Understanding immigration and labor reform laws on the federal and state level: President Obama's immigration proposal and California's change to immigration related laws in 2015

President Obama's announcement of his controversial plan to provide amnesty for illegal immigrants to remain in the country who meet certain requirements raises a few employment and immigration issues for employers. Putting the politics aside, it is a good time for employers to review their obligations under the law to confirm a worker’s eligibility to work, especially given the new laws taking effect in California in 2015. Below are five areas involving federal and state immigration laws and verification requirements California employers need to be aware of going into 2015.

1. The President’s proposal does not change employers’ current obligation to verify employees’ eligibility to work in the United States.

The President’s proposal will take time to implement, and given the change of power in the Senate in the last election, there is a lot of uncertainty about the effect of the President’s proposal. Even with the political uncertainty, the President’s proposal recognizes the need to create a “provisional legal status” for illegal immigrants that may be provided citizenship. The White House’s website states the following:

Undocumented immigrants must come forward and register, submit biometric data, pass criminal background and national security checks, and pay fees and penalties before they will be eligible for a provisional legal status. Agricultural workers and those who entered the United States as children would be eligible for the same program. Individuals must wait until the existing legal immigration backlogs are cleared before getting in line to apply for lawful permanent residency (i.e. a “green card”), and ultimately United States citizenship. Consistent with current law, people with provisional legal status will not be eligible for welfare or other federal benefits, including subsidies or tax credits under the new health care law.

The details of this system still need to be set out and a process put into place. So employers need to continue to follow the current requirements to verify employment eligibility, and it is not likely that any of the requirements under Federal law will change anytime soon.

2. Expect increased enforcement by federal agencies of immigration and labor laws.

President Obama’s proposal also calls for increasing the monitoring and audit of employers to ensure they are complying with the immigration laws. The President’s proposal seeks a new “labor law enforcement fund” to “ensure that industries that employ significant numbers of immigrant workers comply with labor laws.” The White House’s website touts the fact that ICE has increased his audits of employers since January 2009, and has fined more companies than the Bush administration.

Employers need to review their policies to ensure that they comply with federal and California labor laws. In my practice, I have seen an uptick in DOL audits of employers over the last two years. It is important for California employers to understand the different employment law requirements between federal law and California law, and to ensure that they are complying with the law that applies to their particular workforce.

3. In California, employers need to recognize the new California drivers’ licenses being issued on January 1, 2015 to undocumented workers.

Illegal immigrants will be able to obtain a California driver’s license beginning January 1, 2015. AB 60 was passed in 2013 allowing people who cannot prove their eligibility to be in the United States legally the ability to obtain a driver’s license. The California DMV will begin issuing these drivers’ licenses in the beginning of next year. The licenses will be marked with the phrase “federal limits apply” on the front of the license in the same size and color of text as the other text. This statement will be located in the top right corner above the Class designation on the licenses. On the back of the license, it will have the statement that the license is “not valid for official federal purposes.”

The California drivers’ licenses issued under AB 60 are not valid documentation to prove eligibility to work in the United States. It is important for employers to train their personnel who are responsible for verifying documents when completing the Form I-9 to ensure that the documents presented by the worker are valid for I-9 purposes. In addition, it would be a good time for employers to audit their Form I-9 process and document retention policies.

4. It is illegal for employers to discriminate against workers who present licenses obtained through AB60.

A new law passed in 2014, AB 1660, makes it a violation of California’s Fair Employment and Housing Act (“FEHA”) to discriminate against a worker who presents a driver’s license which was issued to them under AB60 and the individual does not have the legal right to work in the United States. Read this last sentence again and it is not hard to see the rock (federal I-9 obligations) and the hard place (California law) that employers find themselves between. AB 1660 amends FEHA to specify that discrimination on the basis of national origin includes, but is not limited to, discrimination on the basis of possessing a driver’s license issued under this new law. California employers need to be clear on what their obligations are under federal law and carefully navigate these obligations to ensure they do not run afoul of AB 1660 and Vehicle Code section 12801.9.

