LEGISLATIVE RECAP
California’s legislative session recently ended with a flurry of activity as Governor Jerry Brown signed and vetoed a number of bills before the September 30th deadline. As expected, this year’s legislative session once again saw a number of new employment-related laws enacted, with most taking effect on January 1, 2015. While the new Paid Sick Leave law (AB 1522) and the law imposing joint responsibility for certain contractor obligations (AB 1897) dominated the headlines, there were a number of other significant new laws, including laws that will:
However, Governor Brown once again vetoed a bill that would have imposed new limits on an employer’s ability to advertise available positions (AB 2271), and a heavily-opposed bill that would have allowed employees to levy pre-judgment liens against employer property in wage disputes stalled late in the legislative session. Looking ahead, it remains to be seen whether these bills will resurface in 2015, or whether there will be “clean up” legislation introduced to answer some of the issues almost certain to arise with the Paid Sick Leave bill (AB 1522) since the Labor Commissioner will not be providing clarifying regulations.
On the municipal level, interim reports suggest that enough signatures have been gathered to force a city-wide referendum on San Diego’s ordinance that would increase the minimum wage and require additional paid sick leave beyond that required under AB 1522. If a referendum occurs, this Ordinance would be stayed until at least mid-2016. In the interim, San Diego has enacted new “e-cigarette” limitations that take effect on October 16, 2014.
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. An update on several municipal-related developments (e.g., San Diego’s Minimum Wage/Paid Sick Leave and E-Cigarette Ordinances) follows the state-level developments.
These legislative, as well as other significant judicial and agency developments, will be discussed at our annual Employment Law Seminar: http://www.wilsonturnerkosmo.com/events/Employment_Law_Seminar/
NEW CALIFORNIA EMPLOYMENT LAWS ENACTED IN 2014
Employers Required to Provide Paid Sick Leave (AB 1522)
On September 10, 2014, Governor Jerry Brown signed the “Healthy Workplaces, Healthy Families Act of 2014” (AB 1522) making California the second state (Connecticut is the other) to require employers to provide paid sick leave. The law takes effect July 1, 2015, and implements a number of new Labor Code provisions (sections 245 et seq.) and will require employers to provide up to three days of paid sick leave each year.
California employers should begin learning the law’s very detailed requirements and compare it against a similar ordinance already enacted in San Francisco to the extent they do business in San Francisco. Listed below is an initial review of this new law’s numerous requirements. The full-text is available at: http://www.leginfo.ca.gov/pub/13-14/bill/asm/ab_1501-1550/ab_1522_bill_20140904_enrolled.pdf.
The Law Applies to Almost All Employers, Regardless of Size
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 applies to almost all employers regardless of size, many public employers, the state, and municipalities.
Notably, however, like many other recent Labor Code amendments, this law contains carve-outs for employees covered by collective bargaining agreements (CBAs) with certain provisions. Specifically, this law does 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 are not covered by this law if the CBA was entered into before January 1, 2015, or if the CBA expressly waives the requirements of this new law in clear and unambiguous terms.
Responding to the State of California’s concern about costs, an amendment inserted at the eleventh-hour also exempts 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.
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 will accrue paid sick leave at a rate of no less than one hour for every 30 hours worked. Exempt employees will 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 will accrue paid sick leave based upon their normal workweek.
Employees will 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 will also have the discretion to lend paid sick days to an employee in advance of accrual, and employers cannot 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 the full paid sick leave allotment 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 on employers who already provide an equal amount of sick time or paid time off. New Labor Code section 246(e) addresses 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, calendar year or 12-month basis. Notably, unlike the exemptions provided to this entire new law for certain groups (discussed above), 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 will not be required to compensate employees for unused sick days upon termination of employment, but they must reinstate the previously unused balance if they rehire 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 will 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 the employee needs 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 that sick leave is more unpredictable than many other forms of leave (e.g., FMLA, etc.), this law 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.
Employees 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.
