Senate Rules Committee

Thank you. Thank you.

limon here grove here grove here jones i'm here jones here laird reyes here reyes here quorum

Aye.

Grove?

Grove, aye.

Aye.

Reyes?

Reyes, aye. Four to zero. All right. That is approved. Four to zero. The next item for Governor's Appointments Not Required to Appear is Item 2D, Michelle Ediger as a member of the Board of Barbering and Cosmetology. Thank you. I have a motion by Vice Chair Grove. Can we please call the roll? Limon? Aye. Limon aye. Grove? Aye. Grove aye. Jones? Aye. Jones aye. Laird? Reyes? Aye. Reyes aye. 4-0. All right the last item for the governor's appointments not required to appear is item 2E David Galavis as a member of the State Park and Recreation Commission. I'll entertain a motion. I have a motion by Vice Chair Grove. Can we please call the roll? Limon. Aye. Limon, aye. Grove. Aye. Grove, aye. Jones. Aye. Jones, aye. Laird. Reyes. Aye. Reyes, aye. 4-0. All right. That item is approved 4-0. Next, I'd like to take up item 3, reference to bills to committees. I'll entertain a motion. I have a motion by Vice Chair Grove. Can we please call the roll? Limon?

Limon, aye. Grove?

Grove, aye. Jones?

Jones, aye. Laird?

Aye.

Aye.

Aye.

Aye.

Reyes?

Reyes, aye. Four to zero. All right, that is four to zero. Our final items before we turn to the governor's appointees are items five through fourteen, floor acknowledgements. I'll entertain a motion. Thank you to Vice Chair Grove. We have a motion Can we please call the roll Limon Aye Limon aye Grove Aye Grove aye Jones Aye Jones aye Laird Reyes Aye Reyes, aye. Four to zero. All right, that is four to zero. We will now turn to Governor's appointees required to appear, item 1A, the appointment of Clint Kellum as Director of the Department of Cannabis Control. Director Kellum, you're welcome to come forward. You'll have one to two minutes for your opening testimony to the committee. In your opening, you're welcome to introduce any guests you may have. We'll keep time and fly for you when you get close to that time. You may begin when you're ready.

You are live.

Thank you. We will begin with this on a merge. I'm going to first turn. Okay. All right. Senator Jones.

there's comparisons drawn because you're both regulating an adult substance. So ABC doesn't have a put in your address and this is the closest bar, this is the closest liquor store, whatever. I just want to kind of get the thought process behind this and why it's there. Yeah, I appreciate the question. We are a standard regulatory agency that wants to protect consumers, youth, and the environment, but we're doing so in a really unique environment. Estimates are that only 40 of Californians consumption is actually coming from our legal market So there quite a bit of consumption within the state that happens outside that market And we have evidence that there quite a bit of consumer confusion There's a consumer survey that was completed in 2023 that showed individuals in banned jurisdictions. 62% of people there thought they could purchase it there legally. 23% didn't know. 88% of people want to purchase legally. So there's this real sort of dichotomy on how much is happening and how much people want to do it. And so it's just providing that awareness to people about the legal sources to do that. We're actually in the middle of launching our Real California Cannabis campaign to do more consumer awareness with that website being one of the places. Double-check your purchasing from legal sources. There's intoxicating hemp. There's smoke shops. There's other illicit opportunities. And I think there's a fair amount that consumers don't know that they're interacting with something that's not legal. And so we're just trying to make that as clear as possible for them.

Yeah. I mean, when we have money available to actually advertise, the results are obviously higher. It's about a million dollars a year, so it's not going to go too far in its reach. But we are looking to sort of partner with our retailers and kind of try to get the word out best we can and looking for opportunities to do that in other forums as well.

The Real California Cannabis website is how they would just.

All of our licensed retailers are on there.

A hundred.

Right. Well, let's start with the straightaway answer. Right. We are interested in protecting youth, and that is absolutely important. and the attractive to children labeling is an issue that the legislature is considering, and we look forward to those discussions on doing a research-based decision on what is or isn't attractive to children, especially given the sort of Venn diagram between what's attractive to adults and children.

Yeah, and I also believe that Not Your Father's Root Beer is also an alcoholic drink as well. This particular one is non-alcoholic. I think they also have a variety of that, too. So you've seen that also in alcohol as well. It's not an excuse, but I'm just pointing out that this is not unique to the cannabis market.

Yeah, and so it does have servings specified on there. So the user would have to look at that and then have some knowledge about that.

