January Newsletter 2012

A new set of labor laws went into effect within the State of California this month.  These include expanded disclosure requirements, increased fines for the misclassification of independent contractors and added leave for pregnant employees.

The most significant change to California’s labor laws is the Wage Theft Prevention Act, a new provision that requires employers to provide new, non-exempt employees a written disclosure notice on everything from the rate of pay they’ll receive to the phone number of the company’s workers’ compensation insurance carrier.

The following is a summary of new laws that will affect most employers.  Please note that this list does not include all of the new laws.

NEW LAWS

Labor

Independent contractors — This new law provides new penalties of between $5,000 and $25,000 for the “willful misclassification” of independent contractors. This measure further prohibits employers from deducting from the paychecks of misclassified individuals any fees or other charges that could not be deducted from paychecks of employees, e.g. for workspace, licenses and equipment.  Even an employer’s third-party advisors, such as financial, accounting, and human resources professionals, can be jointly and severally liable with the employer for fines and penalties. Labor Code section 2753 further broadens the range of potentially liable parties, extending joint and several liability to any person who, for money or other valuable consideration, knowingly advises an employer to misclassify an individual as an independent contractor to avoid employee status. The joint liability section expressly excludes attorneys providing legal advice and employees providing advice to their employer.

Health benefits during Pregnancy Disability Leave —  This new law requires all employers with five or more employees to continue to maintain and pay for health coverage under a group health plan for an eligible female employee who takes pregnancy disability leave up to the entire four month duration of that leave, and under the conditions that coverage would have been provided had the employee remained continuously employed. The extension of health coverage will apply even if the employee was not entitled to an FMLA/CFRA protected leave.

Notice of pay details to new hires — The Wage Theft Prevention Act of 2011, requires employers to provide nonexempt employees, at the time of hire, a written notice that contains wage and business-related information such as:

  • The rate of pay and the basis, whether hourly, salary, piece commission or otherwise, including any applicable overtime rate;
  • The regular payday designated by the employer as required under the Labor Code;
  • The name of the employer, including any “doing business as” names;
  • The physical address of the employer’s main office or principal place of business and any mailing address, if different;
  • The telephone number of the employer;
  • and The name, address and telephone number of the employer’s workers’ compensation carrier.

The employer must also notify each employee in the form of a new or amended written notice of any changes made to this information within seven days of implementation, subject to some exceptions.

Prevailing Wage penalties —  This new law increases the maximum penalty from $50 to $200 per calendar day for each worker paid less than the determined prevailing wage and increases the minimum penalty from $10 to $40 per day for violations of prevailing wage obligations. It also increases the penalty from $25 to $100 per calendar day, per worker, against contractors and subcontractors that fail to respond to a written request for payroll records within 10 days.

Credit Information about applications or employees – This new law prohibits employers and/or prospective employers, not including certain financial institutions, from obtaining credit information about applicants or employees, unless the information contained in the report is substantially related to the employee’s particular job or the position being sought by the applicant.  The prohibition does not apply to “managerial positions,” defined as those who qualify for the executive exemption from overtime and employees who would have access to specific financial and confidential information.  The law requires written notice by the employer informing the person for whom a consumer credit report is sought along with the specific reason for obtaining the report.

Domestic Partnership Equality Law – This new law corrects inequalities between domestic partnerships and heterosexual marriages, including domestic partner health benefits sharing by expanding the California Insurance Equality Act by prohibiting employers that operate in multiple states from discriminating against same-sex couples by not providing the same insurance coverage for domestic partners as they do for spouses.

Interference with rights under leave laws —  This new Law makes it an unlawful employment practice for an employer to interfere with, restrain or deny the employee’s attempt to exercise any right provided to that employee under the California Family Rights Act and the Pregnancy Disability Leave laws.

Gender expression —  This new law amends the Fair Employment and Housing Act to further define “gender” to include both gender identity and “gender expression” and to make clear that discrimination on either basis is prohibited. “Gender expression” is a person’s gender-related appearance and behavior whether or not stereotypically associated with the sex assigned to the person at birth. The law also amends Government Code relating to dress codes to include that an employee must be allowed to dress consistently with both the employee’s gender identity and gender expression.

Genetic information — This new law amends the Fair Employment and Housing Act to state that employers are prohibited from discriminating against employees on the basis of genetic information. The California Genetic Information and Nondiscrimination Act goes beyond the federal protections by incorporating genetic information into the state’s civil rights codes. “Genetic information” is defined as the individual employee’s genetic tests, the genetic tests of the employee’s family members and the manifestation of a disease or disorder in the employee’s family members.

Organ and bone marrow donor leave — This new law clarifies the implementation of California’s organ and bone marrow donor leave law, which applies to employers with 15 or more employees. The new legislation clarifies that the days of leave are business days, not calendar days, and that the one-year period is measured from the date the employee’s leave begins.

Written commission agreement —This new law requires that all employers provide a written contract to employees who are paid commission as a method of payment. The written contract must set forth the method by which the commissions will be computed and paid.  This law does not go into effect until January 1, 2013.

Business

California Anti-Human Trafficking Law –  This law  makes it a misdemeanor to sell phony massage school transcripts. The bill is widely supported by the massage therapy profession and the state’s certification board.

Apprentice programs — This new law changes the audit requirements for apprenticeship programs. This new law eliminates the mandate of random audits during five-year increments, and instead directs the division to conduct audits of apprenticeship programs generally. It also creates requirements for applications for building and construction trades programs for approval of a new or expanded apprenticeship program.

Public Sector

California Gay Bullying Law (Seth’s Law) – Combats bullying of gay and lesbian students in public schools by requiring school districts to have a uniform process for dealing with gay bullying complaints. Mandates that school personnel intervene if they witness gay bullying.  Law effective July 1, 2012.

LGBT Equality and Equal Access in Higher Education Law – State universities and colleges must create and enforce campus policies protecting LGBTs from harassment and appoint employee contact persons to address on-campus LGBT matters. The law includes community colleges statewide.  Law effective 2012.

Public Agency fact finding – allows local public employee organizations to request fact-finding if a mediator is unable to reach a settlement within 30 days of appointment.