Notice, Posting and Record-Retention Rules
This law also furthers a recent trend of new California laws enacting substantive rights and imposing 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 written information at the time of hiring about this new paid sick leave entitlement. Specifically, this law requires that the notice employers have been required to provide since 2012 concerning pay-related information now must 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 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 identifying 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 also requires 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.
Retaliation Protections and Enforcement
This law also prohibits 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 law creates 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” of the Labor Code.
Under new Labor Code section 248.5, the Labor Commissioner may award 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 to the State of California up to $50 for each day a violation occurs or continues.
Employees or other persons may report suspected violations to the Labor Commissioner, and to encourage such reporting, the Labor Commissioner may keep the reporting employee’s identifying information confidential.
The Labor Commissioner or the Attorney General may also file a civil action in court against the employer or any person violating this article. The Labor Commissioner or Attorney General may recover 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 for 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 law 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.
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 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 amends 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. It adds subdivision (v) to Government Code section 12926, specifying that national origin discrimination includes discrimination on the basis of possessing a driver’s license issued under Vehicle Code section 12801.9. It also prohibits a governmental authority or its agent from discriminating against an individual because he or she holds or presents a specified license.
This law 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 also makes 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 law 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.
Notably, this law specifies that it does not affect an employer’s rights or obligations to obtain information required under federal law to determine identity and authorization to work. It also provides that actions taken by an employer that are required by the federal Immigration and Nationality Act would not violate this law.
Lastly, it specifies 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.
FEHA Protections for Unpaid Interns and Volunteers (AB 1443)
This law 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 amends Government Code section 12940(c), which 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 also amends subsection (j) to prohibit harassment against unpaid interns or volunteers because of a legally protected classification. Lastly, it extends the existing religious belief accommodation requirements to unpaid interns and volunteer workers.
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.
Reflecting a recent trend targeting “workplace bullying,” this law amends section 12950.1 to require this harassment training also include the prevention of “abusive conduct.” Newly proposed subsection (g)(2) defines 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.” However, this law specifies that “a single act shall not constitute abusive conduct, unless especially severe and egregious.”
Notably, this law only requires such “abusive conduct” prevention training occur 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 criterion. However, this law does not specify how much of the AB 1825 training much address workplace bullying, nor does it provide specific guidance on what must be included in the training.
Sexual Harassment Training for Farm Labor Contractors (SB 1087)
California presently has detailed laws regulating “farm labor contractors” (FLC) and the procedures for them to obtain the requisite licenses. (See Labor Code section 1682 et seq.) This law amends numerous provisions relating to FLCs generally, including several specific provisions to address concerns about wide-spread sexual abuse of female migrant farm workers recently detailed in the documentary “Rape in the Fields.”
First, this law prohibits the Labor Commissioner from issuing a FLC license to any person who, within the preceding three years, has been found by a court or an administrative agency to have committed sexual harassment of an employee. It also prohibits an FLC license from being issued to any person who, within the preceding three years, employed any supervisory employee he or she knew or should have known had been found by a court or an administrative agency within the preceding three years of his or her employment with the applicant to have sexually harassed an employee. However, the employer will be deemed not to have knowledge of harassment by any supervisory employee if that supervisory employee executes a Labor Commission form averring that the person has not been found to have committed sexual harassment within the preceding three years. This particular provision shall not take effect until the Labor Commissioner prepares and posts on its website this attestation form.
In addition to denying an FLC license, the Labor Commissioner may revoke, suspend, or refuse to renew an FLC license if either of the above-mentioned criteria exists.
This law also requires that the mandatory written examination portion of the licensing process cover laws and regulations concerning workplace sexual harassment, and that the annual mandatory eight hours of educational classes be increased to nine hours, and include at least one hour of sexual harassment training.
An applicant for an FLC license must also execute written statements that the Labor Commissioner shall provide attesting that their employees have received sexual harassment prevention training. Supervisory employees must receive two hours of training each calendar year, while non-supervisory employees must be trained at time of hire and every two years. The sexual harassment training requirements are very similar to the currently-required AB 1825 training for private employers, including that the FLC maintain these harassment training records for three years.
