California Votes: Ballot Initiatives Could Point to HR Shifts

By David Mark Feb 11, 2016
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Presidential candidates probably won’t inundate California with campaigns, as the state for a long time has voted strictly in favor of the Democratic ticket. But Golden State voters will still have a busy election year.

A swath of statewide ballot initiatives—a norm in California election years but particularly plentiful in 2016—will give voters a say on a range of employment-related matters. That includes competing proposals for stiff minimum-wage hikes and legalization of marijuana, in what would be—by far—the nation’s largest jurisdiction to greenlight recreational use of the drug.

Ballot measures have long played a significant role in California politics and policy. A Progressive Era-reform to bypass a clutch of corrupt state lawmakers, ballot initiatives these days are, ironically, a big business. California is the most expensive ballot measure state in the nation, home to over 60 percent of all spending on voter referendums. Paid signature gatherers, expert legal and compliance services, and a range of other costs long ago pushed ballot initiative drives into seven-figure territory.

Crucially for HR managers, California propositions frequently act as bellwethers for national policy and issue trends. There’s property tax-limiting Proposition 13, passed by California voters in 1978, which presaged the nation’s rightward shift during the Reagan years and beyond. Also a trend were the 1990 voter-backed term limits on state lawmakers—now the rule in a majority of states rather than the exception. And in 2012 California voters supported a measure to revise California’s “three strikes” prison sentencing law, which is often cited in ongoing federal criminal justice reform efforts.

The list of influential California ballot measures in recent decades goes on. So voters in November will likely serve as a lodestar for HR trends to come.

“California is on the cutting edge in this election year with ballot initiatives to address income inequality through the state’s minimum wage and to raise tax revenues by legalizing marijuana,” said Mark Baldassare, president and CEO of the Public Policy Institute of California.

For HR professionals, the proposals—particularly the proposed minimum-wage increases—come at a tricky time. A California law enacted by the legislature and governor in 2015 tweaked the state’s paid-sick-leave policies. And new federal overtime regulations, expected to be formalized by the Obama administration later in 2016, would make eligible for the extra pay a whole new group of workers: those making up to $50,440 annually. Currently, only employees making up to $23,660 annually must receive overtime pay.

Those and other HR-related changes have forced employers to spend recent months updating employee handbooks, which are, of course, added company costs. A significant minimum-wage increase will upend things further, said Kim Parker, president and CEO of the California Employers Association.

“There's nothing wrong with change. But there’s something to be said for too fast, too soon,” she said. “The intention of these proposals and new laws may be good. But we need to be careful how they’re implemented.”

Still, nine months out from Election Day, prospects for changes to minimum-wage and marijuana laws are uncertain, said Chris Hoene, executive director of the California Budget & Policy Center.

“The consultants who do work on ballot measures always talk about voter fatigue,” Hoene said. “The question is how many issues is a strong progressive electorate willing to support?”

Minimum Wage

California is renowned for its natural beauty, including oceans, redwood forests, deserts, snow-capped mountains—and everything in between. Yet the state hardly has bragging rights as a friendly business environment. High corporate tax rates and a state regulatory maze make for consistent gripes among business leaders. Elected officials in other states regularly travel to California giving pledges of tax incentives and other goodies to entice businesses to relocate.

Those concerns will be exacerbated by a pair of ballot initiatives aimed at boosting California’s minimum wage by a full 33 percent. The initiatives would eventually hike the bottom hourly wage to $15, from its current $10-an-hour level—which just went up on Jan. 1, 2016, from $9 hourly. “And there were already big concerns about that,” said Parker, head of the California Employers Association.

Each ballot initiative is being pushed by factions of the Service Employees International Union (SEIU). One proposal would make the change by 2020, the other by 2021.

The latter is aimed at making the sizeable pay increase more politically palatable. It would hike the bottom wage to $11 hourly starting Jan. 1, 2017, with dollar-an-hour increases over the next four years. Once at $15-an-hour, the minimum wage would be adjusted annually based on the rate of inflation for the previous years, as set by economic models favored by labor unions.

The other proposal includes a quicker rate of increase. And it would require employers to allow workers to take six paid sick days a year.

The federal minimum wage currently stands at $7.25 per hour. The Obama administration, with less than a year left in office, is interested in raising it, though making that happen appears unlikely with Republicans in control of Congress. Still, as of Jan. 1, 2016, there were 29 states with a minimum wage higher than the federal floor.

The California propositions raise familiar arguments about the merits of minimum-wage increases. Supporters argue that wage hikes help propel lower-skilled workers into the middle class and are a matter of economic justice in a society plagued by rapidly growing income inequality. Critics contend these wage hikes inevitably lead businesses to cut back on expenses and slash jobs, hurting the very people they’re intended to help.

Should Californians choose to raise the state’s minimum wage, the effect nationally could be profound. Rival states could accept California’s increase as a sign of political reality and voluntarily raise their own minimum-wage levels. Or they could amp up their efforts to poach jobs.

Like all minimum-wage increases, the 2016 ballot proposals wouldn’t affect only the bottom pay strata, said Chuck DeVore, a former Republican state assemblyman in California who is now a vice president at the Texas Public Policy Foundation. Pay rates will inevitably rise up the corporate ladder, killing off jobs. “This is part of a bargaining tool for the union,” DeVore said of the SEIU ballot initiative efforts.

