San Francisco's District Attorney is suing DoorDash for classifying workers as contractors instead of employees despite AB5 gig-worker law

Katie Canales

A worker with a DoorDash delivery pouch in San Francisco in 2019. Katie Canales/Business Insider

San Francisco District Attorney Chesa Boudin is suing food delivery platform DoorDash for misclassifying its workers as contractors instead of employees.

The civil lawsuit is one of the latest examples of how California's AB5 law is upending tech companies' reliance on the gig economy.

The law went into effect in January and requires companies to treat their gig workers as employees, an action that the lawsuit is calling for DoorDash to take.

A DoorDash spokesperson told Business Insider in an email that "today's action seeks to disrupt the essential services Dashers provide."

San Francisco District Attorney Chesa Boudin is suing food delivery platform DoorDash for "unlawful and unfair business practices."

According to the complaint, pulled by Mission Local reporter Joe Eskenazi who first reported the news, the company has continued to classify its delivery workers as independent contractors instead of employees in direct defiance of a California law passed to prevent companies from doing just that.

The state's AB5 law went into effect in early January 2020 and strives not only to require companies to classify gig workers as employees but also to pay local, state, and federal taxes in accordance with that classification, as Eater SF notes. Boudin's civil lawsuit is asking for DoorDash to classify its delivery workers, known as "Dashers," as employees.

"Today's action seeks to disrupt the essential services Dashers provide, stripping hundreds of thousands of students, teachers, parents, retirees and other Californians of valuable work opportunities, depriving local restaurants of desperately needed revenue, and making it more difficult for consumers to receive prepared food, groceries, and other essentials safely and reliably," DoorDash Global Head of Public Policy Max Rettig said in an email to Business Insider. "We will fight to continue providing Dashers the flexible earning opportunities they say they want in these challenging times."


San Francisco tech companies — including Uber, Postmates, and Lyft — and their business models rely heavily on gig workers. By doing so they're able to avoid the higher costs that come with doling out wages and benefits typically reserved for full-time employees.

DoorDash — which filed to go public in late February — isn't the only firm that has aggressively pushed back on AB5. The company and others like Lyft, Uber, and Instacart have poured millions into a campaign supporting a California ballot measure designed to reverse the AB5 law.

Ride-hailing giant Uber and food delivery company Postmates had also filed a lawsuit in December 2019 arguing that the law was unconstitutional.

But the gig workers are also going to court.

As Business Insider's Tyler Sonnemaker reported, drivers with Uber and Lyft in California filed claims against the companies in mid-April. The workers claimed they were owed at least $630 million in back wages as their employers continued to classify them as independent contractors, despite the passage of AB5.

SEE ALSO: DoorDash is preparing an IPO.

Feds say company provided subpar steel for US Navy subs

GRIFTER NATION 

MILITARY INDUSTRIAL COMPLEX

GETS SLAP ON THE WRIST
Gene Johnson, The Associated Press,Defense News•June 16, 2020




SEATTLE — For decades, the Navy’s leading supplier of high-strength steel for submarines provided subpar metal because one of the company’s longtime employees falsified lab results — putting sailors at greater risk in the event of collisions or other impacts, federal prosecutors said in court filings Monday.

The supplier, Kansas City-based Bradken Inc., paid $10.9 million as part of a deferred prosecution agreement, the Justice Department said. The company provides steel castings that Navy contractors Electric Boat and Newport News Shipbuilding use to make submarine hulls.

Bradken in 2008 acquired a foundry in Tacoma, Washington, that produced steel castings for the Navy. According to federal prosecutors, Bradken learned in 2017 that the foundry's director of metallurgy had been falsifying the results of strength tests, indicating that the steel was strong enough to meet the Navy's requirements when in fact it was not.

US Navy commissions its last Block III Virginia submarine

Prosecutors say the company initially disclosed its findings to the Navy but then wrongfully suggested that the discrepancies were not the result of fraud. That hindered the Navy's investigation into the scope of the problem as well as its efforts to remediate the risks to its sailors, prosecutors said.

“Bradken placed the Navy’s sailors and its operations at risk,” Seattle U.S. Attorney Brian Moran said in a news release. “Government contractors must not tolerate fraud within their organizations, and they must be fully forthcoming with the government when they discover it.”

There is no allegation in the court documents that any submarine parts failed, but Moran said the Navy had incurred increased costs and maintenance to ensure the subs remain seaworthy. The government did not disclose which subs were affected.

The foundry's director of metallurgy, Elaine Thomas, 66, of Auburn, Washington, was charged criminally with one count of major fraud against the United States. Thomas, who worked in various capacities at the lab for 40 years, was due to make an initial appearance in federal court June 30. Her attorney, John Carpenter, declined to comment.

The criminal complaint said investigators were able to compare internal company records with test results that Thomas certified. The analysis showed that she fabricated the results of 240 productions of steel, representing nearly half of the high-yield steel Bradken produced for Navy submarines — often toughness tests conducted at negative-100 degrees Fahrenheit, the complaint said.

When a special agent with the Department of Defense's Criminal Investigative Service confronted her with falsified results dating back to 1990, she eventually conceded that the results were altered — “Yeah, that looks bad,” the complaint quoted her as saying. She said she may have done it because she believed it was “a stupid requirement” that the test be conducted at such a cold temperature, the complaint said.

Investigators said the fraud came to light when a metallurgist being groomed to replace Thomas upon her planned 2017 retirement noticed some suspicious results. The company said it immediately fired Thomas.

