Three More New Laws Effective January 1, 2012

October 31, 2011

As I stated, Brown has been busy! Here are three more new laws effective January 1, 2012. Please advise your managers especially the one concerning independent contractors. You could be held financially liable.

SB 459 (Misclassification of Independent Contractors):  This new law creates stiff penalties for willful misclassification of employees as independent contractors.  The law defines “willful” as “voluntarily and knowingly misclassifying” an individual.  The law also makes it unlawful for an employer to charge an individual who has been willfully misclassified any fees or other deductions from compensation if those fees and deductions (e.g. for licenses, space rental, equipment) would have been prohibited had the individual been properly classified as an employee. In the event of a finding of willful misclassification, penalties may be assessed in the range of $5,000 to $25,000 per violation.  Additionally, an employer in violation may be ordered to display prominently on its Internet web site (or other area accessible to employees and the general public) a notice that explains the employer has been found guilty of committing a serious violation of the law by willfully misclassifying employees, along with other prescribed information. The new law also imposes joint and several liability on individuals who, for money or other valuable consideration, knowingly advise an employer to treat an individual as an independent contractor to avoid employee status.  Excepted from liability are employees who provide advice to their employer, and licensed attorneys providing legal advice to the employer.

AB 469 (Notice of Pay Details):  This new law requires employers to provide each employee, at the time of hire, with a notice that specifies (1) the pay rate and the basis, whether hourly, salary, commission or otherwise, as well as any overtime rate, (2) allowances, if any, claimed as part of the minimum wage, including meals or lodging, (3) the regular payday, (4) the name of the employer, including any “doing business as” names used by the employer; (5) the physical address and telephone number of the employer’s main office or principal place of business, and a mailing address if different, and (6) the name, address and telephone number of the employer’s workers’ compensation carrier.  The employer must notify each employee in writing of any changes to the information set forth in the notice within 7 days of the changes, unless such changes are elsewhere reflected on a timely wage statement or other writing required by law to be provided.

AB 1236 (E-Verify):  This new law prohibits the state, or a city or county, from requiring employers to use E-Verify as a means of verifying employees they hire are authorized to work in the United States.

Unless otherwise specified most new laws take effect January 1, 2012.  California employers will want to familiarize themselves with these new laws as applicable to their workforces and operations, and revise policies and procedures accordingly.


Brown Signs and Vetoes New Laws Effective Jan 1, 2012

October 23, 2011

 Governor Brown vetoed several unappealing employment bills this past weekend.  The bills he vetoed include (1) AB 267, which would have invalidated forum selection and choice of law provisions in employment contracts with California employees, (2) AB 325, which would have required California employers to provide bereavement leave, and (3) SB 931, which would have imposed new requirements for use of payroll cards.  That is the good news.

The bad news is that Governor Brown signed into law AB 22, which limits California employers’ ability to use credit reports for employment purposes.  Under the new law, employers (with the exception of certain financial institutions) are prohibited from obtaining or relying on credit reports for applicants and employees, unless the report is sought in relation to (1) a position in the California Department of Justice; (2) a managerial position (defined as a position that qualifies for the executive exemption from overtime); (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 (other than in connection with routine solicitation of credit card applications in a retail establishment) to people’s bank or credit card account information, social security number, and date of birth; (6) a position in which the employee would be a named signatory on the employer’s bank or credit card account, authorized to transfer money on behalf of the employer, or authorized to enter into financial contracts on behalf of the employer; (7) a position that involves regular access to cash totaling $10,000 or more of the employer, a customer, or client during the workday; and (8) a position that involves access to confidential or proprietary information (defined as a legal “trade secret” under Civil Code 3426.1(d)).

Even if the employer is permitted to obtain a credit report under one of the exceptions outlined above, the employer must first provide written notice to the applicant or employee, specifying the permissible basis for requesting the report and providing a box for the employee/applicant to check off to request a copy of the report, which must be provided free of charge and at the same time the employer receives its copy of the report.  If employment is denied based on information in a credit report, the employer must advise the applicant/employee and provide the name and address of the credit reporting agency that supplied the report.

Stay tuned! There will be an additional posting by the end of the week.

New California Law Requires Written Contract for Commission Pay Arrangements

October 16, 2011

Late last week, Governor Brown signed into law AB 1396, which requires commission pay arrangements to be set forth in a written contract.  All employers must comply by January 1, 2013. Under the new law, whenever an employer enters into a contract of employment with an employee for services to be performed in California and the employee’s compensation involves commissions, the contract must be in writing and set forth the method by which the commissions will be computed and paid.  The employer must give a signed copy of the contract to the employee and must retain the employee’s signed receipt of the contract.  In the event the contract by its terms expires but the parties nevertheless continue to work under the expired contract, its terms are presumed to remain in full force and effect until the contract is expressly superseded by a new contract or the employment relationship is terminated.  For purposes of the new law, “commissions” are defined in accordance with Labor Code section 201.4 as compensation paid to any person in connection with the sale of the employer’s property or services and based proportionately upon the amount or value thereof.  However, the new law specifies that “commissions” does not include short-term productivity bonuses nor bonus and profit-sharing plans, unless they are based on the employer’s promise to pay a fixed percentage of sales or profits as compensation for work.

