Summary of Significant Changes/Developments in Employment Law for California Employers in 2013
By Gordon Bosserman and Kathryn Eppright
The following is a list of significant changes and/or developments in employment law in California taking effect in 2013. Please note, that it is just a nuts- and- bolts-type of summary. It is not intended to be a definitive discussion of the law. Finally, unless otherwise indicated, these changes are effective as to California employers on January 1, 2013
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Religion and Reasonable Accommodation
The Fair Employment and Housing Act (the “FEHA”) has been amended to clarify religious discrimination and reasonable accommodation. The new law broadly defines “religious dress practice” to include the wearing of certain kinds of clothing and the carrying of certain kinds of religious artifacts. In addition, the new law defines “religious grooming practice” to include certain kinds of facial hair to the extent it is part of the employee’s religious creed. It is important to note, however, that under the law, as amended, an accommodation is “not reasonable” if it would require the employee to be segregated from other employees or the public.
Sex Discrimination and Breastfeeding
Discrimination based on “sex” is prohibited. The amended law defines “sex” to include breast feeding.
Keep in mind that under the law, it is unlawful to discriminate on the basis of a person’s “gender.” “Gender” is now defined to include an employee’s gender expression. “Gender expression” is defined to mean an employee’s gender-related appearance and behavior.
These two amendments to the laws must be included in the Posters displayed by employers beginning in 2013.
Social Media and Personal Passwords
Employers are now prohibited from requiring or even requesting employees or applicants for employment for user names or pass words covering the individual’s social media accounts. There is, however, the very limited exception related to employer investigations. In addition, employee speech regarding working conditions is protected under existing California law. This is an area that is evolving.
Inspection of Personnel Records
California employers must allow employees and former employees’ access to their personnel files and records that relate to the employee’s performance or to any grievance concerning the employee. If the employee requests a copy, employers must now provide a copy of the entire personnel file, but may charge reasonable copy costs incurred to do so. Inspections must be allowed at reasonable times and intervals, but the law now imposes a cap of 50 requests in a calendar month. To comply with the law, employers must do one of the following: (1) keep a copy of each employee’s personnel records at the place where the employee reports to work for at least 3 years from the date of termination, (2) make the personnel records available at the place where the employee reports to work within a reasonable amount of time following the employee’s request, or (3) permit the employee to inspect the records at the location where they are stored with no loss of compensation to the employee. The right to inspect or obtain a copy of personnel records, however, ends if the employee files a lawsuit against the employer.
The right to inspect personnel files and records does not apply to records relating to the investigation of a possible criminal offense, letters of reference, or ratings, reports, or records that (a) were obtained prior to the employee’s employment, (b) were prepared by identifiable examination committee members, or (c) were obtained in connection with a promotional exam.
Pregnancy Disability
Employers with five or more employees are covered by California’s pregnancy disability leave law. Employers with more than 50 employees, will also need to follow the steps outlined in the Family Medical Leave Act (FMLA) and the California equivalent, the California Family Rights Act (CFRA) when administering leaves related to pregnancy. An employee of a covered employer is entitled to up to 4 months or 17 and 1/3 weeks of maternity leave if she is disabled by reason of pregnancy. Normally, the employee’s health care provider makes the determination regarding disability due to pregnancy. A covered employer is required to take certain steps to accommodate an employee affected by pregnancy and may not discriminate against an employee for taking maternity leave. In addition, an employer may not now discriminate against an employee due to her “perceived pregnancy.”
A covered employer with 5 or more employees must continue to maintain and pay for the group health insurance of an employee who takes Pregnancy Disability Leave for up to 4 months. This law applies to qualifying employers regardless of how they treat other temporary disabilities and regardless of whether the FMLA applies. In other words, if in the past you, as an employer, treated pregnancy disability as any other short term disability, this law could require you to change how you are doing things. This leave may run concurrently with any leave to which the employee may be entitled under the FMLA or CFRA.