“While the company acknowledges that it failed to discover and disclose the full scope of the issue during the initial stages of the investigation, the government has recognized Bradken’s cooperation over the last eighteen months to be exceptional,” the company said in an emailed statement. “Bradken has a long history of proudly serving its clients, and this incident is not representative of our organization. We deeply regret that a trusted employee engaged in this conduct.”

Bradken agreed to take steps that include increased oversight over the lab, fraud protections and changes to the foundry’s management team. If Bradken complies with the requirements outlined in the deferred prosecution agreement, the government will dismiss the criminal fraud charge against it after three years.

BEING QUEER SHOULD NOT BE A DEATH SENTENCE

LGBTQ activist Sarah Hegazi, exiled in Canada after torture in Egypt, dies at 30

Hegazi struggled with depression, trauma after enduring 3 months of torture by Egyptian authorities

Nick Boisvert · CBC News · Posted: Jun 16, 2020

friend captured a photo of Sarah Hegazi hoisting a rainbow flag at a concert in Cairo in 2017. She was arrested and tortured by the Egyptian authorities not long after. (Amr Magdi/Twitter)

A prominent LGBTQ activist who sought asylum in Canada after being arrested and tortured in her native Egypt has died, leaving behind unfulfilled dreams of liberating other people targeted for their sexual orientation and political beliefs.

Sarah Hegazi, 30, is being remembered as an inspiring symbol of resistance and bravery by mourners around the world.

She was found dead in her Toronto apartment on Saturday, June 13, of an apparent suicide.

Hegazi was imprisoned in the fall of 2017 after waving a rainbow flag at a concert in Cairo by the Lebanese band Mashrou'Leila, whose lead singer Hamed Sinno is openly gay.

The sight of the flag associated with LGBTQ liberation being so prominently displayed at the concert outraged many in the Egyptian establishment. It ignited a three-week anti-gay crackdown by the authorities, in which Hegazi was the only woman arrested.

"It was a shock for the conservative community and it was a shock to the Egyptian government," said her friend Ahmed Alaa, who was also jailed after raising a rainbow flag at the show.

In interviews, she was tortured by the Egyptian government for three months before her release on bail. Fearing her eventual prosecution as an openly gay woman in a country that routinely targets and charges its gay citizens with crimes of debauchery and blasphemy, Hegazi fled to Canada shortly after.

In Syria, he lived in secret. Now he's helping other LGBTQ refugees

Rainbow Railroad station praises expansion of program to help LGBTQ refugees get to Canada

In an interview with CBC News in 2018, Hegazi spoke of the unrelenting trauma caused by her imprisonment, which she said included torture by electric shock.

"I want to get over it and I want to forget," she said at the time. "But no, I'm still stuck in prison."

Hegazi described a life in Canada marked not by relief or a sense of sanctuary, but of nightmares, depression and panic attacks.

She was also debilitated by severe loneliness after being separated from her beloved mother and younger siblings, who remained in Egypt. Hegazi's mother died of cancer a month after she landed in Canada.

"Home is not land and borders. It's about people you love," Hegazi said. "Here in Canada, I haven't people, I haven't family, I haven't friends. So I'm not happy here."


Sarah Hegazi, a prominent Egyptian LGBTQ activist, has died in Toronto after fleeing imprisonment and torture in her homeland. 

While grateful for the protection from prosecution provided in Canada, Hegazi said she dreamed of returning to her homeland to continue her fight against discrimination, Western imperialism and capitalism.

But doing so would require shaking off the trauma of her imprisonment, which she described as a near-insurmountable task.

"If I get the help and I can feel like I'm finally free from it, I'll be able to not only help my brother and sister, but hundreds of people who I know need it," Hegazi said.
A close friend promises to continue her life's work

Hegazi also hoped to draw attention away from her own experience and toward the many other people languishing in prisons at the hands of menacing regimes.

"I don't want to focus only on my case, I want to focus on the hundreds of thousands of people that are in jail because they either have a different political standing or sexual orientation," Hegazi said.

While Alaa said he is still struggling to accept her death, he pledged to remember her as a champion for human rights.

"For everyone who needs help and support, Sarah was the most kind, the most supportive person you might ever see," said Alaa, who also fled Egypt and now lives in Toronto.

Ahmed Alaa joined Hegazi in Canada after being jailed and tortured. 'All she wanted was to go back to Egypt, to live in peace, to love her siblings,' he said. (Grant Linton/CBC)

The two met in Egypt while working with a domestic violence organization. They later bonded over their shared interest in advancing human rights for Egyptians in the LGBTQ community.

"She was fighting a lot, but she just lost her energy," Alaa said, adding that continuing her work is "the only thing we can do."

Lead singer, LGBTQ community honours Hegazi online

News of her death has sparked an outpouring of support on social media, with many people using the hashtag #RaiseTheFlagForSarah in her honour.

But in a Facebook post, Hamed Sinno confronted an altogether different wave of online comments that welcomed news of her death, which was framed as the result of a life lived in contravention of God. 

https://www.facebook.com/1328501785/videos/10223708227916890/

"I don't know what to make of the amount of hate I've seen over the last two days," he wrote. "None of this is God's will. None of this is religion."

Sinno concluded the post by quoting a line of Hegazi's poetry, originally written in Arabic:

"The sky is sweeter than the earth, and I need the sky not the earth."

