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October 11, 2012

California Legislature and Governor Conclude Busy Legislative Session Creating New Laws Requiring New Employer Action in 2013

The 2012 California legislative season closed September 30, 2012, with Governor Jerry Brown signing numerous bills affecting employers and employment law. Among the legislation Governor Brown signed are bills limiting an employer’s ability to request personal social media information from employees and applicants, and expanding employee and former employee rights to copies of their personnel files, and comprehensive workers’ compensation reform. Governor Brown also vetoed several bills, including bills addressing domestic workers’ rights and agricultural employee safety. 

Below is a summary of the employment-related bills that were signed or vetoed by Governor Brown. Changes to the law are effective January 1, 2013, unless otherwise specified.

Signed Bills
AB 1744 (Lowenthal) Employee Compensation: Temporary Services Employers. This bill requires itemized wage statements to include, if the employer is a temporary services employer, the rate of pay and the total hours worked for each assignment, effective July 1, 2013. This bill also codifies certain requirements deemed material and necessary by the Labor Commissioner pursuant to last year’s Wage Theft Prevention Act (Labor Code Section 2810.5) with regard to temporary services employers. Effective immediately, temporary services employers must include the name, the physical address of the main office, the mailing address if different from the physical address of the main office, and the telephone number of the legal entity for whom the employee will perform work in the notice. The requirement does not apply to licensed security services companies. Employer Action:  Temporary services employers must update their itemized wage statements to ensure that required assignment information is included, and must include the required address and telephone information in their 2810.5 notices.

AB 1844 (Campos) Employer Use of Social Media. This bill prohibits an employer from requiring or requesting an employee or applicant to disclose a user name or account password for the purpose of accessing personal social media, to access personal social media in the presence of the employer, or to divulge any personal social media information. This bill also prohibits an employer from discharging, disciplining, or threatening to do so, or retaliating against an employee or applicant for not complying with a request or demand by the employer that violates these provisions. Employer Action: Do not request employees or applicants to disclose personal social media information.

AB 1855 (Torres) Employment Contracts: Sufficient Funds. This bill adds warehouse contractors to construction, farm labor, garment, janitorial, or security guard contractors with whom businesses are prohibited from entering into a contract, if they know 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 or regulations governing the labor or services to be provided. For purposes of this law, warehouse means “a facility the primary operation of which is the storage or distribution of general merchandise, refrigerated goods, or other products.” This bill also exempts any documents received by the Labor Commissioner pursuant to this bill from the California Public Records Act.

Employer Action: When entering into a contract for labor or services with the contractors referenced above, extra scrutiny may be in order to ensure compliance with this law. 

AB 1964 (Yamada) Discrimination in Employment: Reasonable Accommodation. This bill clarifies that   religious dress and  grooming practices  are “beliefs and observances” covered by the protections under the California Fair Employment and Housing Act (FEHA) against religious discrimination.  The bill specifies that an accommodation of an individual’s religious dress or grooming practice that requires that person to be segregated from the public or other employees is not a reasonable accommodation. This bill also provides that no accommodation is required if an accommodation would result in the violation of laws protecting civil rights. AB 1964 clarifies that religious dress and grooming practices are covered “beliefs and observances.” Employer Action: Ensure reasonable accommodations are provided to individuals for religious dress or grooming practices.

AB 2103 (Ammiano) Employment: Wages & Hour, Overtime. This bill mandates that payment of a fixed salary to a nonexempt employee is deemed to provide compensation only for the employee’s regular, non-overtime hours, notwithstanding any private agreement to the contrary. Employer Action: Ensure overtime is properly compensated and calculated where a nonexempt employee is paid on a salary basis for regularly scheduled non-overtime hours.

AB 2386 (Allen) Employment and Housing Discrimination: Breastfeeding. This bill codifies that, for purposes of the FEHA, the term “sex” also includes breastfeeding or medical conditions related to breastfeeding. Employer Action: Make sure reasonable accommodations are provided to women who are breastfeeding or have medical conditions related to breastfeeding.

AB 2674 (Committee on Labor & Employment) Records: Right to Inspect. This bill expands personnel file inspection rights to require employers to furnish copies of personnel files to current and former employees. Employers must provide copies or allow for inspection within 30 days of a request or face a $750 penalty. Employers must also create a form for employee personnel file requests, although employees are not required to use the form. This bill further provides that personnel files must be retained for three (3) years following termination of employment. Employer Action: Create a personnel file request form, review personnel files to ensure they contain proper personnel information, and review document retention policies to ensure personnel files are retained for at least three (3) years. 

