2013 Legislative Updates

By: Kristina Launey and Daniel Kim

As noted previously in this space, California already permits employees to take many kinds of protected time off not generally available in other parts of the country.  In 2013, California’s Legislature presented workers with even more kinds of legally-protected absences.  It is hard to begrudge leaves of absence for crime victims and emergency volunteers without sounding like the Grinch, but these new laws do add another layer of entitlements for employees and additional administrative tasks and training and potential liabilities for employers.

Expanded Excused Absences for Crime Victims

This legislative season, the California Legislature gave additional statutory employment protection to victims of crimes who take related time off work.  Effective January 1, 2014, Labor Code §§ 230 and 230.1 are amended by SB 400 to extend the existing prohibition against averse action toward victims of domestic violence and sexual assault who take related time off to include victims of stalking.  Similarly, new Labor Code § 230.5 (SB 288) will protect from adverse employment action employees who miss work to go to court because they or their loved ones were victims of serious, violent crimes (murder, sexual assault, child abuse, etc.).

Both new laws allow employers to require a certification (police report, court order, or doctor’s note) within a reasonable amount of time after such an absence.  SB 400 will also require employers to engage in the interactive process to provide reasonable accommodations (such as transfers, modified schedules, installations of locks, etc.) to victims of stalking, sexual assault and domestic violence.

It would appear that the California Legislature thinks all employers behave like Scrooge.  But was this legislation really necessary?  Supporters would say “Yes.” Proponents of SB 288 said it was because while Proposition 9 in 2008 (also known as Marsy’s Law), gave crime victims the Constitutional right to be heard, upon request, at any proceeding, that right was not employment-protected.  And proponents of SB 400 cited a study by the Legal Aid Society – Employment Law Center (also a bill sponsor), which found that nearly 40% of survivors in California reported either being fired or fearing termination due to domestic violence.

Protected Leaves for Volunteer Emergency Personnel

Also effective January 1, 2014, amended Labor Code § 230.4 will require employers to give up to 14 days per year off to employees to take training as volunteer firefighters, reserve peace officers, and emergency rescue personnel.  Formerly, such time off was permitted only for volunteer firefighters.  Community protection used to be the kind of thing we paid taxes for.  However, in California, employers will be required to bear the burden of helping to supplement the public safety forces.  Call us Ebenezer, but even though the time off for training is not paid, employers will suffer the predictable indirect costs that often occur when employees are absent from work, such as inefficiencies, decline in productivity and overburdening of other employees.

Workplace Solutions:  Don’t wait for the Ghosts of Christmas Past, Present and Future to visit and scare you into a change in policies.  Be aware that when your employees are crime victims or are volunteer emergency personnel, as of 2014, you may need to respond differently to their requests for time off.  So, revise policies and procedures now, as necessary, and train all supervisory employees on these new requirements so you are prepared to respond promptly and legally if an employee comes to you with a request for time off due to his or her victim or volunteer status.

For more information about these and other new laws enacted this past year, see our prior blog post here, and attend our free Webinar on December 11, 2013, “New California Employment Legislative Updates — Are You Ready for 2014?”  Sign up here to attend.

By Maya Harel and Colleen M. Regan

As previously reported here one of the pieces of 2013 California legislation that made a big splash is Assembly Bill 10 (AB 10).  AB 10 amends Labor Code § 1182.12 and raises California’s minimum wage in two steps over 18 months, from $8.00 to $9.00 per hour (on July 1, 2014) and then to $10.00 per hour (on January 1, 2016). 

The increase in minimum wage will obviously increase the amount that employers will need to pay for hourly wages, including the regular rate for overtime.  But, we ask, what other ripple effects will this new legislation create for California employers?  Here are some . . .

  • Minimum salary under the  “white collar” exemptions

The minimum salary for employees who qualify for one of the “white collar” overtime exemptions (administrative, executive, or professional) must be equivalent to no less than two times the state minimum wage for full-time employment.  Thus, an increase in the minimum hourly wage will, in turn, increase minimum salary requirements for these exemptions.  Beginning on July 1, 2014, the minimum annual qualifying salary will be $37,440, and on January 1, 2016 it will rise to $41,600.  

