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October 12, 2011

Governor Brown Signs Employment-Related Bills Addressing Credit Reports, Gender Discrimination, E-Verify, and Pregnancy Leave to Conclude 2011 Legislative Session

The 2011 California legislative season closed on October 9, 2011, with the Governor signing numerous bills affecting employers and employment law. Among the legislation the Governor signed are bills greatly limiting the use of credit reports by employers, expanding the definition of gender under state discrimination laws, prohibiting local governments from mandating use of E-Verify except where required by federal law, and requiring employers to pay for health insurance coverage during the entire period of pregnancy disability leave. The Governor also vetoed several bills, including those addressing mandated bereavement leave and pay cards. Below is a summary of the employment-law-related bills that were signed or vetoed by the Governor. The new laws are effective January 1, 2012, unless otherwise specified.

Signed Bills:

AB 22 (Mendoza) Consumer Credit Reports
This bill prohibits an employer or prospective employer, with the exception of certain financial institutions, from obtaining a consumer credit report for employment purposes unless the position of the person for whom the report is sought is (1) a position in the state Department of Justice, (2) a managerial position, (3) that of a sworn peace officer or other law enforcement position, (4) a position for which the information contained in the report is required by law to be disclosed or obtained, (5) a position that involves regular access to personal information for any purpose other than the routine solicitation and processing of credit card applications in a retail establishment, (6) a position in which the person is or would be a named signatory on the employer’s bank or credit card account, or authorized to transfer money or enter into financial contracts on the employer’s behalf, (7) a position that involves access to confidential or proprietary information, or (8) a position that involves regular access to $10,000 or more of cash.

AB 240 (Bonilla) Wage Recovery: Liquidated Damages
This bill permits an employee to recover liquidated damages pursuant to a complaint brought before the Labor Commissioner alleging payment of less than the minimum wage.

AB 243 (Alejo) Labor Contractors
This bill requires farm labor contractors to disclose in the itemized wage statement the name and address of the legal entity that secured the employer’s services.

AB 436 (Solorio) Prevailing Wages
This bill clarifies a law enacted in 2009 (SBX2-9), which funded prevailing wage enforcement at the Department of Industrial Relations with fees paid from bond proceeds used for public construction projects. AB 436 narrows SBX2-9, specifying that fees tied to projects can be used only to enforce and monitor prevailing wage laws on the specific project. In addition, the new law exempts projects operating under Project Labor Agreements (“PLAs”) from such fees, which may create an incentive for local governments to enter into PLAs.

AB 469 (Swanson) Wages: Civil Penalties
This bill provides that in addition to being subject to a civil penalty, any employer who pays or causes to be paid to any employee a wage less than the minimum shall be subject to paying restitution of wages to the employee. This bill extends the period within which the Division of Labor Standards Enforcement (“DLSE”) may commence a collection action from one (1) year to three (3) years. This bill requires an employer to provide each employee, at the time of hiring, with a notice that specifies the rate and the basis of pay and to notify each employee in writing of any changes to the information set forth in the notice within seven (7) calendar days of the changes unless such changes are reflected on a timely wage statement or another writing.

AB 514 (Hernandez) Prevailing Wages: Hauling Refuse
This bill includes in the definition of “hauling of refuse” the hauling of specified materials other than certain recyclable metals, thereby likely expanding the definition of “public works” and thus requiring the payment of prevailing wages for that activity.

AB 551 (Campos) Prevailing Wages: Penalties
This bill increases the maximum penalty from $50 to $200 for each calendar day and increases the minimum penalty except in certain cases of a good faith mistake from $10 to no less than $40 for each calendar day for violations of prevailing wage provisions. The bill also increases the penalty assessed to contractors and subcontractors with prior violations from $20 to $80, and from $30 to $120 for willful violations. This bill increases the amount the penalty from $25 to $100 for each calendar day for each worker to provide certified payroll records following a written request for such records.

This bill provides that contractors or subcontractors on a public works project that are found to have committed two (2) or more separate willful violations within a three (3) year period be debarred up to three (3) years. The bill also subjects contractors and subcontractors to debarment of one (1) to three (3) years if certified payroll records are not produced within 30 days after receipt of the written notice from the DLSE, Division of Apprenticeship Standards, or the awarding body.

AB 587 (Gordon) Public Works/Volunteers
This bill extends the repeal date to January 1, 2017, for the law that exempts specified work performed by a volunteer, a volunteer coordinator, or a member of the California Conservation Corps or a community conservation corps from public works provisions.

AB 592 (Lara) Leaves
This bill formally recognizes that it is an unlawful employment practice for an employer to interfere with any right provided to an employee under the California Family Rights Act or Pregnancy Disability Leave law.

AB 766 (Monning) Public Works
This bill requires nonredacted copies of certified payroll records to be provided, upon request to any agency included in, and for the purposes of, the Joint Enforcement Strike Force on the Underground Economy, or to any law enforcement agency.