With files from Joyita Sengupta, Anand Ram, Adrienne Arsenault, Yasmine Hassan and Chris Glover

CANADA

CERB payments to be extended for 2 more months

Beginning July 5, recipients must sign attestation acknowledging government wants them to work

MAKE IT PERMANENT CALL IT
 UNIVERSAL BASIS INCOME UBI

Kathleen Harris · CBC News · Posted: Jun 16, 2020

Prime Minister Justin Trudeau announced a two-month extension to the Canada emergency response benefit today. (Adrian Wyld/The Canadian Press)

The Canada emergency response benefit (CERB) is being extended by two more months, even as the government encourages people to look for jobs and to go back to work when it's possible to do so.

CERB has provided taxable payments of $2,000 for up to four months to Canadians who lost income because of the COVID-19 pandemic.

Prime Minister Justin Trudeau announced today that the financial supports will be extended for eight weeks for those who still can't work as provinces and territories gradually reopen their economies.

"The reality is that there are three million people out of work who are looking for work, and even as our economy is reopening, there are many, many more people out of work, willing to work, than there are jobs available," he said.

Governments shouldn't 'scare' Canadians, Liberal MP says as Ottawa threatens penalties for CERB fraud

A draft bill placed conditions on CERB payments requiring recipients to actively look for work and to not turn down reasonable work opportunities. That legislation did not pass, but Trudeau said today the government will find ways to encourage people to work when they are able.


CERB payments being extended 8 weeks: Trudea

Prime Minister Justin Trudeau says the Canada emergency response benefit (CERB) will be extended by two more months for those who still cannot work as provinces and territories gradually reopen their economies. 1:53

Employment Minister Carla Qualtrough said CERB recipients for the new phase will be required to sign an attestation acknowledging the government is encouraging them to look for work and to consult with the government's job bank.

"We know that Canadians are eager and ready to do their part. We expect that workers will be seeking work opportunities or returning to work when their employer reaches out to them, provided they are able and it is reasonable for them to do so," she said.

That attestation will be in place on July 5, according to her office.

Canadians have made 190,000 repayments on CERB claims, says CRA

The government has been encouraging employers to apply for the wage subsidy program, which covers 75 per cent of an employee's pay, up to $847 a week. More than 223,000 employers have applied for the Canada emergency wage subsidy to cover 2.6 million employees across the country, Qualtrough said.

"While the CERB has been helping millions of Canadian workers get through this difficult time, we know that this benefit is not a long-term solution," she said. "We are moving from a phase in the pandemic where we were asking everyone to stay home, to a phase where workers are going back to work when it is safe and possible for them to do so."

The student emergency benefit, which gives eligible students $1,250 a month — or $2,000 if they have a dependent — requires recipients to attest they are "actively looking for a job."

"The Canada Revenue Agency (CRA) may ask you to provide information later to verify that you have been looking for work during the eligibility period(s) that you have applied for, so it is important to keep track of your ongoing job search activities," the website reads.
Long-term solutions needed: Singh

NDP Leader Jagmeet Singh had called on the government to extend CERB for at least four months

"Millions of Canadians have been worried about how they will pay their bills this summer. The government can't put people in this situation again come August. Over the weeks ahead, we need a long-term plan to repair EI so that it is finally designed to continue to support workers that can't go back to work and still need help," he said in a statement.

"The prime minister says he has heard us and is extending support through CERB through the summer. This is what we were calling for in the short term. We'll keep working to make sure help is there for Canadians who need it in the long term."

Conservative employment critic MP Dan Albas called on the government to make "simple changes" that would help those ineligible for CERB.

He said there should also be built-in incentives for people to work whenever possible.

Federal deficit likely now at $260 billion due to COVID-19, PBO says

"As businesses start having shifts to fill, Canadians should not be penalized for returning to work. But that's exactly how the Liberals' programs are structured. Earning more than $1,000 a month results in a worker losing their entire benefit," he said.

"That is why Conservatives have called on the government to make the CERB more flexible so that no one is worse off going back to work or picking up a shift."

Employees who make more than $1,000 a month are no longer eligible for CERB. The Conservatives have called for a scaled approach that would allow people to collect a percentage of CERB while working more hours.

Watch | Power & Politics: Employment Minister Carla Qualtrough on the CERB extension
Feds extend CERB by eight weeks | Carla Qualtrough12 hours ago News
Employment Minister Carla Qualtrough on the decision to extend the Canada Emergency Response Benefit by two months. 9:58

USA WAGE SLAVERY
Just 3 in 10 people working outside the home get hazard pay, despite ‘pervasive fear’ of bringing coronavirus home

This fear exists ‘especially among vulnerable workers with the least bargaining power, such as Black and Hispanic workers and low- and middle-income workers’

LIKE THE UI $600 BONUS THE REPUBLICANS AND TRUMP WANT ENDED HERE AGAIN LOW PAID WORKERS WHO WOULD BENEFIT MOST, AS WOULD THE LOCAL ECONOMY, GET SCREWED BY CHEAP ASSED EMPLOYERS, TOO CHEAP TO PAY A LIVING WAGE AND HAZARD PAY

June 16, 2020 By Meera Jagannathan

Workers of color are overrepresented in essential jobs that 

require them to commute to work outside the home. GETTY IMAGES

For many people heading in to work during the COVID-19 pandemic, the rewards haven’t kept pace with the perceived risks, a new analysis suggests.

More than half of workers leaving their homes to go to work say they’re concerned about exposing their households to the coronavirus, but just 30% are compensated with hazard pay, according to a new report by the Economic Policy Institute, a left-leaning think tank. About 27% of white people, 41% of black people and 34% of Hispanic people working outside the home receive hazard pay.