  • Minimum wage for the inside salesperson exemption

The inside salesperson exemption (generally available only to retail and service establishments) requires that employees under the exemption earn more than 1.5 times the current minimum wage and that commissions make up more than half of the employee’s earnings, measured on a workweek basis.  Thus, to be exempt from overtime, as of July 1, 2014, California inside salespersons will need to be paid at least $13.51 per hour, and at least $15.01 starting on January 1, 2016.  And, inside salespeople will need to increase their earnings from commissions to continue to qualify under the overtime exemption.

  • Compensation for non-productive work by commissioned or piece-rate employees

The increase in minimum wage also affects employers who compensate their employees on a commission only or piece-rate basis.  Recent judicial decisions mandate that such employees be compensated at no less than the minimum wage for non-productive work performed by such employees.  Click here to see our prior post on this issue. 

  • Adjusting compensation for employees receiving meal and lodging credits

Wage orders in virtually every industry or occupation allow the value of meals and lodging furnished by the employer to be credited toward the employer’s minimum wage obligation up to specific amounts.  Employers who use this form of compensation as part of their wage obligations will need to adjust accordingly to ensure that they are meeting the increased minimum wage obligations.

  • Changes must be reflected in itemized wage statements

The Labor Code requires employers to provide every employee with a written itemized statement either semimonthly or at the time wages are paid.  (Labor Code § 226).  Among other things, the itemized statement must show all applicable hourly rates in effect during the particular pay period and the corresponding number of hours worked at each hourly rate.  Employers should take steps to make sure that their itemized statements (as well as all other internal payroll-related documents) accurately reflect the increased minimum wage when the changes take effect.

  • Notifying employees of changes in accordance with the Wage Theft Prevention Act

The “Wage Theft Prevention Act of 2011” (see Labor Code § 2810.5) took effect on January 1, 2012.  Among other things, it requires employers to notify non-exempt employees in writing of any changes to their rate of pay.  Notice of any changes must be provided within seven calendar days from the time the change was made.  Accordingly, employees affected by the change in minimum wage must receive notice from their employer by July 7, 2014, for the increase to $9.00, and by January 7, 2016, for the increase to $10.00.

If you are interested in learning more, we will be talking about all of the new employment-related legislative developments at our upcoming free Webinar on December 11, 2013, “New California Employment Legislative Updates — Are You Ready for 2014?”  Sign up here to attend.  

By Dana Peterson and Coby Turner

Depending on your view of the world, California legislators have either implemented much-needed protections for California’s immigrant workforce, or they have given the legislative equivalent of a “gift” to dishonest employees this holiday season.  Starting January 1, 2014, workers will have immunity from disciplinary action for providing updated “personal information” to their employer, including, for example, a new social security number.  Assembly Bill 263 and Senate Bill 666 are purportedly aimed at eliminating unfair immigration-related practices in employment. However, while they may be well-intentioned, these legislative enactments will effectively hamstring employers’ rights to discipline, terminate or (in some cases) report employees who provided false information in order to secure the job in the first place.

AB 263 adds a new provision to California’s Labor Code (section 1024.6) prohibiting an employer from discharging, retaliating, or taking any adverse action against an employee because an employee “updates or attempts to update his or her personal information, unless the changes are directly related to the skill set, qualifications, or knowledge required for the job.” Similarly, SB 666 creates new Labor Code section 244, which makes it an “adverse action” for an employer to report or threaten to report to a government agency the suspected citizenship or immigration status of an employee, former employee, or prospective employee because the person has exercised a right under the Labor Code or other laws. 