I have that too. Yes. And that also on there, as you'll notice, will tell you about edibles and your dosing on that. And not to go, if you're a new user, to start at five milligrams or lower. Give yourself a few hours. It's better to do less than more. And so there are these places where we have to do education. I also think there is room that we've been talking with CDPH about parent education and having a conversation. We talk to our children about not drinking alcohol when it's in the fridge. We would want to have that same and maybe even more important conversation if you happen to have cannabis in the fridge. But I do think there is room to tighten our rules in our regulated space. I think the only other thing I would say is this doesn't, like, absolve us from our responsibility. But given that 60% of the consumption is happening outside the market, whatever we do here doesn't have the same lever and effect that it would. when those are sort of usually the most egregious sort of issues at hand.

But we see room for improvement. We're committed to that and looking forward to the engagement with the legislature.

It's on our website. They are required to print it. It's one of the things we check for when we do our unannounced inspections. It's by the front register. It's required to be given to new users. And so there's a lot of education to happen in this space, and that is part of our role. And so that's one of those ways of doing that.

For sure. I mean, I'm definitely not promoting any more consumption. I'm promoting transferring consumption that's happening in the state from illicit sources to legal sources so they can have the protections necessary. And so some of that is awareness and access. because when there isn't access or awareness, they're preyed upon with, you know, other opportunities that don't have the testing, the age gating, and all of those pieces. So it's information sharing in relation to that, but there is no interest in the department on increasing consumption. It's just functionally getting into the protected environment that we regulate.

Right.

Right.

Appreciate it.

We're going to go to Vice Chair Grove.

for those? Great question. Yeah, there is a lot more illicit cultivation than there is legal. So in the state of California, this is in 2024, we produced 12.8 million pounds of cannabis. 1.4 million of that was legal. And the state consumes about 3.8 million. So the problem is, you know, California oriented and the pieces that we're controlling in relation to that, There's no silver bullet. We have to be a strong regulatory agency doing hallmark regulatory agency work so we can have a strong legal market that people can trust. We have to do illicit market work. We have a team of law enforcement folks focused on that. We're working with locals. We're working with the feds. And there's opportunities to continue to educate and grow in that space. This goes back into, you know, legitimate access. Consumer awareness needs to be part of this discussion. And then also having a viable market for our operators that doesn't compromise trust and safety and figuring out how to sort of balance that act. So those are all the things that have to go well to kind of make progress on that front. I feel like we have initiatives underway to do that, but it is going to be slow progress. I'm not going to pretend like overnight we're going to flip this on its head. And then when you think about the scale, there's also incentives beyond California driving this. And while we will continue to play our role in enforcement, there are the price of California cannabis in Europe. And if somebody can put a couple of pounds in their suitcase and make its way over, make tens of thousands of dollars, that's a strong incentive with a low risk. And so it's just something we're going to continue to put steady progress on. Our illicit market work is going to be intelligence-led investigative work to kind of deepen, get further up into the criminal organizations that are perpetuating much of this activity. And so that's really what we're focused on.

So a couple of pieces. So the scale of our law enforcement team is about 75 sworn staff and about 54 are line level folks. So less than one per county. Most of our work in the illicit supply chain is not outdoor cultivation because CDFW has a similar amount of folks, and that's typically their focus given the environmental piece in their focus. So on that end, we have no reservations about not working with a jurisdiction that doesn't authorize cannabis. that in no way comes into our calculus when our team is out working on things. It is about what is the absolute most effective use of those resources, which isn't always whatever sort of bad activity that people can point out on any given day. We have to do deeper investigative work to make sure that we're being as impactful as possible. And then I think you're also asking about the Board of State and Community Corrections Prop 64 grants. That is a statutory requirement to be eligible that you have to allow retail access. and those grant funds are going out. The department is excited about that opportunity. It's about $125 million. We been partnering with them I think they got about 84 applications under review now And it recently was prioritized for illicit market enforcement so it won be solely for that purpose But it's a meaningful amount of money that's going to go to our local law enforcement community to kind of assist with this effort. And so that is a piece we're excited about. And, you know, to the jurisdictions that don't have that, there's multiple pieces here. We're not going to enforce it away, and we're also not going to just have legal options. but having a legal option for people is the right step to then moving to the enforcement dollars, which I think is kind of the policy paradigm that's being presented there.

Thank you, Vice Chair Grove, and then we'll go to Senator Reyes.

I think it's on the menu of discussion items. I think this is something that I would like to bring to our Cannabis Advisory Committee, which is made up of operators, public health people, local operators, and be able to get feedback in about what they're seeing because it's a continuum. Like I'm a parent too. That worries me when I see that in a fridge by itself. But we also don't have any evidence that actual youth are ingesting legal market products with, you know, childproof resistant caps on them, right? And so like how much of it is that, right? And putting all of those pieces together, I think there was some recent industry news that you hear that basically folks aren't interested in these lower-dose beverages. So we just need to noodle through all the information, but it certainly is one of the options on the table for consideration.

We do have public health doctors on the committee, yes.

