The Labor and Employment Law Blog : Labor & Employment Lawyer & Attorney : Weintraub Genshlea Chediak Tobin & Tobin Law Firm : Sacramento California : Labor & Employment Law Blog

 1.         AB 22 – Consumer Credit Checks.

 Adds Labor Code section 1024.5, which will prohibit an employer or prospective employer (with limited exceptions for financial institutions) from obtaining consumer credit reports unless the person for whom the report is sought has or will have a position in one of the following categories:

a.             A managerial position;

b.            A position with the state Department of Justice;

c.             A sworn peace officer or other law enforcement position;

d.            A position for which the information in a credit report is required to be disclosed or obtained by another law;

e.             A position that involves regular access to someone’s bank or credit card accounting information, SS number, and date of birth (does not include routine solicitation and processing of credit card applications in a retail store);

f.             A position where the person is, or would be, any of the following: i) a named signatory on the bank or credit card account of the employer; ii) authorized to transfer money on behalf of the employer; or iii) authorized to enter into financial contracts on behalf of the employer;

g.            A position that involves access to certain confidential or proprietary information; or

h.             A position that involves regular access to cash totaling $10,000 or more of the employer, or its customers or clients, during the workday.

It also amends Civil Code section 1785.20.5 to require that the written notice provided to prospective employees prior to requesting a credit report for employment purposes, to identify the specific basis (per Labor Code section 1024.5) for the use of such a report. All other notice and disclosure requirements currently in effect under the state Consumer Credit Reporting Agencies Act remain in place. Violation of the new law can result in lawsuits for damages, attorney’s fees and costs, as well as additional penalties of up to $5,000 for each violation.

2.         Written Commission Agreements.

While the Labor Commissioner and certain courts have already held that an employer must have a written commission plan explaining the calculation of, and entitlement to, commissions, there was no state law that mandated such writing until now. 

AB 1396 (not effective until January 1, 2013) will amend Labor Code section 2751 and require that all commission compensation arrangements “shall be in writing and shall set forth the method by which the commissions shall be computed and paid.” The new law defines “commissions” as “compensation paid to any person in connection with the sale of the employer’s property or services and based proportionately upon the amount or value thereof.” Commissions do not include short-term productivity bonuses or bonus and profit sharing plans, unless based on an employer’s promise to pay a fixed percentage of sales or profits as compensation. Failure to comply with the new law can expose the employer to an action for penalties of $100 per pay period per aggrieved employee under PAGA.

3.         Wage Theft Prevent Act of 2011

AB 469 is effective January 1, 2012 and amends and adds a number of provisions to the California Labor Code. Below are a few of the provisions of the new law employers will want to know.

a.             Amends Labor Code section 98 to permit the Labor Commissioner to award liquidated damages to an employee who succeeds in a claim for a violation of the minimum wage law. Previously only a court could award liquidated damages;

b.            Amends Labor Code sections 240 and 243 to permit the Labor Commissioner to require an employer who is convicted of a wage violation or who fails to satisfy a judgment for unpaid wages to maintain a bond for up to two years and, if an employer fails to do so, impose penalties of up to $10,000;

c.             Amends Labor Code section 1174 to increase the number of years an employer must keep employee identification and payroll records as required under that section from two years to three years. Also provides that an employer may not prohibit an employee from maintaining their own “personal” record of hours worked or piece rate units earned. (ASIDE: The DOL’s new app for IPhones will help employees do that);

d.            Amends Labor Code section 1194.2 to increase the amount of liquidated damages a court can award to twice the amount of the unpaid wages plus interest in any action before the court under Labor Code sections 98, 1193.6 or 1194;

e.             Provides that an employer who willfully fails to pay (and has the ability to pay) a final court judgment or final order issued by the Labor Commissioner for all wages due, is guilty of a misdemeanor and subject to fines between $1,000 to $20,000, and possible jail time;

