California

Wage and Hour

Minimum Wage Increase Proposed (AB 196)

This bill would increase California's minimum wage from $8.00 an hour to $8.50 an hour effective January 1, 2013, and provide for annual adjustments beginning in January 2014. These automatic adjustments would be calculated using the California Consumer Price Index (as specified in to-be-amended Labor Code section 1182.12) to maintain employee purchasing power diminished by the rate of inflation during the previous year. The bill would prohibit the Industrial Welfare Commission (IWC) from adjusting the minimum wage downward and from adjusting the minimum wage upward if the average percentage of inflation for the previous year was negative. The IWC would be required to publicize the automatically adjusted minimum wage.

This bill is currently pending in the Labor and Employment Committee. A similar bill (AB 10) failed to pass in 2011.

Presumed Damages Proposed for Wage Statement Violations (SB 1255)

Labor Code section 226 requires employers to provide itemized wage statements containing statutorily-enumerated categories of information, and provides that an employee suffering injury as a result of a knowing and intentional failure by the employer to provide this information is entitled to the greater of all actual damages, or a specified sum not to exceed $4,000. This bill would provide that an employee is deemed to suffer injury for purposes of this penalty if the employer fails to provide a wage statement or fails to provide a wage statement showing the name of the employee and the last four digits of the employee's social security number or the employee identification number.

An employee would also be deemed to have suffered injury if the employer fails to provide accurate and complete information, as specified, and the employee cannot "promptly and easily" determine from the wage statement alone the amount and manner in which the employer calculated the gross and net wages paid to the employee during the wage period, the deductions made to from the gross wages to determine net wages, and the name and address of the employer or legal entity that secured the employer's services. The bill defines "promptly and easily" as meaning a "reasonable person would be able to ascertain the information without reference to other documents or information."

Increased Statutory Penalties for Wage and Hour Violations Proposed (AB 2099)

Currently, Labor Code section 1099 imposes a statutory fine of not less than $100 upon any employer or other person acting as an officer, agent or employee of an employer that does any of the following: (a) requires or causes any employee to work for longer hours than those filed, or under conditions of labor prohibited by a commission order; (b) pays or causes to be paid to any employee a wage less than the minimum fixed by an order of the commission; or (c) violates or refuses or neglects to comply with any provision of this chapter or any order or ruling of the commission. Citing the "inadequate" amount of this statutory penalty, this bill would increase the fine for a violation of this provision from at least $100 to not less than $250.

Proposed Ban on Explicit Mutual Wage Agreements that Predetermine Overtime Compensation (AB 2103)

In Arechiga v Delores Press, Inc. (2011) 192 Cal.App.4th 567, a California court of appeal upheld an explicit written mutual wage agreement that pre-determined overtime compensation. The Arechiga court concluded Labor Code section 515 did not specifically invalidate such agreements, and it declined to enforce the DLSE's Enforcement Manual that held such agreements were impermissible following the enactment of Labor Code section 515 in 2000. This bill would overturn Arechiga by amending Labor Code section 515 to provide that "payment of a fixed salary to a nonexempt employee shall be deemed to provide compensation only for the employee's regular, non-overtime hours, notwithstanding any private agreement to the contrary.

"Direct Contractors" to be Liable for Subcontractor's Wage Violations? (AB 2288)

This bill would add a new Labor Code provision (section 218.7) requiring a direct contractor (as defined) making or taking a contract in the state for the erection, construction, alteration or repair of a building, structure or other work, to assume and be liable for, any debt owed to a wage claimant for labor incurred by a subcontractor or contractor acting under, by or for the direct contractor in performing labor required under the original contract. This bill would also authorize civil actions to enforce this liability.