For some HR managers in California, these hikes won’t be so startling. Many California localities have already voluntarily instituted minimum wages at or near the $15-an-hour threshold.Southern California Public Radio reported in January 2016:

“San Francisco, Oakland and San Jose have higher minimum wages than the state. Los Angeles and Los Angeles County’s unincorporated areas will raise their minimum wage to $10.50 in July, the first step in a gradual climb to $15 per hour for most businesses by 2020. Santa Monica and Pasadena appear headed toward raising the minimum wage similarly in the coming weeks or months. Long Beach is drafting an ordinance to raise the wage to $13 by 2019.”

Prospects for passage of either statewide minimum-wage proposal are uncertain. California is a strongly Democratic state, primarily in its populous coastal communities. But a more centrist, business-friendly caucus of Democratic lawmakers now holds sway in the state legislature. Business groups, from the state Chamber of Commerce to the restaurant lobby, oppose the mandated wage increases and are winning a surprising level of support. Even Democratic Gov. Jerry Brown is less than enthusiastic about the minimum-wage raises being proposed. The more than 10 percent hike that began at the start of 2016 is sufficient for now, Brown contends.

Marijuana Legalization

Allowing for pot use in California—not just for medicinal purposes, but also for fun—could light up voter turnout in November.

The issue has a long history in California. In November 1996 voters there approved Proposition 215, which allowed for use of medical marijuana. Yet in the nearly two decades since, a hodge-podge of local laws and ordinances across the state have seen it interpreted and implemented in wildly uneven ways.

The ballot proposition would legalize recreational marijuana use by adults and, according to backers, regulate and tax the drug like alcohol. Supporters argue this would provide a windfall of new tax revenues. Opponents doubt those fiscally optimistic claims and suggest that outright marijuana legalization will lead to a spike in teen drug use, among other societal problems.

A similar marijuana legalization measure appeared on the 2010 ballot but was defeated, with 53.5 percent of voters casting “no” votes. But the political landscape for pot has changed since then. In 2012 Colorado and Washington became the first two states to allow for legalized recreational marijuana, thanks to ballot measures. In Alaska, adults 21 and older can have an ounce or less of marijuana in their possession and grow up to six plants. Oregon now makes similar allowances for marijuana possession. The possession of small amounts of marijuana also is legal in the District of Columbia for adults 21 and older.

That’s useful for boosters of the California marijuana measure, said John J. Pitney, professor of American politics at Claremont McKenna College, in Southern California.

“It should help the proponents because it's no longer groundbreaking,” he said. “That diminishes the fear factor.”

Medical or recreational use of marijuana is, in fact, now legal to varying degrees in 23 states and the District of Columbia. And in California the 2016 marijuana-legalization proposal has a high-profile backer in Lt. Gov. Gavin Newsom, who made his name nationally a dozen years ago when, as San Francisco mayor, he helped lead a shift in public opinion by promoting the legality of gay marriage. He’s also a 2018 Democratic gubernatorial candidate, and the marijuana legalization proposal potentially provides a political edge over rivals.

Of course “legal” marijuana is a debatable term. Pot is still strictly illegal under federal law. The Obama administration’s Justice Department has eased up considerably on marijuana-related raids and prosecutions, mostly allowing states to do what they like.

But that doesn’t mean the next administration will see it the same way. And that’s among the issues HR managers will need to be mindful of should the California marijuana ballot initiative pass. HR professionals will, among other efforts, need to prepare education efforts for employees about company drug policies.

Some firms will want to stay strictly within federal law and ban any marijuana usage, even if “legal” in that state. The banking sector has largely taken that approach, forcing cannabis dispensaries to deal in cumbersome—and expensive—cash transactions.

Many companies don’t have drug testing policies. Whether or not to implement one is a sensitive matter, involving considerations about corporate culture, workforce size, costs and a range of other issues. If companies are considering drug testing, legal status of marijuana in their state is a serious concern. And the issue becomes more complicated if a company has satellite or branch offices. A Denver-based company might be perfectly compliant with Colorado law but in violation of state statute in, say, Alabama.

To date HR professionals aren’t too sympathetic about employee drug use, no matter local or state law. A Society for Human Resource Management survey in late 2015 found that 82 percent of respondents whose organizations have operations in states where both recreational and medical use are legal have zero tolerance for use while working. As SHRM noted, “Under federal and most state laws, employers can refuse to hire marijuana users. In states where recreational use is legal, 44 percent of respondents said they do not hire recreational users.”

That type of approach is unlikely to change unless federal law legalizes—or at least decriminalizes—marijuana. While that has largely been a fringe position in recent decades, there’s some reason to believe attitudes are changing.

An eclectic, bipartisan group of U.S. House members have introduced legislation in Congress to repeal the federal prohibition on marijuana possession and use. A proposal to do just that has support of 19 House members in a body of 435. Seven of those lawmakers are from California, spanning the ideological spectrum from Democratic Barbara Lee, representing Berkeley, to Republican Dana Rohrabacher, of Orange County.

The California Budget & Policy Center’s Hoene said easing federal marijuana restrictions—through outright legalization, decriminalization or something else—was likely at some point.

“I think that the marijuana issue—with a state like California being added to the mix along with Colorado and others—creates more pressure on the federal government to sort out what it’s going to do on this,” he said. “If more states act on this it will force the federal government to act.”

David Mark (@DavidMarkDC) is a journalist and author in the Washington, D.C., area and most recently co-authored Doubletalk: The Language, Code and Jargon of a Presidential Election(ForeEdge, 2016).

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