CH&LA s Government & Legal Relations Committee, with recommendations

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1 CH&LA LEGISLATIVE BILL SUMMARY Advocacy Efforts and Outcomes CH&LA s Government & Legal Relations Committee, with recommendations from CH&LA s President and CEO, Legislative and Communications Coordinator, and from our contract lobbying firm, Public Policy Advocates, creates CH&LA s legislative agenda. Position bills are bills that CH&LA has officially supported, opposed or watched throughout the legislative session. This legislative agenda is amended and adjusted as the legislature moves through their committee hearings and floor sessions. Many of CH&LA s position bills are removed from this list due to our successful advocacy efforts, including amendments to legislation to remove our opposition. CH&LA s advocacy efforts vary depending on a multitude of factors, but generally include the following actions: writing individual letters as well as joining coalition letters, attending meetings with legislators and staff, attend and provide testimony at committee hearings, seek the Governor s veto on CH&LA s priority legislation and participating in coalition meetings with other associations including the California Chamber of Commerce, California Apartment Association, California Restaurant Association, and CalTravel, among others. The following is a summary of CH&LA s legislative agenda including bills that hoteliers need to know about, other legislation that became law and bills vetoed by Governor Brown. 6 CALIFORNIA HOTEL & LODGING ASSOCIATION ADVOCACY SUMMARY 2016

2 NEW LAWS ENACTED IN 2016 What Hoteliers Need to Know SB 3 (LENO D) MINIMUM WAGE STATUS: Chaptered by Secretary of State. Chapter 4, Statutes of 2016 Effective Date January 1, 2017 POSITION: OPPOSE BACKGROUND: In March 2016, Governor Brown, Democrat leaders and union officials announced an agreement that will raise the minimum wage to $15 an hour by On April 4, 2016, Governor Brown signed into law Senate Bill 3 (Leno D) which will increase the state s current $10-an-hour minimum wage to $10.50 on January 1, 2017 for businesses with 26 or more workers, with subsequent increases to $15 an hour by 2022 and then indexed annually for inflation. Employers with 25 or fewer workers will have an extra year to phase in the increase. The agreement also allows Governor Brown and future Governors to suspend increases during economic downturns or budget deficits. A deal to increase the minimum wage came together quickly with union officials as two union groups SEIU and SEIU-UHW had both qualified ballot measures seeking to raise the minimum wage to $15. These ballot measures would have raised the minimum wage to $15 an hour as early as The Governor s office and Democrat legislative leaders negotiated to pass SB 3 which will raise the minimum wage to $15 an hour by The Governor did not include any business interests in the negotiation of this $15 minimum wage. Some provisions of the deal to raise California s minimum wage to $15 an hour by 2022 include: Annual increases begin Jan. 1, 2017, for companies with 26 employees or more. For smaller firms, each step increase would trail by one year. Consumer price-indexed inflation increases up to 3.5 percent annually begin Jan. 1, The governor can delay a scheduled increase by one year if economic or budget criteria are met. All delay options end after wage reaches $15 an hour. Deal includes no sick days, except for home health workers. SCHEDULED WAGE INCREASES Wage 26 Employees or More 25 Employees or Less $10.50/hour January 1, 2017 January 1, 2018 $11/hour January 1, 2018 January 1, 2019 $12/hour January 1, 2019 January 1, 2020 $13/hour January 1, 2020 January 1, 2021 $14/hour January 1, 2021 January 1, 2022 $15/hour January 1, 2022 January 1, CALIFORNIA HOTEL CALIFORNIA & LODGING HOTEL ASSOCIATION & LODGING ASSOCIATION ADVOCACY ADVOCACY SUMMARY SUMMARY

3 AB 1732 (TING D) SINGLE-USER RESTROOMS STATUS: Chaptered by Secretary of State - Chapter 818, Statutes of 2016 Effective Date March 1, 2017 POSITION: NO POSITION BACKGROUND: On September 29, 2016, Governor Brown signed AB 1732 (Ting D) into law. The author of this bill, Assemblymember Phil Ting, emphasized that a burden is disproportionately experienced by the lesbian, gay, bisexual, and transgender (LGBT) community, women, and parents or caretakers of dependents of a different gender. Assemblymember Ting stated that the goal of this bill is to eliminate the fears and frustration that many people experience in restrooms on a daily basis by designating single-user bathrooms as all gender. This bill requires, commencing on March 1, 2017, businesses, places of public accommodation, or state or local government agencies that offer a single-user toilet facility to be designated as an all-gender toilet facility, as specified, and authorizes an inspector, as specified to inspect for compliance. accessible instead of the traditional male and female designations. Businesses are not required to add or remove existing restroom facilities or alter current restroom structures. Single-user toilet facilities are defined as those with no more than one water closet and one urinal that have a locking mechanism controlled by the user. The California Building Code (CBC) requires only that restroom doors be marked with one of three geometric symbols to indicate whether they are intended for use by men, women, or all genders. No adjustments to the CBC are necessary for implementation of this bill. The scope of this bill is limited to single-user restrooms located in a commercial property or place of business. This bill does not address restrooms that contain multiple stalls. For properties that offer single-user restrooms, they will be required to make those restrooms all-gender SB 269 (ROTH D) DISABILITY ACCESS STATUS: Chaptered by Secretary of State. Chapter 13, Statutes of 2016 Effective Date January 1, 2017 POSITION: SUPPORT 8 BACKGROUND: A small group of highly litigious plaintiffs and attorneys have targeted small innkeepers in the state, especially those without financial resources or sophistication, with lawsuits alleging violations of constructionrelated accessibility standards that violate the Americans with Disabilities Act (ADA). The lawsuits appear to be motivated by a desire to obtain quick cash settlements with the businesses, rather than to improve access to public accommodations. As a result, small innkeepers are justifiably anxious about being sued. This bill ensures that small innkeepers who employ 25 or fewer employees have the information and resources they need in order to bring their properties into compliance with construction-related accessibility standards. SPECIFICALLY, SB 269 (ROTH D) WILL: 1. Establish a presumption that certain technical violations are presumed to not cause a person difficulty, discomfort or embarrassment for the purpose of an award of minimum statutory damages in a construc- CALIFORNIA HOTEL & LODGING ASSOCIATION ADVOCACY SUMMARY 2016

4 tion-related accessibility claim, where the defendant is a small business, the defendant has corrected, within 15 days of the service of a summons and complaint asserting a construction-related accessibility claim or receipt of a written notice, whichever is earlier, all of the technical violations that are the basis of the claim. 2. States that the above presumption affects the plaintiff s burden of proof and is rebuttable by a preponderance of the evidence showing that the plaintiff did, in fact, experience difficulty, discomfort, or embarrassment on the particular occasion as a result of one or more of the technical violations. 3. Protects certain businesses from liability for minimum statutory damages in a construction-related accessibility claim made during the 120 day period after the business obtains an inspection of its premises by a CASp, under specified conditions. 4. Makes a number of related technical and enabling changes to the law. OTHER LEGISLATION THAT BECAME LAW IN 2016 AB 1676 (CAMPOS D) EMPLOYERS: WAGE DISCRIMINATION STATUS: Chaptered by Secretary of State - Chapter 856, Statutes of 2016 POSITION: OPPOSE SUMMARY: Current law makes it a misdemeanor for an employer or other person acting either individually or as an officer, agent, or employee of another person to pay or cause to be paid to any employee a wage less than the rate paid to an employee of the opposite sex as required by these provisions, or who reduces the wages of any employee in order to comply with these provisions. Existing law also makes it a misdemeanor for an employer to refuse or neglect to comply with the above provisions of law. This bill specifies that prior salary cannot, by itself, justify any disparity in compensation under the bona fide factor exception to the above prohibition. AB 1843 (STONE D) APPLICANTS FOR EMPLOYMENT: CRIMINAL HISTORY STATUS: Chaptered by Secretary of State - Chapter 686, Statutes of 2016 POSITION: WATCH SUMMARY: Prohibits an employer from asking an applicant for employment to disclose, or from utilizing as a factor in determining any condition of employment, information concerning or related to an arrest, detention, processing, diversion, supervision, adjudication, or court disposition that occurred while the person was subject to the process and jurisdiction of juvenile court law. The bill, for the purposes of the prohibitions and exceptions described above, provides that conviction excludes an adjudication by a juvenile court or any other court order or action taken with respect to a person who is under the jurisdiction of the juvenile court law, and would make related and conforming changes. 9 CALIFORNIA HOTEL CALIFORNIA & LODGING HOTEL ASSOCIATION & LODGING ASSOCIATION ADVOCACY ADVOCACY SUMMARY SUMMARY

