 percent of their income on housing.

Many of these households are headed by persons who are responsible for sustaining our economy and our standard of living. They work as retail personnel, housekeepers, bank tellers, or they may be our clerical help or entry-level government workers, teachers, medical employees, security personnel, daycare employees, and others. We are dependent on these people for our quality of life and for our cityís overall economic well-being.

But what about their quality of life? These people live in a city where the cost of living is 26 percent higher than the national average. Clearly, if most of their money is earmarked for housing, they have less to spend on other necessities, including clothing, healthcare, transportation, daycare, food, utilities, and other items.

The average price of a home in the San Diego region is over $300,000. The median price of a home is over $200,000. Households earning the median area income in this region canít afford the average priced home or even the medium priced home. If the American dream is out of reach for many middle-income families here, then what kind of message does that send to minimum wage earners?

To further exacerbate the plight of minimum wage earners in San Diego, the vacancy rate for rental units is zero to two percent. This has been a recipe for spiraling rental rates. As rates go up, more and more people, especially minimum wage households, find themselves faced with vacate notices without any alternative place to go.

With the current minimum wage of $5.75, a San Diegan must earn three times that amount during a 40-hour workweek to afford a two-bedroom apartment at the fair market rent here. The only option for that person is to work 112 hours per week at the current minimum wage rate, or, in other words, two and one-half minimum wage jobs per week.

In closing, let me say that it is important that we read the signs and act accordingly. Eight of the ten most expensive places to live in the nation are located in California, and San Diego is on that list. Housing advocates statewide were heartened by the leadership of the Governor and the Legislature during this past session when they stepped up to the plate and substantially increased resources for affordable housing. However, to fully win this battle, incomes must rise as well.

Only by addressing incomes, along with the supply of housing, can we ensure that we will be able to retain a sufficient labor force to keep our economy strong, and that our labor force will be able to support a decent quality of life for themselves and their families.

Thank you.

(Applause)

MS. CALDERWOOD: I was about one of the first people here, and now I can come in.

My name is Cathy Evans Calderwood. Iím here for two organizations. One is my own San Diego Welfare Warriors. The second one is SPIN, Supportive Parents Information Network, which is under the auspices of ALFA and has an office at 4069 30th Street, San Diego, area code 619-285-1003, if anyone here would like to contact SPIN. SPIN is an organization which is dedicated to helping organize for self-help purposes parents who are on welfare and who are on Cal WORKS, who are transitioning off of welfare and need information on how to handle accusations of welfare fraud or anything else that is related to their new status in the employment field.

I have a statement that SPIN wanted me to read, and then I can make my own comments based on an overview.

Supportive Parents Information Network is a grassroots organization of low-income families struggling to achieve self-sufficiency. And Iím speaking here today at the request of the 614 members of SPIN, because they are unable to be here because they are all working or engaged in work-related activities mandated by the welfare reform in San Diego County. They are required to participate in nearly 32 hours per week as a condition of even receiving aid, and 32 hours per week is, by definition, part-time work.

The membership of San Diego Welfare Warriors is representative of the interests of -- it began in 1996 -- the interests of 57,000 families on welfare at that time when welfare reform was instituted. The average number per household is three, so you multiply 57,000 times three. You get 171,000 individuals Iím represented here. That was bigger, according to the Olympic Games, than the population of Iceland. I wanted to let that sink in for a second, because thatís a lot of voting power, thatís a lot of people for the future labor force, that is a lot of humanity out there that cannot be just dismissed. And Iíve seen a lot of dismissal going on here, discounting of human lives, where I thought, earlier, we were going to start hearing about the happy gardens, living on the plantations in the old south, before the nasty old Civil War came and freed the slaves. I canít believe some of the things Iím hearing today, but Iíve actually learned some things.

SPINís whole concern as an organization is with parentsí quest for self-sufficiency. Even a single person earning $6.75 an hour cannot house, clothe, and feed herself in San Diego County. It is ludicrous to think that a parent with one or more children -- many of them have disabled children -- can even approach subsistence, let alone self-sufficiency, on that wage. Already low-income parents in San Diego County have overwhelmed the capacity of charitable and emergency food caches, homeless shelters, and other havens for emergency needs. If we have the big earthquake tomorrow, there wonít be anything for the rest of the middle class to take; weíve already used it up. And weíre just telling the public this. This is a very well kept secret.

Already, the number of parents forced to give their children to relatives or to the protective custody of the state has grown into a steady stream that is clogging the guardianship clinics and the foster care system. I myself worked for several years for San Diego -- Sacramento Childrenís Home. And I worked four hours -- four days on and three days off, shifts. I was not paid for my overtime. My pay stopped at about eight hours.

And there were days I knew I could not leave. I feel like the sheepherders. I know what it is to have ill children get up and take care of for the state, in loco parentis. And I was not compensated adequately at that time.

