Lawmakers and advocates push back on proposed $400 million loan from labor fund; CWOP supporters urge protection

The May revision includes a proposal to loan $400 million from the Labor and Workforce Development Fund to the General Fund. The proposal drew sustained criticism from senators and dozens of public commenters who said the fund supports wage‑theft enforcement and a statewide worker‑outreach program known as the California Workplace Outreach Project (CWOP or "See‑WOP" in testimony), which provides multilingual worker education and outreach.

Senator Durazo expressed concern that the loan would undercut enforcement and outreach designed to prevent wage theft and noted the fund previously lent money to the General Fund in 2020. Jay Sturgis of the Labor and Workforce Development Agency replied that the current proposal would not impact programs supporting wage theft enforcement because those activities are funded from a different special fund (the Labor Enforcement and Compliance Fund). He said the proposed loan would leave approximately $120 million in reserve and that prior loans have an established repayment schedule. Finance staff said revenues to the fund have been volatile — rising from approximately $12 million annually years ago to about $200 million in 2023‑24 — because they derive largely from penalties and settlements.

Multiple community organizations, labor councils and unions who testified during the public‑comment portion urged the subcommittee to reject the $400 million loan and to increase funding for CWOP. Dozens of speakers described CWOP’s outreach work in languages and communities where workers lack access to information about wage, safety and sick‑leave rights and told the committee that CWOP partners identify workplace violations and help workers avoid exploitation. Speakers included representatives of labor councils, immigrant worker organizations and groups that run CWOP regional programs; several advocates asked the committee to expand rather than shrink CWOP funding.

Committee members requested the administration provide documentation within 30 days: the prior loan‑repayment schedule, the original intent and statutory uses of the Labor and Workforce Development Fund, and alternative options for achieving General Fund savings without reducing CWOP and wage‑theft enforcement capacity. The administration said it would provide follow‑up information and noted that statutory language governs allowable uses of the fund and that some of CWOP and wage‑theft enforcement uses are financed by a different special fund.

Why this matters: The proposed loan pits a one‑time budget solution against funding for worker protection and outreach programs that many labor and immigrant‑serving groups say prevent wage theft and reduce costly future enforcement needs. Lawmakers requested a fuller accounting and alternatives before deciding whether to support the loan.