f.             Requires employers to provide each non-exempt employee at the time of hire with a notice that includes the following: i) the rate or rates of pay and basis thereof (e.g. hourly, shift, day, week, salary, piece, commission, etc., including overtime rates); ii) allowances, if any, claimed as part of the minimum wage (e.g. meal or lodging credits/allowances); iii) the dates of regular payday(s); iv) the name of the employer, including any dba’s; v) the physical address of employer’s main office or principal place of business, and a mailing address, if different; vi) the employer’s telephone number; vii) the name, address, and telephone number of the employer’s workers’ compensation insurance carrier; and viii) any other information the Labor Commissioner may deem necessary and material (which means employers will likely see further requirements from the Labor Commissioner before the effective date of the new law). Finally, if any of the information required to be in the notice changes, a new written notice of such change must be provided to each employee within 7 calendar days of the change unless the change is reflected on a timely wage statement.

4.         Continuation of Health Coverage under the PDL.

Unlike under the FMLA and CFRA which require an employer to continue group health insurance benefits for an employee out on a family medical leave (up to a maximum of 12 weeks), there was no requirement to do so when an employee was out on pregnancy disability leave (PDL). 

SB 299 will require employers to maintain and pay for coverage under a group health plan for an employee out on PDL. PDL provides for an employee to take up to a maximum of four months of leave for disabilities related to pregnancy, child birth, or a related medical condition. Therefore, the obligation to continue health insurance coverage could potentially be for up to a four month period.

5.         Misclassification of Independent Contractors.

This is a very important new law and will only bolster the heightened scrutiny over the misclassification of workers by a number of state and federal agencies. In fact the federal DOL has entered into MOU’s with a number of states (California has not yet signed, but is expected to) which provide for collaboration between the DOL and states to audit and take enforcement action against companies that misclassify workers as individual contractors.

SB 459 adds section 226.8 to the Labor Code. The new law prohibits the willful misclassification of an employee as an independent contractor by a consultant or an employer, and prohibits charging misclassified individuals a fee, or taking a deduction from their compensation, if it would otherwise violate the law had the individual been classified as an employee. “Willful misclassification” means that an employer is trying to “avoid employee status for an individual by voluntarily and knowingly misclassifying that individual as an independent contractor.”

Violation of the new law can result in serious consequences, including: a) a court or the California Labor and Workforce Development Agency (LWDA) can impose civil penalties between $5,000 and $15,000 for each violation, or $10,000 to $25,000 for a pattern and practice of violations; b) the LWDA or court can contact the state’s Contractors License Board and require the Board initiate action; and c) the LWDA or court will require any person or employer who willfully misclassifies a worker to prominently displace a notice on its website, or if no website, in an area that is accessible to all employees and the general public, a notice stating: i) it has committed a serious violation of the law by willfully misclassifying employees as independent contractors; ii) it has changed its business practices to avoid further violations; iii) that any worker who believes he/she is being misclassified may contact the LWDA (contact information must be included); and iv) that the notice is being posted pursuant to a state order. The notice must be signed by an officer of the company and remain posted for one year. 

The bill also adds section 2753 to the Labor Code. This new law provides that any person, who for money or other valuable consideration, knowingly advises an employer to treat a worker as an independent contractor to avoid employee status for that worker, shall be jointly and severally liable with the employer if the worker is found not to be an independent contractor. The new law does not apply to attorneys providing legal advice in the course of the practice of law or a person who provides advice to his or her employer.

6.         Out of State Workers’ Compensation Coverage.

Previously, if a California employer had employees who performed work out of state from time to time, they had to obtain a separate workers’ comp policy to cover the employees under the laws where they worked. 

AB 228 amends Insurance Code section 11780.5 to provide that the State Compensation Insurance Fund (SCIF) may also insure a California employer against his or her liability for workers' compensation benefits, under the law of any other state, for California employees

temporarily working outside of California on a specific assignment if SCIF insures the employer's other employees who work within California.