There has been a fair amount of litigation in California over the meaning of “commissions” in cases dealing with the overtime exemption for certain commissioned salespersons.  This new law may well invite more litigation concerning commission pay within the state.  Employers who have employees performing work in California and who are even arguably paid in whole or in part with commissions should be provided a written contract (with an acknowledgement form for the employer to retain) setting forth the formula and timing for earning and payout of commissions.  Failure to comply could subject an employer to an action for penalties of $100 per pay period per aggrieved employee under the Private Attorneys General Act.

Governor Brown Signs Two Transgender Bills into Law

October 14, 2011

Brown has been very busy this week! Among the many bills he signed this week, included two that will have an impact on employers. The first, Assembly Bill 433, the “Vital Statistic Modernization Act,”  makes the process for Californians to obtain, and update, birth certificates easier.  This will streamline the current process for trans people to receive a “new” birth certificate that reflects their “current” gender. Employers will have an obligation to update their records with any current documentation presented under the above circumstances. Please remember, these rights have been afforded by law and your obligation, as managers, and keeper of the personnel records, to maintain the privacy of the individual.

The second bill, Assembly Bill 887, is now known as the “Gender Nondiscrimination Act” and basically supports the current existing law (sexual orientation & gender) under the Fair Employment & Housing Act.  

Again, as I have stressed so many times during our seminars, it is not for us to determine the “rights and wrongs” of how people choose to live their lives. In the work environment, all personal bias must be put to the side and managers must ensure that all employees are treated equally.

California Employers Must Now Provide Health Benefits for Four Months for Pregnancy Disability

October 9, 2011

This week, California Governor Jerry Brown signed into law SB 299, legislation requiring California employers to continue group health coverage to employees on pregnancy disability leave for up to four months.  California employers with five or more employees have long been required to comply with California’s law permitting employees disabled by pregnancy to take a leave of absence of up to four months for the disabling condition.  This leave is in addition to traditional “maternity leave,” which separately provides the employee up to 12 weeks of leave for baby bonding (if the employer has 50 or more employees and is covered under FMLA/CFRA).  Prior to passage of SB 299, employees on pregnancy disability leave were entitled to the same benefits provided by an employer to employees on other types of disability leaves.  With respect to continuation of group health benefits, many employers limit the continuation of such coverage to 12 weeks, as this is the required time period for continuation of coverage under the FMLA/CFRA for family and medical leaves of absence.  With the passage of SB 299, effective January 1, 2012, California employers must extend the continuation period to four months for pregnancy disability leaves. 

As specified in the legislation, group health benefits must be continued on the same terms and conditions as if the employee continued actively reporting to work.  Therefore, if the employer pays the entire premium for employee coverage, it must continue to do so for up to four months of pregnancy disability leave.  If the employee normally pays a portion of the premium, the employee may be required to continue making such contributions (either for self or for dependent coverage) during the leave.  Additionally, if the employee fails to return from pregnancy disability leave, the employer may recoup from the employee the premiums the employer paid to continue the employee’s coverage during the leave, unless the reason the employee did not return is because of a continuing disability or because the employee took a separate protected leave (e.g. maternity leave) under the FMLA/CFRA.

California employers should review their policies and procedures relating to pregnancy disability leaves to ensure compliance with this new law.

Employer and Manager Sentenced to Prison

October 3, 2011

A California roofing contractor had a history with OSHA dating back to 2002. That year the employer was cited for not having a safety plan (Illness and Injury Prevention Plan -IIPP). The owner agreed to take a safety course and in due course, create and hand out the plan to his employees.  Of course, he did not do what he had agreed to do, and OSHA never followed up. As a result, an employee of his paid the ultimate price. The worker, who knew nothing of the agreement so many years before, was working on the edge of a roof of an apartment building,  stepped back (for some unknown reason), and fell four stories to his death.

During the investigation, it came out that the employer had never created the site safety plan nor had he ever addressed fall protection on paper, or in practice. He merely expected his employees to use common sense. The employer probably fell into the trap of thinking that there was no need to be concerned after OSHA had come and gone and never put any safety measures in place. In fact, the employees working on that roof had no railings, barriers, personal fall equipment or training. Furthermore, on the day after the fall, other employees were working on the same roof without any protection. This employer didn’t use common sense.

The employer was cited for willful violation of a construction safety order which actually allowed the district attorney’s office to file criminal charges against the owner AND the site foreman (don’t I keep telling you managers and supervisors can also be on the hook for work related issues!).  Well, the owner ended up pleading guilty to involuntary manslaughter (among other things that included safety violations) and is serving one year in county jail. The foreman also pleaded guilty to leaving the employee unprotected, a misdemeanor, and he is serving six months to a year. Hopefully they are using their time to develop that safety plan!

Employers have to have a safety plan in place. At a minimum, it makes sense, but it is also required by law.  Don’t think because you do not have a hazardous work environment that you are off the hook. You are not. It just means that you probably have less chance of a chance that a major event such as the one above, will happen. Take heed.