5 AB 2138 (LOW D) SELLERS OF TRAVEL STATUS: Chaptered by Secretary of State - Chapter 262, Statutes of 2016 POSITION: NO POSITION SUMMARY: Under current law, a seller of travel is deemed to do business in this state if the seller of travel solicits business from locations in this state or solicits prospective purchasers who are located in this state. This bill clarifies that a seller of travel is deemed to do business in this state if the seller of travel solicits business from locations in this state regardless of the geographic location of the prospective purchaser including persons located outside of this state or country. AB 2820 (CHIU D) CRIMES: PRICE GOUGING: STATES OF EMERGENCY STATUS: Chaptered by Secretary of State - Chapter 671, Statutes of 2016 POSITION: OPPOSE SUMMARY: This bill revises the definitions of a state of emergency and a local emergency to mean a natural or manmade emergency resulting from an earthquake, flood, fire, riot, storm, drought, plant or animal infestation or disease, or other natural or manmade disaster for which a state of emergency has been declared by the President of the United States or the Governor of California or for which a local emergency has been declared by an official, board, or other governing body vested with authority to make such a declaration in any city, county in California. ABX2 7 (STONE D) SMOKING IN THE WORKPLACE STATUS: Chaptered by Secretary of State. Chapter 4, Statutes of Second Extraordinary Session POSITION: WATCH SUMMARY: Prohibits smoking of tobacco products inside an enclosed space at a place of employment. The violation of the prohibition against smoking in enclosed spaces of places of employment is an infraction punishable by a specified fine. This bill would expand the prohibition on smoking in a place of employment to include an owner-operated business, as defined. Under existing law, hotels can have up to 65 percent smoking rooms. This bill changes it to 20 percent. Additionally, this bill eliminates an exemption that allowed for smoking in some hotel lobbies and meeting and banquet rooms. SB 32 (PAVLEY D) CALIFORNIA GLOBAL WARMING SOLUTIONS ACT OF 2006: EMISSIONS LIMIT STATUS: Chaptered by Secretary of State. Chapter 249, Statutes of POSITION: OPPOSE SUMMARY: Requires the State Air Resources Board to ensure that statewide greenhouse gas emissions are reduced to 40% below the 1990 level by CALIFORNIA HOTEL & LODGING ASSOCIATION ADVOCACY SUMMARY 2016

6 SB 1063 (HALL D) CONDITIONS OF EMPLOYMENT: WAGE DIFFERENTIAL: RACE OR ETHNICITY STATUS: Chaptered by Secretary of State. Chapter 866, Statutes of 2016 POSITION: NO POSITION SUMMARY: Prohibits an employer from paying any of its employees at wage rates less than the rates paid to employees of another race or ethnicity for substantially similar work. Existing law prohibits an employer from paying any of its employees at wage rates less than the rates paid to employees of the opposite sex for substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions, unless the employer demonstrates that specific, reasonably applied factors account for the entire wage differential. SB 1167 (MENDOZA D) EMPLOYMENT SAFETY: INDOOR WORKERS: HEAT REGULATIONS STATUS: Chaptered by Secretary of State. Chapter 839, Statutes of 2016 POSITION: OPPOSE SUMMARY: Requires the Division of Occupational Safety and Health, by January 1, 2019, to propose to the Occupational Safety and Health Standards Board for the board s review and adoption, a heat illness and injury prevention standard applicable to workers working in indoor places of employment. The bill specifies that this requirement does not prohibit the division from proposing, or the standards board from adopting, a standard that limits the application of high heat provisions to certain industry sectors. SB 1234 (DE LEÓN D) RETIREMENT SAVINGS PLANS STATUS: Chaptered by Secretary of State. Chapter 804, Statutes of 2016 POSITION: OPPOSE SUMMARY: Requires eligible employers that do not offer specified retirement plans or accounts to have a payroll deposit retirement savings arrangement so that employees may participate in the California Secure Choice Retirement Savings Program within specified time periods based on the number of eligible employees that the employer has, and the bill authorizes the California Secure Choice Retirement Savings Investment Board to extend these time periods. The bill provides that employers retain the right at all times to set up and offer their own qualified retirement plans. 11 CALIFORNIA HOTEL CALIFORNIA & LODGING HOTEL ASSOCIATION & LODGING ASSOCIATION ADVOCACY ADVOCACY SUMMARY SUMMARY

7 SB 1465 (DE LEÓN D) PUBLIC CONTRACTS: 2024 OLYMPIC GAMES AND PARALYMPIC GAMES STATUS: Chaptered by Secretary of State. Chapter 802, Statutes of 2016 POSITION: SUPPORT SUMMARY: Authorizes the Governor to execute games support contracts, not to exceed a specified amount, in connection with the site selection process for the City of Los Angeles to become the host for the 2024 Olympic Games and Paralympic Games, that accept financial liability to provide the state security for amounts owed by the Organizing Committee for the Olympic Games (OCOG), as specified, and for any financial deficit accruing to the OCOG as a result of the hosting of the games by the endorsing municipality. LEGISLATION SUCCESSFULLY OPPOSED BY CH&LA AB 67 (GONZALEZ D) DOUBLE PAY ON THE HOLIDAY ACT OF 2015 STATUS: Dead POSITION: OPPOSE SUMMARY: Would have required an employer to pay at least two times the regular rate of pay to employees at retail and grocery store establishments, for work on a family holiday, as defined. It would have exempted retail food facilities from the act unless the retail food facility is a grocery store establishment, or is located within a retail establishment, or is located within a grocery store establishment and primarily sells food for onsite consumption. 12 AB 1520 (STONE D) PUBLIC RECORDS STATUS: Dead POSITION: OPPOSE SUMMARY: Current law provides that the California Public Records Act shall not be construed to require the disclosure of specified information concerning utility customers of local agencies, except for certain purposes. This bill would have removed requests for usage rates of industrial, institutional, and commercial water users from that exception to required disclosure. CALIFORNIA HOTEL & LODGING ASSOCIATION ADVOCACY SUMMARY 2016

8 AB 2782 (BLOOM D) SUGAR SWEETENED BEVERAGE FEE STATUS: Dead POSITION: OPPOSE SUMMARY: Would have imposed a fee on every distributor for the privilege of distributing in this state bottled sweetened beverages, at a rate of $0.02 per fluid ounce and for the privilege of distributing concentrate in this state, either as concentrate or as sweetened beverages derived from that concentrate, at the rate of $0.02 per fluid ounce of sweetened beverage to be produced from concentrate. SB 133 (MCGUIRE D) TRANSIENT OCCUPANCY TAXES: HOSTING PLATFORMS: COLLECTION STATUS: Dead POSITION: OPPOSE SUMMARY: Would have authorized a city or county to elect to allow platforms that elect to assume the responsibility of collecting and remitting transient occupancy taxes on behalf of operators, to collect and remit those taxes to that city or county. SB 654 (JACKSON D) UNLAWFUL EMPLOYMENT PRACTICE: PARENTAL LEAVE STATUS: Vetoed by Governor Brown POSITION: OPPOSE SUMMARY: Would have prohibited an employer from refusing to allow an employee with more than 12 months of service with the employer, and who has at least 1,250 hours of service with the employer during the previous 12-month period, to take up to 6 weeks of parental leave to bond with a new child within one year of the child s birth, adoption, or foster care placement. The bill would have also prohibited an employer from refusing to maintain and pay for coverage under a group health plan for an employee who takes this leave. SB 878 (LEYVA D) WORK HOURS: SCHEDULING STATUS: Dead POSITION: OPPOSE SUMMARY: Would have required an employer to provide its employees with a work schedule at least 7 calendar days prior to the first shift on that work schedule. The bill also would have required an employer to pay its employees modification pay for each previously scheduled shift that the employer cancels or moves to another date or time, for any previously unscheduled shift that the employer requires an employee to work, or for each on-call shift for which an employee is required to be available but is not called in to work, or for each on-call shift for which an employee is required to be available but is not called in to work that shift. 13 CALIFORNIA HOTEL CALIFORNIA & LODGING HOTEL ASSOCIATION & LODGING ASSOCIATION ADVOCACY ADVOCACY SUMMARY SUMMARY

9 SCA 5/SB 1093 (HANCOCK D) PROPERTY TAXES: ASSESSMENT: COMMERCIAL AND INDUSTRIAL PROPERTY STATUS: Dead POSITION: OPPOSE SUMMARY: Senate Constitutional Amendment 5 of the Regular Session would have required the full cash value of commercial and industrial property to be the fair market value of that property as of the lien date, and would require the Legislature to enact legislation to phase in the reassessment of commercial and industrial property as so described in order to ensure a reasonable workload and implementation period for county assessors and taxpayers. SB 1093, pursuant to the constitutional requirement, for the fiscal year, would require only 50% of those properties that have not been reassessed at fair market value to be assessed at fair market value, and by the fiscal year, would require all other properties that have not been brought to fair market value to be assessed at fair market value. SB 1282 (LENO D) PESTICIDES: NEONICOTINOIDS: LABELING STATUS: Dead POSITION: OPPOSE SUMMARY: Would have required the Director of Pesticide Regulation to require labeling of commercially available seeds and plants sold at retail establishments, excluding noxious weed seeds and plants, that have been treated with a neonicotinoid pesticide, and, by regulation, designate neonicotinoid pesticides as restricted materials by January 1, CALIFORNIA HOTEL & LODGING ASSOCIATION ADVOCACY SUMMARY 2016