7.         No Mandated E-Verify by Government Agencies.

E-Verify is a federal program administered by the U.S. Department of Homeland Security and the US Social Security Administration. Some federal laws require certain employers to utilize the program. Otherwise, other employers can voluntarily use the program to verify that the employees they are hiring are authorized to work in the U.S. (e.g. that the identification documents utilized to complete the federal I-9 Form are in fact legitimate).

AB 1236 (known as the “Employment Acceleration Act of 2011” adds Article 2.5 (section 2811, et. seq.) to the Labor Code. It provides that, except as required by federal law, or as a condition of receiving federal funds, neither the state nor a city, county, city and county, or special district shall require an employer to use an electronic employment verification system, including under the following circumstances: (a) as a condition of receiving a government contract; (b) as a condition of applying for or maintaining a business license; or (c) as a penalty for violating licensing or other similar laws.

8.         Expanding the Definition of “Gender”.

AB 887 amends, among other statutes, the Fair Employment and Housing Act (FEHA) (Government Code §§12920, et. seq.) to include gender expression in the definition of “gender.” “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. The new law makes it unlawful to discriminate on the basis of gender identity and gender expression and also requires employers to allow an employee to appear or dress in a manner consistent with the employee’s gender expression.

9.         Protection of “Genetic Information.”

Consistent with the federal Genetic Information Nondiscrimination Act (GINA), SB 559 amends, among other statutes, the FEHA (Government Code §§12920, et. seq.) to include “genetic information” as protected from forming the basis for employment discrimination.  “Genetic information" is a separate category from “genetic characteristics” which were already protected under FEHA.   "Genetic information" includes any request for, or receipt of, genetic services, or participation in clinical research that includes genetic services, by an individual or any family member of the individual.  It does not include information about the sex or age of any individual.

On the other hand, "genetic characteristics" means either of the following:  (a) any scientifically or medically identifiable gene or chromosome, or  combination or alteration thereof, that is known to be a cause of a disease or disorder in a person or his or her offspring, or that is determined to be associated with a statistically increased risk of development of a disease or disorder, and that is presently not associated with any symptoms of any disease or disorder; or (b) inherited characteristics that may derive from the individual or family member, that are known to be a cause of a disease or disorder in a person or his or her offspring, or that are determined to be associated with a statistically increased risk of development of a disease or disorder, and that are presently not associated with any symptoms of any disease or disorder. 

CONCLUSION:

Wow…. that was a lot to digest wasn’t it. What should employers do now? Well, because of the immensity of the new laws, and the consequences for failing to comply with them, employers are advised to work with their employment counsel to ensure that their policies and procedures are updated appropriately, and that they take all steps necessary to train their supervisors and managers to comply with the new obligations. The employment lawyers at Weintraub Genshlea Chediak Tobin & Tobin are available to assist employers in their understanding of, and compliance with, these new laws. Please feel free to contact us. 

Highlights of the Regulatory Changes in the Final Regulations:

New Regulations Re: Military Family Leave:

1) Military Caregiver Leave (also known as Covered Servicemember Leave):

Under the first of these new military family leave entitlements, eligible employees who are family members of covered servicemembers will be able to take up to 26 workweeks of leave in a “single 12-month period” to care for a covered servicemember with a serious illness or injury incurred in the line of duty on active duty. Based on a recommendation of the President’s Commission on Care for America’s Returning Wounded Warriors (the Dole-Shalala Commission), this 26 workweek entitlement is a special provision that extends FMLA job-protected leave beyond the normal 12 weeks of FMLA leave. This provision also extends FMLA protection to additional family members (i.e., next of kin) beyond those who may take FMLA leave for other qualifying reasons.
 