It feels like that because that is usually the face. That's what people hear about. that is part of what we have to do. And usually when we're talking publicly, we're doing education and information, which is our biggest lever on that topic. But when you look at us as an institution, you know, we are about 590 actual employees. 240 of those are like our licensed compliance staff. So they're out doing our legal kind of field work. We have about 100 in our licensing division doing all the normal sort of application and licensing work. And then we have about 75 are related to illicit market enforcement. So it gives you kind of the scale of our institution of how much of it resource is dedicated to that work It not sort of at the level that you hearing it being discussed but it is on the forefront of people minds Why isn it

That's a good question. Yeah, I think a little bit of its artifact of expectations. I worked as a department.

When I was at –

I think there was an expectation that there would be some transition in the market, but that there would be more sort of legal consumption sooner. And so that's what we're seeing. But also the department isn't in this by itself. Like I mentioned, we have about 75 sworn. CDFW has a similar number. We have Parks that's a partner. CDTFA is involved in this work. So it's not us by ourselves. And then I mentioned the local public safety community as well, which is 600 local law enforcement agencies, and there's varying amounts of interest and capacity to engage in this work. And so we're organizing, we have, you know, our Unified Cannabis Enforcement Task Force that helps unify us at the state level, and we're starting to build into that local continuum. The Board of State and Community Corrections Fund being a cohort of agencies we're looking forward to kind of building that momentum with. We're having positive engagement with different jurisdictions and looking for those opportunities. So the challenge, too, is we are the regulator at the state level, and that is our ultimate responsibility. but there is an aspect of this that we are sort of communicating about and leading on because that's naturally what takes place given the sort of unique state of the market.

So given a couple of things, maybe on the first point here, of like, I think we have shared interest here in that we want to see more of California's consumption come from the legal market. It being a transference, not an increase. And but the actual legal market does need to have fidelity. And that is what a regulatory agency is set up and established to do. And there are financial incentives for a legal entity unchecked to also sort of go to maybe things that are less ideal for consumers. So we still have to maintain that ultimately the products that our consumers receive in the legal market have that fidelity. And that is what our team was established to do and dedicated to do. And that's why it is in the place it is. When you talk about the illicit market and like what we do to bring folks in, generally because of the scale and where we've seen really more like organized crime entities being involved in this than like the everyday small business owner that's just trying to like do it outside the system. We don't really have the resources to chase that person down. At this point, it's really sort of like we're looking at the more material issues.

So it's just like a typical investigation. You know, we develop surveillance, investigate it, develop a report, develop probable cause, go serve a search warrant, see what we can find on site. That would probably take that site down. Does that advance our investigation further. And so it's just kind of the normal investigative work that you would do.

Yes.

So I would have to get back to you on the specific numbers. But I think we're in the neighborhood of like every search warrant that we serve involves another local agency at a minimum and sometimes multiple. And in each of these instances, you're working with locals, sometimes local, state and feds, multiple state agencies. So there's a lot of collaboration, but it tends to be very case-specific, and that's a function of really law enforcement and how it works in general. And so I think last year, we'll get back to you, but order of magnitude is like at least 100 different agencies we worked on with on different cases. But I think it could be orders of magnitude higher than that. It also depends on the sort of scale of a local entity, their ability to place any investigative resources on that, too.

We do work together with CDFW, but I don't know the specific mechanisms for notification. And so in the absence of giving you bad information, we'll respond back. But we are working with water board and CDFW and protected watersheds.

Right. So we have established a team internally dedicated to package review because it can be quite subjective, and having consistency in that review process is something we've put in place over the last 18 months or two years. And so we've seen our activity in relation to reviews and administrative actions increase over that period of time. That gives our field staff like, hey, I saw this. I'm going to go contact this person that is kind of a specialist in that to help me noodle through that. Because while that seems reasonable, it's like does that also meet the sort of statutory or regulatory language that we have available to take administrative action? And so we have people dedicated to that work. But we have been taking the most clear one, and depending on the level of sort of severity, especially if it's like an edible or a beverage or something that's more likely for a youth to accidentally consume, that would be something where we would recall the product. And so the actual manufacturer has to destroy the product. There could be – we've done some citations in relation to this too. I'm not aware that we've done – it has seen enough repeat actors basically to do this. the market wants to differentiate their products and they want to be attractive to their consumers. In our licensed retailers, there's very few, if ever, youth interacting with it, right? So somebody takes that and then comes home with it, which is part of where the challenge is. So we've been doing that, but we also are in the development of an AI image analyzer that isn't going to be the ultimate decision maker on what is attractive to children, but it will be available to our licensees to put their images and their packaging through to help them identify, is this going to violate, might this violate, or is this okay? Because they are interested.

