LEGISLATIVE RECAP
The deadline for the California Legislature to advance bills expired on August 31st, and as expected, there were quite a few employment-related bills considered. In fact, seven employment-related bills have already been passed by the Legislature and signed by Governor Jerry Brown with most taking effect January 1, 2015.
The California Legislature also passed and forwarded to Governor Jerry Brown another seventeen employment-related bills, including bills that would:
Governor Brown has until September 30, 2014 to sign or veto these bills.
Listed below, largely by subject matter, are the state-wide employment-related bills that have been signed into law and will become effective January 1, 2015, unless otherwise noted, followed by the bills currently being reviewed by Governor Brown. An update on several municipal-related developments (e.g., San Diego’s Minimum Wage/Paid Sick Leave Ordinance and San Francisco’s Commuter Benefits Ordinance) follows the state-level developments.
NEW CALIFORNIA EMPLOYMENT LAWS ENACTED IN 2014
Rest and Recovery Periods are Counted as Hours Worked (SB 1360)
Labor Code section 226.7 presently precludes employers from requiring employees to work during any meal, rest, or recovery period, and to pay an additional hour of pay at the employee’s regular rate of pay for each workday a meal, rest, or recovery period is missed. (In 2013, California enacted SB 435 adding the language regarding “recovery periods” to the then-existing version of section 226.7.) Responding to concerns that employers were not sure if rest or recovery periods needed to be paid, this law amends section 226.7 to specify that rest or recovery periods required under state law shall be counted as hours worked for which there shall be no deduction from wages. The bill’s proponents state that this language was mistakenly omitted from SB 435 during the 2013 legislative session.
This law specifically states it is declarative of existing law, and therefore is immediately effective and applies retroactively.
Waiting Time Penalties for Final Wage Violations for Unionized Theatrical Employees (AB 2743)
While Labor Code section 201 sets forth the general rule regarding the payment of final wages, the Labor Code also enumerates alternative final pay rules for particular industries due to the unique nature of those industries. Labor Code section 203, which authorizes waiting time penalties for failure to comply with these final pay rules, generally cross-references both section 201 and these more specific final pay statutes. However, and likely due to a legislative drafting error, Labor Code section 203 did not previously cross-reference section 201.9, which governs final pay for employees at live theatrical and concert events that are subject to a collective bargaining agreement. This law amends section 203 to include section 201.9 as one of the specific final pay statutes to which waiting time penalties apply if final wages are not paid in accordance with the applicable Labor Code section.
Longer Statute of Limitations for Recovering Liquidated Damages for Unpaid Wages (AB 2074)
California law permits an employee to pursue a civil action to recover unpaid wages or compensation, and Labor Code section 1194.2 permits a successful employee to also recover liquidated damages equal to the unpaid wages plus interest in civil actions regarding minimum wage violations. Responding to recent cases suggesting that actions for recovery of penalties must be filed only within one year, whereas actions to recover unpaid wages have a three-year statute of limitations, this law amends section 1194.2 to specify that the statute of limitations to pursue liquidated damages is the same as in an action for wages from which the liquidated damages arise.
The “Child Labor Protection Act” (AB 2288)
Known as the Child Labor Protection Act of 2014, this bill enacts a new Labor Code provision (section 1311.5) to provide additional remedies for violations of California’s laws regarding employment of minors. For instance, the statute of limitations for claims related to the employment of minors shall be tolled until the individual allegedly aggrieved by the unlawful employment practice reaches 18 years of age. The bill specifies that this provision is declarative of existing law, meaning it applies retroactively.
This law also authorizes individuals who are discriminated or retaliated against because they filed a claim alleging a child labor violation to receive treble damages in addition to any other legal remedies available. Lastly, while Labor Code section 1288 presently identifies certain “classes” of violations resulting in statutorily-enumerated penalties, this law imposes a civil penalty of $25,000 to $50,000 for each violation involving minors less than 12 years of age.
“Immigration-Related” Retaliation Protections Clarified (AB 2751)
This “clean up” bill makes relatively-minor changes to several measures enacted last year to protect immigrant workers against unlawful retaliation. For instance, in 2013, California enacted AB 263 and SB 666 which, in turn, enacted Labor Code section 1019 prohibiting employers from engaging in various “immigration-related practices” against persons who had exercised certain rights protected under state labor and employment laws. These immigration-related practices included threatening to file or filing a false police report. This bill expands this particular provision to also include the threatening to file or the filing of a false report or complaint with any state or federal agency, not just the police.