5. California employers need to treat driver’s license information as confidential employee information.

AB 1660, which amends Vehicle Code section 12801.9, provides that employees’ drivers’ license information obtained by the employer is confidential:

Driver’s license information obtained by an employer shall be treated as private and confidential, is exempt from disclosure under the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code), and shall not be disclosed to any unauthorized person or used for any purpose other than to establish identity and authorization to drive.

Therefore, employers need to review their record keeping procedures to ensure that any driver’s license information for their employees is keep in a secure manner and limit other employees’ access to the data.

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Five issues employers must understand about California's harassment and discrimination laws

1. Automatic liability for a company when harassing or discriminatory conduct is taken by supervisors.
A company is automatically liable for any harassment or discriminatory actions taken by its supervisors. Under California’s Fair Employment and Housing Act (FEHA), a supervisor is defined as anyone who has the authority to hire, transfer, suspend, layoff, recall, promote, discharge, assign, reward, or discipline other employees, or the responsibility to direct them, or to adjust their grievances, or effectively to recommend these actions to the employer.

2. When is a company liable for harassment by non-supervisory employees?
Employers are only liable for harassment in the workplace that it knew about or should have known about, and failed to take corrective action to stop the harassment.

3. Is there personal liability for harassment or discrimination?
There is a difference regarding personal liability for alleged harassment and discrimination.  Employees can be held personally liable for harassment, but there is no personal liability for discrimination.

Any employee working for a company covered by FEHA can be held personally liable for harassment that employee engages in. However, a supervisor who did not engage in harassment and who is aware of harassment taking place but fails stop the harassment, cannot be held personally liable for aiding and abetting the harassment.  However, obviously, this will create liability for the company. 

On the other hand, supervisors are not held personally liable for discrimination or retaliation. This is because the basic job duties of a supervisor could be viewed as discriminatory, acts such as hiring, firing, and setting schedules. Therefore, the courts did not want to impose personal liability on to supervisors for their day-to-day duties. However, it is important to remember that even though the supervisor does not have personal liability for discrimination or retaliation, the employer will always be liable for any proven misconduct.

4. The avoidable consequences doctrine could reduce liability in certain cases.
Under the avoidable consequences doctrine, an employee’s damages can be limited if the employer can show that: (1) it took reasonable step to prevent harassment, (2) the employee unreasonably failed to utilize the procedures put in place by the employer to prevent harassment, and (3) had the employee used the procedure to prevent the harassment some of the damages would have been prevented. Under this defense the employer’s complaint system put in place will be challenged and viewed under high scrutiny.  Therefore it is important for employers to show that employee’s who complained in the past had their complaints properly addressed and there was never any retaliation for making the complaint.  

5. Revise sexual harassment training in 2015 to include discussion about abusive conduct.
Even though workplace bullying is not illegal under California law, a new law going into effect in 2015 amends the law requiring employers with 50 or more employees to provide sexual harassment prevention training to include a discussion about workplace bullying and abusive conduct.

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Friday's Five: Five new laws for 2015 that employers should review

Below are five new laws going into effect in 2015 that California employers should know about before the start of 2015. Employers should also take time and review their current policies to ensure compliance for the new year.

1. Mandatory paid sick leave.
You’ve probably been beaten over the head from emails from your employment lawyer already about this new law, so I won’t rehash the particulars. If you need more information, see my prior post.

2. Must revise sexual harassment training to include anti-abusive conduct training.
This is a simple revision to sexual harassment training should be implemented into any sexual harassment training. For more information, see my prior post here.

3. Undocumented workers’ driver’s licenses: immigration and confidentiality issues.
Last year, California passed AB 60 that allows undocumented immigrants to apply for a driver’s license. This year, AB 1660 was passed to clarify some issues left unresolved by AB 60, and to provide greater rights to immigrants who present a driver’s license to employers that was obtained without establishing citizenship. The California DMV will begin issuing driver’s licenses under the new law on January 1, 2015. These licenses will be marked with the term “federal limits apply” on the front of the license. Therefore, employers must be aware that these licenses cannot be used to establish eligibility to work when completing the Form I-9. Once the new licenses are issued, employers should train the individuals regarding the different licenses and which licenses can be used to verify eligibility to work in the U.S. when completing the I-9. In addition, the new law makes it illegal to discriminate against employees who present these licenses for employment purposes.
Finally, employers must be aware that the new law also makes driver license information obtained by the employer “private and confidential.” Therefore, employers should take steps to ensure that this information is treated with the same safeguards as other confidential information.