Meal Period Exceptions Proposed for Commercial Drivers, Including Under the "Motor Carrier" Laws (SB 1362)

Labor Code section 512 requires employers to provide a meal period or periods to employees who work a specified number of hours, and provides civil penalties for non-compliance. While legislative efforts to broadly clarify section 512 have repeatedly stalled, there have several minor exceptions enacted recently, including in 2010 for certain unionized employees covered by collective bargaining agreements containing statutorily-enumerated provisions. (See AB 569 which took effect January 1, 2011, and is codified in Labor Code section 512(e).).

This bill would create an exemption from the meal period requirements for commercial drivers and other persons employed in the transportation industry and are either (a) governed by specified federal and state regulations with regard to their hours of service, or (b) employed by a "motor carrier," as defined by federal law, if compliance would commit the employer to a particular price, route or service. This bill would provide that these exemptions would apply to wage claims pending as of the bill's date of enactment.

Meal Period Exemption Proposed for Commercial Drivers (AB 2176)

Labor Code section 512 requires employers to provide a meal period or periods to employees who work a specified number of hours in a shift. This bill would amend section 512 and provide an exemption from the meal period requirements for commercial drivers operating a vehicle that is required to display placards pursuant to specified provisions of the Vehicle Code.

Ten Hour Workday, Rather Than Eight Hour Workday, Proposed (SB 1114)

Labor Code section 510 presently establishes 8 hours as a day's work and a 40-hour workweek, and requires payment of overtime for additional hours worked either daily or weekly. This bill would amend section 510 and require payment of overtime compensation for hours worked in excess of 10 hours in one workday or in excess of forty hours in a workweek.

Individual Alternative Workweek Schedules Proposed for Small Employers (SB 1115)

Labor Code section 510 presently establishes 8 hours as a day's work and a 40-hour workweek, and requires payment of overtime for additional hours worked either daily or weekly. Labor Code section 511 authorizes the adoption, by two-thirds vote of employees in a work unit, of "alternative workweek schedules providing for workdays no longer than 10 hours within a 40-hour workweek, without incurring overtime. This bill would permit an individual non-exempt employee employed by an employer with 10 or less employees to request an employee-selected flexible work schedule providing for workdays up to 10 hours per day within a 40-hour workweek, and would allow the employer to implement this schedule without any obligation to pay overtime compensation.

Bill Altering Wage Garnishment Amounts Introduced (AB 1775)

Presently, a levy of execution upon the earnings of a judgment debtor is made by service of an earnings withholding order upon the debtor's employer, with federal law limiting the amount of an employee's earnings subject to such withholding orders. This bill would amend these provisions to specifically enumerate in California's Code of Civil Procedure the maximum amounts subject to such withholding orders, rather than requiring reference to federal law. If enacted, the amount of an individual judgment debtor's weekly disposable earnings subject to a garnishment shall not exceed 25% of the employee's weekly disposable earnings or the amount by which the individual's disposable earnings exceed 40 times the state minimum hourly wage in effect at the time the earnings are payable.

Moratorium on PAGA Suits Proposed Until After Wage Order Review (AB 1789)

This bill would require the Industrial Welfare Commission (IWC) to review and, if necessary, revise every Wage Order in effect as of January 1, 2013, to ensure that each order is consistent with current work conditions in the industry covered by that Wage Order. The IWC would be required to indicate on its website that a Wage Order has been reviewed and whether revision of the order is needed. This bill would also prohibit actions under the Labor Code Private Attorneys General Act of 2004 from being brought for a violation of a wage order until the Wage Order has been reviewed and, if revision is deemed necessary by the IWC, revised. This bill has been referred to the Labor and Employment Committee.

Legislature Contemplating Whether it Shall be Subject to California's Wage and Hour Laws (AB 1948)

Presently, and except where specifically stated, California's wage and hour laws, including their penalty provisions, apply to private employees but not state employees. This bill would add Labor Code section 501 to specify that the wage and hour provisions in that chapter, including meal and rest periods, and overtime, shall apply to the Legislature.

