Bill Text: CA SB640 | 2023-2024 | Regular Session | Enrolled

California Senate Bill 640

Bill Title: California State University: food service contracts and hotel development projects.

Spectrum: Partisan Bill (Democrat 3-0)

Status: (Vetoed) 2024-01-25 - Veto sustained. [SB640 Detail]

Download: California-2023-SB640-Enrolled.html

Enrolled September 13, 2023

Passed IN Senate May 31, 2023

Passed IN Assembly September 11, 2023

Amended IN Senate May 18, 2023

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Senate Bill

No. 640

Introduced by Senator Portantino
(Principal coauthor: Senator Durazo)
(Coauthor: Assembly Member Santiago)

February 16, 2023

An act to add Sections 89036.5 and 89912.5 to the Education Code, relating to the California State University.

LEGISLATIVE COUNSEL'S DIGEST

SB 640, Portantino. California State University: food service contracts and hotel development projects.

Existing law authorizes the Trustees of the California State University to enter into agreements for the performance of acts or for the furnishing of services, facilities, materials, goods, supplies, or equipment under certain conditions. Existing law requires the trustees to prescribe policies and procedures for the acquisition of services, facilities, materials, goods, supplies, or equipment, subject to specified criteria.

This bill would require the trustees, for each food service contract and participation in a hotel development project, to require the person contracting with the trustees and each food service employer or hotel employer, to be party to a labor peace agreement under that contract or participation with any labor organization that represents or seeks to represent the employees performing work under the food service contract or hotel employees at the hotel development project, as specified. The bill would extend that requirement to any food service contract or hotel development project in which the California State University or the State of California has a proprietary interest and that is performed pursuant to a contract entered into or awarded by a California State University auxiliary organization.

Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO

The people of the State of California do enact as follows:

SECTION 1.

The Legislature finds and declares all of the following:

(a) In the course of managing real property it owns or in otherwise carrying out its functions, the Trustees of the California State University may participate in real property developments, such as hotel developments, as a property owner, lessor, proprietor, lender, or guarantor, facing similar risks and liabilities as other business entities participating in those ventures. As a result, the trustees have an ongoing proprietary interest in these developments and a direct interest in their financial performance. The trustees also contract for the provision of food services at campuses, including services provided through auxiliary organizations, and have a proprietary interest in ensuring the efficient procurement and delivery of those services and any revenues derived from such contracts.

(b) The trustees must make prudent management decisions, similar to any private business entity, to ensure efficient management of these business concerns and to maximize benefits and minimize risks. One risk is the possibility of labor-management conflict. Experience has demonstrated that the risk of labor-management conflict is particularly acute in the hotel and food service sectors.

(c) A potential outcome of labor-management conflict is economic action by labor unions against employers. Labor-management conflict can result in delays, work stoppages, picketing, strikes, consumer boycotts, and other forms of adverse economic pressure. Such conflict may adversely affect the trustees’ financial or other proprietary business interests.

(d) An effective method of reducing the risk to the trustees’ proprietary interests is to require, as a condition of the trustees’ economic participation in a hotel development project or a food service contract, that employers taking part in the development project or contract obtain agreements with labor organizations that represent or seek to represent their workforce, in which the labor organizations agree to forbear from adverse economic action against the employers’ operations.

SEC. 2.

Section 89036.5 is added to the Education Code, to read:

89036.5.

(a) For purposes of this section, the following definitions apply:

(1) “Food service contract” means a contract with the trustees or the California State University for a cafeteria or food and beverage outlet on or serving a California State University campus.

(2) “Food service employer” means a person who employs employees performing work at a food service venue under a food service contract or subcontract of that contract.

(3) “Hotel” means any hotel, motel, bed and breakfast inn, or other similar commercial transient lodging establishment, and shall include any contracted, leased, or sublet premises connected to or operated in conjunction with the hotel’s purpose.

(4) “Hotel development project” means a real estate development project that includes or is planned to include one or more hotels and in which the trustees or the California State University have a proprietary interest.

(5) “Hotel employer” means any person who owns, controls, or operates a hotel in a hotel development project and who employs employees at that hotel.

(6) “Labor organization” means any organization of any kind, or any agency or employee representation committee or plan, in which employees participate and that exists for the purpose, in whole or in part, of dealing with employers concerning grievances, labor disputes, wages, rates of pay, hours of employment, or conditions of work.

(7) “Labor peace agreement” means a written agreement with a labor organization that contains, at a minimum, a provision prohibiting the labor organization and its members from engaging in any picketing, work stoppage, boycott, or other economic interference with the performance of a food service contract or a hotel employer’s operations at a hotel development project.

(8) “Person” means an individual, corporation, partnership, limited partnership, limited liability partnership, limited liability company, business trust, estate, trust, association, joint venture, agency, or other legal or commercial entity, whether domestic or foreign.

(9) “Proprietary interest” means an interest in the efficient procurement of goods and services or a financial, nonregulatory interest as a market participant, such as a landlord, contractor, investor, owner, or financier. “Proprietary interest” may include, but is not limited to, a financial interest in the form of expected lease revenues, expected debt service on a loan provided by the trustees, and underwriting or guaranteeing the development of a hotel development project or loans related to the project.

(b) (1) Notwithstanding any other provision in this part, the trustees shall make it a condition precedent to entering into each food service contract and to the trustees’ participation in a hotel development project, and an ongoing material requirement of that contract or participation, that the person contracting with the trustees and each food service employer or hotel employer be party to a labor peace agreement under that contract or participation with any labor organization that represents or seeks to represent the employees performing work under the food service contract or hotel employees at the hotel development project.

(2) If a food service employer or hotel employer cannot reach agreement with a labor organization on the terms of a labor peace agreement, the requirements of paragraph (1) may be waived by the office of the Chancellor of the California State University upon a finding, supported by the substantial evidence, that the employer has made a good faith effort to reach a labor peace agreement to protect the trustees’ proprietary interest, but the labor organization is not interested in negotiations, has not negotiated in good faith, or has abused the negotiation process, such that the trustees’ proprietary interest would no longer be served by insisting on satisfying the requirements of this subdivision. An employer or labor organization may appeal to the trustees the chancellor office’s decision on whether to grant a waiver pursuant to this paragraph.

SEC. 3.

Section 89912.5 is added to the Education Code, to read:

89912.5.

(a) Any food service contract or hotel development project in which the California State University or the State of California has a proprietary interest and that is performed pursuant to a contract entered into or awarded by an auxiliary organization is subject to Section 89036.5, except that, to the extent the definitions in Section 89036.5 conflict with the definitions in this section, the definitions in this section shall apply, and the references to “trustees” in Section 89036.5 shall refer instead to the auxiliary organization.

(b) As used in this section, the following definitions apply:

(1) “Auxiliary organization” means those entities that are included as auxiliary organizations pursuant to Section 89901.

(2) “Food service contract” means a contract for a cafeteria or food and beverage outlet on or serving a California State University campus.

(3) “Hotel development project” means a real estate development project that includes or is planned to include one or more hotels.

(4) “Proprietary interest” has the same meaning as that term is defined in Section 89036.5.