SACRAMENTO, Calif. (CN) — A bill in the California Legislature that would have banned non-disclosure agreements when crafting legislation — a response to the so-called “Paneragate” scandal — failed to pass out of the Assembly’s Elections Committee on Thursday.
Assemblymember Vince Fong — a Bakersfield Republican — said that non-disclosure agreements have a legitimate place, but that secrecy erodes trust. He said such agreements shouldn’t be used when legislators draft laws.
Assembly Bill 2654 would have prohibited certain people — including lobbyists, public officials, lawmakers and employees of the governor — from entering a non-disclosure agreement when drafting, negotiating or discussing bills.
“We are in the people’s house doing work on behalf of all Californians,” Fong said.
The impetus of the bill has been dubbed “Paneragate” by the media. It stems from a measure granting a $20 minimum wage for fast food workers that went into effect April 1. Some businesses are exempt from the new wage hike, like places that bake bread on site for sale as a standalone item.
Non-disclosure agreements were used during negotiations for the minimum wage bill. Governor Gavin Newsom caught flak over that because of Greg Flynn, a contributor to the governor’s campaigns and owner of some two dozen Panera Bread stores.
Newsom has denied working an exception into the law for a donor.
Robert Lapsley, president of the California Business Roundtable, said the bill was about upholding democracy. The existing state Public Records Act has almost 80 exemptions, including for trade secrets. Anticipating the opponents’ argument, Lapsley said non-disclosure agreements aren’t needed to protect proprietary information.
Brittney Barsotti, general counsel with the California News Publishers Association, said the bill doesn’t compel disclosure. Fong agreed, noting that non-disclosure agreements would only be prohibited in the creation of legislation.
“We’re protecting the legislative process,” Fong said.
Ben Golombek, with the California Chamber of Commerce, said his organization opposes any legislation that limits the confidentiality of private parties. He said non-disclosure agreements don’t limit lawmakers’ ability to debate bills, adding that Fong’s bill doesn’t properly define such an agreement.
Golombek calling the bill broad-natured drew a series of questions from Assemblymember Bill Essayli, a Corona Republican and committee member. He said the bill’s intent wasn’t to interfere with getting a legal opinion. He questioned whether the opposition would accept the bill if its language was clearer, and there was an assurance attorney-client privilege would be unaffected.
According to Golombek, issues would remain, like non-disclosure agreements not being defined.
“What is your concern?” Essayli asked, saying the discussion was about drafting legislation. “Why should you not be subject to the transparency rules that we are?”
Robert Moutrie, also with the state chamber, gave an example of a restaurant chain that had a secret recipe. That chain owner tells a lobbyist, who later leaves and shares the information with a competitor.
Essayli wasn’t convinced, saying the bill focused on third parties talking to each other, not a client like a lobbyist.
Pushing the issue of the exception during Thursday’s hearing, Essayli said he wanted to know how it got into the minimum wage bill. Ultimately, Assemblymember and committee chair Gail Pellerin, a Santa Cruz Democrat, said the proceeding was “getting a little absurd.”
“What you see is the bill,” Pellerin said. “You see the bill in print.”
Assemblymember Akilah Weber, a La Mesa Democrat and committee member, said every legislator wanted transparency, adding that more time is needed for Fong’s bill.
Fong pushed back, noting that he only learned of the non-disclosure agreements after the deadline to file bills had passed. An existing bill was amended to address the issue, like a bill was amended this week to allow Arizona doctors to perform abortions on their patients in California.
Speaking to Courthouse News after the failed vote, Fong said the process was frustrating. He said he’s seen budget bills move through committees in three days.
A candidate for Congress, Fong said he’s spoken to colleagues about advancing his bill in a future session.
“A number of my other colleagues are going to want to move this forward,” he added.
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