Thank you for just the information you've shared. I'm going to start by echoing, I think, what you've heard from a very bipartisan perspective about the impact we're seeing with youth. As a former school board member, I remember every time that we said something, you legalize something that's not allowed for children. it turns out you see an increase in K-12 schools, even though it's not legal for children. You would see, I mean, name whatever product you want, and you would see that. And so the practice with, you know, our laws are, of course, designed to protect, but also the practice sometimes is just different, and so we've grappled with that. So I want to piggyback on that because just this last, no, February, February of 2026, The Journal for the American Medical Association Health Forum put out a research piece, and they followed over 463,000 adolescents. And so you may be familiar with this, up to the age of 25, and looking at their impact of cannabis use. And the impacts are actually greater than we thought, specifically tied it to some mental health issues for those who are using under the age of 25. And so I think that one of the reasons this is coming up, I think, as an importance is because we've learned so much more. As we've legalized it, there was, you know, as we've legalized it, and also there is more to learn about both the illegal market and the legal market. And so I want to hear more on, we've talked a lot about labeling, but outside of labeling, what are the menu of options that you think should be considered given the concern, the growing concern that exists, not just from the legislature, but from the public who's bringing this forward, from medical professionals who are bringing this forward as well?

Do you or the Cannabis Advisory Board think that the pamphlet is effective? If so, why?

And from your perspective or the agency's perspectives, what are the biggest takeaways in that decade?

Thank you.

That was an issue at the beginning. We were hoping in two to three years we would see more transition from provisionals to annuals. And I guess I'm speaking also outside the equity licensees. But if you can speak a little bit to that and where you see that going in terms of our efforts as a state to,

Yeah, so I think that is a success story. We did start with the temporary provisional licenses for many years, and that sunsetted, except for equity retailers. So between July 2021 and December 2025, we transitioned 6,500 licenses from provisional status into annual status. We now have less than 8,000 licenses, about 7,900, and only about 15 of those are the equity retailers. So there's no other provisional licenses at this point. So everybody has reached their full licensure status. That means they've completed CEQA, local control, all the other requirements they have. And so I think that is a testament to that success. We're just on the heels of that. We actually internally adjusted about 35 people from our licensing division out into the field under the recognition that there's less coming through the front door, there's less of that provisional churn, and we have more field work to do. And I'm, you know, getting indications that when the applicant's ready, the local control comes quickly and all those documentations are there. We're turning around applications quite quickly on that front. So I think there is success and momentum. Definitely room for improvement. We have IT challenges. We have sort of like refinement and improvement that we'll continue to make. But there's been positive momentum in that over the last five years, I would say.

Yeah, I think I said it at the outset. I mean, I fell into public service, and I've worked on it for the last 18 years, and I just love it. I mean, I worked at the Department of Finance on varied issues, cannabis being one of those things that I worked on shortly after Prop 64 passed, and it was in my portfolio, and I was intimately involved. And then I moved away to this little financing authority called iBank, but I came back to it, and it kind of feels like finishing that story for me. I have a great team of people, a department that's dedicated. It's new. They want to help and make improvement, too, and I love leading and working with people on that front, and so I'm just energized and excited.

I was waiting for others to go before me, so I apologize, and then my shoe fell off. So I'm Lori Kammerer. Then I was really delayed. So thank you, Madam Pro Tem. I am working with a company, Mortensen Advisors, and they're an AI company that has done a lot of research in the cannabis industry, looking at the amount of canopy growth and those who are insured for workers' compensation or with a workers' compensation policy. They have found that out of 97,000 employees in the cannabis industry, I don't have the exact number, but very few of them are able, the employers are unable to get a policy. The banks won't take their money, the big banks. The workers' comp insurance carriers will not write their policy. So we've been able to look at or they have been able to look at, you know, the detailed data. Whereas, you know.

Oh, I'm sorry. I thought I was going to be able to say something. Very, very much in support in working with you and the Department of Industrial Relations to make sure these people are covered.

Thank you. I was going to go on to.

Can I ask one more question?

A couple of things that came up on the illicit market, and maybe we kind of danced around it a little bit, not you necessarily, But, you know, on the illicit market, a lot of that's up to law enforcement and up to, you know, statewide law enforcement. This is a governor's appointee. Do you feel like you have a good audience with the governor when it comes time to bring, if you find illicit grow, as Senator Grove mentioned, in her area? I have them in my area. the San Diego County Sheriff's Department has an entire task force just to go after the illicit grows in the forested areas of San Diego County. I know it's across the border, you know, and obviously the North Coast. Can you talk to that? I mean, like, if you're bringing this up to the statewide law enforcement, What kind of interaction are you having with the governor specifically and the rest of the administrative HP?

but do you have some notable stories that you can send us on some enforcement activities

be really instructive use case and ask for you to send that to us okay sounds good I'll move I'll make the motion it's okay with the vice chair so we have a

In your opening, you're welcome to introduce any guests you may have.

