Railroads Fight New California Labor Law

SACRAMENTO, Calif. (CN) - Three of the nation's largest railroads sued California and its Division of Labor Standards this week over a new state labor law they claim will wreak havoc with their collectively bargained employee "sickness" benefits.

California's Healthy Workplaces, Healthy Families Act of 2014, which goes into effect on July 1, 2015, exempts employees covered by collective bargaining agreements.

But in a lawsuit filed Wednesday in Sacramento Federal Court, the Amtrak and the cargo-carrying Union Pacific and BNSF Railways claim the new law's sick leave requirements do not provide for the "alternative forms of sickness benefits" contained in the railroads' collectively bargained supplemental sickness plans.

They are seeking a declaration from the court that federal laws take precedence over the California law.

"In light of federal regulation of railroad unemployment benefits, we believe that federal law preempts California's paid sick leave under AB 1522, and therefore the law does not apply to railroad employees," Union Pacific's director of corporate relations & media said in an email.

The lawsuit claims plaintiffs Union Pacific, Amtrak and BNSF Railways will not implement or comply with the act, which would leave the railroads subject to "substantial threat of imminent prosecution," because individual employees would be permitted to report violations, and the railroads have "well over 1000 employees in California."

The plaintiffs maintain the state sick leave law is preempted by the federal Railroad Unemployment Insurance Act, the Railway Labor Act and the Employee Retirement Income Security Act.

The sick leave benefits the railroads' employees have vary by job, or "craft," and whether or not they are unionized. "Non-operating" employees, known as "support crafts," are covered by supplemental sickness plans, according to the plaintiffs. Unionized employees are covered by a variety of collective bargaining agreements. The California law, in some cases, would provide more time off, higher rates of hourly compensation or more generous accrual, carry over and use benefits.

In November 2014, the railroads' representatives met with state representatives and it became clear the new law did not take into consideration unique factors relevant to that industry, plaintiffs said in the action.

"For example, many railroad employees are paid by the mile, rather than the hour, and thus are not entitled to any form of premium pay for overtime. Thus, it is unclear whether they would be exempted under the provision exempting employees covered by a valid collective bargaining agreement (which requires 'premium wage rates for all overtime hours worked')," the complaint says.

The railroads' representatives also asked for clarification regarding whether the new state law would apply to employees covered by the RUIA, "which provides that it shall be the 'exclusive' source of sickness benefits or compensation for all railroad employees." The state representatives were either unwilling or unable to confirm these points, plaintiffs claimed in the action.

A March 30, 2015 response to two letters the industry sent to the defendant Labor Commissioner's Office in January and March of this year, said "whether the California law conflicts with any of these federal laws, as applied, will require close examination in particular cases and it would not be appropriate for an enforcement agency to carve out an exception to application of the state law on an industry-wide basis at this time," the action quoted.

Plaintiffs additionally claim the state's law would require a change in pay rates, rules and working conditions, would interfere with recent or ongoing collective bargaining negotiations, and would deprive the railroads of an equitable bargaining process.

In Governor Jerry Brown's press release at the time he signed the sick leave bill, it was noted that the Healthy Workplaces, Healthy Families Act, put forward by Assemblywoman Lorena Gonzalez, D-San Diego, provides paid sick days for the estimated 6.5 million Californians, or 40 percent of the state's workforce, who do not currently have this benefit.

"As a single working Mom, I know first-hand the challenge of having to juggle a sick child who needs to see a doctor and your responsibilities at work," Gonzalez was quoted as saying in the governor's announcement. "But no parent should have to experience the heartache of having to choose between making the rent and taking care of their child. I am exceptionally proud to have authored this pro-family, pro-worker and pro-public health legislation."

The railroads are represented by Catherine Nasser and Donald Munro of Jones Day. Nasser is with the San Francisco office; Munro, with the firm's Washington, D.C. office.

Representatives of California's Division of Labor and Standards Enforcement did not immediately respond to a request for comment on Friday afternoon.

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