10 REGULATORY ISSUES PROPOSITION 65 IBACKGROUND n May 2013, Governor Brown proposed reforms to strengthen and restore the intent of Proposition 65, a three decade old law enacted to protect Californians from harmful chemicals that has been continually abused by unscrupulous lawyers largely driven by profit rather than public health. In August 2013, CH&LA received notice from the Governor s office that instead of creating Proposition 65 reforms through the legislative process, any new reforms would be done through regulatory efforts via the California Office of Environmental Health Hazard Assessment (OEHHA), the agency in charge of Proposition 65. In November 2015, California s Office of Environmental Health Hazard Assessment (OEHHA) formally withdrew its proposed Proposition 65 warning regulations and issued a new, separate proposal, thus, restarting the rulemaking process. Over the past three and a half years, CH&LA has participated in the Governor s Proposition 65 Working Group and has also participated in an expansive coalition consisting of over 100 business groups and companies. CH&LA has also met directly with OEHHA multiple times to discuss the impact on the hotel industry if any new proposed Proposition 65 guidelines go into effect. RECENT DEVELOPMENTS In March 2016, CH&LA met with OEHHA to discuss Proposition 65. During the meeting, OEHHA agreed that individually hotels and apartments could each have their own safe harbor warning language allowing for warnings at public entrances (subject to the carve outs for alcohol, food and garages). CH&LA legal counsel also brought up CH&LA s concerns with the proposed Proposition 65 revisions regarding the definitions of affected area consumer product and consumer product exposure. In May 2016, OEHHA released a modified proposal to amend the Prop 65 warning regulations. In response to our meeting with OEHHA in late March, the proposal states that OEHHA also intends to continue to adopt additional provisions in the regulations that address specific exposure situations such as exposures that occur at hotels and apartments. On August 30, 2016, OEHHA adopted new warning regulations for Proposition 65. The new warning regulations will become effective in two years from the adoption date on August 30, Businesses may conform to the new regulations between the adoption date and the effective date. LOOKING AHEAD In looking ahead to 2017, CH&LA is working with OEHHA to produce a tailored safe harbor warning specifically for the hotel industry. CH&LA is requesting that hotel specific language is inserted into the new warning regulations that would allow hotels to have primary signage at the entrance of a hotel, instead of multiple signs throughout a property, or in each guest room. 15 CALIFORNIA HOTEL CALIFORNIA & LODGING HOTEL ASSOCIATION & LODGING ASSOCIATION ADVOCACY ADVOCACY SUMMARY SUMMARY

11 CAL/OSHA HOUSEKEEPING REGULATION UPDATE Subsequent to the failed legislative effort to require fitted sheets and long-handled tools in all hotels, the California Occupational Safety and Health Standards Board received a petition in January of 2012 from Unite Here requesting that the Board amend Title 8, California Code of Regulations, to address what Unite Here perceived as a causal relationship between hotel housekeeping tasks and musculoskeletal injuries to housekeepers. The Division of Occupational Safety and Health (Division), which (along with Board staff) evaluated the petition and formed an advisory committee in 2012, to discuss perceived occupational hazards in the hotel housekeeping industry. The committee has met once in five successive years, 2012 through 2016, during which meetings, labor and industry representatives presented arguments for and against a hotel housekeeping-specific regulatory regime. CH&LA has participated in each Advisory Committee, presenting research, developing a developmental guide for Injury & Illness Prevention Programs, conducted housekeeping training and safety seminars, and presented at each meeting. In December 2015, CH&LA participated in the Cal/OSHA Hotel Housekeeping Advisory Committee in Oakland. The meeting covered the latest discussion draft from the Division of Occupational Safety & Health (DOSH). In June 2016, Cal/OSHA posted the Final Advisory Committee Draft on the DOSH Housekeeping in the Hotel and Hospitality Industry website. This Final Advisory Committee Draft has been submitted to the Standards Board staff for their review. The final discussion draft would impose specific and sweeping new obligations on hotel and hospitality employers without any scientific evidence to demonstrate the existence of the alleged hazards or the effectiveness of mandated interventions. Additionally, it would increase the union s role by inserting union representatives subjective, non-professional opinion as a mandatory feature of musculoskeletal injury investigations. CH&LA has engaged legal counsel, industry stakeholders, and medical and ergonomic resources to submit comments in response to the Housekeeping in the Hotel and Hospitality Industry Advisory Committee s June 1, 2016 Discussion Draft and will work closely with the Department of Industrial Relations and other stakeholders in the next steps of administrative review. 16 CARBON MONOXIDE ALARMS In the summer of 2014, the international building and fire codes were updated, with the 2015 codes eliminating a 2012 requirement that required a carbon monoxide (CO) alarm in each hotel guest room. With CH&LA s input and working closely with the California Department of Housing and Community Development, California s Building Code was amended to reflect the international building code s position on CO alarms. Under the new language adopted in the California Building Code, effective January 1, 2017, CO detectors will no longer be required in any hotel guest room unless a particular guest room has a fuel-burning fireplace, fuel-burning appliance, or perhaps where there is a forced-air furnace. The implications of this will save hotels a lot of money in detectors - installation and maintenance - as well as exposure to legal and regulatory liability. It is imperative that all California lodging operators take steps to ensure that they will be in compliance by January 1, CALIFORNIA HOTEL & LODGING ASSOCIATION ADVOCACY SUMMARY 2016

12 DEPARTMENT OF LABOR NEW OVERTIME RULES On May 18, 2016, the U.S. Department of Labor (DOL) announced the new federal overtime rule under the Fair Labor Standards Act (FLSA). According to the White House, an estimated 4.2 million white collar workers will become entitled to overtime pay when they work extra hours as a result of the new rule, and wages for workers will increase by $12 billion over the next 10 years. Employers will need to be in compliance with the new rule by December 1, The final rule changes the salary level that must be met before an employee can be exempt from overtime. The minimum salary threshold will increase to $913 per week, $47,476 annually, and will apply to nearly all employees an employee paid less than this threshold amount will be guaranteed overtime pay. Importantly, this threshold is higher than California s minimum annual salary threshold, which is currently $41,600. DOL also announced it will automatically increase the threshold every three years. CH&LA has been following this rulemaking since March 2014 when the President issued a memorandum directing the Secretary of Labor to update the exemptions. In July 2015, DOL proposed increasing the threshold to $50,440 with automatic updates on an annualized basis. Through each and every stage of the rulemaking process, CH&LA has been advocating for positive changes that would lessen the negative impact of the many unintended consequences associated with the proposed rule. While the final rule is somewhat less extreme than the original proposal, the salary threshold still is a significant increase that will go into effect all at once in December 2016 for California hoteliers. NEXT STEPS In September 2016, Texas and 20 other states filed a lawsuit against the Obama Administration seeking to block the overtime rules from going into effect on December 1, The lawsuit claims that the Obama Administration ignored a required public comment period and that the new rule encroached along Congress s authority to set minimum wages. A federal judge is currently considering whether to consider an injunction on the rule and whether to ultimately overturn it. CALIFORNIA BUILDING CODE POOL SIGNS In December 2015, CH&LA and a coalition of trade associations submitted a petition to the California Department of Public Health (CDPH) asking them to repeal the diarrhea pool sign requirement that is still in the California Building Code. This regulation was found in both health and building codes; however, the California Department of Health Services deleted this requirement in its Title 22 regulations in CH&LA s petition sought to delete the diarrhea sign requirement that is still in the California Building Code (Title 24). In January 2016, we received notice that the main points of the petition were denied. CDPH did, however, recognize the concern brought forward by CH&LA that the language required by the provisions can be perceived as the creation of a new standard of care for pool owners. CDPH claimed that they did not intend for the pool owner to feel obligated to interrogate pool users on their diarrheal status. In June 2016, CH&LA worked with CDPH to amend the language to provide clarity as to the pool owner s responsibilities. CH&LA s is currently reviewing the petition response to evaluate the next steps that we may take on this issue. The building code opens back up again in 2017 and at that time CH&LA plans on submitting a revised petition. 17 CALIFORNIA HOTEL CALIFORNIA & LODGING HOTEL ASSOCIATION & LODGING ASSOCIATION ADVOCACY ADVOCACY SUMMARY SUMMARY