Secondly, this law increases the ability of the Division of Labor Standards Enforcement (DLSE) to enforce applicable laws. Accordingly, it increases funding for FLC enforcement and verification, and aims to increase bonding requirements, increase wage and hour reporting, and increase penalties for violations.
“Client Employers” to Share Certain Legal Responsibilities with Labor Contractors (AB 1897)
Labor Code section 2810 previously prohibited a person or entity from entering into a contract or agreement for labor or services with specified types of contractors (e.g., construction, farm labor, garment, janitorial, security guard, or warehouse contractor) if 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 all applicable local, state, and federal laws. Citing a concern about protecting workers in the “subcontracted economy,” this law enacts a new section, Labor Code section 2810.3, requiring a “client employer,” as defined to share with the labor contractor legal responsibility and liability for certain obligations.
Specifically, client employers will share with the labor contractor all civil legal responsibility and civil liability for workers supplied by that labor contractor for: (1) the payment of wages; and (2) the failure to secure valid workers compensation coverage. Despite this shared responsibility, a worker or their representative cannot file a civil action against the client employer until after providing thirty days notice of violations of any shared obligations. This law prohibits the client employer or the labor contractor from taking any adverse action against any worker for providing notification of violations or filing a civil action.
This law also prohibits client employers from attempting to contract around these provisions, such as by shifting these responsibilities solely to the labor contractor, but the employer and labor contractor may contract regarding certain remedies, including indemnification for the other party’s violations of this section. However, this law prohibits a client employer from shifting to the labor contractor any legal duties or liabilities to provide a safe workplace with respect to workers supplied by the labor contractor.
As with the new Paid Sick Leave law (AB 1522), one of the more controversial aspects of this law is its scope. As noted above, California has already enacted additional protections (e.g., Labor Code section 2810) against specific industries with documented histories of violations involving contracted labor. This new law, however, dramatically expands the scope of industries affected, and requires employers to navigate a maze of defined terms, some of which are included below, while it also exempts certain specified groups from its coverage.
For purposes of this law, “client employer” is defined as a business entity, regardless of form, that obtains or is provided workers to perform labor or services within the usual course of business from the labor contractor. “Client employer” does not include: (a) a business entity with a workforce of less than 25 workers, including those hired directly by the client employer and those obtained from or provided by, any labor contractor; (b) a business entity with five or fewer workers supplied by a labor contractor or labor contractors to the client employer at any given time; or (c) the state or any political subdivision of the state of California.
Subsection (p) to section 2810.3 also delineates specific instances where liability may not be imposed against certain client employers, including certain motor carriers, non-motor carriers (as specified), cable operators and motor clubs (as specified). Section 2810.3 also will not impose individual liability on a homeowner for labor or services performed at the home, nor shall it impose liability on an employer for the use of a bona fide independent contractor.
“Labor” will have the same definition as under Labor Code section 200, meaning any labor, work or service rendered or performed under contract, subcontract, partnership, station plan or other agreement if the labor to be paid for is performed personally by the person demanding payment. However, “worker” only applies to non-exempt employees.
“Labor contractor” means an individual or entity who supplies, either with or without a contract, a client employer with workers to perform labor within the client employer’s usual course of business. However, it does not include: (a) a bona fide non-profit community-based organization that provides services to workers; (b) a bona-fide labor organization or apprenticeship program; (c) a motion picture payroll services company; or (d) a third-party who is a party to an employee leasing arrangement, as defined and with certain exceptions.
“Usual course of business” is defined as the regular and customary work of a business, performed within or upon the premises or worksite of the client employer.
This law also requires a client employer or labor contractor to provide to a requesting enforcement agency or department, and make available for copying, information within its possession, custody or control required to verify compliance with state laws. This does not require the disclosure of any information that is not otherwise required to be disclosed by employers upon request by a state enforcement agency or department.
Rest and Recovery Periods Count 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 wa
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