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October 2, 2014

New State Laws to Impact Employers in 2015

The 2014 California legislative season closed September 30, 2014, with Governor Jerry Brown waiting until the last day to sign numerous bills affecting employers and employment law. Among the legislation Governor Brown signed are bills providing for paid sick time; extending liability for wage and hour violations to employers who contract for labor through staffing companies; and requiring “abusive conduct” training to be incorporated into sexual harassment training.

Below is a summary of the employment-related bills that were signed into law by Governor Brown.  Changes to the law are effective January 1, 2015, unless otherwise specified.

AB 1443 (Skinner-D) Harassment: Unpaid Interns.  This bill makes it an unlawful employment practice to discriminate against any person in the selection or training of that person in an unpaid internship or other limited duration program providing unpaid work experience, or to harass unpaid interns/volunteers, on the basis of the protected characteristics listed in the Fair Employment and Housing Act (“FEHA”). 

Employer Action: Employers should review their sexual harassment and non-discrimination policies to ensure coverage of volunteers and unpaid interns. 

AB 1522 (Gonzalez-D) Paid Sick Days.  This bill provides that beginning July 1, 2015, employees who work within California must receive and be permitted to use paid sick days, to be accrued at a rate of not less than one hour for every 30 hours worked.  Employees will be entitled to begin using accrued sick time beginning on the 90th day of their employment.  Employers may limit an employee’s use of paid sick days to 24 hours in each year of employment.  Employers may not discriminate or retaliate against an employee who requests paid sick days, and must satisfy specified posting, notice, and record-keeping requirements. 

Employer Action: Employers who do not already have paid sick time policies will be required to adopt such policies by July 1, 2015.  Employers who already have paid sick time or paid time off policies must ensure those policies provide benefits in compliance with the new law.  For additional information regarding the many details of the law, please see our September 3 Alert.
AB 1634 (Skinner-D) OSHA violations. 
This bill imposes limitations upon Cal-OSHA’s discretion to limit monetary penalties for serious safety violations, and prohibits the stay of an abatement period during the pendency of an appeal of a citation for a violation that is classified as a “serious,” “repeat serious,” or “willful serious” violation. 

Employer Action: Employers should understand that Cal-OSHA will now have less discretion in the imposition of monetary penalties and stays of abatement periods for workplace safety violations, likely resulting in more stringent enforcement of safety laws.  In addition to working to mitigate workplace safety hazards before violations occur, employers will now be required to act more diligently to correct hazards after such violations occur. 

AB 1650 (Jones-Sawyer-D) Public Contract: bidders: employment practices. This bill enacts the “Fair Chance Employment Act,” requiring construction contractors bidding on state contracts to certify that they will not ask an applicant for onsite construction-related employment to disclose information concerning his or her conviction history on or at the time of application.  The bill provides exceptions for positions for which state or federal law requires conviction or criminal history checks, and does not apply to employers to the extent they obtain workers through a hiring hall pursuant to a collective bargaining agreement.

Employer Action: This bill builds upon previous legislation preventing inquiries into criminal history by state employers.  San Francisco implemented a similar ordinance as to all employers with 20 or more employees.  It would not be surprising if similar legislation in the future is aimed at all employers in the state.

AB 1660 (Alejo-D) Driver’s licenses: nondiscrimination.  Existing law requires the Department of Motor Vehicles (“DMV”) to issue a driver’s license to persons whose presence in the United States is unauthorized.  This bill makes it a violation of the FEHA for an employer to discriminate against an individual because he or she holds such a license.
Employer Action: The bill specifies that compliance with the Immigration Reform and Control Act is not a violation of FEHA.  Therefore, until federal immigration law changes, this bill is of little effect.   

AB 1723 (Nazarian-D) Employees: wages.  Existing law authorizes the Labor Commissioner to issue a citation to an employer for failure to pay the minimum wage after an inspection or investigation.  Existing law authorizes the Labor Commissioner to order a civil penalty, restitution of wages, and liquidated damages payable to the employee.  In addition to those penalties, this bill authorizes the Labor Commissioner to assess waiting time penalties against an offending employer.

Employer Action: Employers should take note of the Labor Commissioner’s expanded authority and the potential for increased damages in the event of a wage violation.

AB 1792 (Gomez-D)  Public Benefits – Report on Employers.  The bill prompts the California Department of Finance to publish a report of employers that employ 100 or more employees who receive Medi-Cal and/or SNAP (“food stamp”) benefits through the state.  The bill further prohibits an employer from retaliating or discriminating against an employee or refusing to hire an applicant who receives Medi-Cal benefits.

Employer Action:  This bill aims to pressure employers to comply with the Affordable Care Act (“ACA”) mandate to provide employees with health insurance through “public shaming” on a government website.  Employers may take solace in that this legislation did not go so far as prior legislation that would have fined employers with 500 or more employees for each employee who received Medi-Cal benefits.  The SNAP benefit portion of the bill appears aimed at an effort to pressure employers to raise wages so that employees do not have to rely on public benefits while employed.

AB 1897 (Hernandez-D) Labor Contracting – Client Liability.  This bill imposes additional legal obligations for the payment of wages and for providing workers’ compensation insurance, upon persons or entities who obtain labor services from a third-party labor contractor (i.e., a temporary staffing firm).  This bill requires the “client employer” (i.e., the party obtaining the labor/services from the staffing firm) to share with the staffing firm all civil legal responsibility and liability for all workers supplied by the staffing firm for the payment of wages and the failure to obtain valid workers’ compensation coverage. 