13 LOCAL ISSUES SHORT TERM RENTAL UPDATE S hort-term rental laws and ordinances are being considered in some form by over 30 cities and counties in California. CH&LA is heavily involved in helping craft short-term rental ordinances across the state. Please see a brief overview of a few of the current local short-term rental laws and proposals below. on how often short-term rentals were allowed to 180 days annually, from the proposed 90 days in the original draft. Additionally, the Planning Commission also voted to allow people to rent out other kinds of property for short stays such as a second home for a maximum of 15 days a year. In April 2016, the Los Angeles Department of City Planning released the proposed Home-Sharing Ordinance (HSO), which addresses the issue of short-term rentals in the City of Los Angeles. In July 2016, the City of Los Angeles and Airbnb announced that they had reached a deal to allow Airbnb to start collecting and remitting lodging taxes from rental hosts. The deal, which was worked out with city budget and tax officials, went into effect in August The home-sharing ordinance is expected to be heard by the city council after there is a hearing from the City of Los Angeles Planning and Land Use Management Committee. LOS ANGELES - In June 2016, the City of Los Angeles Planning Commission voted to back the proposed homesharing ordinance. During the meeting, the commission opted to increase the proposed cap In June 2016, the San Francisco Board of Supervisors passed a final version of an amended short-term rental ordinance requiring short-term rental platforms to verify that their San Francisco hosts have registered with the city and the legislation established penalties for the companies up to $1,000-per-day fines and misdemeanor charges if they fail to comply. SAN FRANCISCO - In response to this, two short-term rental companies filed a lawsuit against the City of San Francisco seeking an injunction to prevent San Francisco s recently passed short-term rental provisions from taking place. The short-term rental companies are suing over claims that the city s rental restrictions violate protections for internet companies and its free-speech rights. In October 2016, a federal judge appeared skeptical of the short-term rental company s arguments. Whichever way the judge rules, the case is likely to be appealed to a higher court. The new amended law, which 18 C AL IFO R N I A HOTE L & LO DGING ASSOCIATION ADVOCACY SU MMARY

14 was scheduled to go into effect in July 2016, has now been postponed until the lawsuit is settled. The San Francisco Board of Supervisors are considering a proposal to further amend the law in hopes of addressing the legal criticisms outlined in the lawsuit. A new proposed amendment proposes limiting vacation rentals in private homes to 60 days a year. SANTA MONICA - In September 2016, two shortterm rental companies filed a lawsuit against the City of Santa Monica, arguing that the city violated federal laws protecting privacy and online speech. In 2015, the Santa Monica City Council passed an ordinance that explicitly banned vacation rentals rentals of 30 days or less where the primary occupant of the home or apartment is not present while legalizing and taxing home-sharing (renting a couch, spare room or backyard cottage). Home-sharers must obtain a city business license and pay Santa Monica s 14% transient occupancy tax. ANAHEIM - In June 2016, the Anaheim City Council voted to ban the operation of shortterm rentals in the city and notified current short-term rental hosts that they will have 18 months to stop operating. Any short-term rental owner who is caught operating an un-permitted short-term rental would have their home s power and water turned off by the city. In June 2016, two short-term rental companies filed a lawsuit against the City of Anaheim, claiming that the city s recently passed shortterm rental ordinance is violating the Communications Decency Act and the First Amendment. In August 2016, these short-term rental companies dropped their lawsuits against the City of Anaheim after they were told by a city official that their hosting platforms wouldn t be subject to enforcement of the rule. Individual short-term rental owners have since filed suit with the city claiming the ban is unlawful. TOURISM MARKETING DISTRICTS Tourism Marketing Districts (TMD) around the state have contributed to a robust travel industry and have generated hundreds of millions of dollars for the California economy. Hotels, as the primary funder of TMD s in cities around the state rely on these TMD s to promote travel to these cities. There are currently 96 TMDs in California. Each year, these districts spend over $200 million in assessment funds for tourism promotion. Studies have shown that each $1 spent by assessed lodging businesses in a TMD produces a $20 return on investment for hotels. The formation of a TMD begins when a written petition, signed by the business owners who will pay more than fifty percent (50%) of the total district assessment, is submitted to a city council, which can vote to form the district. Currently, TMD s are under threat from litigation, such as against the San Diego Tourism and Marketing District, claiming that TMD assessments against hotel guests are a special tax and must be approved by two-thirds of the voters. The lawsuit alleged that the current statutory process for TMD formation violates the two-thirds voter approval required by Proposition 26, The Right to Vote on Taxes Act. Should the courts side with plaintiff, California TMDs could be eliminated. In 2014, CH&LA supported a CalTravel backed Assembly Bill 843 (Ting D), which sought to make it possible for TMD s to comply with the terms of Proposition 26. Even with the passage of this bill, TMD s are still in a precarious situation as there is still pending litigation that is yet to rule on the legality. The most definitive way to protect TMD s is to enact a new constitutional amendment through the state legislature or qualify a ballot initiative for the November 2018 election. CH&LA, working with CalTravel, TMD s, cities and hospitality leaders will work together in the coming year to find a solution to this issue. 19 CALIFORNIA HOTEL CALIFORNIA & LODGING HOTEL ASSOCIATION & LODGING ASSOCIATION ADVOCACY ADVOCACY SUMMARY SUMMARY

15 PAID SICK LEAVE On July 1, 2015, California s paid sick leave law became effective allowing up to 48 hours or six days of paid sick leave. In addition to the statewide paid sick leave law, seven municipalities within the state have passed paid sick leave ordinances that go beyond what the state law mandates. STATEWIDE: In September 2014, Governor Jerry Brown signed AB 1522, the Healthy Workplaces, Healthy Families Act of 2014 into law. Under this law, an employee who works in California for 30 or more days within a year from the beginning of employment is entitled to paid sick leave. Paid sick leave accrues at the rate of one hour per every 30 hours worked, paid at the employee s regular wage rate. Accrued paid sick leave shall carry over to the following year of employment and may be capped at 48 hours or 6 days. EMERYVILLE: On June 2, 2015, the Emeryville City Council adopted an ordinance requiring employers to provide paid sick leave to employees. The ordinance went into effect on July 2, Emeryville s ordinance requires paid sick leave for full-time, parttime and temporary employees and includes a maximum of 48 paid sick leave hours accruable for employees of small businesses and 72 hours for employees of large businesses. LONG BEACH: On November 6, 2012, City of Long Beach voters approved Measure N, which requires hotel employers to provide at least five days of paid sick leave to hotel workers. LOS ANGELES: On October 10, 2014, the Los Angeles City Council passed the Citywide Hotel Worker Minimum Wage Ordinance that requires hotels to provide full-time workers with 96 paid hours off per year for any purpose, and a proportional number of hours to part-time hotel workers. OAKLAND: In November 2014, Oakland voters approved Measure FF. Employees accrue one hour of paid sick leave for every 30 hours worked. Employees can collect up to 72 hours of paid sick leave if their employer employs 10 or more employees in any location. Employees can collect up to 48 hours of paid sick leave if their employer employs fewer than 10 employees. SAN DIEGO: On June 7, 2016, City of San Diego voters approved a paid sick leave ordinance, that became effective on July 11, On August 3, 2016, the San Diego City Council approved an implementing ordinance that will amend the current paid sick leave ordinance. The implementing ordinance will allow employers to cap an employee s total sick leave accrual to 80 hours. SAN FRANCISCO: The San Francisco Paid Sick Leave Ordinance became effective on February 5, All employers must provide paid sick leave to each employee (including temporary and part-time employees) who performs work in San Francisco. On June 7, 2016, San Francisco voters passed Proposition E, amending the City s Paid Sick Leave Ordinance (PSLO) to include protections for employees under the PSLO that largely parallel recent State law enactments pertaining to paid sick leave. The revised ordinance takes effect on January 1, SANTA MONICA: The Santa Monica paid sick leave ordinance, which takes effect January 1, 2017, requires paid sick leave for fulltime, part-time, and temporary employees. Accrual rate is one hour for every 30 hours worked. Accrual limits are as follows: Jan. 1, 2017: 32 hours for small businesses (25 or fewer employees); 40 hours for larger businesses (26 or more employees). Jan. 1, 2018: 40 hours for small businesses; 72 hours for larger businesses. 20 CALIFORNIA HOTEL & LODGING ASSOCIATION ADVOCACY SUMMARY 2016

16 LEGAL ISSUES U.S. DEPARTMENT OF LABOR - TIP POOLING In 2011, the United States Department of Labor (USDOL) put into effect a tip-pooling regulation in response to the 9th Circuit Appellate Court s 2010 ruling in Cumbie v. Woodie Woo, Inc. At issue in this case was whether Section 203(m) of the Fair Labor Standards Act (FLSA), which permits an employer to fulfill part of its hourly minimum wage obligation to a tipped employee by taking a credit for the employee s tips if certain criteria are met, also applies to employers who do not use a tip-credit. The Ninth Circuit ruled in favor of the employer and held that section 203(m) s restrictions on tip-pooling apply only to employers that use a tip-credit to satisfy their minimum wage obligations. After the 9th Circuit s ruling on this case, the USDOL issued a new regulation, stating that tips are the sole property of the tipped employee and cannot be used in a pool to share with back house staff. In response to the USDOL s new regulation, the Oregon Restaurant and Lodging Association filed a lawsuit to challenge it. On February 23, 2016, the 9th Circuit upheld the USDOL s rule in a 2-1 decision. This decision was a complete reversal from the 9th Circuit s ruling in the Cumbie v. Woodie Woo, Inc. case. Restaurant Association and other hospitality groups have filed an amici curiae brief with the Supreme Court. Hospitality businesses will have to re-configure how tips are dispersed unless the ruling from the 9th Circuit is heard and overturned by the United States Supreme Court. Hotels and restaurants using a tip pool will need to ensure that none of their back-of-the-house staff such as cooks, dishwashers or any other staff that may not fall within the FLSA s definition of customarily and regularly tipped employees partake in a tip-sharing pool. A coalition of hospitality employers asked for a full panel of 9th Circuit judges to review the decision in hopes of overturning it. On September 6, 2016, the full slate of 9th Circuit judges voted to refuse a rehearing. The National Federation of Independent Business, the National 21 CALIFORNIA HOTEL CALIFORNIA & LODGING HOTEL ASSOCIATION & LODGING ASSOCIATION ADVOCACY ADVOCACY SUMMARY SUMMARY