These are not parents who lack love for their children. These are parents who only have failed to find work at a decent wage. It is bad enough that the poor are relegated to impermanent, mostly part-time, no-benefit jobs. They are the first to go when the economy contracts even slightly. But worse, even when the poor do find such work, we are paid at a minimum wage that only guarantees we will not be able to meet the most frugal and critical of needs. At the current compensation level under welfare in San Diego County, a family of three is only given a maximum aid payment of $626 cash. That does not count the federal food stamp program. It is not touchable to pay utilities or other necessities. Itís locked up in an electronic banking card system so that you -- you have records being kept, a fingerprint, if you will, of what your buying patterns are, what kind of groceries, what kind of Lucky Charms, what kind of -- you know, anything you get, and that doesnít even include toilet paper or soap for hygiene.

So, we are talking about a three-person family on welfare trying to live on $626 cash, and in an economy in San Diego where I donít even know of any housing that might be big enough to really accommodate that family. Studios are going from $550 a month. So, you figure out whatís really going on here.

So then, when I talk about minimum wage, that was one adult working in most of these families, single-parent homes. One adult working, the most that is humanly possible -- they are still not going to be able to take care of their needs -- just sit there and do the math. It isnít possible in San Diego. And add that to the spiraling fun and games thatís going on with the power exchange, and we find out that we have crisis looming big on the horizon.

We have families that are already stressed. And now they are going to be losing their housing through lack of ability to pay the rent. If the minimum wage is not raised, we are going to be imbalanced by all this. Itís going to put massive amounts of people on the streets, overburdening the systems that we have, we thought we had, to deal with emergency circumstances.

You propose a raise of $1.00 in the minimum wage by January of 2002. As the saying goes, what planet have you been living on? That increase will not get low-income families anywhere near subsistence living in San Diego County. A subsistence living, not a vacation or childcare, medical insurance, or retirement benefits, or a new car, or a house, but a living that will put some kind of food on the table in some kind of dwelling for folks with some kind of clothing. Low-income parents cannot achieve that without an increase of at least $3.00 an hour in the minimum wage, right now. Not in three or four years, right now.

SPINís membership, therefore, calls upon this Commission to recognize that people who work in the lowest levels of the economy have the right to the dignity of a wage that will keep their families nourished and together. No family should have to give up any of its family members to institutional care or to state care. And now that the laws have been change so that after a child has been placed in foster care, after fifteen months, parental rights can be terminated and that child can be adopted by somebody else. This is very scary, and it hits at the heart of what it is to be a human being in our society.

And I sincerely hope that all of those transcripts, I assume, are going to be read by all the panelists? Yes?

COMMISSIONER DOMBROWSKI: Itís available for all.

MS. CALDERWOOD: Oh. So, all the people who have left -- I mean, I feel weird watching people go --

COMMISSIONER DOMBROWSKI: Let me interject something, which -- maybe you donít deal with the IWC very much, obviously -- but if youíve ever a matter before the IWC, written communications are equal to public appearances.

MS. CALDERWOOD: Okay.

COMMISSIONER DOMBROWSKI: We get everything. We read it. You donít have to sit here all day and make public testimony.

MS. CALDERWOOD: On the other hand, this is a wonderful way to network with other people who I didnít even know existed, who also had common concerns.

COMMISSIONER DOMBROWSKI: Thatís your choice. Iím just telling you --

MS. CALDERWOOD: Well, that is my choice. That is my choice. And I fought really hard to make sure that I didnít have to work four days and nights on and three days and nights off, shifts again, because I was looking for the 8-hour day and the 40-hour week. And I understand that you just stopped that.

So I think that it was worth the time and trouble that I and my constituency have put into it.

MR. BARON: Just so you know, all the members will eventually get the transcript. And copies of the transcripts are put on our Website so everybody can look at the transcript.

MS. CALDERWOOD: Those of you who responded to our survey, in other words, those who have the wherewithal to have a computer that has Internet access, who have electricity, and can read something on the Internet. I appreciate that, but Iím just talking -- Iím just talking --

COMMISSIONER DOMBROWSKI: Thank you.

MS. CALDERWOOD: So that is something that you need to pay attention to, is the fact that we have a huge technology gap that has occurred at the end of the century. We have people that are still living, apparently, as sheepherders in the stone age. And we have other people who have cell phones and can take up all the time in a law library bothering other people with their cell phones. Itís been interesting.

COMMISSIONER DOMBROWSKI: Are you finished?

MS. CALDERWOOD: No, Iím not, because I havenít finished reading the statement for SPIN and I havenít made my comments yet.

However, if you would like me to finish -- is there some problem with this? Itís not my fault. I was here at nine. You know, Iíve been waiting patiently.