Newly-enacted section 1019 also authorizes the court to order, upon application of a party or upon its own motion, the appropriate government agencies to suspend certain business licenses held by the violating party for prescribed periods based on the number of violations. These amendments clarify that the licenses to be affected would be “specific to the business location or locations where the unfair immigration-related practice occurred,” rather than potentially state-wide.
Last year’s bills also added subsection (b)(3) to Labor Code section 98.6 to authorize a $10,000 penalty against an employer per employee for each violation. Since last year’s amendment did not specify to whom this penalty would be awarded, this new law specifies these penalties shall be “awarded to the employee or employees who suffered the violation.”
In 2011, AB 22 enacted Labor Code section 1024.5 limiting an employer’s ability to use consumer credit reports, and in 2013 AB 263 enacted Labor Code section 1024.6 prohibiting employers from retaliating against employees who update their “personal information.” Because AB 263 did not define “personal information,” this law further amends section 1024.6 to specify that employers may not discharge or discriminate against employees who update their personal information “based on a lawful change of name, social security number or federal employment authorization document.” Responding to employer concerns, these amendments also specify that “an employer’s compliance with this section shall not serve as the basis for a claim of discrimination, including any disparate treatment claim.”
Expedited Workers’ Compensation Proceedings Involving Illegally Uninsured Employers (AB 1746)
California’s Workers’ Compensation system requires the administrative director to establish a priority conference calendar for cases in which the employee is represented by an attorney and the disputed issues are employment or injury (as specified). This law amends Labor Code section 5502 to require that cases in which the employee is or was employed by an illegally uninsured employer and the disputed issues are employment or injury (as specified), be placed on this priority conference calendar.
Employers May Report Workplace Injuries via Email Rather than Telegraph (AB 326)
Although Labor Code section 6409.1 has long required employers to immediately notify the Division of Occupational Safety and Health of an employee’s serious injury, illness or death, this section had not been updated recently, and so it required the employer to provide this notice via telephone or telegraph. This new law amends section 6409.1 to enable the employer to make such reports via telephone or email, and it deletes language authorizing the use of a telegraph.
EMPLOYMENT BILLS SENT TO GOVERNOR JERRY BROWN
Discussed below are the employment bills that recently passed the California Legislature and must be signed or vetoed by Governor Jerry Brown before September 30, 2014:
Paid Sick Leave Bill (AB 1522)
Known as the “Healthy Workplaces, Healthy Families Act of 2014,” this bill would implement a number of new Labor Code provisions (section 245 et seq.) requiring employers to provide paid sick leave for their employees. If enacted, California would be the second state (Connecticut is the other) to implement paid sick leave state-wide.
Accrual and Usage Rules
After July 1, 2015, employees who work in California for thirty or more days within a year from the commencement of employment would accrue paid sick leave at a rate of no less than one hour for every 30 hours worked. Exempt employees would be deemed to work 40 hours per week for accrual purposes, unless their normal workweek schedule is less than 40 hours, in which case they would accrue paid sick leave based upon that normal workweek.
Employees would be entitled to use accrued paid sick days beginning on the 90th day of employment, after which they may use paid sick days as they are accrued. Employers would also have the discretion to lend paid sick days to an employee in advance of accrual, and employers could not require employees to locate a replacement worker to cover days on which an employee uses paid sick days.
While accrued paid sick days shall carry over to the following year of employment, employers may limit an employee’s use of paid sick leave to 24 hours, or three days, in each year of employment. However, no accrual or carry-over is required if the full amount of sick leave is received at the beginning of each year. An employer also has no obligation to allow an employee’s total accrual of paid sick leave to exceed 48 hours or six days, provided that an employee’s rights to accrue and use paid sick leave under this section are not otherwise limited. This six-day accrual limit appears intended to ensure the employee has their full sick leave rights both for the instant year and the beginning of the next year.
One of the bigger concerns about this proposed law was its potential impact employers on who are already providing an equal amount of sick time of paid time off. Proposed section 246(e) attempts to address this concern by stating that an employer does not need to provide “additional” paid sick days if it meets certain requirements. Specifically, the employer is exempted from providing additional paid sick days if (a) it has a paid leave policy or paid time off policy, (b) the employer makes available an amount of leave that may be used for the same purposes and under the same conditions as specified in this new law, and (c) the employer’s policy does either of the following: (1) it satisfies the accrual, carry over and use requirements of this new law; or (b) it provides no less than 24 hours or three days of paid sick leave, or equivalent paid leave or paid time off, for employee use for each year of employment or calendar year or 12-month basis. Notably, unlike the exemptions provided to this entire new law for certain groups (discussed below), this particular exemption seems to apply only to the provision of “additional” time off, but does not exempt employers from other aspects of this new law (i.e., notices, posters, record-keeping, etc.).