4. Joint liability for employers who contract with outside companies for workers.
AB 1897 automatically makes an employer jointly liable with a labor contractor, such as an employment agency, for wage and workers’ compensation violations. The law exempts some companies from this joint liability, such as companies with fewer than 25 employees, or businesses with five or fewer workers supplied by a labor contractor. With this new potential liability, employers need to carefully review the contractors who provide workers for their companies. While companies cannot contract around the provisions of the new law, companies can enter into indemnification agreements with the staffing agencies to mitigate some of the risk. Companies should audit the staffing agencies they work with to insure they are compliant with the law, and should consider asking for indemnification from the staffing agency should there be any wage and hour violations.

5. Employers may utilize email to report serious injuries.
Under existing law, employers are required to file a report with the Division of Occupational Safety and Health (DOSH), every occupational injury or illness which results in lost time beyond the date of injury or illness, or which requires medical treatment beyond first aid. Employers are required to immediately report a serious injury or illness, or death at the workplace to DOSH. The prior law permitted employers to make these reports by telephone or telegraph. AB 326 updates the law to allow employers to make the reports by telephone or email. This is not a major change in the law, and one to make it easier for employers, but a good reminder for employers to review injury protocols in the workplace and ensure that these reports are being made to DOSH when required. Failure to do so could result in a $5,000 fine.

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Friday's Five: Five points to understand about California's new requirements for sexual harassment training

AB 2053 was signed into law by Governor Brown, and as of January 1, 2015, employers have to comply with new obligations regarding the sexual harassment training already required for some employers under California law.  Here are five issues employers should understand about AB 2053. 

1. What are employer’s current obligations to have supervisors attend sexual harassment prevention training before AB 2053 was passed?

In California, employers with 50 or more workers must provide at least two hours of sexual harassment prevention training to all supervisors. This training must be provided to supervisors within six months of the time they become a supervisor, and then at least once every two years. The training must cover federal and state statutory laws regarding prohibitions against sexual harassment, remedies available to victims, how to prevent and correct sexual harassment, discrimination, and retaliation. This requirement is set forth in California Government Code section 12950.1.

2. What new obligations does AB 2053 add to California’s sexual harassment training requirement?

AB 2053 amends Government Code section 12950.1, and takes effect January 1, 2015. The new law requires employers subject to the sexual harassment training requirement must continue with their obligations under Gov. Code section 12950.1, but to “also include prevention of abusive conduct as a component of the training and education….”

The law defines “abusive conduct” as follows:

For purposes of this section, “abusive conduct” means conduct of an employer or employee in the workplace, with malice, that a reasonable person would find hostile, offensive, and unrelated to an employer’s legitimate business interests. Abusive conduct may include repeated infliction of verbal abuse, such as the use of derogatory remarks, insults, and epithets, verbal or physical conduct that a reasonable person would find threatening, intimidating, or humiliating, or the gratuitous sabotage or undermining of a person’s work performance. A single act shall not constitute abusive conduct, unless especially severe and egregious.

Therefore, going forward, employers need to provide training that complies with this new requirement. Currently, there are no guidelines specifically setting forth details about how long the training should focus on this “abusive conduct” requirement. Employers are encouraged to take reasonable steps to implement a training that complies with this new requirement (I’m updating my training materials right now). Employers providing training by the end of 2014 should seek a training class that complies with the new requirements immediately.

3. Does it create a new cause of action for “abusive conduct” in the workplace?

No. While it may not good business practices, there is no law in California that makes workplace bullying or “abusive conduct” as defined in AB 2053 illegal. The policy reason behind not making such conduct illegal is that it would be difficult to determine what conduct is simply discipline, counseling, and day-to-day management actions versus actions taken with “malice” by a manager. Making such conduct actionable under the law would, in effect, make the court system the final decision maker in resolving normal day-to-day workplace disputes, which could stress the already overwhelmed court system.

