California
New Round of Employee-Friendly Laws for the
State
California Governor Jerry Brown has signed into law a number of
bills that could significantly impact employers in 2012.
Misclassification of Independent
Contractors
Consistent with the trend toward government "crackdowns" on
employers who misclassify their employees as independent
contractors, California's SB 459 provides a comprehensive approach
to enforcing wage laws. The legislature enacted the new law
prohibiting the "willful misclassification" of individuals as
independent contractors, as well as the practice of deducting from
the paychecks of misclassified individuals any fees or other
charges that could not be deducted from the paychecks of employees
(e.g., for workspace, licenses and equipment). The "willful
misclassification" of an individual is defined as "avoiding
employee status for an individual by voluntarily and knowingly
misclassifying that individual as an independent contractor."
SB 459 also provides for the assessment of civil penalties in
the range of $5,000 to $15,000 for each violation and for
individuals found guilty of a "repeated pattern or practice," the
penalty may increase to between $10,000 and $25,000 per violation.
The law imposes liability upon any person who, for money or other
valuable consideration, "knowingly advises" an employer to treat an
individual as an independent contractor to avoid employee status
where that individual is later found to be an employee. Excepted
from this provision are persons providing advice to their employer
and licensed attorneys dispensing legal advice during the course of
practicing law. The new law becomes effective January 1, 2012.
California's New "Anti-Wage Theft" Law
AB 469, dubbed the "Wage Theft Prevention Act of 2011," adds
Section 2810.5 to the Labor Code and requires employers to furnish
to non-exempt employees, at the time of hiring, a notice specifying
the employee's rate or rates of pay and the basis on which the
employee's wages are to be calculated (e.g., hourly, daily, piece,
salary, commission or by some other method). The notice must
include applicable overtime rates; allowances, if any, claimed as
part of the minimum wage; the employer's designated regular pay
day; the name of the employer, including any fictitious names under
which the business operates; and the employer's physical and
mailing addresses. Further, the employer must notify each employee
in the form of a new or amended written notice of any changes made
to this information within seven days of their implementation,
unless such changes are reflected on a timely wage statement or
other writing required to be provided by law. The statute also
clarifies existing law to expressly require that employer's pay, in
addition to applicable civil penalties, restitution to any employee
who has been paid a wage less than the minimum fixed by the
Industrial Welfare Commission wage orders. AB 469 also criminalizes
certain wage violations by providing that any employer who
willfully violates specified wage statutes or orders, or who
willfully fails to pay wages due under a final court judgment or
final order of the Labor Commissioner, is guilty of a misdemeanor.
Additionally, beginning January 1, 2012, the statute of limitations
for the Division of Labor Standards Enforcement (DLSE) to collect
statutory penalties increases from one to three years.
Limitations on the Use of Consumer Credit Reports in
Employment
AB 22 limits the use by employers of consumer credit reports.
Specifically, the law prohibits employers and prospective employers
(except certain financial institutions) from obtaining or relying
on consumer credit reports regarding employees or job applicants,
unless the position occupied or sought is (1) a position within the
California Department of Justice; (2) a "managerial" position,
defined as a position that qualifies for the executive employee
overtime exemption; (3) a sworn peace officer or other law
enforcement position; (4) a position for which credit information
is required by law to be disclosed or obtained; (5) a position that
involves regular access to specified personal information (except
for the routine processing of credit card applications in a retail
establishment), including bank or credit card account information,
Social Security numbers, and dates of birth; (6) a position in
which the employee or applicant would be a named signatory on the
employer's bank or credit card account, or given authority to
transfer money or enter into financial contracts on the employer's
behalf; (7) a position that involves access to confidential or
proprietary information, defined as a "trade secret" under
California Civil Code Section 3426.1(d); or (8) a position that
involves regular access to cash totaling $10,000 or more which
belongs to the employer, a customer or a client. To the extent an
employee or applicant falls within one of the above-enumerated
categories, before obtaining a credit report an employer must
provide written notice to the consumer specifying the basis for
requesting the report, informing the person of the source of the
report and providing a box to check to request a free copy of the
report.
Additional Pregnancy Disability Leave
Protections
As currently written, the California Family Rights Act (CFRA) does
not explicitly prohibit "interference" with an employee's right to
take a leave of absence. Although merely "declarative of existing
law," the recently enacted AB 592 clarifies that it is an unlawful
employment practice for an employer to "interfere with," restrain
or deny the exercise of any right provided under the CFRA or due to
disability by pregnancy, childbirth or related medical
conditions.
SB 299 requires employers with five or more employees to
maintain and pay for health coverage under a group health plan for
any eligible female employee who takes up to four months of leave
due to pregnancy, childbirth or a related medical condition in a
12-month period. The employee's benefits must be maintained at the
same level and under the same conditions as coverage would have
been provided had the employee continued in employment continuously
for the duration of the leave.
Gender Identity and Expression
AB 887 amends the Fair Employment and Housing Act (FEHA) and
defines "gender" to include both gender identity and "gender
expression." Gender expression is a person's "gender-related
appearance and behavior, whether or not stereotypically associated"
with the sex assigned to the person at birth. AB 887 prohibits
discrimination in the workplace both on the basis of one's gender
identity (i.e., how the person sees him or herself) and gender
expression (i.e., how other people view the person). Under the new
law, an employee must be permitted to dress consistent with the
employee's gender identity and expression.