COMMISSIONER DOMBROWSKI: So have I.

MS. CALDERWOOD: I havenít eaten, but Iíve watched you eat. And most of my constituency is in that situation of having to watch other people eat, or enjoy time with their families.

COMMISSIONER DOMBROWSKI: The reason we ate is because we needed to hear everyone. We didnít have time to take a break.

MS. CALDERWOOD: Thatís right.

COMMISSIONER DOMBROWSKI: You had time to go and eat if you wished, maíam.

MS. CALDERWOOD: I understand that. I understand that.

COMMISSIONER DOMBROWSKI: So, what are you telling us? What are you telling us?

MS. CALDERWOOD: I am saying that we are talking about nuts and bolts, gut-level -- Iíll call them animal -- basic needs.

COMMISSIONER DOMBROWSKI: Well, I have other speakers. If you have anything else you want to say about the minimum wage, please say it.

MS. CALDERWOOD: Well, I donít really understand where this hostility is coming from. I mean, I havenít waved a shovel up here and told you that Iím being forced to dig a hole. I have no weapons. I only have the name Welfare Warriors, okay?

But the reason is -- perhaps it is the fact that we have a tendency in our society to devalue people based on -- one of the speakers earlier talked about value, how you place a value. A personís worth is how much they get paid, in this society, not how much the actual worth of their occupation is. And I think that -- that behooves you, in the place that God has put you, you have -- you are in a unique position right now to do something very, very important, and not just Godís eyes, but everyone else whoís watching you.

COMMISSIONER DOMBROWSKI: Could we please keep the conversations at a minimum, please?

MS. CALDERWOOD: Yes, this is about the minimum wage.

COMMISSIONER DOMBROWSKI: I was talking to the others.

MS. CALDERWOOD: Oh, thatís fine. The other lady quoted the Bible. I havenít done that yet either. I could. Proverbs 38 and 31.

I think itís really important to understand the domino effect on society and social services that this is going to cause if it is not raised. I think that is the most important thing you could consider here. And if you need written reports, Iíd be happy to get the people together who can send that information to you.

COMMISSIONER DOMBROWSKI: Thank you.

Carol Urist, Nicole Driver, Tina Verdugo, Reverend Clara Darvy, Tom Castleman, Charles (inaudible).

MS. VERDUGO: Good afternoon. Iím Tina Verdugo.

Just quickly, I want to say thank you for your patience.

COMMISSIONER DOMBROWSKI: Closer to the mike.

MS. VERDUGO: Just real quickly, I want to say thank you for your patience and our patience as well.

A lot has been said, and I canít repeat all the support that weíve gotten. And I just want to say thank you, and I want you to pay close attention to what we say and hear us out.

REV. DARVY: Good afternoon. Iím Reverend Clara L. Darvy, and Iím a homecare worker under the In-Home Supportive Services program in Imperial County. I want to thank you for your patience and hear us out. And Iím also a member of the United Domestic Workers of America.

I have been working in the program for about three or four years. My patients have either died or moved, but I have a patient now that I care for. And the county has given me 76.5 hours to work with this gentleman. When I first received him last May, he could not walk. He had had three massive heart attacks. He was not able to go to the rest area, or he didnít want to go, so I was asked, because of my medical background, if I would care for him in his home. I didnít have to work with his 16-year-old son.

And I felt like the 76.5 hours was not enough, until the other programs -- for instance, he was needing physical therapy because he was not able to walk. I was doing more things than I was assigned to do. I had to do the shopping, I had to give him total bedbaths, cut his hair, everything. So, itís not -- excuse me -- the hours that I was concerned about, yes and no. But I love to work with people. I love to do what I do, and I knew Iíd do the best of what I can do.

But the minimum wage is really not enough. I mean, this man was five pounds from 500 -- itís not your fault -- the turning and the lifting and the getting up and trying to do a lot of things. And many times, I have worked overtime. I was working only -- because of my ministry -- five hours -- pardon me -- five days a week, but I would always leave open Saturdays and Sundays to let him know that, "If you need me, Iím there." And I appreciate the job, but I feel like this minimum wage needs to be raised more than what receive.

And every patient that we have is different. Some people just have patients are ambulatory, et cetera, donít have to feed. Some have to feed. Turning them -- so, all of us do different things to those patients. And you really have to love what you do.

I work about five hours a day. By the time they take out all of the Social Security and all that other stuff, I make about $370 a month. And I feel like, now that our gas prices in El Centro -- I pay $2.03 a gallon for gas. I donít know what you pay here. But because of the little Social Security that I receive -- my husband is retired civil service -- we are not stressing too much, but we also need other income to help support us.

I appreciate your having me here. I appreciate the union. I appreciate being a part of the in-home services department. And weíre just here asking, please, for a raise.

