Legislative Weekly
                            November 2, 2001
                           Issue 43, Volume 3

                     A weekly publication from the
           California Manufacturers & Technology Association
     detailing legislative and regulatory developments in Sacramento

CMTA PARTICIPATES IN GOVERNOR'S ECONOMIC SUMMIT
Press Release

Today at Governor Davis? Economic Summit at Walt Disney Studios in
Burbank, California, the California Manufacturers & Technology
Association (CMTA) proposed three recommendations to help bring
immediate relief to the state's faltering economy.

?California is in a dramatic economic decline,? said CMTA President Jack
M. Stewart.  ?Manufacturing employment is down 63,000 this year and by
more than 10,000 jobs in September alone. The state's unemployment rate
has risen steadily for the eight consecutive months, peaking at its
present 5.4 percent.?

?It's time for the state to implement new policies that will incent
investment sooner rather than later,? said Stewart.

CMTA today will introduce proposals to:

   * Implement a Sales Tax Exemption
     (http://www.cmta.net/press/salestax110201) on Manufacturing,
     Processing and Telecommunications Equipment
   * Reduce Electricity Rates
     (http://www.cmta.net/press/electricrates110201) and Provide
     Customer Choice in Energy
   * Declare a Moratorium on New and Increased Regulatory Fees
     (http://www.cmta.net/press/stopfees110201) and Taxes

These initiatives will comprise the association's focus in the coming
months, and were a collaborative effort among CMTA members.

?The costs associated with a battered business community are not only
measured by stock-tickers and cable financial networks.  They are the
human toll of jobs that are lost, mortgages that fail and families that
go with less,? added Stewart.  ?These measures will restore confidence
in every manufacturers? ability to remain productive and allow them to
reinvest in the state's workforce.?

California's manufacturing sector currently produces:

   * 80 percent of state exports
   * One sixth of state payroll
   * 40 percent higher wages than the statewide average
   * And for every manufacturing job, an additional 1-3 jobs are
     produced

?These proposals are common sense ideas that will send a strong message
to the largest and most important sector of our economy that the state
will provide the critical relief they need to help themselves and help
California through this economic crisis,? concluded Stewart.


BAY AREA VENTURE INVESTMENT FALLS

According to just released data from Venture Economics and  the National
Venture Capital Association (NVCA), venture capital investment in the
Bay Area during the 3rd quarter dropped 27 percent over the 2nd quarter
of this year. Investment has slowed significantly this year and the 3rd
quarter investment is 74 percent lower than the $9.3 billion high
reached during the 2nd quarter of 2000.

The Bay Area drop in investment nearly matched the national trend for
the 3rd quarter. Venture capitalists invested $7.7 billion nationally
during the quarter, down 31 percent from the previous quarter, and 73
percent from the $28.5 billion high of last year.

?Although these are clearly difficult times for all business sectors,
the venture industry will persevere. Veterans in our industry recognize
this downturn as part of the long-term venture capital cycle. Real value
can be created in down cycles by sticking with committed entrepreneurs
with strong business models and the tenacity to see their ideas
through,? commented Mark Heesen, NVCA President.


CMTA GETS VETO ON BILL RESTRICTING SICK LEAVE

At the urging of the California Manufacturers and Technology Association
(CMTA) and other employer organizations, Governor Gray Davis vetoed SB
1197 by Senator Gloria Romero (D-Los Angeles). The bill would have
prohibited an employer to count any sick leave taken by an employee to
tend to a sick child, parent or spouse in any absence control program

Current law permits an employee to use half of their annual accrued sick
leave in a calendar year to attend to the illness of a child, parent, or
spouse who would not otherwise qualify under the family medical leave
act that only applies to serious health conditions.  The provision
covers brief illnesses such as colds, high temperature, sore throats
etc., that are more likely to be associated with children and is less
likely to involve physician or hospital care.  However, employers
opposed the bill because many employees take advantage of the easy
threshold and use it to avoid workplace sanctions.

When employees don't show up or show up late for work, it negatively
impacts production.  In order to mitigate this problem, employers have
implemented absentee control programs that may include counseling,
suspension and termination.  After the above provision became law,
employers began to see a steady rise in the use and abuse of sick leave
under this provision, so employers decided to include sick leave in
their employee absence control programs in order to eliminate the
abuse.  SB 1197 would have eliminated that option and could have forced
employers to take a more drastic action to resolve the problem.

In addition to insuring that production schedules are met, the main
reason for an employer's absence policy is to provide a fair way to
identify and deal with those employees who have trouble coming to work
as scheduled and/or on time.  Making a decision to sanction an employee
under an absence control policy is not taken lightly by employers and
must be based on sound reasoning.  For example, if an employee's
attendance records were examined and patterns of use involving sick
leave were to show unusually high usage on Fridays, Mondays and holiday
weekends and the employee were to declare that the absences were for
family member sick leave purposes, no disciplinary action could be
taken. In other instances, it is used to cover for tardiness that would
otherwise be sanctioned under the employer absence control program by
calling in just before the shift begins in order to start the shift
late.

SB 1197 would have provided for new lawsuits for violation of the
statute where an employer has an absence control policy.  Consider that
employers are not required to provide sick leave and the bill would only
apply to those employers who voluntarily provide sick leave for their
employees.  CMTA discussed with legislators the counter-productive
nature of restricting an employer's ability to manage a voluntarily
provided benefit. When laws become overly restrictive or very difficult
to comply with and the employer is facing sanctions for violations, it
provides a strong incentive for the employer to simply eliminate their
sick leave program.

CMTA believes that it would be poor public policy to protect those
employees who have trouble getting to work under SB 1197 and could end
up eliminating the benefit for all employees.  CMTA applauds Governor
Davis's veto of the bill.



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Sacramento, CA  95814
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(916) 447-9401 fax

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