The regulations provided that:
 

• This leave is available when a “covered servicemember” is undergoing medical treatment, recuperation, or therapy or is otherwise in outpatient status, or on the temporary disability list, for a “serious injury or illness” incurred in the line of duty on activity duty. A “serious injury or illness” is one incurred in line of duty that makes person unfit to perform duties of his/her office, grade, rank or rating.
• Stepsons, stepdaughters, and stepparents can take this leave.
• Leave is up to 26 workweeks during a “single 12 month period,” and such 12 month period begins on the first day the eligible employee take such leave and ends 12 months after that date regardless of the method used by the employer to determine FMLA leave entitlements and/or other FMLA qualifying reasons.
• A servicemember’s “next of kin” is entitled to this leave. The servicemember can designate who his or her next of kin is. If there is no designation, the regulations define “next of kin” as: the nearest blood relative, other than the servicemember’s spouse, parent, son, or daughter, in the following order: blood relatives with legal custody of service member, brothers, sisters, grandparents, aunts and uncles, and first cousins. All family members sharing the closes level of kinship are considered next of kin and are eligible for leave.
• The leave is permitted only for the serious injury or illness of current service members, not retired or permanently disabled servicemembers.
• The leave is a “per-servicemember, per-injury” entitlement so an employee may take 26 workweeks of leave to care for one servicemember in a “single 12 month period” and then take another 26 workweeks in a different “single 12-month period” to care for another covered servicemember or the same covered service member with a subsequent serious injury or illness.
• Same notice obligations as other FMLA leaves for serious health condition of a family member.
• Employers have right to obtain medical certification under this leave.
• If leave qualifies for both military caregiver leave and care for family member with serious health condition, regulations provide that employer must designate as military caregiver leave first.

 2) Qualifying Exigency Leave:

The second new military leave entitlement helps family of members of the National Guard and Reserves manage their affairs while the member is on active duty in support of a contingency operation. This provision makes the normal 12 workweeks of FMLA job-protected leave available to eligible employees with a covered military member serving in the National Guard or Reserves to use for “any qualifying exigency” arising out of the fact that a covered military member is on active duty or called to active duty status in support of a contingency operation.

The regulations provide that:

• Active duty” or “call to active duty” refers to an order to report to duty to support a contingency operation.
• This leave applies only to members of the National Guard or Reserves not to members of the Regular Armed Forces.
• This leave can be used for a son or daughter who is older than 18, and son and daughter include stepson and stepdaughter.
• The leave may be taken on an intermittent or reduced leave schedule basis.
• Qualifying exigencies include:
  a)   Short-term deployment – on seven or less days notice;
  b)   Military events and related activities – such as official ceremonies, programs or events  sponsored by the military.
  c)   Childcare and related activities – arising from the call to active duty or active duty such as arranging alternative childcare.
  d)   Financial and legal arrangements – needed to address a military member’s absence.
  e)   Counseling – by someone other than a healthcare provider for oneself, the military member, or child of covered military member, the need for which arises from the call to activity duty or active duty.
  f)   Rest and recuperation – up to 5 days of leave to spend time with a covered military member on short term temporary leave during deployment.
  g)   Post-deployment activities – to attend things like arrival ceremonies, reintegration briefings and other events sponsored by the military for a period of 90 days following termination of covered military members active duty status and addressing issues arising from death of a covered military member.
  h)   Other events - that employer and employee agree are a qualifying exigency.
   
• Employee’s ability to substitute accrued vacation, sick leave or PTO is determined by terms of employer’s leave policy.
• Employee must provide “sufficient information” to make employer aware of need for FMLA leave and anticipated timing and duration. “Sufficient information” includes that leave is for a particular qualifying exigency related to active duty or call to active duty of covered military member and anticipated duration of leave; and
• Employer must give eligibility of tie to employee within 5 business days of request and inform employee of rights and responsibilities under FMLA.

The final rule also includes two new DOL certification forms that may be used by employees and employers to facilitate the certification requirements for the use of military family leave.