Employer Action:  This bill effectively makes companies utilizing workers supplied by staffing firms liable, to the same degree as the staffing firm, for the wages, working conditions, and workers’ compensation coverage of the workers.  That is, a worker supplied by a staffing firm can bring claims for unpaid wages or workplace injury directly against the company for whom he or she provided the services, even though that company may not be the statutory employer.  An in-depth Alert on AB 1897 is forthcoming.    
AB 2053 (Gonzalez-D) Harassment Training: Abusive Conduct.  This bill requires employers who are already required to provide supervisory employees with sexual harassment prevention training (pursuant to AB 1825) to incorporate “abusive conduct” prevention into such training.  “Abusive conduct” is defined to mean “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. 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. A single act shall not constitute abusive conduct, unless especially severe and egregious.”

Employer Action: Employers should update their sexual harassment prevention training curriculum to incorporate abusive conduct prevention training. 

AB 2074 (Hernandez-D) Recovery of Wages.  Existing law provides a three-year statute of limitations for a lawsuit or administrative claim alleging unpaid wages.  Employees who have not been paid the minimum wage can also claim liquidated damages in an amount equal to the unpaid balance of minimum wages.  This bill extends the period for which recovery of liquidated damages may be obtained, up to the same period of time contained within the statute of limitations applicable to the appropriate minimum wage (in most cases, up to three years).   

Employer Action: This is another bill in a pattern over the last couple years increasing penalties against employers for wage and hour violations.  Employers may consider this added “incentive” to comply with such laws.  

AB 2751 (Hernandez-D) Fines for Retaliation.  Existing law prohibits an employer from engaging in an unfair immigration-related practice against a person for the purpose of retaliating against that person for exercising a right protected under state labor and employment laws or local ordinance.  Existing law defines an unfair immigration-related practice to include, for example, threatening to file or filing a false police report.  This bill adds to the definition of unfair immigration-related practice, the threatening to file or the filing of a false report or complaint with any state or federal agency. This bill further authorizes a court to order government agencies to suspend certain business licenses held by the violating business.

Existing law also prohibits an employer from discharging an employee or in any manner discriminating, retaliating, or taking any adverse action against an employee because the 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.  This bill revises the law to prohibit an employer from discharging or discriminating, retaliating, or taking any adverse action against an employee because the employee updates or attempts to update personal information based on a lawful change of name, social security number, or federal employment authorization document.

Employer Action: This bill expands on the “Unfair Immigration-Related Practices” legislation passed last year.  Filing false reports with the government constitutes a violation, and businesses face losing their licenses for violations of the law.  Currently, there is no legal definition on the precise meaning of terms used in this law such as “update” and “lawful change,” so employers should consult with their counsel before taking action with regard to new information provided by an employee that indicates that prior information may have been inaccurate.

SB 477 (Steinberg-D) Foreign Labor Contractor Registration.  This bill requires foreign labor contractors to register with the Labor Commissioner effective July 1, 2016.  The bill also imposes obligations upon foreign labor contractors with respect to paying a registration fee and depositing a surety bond with the Labor Commissioner, and imposes various obligations upon persons using the services of a foreign labor contractor.
Employer Action:  Persons engaged in the business of foreign labor contracting will be required to, among other things, register with the Labor Commissioner, pay a yet-to-be-determined registration fee, and deposit a surety bond based on the amount of their gross receipts.  It is anticipated that more information regarding compliance will be forthcoming, but foreign labor contractors will want to keep this bill on their radar for the July 1, 2016 effective date.  

SB 1034 (Monning-D) Health Care Coverage; Waiting Periods.  This bill repeals the 60-day waiting period limit imposed on certain health insurance plans in California.  2012 legislation, AB 1083, imposed a 60-day waiting period limit effective in 2014, which conflicted with the federal ACA 90-day waiting period limit.  With the repeal, California employers may operate consistent with federal ACA regulations concerning waiting periods in 2015.  For more information on this bill, see our August 25 Alert.

Employer Action: California employers should review their policies and eligibility language to determine where they stand in relation to the most recent rule changes.  Employers should also check with their insurance carrier as to what options the carrier is offering for its clients.  Employers should keep in mind that 90-days is the maximum and that employers may voluntarily implement shorter waiting periods.
SB 1087 (Monning-D) Farm Labor Contractors.  This bill represents a wide-ranging and comprehensive reform of existing farm labor contractor licensure requirements.  Among other things, it increases the bonding requirements and raises the licensure fees for farm labor contractors.  It also prohibits the granting of a license to operate as a farm labor contractor to a person who, within the preceding three (3) years, has been found by a court or an administrative agency to have committed sexual harassment of an employee; or who employed any supervisory employee whom he or she knew or should have known has been found by a court or an administrative agency, within the preceding three (3) years of his or her employment with the employer, to have committed sexual harassment of an employee.

Employer Action: Farm labor contractors will need to ramp up applicant screening efforts to ensure compliance with the law.  The bill also provides such employers with added pressure to settle harassment claims prior to the issuance of an adverse finding.  Other employers must wait to see if the law is expanded to other industries in subsequent legislation.
SB 1360 (Padilla-D) Meal & Rest Recovery Periods.  This bill clarifies that legally mandated recovery periods must be counted as hours worked and compensated accordingly.  According to its sponsors, this bill corrects a drafting error in prior legislation, but also serves to clarify that piece rate workers are entitled to be paid their average piece rate earnings during rest periods and recovery periods. 

Employer Action: This bill builds upon case law that held piece rate workers must be paid the minimum wage for downtime such as rest periods.  Employers who compensate their employees a piece rate should review their compensation agreements to ensure employees are properly paid for all downtime, including rest and recovery periods.   

We will discuss these bills in more detail in the December breakfast briefings.  In the meantime, if you have any questions regarding the application of any of the bills, please contact one of the authors or other AALRR labor and employment attorneys.

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