17 NATIONAL LABOR RELATIONS BOARD DECISION AWAITING HEARING IN COURT OF APPEALS On August 27, 2015, the National Labor Relations Board (NLRB) revised its test for determining joint-employer status. In a split decision, the NLRB ruled that Browning-Ferris Industries of California Inc. was a joint employer of workers provided by a staffing agency at a recycling plant. The NLRB found that BFI and Leadpoint Business Services were joint employers of temporary workers that BFI subcontracted from Leadpoint. On January 20, 2016, the Department of Labor s (DOL) Wage and Hour Division released a 16-page administrative interpretation on Joint Employment that appears to provide a broader interpretation of joint employment under the Fair Labor Standards Act (FLSA). This latest interpretation goes further than even the National Labor Relations Board s (NLRB) definition established in its Browning-Ferris decision (BFI). While the guidance does not have the force of law, it reveals how the DOL will make joint employment determinations under the FLSA, and what industries it is investigating for joint employer. The interpretation notes that joint employment can be found in the hospitality industries and the Wage and Hour Division actually used hotels as part of their infographic found here. POTENTIAL RAMIFICATIONS FOR HOTEL FRANCHISORS/FRANCHISEES Prior to this decision and interpretation, the traditional joint employer test focused on wages, governance, supervision decisions, and control. The test excluded limited and routine supervision and oversight because it was not considered essential or meaningful to the employment relationship. Under the new revised standard, a finding of joint employment is much broader, and only requires that a business exercise indirect control over workers. Under the new test, a company may not only be held liable for its own labor violations, but also for those of the other entity. The new standard is likely to expand wage and hour liability and cause operational headaches for franchisors. The terms and conditions of franchisors employment practices liability insurance (EPLI) may change as well, particularly if a corporate entity begins incurring losses due to the joint employment relationship. NEXT STEPS In January 2016, Browning-Ferris Industries of California filed an appeal with the U.S. Court of Appeals for the D.C. Circuit challenging the NLRB s decision in its case from August In June 2016, a coalition of business organizations, including AH&LA, filed an Amicus in support of the Browning-Ferris Industries (BFI) appeal to the U.S. D.C. Circuit Court. The Amicus brief illustrates the harmful effects this new joint employer standard will have on businesses of all kinds. Additionally, the NLRB is litigating a case against McDonald s, which it claims is a joint employer. The NLRB is alleging that McDonald s (the corporation) is liable for violations of the National Labor Relations Act (NLRA), even though the unlawful conduct happened at a franchise location. This case is currently awaiting trial. If Browning-Ferris and McDonald s are found to be joint employers, there is concern that franchisors could face liability for their franchisee s labor and employment violations, which could completely change the whole franchise structure that exists today. 22 CALIFORNIA HOTEL & LODGING ASSOCIATION ADVOCACY SUMMARY 2016

18 15 TH ANNUAL CALIFORNIA LODGING INDUSTRY LEGISLATIVE ACTION SUMMIT 2016 On March 2, 2016, CH&LA, AAHOA, and CABBI hosted their 15th Annual Legislative Action Summit (LAS) at the Sutter Club in Sacramento, CA. Participants attending represented hotels, resorts, universities, development companies, vendors, management, and hospitality groups. We are here today to ensure that the voice of our industry is heard and the elected officials understand the issues facing the lodging industry. Hotels represent a significant segment of the state s economy, last year, 6.8% of all jobs in the state were related to the industry and generated nearly $8 billion in tax revenue. Lynn S. Mohrfeld, CH&LA President & CEO. California State Senator Mike McGuire (D- Healdsburg), kicked off the Legislative Action Summit by talking about working with the industry to address the issue of short-term rentals. Michael Jacobson, Director of Industry Relations and Political Engagement with the U.S. Travel Association provided attendees with an update on U.S. Travel s priority issues and how they are affecting the lodging industry. Chip Rogers, President & CEO of the Asian American Hotel Owners Association provided an update of his association s activities. Ralph Heim and John Caldwell, with CH&LA s contract lobbying firm Public Policy Advocates provided members with a look back at the 2015 legislative session and discussed how our legislative issues faired and provided insight to the issues that were talked about in Lastly, Marty Wilson, Executive Vice President of the California Chamber of Commerce updated attendees on the upcoming 2016 elections and discussed the efforts that the business community is taking to elect a more business friendly legislature and touched upon the initiatives that could be of consequence to the business community. The LAS included the opportunity for attendees to understand how the legislative process works in Sacramento and learn what the critical legislative issues facing our industry are ISSUES SUMMARY CH&LA focused on two two major issues being considered in Sacramento that are important to the industry as well as to workers and local communities where they operate. SHORT-TERM RENTALS Hoteliers simply want a level playing field with short-term rental platforms. Short-term rentals are very much a commercial enterprise with as much as 40% of the revenue from platforms being derived by commercial businesses, which HOTELS REPRESENT A SIGNIFICANT SEGMENT OF THE STATE S ECONOMY. LAST YEAR, 6.8% OF ALL JOBS IN THE STATE WERE RELATED TO THE INDUSTRY AND GENERATED NEARLY $8 BILLION IN TAX REVENUE. LYNN S. MOHRFELD, CH&LA PRESIDENT & CEO are essentially running illegal and unregulated hotels. Additionally, short-term rental platforms have largely refused to cooperate with local municipalities, compounding the issues of regulation and enforcement. HUMAN TRAFFICKING Hotels play an important role in fighting human trafficking and have worked to increase awareness of this important issue. Through currently available resources, hotels are encouraged to establish procedures and policies to determine how to best address these terrible crimes. CH&LA is proactively working to educate legislators and ensure that any legislation on the issue of human trafficking is effective, while not being overtly onerous to the hotel and lodging industry. 23 CALIFORNIA HOTEL CALIFORNIA & LODGING HOTEL ASSOCIATION & LODGING ASSOCIATION ADVOCACY ADVOCACY SUMMARY SUMMARY

19 CALIFORNIA STATE INITIATIVES AND REFERENDUMS In California, a ballot proposition is a proposed law that is submitted to the electorate for approval in a direct vote. It may take the form of a constitutional amendment or an ordinary statute. A ballot proposition may be proposed by the State Legislature or by a petition signed by registered voters in California to qualify for the ballot. During the June primary election, only one ballot measure, Proposition 50, was voted on. This measure passed with 75% of the vote and it will allow the legislature to suspend one of its members by a two-thirds vote and require that member to forfeit their salary and benefits while suspended. The November general election ballot will feature 17 statewide initiatives and referendums. Below is a list of all the ballot measures and where they will appear on the November general election ballot: PROPOSITION 51: Proposes $9 billion in bonds be put toward improving schools (grades K-12) and community colleges. PROPOSITION 52: Requires voter approval to change hospital fee programs that divert Medi- Cal (the state s version of Medicaid) funds to the general state fund. PROPOSITION 53: Requires voter approval for the state to issue public infrastructure bonds worth more than $2 billion. PROPOSITION 54: Proposes that the Legislature cannot pass any bill until it has been printed and up on the internet for at least 72 hours before being voted on. PROPOSITION 55: Proposes an increase on personal income taxes for incomes over $250,000. Proposition 56: Increases the tax on tobacco to $2 per pack. PROPOSITION 57: Suggests increasing parole and good behavior opportunities for felons convicted of nonviolent crimes. PROPOSITION 58: Allows voters to approve a measure allowing non-english languages to be used in public schools. PROPOSITION 59: Allows elected officials to use their power to overturn the Supreme Court s Citizens United decision, potentially through proposing an amendment to the US Constitution. PROPOSITION 60: Requires the use of condoms in pornographic films. PROPOSITION 61: Regulates the price of prescription drugs. PROPOSITION 62: Repeals the death penalty. PROPOSITION 63: Seeks to prohibit possession of large-capacity ammunition magazines. PROPOSITION 64: Legalizes marijuana. PROPOSITION 65: Allocates revenue generated from the sale of disposable plastic bags to the Wildlife Conservation Fund. PROPOSITION 66: Streamlines the legal procedure around the death penalty. PROPOSITION 67: Bans grocery stores, pharmacies, convenience stores, and others from using disposable plastic bags. 24 CALIFORNIA HOTEL & LODGING ASSOCIATION ADVOCACY SUMMARY 2016