Employers would not be required to compensate employees for unused sick days upon employment ending, but they would be required to reinstate the previously unused balance if they rehired the employee within one year. In that instance, the rehired employee shall be entitled to use those previously accrued and unused paid sick days and to accrue additional paid sick days upon rehiring.
Employees would be entitled to use paid sick time for preventive care for themselves or a family member, as well as for the diagnosis, care, or treatment of their or their family member’s existing health condition. For purposes of this bill, “family member” means a (1) child (as defined), (2) parent (as defined), (3) spouse, (4) registered domestic partner, (5) grandparent, (6) grandchild, or (7) sibling. The employer shall also provide paid sick days for an employee who is a victim of domestic violence, sexual assault, or stalking, as discussed in Labor Code sections 230 and 230.1.
An employee may determine how much paid sick leave they need to use, but an employer may set a reasonable minimum increment, not to exceed two hours, for the use of paid sick leave. In response to employer concerns sick leave is more unpredictable than many other leaves (e.g., FMLA, etc.), this bill requires employees to provide “reasonable” advance notification if the need for paid sick leave is foreseeable. Where the need for paid sick leave is unforeseeable, the employee shall provide notice of the need for leave as soon as practicable.
Employee’s using paid sick leave shall be compensated at the employee’s normal rate during regular hours of work. If the employee in the 90 days of employment before taking accrued sick leave had different hourly pay rates, was paid by commission or piece rate, or was a nonexempt salaried employee, then the rate of pay shall be calculated by dividing the employee’s total wages, not including overtime premium pay, by the employee’s total hours worked in the full pay periods of the prior 90 days of employment.
Employers Covered by and Exempted from this New Law
Likely one of the more controversial aspects of this new law is its scope. For instance, unlike Connecticut’s Paid Sick Leave law which applies only to employers with more than 50 employees and San Francisco’s Paid Sick Leave Ordinance which exempts smaller employers from certain obligations, this new law would apply to almost all employers regardless of size, many public employers, the state, and municipalities.
Notably, however, like many other recent Labor Code amendments, this bill also contains carve-outs for employees covered by collective bargaining agreements (CBAs) with certain provisions. Specifically, this bill would not apply to employees covered by CBAs that expressly provide for the wages, hours of work, and working conditions of employees, as well as for paid sick days (with final and binding arbitration for any disputes regarding paid sick days), premium wage rates for all overtime, and a regular hourly rate of not less than 30 percent more than the state minimum wage.
Similarly, construction industry employees covered by a CBA with these provisions would also not be covered by this bill if the CBA was entered into before January 1, 2015, or if the CBA expressly waives the requirements of “this article” in clear and unambiguous terms.
Responding to the State of California’s concern about costs, an amendment inserted at the eleventh-hour would also exempt a provider of in-home supportive services under specified sections of the Welfare and Institutions Code.
Finally, certain individuals employed in the airline industry and covered by the federal Railway Labor Act are exempted provided they receive compensated time-off at least equal to this new law.
Notice, Posting and Record-Retention Rules
This new law also furthers a recent trend of new California laws that enact substantive rights and impose administrative responsibilities, although arguably in less expansive form due to last-minute amendments proposed by human resources organizations.
For instance, this law amends Labor Code section 2810.5 to require employers to provide at the time of hiring written information about this new law. Specifically, this law requires that the notice employers have been required to provide since 2012 concerning pay-related information now also include language advising employees of their right to accrue and use paid sick leave, their right to be free from retaliation, and their right to file a complaint. Fortunately, this particular Labor Code section generally requires the Labor Commissioner to develop a template employers may use, so presumably the Labor Commissioner will develop an updated form. An earlier but-since deleted provision of this law would have required employers to essentially develop and distribute written notice in at least five languages but was silent as to what the notice would have been required to say or when it needed to be distributed.
An employer will also be required to display in a conspicuous place in each workplace of the employer a poster notifying employees of these paid sick leave rights. The Labor Commissioner will be responsible for preparing this poster. Employers who willfully violate the posting requirements will be subject to a civil penalty of not more than $100 per offense.
