New Laws For 2012 Affecting California Employers

Sun, 12/11/11
By: Dawn Ross, Partner

The Legislature was busy last year, and has passed several new employment laws that will have an impact on California employers' day-to-day operations and policies in 2012. Here is a summary of the most significant changes.

CHANGES TO YOUR EMPLOYEE HANDBOOKS

Please review and update your employee handbooks to reflect the new laws set forth below

1. Pregnancy Disability Leave Policy

Government Code §12945 now requires all employers with five or more employees to continue to maintain and pay for health coverage under a group health plan for an eligible female employee who takes Pregnancy Disability Leave (PDL) up to a maximum of four months in a 12-month period. The benefits are at the same level and under the same conditions as if the employee had continued working during the leave period.

Under current law, employers were only required to provide benefits for pregnancy leave to the same extent and for the same length of time as they would for other temporary disability leaves. If the employer was covered by the federal Family and Medical Leave Act, it had to provide continuing coverage during the twelve weeks of FMLA leave.

The new law requires group health insurance continuation coverage for all employers with five or more employees regardless of how they treat other temporary disability leaves and regardless of FMLA coverage.

2. Organ and Bone Marrow Donor Leave

Labor Code §1510 clarifies the implementation of California's organ and bone marrow donor leave law. Existing law provides up to 30 days of leave in a one-year period for organ donation and up to five days of leave in a one-year period for bone marrow donation. The new legislation clarifies that the days of leave are business days, not calendar days, and that the one-year period is measured from the date the employee's leave begins. Former law stated that employers' could require use of sick and vacation leave, but did not mention paid time off (PTO). The new legislation clarifies that employers can require the use of a specified number of earned but unused days for PTO.

3. Genetic Information

The Fair Employment and Housing Act (FEHA) was amended to state that employers are prohibited from discriminating against employees on the basis of genetic information. The legislature noted that the range of protection provided by the federal Genetic Information Nondiscrimination Act (GINA) is not complete for California. Also, FEHA applies to employers with five or more employees while the federal law applies to employers with 15 or more employees.

Genetic information is defined as information about any of the following:

• The individual's genetic tests
• The genetic tests of family members of the individual
• The manifestation of a disease or disorder in family members of the individual

Genetic information includes: any request for, or receipt of, genetic services, or participation in clinical research that includes genetic services, by an individual or any family member of the individual. Genetic information does not include information about the sex or age of any individual. This prohibition against discrimination on the basis of genetic information is in addition to the existing state law prohibition against discrimination based on a medical condition, including genetic characteristic.

4. Gender Expression

The Fair Employment and Housing Act has also been amended to further define "gender" to include both gender identity and "gender expression" and to make clear that discrimination on either basis is prohibited. Current law only uses the term gender identity. "Gender expression" is defined as "a person's gender-related appearance and behavior whether or not stereotypically associated with the person's assigned sex at birth." This definition is not a change from existing law relating to gender identity. Government Code section 12949 relating to dress codes, has also been amended to include that an employee must be allowed to dress consistently with both the employee's gender identity and gender expression.

CHANGES TO YOUR HIRING PRACTICES

When recruiting and hiring, please be aware of these new laws:

1. Notice of Pay Details

Labor Code §2810.5 requires employers to provide nonexempt employees, at the time of hire, a notice that specifies:

• The rate of pay and the basis, whether hourly, salary, piece commission or otherwise, including any overtime rate
• Allowances, if any, claimed as part of the minimum wage, including meal and lodging allowances
• The regular pay day designated by the employer as required under the Labor Code
• The name of the employer, including any "doing business as" names
• The physical address of the employer's main office or principal place of business and any mailing address, if different
• The telephone of the employer
• The name, address and telephone number of the employer's workers' compensation carrier

The statute also requires notice of any other information the Labor Commissioner deems material and necessary. This information can either be incorporated into your standard offer letter, or you can provide a form developed by the Labor Commissioner, which can be found at http://www.dir.ca.gov/dlse/LC_2810.5_Notice.pdf The notice must be provided in the language the employer normally uses to communicate employment-related information to the employee. The Labor Commissioner form is currently only in English, but will be translated into other languages soon. The new law only applies to nonexempt employees, but we recommend that it be incorporated into offer letters of all employees.

If, after hire, any of the information in the notice changes, the employer must notify each employee, in writing, within seven calendar days of the changes, unless the changes are elsewhere reflected on a timely wage statement or other writing required by law.

2. Written Commission Agreements

Labor Code §§2751 & 2752 require employers who have commission pay arrangements to put those agreements into a signed written agreement. The written agreement must set forth the method by which the commissions will be computed and paid. If the agreement expires but the parties keep working under the expired agreement, the terms are presumed to remain in effect unless superseded by a new agreement or the employment relationship is terminated. The bill is effective January 1, 2013. Employers have a year to bring their commission agreements into compliance. Again, we recommend this information be included in the offer letter.

3. Credit Checks

Civil Code §1785.20.5 prohibits employers and prospective employers, not including certain financial institutions, from obtaining and using consumer credit reports (credit information) about applicants or employees. The prohibition does not apply to "managerial positions," defined as those who qualify for the executive exemption from overtime. This exception reinforces the need to make the correct exempt/nonexempt classification at the time of hire.

The prohibition against obtaining and using credit reports also does not apply to the following:

• Law enforcement positions and positions for which the information is required by law
• Positions that involve regular access (other than in connection with routine solicitation and processing of credit card applications in a retail establishment) to bank or credit card information, Social Security numbers, and date of birth
• Positions in which the person is, or would be, a named signatory on the employer's bank or credit card account, or authorized to transfer money or enter into financial contracts on behalf of the employer
• Positions that involve access to confidential or proprietary information, as defined
• Positions that involve regular access to cash totaling $10,000 or more of the employer, a customer, or client during the workday

4. Use of E-Verify

Labor Code §2811 relates to the E-Verify program; a federally created program that allows employers to use an Internet-based system to electronically verify the employment eligibility of newly hired employees. E-Verify compares FormI-9 documentation against federal government databases to verify employees' employment eligibility. Section 2811 allows employers to continue to choose to use E-Verify, but prohibits California state agencies and local governments from passing mandates that require employers to use E-Verify.

5. Willful Misclassification of Independent Contractors

Labor Code §§226.8 & 2753 provide new penalties of $5,000 to $25,000 for the "willful misclassification" of independent contractors. Willful misclassification is defined as: "avoiding employee status for an individual by voluntarily and knowingly misclassifying that individual as an independent contractor." This serves as another reason to be very cautious before classifying someone as an independent contractor, rather than an employee.

6. Farm Labor Contractors – Wage Notices

Labor Code §226 has been amended to expand the information that must be included on pay statements, but only for farm labor contractors. Employers that are farm labor contractors must now disclose on the itemized payroll statement furnished to their employees, the name and address of all legal entities (for example other growers or other farm labor contractors) that secured the employer's services. The bill provides that this listing would not create any legal liability on the part of the legal entity.

7. Wage Penalties

Labor Code §§ 1775 & 1776 increase the maximum penalty from $50 to $200 per calendar day for each worker paid less than the determined prevailing wage and increases the minimum penalty from $10 to $40 per day for violations of prevailing wage obligations. These obligations apply to certain state or federal contracts and generally require a set wage that is significantly higher than minimum wage. The law also increases the penalty from $25 to $100 per calendar day, per worker, against contractors and subcontractors that fail to respond to a written requires for payroll records within 10 days.

For more information on any of these changes, please contact Dawn Ross – dross@cmprlaw.com