Thank you.

COMMISSIONER BOSCO: Do you make minimum wage?

REV. DARVY: Yes.

MS. VERDUGO: We all make minimum wage.

REV. DARVY: $5.75 an hour. Yes, we do.

COMMISSIONER BOSCO: Again, youíre paid through the state?

REV. DARVY: Yes. Yes.

MS. VERDUGO: Yes. My employer has to pay a co-payment directly to me. But my share of the co-payment goes directly into my share of the rent. So I get -- what? -- $50 every two weeks. What am I going to do with $50? That doesnít even pay the light bills.

Thank you.

REV. DARVY: Thank you.

(Applause)

COMMISSIONER DOMBROWSKI: Anyone else who wishes to speak?

MS. SMITH: Good afternoon. My name is Donna Smith. Iím a homecare provider in El Centro, California. I have been doing this for six years.

I take care of my mother. Sheís 64 years old. She has Alzheimerís. Sheís taken me from childhood to adulthood; now Iím taking my mother from adulthood to childhood.

Thereís a lot of things that I do for my mom that I just do because sheís my mom. And I was blessed with 276 hours, because my mom canít do anything for herself. Itís been really great to have a landlord that has reduced my rent in order to help me so I donít have to move, because I have lived in my house for two years. My mother has become very familiar with this house, and it also has security gates and everything around it, because she will get loose, like a two-year-old.

And Iím making $5.75 an hour. And because of the expenses, taking her back and forth to a doctor -- she just got out of the hospital -- paying for that, some medical supplies that I have to buy for her, she has no teeth so I have to buy certain foods, there are certain things that I have to get for her that I have to pay cash, and because of the $5.75 minimum wage that we get paid, I canít always get the things that I would like to get for my mom. And sheís always given me nice things.

And the landlord reduced my rent, which is cool. My gas -- my gas is also $2.08, $2.03, and $2.06 for my car.

All we need is just a little bit of help, you know. I mean, where everybody is struggling, everywhere, I donít think any of you would accept a job for $5.75. I mean, not really. Would you let your kids work for $5.75? I mean, itís a great start, you know, that they get out there in the work -- you know, workforce and learn something. But Iím 43 years old. I canít go get a job at McDonaldís for $5.75 and take care of my family, and I donít think any of you could either, you know.

And all we need is an increase. You know, weíre asking you for help, you know, so that we donít have to put my mom in a home because I canít take care of her, or, you know, your mom, one of your kids, anything, because nothing is guaranteed for tomorrow. Somebody could leave out of here today, be in an accident, and need one of us. And what if we donít want to work for $5.75 for you? I mean, youíve got -- the things that we have to do for these people -- I havenít always worked for my mom -- are like way out, way out, you know. Weíre cleaning bedsores, and weíre getting $5.75 for this. Weíre cooking, weíre cleaning, weíre moving furniture, weíre back and forth.

In El Centro, our heat, our weather, is like 115, 118. We still have one more week of high heat to come out there, because September 18th, I think, will be our last day of summer, as they say, because weíre an agriculture town.

But all we need is an increase in pay. Yes, the state does issue us a check. And, yes, as soon as I get my check, it does go to my rent. I get paid every two weeks. Half of my check goes to my rent, the other half goes to whatever bills I can pay. And Iím really scared theyíre going to turn off our lights, and Iím -- but weíre not there yet.

All Iíd like for you guys to do is please take this minimum wage vote and, you know, increase it for us. Just give us a help so that we can live decent lives, just like you guys want to live.

Thank you.

(Applause)

MR. SEATON-MSEMAJI: Mr. Chair, just for the record, several of the people who had slips in that you called had to go, some of them back to their patients, and some of them were from Riverside and Orange County.

COMMISSIONER DOMBROWSKI: And do you want to just -- do you wish to have -- weíll keep the cards and put them on the record. If thereís others you want to submit in support, you can send a letter with their names. Thatís fine.

MR. MSEMAJI: Thank you very much.

COMMISSIONER DOMBROWSKI: Any other business before the Commission?

(No response)

COMMISSIONER ROSE: Move we adjourn.

COMMISSIONER DOMBROWSKI: Second. Thank you.

(Thereupon, at 3:30 p.m., the public

hearing was concluded.)

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CERTIFICATE OF TRANSCRIBER

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I, Cynthia M. Judy, a duly designated transcriber, do hereby declare and certify under penalty of perjury under the laws of the State of California that I transcribed the three tapes recorded at the Public Hearing of the Industrial Welfare Commission, held on September 21, 2000, in San Diego, California, and that the foregoing pages constitute a true, accurate, and complete transcription of the aforementioned tapes, to the best of my ability.

Dated: October 9, 2000 ______________________________

CYNTHIA M. JUDY, Transcriber