Employers will also be required to provide employees with written notice that identifies the amount of paid sick leave available, or paid time off an employee provides in lieu of sick leave, for use on either the employee’s itemized wage statement required under Labor Code section 226 or in a separate writing provided on the designated pay date with the employee’s payment of wages. An employee alleging failure to provide such notice shall be entitled to the penalties specifically enumerated under this law (discussed below) rather than under Labor Code section 226.
New Labor Code section 247.5 would also require employers to retain, for at least three years (rather than the five years originally proposed), records documenting the hours worked, paid sick days accrued, and paid sick days used by each employee. These records may be inspected by the Labor Commissioner under Labor Code section 1174, or by an employee under Labor Code section 226. Troublingly, and in another example of a recent trend in California, this section provides that if an employer fails to maintain adequate records, it shall be presumed that the employee is entitled to the maximum number of hours accruable under this new article, unless the employer proves otherwise by clear and convincing evidence. In other words, an employer cannot simply prevail by satisfying the preponderance of the evidence standard traditionally used, but must satisfy the much more rigorous “clear and convincing” standard traditionally reserved for punitive damages purposes but which has begun to be tucked into new Labor Code amendments by plaintiff’s attorneys.
Retaliation Protections and Enforcement
This bill would also prohibit discrimination or retaliation against employees for using accrued sick days, or for filing a complaint regarding any sick day policy violation. However, similar to last year’s protections against “immigration-related practices” (AB 263), this bill would create a rebuttable presumption of unlawful retaliation if an employer takes an adverse employment action (including denying the right to use sick days) within 30 days of an employee (1) filing a complaint with the Labor Commissioner or in court alleging violations of this article; (2) cooperating with an investigation or prosecution of an alleged violation of this article; or (3) opposing a policy, practice or act that is prohibited by this article.
Under Labor Code section 248.5, the Labor Commissioner would be entitled to enforce this article by awarding reinstatement, back pay, and payment of sick days unlawfully withheld, plus the payment of an additional sum in the form of an administrative penalty to an employee whose rights were violated. Where paid sick leave is unlawfully withheld, the employee shall recover the dollar value of the paid sick days withheld, or $250 multiplied by three, whichever is greater, but not to exceed an aggregate penalty of $4,000. If a paid sick leave-related violation results in “other” harm to the employee or person, the administrative penalty shall include a sum of $50 for each day that the violation occurred or continued, not to exceed $4,000.
If the employer fails to promptly comply, the Labor Commissioner may take “appropriate” enforcement action to ensure compliance, including filing a civil action. In such instances, the violating employer may be ordered to pay up to the state of California $50 for each day a violation occurs of continues.
Employees or other persons may report suspected violations to the Labor Commissioner, and to encourage such reporting, the Labor Commissioner would be permitted to keep the reporting employee’s identifying information confidential.
The Labor Commissioner or the Attorney General would be able to file a civil action in court against the employer or any person violating this article. The Labor Commissioner or Attorney General would be entitled to appropriate legal and equitable relief, including reinstatement, back pay, the payment of sick days improperly withheld, and liquidated damages of $50 to each employee for each violation each day, plus reasonable attorneys’ fees and costs. (A provision authorizing employees to file civil actions was deleted by recent amendment while another amendment clarifies that these administrative actions would be maintained on “behalf of the aggrieved,” suggesting any penalties would ultimately be awarded to the employee.) Subdivision (b) to Labor Code section 245 clarifies that the provisions of this new article “are in addition to and independent of any other rights, remedies or procedures under any other law.
Lastly, proposed section 249, subdivision (d), specifies this bill establishes “minimum” requirements for paid sick days and does not preempt, limit or otherwise affect the applicability of any other law or ordinance that provides greater accrual of use of paid sick days. California employers already must consider slightly different variations in San Francisco and, unless stayed by referendum, San Diego shortly, and this legislative invitation for municipalities to enact still-broader versions suggests employers may soon need to have multiple versions of their paid sick leave policies.
As mentioned, this bill appears considerably broader than that enacted in Connecticut and previously proposed for the state of California (although prior versions would have required additional paid sick leave [e.g., five or nine days rather than three].) However, Governor Brown has already signaled his support for this bill, suggesting it will be enacted.