AB 887 (Atkins) Gender Discrimination
This bill makes changes to state discrimination law by refining the definition of gender to include a person’s gender identity and gender expression. Gender expression is defined as a person’s gender-related appearance and behavior whether or not stereotypically associated with the person’s assigned sex at birth.

AB 1236 (Fong) Use of E-Verify
The bill prohibits the state, a city, county, or special district from requiring an employer other than one of those government entities to use an electronic employment verification system (E-Verify) except when required by federal law or as a condition of receiving federal funds.

AB 1396 (Committee On Labor & Employment) Commissions Agreements
This bill requires all employers, within the state, or from out-of-state, to enter into written contracts of employment by January 1, 2013, where commissions are a method of payment with the employee for services rendered in the state.

SB 126 (Steinberg) Agricultural Labor Relations
This bill revises election, bargaining, and unfair labor practice procedures before the Agricultural Labor Relations Board.

SB 136 (Yee) Prevailing Wages: Energy
This expands the definition of “public works,” to include any construction, alteration, demolition, installation, or repair work done under private contract where the following conditions exist: (a) The work is performed in connection with the construction or maintenance of renewable energy generating capacity or energy efficiency improvements; (b) The work is performed on the property of the state or a political subdivision of the state; and (c) Either of the following conditions exists: (1) More than 50 percent of the energy generated is purchased or will be purchased by the state or a political subdivision of the state; or (2) The energy efficiency improvements are primarily intended to reduce energy costs that would otherwise be incurred by the state or a political subdivision of the state.

SB 272 (DeSaulnier) Leave of Absence: Organ Donation
This bill provides that the days of leave for purposes of bone marrow and organ donation leave are business days rather than calendar days, and that the one-year period is measured from the date the employee’s leave begins and consists of 12 consecutive months. This bill also provides that such a leave of absence is not a break in the employee’s continuous service for the purpose of his or her right to paid time off. This bill further provides that the employer may condition the initial receipt of leave upon the employee’s use of earned but unused days for paid time off.

SB 299 (Evans) Pregnancy Leave
This bill prohibits an employer from refusing to maintain and pay for coverage under a group health plan for an employee who takes Pregnancy Disability Leave.

SB 459 (Corbett) Independent Contractors
This bill prohibits willful misclassification of individuals as independent contractors. The bill also authorizes the Labor Commissioner to assess civil and liquidated damages against a person or employer based on a determination that the person or employer violated these prohibitions.

SB 559 (Padilla) Discrimination: Genetic Information
This bill prohibits genetic information discrimination under the Fair Employment and Housing Act and Unruh Civil Rights Act .

SB 757 (Lieu) Health Insurance Plan Discrimination
This bill prohibits group health insurance plans or policies from discriminating in coverage between spouses or domestic partners of a different sex and spouses or domestic partners of the same sex.

SB 922 (Steinberg) Project Labor Agreements
This bill requires local governments or public entities that have passed ordinances banning PLAs for public construction projects to repeal such rules or lose state funding for state-involved projects. This bill also establishes requirements for PLAs to include provisions addressing prohibitions against discrimination, open bidding for union and non-union contractors, drug testing, guarantees against strikes, lock-outs and other similar disruptions, and arbitration of disputes.

This bill also provides that, if a charter city has banned PLAs as described in this bill for a project to be awarded by the city, state financial assistance must not be used for that project. This provision of the bill becomes operable beginning January 1, 2015.

Vetoed Bills:

AB 267 (Swanson) Employment Contracts
This bill would have made void and unenforceable as against public policy any provision in an employment contract that requires an employee, as a condition of obtaining or continuing employment, to use a forum other than California, or to agree to a choice of law other than California law, to resolve any dispute with an employer regarding employment-related issues that arise in California.

AB 325 (Lowenthal) Bereavement Leave
This bill would have allowed for four (4) days unpaid leave for bereavement purposes upon the death of a spouse, child, parent, sibling, grandparent, grandchild, domestic partner, or domestic partner’s of a spouse, child, parent, sibling, grandparent, grandchild, domestic partner, or domestic partner’s child, within 13 months of the death of the bereaved individual. The provisions of the bill would not have applied to an employee who is covered by a valid CBA that provides for bereavement leave and other specified working conditions.

SB 104 (Steinberg) Labor Representatives: Elections
This bill would have permitted agricultural employees, as an alternative procedure, to select their labor representatives by submitting a petition to the Agricultural Labor Relations Board accompanied by representation cards signed by a majority of the bargaining unit.

SB 931 (Evans) Payroll Cards
This bill would have formally authorized employers to pay employees’ wages by means of payroll cards under the California Labor Code. According to the Governor’s veto message, while pay cards are used by thousands of California employees and employers, this bill would have imposed numerous and costly new requirements on pay card providers, which may likely have resulted in banks and employers stopping to offer such services.

These bills will have significant impact going forward on California employment law.


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