Good afternoon, Madam Pro Tem and committee members. My name is Jennifer Osborne, and I'm honored to appear before you today regarding my appointment as the director of the Department of Industrial Relations. I'm grateful to Governor Gavin Newsom for the opportunity to serve in this role. And I'm also mindful that I do not stand here alone. In the audience and watching online are friends, mentors, and colleagues who have supported me at every stage of my career. Their guidance and generosity have shaped my path, and I'm sincerely thankful for their influence. I'm a lifelong Californian raised in northeast San Diego County. My father served as a city firefighter for 35 years, and my mother worked in our local library. I began my state career at the Department of Finance in 1998, and later served on executive roles at the Government Operations Agency, the Department of Corrections and Rehabilitation, and the Department of General Services. Across these roles, I gained valuable experience, but two principles in particular, and still during my time at GoOps by Secretary Maribel Batcher, continue to guide me, to challenge the notion of that's the way we've always done it, and to find a way to get to yes. At the Department of Industrial Relations, I bring that mindset to supporting the outstanding leaders who oversee our core programs, the Labor Commissioner's Office, Cal OSHA, the Division of Workers' Compensation, and the Division of Apprenticeship Standards. Part of my role is to help remove barriers, navigate complex systems, and ensure that our teams have the tools they need to deliver on their mission. That mission is carried out by a dedicated workforce of public servants, attorneys, inspectors, scientists, researchers, technologists, and administrative professionals who work every day to ensure California's workplaces are safe, that workers are paid fairly and on time, that those injured on the job receive appropriate care, and that Californians have access to meaningful pathways into the workforce through high quality apprenticeship programs. My commitment to this work is also personal. During high school, I held a number of hourly lower wage jobs. I cashiered at Taco Bell, I cleaned bathrooms in the Chico State dorms I sold lingerie at Macy and I worked as a prep cook in a sandwich shop In one of those jobs I was injured at work and relied upon workplace protections to receive care Those early experiences gave me first understanding of how important these systems are when they work and how critical it is that they work for everyone. These experiences underscore the importance of DIR's mission and inform my approach to this role every day. Thank you, and I look forward to your questions.

Thank you. I deeply apologize that I was caught in a committee, and it was a little bit difficult to get back to our appointment, so I apologize that we didn't have an opportunity to talk beforehand. As an employer in the state for over 30 years, I deeply respect what the DIR does, and Christine Baker was one of my dearest friends. Outside of politics and the DIR, she was just incredible. She was, I think, two before you or one before you. And I really appreciate all that you do and the resources that you provide employers. And I understand what you do as a role in the several departments that you oversee. I don't have an issue with workers' comp. I don't have an issue with, you know, departments of labor standard enforcement. I don't have an issue with any of those things. I have an issue with the CRD because of a lot of the complaints that have come to me. not only in my district but from around the state. So I do have several questions regarding that department and would like to ask you and focus on those questions. And I think I sent you some information to review so that we could probably get some questions on the record. I'd really appreciate it. So the questions that I have are the formal-based complaints that have been submitted both to the governor and the Department of Justice. Are you aware of these complaints that have been submitted?

Okay. Thank you for that. So I do have several questions. I mean, if you can answer yes or no, that would be great. If you need to give a lengthy answer, I understand that as well. but there are several, and I think the pro tem will start rolling her eyes at me about question number 55. Joking. Okay. So these allegations that have been made, they span over a decade and are closed and partially closed cases. Are you aware of that?

Have you personally reviewed any of these complaints?

So in the beginning I told you that my business has operated in this state for 30 years in spite of this state sometimes, but I appreciate what your department does, and I think you're more of a resource to employers, and if employers would access those resources that you offer, their lives would probably be a little bit easier in some cases, and they would not make errors. When I say errors, I'm just describing how I'm not adversarial to your department is what I'm trying to say at all. But I do have questions about being the person who's in charge of all this. And I realize that you're only as good at your job as what is provided to you by the people that you oversee and the management leadership team that you have below you. If you are not reviewing these complaints and you don't have knowledge of what your departments are doing, how do you expect to, you know, address the issues that are facing some employers in this state?

And I don't know the details of how CRD operates. So I'm understanding that CRD is part of your purview. Are you saying it's not?

I apologize. Oh, okay. No, I apologize.