WH-382

WH-384

WH-385

Updates to Existing FMLA regulation:

• The Ragsdale Decision/Penalties: The final rule includes a number of technical regulatory changes to reflect current law following the U.S. Supreme Court’s decision in Ragsdale v. Wolverine World Wide, Inc., which invalidated a penalty provision of the regulations. Ragsdale ruled that the current regulation’s “categorical” penalty for failure to appropriately designate FMLA leave, which in that case would have required the employer to provide an additional 12 weeks of FMLA-protected leave after the 30 weeks of leave the employee had already received, was inconsistent with the statutory entitlement to only 12 weeks of FMLA leave and contrary to the statute’s remedial requirement that an employee demonstrate individual harm. Several other courts have also invalidated similar categorical penalties in other notice provisions of the current regulations. The final rule therefore removes these categorical penalty provisions and clarifies that where an employee suffers individualized harm because the employer failed to follow the notification rules, the employer may be liable.
• Light Duty: At least two courts have held that an employee uses his or her 12 week FMLA leave entitlement while on a “light duty” assignment following FMLA leave. Under the final rule time spent performing “light duty” work does not count against an employee’s FMLA leave entitlement and that the employee’s right to restoration is held in abeyance during the period of time the employee performs light duty (or until the end of the applicable 12-month FMLA leave year). If an employee is voluntarily performing a light duty assignment, the employee is not on FMLA leave.
• Waiver of Rights: The final rule codifies the Department’s longstanding position that employees may voluntarily settle or release their FMLA claims without court or Department approval. Although this is not a change in the law, the clarification is needed because a recent Fourth Circuit decision interpreted the Department’s regulations as prohibiting employees from either prospectively or retroactively waiving their rights. Prospective waivers of FMLA rights continue to be prohibited under the final rule.
• Serious Health Condition: The final rule retains the six individual definitions of serious health condition while adding guidance on three regulatory matters. One of the definitions of serious health condition involves more than three consecutive, full calendar days of incapacity plus “two visits to a health care provider.” Because the current rule is open-ended, the Tenth Circuit has held that the “two visits to a health care provider” must occur within the more-than-three-days period of incapacity. Under the final rule, the two visits must occur within 30 days of the beginning of the period of incapacity and the first visit to the health care provider must take place within seven days of the first day of incapacity. A second way to satisfy the definition of serious health condition under the current regulations involves more than three consecutive, full calendar days of incapacity plus a regimen of continuing treatment. The final rule clarifies here also that the first visit to the health care provider must take place within seven days of the first day of incapacity. Thirdly, the final rule defines “periodic visits” for chronic serious health conditions as at least two visits to a health care provider per year since that provision is also open-ended in the current regulations and potentially subjects employees to more stringent requirements by employers.
• Substitution of Paid Leave: FMLA leave is unpaid. However, the statute provides that employees may take, or employers may require employees to take, any accrued paid vacation, personal, family or medical or sick leave, as offered by their employer, concurrently with any FMLA leave. This is called the “substitution of paid leave.” The current regulations apply different procedural requirements to the use of vacation or personal leave than to medical or sick leave. Complicating matters even further, the Department has treated family leave differently than vacation and personal leave. Accordingly, under the final rule, all forms of paid leave offered by an employer will be treated the same, regardless of the type of leave substituted (including generic “paid time off”). An employee electing to use any type of paid leave concurrently with FMLA leave must follow the same terms and conditions of the employer’s policy that apply to other employees for the use of such leave. The employee is always entitled to unpaid FMLA leave if he or she does not meet the employer’s conditions for taking paid leave and the employer may waive any procedural requirements for the taking of any time of paid leave.
• Perfect Attendance Awards: The final rule changes the treatment of perfect attendance awards to allow employers to deny a “perfect attendance” award to an employee who does not have perfect attendance because of taking FMLA leave as long as it treats employees taking non-FMLA leave in an identical way. This addresses the unfairness perceived by employees and employers as a result of requiring an employee to obtain a perfect attendance ward for a period during which the employee was absent from the workplace on FMLA leave.