Pushing Back on E-Verify: The Employment Acceleration
Act
Known as the Employment Acceleration Act of 2011, AB 1236
prohibits the state, a city or a county from requiring employers to
use an electronic employment verification system to verify that the
employees they hire are authorized to work in the United States as
a condition of receiving a government contract or of obtaining a
business license or as a penalty for violating licensing laws. The
new law specifically exempts from this prohibition electronic
verification systems the use of which is required by law or as a
condition of receiving federal funds. Moreover, nothing in AB 1236
alleviates an employer's obligation to require employees to
complete an I-9 Employment Eligibility Verification Form upon
hire.
Commission Agreements to be in Writing by
2013
AB 1396 amends the Labor Code to require, by January 1, 2013, that
when an employer enters into a contract of employment with an
employee for services to be rendered within the state of California
and the "contemplated method of payment" involves commissions, the
contract must be in writing and must set forth the method by which
the commissions are to be computed and paid. Here, the meaning of
the term "commissions" is imported from Labor Code Section 204.1,
which generally excludes short-term productivity bonuses and
profit-sharing plans.
Organ and Bone Marrow Donor Leave
SB 272 clarifies a law enacted last year (SB 1304) allowing
employees to take paid leaves of absence for bone marrow and organ
donation. This year's installation of the law makes clear that
under SB 1304, which applies to employers with 15 or more employees
and took effect January 1, 2011, employees may take leaves for
organ donation of up to 30 business days and for bone marrow
donation of up to five business days in a one-year period, measured
from the date the employee's leave begins. The employer may require
the employee to take up to five days of earned but unused paid days
off (for bone marrow donors) and up to two weeks of earned but
unused paid days off (for organ donors) as an initial condition of
granting leave. However, leaves of absence for either type of
donation may not be treated as a break in the donor's continuous
service for the purpose of his or her right to salary adjustments,
sick leave, vacation, annual leave or seniority. Since the bill
specifies that it is declarative of existing law, employers should
apply SB 272's amendments as if effective January 1, 2011.
Discrimination Based on "Genetic
Information"
During this active legislative session, the California Legislature
saw fit to add genetic information to the list of protected
categories under the Fair Employment and Housing Act (FEHA). SB 559
defines "genetic information" as an individual employee's genetic
tests, the genetic tests of the employee's family members and the
"manifestation of a disease or disorder" in the employee's family
members. Under the new law, discrimination in hiring or employment
based on any of these characteristics is unlawful.
Medical Debts Exempt from Wage
Garnishment
Current law provides that an employer must withhold from an
employee's wages the amount stated on an earnings withholding
order, up to the portion of the earnings the debtor proves is
necessary to support himself or his family. AB 1388 adds an
exemption from wage garnishment for debt that is incurred "for the
common necessaries of life furnished to the judgment debtor" or his
or her family, including hospital services and other medical
debts.
Coverage of California Domestic Partners Under Health
Insurance Plans Issued to Out-of-State Employers
SB 757 expands the reach of the California Insurance Equality Act,
which currently requires insurance companies to provide the same
coverage for registered domestic partners as for spouses. Existing
law provides that a policy marketed, issued or delivered to a
California resident is subject to the nondiscrimination provisions
of the California Insurance Code; however, SB 757 closes the gap
that has, for the past several years, allowed out-of-state policies
issued to employers who maintain their principal place of business
and a majority of their employees outside of the state to limit
benefits to spouses. Under the new law, every group health
insurance policy provided to a California resident, regardless of
the situs of the contract, must offer equal coverage for spouses
and registered domestic partners.
Minors in the Entertainment Industry
This new law establishes a temporary work permit program for
minors in the entertainment industry. Under current law, the Labor
Commissioner must furnish his or her written consent in order for a
minor under the age of 16 to participate in certain projects. AB
1401 creates a program to be administered by the Labor Commissioner
that allows the parent or guardian of a minor performer to obtain a
temporary permit for the minor's employment under certain
circumstances.
New Time Limit for Acceptance of Conditional New Trial
Orders
AB 1403 amends the California statute governing additur and
remittitur by setting a deadline for parties to accept or reject a
judge's proposed modified award of damages. Under current law, a
party can request a new trial on grounds that the jury returned an
inadequate or excessive damage award; the judge may order a new
trial but condition the order on acceptance or rejection of a
modified award. Pursuant to AB 1403, in the absence of a deadline
stated in the court's conditional order, the default deadline for
parties to respond will now be 30 days from the date the order is
served by the court's clerk. A party's failure to respond by the
deadline is deemed a rejection of the offer, which will trigger a
new trial on the issue of damages.
AB 1403 also prohibits trial judges from establishing absolute
or blanket time limits for voir dire and provides that counsel for
each party should be given reasonable time to evaluate any written
questionnaire responses from prospective jurors before oral
questioning begins. Attorneys also will be permitted to deliver
brief opening statements. Finally, "to help facilitate the jury
selection process," under the new law judges "should" provide lists
of potential jurors, both in alphabetical order and in the order in
which they will be called.