So what does this mean?  It means that employees who are undocumented at the time of hire, but later receive work permits and social security cards, can provide “corrected” information to their employers, who are prohibited from taking any adverse action against the employee for seemingly providing false documentation before.  As thousands of young Californians apply for and receive work authorization through the Obama administration’s Deferred Action for Childhood Arrivals program, employers should expect to receive more and more such updates, or “corrections.”  It is therefore vital that your HR, payroll and management personnel be apprised of these new protections and prohibitions.  Also, when an employee has recently engaged in protected activity, such as complaining about unpaid wages or reporting a suspected safety violation, employers should be cautious about reporting that employee’s immigration or citizenship status to any government agency for any reason in order to avoid even the inference of retaliation under Labor Code section 244. 

Employers should be aware this legislation is coming so they can respond to employee inquiries, know effective dates of the legislation, and prepare to modify current systems and policies to ensure necessary changes are made.  If you are interested in learning more, please contact us and ask about our “California Peculiarities” full-length publication and if you would like to discuss strategies for effectively complying with the new laws, please contact a Seyfarth Shaw attorney.

We will be talking about these new legislative enactments and more at our upcoming free Webinar on December 11, 2013, “New California Employment Legislative Updates — Are You Ready for 2014?”  Sign up here.

Also, keep an eye on http://www.nationofimmigrators.com/, the immigration-policy blog of Seyfarth Shaw’s Angelo Paparelli, for more information regarding how state laws of this type and related  federal immigration developments may affect you and your business.  Early next week, he’ll be addressing federal preemption of new state immigration provisions, the duty of employers to investigate discrepant employee information, union-related issues, and other immigration topics of interest.  Stay tuned!

By Kristina Launey

October 13, 2013, marked the last day for California Governor Jerry Brown to sign or veto bills the Legislature sent to him for approval in the first half of the 2013-14 Regular Session.  Of the bills we tracked as most relevant to our clients that made it to the Governor’s desk, the vast majority—18 of 23—will become law. 

View a full summary each of the approved, vetoed, and “two-year” (i.e., bills that did not make it to the Governor’s desk and that may resurface in 2014) bills here.

We’ve already blogged about the new bills that the Governor approved prior to the October 13 deadline.  In the coming weeks, we’ll blog about how more of the new laws, including the following, may affect employers doing business in California, and our thoughts for Workplace Solutions:

•   Changes to protected statuses, pre-employment inquiries, and leaves of absence/time off work;

•   New retaliation prohibitions for immigration-related practices;

•   New wage and hour laws including:

o   Liquidated damages for failure to pay minimum wage;

o   Amendment to Labor Code section 226.7 to include “recovery periods”;

o   Penalty for failure to remit withheld wages to the appropriate agency;

o   Specify no administrative exhaustion requirement for certain Labor Code provisions;

o   Impose up to $10,000 penalty upon employers for violation of Labor Code section 98.6;

o   Not to mention the minimum wage increase, which we reported here.

•   Farm labor contractor successor liability

•   Governor’s VETO of the law that would have modified the mixed-motive instruction (prompted by the ruling in Harris v. Santa-Monica).

Stay tuned.

By Kristina Launey 

Since the 2013 portion of this California Legislative session concluded in mid-September, a number of employment-related bills have gone to Governor Brown for consideration.  As of today, the Governor has signed 8 of those bills into law, covering:

 

✓   Minimum wage increase, from $8 to $10/hour, over two years

✓   Criminal background checks for youth sports leaders

✓   Employment contracts for minor actors

✓   New penalty for violation of posting requirements for garment manufacturers

✓   Change in definition of sexual harassment

✓   Recovery of defense attorney’s fees in wage claims only if bad faith

✓   Expansion of coverage of Paid Family Leave

✓   Mandatory overtime for domestic workers who work over 9 hours/day or 45 hours/week. 

For a complete roundup of the (1) signed bills, (2) passed bills awaiting Governor’s action, and (3) failed bills, click here.  We will be updating this information as the pending bills are either signed or rejected by the Governor, who has until October 13 to act. 