• Employer Notice Obligations: The final rule consolidates all the employer notice requirements into a “one-stop” section of the regulations and reconciles some conflicting provisions and time periods under the current regulations. Further, the final rule clarifies and strengthens the employer notice requirements in order to better inform employees and allow for a better exchange of information between employers and employees. Employers will be required to provide employees with a general notice about the FMLA (through a poster, and either an employee handbook or upon hire); an eligibility notice; a rights and responsibilities notice; and a designation notice. In order to ensure employers are able to better inform employees under the new notice provisions, the final rule extends the time for employers to provide various notices from two business days to five business days.
• Employee Notice: The final rule modifies the current provision that has been interpreted to allow some employees to provide notice to an employer of the need for FMLA leave up to two full business days after an absence, even if they could have provided notice more quickly. Lack of advance notice (e.g., before the employee’s shift starts) for unscheduled absences is one of the biggest disruptions employers point to as an unintended consequence of the current regulations. The final rule provides that an employee needing FMLA leave must follow the employer’s usual and customary call-in procedures for reporting an absence, absent unusual circumstances. The final rule also highlights (without changing) the existing consequences if an employee does not provide proper notice of his or her need for FMLA leave.
• Medical Certification Process (Content and Clarification): The final rule, which is the result of significant stakeholder feedback (including a Fall 2007 meeting at the Department on medical certifications) recognizes the advent of the Health Insurance Portability and Accountability Act (HIPAA) and the applicability of the HIPAA privacy rule to communication between employers and employees’ health care providers. Further, in response to specific concerns raised by employees about medical privacy, the Department has added a requirement to the final rule that specifies that the employer’s representative contacting the health care provider must be a health care provider, human resource professional, a leave administrator, or a management official, but in no case may it be the employee’s direct supervisor. Further, employers may not ask health care providers for additional information beyond that required by the certification form. The final rule also improves the exchange of medical information by updating the Department’s options Form WH-380 to create separate forms for the employee and covered family members and by allowing – but not requiring – health care providers to provide a diagnosis of the patient’s health condition as part of the certification. In addition, the final rule specifies that if an employer deems a medical certification to be incomplete or insufficient, the employer must specify in writing what information is lacking and, give the employee seven calendar days to cure the deficiency. These changes will improve FMLA communications, protect the privacy of workers, and help ensure that the employees who need leave will get it and not be subject to repeated requests for additional information or be denied FMLA leave on a technicality.
• Medical Certification Process (Timing): The final rule codifies a 2005 DOL Wage and Hour Opinion letter that stated that employers may request a new medical certification each leave year for medical conditions that last longer than one year. The final rule also clarifies the applicable time period for recertification. Under the current regulations, employers may generally request a recertification no more often than ever 30 days and only in conjunction with an FMLA absence unless a minimum duration of incapacity has been specified in the certification, in which case recertification generally may not be required until the duration specified has passed. Because many stakeholders have indicating that the current regulation is unclear as to the employer’s ability to require recertification when the duration of a condition is described as “lifetime” or “unknown,” the final rule restructures and clarifies the regulatory requirements for recertification. In all cases, the final rule allows an employer to request recertification of an ongoing condition every six months in conjunction with an absence.
• Fitness-For-Duty Certifications: The current FMLA regulations allow employers to enforce uniformly-applied policies or practices that require all similarly-situated employees who take leave to provide a certification that they are able to resume work. This is called a “fitness-for-duty” certification. The final rule makes two changes to the fitness-for-duty certification process. First, an employer may require that the certification specifically address the employee’s ability to perform the essential functions of the employee’s job. Second, where reasonable job safety concerns exist, an employer may require a fitness-for-duty certification before an employee may return to work when the employee takes intermittent leave.