See also:Cuomo: Federal government should pay frontline workers ‘hazard pay’ for risking their lives during coronavirus pandemic

Black, Hispanic and non-college educated workers leaving home for work are more likely to get hazard pay, the study found, “though not in proportion to the perceived greater risks”: About 71% of black people working outside the home are afraid of bringing the virus into their households, for example, while around 41% get hazard pay.

The study commissioned questions on a recent YouGov poll and also wrapped in survey findings from the National Employment Law Project (NELP), the progressive Roosevelt Institute and other sources. It defined hazard pay as when workers “received extra pay or benefits because of the higher risks you face” as either a one-time bonus or payment, a change in wage rate or another type of financial benefit.

‘Workers are thus being forced to make unacceptable choices between economic sustenance and their health and their family’s health, a squeeze targeted at those with the least power in the labor market.’— report by the Economic Policy Institute

“There is pervasive fear among workers of bringing the coronavirus home from work, especially among vulnerable workers with the least bargaining power, such as Black and Hispanic workers and low- and middle-income workers,” wrote the authors. “These workers are not being protected by OSHA-established standards and they are also not receiving additional compensation in proportion to the risks they face.”

Workers of color are overrepresented in essential jobs that require them to commute to work outside the home, the U.S. Centers for Disease Control and Prevention note.

One Washington Post-Ipsos survey included in the EPI analysis found that 72% of Hispanic workers and 68% of black workers employed outside of their homes worried about exposure to COVID-19 on the job and subsequent infection of household members, compared to 50% of white workers.

Racial disparities also emerged in responses to a separate NELP survey, which asked, “Have you gone to work outside your home during this pandemic, even though you thought it might be seriously risking your health or a family member’s health?” Some 73% of black respondents and 64% of Hispanic respondents replied “yes” to the question, versus 49% of white respondents.

The HEROES Act passed by the Democrat-controlled House last month would provide up to $10,000 in “pandemic premium pay” for essential workers.
Many employees are “being forced to work in order to sustain their families, and many are being denied unemployment benefits for not being willing to go to jobs they consider unsafe,” the EPI report’s authors wrote.

“Workers are thus being forced to make unacceptable choices between economic sustenance and their health and their family’s health, a squeeze targeted at those with the least power in the labor market,” they said. “Policies to protect workers’ health on the job as well as to provide decent pay and income maintenance are essential.”

The extra $600 Americans receive in weekly unemployment benefits ends in July — how that could cost the U.S. more jobs

For every dollar spent on unemployment insurance, there’s a multiplier effect leading to a 1.64 increase in GDP, research shows

IN CANADA THE GOVERNMENT HAS EXTENDED ITS EMERGENCY FUNDING TILL THE END OF SEPTEMBER

CERB payments to be extended for 2 more months | CBC News

https://www.cbc.ca › news › politics › cerb-extended-trudeau-1.5613782

11 hours ago - Prime Minister Justin Trudeau announced today that the financial supports will be extended for eight weeks for those who still can't work as ...

Published: June 16, 2020 By Elisabeth Buchwald

In New York, the state that’s been hardest hit by coronavirus, construction workers are being put back to work in some areas during the state’s Phase 1 reopening. GETTY IMAGES

Two-thirds of Americans are receiving more money from unemployment benefits than they did from their jobs, largely because of a supplemental $600 weekly benefit that’s part of the $2.2 trillion CARES Act.
But decreasing those benefits could cost the country even more jobs on top of the historic 20 million jobs that have already been wiped away by the coronavirus pandemic, Heidi Shierholz, an economist at the Economic Policy Institute, a left-leaning think-tank based in Washington, D.C., said.

If the extra $600 unemployment benefit expires, millions of Americans will have less money to spend in stores, and that could ultimately lead to more unemployment.— Heidi Shierholz, an economist at the Economic Policy Institute

The weekly supplemental $600 benefit is set to expire at the end of July if the U.S. Senate and President Donald Trump don’t pass the $3 trillion HEROES Act stimulus package, which would extend the $600 weekly add-on unemployment benefit into January 2021.

Don’t miss: The extra $600 Americans get in weekly unemployment benefits ends next month — here’s what lawmakers are proposing to replace it


Republican lawmakers hold that the $600 weekly boost in unemployment insurance during the pandemic is a disincentive to return back to work, given that people could earn more from not working.

Ohio Republican Senator Rob Portman has instead proposed using federal funds to distribute a $450 return to work bonus. White House economic advisor Larry Kudlow said Tuesday that “it’s something we’re looking at very carefully.”


However, job openings hit a three-year low in March but made a slight bounce back in April with 10 million job losses compared to 14.6 million in March, according to Bureau of Labor Statistics monthly Job Openings and Labor Turnover report. The number of people hired in April fell to the lowest level on record at 3.5 million. Before the pandemic, job openings were running well above 7 million and had hit a record high.

Job openings are expected to continue to dwindle, suggesting that more Americans are unlikely to leave their state’s unemployment insurance program.

If the extra $600 unemployment benefit expires, millions of Americans will have less money to spend in stores, and that could ultimately lead to more unemployment, Shierholz said. “It’s not true that there’s a pool of jobs out there that people would fill if they weren’t receiving unemployment benefits,” she said.


For every dollar spent on unemployment insurance, there’s a multiplier effect leading to a 1.64 increase in GDP.

For every dollar spent on unemployment insurance, there’s a multiplier effect leading to a 1.64 increase in GDP, according to a 2008 study published by Mark Zandi, chief economist at Moody’s Analytics MCO, +1.60%. Meanwhile, for every dollar spent on infrastructure projects, U.S. GDP could be expected to increase by a multiple of 1.59.