Disability Discrimination and Accommodation
The Americans with Disabilities Act (the ADA), a federal statute, prohibits discrimination against persons with certain mental or physical disabilities. The ADA applies to employers with 15 or more employees. The Fair Employment and Housing Act (the FEHA), a California statute, also prohibits discrimination based on certain types of mental or physical disabilities, and it applies to employers with 5 or more employees. Interestingly enough, neither law protects the use of medical marijuana to treat a disability.
California has adopted regulations which expand the definition of “mental” and “physical” disability. There is also now an extensive discussion of what is required in order to properly engage in an interactive process with an employee over what might be considered to be a reasonable accommodation. There is a very useful statement of what is considered to be a “reasonable accommodation” under the ADA which can be accessed by an employer over the internet at www.askjan.org. “JAN” is an acronym for the Job Accommodation Network, and this website is a service of the U.S. Department of Labor’s Office of Disability Employment Policy.
Itemized Wage Statements/Temporary Service Employers
At the time wages are paid, an employer must provide each employee an itemized statement, in writing, that contains the following information:
1. Gross wages earned
2. Total hours worked (except salaried exempt employees)
All deductions, including taxes, disability insurance
Deductions ordered by the employee can be aggregated and shown as one item
3. Net wages earned
4. The pay period’s inclusive dates
5. Name of the employee and last four digits of his/her Social Security number (SSN) or other identifying designation.
6. Name and address of employer or legal entity
7. All applicable hourly rates in effect during the pay period and the corresponding number of hours the employee worked at each hourly rate
8. Piece rate units and applicable piece rate
An amount paid for completing a particular task or making a particular piece of goods, if the employee is paid on a piece rate basis
Beginning July 1, 2013, temporary service employers (employee leasing companies) must also include the rate of pay and the total hours worked for each temporary services assignment. Licensed security services companies are specifically excluded from this new law. A copy of the statement and the record of deductions must be kept for at least three years at the place of employment or at a central location within the State of California. An employer must make these records available for an employee’s inspection upon reasonable request. The copy an employer must maintain can be a duplicate of the itemized statement given to the employee or a computer generated record accurately showing all information required in the itemized statement. California now requires employers to provide non exempt (An employee who is subject to California laws pertaining to overtime, minimum wage, meal periods and rest periods) employees with a notice specifying pay details upon hire.
Penalties for Wage Statement Violations
A knowing, intentional failure to provide the itemized job statement information that results in an employee “suffering injury” entitles the employee to recover all actual damages or up to $50 for the initial pay period in which a violation occurs and $100 per employee for each violation in a subsequent pay periods, up to a total of $4,000, plus costs and reasonable attorneys’ fees. For 2013, the Legislature has amended the Labor Code to specifically define when an employee is considered to have “suffered an injury.” The new law also states that a “knowing and intentional failure” does not include an isolated and unintentional payroll error due to a clerical or inadvertent mistake. In determining whether an employer complied with the law, a fact finder may consider whether the employer, prior to an alleged violation, has adopted and is in compliance with a set of policies, procedures, and practices that fully comply with this section.
Additional Penalties
If an employer does not provide the required statements to the employee in writing or if the employer fails to keep the above records for the required three years, the employer is subject to civil penalties of $250 per employee per violation for the first violation and $1,000 per employee for each subsequent violation. If the employer makes a clerical error or inadvertent mistake on the first violation, the Labor Commissioner has discretionary power not to penalize you.
Commission Agreements
Employers must put all commission agreements in writing. Any employee hired to perform work for commissions in California must receive a written contract that includes the method for calculating and paying the commissions. This law applies to employers located inside and outside California. The new law appears simple and straightforward. However, a number of potential pitfalls within the law could result in the event a wage-and-hour claim is filed against an employer.
The law has been amended to exempt from this requirement temporary, variable incentive payments that increase, but do not decrease, payment under the written contract.