By Kristina Launey

This week sees California’s official adoption of two pro-employee measures: 

1)   Increase in the State Minimum Wage

             This morning, Governor Brown signed AB 10.  As we previously reported, this bill raises the minimum wage in two (2) $1.00 increments, from the current $8 per hour rate to $9 per hour effective July 1, 2014.  Then to $10 per hour effective January 1, 2016.  California’s minimum wage is currently seventh highest in the nation, trailing CT, IL, NV, OR, VT and WA.  If no other states increase their minimums, by 2016 California will have the highest minimum wage in the country.  

2)   Paid Family Leave Coverage Expanded

             Yesterday, September 24, 2013, Governor Brown signed into law SB 770, which will expand the familial relationships covered by California’s paid family leave program.  Currently, employees who are permitted to take unpaid time off to care for a seriously ill child, spouse, parent, domestic partner, or to bond with a minor child within one year of the birth, adoption or foster care placement of the child, can receive up to 6 weeks of wage replacement benefits under California’s family temporary disability (paid family leave) program.  Beginning July 1, 2014, a seriously ill grandparent, grandchild, sibling and parent-in-law will also be included.  This change does not directly increase an employer’s out-of-pocket expenses, as the program is funded by mandatory payroll deductions. 

Last night — on the eve of the last day for the California Legislature to pass bills before interim recess in this 2013-2014 regular session — the Legislature sent to the Governor for signature AB 10, which, over time, will raise the minimum wage in California from $8.00 per hour to $10.00 per hour. 

The Governor has already publicly announced that he will sign the bill, stating that “the minimum wage has not kept pace with rising costs” and will help families “struggling in this harsh economy.”  Assembly Speaker John Pérez and Senate President Pro Tempore Darryl Steinberg also supported the bill, claiming the money will be put back into the economy through spending and help ensure economic recovery and job growth.  California first set a minimum wage in 1916.  The California Chamber of Commerce opposed the measure because the increase exceeds a 3.5% rate of inflation and only adds to the costs — such as the Affordable Care Act, Proposition 30 taxes, and CA Department of Industrial Relations employment assessments — that California employers are already facing.

The bill will raise the minimum wage in two one-dollar increments, from the current $8 per hour rate to $9 per hour effective July 1, 2014.  Then to $10 per hour effective January 1, 2016.

Workplace Solution:  Employers should be aware this legislation is coming so they can respond to employee inquiries, know actual effective dates of each increase, and prepare to modify payroll systems and wage notices and forms to ensure necessary changes are made. This development also makes still more significant the recent judicial interpretations [see here and here] that require separate payment of minimum wage for the non-productive work performed by workers compensated on a piece-rate or commission basis. 

            What happens when an employee makes a claim for unpaid wages, and wins?  The employee, as the prevailing party, has a statutory right to recover the attorney’s fees reasonably incurred in achieving the victory. 

            What happens when an employee makes a claim for unpaid wages (other than minimum wage or overtime)[1] and loses?  The employer, as prevailing party, could also recover its attorney’s fees reasonably incurred in defending against the meritless claim.  That’s about to change. 

            Effective January 1, 2014, Labor Code § 218.5 will provide that a prevailing employer can recover its defense costs only if it proves to the court that the employee brought the action “in bad faith.”  “In bad faith” is not defined in the statute, but it will probably mean something like “the claim was brought with knowledge that it was baseless or with intent to harm the employer.” 

            Governor Brown signed the legislation, SB 462, making this change on August 26, 2013.  The bill’s author, Sen. Bill Monning, D-Carmel, stated that this amendment corrects “an historic injustice” and “brings California into conformity with the overwhelming majority of states in the country.”  Many employers, however, see nothing unjust in being allowed to recoup expenses they have laid out in response to an employee’s unfounded claims. 