That’s evident in last month’s retail sales report which documented a record 17.7% jump in retail sales. The brightest spots in terms of purchases Americans made were cars, clothing, furniture, books, music and sporting goods.

If people didn’t have checks to make these purchases, the job losses would have been much greater, Shierholz said. That could also help explain May’s surprise jobs report where nearly 2.7 million Americans who were temporarily laid off amid the coronavirus pandemic were rehired.

That’s why she considers it “incredibly efficient money to fight the recession.”

Right now, “it is appropriate to have the additional $600,” Zandi told MarketWatch, given the country’s 13.3% unemployment rate. Speaking anecdotally, he added that it is “hard to imagine people wouldn’t take their jobs back for a couple of hundred bucks.”

Meanwhile, for people who have no savings, “If they don’t get a check they’re going to be panicked and that makes for a very dark situation,” said Zandi, who advised the presidential campaign of the late U.S. Senator John McCain.

But that doesn’t mean that the extra $600 in unemployment should stay forever.

“At some point, lawmakers need to think about reducing it and winding down,” Zandi said. Once unemployment returns to “single digits,” he said, lawmakers should consider halving unemployment benefits.

Like Sen. Portman, Stan Veuger, an economist at the American Enterprise Institute, a right-leaning policy think-tank, believes the amount of money being distributed to Americans who are out of work is problematic.

“It’s reasonable to have an addition to what people would otherwise receive from their state unemployment program, but I don’t think it should be as large,” he said. “We want businesses to rehire, but replacement rates right now are just too high.”

PG&E pleads guilty to 84 deaths in 2018 California wildfire

CORPORATIONS ARE PERSONS UNDER US LAW, SO WHICH PERSON IS GOING TO JAIL? 

MICAEL LIEDTKE,Associated Press•June 15, 2020



1 / 10

California Wildfires Utility
FILE - In this Feb. 7, 2019, file photo, Christina Taft, the daughter of Camp Fire victim Victoria Taft, displays a collage of photos of her mother, at the burned out ruins of the Paradise, Calif., home where she died in 2018. Pacific Gas & Electric officials are to be expected to appear in court Tuesday, June 16, 2020, to plead guilty for the deadly wildfire that nearly wiped out the Northern California town of Paradise in 2018. (AP Photo/Rich Pedroncelli, File)
More


SAN RAMON, Calif. (AP) — Pacific Gas & Electric confessed Tuesday to killing 84 people in a devastating 2018 wildfire that wiped out the Northern California town of Paradise in November 2018.

PG&E CEO Bill Johnson entered guilty pleas on behalf of the company for 84 felony counts of involuntary manslaughter stemming from the fire, which was blamed on the company’s crumbling electrical grid.

“Our equipment started that fire," said Johnson, who apologized directly to the victims' families. ”PG&E will never forget the Camp Fire and all that it took away from the region.”

Although the admission was part of a plea deal, it came during a dramatic court hearing designed to publicly shame the nation’s largest utility for neglecting its infrastructure.

Butte County Superior Court Judge Michael Deems read the name of each victim aloud in the courtroom while the images of the dead were shown on large screen as Johnson entered a plea for each of the counts. The fire killed 85 people, but prosecutors weren’t certain they could prove PG&E was responsible for one of the deaths.

Johnson also pleaded guilty on behalf of the company to one felony county of unlawfully starting a fire.

Later Tuesday, Butte County District Attorney Mike Ramsey is expected to release a long-awaited grand jury indictment detailing the corporate misconduct that ignited the November 2018 wildfire that destroyed Paradise, California, located about 170 miles (275 kilometers) northeast of San Francisco.

PG&E has agreed to pay a maximum fine of $3.5 million for its crimes in addition to $500,000 for the cost of the investigation. The San Francisco company won’t be placed on criminal probation, unlike what happened after its natural gas lines blew up a neighborhood in San Bruno, California, killing eight people in 2010. That tragedy resulted in a criminal conviction that put San Francisco on a five-year probation that ends in January 2022.

With no prospect of jail time for a corporation, Ramsey tried to use Tuesday’s hearing to force PG&E to confront the death and destruction stemming from its its corporate culture of placing a greater priority on profits for its shareholders than protecting the safety of the 16 million Northern Californians who rely on the utility for power.

PG&E is hoping to emerge from its nearly year-and-half-long bankruptcy. The company has agreed to pay $25.5 billion for losses from the 2018 fire and other blazes in 2017 blamed on its crumbling equipment. The company says it has already made changes that will create a more reliable and safer electrical grid, although it still expects to rely on deliberate power outages during the next few years to minimize the risks of causing more fires. More than 20 family members of people killed in the 2018 wildfire are expected to appear before Deems in a proceeding Wednesday.

The proceeding unfolded as PG&E approaches the end of a complicated bankruptcy case that the company used to work out $25.5 billion in settlements to pay for the damages from the fire and others that torched wide swaths of Northern California and killed dozens of others in 2017. The bankruptcy deals include $13.5 billion earmarked for wildfire victims. A federal judge plans to approve or reject PG&E’s plan for getting out of bankruptcy by June 30.

“We want this to be impactful because this can't go on any longer," Butte County District Attorney Mike Ramsey told The Associated Press. “There is going to have to be a sea change in PG&E's method of operation."

The judge will formally sentence PG&E on Thursday or Friday, according to Ramsey. The plea agreement also spares PG&E from being placed on criminal probation for a second time. The company is in the midst of a five-year probation under the withering supervision of U.S. District Judge William Alsup for a 2010 explosion in its natural gas lines that blew up a neighborhood in San Bruno and killed eight people. The probation lasts until January 2022.