Fixed Salaries and Overtime
In California, with certain exceptions, the law provides for 8 hours as a day’s work and a 40-hour workweek, and requires payment of overtime compensation for additional hours worked. Existing law provides that for the purpose of computing the overtime rate of compensation required to be paid to a nonexempt full-time salaried employee, the employee’s regular hourly rate shall be 1/40th of the employee’s weekly salary.
The law was amended, however, to overrule the Court of Appeal decision in Arechiga v. Dolores Press (2011) 192 Cal.App.4th 567 and its interpretation of the law. Now, the law provides that payment of a salary to a nonexempt employee shall be deemed to provide compensation only for the employee’s regular, non over time hours, notwithstanding any private agreement to the contrary.
Human Trafficking Posting
The law now requires employers to post, on or before April 1, 2013, an 8.5” x 11” notice that contains information about organizations that provide services to eliminate slavery and human trafficking. The Department of Justice is supposed to develop a model notice that complies with the requirements of the law.
Wage Garnishment
Existing law provides for, among other things, the calculation of the amount to be withheld and paid over by an employer when properly served with levy that requires wage garnishment. Beginning on July 1, 2013, the law in this area changes with respect to the calculation of this amount.
Workers’ Compensation Reform
The law in this area has been changed so as to offset necessary increases in permanent disability benefits and potentially lowers system costs for employers. You should contact your Workers’ Compensation insurance agent or carrier for details and for the impact, if any, of this change on your insurance costs.
Accessibility Reform
Existing law requires an attorney to provide a written advisory note to a building owner or tenant with each demand for money or complaint for any construction-related accessibility claim. A violation of this requirement may subject the attorney to disciplinary action. This bill would, instead, require an attorney to provide a written advisory with each demand letter or complaint, as defined, sent to or served upon a defendant or potential defendant for any construction-related accessibility claim. This change in the law is designed to limit frivolous litigation regarding technical violations concerning disability access by reducing statutory damages, putting into place new provisions to prevent “stacking” of multiple claims to increase statutory damages and banning letters making demands for money before litigation.
FEHC Eliminated, Duties Transferred to the DFEH
The law eliminates the California Fair Employment and Housing Commission (FEHC). However, its functions have simply been moved to the Department of Fair Employment and Housing (the DFEH); and, the DFEH may now bring a civil action on behalf of a complaining employee directly in a civil court.
Intellectual Disabilities
The law now substitutes the term “intellectual disability” for the term “mental retardation” wherever it is used in laws or regulations.
Unemployment Insurance: Overpayment and Penalties
This change in the law would allow the Employment Development Department (EDD) to deny reimbursement to an employer for any overpayments made to its unemployment insurance reserve accounts if the EDD determines that the overpayment resulted from an employer’s failure to respond to or provide adequate information to the EDD.
Prevailing Wage
This change in law provides that to the extent that any increased employer payment contributions results in a lower hourly straight time or overtime wage to an employee, they do put the employer in a position of violating the applicable prevailing wage laws as long as certain specified conditions are met.
Farm Labor Contractors
Existing law requires farm labor contractors to be licensed by the Labor Commissioner and to comply with specified employment laws applicable to farm labor contractors. Under existing law, a person who violates farm labor contractor requirements is guilty of a misdemeanor punishable by specified fines, or imprisonment in the county jail for not more than 6 months, or both.
The law has been changed, to subject a violator of the requirement that a farm labor contractor be licensed to citations issued by the Labor Commissioner and civil penalties that increase as the number of citations for violations increase.
Warehouse Workers
Before the change, existing law prohibited a person or entity from entering into a contract or agreement for labor or services with a construction, farm labor, garment, janitorial, or security guard contractor where the person or entity knows or should know that the contract or agreement does not include funds sufficient to allow the contractor to comply with applicable laws governing the labor or service to be provided.
The law has been changed to add warehouse workers to the list of specified contractors subject to sufficient funds requirements.
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