4. If employers have already conducted sexual harassment training within the last few months, do they need to re-train their supervisors on January 1, 2015?

The law is unclear on this issue. I placed a call into Assemblywoman Lorena Gonzalez’ office, author of the bill, and was told by a spokesperson that the law would not require re-training of supervisors any sooner than when the two year deadline required them to receive their next training. However, employers should approach this issue with caution, as the law is not clear on the requirement regarding when supervisors must receive training compliant with this new requirement regarding “abusive conduct.” Also, if employers are conducting training of its supervisors between now and the end of 2014, it goes without saying that the training should cover this new requirement to avoid any issues.

5. Could this amendment eventually lead to a law making “abusive conduct” illegal?

Potentially. Even though there is no legal cause of action for “abusive conduct” as defined in the new law, this type of legislation could be amended to make this conduct illegal in the future.

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Friday's Five: Five things every California employer needs to know about the newly enacted paid sick leave law

On September 10, 2014, the Governor signed into law a bill that requires a minimum of three paid sick days per year for employees. The new law applies to all employers, regardless of size. Here are five essential points employers must understand to begin the process of meeting their obligations under the new law.

1. How much paid sick time must employers provide employees?

Starting on July 1, 2015, any employee who works in California for 30 or more days within a year is entitled to paid sick days. Employees accrue paid sick days at the rate of one hour for every 30 hours worked, beginning at the start of their employment. Employees can use accrued paid sick days beginning on the 90th day of employment.

2. Does this apply to all employers, and when do employers need to comply with this new sick leave requirement?

The law applies to all California employers, regardless of size. It also covers all employees, part-time, full-time, exempt, and non-exempt. Leave may be taken by employees for diagnosis, care, or treatment or preventative care for an employee or an employee’s family member, and victims of domestic violence and sexual assault.

The law takes effect on July 1, 2015. However, it is advisable for employers to start taking action and revising handbooks and leave policies in the beginning of 2015.

Accrued paid sick days carry over to the following year of employment. Employers may limit an employee’s use of paid sick days to 24 hours or three days in each year of employment.

Employers do not have to provide additional accrual or carry over if the full amount of leave is received by the employee under the employer’s leave policy which at least provides for the minimum requirements under the law.

3. Can employers limit the use of paid sick leave or cap the amount of accrual?

Limits on amount of leave used in one year: Employers may limit the use of sick leave at 24 hours or three days of paid sick leave, or equivalent paid leave or paid time off, for each 12 month period based on the employee’s year of employment, a calendar year, or rolling 12-month basis.

Limits on amount used in one day: An employee may determine how much paid sick leave he or she needs to use, but the employer can set a reasonable minimum increment not to exceed two hours that the employee must use each time.

Cap of accrual of total paid leave: In addition, employers can cap the accrual of paid sick leave to 48 hours or 6 days.

Employers may not require that employees obtain a replacement worker to fill their position in order to take the leave. Employees are required to provide reasonable advance notice if the time off is foreseeable, otherwise employees must provide notice of the need for leave as soon as practicable.

4. Does accrued but unused sick leave have to be paid out to an employee upon separation from employment?

No, an employer is not required to provide compensation to an employee for accrued, unused paid sick days upon leaving employment. However, if an employee leaves employment and is rehired by the employer within one year, previously accrued and unused paid sick days must be reinstated. The employee is entitled to the previously accrued and unused paid sick days and to accrue additional paid sick days upon rehiring.

5. What documentation and written requirements does the new law impose on employers?

The law requires that employers provide an employee with written notice setting forth the amount of paid leave available. This information must be included on the employee’s pay stub, or may be provided to the employee in a separate writing given to the employee on the employee’s pay date. In addition, the law amends Section 2810.5 of the Labor Code and adds the following language that must be provided on the employee’s wage notice: “That an employee: may accrue and use sick leave; has a right to request and use accrued paid sick leave; may not be terminated or retaliated against for using or requesting the use of accrued paid sick leave; and has the right to file a complaint against an employer who retaliates.”