Since filing for bankruptcy early last year, PG&E says it has been dramatically altering a corporate culture that prioritized profits for its shareholders over the safety of the 16 million people who rely on the utility.

The company says it is being more vigilant about trimming trees around its power lines and replacing outdated equipment before it crumbles, although Alsup has repeatedly scolded PG&E for not doing even more to ensure its grid doesn’t cause more tragedy. As part of a deal with California power regulators, PG&E will replace 11 of its 14 board members. CEO Bill Johnson will step down June 30.

Despite PG&E’s pledge, critics fear more danger looms during an upcoming wildfire season after an unusually dry winter in Northern California.

The court hearing was streamed online.




PG&E pleads guilty to manslaughter charges from Camp Fire

PG&E raises fresh debt as it works toward bankruptcy exit

Bond financing comes as Fed eases criteria for corporate bond purchases through index program

Published: June 16, 2020 By Joy Wiltermuth

PG&E crews work to restore power in fire-damaged Santa Rosa, Calif., in October 2017. GETTY IMAGES

Email icon
Facebook icon
Twitter icon
Linkedin icon
Flipboard icon
Print icon
Resize icon

Referenced Symbols
PCG
-0.27% TMUBMUSD10Y
0.749% DJIA
+2.04%


Pacific Gas and Electric Co. completed an $8.925 billion debt deal on Tuesday to help finance the company as it emerges from bankruptcy.

The six-part bond deal, rated Baa3 by Moody’s and BBB- by S&P, is part of a larger $59 billion turnaround plan for the California power utility, which is gearing up to leave Chapter 11 with more debt than it entered bankruptcy with, in part to help pay billions of dollars’ worth of fire-related claims.


The new debt deal comes on the same day that a bankruptcy judge in San Francisco said he planned to greenlight the company’s reorganization plan and as PG&E’s chief executive pleaded guilty on behalf of the company to killing 84 people in the 2018 wildfire that wiped out the Northern California town of Paradise.
“I am here today on behalf of the 23,000 men and women of PG&E, to accept responsibility for the fire here that took so many lives and changed these communities forever,” said Bill Johnson, PG&E’s PCG, -0.27% CEO. “Our equipment started the fire that destroyed the towns of Paradise and Concow and severely burned Magalia and other parts of Butte County.”


S&P Global, a credit-ratings firm, this week said that PG&E is expected to emerge from bankruptcy with about $38 billion of debt, most of which will be backed by a first mortgage, but that it also owes $25.5 billion in wildfire settlements.

The new debt financing benefited from a further rally in corporate credit this week, after the Federal Reserve on Monday tweaked terms of its $750 billion emergency corporate lending facilities to further ease the flow of credit to big U.S. businesses.

Credit conditions briefly weakened last week on fears of rising COVID 19 infections and hospitalizations in some U.S. states.

But borrowing conditions improved Monday, after the Fed said it would start purchasing individual corporate bonds in the secondary market that mature in five years or less, through an index format. The Fed also clarified that bonds purchased through its index program will not require certification, a formal process that shows a company isn’t insolvent, but also lacks adequate access to credit at prices that reflect a “normal, well-functioning” market]

It is unclear if PG&E’s shorter-dated bonds would fit the Fed’s expanded purchase criteria. PG&E did not respond to requests for comment. The corporate lending facility is set to expire in late September, unless the it is extended.

For PG&E’s part, the utility on Tuesday sold its shortest $2.5 billion parcel of two-year bonds at a spread of 155 basis points over Treasurys, a yield of 1.753%.

That’s roughly a savings of 45 basis points from where initial pricing levels were circulated on Tuesday morning, according to a person with direct knowledge of the dealings.

Its longest $1.925 billion slug of 30-year bonds, due in 2050, cleared the market at 200 basis points over Treasurys to yield 3.534%. The initial spread level was in the 262.50 basis points area over Treasurys.

Spreads are the level of compensation investors are paid over a risk-free benchmark, like Treasury TMUBMUSD10Y, 0.749% notes.

Lower spreads can indicate high demand for a bond deal and can also point to a more bullish market tone. U.S. stocks extended their gains for a third day in a row on Tuesday, including the Dow Jones Industrial Average DJIA, +2.04%, which ended more than 500 points higher.

‘We’re still in a first wave,’ Fauci says, noting precautions can prevent second wave of coronavirus

Infectious-disease expert says he hasn’t talked to Trump in two weeks

Published: June 16, 2020 By Mike Murphy

Dr. Anthony Fauci speaks alongside Vice President Mike Pence at the White House on April 1. AFP VIA GETTY IMAGES

Dr. Anthony Fauci said Tuesday that he hasn’t spoken to President Donald Trump in weeks, and warned that America is still not through the first wave of coronavirus cases.

“People keep talking about a second wave. We’re still in a first wave.”— Dr. Anthony Fauci

In an interview with the Wall Street Journal, Fauci, the government’s top infectious-disease expert, said that risky behavior as states reopen their economies is likely leading to a resurgence in COVID-19 cases.

“When I look at the TV and I see pictures of people congregating at bars when the location they are indicates they shouldn’t be doing that, that’s very risky,” he said.

While the White House has dismissed the increase in coronavirus cases as a result of more widespread testing, Fauci told the Journal that, in many states, the upswing in new cases “cannot be explained by increased testing.”

In a separate interview Tuesday with NPRs “1A” podcast, Fauci, who is a member of the White House coronavirus task force, said he hasn’t talked to Trump in two weeks. While the task force has not been in the public spotlight as much recently, he said hard work is still being done. “The seriousness with which the task force takes and the effort that we put into this is really substantial,” he said.