            The amendment was prompted by a 2012 California Supreme Court ruling holding that a prevailing employer in a meal-rest penalties case could not recover attorneys’ fees because such penalties are not “wages” and the Labor Code statutes permit fee recovery only in actions involving wages. Kirby v. Immoos Fire Protection, 53 Cal. 4th 1244 (2012).  Although there was no applicable fee-shifting statute in Kirby, the case implied that if the claims had involved wages instead of penalties, an award of attorneys’ fees to the prevailing employer would have been appropriate.  The reaction from SB 462’s sponsor — the California Employment Lawyers Association — was to try to protect plaintiff employees from that eventuality by requiring successful employers to prove bad faith. 

            Workplace Solution:   Employers hoping to recover attorney’s fees for successfully fending off non-minimum wage and non-OT claims for wages or benefits must prove that the claiming employee or former employee was a bad actor.  This new law makes it even more important to have good policies and practices in place to avoid facing wage claims in the first place.


[1]  California has a one-way, pro-employee fee-shifting provision in place for claims seeking unpaid minimum wages and unpaid overtime pay, by which the prevailing employee is entitled to attorney’s fees.  This new amendment does not change that rule.

Starting January 1, 2014, unemancipated minors working as extras or background performers will be able to take home their full pay, and their employers will be relieved of the obligation to maintain a trust for those minors.  AB 533, which Governor Brown signed into law yesterday, exempts employers of minors under contracts for artistic employment for services as an extra, background performer, or in a similar capacity (including actors, dancers, musicians, comedians, singers, stunt-persons, voice-over artists, or sports players) from a requirement that the employer set aside 15% of the minor’s gross earnings in trust for the benefit of the minor.

The stated intent of the bill is to remove this onerous “Coogan Trust” requirement so that child actors who do not earn large sums as principal performers can access and use the relatively small amounts they earn prior to becoming adults.  Primary performer minors and their employers remain subject to the trust requirement.

The bill amends Section 6752 of the Family Code.

Yesterday Governor Brown signed into law SB 292, by Senator Ellen Corbett, which amended the definition of harassment because of sex in the Fair Employment and Housing Act to specify that sexually harassing conduct need not be motivated by sexual desire.

The stated intent of the bill is to overturn the decision in Kelley v. Conco Companies, 196 Cal. App. 4th 191 (2011), and “clarify” that establishing sexual harassment under FEHA does not require proof of sexual desire toward the plaintiff.  According to the author, the appellate court in Kelley “created confusion” by directly contradicting a sister court’s ruling in Singleton v. United States Gypsum Co., 140 Cal. App. 4th 1547 (2006), and ignoring key provisions of the leading U.S. Supreme Court decision on same-gender sexual harassment, Oncale v. Sundowner Offshore Services, Inc., 523 U.S. 75 (1998).

The Kelley court had found that, because there was no evidence that the heterosexual male supervisor and coworkers sexually desired the male plaintiff, the plaintiff failed to prove sexual intent—the first of three evidentiary routes to prove a defendant’s harassing conduct was of a sexual nature (the other two are general hostility by the defendant toward a particular sex, of which the plaintiff is a member, and comparative evidence about how the alleged harasser treated members of both sexes in a mixed-sex workplace).  In Kelley, the defendant and coworkers used language that “was graphic, vulgar, and sexually explicit; and made statements that literally expressed sexual interest and solicited sexual activity.  Despite this, the court found there was no ‘credible evidence that the harasser was homosexual’ or that the harassment was ‘motivated by sexual desire.’”  While this sexual intent route was not dispositive in the Kelley case, (the third route—lack of showing of comparative evidence about how the alleged harasser treated members of both sexes in a mixed-sex workplace—was), Senator Corbett reported, as justification for this legislation, that the Kelley opinion is being construed to require a plaintiff to show sexual desire to prevail on any sexual harassment claim. 

The new language: This bill only adds the following clause (in bold) to Government Code section 12940(j)(4)(C): “For purposes of this subdivision, “harassment” because of sex includes sexual harassment, gender harassment, and harassment based on pregnancy, childbirth, or related medical conditions. Sexually harassing conduct need not be motivated by sexual desire.

Effective date: January 1, 2014.