In addition, the law requires employers to document and keep records of the hours worked and paid sick days accrued and used by an employee for at least three years. Employees (as well as the Labor Commissioner) have the right to access these records. Failure to keep the required records creates a presumption against the employer that the employee is entitled to the maximum number of hours provided for under the law.

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San Diego City Council moves closer to raising minimum wage and mandating paid sick leave for San Diego employers

The San Diego City Council approved an ordinance that increases the minimum wage required to be paid to workers within the city to $11.50 per hour by 2017. In addition the ordinance calls for the minimum wage to automatically increase every year after 2018 by indexing the minimum wage to inflation. Currently California's minimum wage is set at $9.00 per hour, which increased from $8.00 per hour in July 2014

San Diego Proposed Minimum Wage Increases

Current Minimum Wage

$9.00 per hour

January 1, 2015

$9.75 per hour

January 1, 2016

$10.50 per hour

January 1, 2017

$11.50 per hour

January 1, 2018

Minimum wage will increase each year measured in the increase of the Consumer Price Index.

The ordinance also requires employers to provide up to five days of paid sick leave. If enacted, the sick leave requirement will begin in April 1, 2015 and provides employees with one hour of paid sick leave for every 30 hours worked. Leave must be carried over from year to year, but employers may cap the use of the sick leave to 40 hours of paid leave within a benefit year. The ordinance also provides that:

-          For employees that are not covered by the overtime requirements of California law, it will be presumed that they work 40 hours a week. If an employee works less than 40 hours they will only accrue sick leave based on their actual hours worked.

-          Employers may set a reasonable minimum increment for use of sick leave, but this minimum may not exceed two hours.

-          If an employee separates employment, but returns to work within six months, all previously unused sick leave will be reinstated to the employee. 

-          If an employee uses sick leave for more than three consecutive work days, the employer may require “reasonable” documentation from a licensed heath care provider justifying the leave. 

Currently the ordinance is before San Diego’s Mayor, Kevin Faulconer, who has stated he will veto the measure. However, the ordinance was passed by a super-majority that can override the Mayor’s veto, possibly forcing the issue to a referendum. If this occurs, the City Council will have the option to either rescind the legislation, or submit the matter to the voters of San Diego.

 

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Are you ready for the increase in minimum wage? Join us for a mid-year update on employment and corporate issues.

My firm is conducting a webinar on Thursday June 19, 2014 at 10:00 a.m. for a mid-year update on emerging employment law issues and the newly enacted LLC statute effecting most California Limited Liability Companies. 

For more information and to register, please complete the form below:

 

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What other legal issues arise from an increase in California's minimum wage?

With Governor Brown's signing of the bill raising California's minimum wage to $10.00 per hour by January 2016, there are a few new considerations this triggers for California employers.  This quick video discusses the increase in guaranteed salary employers must pay in order to for employees to qualify as exempt. 

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New Law Effective 2012 Restricts Employers Ability To Conduct Employee Credit Checks

California’s new labor code provision severely restricts an employer’s ability to conduct credit checks on employees. Labor Code 1024.5, which took effect on January 1, 2012, only allows employers to conduct credit checks for employees who meet one of the following categories:

    • A managerial position.

    • A position in the state Department of Justice.

    • That of a sworn peace officer or other law enforcement position.

    • A position for which the information contained in the report is required by law to be disclosed or obtained.

    • A position that involves regular access, for any purpose other than the routine solicitation and processing of credit card applications in a retail establishment, to all of the following types of information of any one person: (A) Bank or credit card account information. (B) Social security number. (C) Date of birth.

    • A position in which the person is, or would be, any of the following: (A) A named signatory on the bank or credit card account of the employer. (B) Authorized to transfer money on behalf of the employer. (C) Authorized to enter into financial contracts on behalf of the employer.

    • A position that involves access to confidential or proprietary information, including a formula, pattern, compilation, program, device, method, technique, process or trade secret that (i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who may obtain economic value from the disclosure or use of the information, and (ii) is the subject of an effort that is reasonable under the circumstances to maintain secrecy of the information.