When you said that, I thought, what is she saying? So because I was informed that you were the person. As a matter of fact, when your name came up for interview for the confirmation hearing and in the office, they were like, yay, we get to ask her all these questions on the CRD, because we've been trying to get some answers for quite some time. I'm happy to take it back to the folks at that agency. That's all right. I can go to Labor Standards and Enforcement. I know who they are. I can do that. I can do that. So let me skip over to some other questions that I had. I was going to focus on the CRD questions, but since you are not in that purview, I do want to ask you, like following the 2024 PAGA reforms, PAGA is a huge issue in the state of California. Labor workforce development agencies proposed new regulations in February of 2026 to strengthen notice requirements and expand cure options and address the high-frequency filings. What role is a DIR playing to ensure that these reforms translate into fewer and lower litigation costs? And I'll give you a reason why I'm asking that question. And I'm interested also in chronic litigants and let's just call them chronic attorney plaintiffs that are – plaintiff's attorneys that are filing these cases.

Okay. Okay. The reason why I ask you that is because I'm going to try to pull it up really fast for you just to give you an idea. But I'm technology challenged, so I do apologize. We never used to really track PAGA cases As a matter of fact I was in the assembly when I started tracking PAGA cases And when I went to the agency um they were like wow where you get this information And so I was getting it from attorney who was picking up all the filings and all the court cases that were being filed on a daily basis regarding PAGA cases. We had over 16,000 PAGA cases documented and the state of California did not have that. So we started tracking them. We incorporated an organization called CABA. CABA.org is their website. And when you go to their website, I'm going to pull it up for you just to give you an example. They track current PAGA lawsuits. And these are, there are, so far this year, 471 lawsuits. The average settlement is $747,000. The average attorney payout is $352,000. So these are what I would call mill attorneys. They're coming up from Los Angeles, coming over to the Central Valley. And when you look at the lawsuits and you get these, we call them the, I don't know, the bad 10. These 10 attorney firms are filing cases, 90% of the cases filed in the state of California. and if you look like this number one guy right here, you just type on it, these are all the PAGA cases just filed this year, every one of these little things. I think there's 400 or 300. He did 300 of them. These are, and I'm saying that, and they're repeat files on everything, and when you look at the data, and it's not your fault the way the law is written that the employer is automatically responsible, and litigation and settling these documents is cheaper, far cheaper, than having to go through the process. I'm just saying that PAGA is a huge problem. I know Senator Umberg knows it's a huge problem, and several other individuals on the other side of the aisle know it's a huge problem. That's why the 2026 legislation regarding the notice requirements and right to cures, because they were going after people for a paycheck stub violation because there wasn't a period or comma, or one company had to pay a million dollars because they had a Wells Fargo logo, and it didn't have accurate information on the pay stub because your employee wouldn't know that Wells Fargo is where you cash that check, with a stagecoach, right? You have to have Wells Fargo bank or they don't get it and that's a violation. So all these little minor things. And so it was, it is better now that it's brought under the DIR. But I guess my question to you is with all of that to say, is there anything else that we can provide you that will help you be better equipped to deal with these chronic litigants that employers are going to, the attorneys are going to Facebook and they're like, you know, be an enhanced employee. So out of that $700,000 settlement, when $302,000 went to the attorney, the enhanced employee got $50,000, and everybody else got $3.50, but it cost the employer almost $2 million. That's not good for California jobs. So is there anything we can offer to help you with that?

So you – okay. No, I appreciate that. Let me ask you one more question, and then I'm sure I'll be done. Sorry. Your background includes serving as the Chief Deputy Director of General Services and the Director of Administrative Services in California Department of Corrections and Rehabilitations With the extensive experience in fiscal management and large operations how has the experience shaped your approach in leading the DIR, particularly addressing backlogs, staff challenges, and providing practical compliance assistance for employers?

taking a classification that is in place, and then updating it to basically have it fit what the minimum qualifications would be for someone today. So in the Labor Commissioner's Office, there were two series of classifications that had not had updates in many years since the 70s or the 80s, and that was resulting in an inability to kind of find qualified candidates. And so what we did working with State Personnel Board and CalHR was to update those revisions. So there's an entry-level series that used to require a college degree, and a lot of people were not able to meet that, but what we were finding were there were really good candidates. They just couldn't get in the door because of that degree requirement. And so over time, we were able to, in fact, just in November and December of 2025, we received approval from the State Personnel Board to change those specifications. And as a result, that now allows us to go out and cast a wider net for employees and bring in more folks to address the vacancy issue, which by, you know, was related to part of the growth of the backlog, just that we didn't have the bodies to process the work. Another thing that was causing some of the backlog was the case intake IT solution that they're using. It's outdated and has to have a lot of customization. And so rather than kind of being set up for the way things come in today, we have to bring in vendors to come in and make changes to it. And it's sort of just, as you may know, it's so, it's not simple anymore, and it's hard to keep going. And so one of the things we're looking at is with our new CIO is it is a new product that is made by the same entity. It's still a Salesforce solution, but it would, but it's meant for government, and it's meant to kind of do that kind of work. And so we're looking, we're piloting that currently with the teams, and we believe we can actually, it's looking promising that we can actually implement that for about half the cost of what we're spending now with bringing in the customization and just sort of the, the kind of crumbling under its own weight of the old system. And so that's one of the things we're looking at that again, comes from my experience with working with for many years with CD the department of technology as well as DGS Another another thing that has contributed to backlogs in the Labor Commissioner office has just been the shortage of people to adjudicate at the very at the tail end of the process And so what we have been exploring with the Labor Commissioner's support are whether there are other entities in state government that have capacity to maybe take that work on. And one of the ones we looked at was the Office of Administrative Hearings under the Department of General Services, which is sort of a generalist group of ALJs. And so we're kind of working through the possibilities there, as well as potentially some other ALJ groups within state government, and potentially on a reimbursement basis we could see if they could do some of that work to get at the backlog. So those are a few of them. No, thank you very much.