20 PRIMARY ELECTION REVIEW The California primary election was held on June 7, Under electoral rules, the top two vote getters in the primary advanced to the November general election, regardless of party affiliation. CH&LA closely followed races involving U.S. Senate, State Assembly and State Senate. For U.S. Senate, Attorney General Kamala Harris (D) and Congressmember Loretta Sanchez (D), both advanced to the general election in November. Harris received 40% of the vote, while Sanchez received 18%. This marked the first time in recent state history that two members of the same party will go against each other in the general election for a U.S. Senate seat. In 2018, all statewide offices will be up for election and it is very possible that in a race such as governor, it could see two members of the same party advance to the general election. In the State Assembly and Senate, the primary election set the table for a slate of races in the November general election that could have vast implications on the makeup of the legislature. Democrats currently control 52 of 80 Assembly seats and 26 of 40 Senate seats. In the general election, if the Democrats are able to add two seats in the Assembly and one seat in the Senate, it would give them a two-thirds supermajority to vote on issues like taxes and spending without Republican support. Additionally, the primary election advanced a record number of same-party runoffs, including 13 Democrat vs. Democrat races. These races typically feature two factions of the Democratic Party, the progressive liberal wing of the party that has the backing of labor unions, and the moderate pro-business wing of the party that is backed by business groups. In the past four years, business groups have had success in electing more moderate business friendly Democrats in races that pitted them against a more liberal opponent. Please note that at the time of print, results have not been finalized for the general election. Please check for a memo detailing results from the 2016 November general election. 25 CALIFORNIA HOTEL CALIFORNIA & LODGING HOTEL ASSOCIATION & LODGING ASSOCIATION ADVOCACY ADVOCACY SUMMARY SUMMARY

21 CALIFORNIA HOTEL & LODGING ASSOCIATION S POLITICAL ACTION COMMITTEE (CHALPAC) CH&LA s political action committee, CHAL- PAC, was established for the sole purpose of receiving contributions from individuals and businesses interested in the well-being of California s lodging industry. A contribution to CHALPAC enables us to present a strong, unified voice and to help elect candidates that are both knowledgeable about our industry and supportive of our interests. Through the first three quarters of 2016, CHAL- PAC distributed $89,600 to candidates, elected officials, independent expenditure committees and participated in numerous events. CHALPAC s available cash on hand stayed steady this year with over $120,000 in member contributions available for future disbursement. SELECT HIGHLIGHTS OF 2016 CHALPAC ACTIVITY: CH&LA renewed its membership to serve on the executive committee of JobsPAC, the California Chamber of Commerce s independent expenditure committee to help elect business-friendly candidates. This membership allow CH&LA to know which races the business community is prioritizing. CH&LA staff attended Public Policy Advocates private client-only dinners for Democrat Senators Kevin de Leon, Ricardo Lara, Jim Beall and Assembly Speaker Anthony Rendon. CH&LA s President & CEO attended events for Los Angeles City Council President Herb Wesson and Los Angeles City Councilmembers Mike Bonin and Curren Price. CH&LA s contract lobbying firm Public Policy Advocates attended an event for Democrat Assembly candidate Cecilia Aguiar-Curry, Todd Gloria, Raul Bocanegra and Blanca Rubio. CH&LA contributed $20k to the California Republican Party to help in their efforts to protect vulnerable Republican seats. Contributions to CHALPAC provide the most direct means for you to impact what happens in the lodging industry, and to your businesses, in California. There are now multiple ways to contribute to CHALPAC. To contribute via check, please contact Danny Friedman, CH&LA s Legislative and Communications Coordinator at (916) or via at danny@calodging.com. To contribute to CHALPAC online, go to chalpac/. 26 CALIFORNIA HOTEL & LODGING ASSOCIATION ADVOCACY SUMMARY 2016

22 2016 GOVERNMENT & LEGAL RELATIONS COMMITTEE MEMBERS Farah Bhayani, G6 Hospitality René Boskoff, Monterey Marriott Hotel Mike Brower, G6 Hospitality Dave Costain, Team San Jose James Eiler, Esq., Murchison & Cumming LLP Mike Getto, CHA, The Hills Hotel Kevin Gleason, Starwood Hotels & Resorts, West Coast Dana Kravetz, Michelman & Robinson Elvin Lai, Ocean Park Inn Robert Mayer, Jr., The Mayer Corporation Anand Patel, Royala Motel Tarun Patel, CHA, Pacific Hospitality Company Pragna Patel-Mueller, Samata Management, Inc. Tom Patton, CHA, Ramada Santa Barbara Beran Samba, G6 Hospitality David Schweitzer, International Hotels group (IHG) Pat Seminario, Marriott International John Spear, Hotel Drisco Wes Tyler, CHA, Chancellor Hotel On Union Square Carrie Nocella, The Disneyland Resort PUBLIC POLICY ADVOCATES, LLC CH&LA works with Public Policy Advocates, LLC (PPA), a contract lobbying firm, to implement legislative efforts for the association in coordination with our in-house staff. For over 20 years, PPA has been responsible for identifying and tracking legislation important to the industry through their ongoing relationship with CH&LA. CH&LA STAFF Lynn Mohrfeld, CAE, President & CEO Jennifer Flohr, CAE, CMP, Senior Vice President Jim Abrams, Member Legal Advisor Susan Ragatz, Education Director Danny Friedman, Legislative & Communications Coordinator Michelle Donohue, CAE, Finance & Operations Manager Sandra Oberle, Senior Membership Manager Jenn Wheaton, CMP, Program & Events Manager Jessica Counts, Events Coordinator Sue Norton, Member Services Coordinator Monica Slingerman, Member Services Assistant 27 CALIFORNIA HOTEL CALIFORNIA & LODGING HOTEL ASSOCIATION & LODGING ASSOCIATION ADVOCACY ADVOCACY SUMMARY SUMMARY

23 AH&LA LEGISLATIVE UPDATE 28 Serving the hospitality industry for more than a century, the American Hotel & Lodging Association (AH&LA) represents all segments of the 1.8 million-employee U.S. lodging industry, including hotel owners, REITs, brands, franchisees, management companies, independent properties, state hotel associations, and industry suppliers. Headquartered in Washington, D.C., AH&LA provides focused advocacy, communications support, and educational resources for an industry generating $155.5 billion in annual sales from 4.9 million guestrooms. This brief overview summarizes the major national issues on which the American Hotel & lodging Association is advocating, and provides both a status on each issue and the steps the governmental affairs team is taking to continue speaking as the voice of the industry. ONLINE BOOKING SCAMS Hotel consumers and businesses have increasingly been misled by rogue third-party websites that trick consumers into believing they are booking directly with hotels. In addition to harming hoteliers reputations and creating reservation problems for guests, these scams erode consumer confidence in booking hotel rooms online. After an extensive public awareness campaign, AH&LA worked closely with Members of Congress, resulting in bipartisan legislation requiring third-party hotel booking websites to disclose, clearly and conspicuously, that they are not affiliated with the hotel for which the traveler is ultimately making the reservation. This legislation will help consumers tell the difference between the actual hotel website and fraudulent one s masquerading as name brand sites. CLOSING TAX LOOPHOLES AND PROMOTING DISCLOSURE Online travel agencies (OTAs) typically remit occupancy taxes based only on the portion of the sales price that the OTAs pay back to hotels, and not on the full amount paid by hotel guests when purchasing the room. Hotels, however, apply the occupancy tax rate to the full price paid by the consumer. As a result, dozens of cities and states have sued the OTAs to recover the lost revenue, but unfortunately, the courts have not always ruled in the local jurisdiction s favor. AH&LA strongly supports policies that close loopholes giving the OTAs a free pass on remitting the full amount of tax paid by the consumer and in the process, create a level playing field between hotel companies and OTAs. REINING IN ILLEGAL HOTELS Across the country, there is a growing concern that some short-term rental companies are enabling the proliferation of illegal hotels, where hosts rent multiple units for extended periods of time without reasonable oversight or regulation. These unregulated commercial businesses often compromise consumer safety and security, undermine job growth, increase housing costs, endanger the character and security of residential neighborhoods and avoid tax obligations. AH&LA believes all lodging platforms should operate under a level and legal playing field to ensure the safety and security of guests and communities. Further, AH&LA will work with the appropriate levels of government to help stop individuals or entities from operating multiple units full-time, essentially illegal hotels, without adhering to any safety or security standards, or tax obligations, as well as ensuring law enforcement has the tools necessary to enforce existing laws. PROMOTING TRAVEL & TOURISM Critical to generating and maintaining growth hotel industry has been, and will be, government and industry focus on increasing the flow of foreign visitors to the U.S. and recognizing the value of government, business, and leisure travel here at home. Working with the broader travel industry, AH&LA will continue to support policy initiatives that promote tourism, including issues like the visa waiver program to CALIFORNIA HOTEL & LODGING ASSOCIATION ADVOCACY SUMMARY 2016