New Definition of "Independent Contractor" Proposed (AB 2373)

Presently, Labor Code section 3353 defines "independent contractor" as "any person who renders service for a specified recompense for a specified result, under the control of his principal as to the result of his work only and not as to the means by which result is accomplished." This bill would repeal section 3353 and instead adopt a new Labor Code provision (section 30) that would include this definition but also enumerate 17 factors the court may consider in determining whether someone is an independent contractor. These factors include those often considered in making these determinations including the extent to which the principal directs the manner and means of rendering the service, whether the service rendered is integrated into the principal's business operations, whether a continuing relationship exists between the principal and the person providing the service.

Bill Proposes Allowing Wage Claimants to Have Lien Rights Against an Employer's Real or Personal Property (AB 2517)

Presently, laborers who contribute labor, skills or services to a work of improvement are entitled to a mechanics lien upon the property so improved. This bill would authorize an employee to record and enforce a wage lien upon specified real and personal property for wages and related penalties and damages owed the employee, including property owned by the employer in the state, or upon property upon which the employee performed work.

DLSE Consulting Unit Proposed (SB 1333)

This bill proposed to establish in the Division of Labor Standards Enforcement (DLSE) the Labor Standards Consultation Unit to provide consulting services to employees and employers with 100 or fewer employees regarding compliance with wage and hour laws. This bill would prohibit the DLSE from citing an employer for a violation of any labor standard, order or regulation discovered as a result of an employer requesting or accepting services from the unit pursuant to this bill if the employer remedies the violation within an unspecified number of days and the employer is not the subject of an ongoing investigation by the DLSE. To defray costs, the DLSE would be permitted to charge a consulting fee to the request for services provided, not to exceed the actual cost to the unit.

Proposed Bill Requires DIR to Publicize Prevailing Wage Laws (SB 1370)

California law requires that workers employed on a public work, as defined, be paid not less than the general "prevailing rate" of per diem wages, as specified. This bill would require the Director of Industrial Relations (DIR) to post a list of every California code section and the language of those sections that relate to the prevailing wage rate requirements for workers employed on a public work on the DIR's website on or before June 1, 2013 and to update that list each February 1st thereafter.

Class Certification Decisions Immediately Appealable? (AB 2043)

Code of Civil Procedure section 904.1 enumerates the judgments and orders from which an appeal may be taken to the court of appeal. This bill would add an order granting or denying class action certification to those allowing appeal at the discretion of the appellate court. The petition to appeal would be due within 14 days after the entry of the order granting or denying class certification, and factors the appellate court should consider in deciding whether to permit the appeal would include (a) whether the trial court's order denying class status would effectively end the litigation and any reasonable possibility of prosecuting individual claims; (b) whether the trial court's order granting class status would place substantial pressure on the defendant to settle without regard to the merits of the case; (c) whether an interlocutory appeal of the order would facilitate the development of the law pertaining to class actions; (d) whether the order granting or denying class certification is clearly erroneous; and (e) whether any other special circumstances exist that are sufficient to justify an interlocutory appeal.

Discrimination/FEHA

Bill Prohibiting Discrimination Against Unemployed Applicants Passes Initial Committee Vote (AB 1450)

As discussed in prior newsletters, the California legislature is considering a bill that would limit an employer's ability to take employment actions relating to an individual's "employment status," defined as an individual's "unemployment." Specifically, this bill would prohibit an employer with 15 or more employees, unless based upon a bona fide occupational qualification, from (a) refusing to consider an individual or offer employment because of the individual's "employment status," (b) publishing advertisements suggesting an individual's current employment is a job requirement; or (c) directing an employment agency to take an individual's employment status into account in screening or referring applicants for employment. This bill would impose similar prohibitions on employment agencies.

As amended, this bill would not prohibit employers or employment agencies from publishing job advertisements setting forth the lawful qualifications for the job, including but not limited to the holding of a current and valid professional or occupational license. It would also not prohibit advertisements for job vacancies stating that only applicants who are currently employed by that employer will be considered. (so-called "internal" hiring). This bill would not also preclude an employer from considering an individual's employment history or from examining the reasons underlying an individual's unemployment status; but they could not refuse to hire simply because they were unemployed.