Thank you.

Just a quick question. Tell us about moving from the Department of Corrections to the Department of Industrial Relations. That's an interesting change in career path.

Yes.

Okay. And you're obviously confident that the skill set and talents that you have now are transferable from one agency to the other. Great. Thank you.

Thank you for the question. I believe that there are multiple sources of being informed on those things. on those things. I mean, certainly within DIR, we have obviously the Division of Occupational Safety and Health. They strive to do inspections and make sure that workplaces are safe. I think that's the starting point. But if we're able to keep the workplace as safe or as safe as possible, then on the workers' comp end of things, you maybe don't have the same order of magnitude of of folks moving into that. But there will always be people getting injured, you know, through no fault of the employers or the employees. And so having a robust system on to ensure that they are given the care that they're to which they're entitled and which they need as well as the compensation is important. I mean, I look to all of my team members for input and information on that, as well as folks outside of DIR. I recently went to and during the month of March two different sessions of a Kind of a statewide workers compensation conference, which I found to be fascinating There were many different speakers kind of talking about trends and talking about again ways to solve problems And what's coming down the pipe and and so I just I put myself in a learning mode because again This area is not been you know my background and so I'm still learning a lot lot. And I think just taking all of the information in and then working with my experts in both in the department and as well as I serve as an ex-officio member of the SCIF board. And I learn a lot in those meets too, just because they're kind of operating from an insurer perspective. And so I would just say that, of course, keeping employees safe is critical. But when for whatever reason they are injured, then there needs to be a robust system to kind of catch them and to have it work for them as well. And so I just strive to do my best to kind of be, you know, make both systems available to all employees who are vulnerable in that way. Wonderful. You said at the beginning,

I question why are we doing this this way? Why are we, you know, even just, and I don't want to, you know, throw my HR folks under the bus a little bit, but I've said, can we do this? And they will say no, you know, and I say, well, are you sure? Can we, let's talk to our, you know, my friend over at the state personnel board and get their take on it. I try to push them. I want my teams to be experts in what they do. I want my HR folks to be experts in HR because a problem might come to them that they need to solve. And they might not be able to do it the way that I've asked them to do it, but they might know another way to get to that same outcome. And if they're experts, they have kind of that in their pocket. Here's three or four other options to do this, similar to procurement. And, you know, we need a contract right away. Well, that'll never get through DGS. And so I just challenge them to kind of push a little bit, understanding there are rules and that we have to certainly live within them. But I think that there's a way to kind of look at alternatives. And maybe sometimes we make our own rules that we then put ourselves inside of that kind of bureaucratic cage. And sometimes it bears an evaluation of whether those rules need to be changed, especially if they're ours and they're keeping us from getting to the point that we need to be.