    • A position that involves regular access to cash totaling ten thousand dollars ($10,000) or more of the employer, a customer, or client, during the workday.

A “managerial position” is defined as an employee who qualifies for the executive exemption set forth in the Industrial Welfare Commission’s Wage Orders. The test of who qualifies as an exempt executive is very detailed, and it is determined by the amount of pay and actual duties the employee performs. So employers need to approach this prong with caution and obtain guidance to ensure the employee actually qualifies as an exempt executive.

The new law also added the requirement under California Civil Code section 1785.20.5 that employers must notify the employee in writing of the basis in Labor Code section 1024.5 as set forth above that applies to permit the employer to perform the credit check. The new law does not change the other obligations already in effect that employers had to comply with prior to conduct a credit check. These obligations include informing the employee in writing that a credit check would be performed, the source of the credit check, and that the employee may receive a free copy of the credit check. Finally, if an adverse employment action is taken by the employer based on the report, the employee must be notified of the name and address of the reporting agency making the report.

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Template To Comply With Wage Theft Protection Act of 2011 Notice Requirement To All Hires Beginning in 2012 Published By Labor Commissioner

Today the Division of Labor Standards Enforcement (“DLSE”) published a template that employers can use in order to comply with the new notice requirements set forth in Labor Code section 2810.5. A Word version can be downloaded here and a PDF version can be downloaded here.

All California employers are required to provide a notice to all employees hired beginning on January 1, 2012 that complies with the requirements of section 2810.5. The new law required the Labor Commissioner to publish a template for employers to use in order to comply with the new law. For more information regarding the notice, and the new law, see my previous post.

I’ve only had a chance to do a quick review of the template, but one area of new information that the DLSE is apparently requiring on the notice is whether the “employment agreement” is oral or written in the wage information section of the template. The new Labor Code section 2810.5 did not require this to be on the notice to the employee, but the law does provide that there may be “[o]ther information added by the Labor Commissioner as material and necessary.” I am wondering if the fact that all employers are required to provide this information on the form necessary means that the “employment agreement” is therefore always going to be written.

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All California Employers Have New Employee Notice Requirements Beginning January 1, 2012

The new law affecting every employer in California is the Wage Theft Protection Act of 2011. It takes effect on January 1, 2012 and adds additional notice and record keeping requirements that employers must comply with. The new law added Labor Code section 2810.5, which requires private employers to provide all new employees with a written notice that contains certain information.

The new law requires private employers to provide all newly-hired, non-overtime-exempt employees with a disclosure containing the following information:

(a) The job rate or rates of pay and whether it pays by the hour, shift, day, week, salary, piece, commission, or otherwise, including any rates for overtime.
(b) Any allowances claimed as part of the minimum wage, such as for uniforms, meals, and lodging.
(c) The employer's regular payday, subject to the Labor Code.
(d) The employer's name, including any “doing business as” names used.
(e) The address of the employer's main office or principal place of business, and its mailing address, if different.
(f) The employer's telephone number.
(g) The name, address, and telephone number of the employer’s workers’ compensation insurance carrier.
(h) Other information added by the Labor Commissioner as material and necessary.

The new law also requires employers to notify employees in writing of any changes to the information in the notice within seven calendar days of any changes, unless the changes are reflected on a timely wage statement that complies with Labor code Section 226. Employers also do not need to notify employees of any changes if the change is provided in another writing required by law within seven days of the changes.

The new law requires the Labor Commissioner to publish a template for employers to follow in order to comply with the law. The Labor Commissioner’s website states it is “anticipated” and the template will be published in mid-December. However, as of the publishing of this post, the Labor Commissioner has not yet published the template.

There is no prescribed requirement in the law about how long this notice should be retained, but as wage and hour violations contain a four year statute of limitations, these notices should be retained in the employee’s personnel file for four years. It is also important to note that the new law does not apply to exempt employees. However, if there is ever a challenge to the employee’s classification as exempt and they are found to be non-exempt, this provision could result in increased penalties. Therefore, it may be wise to complete this form for exempt employees just as a safety precaution.