While Fauci did not explicitly fault states for reopening too soon, he did blame some people for flouting safety rules. “States may say they’re in this particular stage, but then you might find people are not adhering to the guidelines,” he told NPR. “That’s clearly increasing the risk and likely explaining some of the upticks you’re seeing.”

A second wave of outbreaks is not inevitable, he said, as long as “we do what we need to do to prevent it from happening.”

Read:Why do so many Americans refuse to wear face masks? Politics is part of it — but only part

Fauci said he was also concerned by the perception that shutting businesses or reopening them was a simple, “all or none” choice.

“It isn’t as if you stay locked down or you open up and leave caution to the wind,” he said, noting that each region needs to be treated differently, depending on a multitude of factors, and that safety precautions such as face masks and social distancing will be the norm for the foreseeable future.

“We are nowhere near herd immunity,” he said. “The bottom line is, you’ve got to protect yourself.”

As of Tuesday, the U.S. has had 2.1 million confirmed coronavirus cases, with nearly 117,000 deaths, according to data from Johns Hopkins University.

Fauci: No Need for a Second Lockdown
Erin Banco, Olivia Messer, The Daily Beast•June 16, 2020

Illustration by Elizabeth Brockway/The Daily Beast/Getty

With top officials in the Trump White House declaring the mission accomplished in slowing the spread of the coronavirus, the nation’s leading infectious disease expert is sounding a more ominous note.

There’s no need to talk about avoiding a second wave of the pandemic, Dr. Anthony Fauci, the head of the National Institute of Allergy and Infectious Diseases said on Tuesday, because the country is still in the first one.

“We are seeing infections to a greater degree than they had previously seen in certain states, including states in the southwest and in the south,” Fauci said. “I don't like to talk about a second wave right now, because we haven't gotten out of our first wave.”

Fauci’s comments, which came during an interview with The Daily Beast on Tuesday, rang far different than the triumphant tune sung by Mike Pence that same day in Iowa, when the Vice President touted lower death counts and exclaimed “we did it” with respect to flattening the curve. And they come as counties across the country, including in states such as Arizona, California, North Carolina, Alabama and South Carolina, continue to see coronavirus cases and related hospitalizations increase.

Dr. Fauci Re-Emerges From Media Blackout, Says We’ll Be ‘Seeing More’ of Him

Fauci wasn’t entirely despondent about the trajectory the country was taking. He said he did not think it was “inevitable” that the U.S. would see another wave of infections and doubted that there would be another scene similar to that of New York City in April, where officials reported thousands of new cases a day and hospitals overflowed with patients.

“New York, unfortunately, really got hit by surprise, because they had activity coming into this city from Europe when everybody was focusing on China. They all of a sudden found that they had a massive outbreak,” he said. “I don't think that could happen under today's circumstances of our full awareness of the potential of this virus, which is highly transmissible.”

Fauci also said he did not believe that cities would have to go back into lockdown (after having started the process of re-opening) because of the virus’ spread. “I really don't think so,” he said. And, he said, while there’s still some reason to worry about the outbreaks across the country, rising case numbers can be managed if states continue to work to maintain the virus.

“When you start to see the inevitable exceptions that you might see when you try to pull back on the mitigation and open up…use public health measures to help you to get to your goal,” Fauci said. “Namely, if you get new infections, you put into place, the manpower, the system ... the ability to identify, isolate and contact trace so that you're actually utilizing public health measures to help you to open up.”

The longtime infectious disease specialist was clearly nervous about some of the rush to re-open that he’d seen, noting the images on TV of “people congregating in bars, with no masks.” And he didn’t sugarcoat his anxiety about his boss—President Donald Trump—moving forward with plans to hold large-scale events, including in cities with new or recurring outbreaks such as Tulsa, Oklahoma and Phoenix, Arizona.

Asked if he would personally attend, Fauci said “No.”

“I'm in a high risk category. Personally, I would not. Of course not,” he said, adding that when it came to Trump’s rallies “outside is better than inside, no crowd is better than crowd” and “crowd is better than big crowd.”

Tulsa Health Director: ‘If You Want to Stay Safe, Don’t Go’ to Trump Rally

Fauci’s comments come at a political inflection point with respect to the pandemic. With increasing case numbers, public health experts around the country have begun calling for the consideration of secondary lockdowns. But many acknowledge that it may not seem tenable for any state leader to actually order one.

In Texas, city leaders in Austin and Houston have tried to implement local stay-at-home orders. But none are allowed to impose anything more strict than Gov. Greg Abbott’s executive orders, and local officials have been threatened with legal action from some residents for trying to enforce mandatory mask-wearing. And In Oklahoma and in Arizona—where national public health experts have called special attention to rising cases and New York Gov. Andrew Cuomo has dubbed the state’s surges “cautionary tale” for reopening too quickly—concerns have been heightened by President Trump’s plan to restart large-scale rallies there.

Scientists and doctors have said repeatedly that until a vaccine for the coronavirus hits the market, the risk of the infection spreading will continue in communities across the nation. Fauci noted that companies have signaled to the administration that a vaccine would not be ready until the first quarter of 2021.

Some of the companies particularly said they could have 100 to 200 million doses by then, Fauci said. He declined to say whether or not he believed the vaccine should be made free for public consumption. But he did say he expected that without universal availability, “you prioritize by people at the highest risks. For example, health workers who deliberately put themselves in harm's way to help care for people. In addition, those who have comorbidities which put them at a greater risk to be able to develop the complications leading to a poor outcome.”