This bill would authorize civil penalties of $1,000 for the first violation, $5,000 for the second violation and $10,000 for each subsequent violation, enforceable by the Labor Commissioner. Lastly, "state contracts" entered into after January 1, 2013 shall require compliance with these requirements, and failure to do so would be grounds for cancelling, terminating, or suspending the contract and debarring the contractor from eligibility for future state contracts, as specified.

This bill recently passed an initial vote in the Labor and Employment Committee and has been referred to the Committee on Judiciary.

Religious Accommodation Clarifications Proposed for FEHA (AB 1964)

California's Fair Employment and Housing Act (FEHA) presently precludes discrimination based on religion, and requires employers to reasonably accommodate "religious beliefs or observances" which is defined to include observance of the Sabbath or holy days and reasonable travel time prior to and subsequent to a religious observance. This bill would amend FEHA's religious accommodation provisions to include the practice of wearing religious clothing or hairstyles (as defined) as a belief or observance. "Wearing religious clothing or a religious hairstyle" would mean any of the following: (a) wearing religious apparel that is part of the observance of the religious faith practiced by that individual; (b) wearing jewelry or an ornament that is part of the observance of the religious faith practiced by that individual; (c) carrying an object that is part of the religious faith practiced by that individual; or (d) adopting the presence, absence or style or a person's hair or beard that is part of the observance of the religious faith practiced by that individual.

This bill would specify that an accommodation is not reasonable if the accommodation requires segregation of an employee from customers or the general public. As with disability accommodation, an employer does not have to adopt an accommodation posing an "undue hardship" and this bill would adopt for religious accommodation purposes the "undue hardship" factors used for disability accommodation analysis.

Labor and Employment Committee Passes Bill Adding "Breastfeeding" to FEHA's Protections (AB 2386)

The FEHA presently precludes discrimination based on sex, which is defined to include gender, pregnancy, childbirth and medical conditions related to pregnancy or childbirth. This bill would add "breastfeeding and related medical conditions" to the FEHA's definition of "sex" as protected categories for unlawful employment discrimination under state law. In effect, this bill would supplement the lactation accommodation requirements contained in Labor Code sections 1030 through 1033, by prohibiting employers from discriminating or retaliating against female employees who express milk at work after they return from pregnancy disability or CFRA baby-bonding leave.

"Familial Status" Protection Proposed for FEHA (AB 1999)

This bill would amend the Fair Employment and Housing Act (FEHA) and include "familial status" as an additional basis upon which the right to seek, obtain and hold employment cannot be denied. "Familial status" would be defined as an individual who is, who will be or who is perceived to be a family caregiver, with "family" meaning a child, a parent, a spouse, a domestic partner, a parent-in-law, a sibling, a grandparent or a grandchild.

Leaves of Absence

Bill Expanding CFRA's Leave Provisions Passes Committee Vote (AB 2039)

California's Family Rights Act (CFRA – Government Code section 12945 et seq.) generally authorizes eligible employees to take up to 12 weeks of job-protected leave in a year for (a) the birth or placement of a child; (b) to care for the employee's parent, spouse, or child who has a serious health condition; or (c) to care for the employee's serious health condition that prohibits them from performing the essential functions of their job. The Assembly's Labor and Employment Committee recently passed a bill that would expand these leave rights and, if enacted, create additional differences between CFRA and the federal Family Medical Leave Act (FMLA).

For instance, like the FMLA, CFRA presently defines "child" as an individual under the age of 18 or an adult dependent child. This bill would eliminate the age and dependency status of a child, meaning employees would be eligible for CFRA leave to care for adult children. This bill would also expand CFRA to allow employees to take leave to care for a sibling, grandparent, grandchild or parent-in-law with a serious health condition. It would also specify that CFRA leave may be used to care for a "domestic partner" with a serious health condition, and adopt the Family Code's definition of "domestic partnership" as "two adults who have chosen to share one another's lives in an intimate and committed relationship of mutual caring."