24 strengthen business and leisure travel and the H-2B program to provide valuable support for businesses looking to supplement their workforce with temporary seasonal employees if no American workers are available. PER DIEMS AND GOVERNMENT TRAVEL Federal per diem rates are established each year by the General Services Administration (GSA) based on actual market data compiled and provided by Smith Travel Research (STR). AH&LA continues to work with the GSA to underscore the importance of maintaining per diems at sustainable rates. Additionally, AH&LA is engaged with Congress on legislation and policies that impact per diems. AH&LA supports per diem policies that reflect market realities and allow hotels to be fairly compensated for the services they provide, while recognizing the need for the government to get the best value it can for taxpayers. Further, AH&LA will work to change legislative or regulatory actions related to per diems that hurt our customers, including DOD s long-term per diem policy. PROTECTING THE FRANCHISE MODEL For decades, the hotel industry has thrived by fostering opportunities for small business owners around the country to open their own hotels thanks to the franchise model. In August 2015, the National Labor Relations Board issued its decision in the Browning-Ferris Industries of California (BFI) case and created a new joint employer standard under federal labor law. AH&LA and a broad-based business coalition continue working to reinstate the long-standing joint employer definition. Changes to this definition could severely disrupt the pathway to success and hurt franchisors and franchisees alike. The new standard makes employers potentially liable for actions and activities of employees that they do not employ and it could jeopardize a number of business to business contractual relationships. LOCAL EXTREME WAGE INITIATIVES Across the country, local and state governments have proposed wage increases that target only our industry above others. Certain localities have passed wage ordinances singling out hotels that also include provisions giving labor an unfair advantage, which is discriminatory and disrupts the well-established balance between management and labor laid out by federal labor law. AH&LA views local wage initiatives that target only hotels as a direct attack on the hotel industry. Further, wage increases that are too high and too fast hurt our businesses and, more importantly, the jobs of the people these wages are purported to help. 29 CALIFORNIA HOTEL CALIFORNIA & LODGING HOTEL ASSOCIATION & LODGING ASSOCIATION ADVOCACY ADVOCACY SUMMARY SUMMARY

25 2016 AH&LA LEGISLATIVE ACTION SUMMIT In May 2016, AH&LA and AAHOA held their Legislative Action Summit (LAS) in Washington D.C. More than 500 hoteliers from across the country came together to raise awareness with Congressional leaders about the strength of the lodging industry and its meaningful impact on communities around the country. LAS participants heard from key leaders in Washington who offered their insights on the political climate and congressional landscape, including remarks by U.S. Senator Cory Gardner (R-CO), U.S. Senator Richard Burr (R- NC), U.S. House of Representatives Minority Whip Steny Hoyer (D-MD), and political analysist Charlie Cook, editor and publisher of the Cook Political Report. Hoteliers from California went on appointments with key members of the House and Senate. Hoteliers advocated for policies that encouraged business growth and entrepreneurial opportunities while urging more transparency on the rise of commercial activity fostered by short-term rental platforms and protecting consumers from online hotel booking scams. CH&LA President & CEO Lynn Mohrfeld and California hoteliers meeting with U.S. Senator Diane Feinstein (D-CA) 30 CALIFORNIA HOTEL & LODGING ASSOCIATION ADVOCACY SUMMARY 2016

26 AH&LA s POLITICAL ACTION COMMITTEE: HOTELPAC HotePAC is the American Hotel & Lodging Association s (AH&LA) Political Action Committee (PAC). It is a voluntary, bi-partisan PAC formed to help elect federal candidates who support the lodging industry. In particular, HotelPAC serves to strengthen the lodging industry s political voice, educate and mobilize members to become more politically active, and support candidates who promote legislation and policies that create a fair business environment, allowing the lodging industry to create jobs and grow the economy. In 2016, Hotel- PAC contributed funds to several California politicians. In accordance to their bipartisan charter, HotelPAC contributed to both Democrat and Republican parties. HOTELPAC CONTRIBUTIONS TO CALIFORNIA CANDIDATES CITIZENS FOR MAXINE WATERS COMMITTEE - $5, 000 KEVIN MCCARTHY FOR CONGRESS - $2,500 KAMALA HARRIS FOR SENATE - $2,500 MIMI WALTERS FOR CONGRESS - $2,500 TONY CARDENAS FOR CONGRESS - $2,500 ANNA ESHOO FOR CONGRESS - $1,000 Source: Federal Elections Commission 31 CALIFORNIA HOTEL CALIFORNIA & LODGING HOTEL ASSOCIATION & LODGING ASSOCIATION ADVOCACY ADVOCACY SUMMARY SUMMARY

27 GLOSSARY OF LEGISLATIVE TERMS ACT - A bill passed by the Legislature meeting, occurring at the close of each legislative day upon the completion of business, with the hour and day of the next meeting being set prior to adjournment. ments are proposed by the bill s author and may be adopted on the floor prior to the Committee hearing on the bill with the Committee Chair s approval. Hostile amendments are proposed by another member and opposed by the author in a Committee hearing or during the Assembly or Senate floor consideration. ADJOURNMENT SINE DIE - Final APPROPRIATION - The amount of and enacted into law. ADJOURNMENT - Termination of a adjournment of the Legislature: regular sessions of the Legislature; and any special session not previously adjourned, are adjourned sine die at midnight on November 30th of each even-numbered year. AMENDMENT - Proposal to change 32 the text of a bill after it has been introduced. Amendments must be submitted to the Legislative Counsel for drafting or approval. Author s Amend- money made available for expenditure by a specific entity for a specific purpose, from the General Fund or other designated State fund or account. APPROVED BY THE GOVERNOR - Sig- nature of the Governor on a bill passed by the Legislature. ASSEMBLY - The house of the California Legislature consisting of 80 members, elected from districts deter- C AL IFO R N I A HOTE L & LO DGING ASSOCIATION ADVOCACY SU MMARY mined on the basis of population. Two Assembly Districts are situated within each Senate District. AUTHOR - Member of the Legislature who introduces a legislative measure. BILL - A proposed law, introduced during a session for consideration by the Legislature. And identified numerically in order of presentation; also, a reference that may include a joint and concurrent resolutions and constitutional amendments. BILL ANALYSIS - A document prepared by Committee and/or floor analysis staff prior to hearing the bill in that Committee or on the floor of the Assembly or Senate. It explains how a bill would change current law and sometimes identifies major interest groups in support or opposition.

28 BUDGET YEAR - The fiscal year addressed by a proposed budget beginning July 1 and ending June 30th. CHAMBER - The Assembly or Senate location where floor sessions are held. CHAPTER - When a bill has passed by the Legislature and enacted into law, the Secretary of State assigns the bill a chapter number such as Chapter 123, Statutes of 2011, which is subsequently used to refer to the measure in place of the bill number. COAUTHOR - A member of either house whose name is added to a bill as a coauthor by amending the bill, usually indicating support for the proposal. CODES - Bound volumes of law organized by subject matter. The code sections to be added, amended, or repealed by a bill are identified in the title of the bill. COMPANION BILL - An identical bill introduced in the other house. The procedure is far more common in Congress than in the California Legislature. CONCURRENCE - The approval by the house of origin of a bill as amended in the other house. If the author is unwilling to move the bill as amended by the other house, the author requests nonconcurrence in the bill and asks for the formation of a conference committee. CONSENT CALENDAR - File containing bills that received no dissenting votes in Committee. CONSTITUTIONAL AMENDMENT - A resolution proposing a change to the California Constitution. It may be presented by the Legislature or by initiative, and is adopted upon voter approval at a statewide election. CONVENE - To assemble a meeting. Each house of the Legislature usually convenes twice a week during session. DAILY FILE - Publication produced by each house for each day the house is in session. The publication provides information about the bills to be considered at upcoming Committee hearings and bills that are eligible for consideration during the next scheduled floor session. Pursuant to Joint Rule 62(a), any bill to be heard in the Committee must be noticed in the Daily File for four days, including weekend days. The Daily File also contains useful information about Committee assignments and the legislative calendar. DISTRICT - The area of the state represented by a legislator. Each district is determined by population and is designated by a number. There are 40 Senate Districts and 80 Assembly Districts. DO PASS - Motion that, if adopted by Committee, moves a bill to the floor or to the next Committee. DO PASS AS AMENDED - Committee motion that a bill be passed with the recommendation that the floor adopt specified amendments. DOUBLE REFER - Legislation recommended for referral to two policy committees for hearing rather than one. Both committees must approve the measure to keep it moving in the process. Typically used for sensitive subject areas that transcends the jurisdiction of one policy committee. Bill referrals are made by the Assembly and Senate Committees on Rules for their respective houses. DROPPED - Author has decided not to pursue the passage of the bill. ENACTING CLAUSE - The following phrase at the beginning of the text of each bill: The people of the State of California do enact as follows. ENROLLMENT - Whenever a bill passes both houses of the Legislature, it is ordered enrolled. In enrollment, the bill is again proofread for accuracy and then delivered to the Governor. The enrolled bill contains the complete text of the bill with the dates of passage certified by the Secretary of the Senate and Chief Clerk of the Assembly. A resolution, when enrolled, is filed directly with the Secretary of State. EXTRAORDINARY SESSION - A special legislative session called by the Governor by proclamation to address only those issues specified in the proclamation; also referred to as a special session. Measures introduced in these sessions are numbered chronologically with a lower case x after the number. (For example AB 28x) FINAL HISTORY - The publication printed at the end of every session showing the final disposition of all measures. FIRST READING - Each bill introduced must be read three times before final passage. The first reading of a bill occurs when it is introduced. FISCAL COMMITTEE - Generally, a measure that contains an appropriation of funds or requires a state agency to incur additional expense. The Legislative Counsel s designation of whether a bill is a fiscal bill appears at the end of the Digest found in the printed bill. Fiscal bills must be heard by the Assembly and Senate Appropriations Committees in addition to the policy Committee in each house. If the fiscal Committee approves the bill, it then moves to the floor. FISCAL DEADLINE - The date on the legislative calendar by which all bills with fiscal effect must have been taken up in a policy Committee and referred to a fiscal Committee. Any fiscal bill missing the deadline is considered dead unless it receives a rule waiver allowing further consideration. FISCAL YEAR - The 12 month period, on which the state budget is planned, beginning July 1 and ending June 30 of the following year. The federal fiscal year begins October 1 and ends September 30 of the following year. FLOOR - 1. The Assembly or Senate Chamber. 2. The term used to describe the location of a bill or the type of session, connoting action to be taken by the house. Matters may be said to be on the floor. FLOOR MANAGER - The legislator responsible for taking up a measure on the floor. This is always the bill s author in the house of origin, and a Member of the other house designated by the author when the bill is considered by the other house. The name of the floor manager in the other house appears in parentheses after the author s name in the second or third reading section of the Daily File. GRANDFATHERING - When a preexisting situation is exempted from the requirements of a new law. HEARING - A Committee convened for the purpose of gathering information on a subject or considering specific legislative matters. HELD IN COMMITTEE - Status of a bill that fails to receive sufficient affirmative votes to pass out of Committee. HOUSE - In California, refers to either the Senate or the Assembly. INACTIVE FILE - The portion of the Daily file containing legislation that is ready for floor consideration, but, for a variety of reasons is dead or dormant. An author may move a bill to the inactive file, and move it off the inactive file at a later date. During the final weeks of the legislative session, measures may be moved there by the 33 CALIFORNIA HOTEL CALIFORNIA & LODGING HOTEL ASSOCIATION & LODGING ASSOCIATION ADVOCACY ADVOCACY SUMMARY SUMMARY