Is This COVID-19 Vaccine Trial a Promising Start or a Dead End?

Fauci’s interview with The Daily Beast came in the middle of a renewed media tour. The infectious disease specialist had been a regular presence on television and in the White House briefing room during the early stages of the pandemic. But in recent weeks his public speaking had been limited as had his conversations with President Trump.

Throughout the interview, he expressed reservations that his press appearances were often reduced to “soundbites” that misconstrued the meaning of his message. Normally loquacious, Fauci, on several occasions, begged off questions for fear that they would land him in trouble.

He acknowledged that things are different now than when he’s faced other public health crises. And here’s what’s made his job more difficult: the politicization of the virus. 

“There’s more back and forth ... people of different political stripes that are taking shots at each other,” he said. “I don't think it's more disinformation. It is just a situation of hoping that people would all be pulling together as opposed to, you know, being at odds with each other.”

MAINSTREET STIMULUS
The No. 1 thing Americans are spending their stimulus checks on — even more than shopping at Costco, Walmart and Target

U.S. retail sales jumped by 17.7% in May. Economists polled by MarketWatch had forecast an 8.5% increase


In late March, lawmakers passed the Trump administration’s $2.2 trillion CARES Act, which included $290 billion in direct payments. 

ISTOCKPHOTO MARKETWATCH PHOTOMONTAGE

Published: June 16, 2020 

U.S. retail sales jumped by 17.7% in May, the government said Tuesday. Economists polled by MarketWatch had forecast an 8.5% increase.

The rebound in U.S. retail sales follows record drop in prior two months, with clothing, home-furnishing stores and stores that sell books, music, sporting goods and other hobby items showing an increase. However, food-service sales were still down 40% in May on the year.

“The comeback was much faster than expected, and looks like a beginning of a v-shaped recovery in consumer spending,” wrote Jefferies analysts Aneta Markowska and Thomas Simons in a note. “That’s assuming the positive momentum is sustained, something we remain skeptical about.”

‘Americans used these funds to keep a roof over their head’

Nearly one-third (30%) of people said they used their stimulus checks to pay bills, according to a survey released this week, another sign that Americans are struggling to make ends meet, particularly with more than 38 million people filing for unemployment since mid-March.

Those bills — including for cellphones, utilities, cable TV and rent — are the No. 1 priority, even more than purchasing essentials and “relief spending” on apparel, televisions, video games, sporting goods and toys at Walmart WMT, +1.33%, Costco COST, +1.40% and Target TGT, +0.89%.

“It’s alarming to look at how many Americans used these funds to keep a roof over their head and pay for necessities considering the federal government has not provided clarity about another round of stimulus payments being provided in the near future,” according to the report by YouGov.

“Americans are aware of how grim the near future could be, and they took the opportunity to use the stimulus funds to help prepare them for it. By paying off debt, consumers free up some credit so they can turn to it, should they find themselves out of a job in the near future,” it added.

Over 160 million stimulus checks are winding their way to households. They’re a key part of the government’s $2.2 trillion CARES Act, but many furloughed and laid-off workers say a maximum $1,200 payment is not enough to see them through another, and perhaps bigger, Great Recession.

Although new jobless claims have been falling since March, over 2.2 million applications for unemployment compensation were filed in the last week of May through state and federal relief programs. That’s almost as many as the 2.5 million jobs supposedly regained in the entire month.



Other recent findings support the theory that people are struggling to pay bills most of all. As Americans have received their $1,200 stimulus checks, many have used it to keep a roof over their head and food on the table, according to separate research by a team of economists.

“Given the size of the 2020 stimulus checks, we might have expected large impacts on categories like automobile spending, electronics, appliances, and home furnishings,” wrote economists from Columbia University, Northwestern University, the University of Chicago and the University of Southern Denmark.

‘Individuals are catching up with rent and bill payments.’

“Instead, it seems that individuals are catching up with rent and bill payments as well as engaging in spending on food, personal care and nondurables,” it said. That research analyzed the spending and saving habits of more than 1,600 people who received their stimulus checks by April 21.

The study, distributed this month by the National Bureau of Economic Research, provides another look at how the coronavirus outbreak and its economic consequences suddenly left many American families cash-strapped — especially those making lower incomes.

There were glimmers of hope for U.S. workers who are endeavoring to make ends meet with their $1,200 stimulus checks. The Democratic-run House of Representatives approved its HEROES Act, a $3 trillion coronavirus relief package, a fortnight ago, and analysts say it’s likely next month or later.

“We expect that negotiations over a finalized version of the Phase 4 bill will take at least until the end of May,” said Height Capital Markets analysts in a note. “We expect a final package to come together successfully but note that passage will likely be delayed into June.”

The number of confirmed COVID-19 cases and the number of deaths continues to rise. As of Tuesday, there are 2,136,208 confirmed cases of COVID-19 in the U.S., and 116,905 deaths, and 30,897 deaths in New York, the largest of any state in the country.

Worldwide, there were 8,152,885 confirmed cases and 441,407 deaths, according to Johns Hopkins University’s Center for Systems Science and Engineering. The markets, meanwhile, are looking to vaccine research on COVID-19, and the effects of any resurgence may have on corporate earnings.

The Dow Jones Industrial Index DJIA, +2.04% and the S&P 500 SPX, +1.89% ended higher Tuesday on the back of higher-than-expected retail sales and a report of a potential therapeutic steroid treatment for patients with severe COVID-19 symptoms.

(Andrew Keshner and Silvia Ascarelli contributed to this story.)