Employee Relations/Privacy

Amendments Proposed Regarding Employee Rights to Inspect Personnel Files (AB 2674)

Labor Code section 1198.5 presently provides that an employee has the right to inspect the personnel records the employer maintains relating to the employee's performance or to any grievance concerning the employee. This section presently requires the employer to permit inspection at "reasonable intervals" but does not specify whether former employees have inspection rights, and does not identify a particular time limit to comply or enumerate a specific penalty for non-compliance. This bill would specify that both current and former employees have inspection rights, and require an employer to permit inspection no later than 30 days after receiving a written request (unless mutually extended to 35 days from the original request). This bill would also require employers, upon an employee's request, to provide copies of these records at a charge not to exceed the actual cost of reproduction within these same time frames.

This bill specifies that these inspection rights would cease during the pendency of any litigation by a current or former employee relating to a personnel matter. This bill would also provide alternative inspection/copying mechanisms involving former employees terminated for violations of law, or an employment-related policy involving harassment or workplace violence.

This bill would also permit a current or former employee or the Labor Commissioner to recover a penalty of $750 from the employer, and would further permit a current or former employee to obtain injunctive relief and attorneys' fees.

Prohibition on Employers Seeking Access to Employee's Social Media (AB 1844)

As discussed previously, the legislature is considering a bill that would prohibit employers from requiring a prospective employee to disclose a user name or account password to access a personal social media account that is used exclusively by the prospective employee. (As originally introduced, this bill would have precluded employers from seeking such information from both employees and prospective employees, but as amended it only protects prospective employees). As originally drafted, this bill would have provided a bright-line rule and provided that employers who fail to search social media shall not be deemed to have failed to exercise reasonable care. As amended, the bill provides that an employer does not have a duty to search or monitor social media before hiring an employee.

Social Media Privacy Act Proposed (SB 1349)

In a similar vein, this bill known as the Social Media Privacy Act, would preclude any employer, public or private, from requiring or requesting in writing that any employee or prospective employee disclose the user name or account password for a personal social media account or to otherwise provide the employer with access to any content of that account. This bill would impose similar restrictions upon postsecondary educational institutions vis-à-vis students or prospective students.

Public Sector

Public Employees' Bill of Rights Passes Committee Vote (AB 1655)

As also discussed, the California Legislature is also contemplating the "Public Employees Bill of Rights Act" that would, amongst other things, provide that state employees shall be entitled to priority over contractors in filling permanent, overtime and on-call positions. It would also require employers to provide an accurate job description and benefits overview at the outset of employment, and preclude employers from standardizing work in relation to a period of time and preclude employers from dissuading employees from using their meal or rest periods or accrued leave time. It would also change from three years to one year the period of time to serve any notice of adverse action and to complete any investigation against any state employee for any cause for discipline based on any civil service law. This bill also recently passed a committee vote and has been referred to the Appropriations Committee.

Expansion of Meyers-Milias-Brown Act Protections Proposed (AB 1808)

The Meyers-Milias-Brown Act establishes procedures governing the resolution of disputes regarding wages, hours, and other terms and conditions of employment between public employees and pubic employee organizations. Under this act, "public employees" (as defined) have the right to form, join, and participate in the activities of employee organizations of their own choosing for purposes of representation on all matters of employer-employee relations. This bill would expand the definition of "public employee" to include any person employed by an employer that is not a public agency, but with which a public agency shares or co-determines decisions governing essential employment conditions of that person. This bill would also state that it is declaratory of existing law.

Public Utility Whistleblower Protection Program Proposed (AB 1843)

Under California law, the Public Utilities Commission has regulatory authority over public utilities and the ability to establish rules for all public utilities. This bill would require the Commission to establish a comprehensive whistleblower protection program to protect public utility employees, former employees, and third-party contractors and subcontractors from retaliation for bringing information to the Commission or other public entities (as specified) regarding safety and other enumerated issues.