29 leadership as a method of encouraging authors to take up their bills promptly. INITIATIVE - A legislative proposal to change statutory law or the California Constitution, submitted by members of the public rather than by the legislature, and requiring voter approval at a statewide election. To qualify for a statewide ballot, a statutory initiative must receive signatures equal to 5 percent, and a constitutional amendment initiative must receive signatures equal to 8 percent, of the votes for all candidates for Governor at the last gubernatorial election. INTERIM - The period of time between the end of a legislative year and the beginning of the next legislative year. The legislative year ends on August 31 in even-numbered years and in midseptember in odd-numbered years. INTERIM STUDY - The assignment of registration with the Secretary of State if an individual s lobbying activity exceeds 25 contacts with decision makers in a two month period. LEGISLATIVE ANALYST - The Leg- islative Analyst, who is a legislative appointee, and his or her staff provide thorough, nonpartisan analysis of the budget submitted by the Governor; also analyze the fiscal impact of other legislation and prepare analyses of ballot measures published in the state ballot pamphlet. MAJORITY FLOOR LEADER - As- sembly Member who is an issues and political strategist for the Assembly s majority party, second in command to the Assembly Speaker. Elected by the members of the Assembly s majority party. MAJORITY LEADER - Senator who is the subject matter of a bill to the appropriate Committee for study during the period the Legislature is not in session. an issues and political strategist for the Senate s majority party, second in command to the Senate President Pro Tempore. Elected by the Senate s majority party. JOINT COMMITTEE - A Committee MAJORITY VOTE - A vote of more composed of equal numbers of Assembly Members and Senators LEGISLATIVE ADVOCATE - An individual (more commonly known as a lobbyist) engaged to present to legislators the views of a group or organization. The law requires formal than half of the legislative body considering a measure. Constituted by 41 votes in the Assembly and by 21 votes in the Senate. MAY REVISION - Occurring in early May, the updated estimate of revenues and expenditures that replaces the 34 C AL IFO R N I A HOTE L & LO DGING ASSOCIATION ADVOCACY SU MMARY estimates contained in the Governor s budget submitted in early January. MEASURE - A bill, resolution, or constitutional amendment that is considered by the Legislature. MINORITY FLOOR LEADER - Highest ranking minority party post in each house; chief policy and political strategist for minority party. MINORITY WHIP - One of the mem- bers of the minority party s leadership team in the Assembly or Senate; responsible for monitoring legislation and securing votes for legislation on the floor. ON CALL - A roll call vote in a Com- mittee or on the Assembly or Senate floor that has occurred but has not yet been concluded or formally announced. Members may continue to vote or change their votes as long as a measure remains on call. Calls are usually placed at the request of a bill s author in an effort to gain votes. Calls can be lifted by request at any time during the committee hearing or floor session, but cannot be carried over into the next legislative day. ON FILE - A bill on the second or third reading file of the Assembly or Senate Daily File. OVERRIDE - Enactment of a bill despite the Governor s veto, by a vote

30 of two thirds of the members of each house (27 votes in the Senate and 54 in the Assembly). PRESIDENT PRO TEMPORE OF THE SENATE - (Literally: for the time) Highest ranking member of the Senate; also chairs the Senate Committee on Rules. Elected by the Senators at the beginning of each two-year session. READING - Presentation of a bill before the house by reading its number, author and title. A bill is either on first, second or third reading until it is passed by both houses. REAPPORTIONMENT - Revising the allocation of congressional seats based on census results. Also refers to redistricting (the revision of legislative district boundaries). To reflect census results. Occurs every ten years following a census year. RECESS - 1. An official pause in a committee hearing or floor session that halts the proceedings for a period of time but does not have the finality of an adjournment. 2. A break of more than four days in the regulator session such as the Summer Recess. RECONSIDERATION - A motion giving the opportunity to take another vote on a matter previously decided in a Committee hearing or floor session. REFERENDUM - A method, used by members of the public, by which a measure it adopted by the Legislature may be submitted to the electorate for a vote. A referendum petition must be signed by voters equal to the number of 5 percent of all of the votes for all candidates for Governor at the last gubernatorial election. SENATE - The house of the California Legislature consisting of 40 members elected from districts apportioned on the basis of population, one half of whom are elected or reelected every two years for a four year term. SESSION - The period during which the Legislature meets. The Legislature may meet in either regular or special (extraordinary) session. SPEAKER - The presiding officer of the Assembly, elected by the membership of the Assembly at the beginning of a two-year session. This is the highest ranking member of the Assembly SPEAKER PRO TEMPORE - Member, appointed to this office by the Speaker, who presides over a floor session of the Assembly at the request of the Speaker. SPONSOR - The member of the Leg- islature, private individual, or group who develops a measure and advocates for its passage. SPOT BILL - A bill that proposes no substantive amendments to a code section in a particular subject; introduced to assure that a bill will be available, subsequent to the deadline to introduce bills, for revision by amendments that are germane to the subject of the bill. STATE MANDATE - State legislative enactment or administrative regulation that mandates a new program or higher level of service on the part of a local government, the costs of which are required by the California Constitution to be reimbursed to that local government. STATUES - Enacted bills, which are chaptered by the Secretary of State in the order in which they become law. SUPERMAJORITY - A superma- jority or a qualified majority is a requirement for a proposal to gain a specified greater level of support than a 50% simple majority. In some jurisdictions, for example, parliamentary procedure requires that any action that may alter the rights of a minority has a supermajority requirement (such as a two-thirds majority). Changes to constitutions, especially those with entrenched clauses, commonly require supermajority support in a legislature. A supermajority is absolute if the required percentage or fraction is based on the entire membership rather than on those present and voting. THIRD HOUSE - Collective reference to lobbyists. (See legislative advocates) THIRD READING - Each bill intro- duced must be read three times before final passage. Third reading occurs when the measure is about to be taken up on the floor of either house for final passage. TWO THIRDS VOTE - In the Assembly, 54; in the Senate, 27. Required, for example, for urgency measures and most measures making appropriations from the General Fund. TWO YEAR BILL - A bill that is dead, stalled, held or simply not moved by the author in the first year of a two-year session and cannot be heard again until the second year of the session. Generally a bill becomes a two-year bill when it fails to meet a legislative deadline, such as a fiscal committee or policy committee deadline. A bill cannot become a two-year bill in the second year of the session, since there is no additional year to which the bill would be carried over. URGENCY MEASURE - A bill affect- ing the public peace, health or safety, containing an urgency clause, and requiring a two thirds vote for passage. An urgency bill becomes effective immediately upon enactment. URGENCY CLAUSE - Section of a bill stating that the bill will take effect immediately upon enactment. A vote on the urgency clause, requiring two thirds vote in each house must precede a vote on the bill. OC AT ON U M2 M013 A RY 2016 C A L I F O R N I A H O T E LC AL & ILFORNI O D G IANHGOTAESLS&OLODGI C I AT ING O NASS AD V IO CIA C YADVOC S U MACY M A RS Y 35 35