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California Employment Law Update: What's New for 2012

2011 was an active year in California employment law. The following is a summary of important new laws that California employers must now comply with:

AB 469: The Wage Theft Prevention Act of 2011
This act requires employers to provide all newly-hired, non-exempt employees with a written notice of the following wage information at the time of hiring:

  • The rate or rates of pay and the basis for the pay;
  • Allowances, if any, claimed as part of the minimum wage, including meal or lodging;
  • The regular payday;
  • 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 a mailing address, if different;
  • The employer’s telephone number;
  • The name, address, and telephone number of the employer’s workers’ compensation insurance carrier; and
  • Any other information the California Labor Commissioner deems necessary.

Employees must be notified of changes to this information within seven days of the change. The California Labor Commissioner has published a model notice and answers to frequently asked questions about the law.

In addition, the law increases penalties for wage violations, provides for employer restitution of certain wages, and extends from one years to three years the statute of limitations on collection actions by the California Department of Labor Standards Enforcement.

New Fines for Willful Misclassification of Independent Contractors (SB 459)
Imposes a civil penalty of between $5,000 and $15,000 for each violation on a person or employer that willfully misclassifies an employee as an independent contractor. The penalty increases to between $10,000 and $25,000 for each violation if there is a “pattern or practice” of willful misclassification. The law also subjects paid, non-attorney advisors to joint and several liability if they knowingly and incorrectly advise the employer to treat an individual as in independent contractor. Employers must post notice of any violations for one year on their website. In addition, employers may not charge a fee or make any deduction from an individual’s compensation where the fee or deduction would have been illegal if the individual were not an independent contractor.

Restrictions on Use of Consumer Credit Reports (AB 22)
Prohibits employers from obtaining a consumer credit report in connection with an employee or applicant background check except for the following positions:

  • A managerial position which qualifies for the executive exemption from overtime pay under the California Wage Orders;
  • A position that affords regular access to all of the following information of any one person: bank or credit card information, Social Security numbers and dates of birth (as long as the access to this information does not merely involve routine solicitation and processing of credit card applications in a retail establishment);
  • A position for which the employer is required by law to consider credit history information;
  • A position for which the information contained in the report is required by law to be disclosed or obtained;
  • A position requiring the employee to be named a signatory on the bank or credit card account of the employer, transfer money on the employer’s behalf, or be authorized to enter into financial contracts on the employer’s behalf;
  • A position that affords access to confidential, proprietary and/or trade secret information;
  • A position that affords regular access during the workday to the employer’s, a customer’s or a client’s cash totaling at least $10,000; and
  • A position in the State Department of Justice or a sworn peace officer or law enforcement position.

If an applicant or employee falls within one of these exceptions, the employer must give advance notice of the specific exception that applies.

In addition, employers that order background reports other than credit reports, such as criminal background reports or motor vehicle reports, must provide the subjects of the report with the website address of the consumer reporting agency. If there is no website address, the employer must provide the telephone number of the agency.

Commission Contract Requirements (AB 1396)
Effective January 1, 2013, employers that enter into an employment contract involving commission payments for services to be rendered within California must put the contract in writing and specify the method by which commissions are to be computed and paid. The employer must give a signed copy of the contract to every employee who is a signed party to the agreement and must obtain a signed receipt for the contract from each new employee.

Health Benefit Contribution Requirements for Pregnancy Disability Leave (SB 299)
Employers must provide up to four months of Pregnancy Disability Leave under existing California law. Now, they must provide up to four months of group health insurance coverage to employees on pregnancy leave on the same terms and conditions as if the employee continued actively reporting to work.

Organ and Bone Marrow Donor Leave (SB 272)
Employers must provide 30 business days of leave in a one year period for employees who are organ donors, and 5 business days in a one year period for employees who are bone marrow donors. The leave is measured from the date the employee’s leave begins and consists of 12 consecutive months. The law clarifies that the leave is not a break in service regarding the right to any paid time off, and contains further provisions regarding use of the leave in relation to paid time off, sick time and vacation leave.

Genetic Information (SB 559)
Amends the California Fair Employment and Housing Act (FEHA) to prohibit discrimination on the basis of genetic information. Genetic information is defined as information about (1) the individual’s genetic tests, (2) the genetic tests of family members of the individual, (3) the manifestation of a disease or disorder in family members of the individual, and (4) any request for, or receipt of, genetic services, or participation in clinical research that includes genetic services, by any individual or family member of the individual.

Gender Expression (AB 887)
Amends the FEHA to clarify that prohibited discrimination on the basis of sex or gender includes discrimination on the basis of a person’s gender identity and gender expression. The law defines gender expression as gender-related appearance and behavior, whether or not stereotypically associated with the person’s assigned sex at birth.

For more information about any of these new laws, contact the attorneys of Michelman & Robinson’s Labor & Employment Department.

This article is not offered as, and should not be relied on as, legal advice. You should consult an attorney for advice in specific situations.