AB 2675 (Swanson) Employment Contract Requirements. Legislation passed last year (AB 1396), effective January 1, 2013, requires that when an employer enters into a contract of employment with an employee based on commission, the contract must be in writing and set forth the method by which the commissions are to be computed and paid.  This bill exempts from this requirement (1) short-term productivity bonuses, (2) temporary, variable incentive payments that increase, but do not decrease, payment under the written contract, and (3) bonuses and profit sharing plans, unless based on a fixed percentage of sales or profits. Employer Action: Review commission arrangements to ensure compliance with the January 1, 2013 requirement for commission contracts to be in writing.

SB 863 (De Leon) Workers’ Compensation. This bill comprehensively revises workers’ compensation laws relating to chiropractic doctors, return-to-work programs, labor-management agreements, self-insured employers, surgery, re-training and skill enhancement, home health care services, independent medical review, medical provider networks, billing, liens, language interpretation services, and certain reporting requirements. The bill increases benefits to permanently disabled workers and gives employers a break on insurance costs. The bill also changes how benefits are calculated for injured workers, creates a binding arbitration process to resolve coverage disputes, eliminates coverage for insomnia and mental-health problems, establishes a binding independent review system to resolve medical disputes, and shortens the timeline for approval of treatment from two years to three months. Employer Action: Continue to ensure a safe workplace and work closely with workers’ compensation claims adjusters to make certain claims are administered properly and efficiently in order to keep workers’ compensation costs to a minimum.

SB 1038 (Committee on Budget & Fiscal Review) State Government. Among many other provisions, this bill eliminates the Fair Employment and Housing Commission and transfers the duties of the Commission to the Department of Fair Employment and Housing (DFEH). The bill also expands specified powers of the DFEH related to complaints, mediations, and prosecutions, and provides mandatory dispute resolution at no cost to the parties involved.  The bill also eliminates a specified cap of actual damages under the FEHA, and instead requires certain actions be brought in court by civil action, rather than by accusation by the DFEH. Employer Action: Upon receipt of  notice of complaint from the DFEH, be certain to research thoroughly and work closely with the DFEH during the investigation process to minimize the impact of the claims.

SB 1234 (De Leon) Retirement Savings Plan. This bill enacts the California Secure Choice Retirement Savings Trust Act, which envisions a state-run retirement plan program for private non-unionized employers that do not offer retirement plans to their employees. The first step in this program will create a seven-member California Secure Choice Retirement Investment Board, which will conduct the feasibility study of such a retirement program, once funded and once approved by federal government authorities. Employer Action: Private sector employers that do not offer retirement plans will want to keep apprised of the funding status and feasibility study of the Secure Choice Retirement Investment Board.

SB 1255 (Wright) Employee Compensation: Itemized Statements. This bill provides that an employee “suffers injury” for purposes of assessing penalties if an employer fails to provide a wage statement. The bill also provides that an employee is deemed to “suffer injury” if the employer fails to provide accurate and complete information 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 pay period, the deductions the employer made from the gross wages to determine the net wages paid to the employee during the pay period, and the name and address of the employer or legal entity that secured the services of the employer, or the name of the employee and the last four digits of his or her social security or employee identification number. Employer Action: Review itemized wage statements closely to ensure compliance with the Labor Code.

Vetoed Bills
AB 889 (Ammiano) Domestic Work Employees. This bill would have imposed overtime and rest and meal periods for domestic work employees.  According to the Governor’s veto message, while improving the working conditions of domestic workers is a priority, the bill may have increased costs to the point of forcing people out of their homes and into licensed institutions. The Governor called for a study by the Department of Industrial Relations and for the Department to simultaneously issue new regulations. 

AB 1450 (Allen) Employment Discrimination: Status as Unemployed. This bill would have prohibited employers from stating in employment advertisements that applicants must be employed and would have subjected violating employers to civil penalties.  According to the Governor’s veto message, as the bill went through the legislative process, it was changed in a way that could lead to unnecessary confusion.

AB 2346 (Butler) Agricultural Employee Safety: Heat-Related Illness. This bill would have prescribed duties on agricultural employers to reduce the risk of heat illness among agricultural employees, to be enforced by the Division of Occupational Safety and Health (“OSHA”). According the Governor’s veto message, the bill was flawed because it would have created a new enforcement structure that would single out agricultural employers and burden courts with private lawsuits.

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