Time Off for Emergency Rescue Personnel (AB 2536)
Labor Code section 230.3 prohibits an employer from discharging or in any manner discriminating against an employee for taking time off to perform emergency duty as a volunteer firefighter, reserve peace officer, or emergency rescue personnel. Section 230.3 presently defines “emergency rescue personnel” to include an officer, employee, or member of a political subdivision of the state, or of a sheriff’s department, police department, or a private fire department. This bill would expand this definition of “emergency rescue personnel” to include an officer, employee, or member of a disaster medical response entity sponsored or requested by the state.
This bill would also require an employee who is a health care provider (as defined by the Business and Professions Code) to notify their employer at the time they become designated as an emergency rescue personnel, and when the employee is notified they will be deployed because of that designation.
This bill faces no opposition and is likely to be signed into law.
FEHA to Prohibit Discriminating Against Employees Because of Drivers Licenses Issued to Undocumented Citizens (AB 1660)
In 2013, California enacted AB 60 which created new Vehicle Code section 12801.9 authorizing the Department of Motor Vehicles to issue an original driver’s license to a person who is unable to submit satisfactory proof that the applicant’s presence in the United States is authorized under federal law. AB 60 had also amended the California Unruh Act (Civil Code section 51 et seq.) to prevent business establishments from discriminating against individuals who hold or present such driver’s licenses.
This law would amend the Fair Employment and Housing Act (FEHA, Government Code section 12940 et seq.) to prohibit discrimination against an individual because he or she holds or presents a drivers license issued under Vehicle Code section 12801.9, except as specified. This bill would amend Government Code section 12926 with new subdivision (v) to specify that national origin discrimination includes discrimination on the basis of possessing a driver’s license issued under Vehicle Code section 12801.9. This bill also prohibits a governmental authority or its agent from discriminating against an individual because he or she holds or presents a specified license.
This bill also makes corresponding amendments to Vehicle Code section 12801.9 to provide that it will be a FEHA violation to discriminate against a person holding or presenting a driver’s license issued pursuant to that section. It would also make it a FEHA violation for an employer or covered person to require a person to present a driver’s license, unless possessing a driver’s license is required by the employer and the employer’s requirement is otherwise permitted by law. This bill specifies that Vehicle Code section 12801.9 shall not be construed to limit or expand an employer’s authority to require a person to possess a driver’s license.
Similarly, this bill would not affect an employer’s rights or obligations to obtain information required under federal law to determine identity and authorization to work. These amendments also provide that actions taken by an employer that are required by the federal Immigration and Nationality Act would not violate this law.
This bill would also specify that driver’s license information obtained by an employer shall be treated as private and confidential; and exempt from disclosure under the California Public Records Act; and shall not be disclosed to any unauthorized person or used for any purpose other than to establish identity and authorization to drive.
Proposed new subsection (k) to section 12801.9 provides that a license pursuant to this section shall not be used to consider an individual’s citizenship or immigration status, or as a basis for an investigation, arrest, citation or defense.
FEHA Protections for Unpaid Interns and Volunteers (AB 1443)
This bill amends the FEHA in response to several court rulings in other jurisdictions suggesting interns or volunteers are not employees for purposes of harassment and discrimination laws.
For instance, it would amend Government Code section 12940(c), which presently prohibits discrimination in apprentice training programs, to also preclude discriminating on the basis of any legally protected classification (e.g., race, religion, disability, etc.) in an unpaid internship or another limited duration program to provide unpaid work experience for that person.
It would also amend subsection (j) to prohibit harassment against unpaid interns or volunteers because of a legally protected classification. Lastly, it would extend the existing religious belief accommodation requirements to unpaid interns and volunteer workers.
This bill unanimously passed the Legislature and is likely to be enacted into law.
AB 1825 Training to Include Prevention of “Abusive Conduct” (AB 2053)
In 2004, California enacted AB 1825, which requires employers with more than 50 employees to provide at least two hours of sexual harassment training for supervisors located in California. Under Government Code section 12950.1, employers must provide this training within six months of an employee’s assumption of a supervisory position, and once every two years thereafter.
This bill would amend section 12950.1 to require that this training include the prevention of “abusive conduct.” Newly proposed subsection (g)(2) would define abusive conduct as “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.” It further specifies that such 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.” The bill specifies that “a single act shall not constitute abusive conduct, unless especially severe and egregious.”
Notably, this bill only would require such “abusive conduct” prevention training within the already required AB 1825 harassment training, and it does not otherwise amend the FEHA to prohibit “abusive conduct” unrelated to an already protected cr
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