AB 5 is Gone for Now!

Many businesses, including staffing agencies such as San Luis Personnel Services, were greatly relieved to receive the news today that California AB 5 is “dead for now”. The California legislature considered the bill in 2017 and continued it to 2018 with a hearing scheduled for January 18th in the Assembly Appropriations Committee. The Chairperson of the Assembly Appropriations Committee declined to take the bill up for a vote in the committee which effectively killed the bill for 2018. Unfortunately, the matter could come again in a different or a new bill later in 2018.

AB 5 was definitely a “Job-Killer” bill and one of the most ill-conceived bills that I have read in many years. AB 5 required employers with 10 or more employees to offer additional hours of work to existing part-time, nonexempt employees before hiring or using additional employees or subcontractors, including temporary workers.

Requiring businesses and hiring authorities to first offer jobs to any part-time, qualified employees and to justify why a “new” employee is being hired creates laborious and unnecessary work for Human Resources and other hiring authorities to evaluate every part-time employee’s skills for any job opening. Equally important, it would frequently prevent businesses from hiring the applicant who is the most qualified for the position. Instead, businesses would have to increase the hours for less qualified employees resulting in lower productivity. It is my opinion that some companies would decide to just not hire additional employees due to the added workload, the loss of flexibility in hiring, the removal of choice to hire the best candidate and the fear of litigation.

There is no doubt that AB 5 would have destroyed many jobs –harming temporary and contract workers, unemployed candidates seeking employment, staffing firms, businesses and the California economy.

Congratulations and thank you to the California Chamber of Commerce, the American Staffing Association, the California Staffing Association and all others who worked to be sure that legislators understood the damage that could be done to employers and prospective employees by AB 5.

Julia S. Aguilar
Principal, CSP


More Jobs than Workers

The greatest challenge facing many businesses in 2018 will be the shortage of applicants seeking jobs. “Now Hiring” signs are posted in windows, “Now Hiring” banners hang from the fronts of stores, recruitment ads appear on company websites, recruiting websites, job boards and in various media.

The share of Americans either employed or actively looking for work has shrunk to 62.7% from 66% in 2007, the beginning of the 2008-09 economic downturn. The reason for the decrease is still up for debate. While reasons are unclear, the trend is definitely a troubling one. There was a 20% decrease in men’s workforce participation and a 25% decrease in women’s workforce participation between 1999 and 2015.

There is no doubt that the unemployment rate is low in many places and the unemployment rate for us in San Luis Obispo is extremely low at 3.7% (9/17). Five % unemployment is sometimes referred to as full employment so 3.7% makes quite a statement!

Wages have remained stagnant despite unemployment reaching new lows. Minimum wage increases in California will likely result in higher wages for low to mid-level positions. This may entice some to reenter the workforce.

The “skills gap” is likely to be a continuing problem. Finding highly trained workers to fill specialized positions is particularly difficult. Manufacturing companies have found this particularly an issue as more manufacturing jobs require intermediate computer training.

Companies will need to take a serious look at wages for 2018 and beyond. Wages may need to increase in order to hire and retain the skilled workers needed to grow businesses. Companies will also need to consider hiring workers who do not have all of the desired skills, but have some skills and good potential.

This bodes well for the temporary staffing industry. The “try the employees out before making a long-term hiring decision” may be the key to hiring the employees you need in 2018!

Julie Aguilar