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Webinar: New Laws Facing California Employers In 2012

 

Governor Brown signed a number of new employment laws that take effect in January 2012.  During this webinar, we will cover the new obligations facing employers under these recently enacted employment laws as well as the proper steps employers should take to comply with them.  The discussion will also cover the recent oral argument in Brinker Restaurant Corp. v. Superior Court and what steps employers should take while waiting for the Supreme Court’s ruling.

Other topics will include:

  • New laws effective January 2012, including:
    • Statute increasing the penalties for employers who misclassify independent contractors
    • What the Wage Theft Protection Act of 2011 means for employers
    • Gender identity and expression
    • Prohibiting e-verify requirements under the Employment Acceleration Act of 2011.
    • New requirement to provide health benefits during pregnancy disability leave
  • Review of new developments that took place in 2011:
    • Development of case law upholding class action waivers in arbitration agreements
    • Payment requirements for non-resident employees working in California

The cost is $150 per connection (no fee for existing clients).  Click here for more information and to register. 

 

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New Law Imposes Large Penalties For Misclassification Of Independent Contractors

Over the weekend, Governor Brown signed S.B. 459 into law (among other employment bills) which makes employers liable for civil penalties of $5,000 to $15,000 for each violation of “willful misclassification” of employees as independent contractors. In addition, if it is found that the employer has a pattern and practice of misclassifying independent contractors, the penalties can increase to a minimum of $10,000 to $25,000 per violation. The new law adds Sections 226.8 and 2753 to the Labor Code. 

The new law imposes the penalties for a “willful misclassification,” which is defined as:

"Willful misclassification" means avoiding employee status for an individual by voluntarily and knowingly misclassifying that individual as an independent contractor.

Click here to read more information about the factors considered in determining whether a worker qualifies as an independent contractor and other areas of liability employers face in addition to this new law. 

Internet Posting

In addition to the substantial civil penalties, employers who violate the law are also required to post a notice on their website, or if the employer does not have a website they must post it in an area available to employees and the general public, for one year about the violation. The notice must contain the following information:

(1) That the Labor and Workforce Development Agency or a court, as applicable, has found that the person or employer has committed a serious violation of the law by engaging in the willful misclassification of employees.
(2) That the person or employer has changed its business practices in order to avoid committing further violations of this section.
(3) That any employee who believes that he or she is being misclassified as an independent contractor may contact the Labor and Workforce Development Agency. The notice shall include the mailing address, e-mail address, and telephone number of the agency.
(4) That the notice is being posted pursuant to a state order.

The law gives the Labor Commissioner the power the collect the civil penalties. There is also an argument that individual litigants may recover a portion of the civil penalties by bringing a Private Attorneys General Act (PAGA) claim. However, PAGA was not amended to specifically deal with the new labor code sections created by the new law, so there will undoubtedly be litigation over the extent the new law is actionable under PAGA, or the legislature may amend PAGA to clarify this issue.

The intent of the legislature is clear by passing this law - it does not want independent contractors to be used in California.  Employers must therefore be very careful in conducting the analysis of whether employees are properly classified as independent contractors.

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New Law Makes It Illegal To Impersonate Others On Social Networking Sites

Among the seven hundred or so new laws that took effect on January 1, 2011 is SB 1411 that makes it a misdemeanor for anyone to impersonate another on the internet “for the purposes of harming, intimidating, threatening, or defrauding another person.” The bill, which was signed into law by Governor Schwarzenegger, adds section 528.5 to the California Penal Code and makes the offense punishable up to $1,000 and one year imprisonment.

The law specifically makes it an offense to open an email account or social networking profile to impersonate another person:

For purposes of this section, "electronic means" shall include opening an e-mail account or an account or profile on a social networking Internet Web site in another person's name.

The law is intended to prevent cyberbullying that has occurred in schools and the workplace. This law will be an additional aid for employers to prevent any type of abuse at the workplace, and provide victims an additional avenue for protection. In addition to the criminal punishment set forth, it also provides that a victim may bring a civil lawsuit against the defendant for compensatory damages and injunctive relief.