Certainly, when I started, that Cal OSHA audit, it either came out the day that I was appointed or the day after. I'm not sure. And so it was definitely a deep dive into all things Cal OSHA at that time for me. They have done a number of things. They and we as a department have done a number of things to address the findings in that audit. One of the main ones and one of the things that was called out in the audit was a lack of policies and procedures about when to go into the field and do an inspection versus sending a letter. Or when to, you know, or employees, one of the things that was called out was employees were making, you know, making decisions moving to the next step without a clear policy rubric to follow. And so the program has under the leadership of Chief Lee been working very diligently on revisions to those policies and procedures They are now moving into the training phase They training all of their employees on every change and every policy and procedure That's going on kind of in real time. And they will basically from intake to completion, kind of the entire roadmap of every investigation. We're on track to have this completed by July of this year. And then those revised policies and procedures will be posted on the department's website once the training courses are complete. In addition to that, the audit referenced sort of a lack of – we don't have enough – the audit said we don't have enough staff. I'm going to say that it probably would not be possible to cover the entire state at a level necessarily. However – but there have been vacancy problems, similar to on the Labor Commissioner's side that Senator Grove referenced. And so what we have done is work to, first of all, request from the legislature in the budget that's currently before you a number of resources to address the audit findings. One of them is to add additional positions to the Bureau of Investigation, which is the group, the kind of quasi-law enforcement group that goes out and investigates the most serious cases and fatalities. We're essentially with double the size of that unit. In addition, we're proposing to add a centralized complaint intake unit, which would enable investigators to spend more time in the field. Currently, the investigators we have are required to spend two days a week doing intake in the office, which keeps them from being able to go out into the field and do investigations. So under this proposal, we would hire kind of lower-level staff to do the intake work so that the investigators could be out on the ground in the workplaces responding to complaints. And then our third BCP in this area is to continue the work of 34 positions that were working on the administration's Extreme Heat Action Plan, as well as the Agricultural Enforcement and Outreach Task Force, which provides targeted enforcement and outreach in agricultural settings. Agricultural employees are less likely to make complaints to Cal OSHA and yet are exposed to multiple serious occupational hazards. These resources will allow for proactive inspections and outreach to educate employees and employers about these hazards and employees about their responsibilities under the law. We additionally are moving from a paper process to, and I think I mentioned this in my meeting with you, to an automated process, and we're currently on track to go live with that system by the end of the calendar year. I think, as in my prior experience, I've learned that IT projects in state government can be fought with danger in terms of just likelihood of success or not. And so I have made it a priority to make sure that we are paying very close attention to the vendor in this case and making sure that they are fulfilling their promises to us that they made under their contract. It's something that I have brought in an IT expert to help advise us on, and we definitely want to make sure that this project does not go sideways and that we fulfill that promise both to what we said to the auditor as well as to the people of California. Wonderful. Thank you so much.

Sure. I may have to get – I can speak at a high level and may have to get back to you with details because I don't want to give you the wrong information. But certainly I think one of the – a natural disaster that I think pinpointed a lot of this where the LA fires and what was happening in mainly in the, maybe not, let's see, let me back up a minute.

All of the above.

So certainly it's an area that I believe, I know that my teams are aware of. I don't know that we've gone deep into, at least with them, kind of briefing me on all of the details. I know we have been involved with the wildfire recovery efforts and ensuring that folks cleaning up after the wildfires are adhering to safety measures so that they're not negatively impacted by the work that they're doing. I know Cal OSHA has partnered with both our CWAPs, which are California Workplace Outreach Project Groups, and labor centers to provide additional, I think, assistance in the form of some trainings and other efforts. And I think it's just something that we absolutely need to kind of keep an eye on, especially as the likelihood of natural calamities potentially increases with climate change. But I would like to, I think, make an offer to get back to you on more details on that specifically, if possible.

Right. We are looking as of November 2025, there were about 86,000 open cases. And in 2024, the average was 634 days to close a case.

So what I will say is that we're very aware that it's a high caseload. I think some of the high caseload has actually been increased by just the success. And I assume you're talking about the Labor Commissioner's Office, right, in this case. But they have been very forward-leaning in outreach. And I think as a result, a lot of people are more aware of their rights and they're filing cases. And so not to say that the backlog is not – it's certainly, I think, a sign of how well the Labor Commissioner has been doing with outreach. But at the same time, we do need to focus in on how to get the backlog down. I don't know an ideal number. I'm working correctly. with the Labor Commissioner to kind of identify what's a good metric and what's a good goal so that we can kind of chunk out those, like, is it, you know, what is the number per month? But I know, too, that there's been a lot of, you know, not having a great data system has kind of kept us, I think, from having good visibility into the reasons behind some of the backlogs. I know they made a huge effort to clean up some of the, there was a large number of cases where there was just additional information that needed to be closed out, and so that was included in that number. I would love to get back to you again with better metrics and kind of a more cohesive rubric of what's happening and what our plans are in that area.

With that, we're going to open it up to members of the public. If there are any members of the public who wish to speak in support of the appointee in front of us, please feel free to come forward. We just ask that you state your name, your affiliation, and position. I missed that the first time, Madam Proton. Sorry.

Hi I'm Lisa Ann Hurt Forsyth, Vice President of Government Affairs for the American Association of Payers, Administrators and Networks. Very much in support of Ms. Osborne. I'm glad you're taking the helm. We look forward to working with you. I'm glad you're on board.

Thank you.

Are there any members of the public who are here to speak in opposition? All right, seeing none, we'll bring it back. Thank you. Thank you, Madam Chair. I'd make a motion to move the conferee to the full Senate floor for a vote. Thank you so much to our Vice Chair, Grove. With that, we're going to go ahead and call the roll.

Limon, aye. Grove? Aye. Grove, aye.

Jones, aye. Laird?

Reyes, aye. 4-0. The appointment has been approved to move to the full Senate floor for confirmation.

Thank you. This concludes today's public agenda. I want to thank all the individuals that were here participating and provided comments and feedback, and thank everybody for their cooperation. We're going to close the public portion of this hearing to move into the closed session.