Miscellaneous

Expansion Proposed of Tax Credits for Hiring Full-Time Employees (AB 1596)

Currently, California's Personal Income Tax Law and Corporation Tax Law authorize "qualified employers" (i.e., a taxpayer employing 20 or fewer employees) to obtain a credit in the amount of $3,000 for each full-time employee hired. This bill would expand the definition of "qualified employer" to mean a taxpayer that employs 50 or fewer employees as of the last day of the preceding taxable year. This bill has been referred to the Committee on Revenue and Taxes.

Tax Credits for Hiring Qualified Veterans Proposed (SB 1197)

California's Personal Income Tax Law and Corporations Tax Law presently allow various credits against taxes imposed by this law. This bill would, for taxable years beginning on or after January 1, 2012, allow a credit against those taxes in a to-be-determined amount of the qualified first year wages, as defined, paid by the taxpayer to a "qualified veteran," as defined under federal law, during the taxable year.

Mandated Pension-Related Reporting for Retired Corporate Executive Officers Proposed (SB 1208)

Presently, domestic and publicly-traded corporations must annually file a report disclosing the compensation, as specified, of each board of director member and its five most highly compensated executive officers who are not members of the board, and its chief executive officer. This bill would amend these requirements and instead require that a publicly traded corporation include in that report the "total compensation," as defined, paid to each director, the principal executive officer, principal financial officer, and each of the three most highly compensated executive officers other than the principal executive officer or principal financial officer. Publicly traded corporations would also be required to include the "total compensation" with respect to each of the corporation's five most highly compensated retirees, and the names of those retirees.

Bill Proposes Authorizing Permits for Undocumented Workers to Fill Agricultural and Service Industry Jobs (AB 1544)

Known as the Agricultural Jobs and Industry Stabilization Program, this bill would essentially enable undocumented workers to work in certain agricultural and service industry jobs. Since federal law preempts state immigration laws, this bill would first require the Employment Development Department (EDD) to obtain necessary approvals from federal authorities. Once obtained, the EDD would certify that there are not enough legal residents in California to fill all open agricultural and service industry jobs, and then issue permits to undocumented workers to work in these industries and who meet specified criteria.

AGENCY

Federal

EEOC Issues Final Rule on "Reasonable Factors Other than Age" Defense to Disparate Impact Age Claims

On March 29th, the Equal Employment Opportunity Commission (EEOC) issued its Final Rule amending its regulations concerning disparate impact claims under the Age Discrimination in Employment Act (ADEA), specifically as to the "reasonable factors other than age" (RFOA) defense to such claims. This Final Rule is intended to explain the meaning of the RFOA defense to employees and employers, and to make the EEOC's regulations consistent with several recent United States Supreme Court cases. (See e.g., Smith v. City of Jackson (2005) 544 U.S. 228 [recognizing RFOA defense to disparate impact claims under ADEA]; Meacham v. Knolls Atomic Power Lab (2008) 554 U.S. 84 [holding that employer bears the burden of persuasion as to RFOA defense].)

Amongst other things, the Final Rule confirms that the RFOA is an affirmative defense available only in disparate impact claims, but not disparate treatment claims, and that the employer bears the burdens of production and persuasion. The Final Rule also specifies that an employer who uses the RFOA defense must demonstrate more than its challenged policy is not irrational (i.e., reasonableness must be shown by more than a rational basis test). The Final Rule observes that the RFOA determination is a fact-specific inquiry and it enumerates a list of potential relevant factors a court may consider. The Final Rule will take effect in late April 2012, and is available for download at:https://www.federalregister.gov/articles/2012/03/30/2012-5896/disparate-impact-and-reasonable-factors-other-than-age-under-the-age-discrimination-in-employment.

JUDICIAL

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