For California employers, the new law stresses the need to keep current with the new obligations employers face in regards to social networking sites and and to review their policies about how they monitor employees' use of technology, as well as what is appropriate uses of the company's technology. Under the theory of respondeat superior, employers are vicariously liable for tortious acts committed by employees during the course and scope of their employment. Therefore, if an employee uses a company computer to violate the new law, the company could face joint liability in a civil lawsuit for compensatory damages.

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Governor Vetoes Bill Giving Farmworkers Greater Overtime

Last week, Governor Schwarzenegger vetoed SB1121, a bill that would have given farm workers overtime when they work over eight hours in one day or over forty hours in one week. Currently, California farm workers earn overtime for all hours over 10 hours in one day and 60 hours in one week. Federal law, by contrast, does not require employers to pay farm workers any overtime at all.

 

The Governor explained:

In order to remain competitive against other states that do not have such wage requirements, businesses will simply avoid paying overtime.

The bill would have also applied California’s meal and rest break requirements to farm workers. The Governor also cited this as a reason why he vetoed the law:

Finally, it should be noted that Senate Bill 1121 would not just change the rules governing overtime pay for agricultural workers, but would also apply California's confusing and burdensome rest and meal requirements. Unfortunately, while there have been several attempts to clean up this section of law, efforts at comprehensive reform continue to fail. There is no reason to exacerbate this continuing problem by adding agricultural workers to it. For these reasons, I am unable to sign this bill.

The Governor’s statement is referring to the issues that the California Supreme Court is currently reviewing in Brinker Restaurant Corp. v. Superior Court. One of the many issues being reviewed in Brinker, is whether California employers need to only provide, not ensure, employees with their 30-minute meal break under California law. Click here for more analysis on the Brinker case
 

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Proposed Bill Targets Employers' Classification of Independent Contractors

The US House of Representatives introduced a bill (H.R. 5107), Employee Misclassification Prevention Act, that if passed would amend the FLSA to required employers who employ “non-employees” to keep records of classification of the non-employees. The bill refers to non-employees, which is targeting employers’ classification of independent contractors.

Should the employer fail to maintain the records required under the proposed bill, a presumption would be created that the worker is an employee – not an independent contractor. The employer could only then overturn this presumption by presenting “clear and convincing evidence” that the worker is properly classified.

The bill would also require employers to provide written notice to any non-employees about their classification. Among other items, the notice would need to state:

Your rights to wage, hour, and other labor protections depend upon your proper classification as an employee or non-employee. If you have any questions or concerns about how you have been classified or suspect that you may have been misclassified, contact the U.S. Department of Labor.

The notice would also need to include additional information that Department of Labor deems necessary by regulation at a later date.

Violation of the proposed bill’s requirements carries a civil fine of $1,100 per worker, which could increase to $5,000 for willful repeat violations.

The bill (H.R. 5107) can be read here. From what I could gather, it appears that the bill has a strong chance of becoming law. This is definitely one I will be keeping my eye on in coming months.

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Politicians Closer To CA Budget Deal - No Changes To Meal & Rest Break Laws

It appears that the California state politicians are close to finalizing a budget deal in Sacramento by this Friday. The Governor placed everything on the table during these negotiations, including attempting to bring some relief to businesses in regards to the meal and rest break laws and even revising California’s requirements that overtime is owed for all work performed over 8 hours in a day. However, by many reports it appears that there will be no change to the current meal and rest break laws, or the overtime requirements.

Many California businesses have been sued in wage and hour class actions alleging that they have not properly administered meal and rest breaks. Employers face large amounts of liability in these class actions in the form of premium pay of one hour of pay at the employee’s regular rate of pay for each violation for a period of four years.

The Press Democrat also reports that the deal will increase taxes:

Vehicle license fees would nearly double, going from the current rate of 0.65 percent to 1.15 percent of the value of a car or truck.
The sales tax would increase by 1 cent. Gas taxes would increase by 12 cents a gallon.
Californians would pay a new surcharge on their personal income taxes, amounting to 2.5 percent of their total tax bills. The state's dependent credit would be cut in half, raising taxes for parents and those who take care of elders.
The new and increased taxes would remain in effect for at least two years.
 

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