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Legislative Developments for 2013

With each new calendar year comes new employment-related laws that may affect your organization’s decisions and practices.  This Alert highlights certain federal law as well as certain state law developments in Illinois, California, Georgia and New York affecting employers in 2013.

Federal Law

  • Updated FCRA Notice:  Effective January 1, 2013, employers who perform background checks on prospective and current employees must provide those employees with an updated version of the Summary of Your Rights Under the Fair Credit Reporting Act (“FCRA”) form, available here: http://www.gpo.gov/fdsys/pkg/CFR-2012-title12-vol8/pdf/CFR-2012-title12-vol8-part1022-appK.pdf.  The updated Summary of Rights form reflects a change in responsibility for FCRA enforcement from the Federal Trade Commission (“FTC”) to the Consumer Financial Protection Bureau (“CFPB”).  The new Summary of Rights Form now directs employees to contact the CFPB with questions rather than the FTC.  Employers that fail to use the new form may be subject to penalties and fees.
  • Nondisplacement of Qualified Federal Service Contract Workers:  Effective January 18, 2013, Executive Order 13495, Nondisplacement of Qualified Workers Under Service Contracts, requires successor contractors and their subcontractors to, in most circumstances, offer employees employed under the predecessor contract, whose employment will be otherwise terminated as a result of the successor contract, employment in positions for which they are qualified.  Successor contractors may reduce the size of the workforce and give first preference to certain of their current employees.  Successor contractors that are subject to the Executive Order must provide written notice to eligible employees of the predecessor contractor of the possible right to an offer of employment.  Such notice may either be posted in a conspicuous place at the worksite or may be delivered to the employees individually.  An offer of employment may be for any position for which the employee is qualified and need not be for the same position that the employee previously held.
  • Delayed H-2B Program Wage Rule:  The U.S. Department of Labor (“DOL”) has delayed the effective date of the Wage Methodology for the Temporary Non-Agricultural Employment H-2B Program (“Wage Rule”) from October 1, 2012 to March 27, 2013.  The Wage Rule revises the methodology by which the DOL calculates the prevailing wages to be paid to H-2B workers and United States workers recruited in connection with a temporary labor certification for use in petitioning the Department of Homeland Security to employ a nonimmigrant worker in H-2B status.

California

  • Requirements for Employers that Pay Employees Commissions:  Effective January 1, 2013, AB 1396/AB2675 requires employers that pay employees at least in part on a commission basis to provide written contracts to their employees detailing (1) the formula used for computing commissions and (2) the method of payment, and to retain signed receipts for these agreements.  “Temporary, variable incentive payments that increase, but do not decrease, payment under the written contract” are generally excluded from the definition of commissions.  There are no statutory penalties associated with these new requirements; however, liability for employers can still exist pursuant to the Private Attorneys General Act.
  • Nonexempt Salaried Employees are Entitled to Overtime:  Effective January 1, 2013, AB 2103 amends Labor Code §515 such that non-exempt employees paid on a salary basis are entitled to overtime, even where they are working pursuant to an agreement that states that their salary covers both regular and overtime work.  For overtime purposes, the law states that a salaried employee’s regular rate will be 1/40th of the employee’s weekly salary.
  • Wage Statements for Temporary Employees:  Effective July 1, 2013, AB 1744 will require temporary service employers to include on employee wage statements the rate of pay for each separate assignment and the total hours worked for each entity.  In addition, upon hire, temporary service employers will be required to provide employees with the name, main office address, mailing address, and telephone number of the entity for whom the employee will perform work.
  • Religious Accommodations under FEHA:  Effective January 1, 2013, AB 1964 clarifies that the Fair Employment and Housing Act’s prohibition against discrimination based on“religious beliefs and observances” applies to religious dress and grooming practices.  The law further clarifies that segregation from the public or other employees due to one’s religious dress or grooming practices is not considered a reasonable accommodation.
  • Breastfeeding Protected under FEHA:  AB 2386 amends the Fair Employment and Housing Act’s definition of “sex discrimination” to expressly include breastfeeding and related medical conditions.  Accordingly, employers may not discriminate against someone based on her breastfeeding status.  Employers will also be required to provide employees with an updated Discrimination and Harassment Notice.
  • Protection of Social Media Usernames and Passwords:  Effective January 1, 2013, AB 1844 prohibits employers from requesting or requiring employees or applicants to (1) disclose their social media usernames or passwords, (2) access their social media accounts in the employer’s presence, or (3) “divulge” personal social media.  However, disclosure of social media passwords and usernames may be compelled by an employer to investigate possible employee misconduct or violations of the law and to access employer-provided electronic devices.  “Social media” includes any “electronic service or account, or electronic content, including, but not limited to, videos, still photographs, blogs, video blogs, podcasts, instant and text messages, email, online services or accounts, or Internet Web site profiles or locations.”
  • Employer Recordkeeping and Inspection Requirements:  Effective January 1, 2013, AB 2674 amends Labor Code §1198.5 such that employers are now required to keep employee personnel records for at least 3 years following termination of employment.  Further, current and former employees or their representatives must be allowed to inspect, or provided with a copy of, their files within 30 days of the submission of a written request.  Employers are required to generate a form that employees can use to submit requests to review their personnel files.  An employer’s failure to comply with these requirements may be subject to a $750 penalty, injunctive relief and attorneys’fees.
  • Clarification of “Injury” Requirement for Wage Statement Violations:  Under Labor Code §226, employers are required to provide employees with itemized wage statementsincluding, but not limited to, detailed information such as the employees’ hours worked, wages earned, and hourly rates, if applicable.  Section 226 further provides that an employee that suffers “injury” as a result of an employer’s failure to provide a complete wage statement is entitled to statutory penalties and costs.  Effective January 1, 2013, SB 1255 amends §226 to clarify that actual injury is not necessary.  Rather, an employee suffers “injury” under §226 when the employer fails to provide a wage statement altogether or fails to provide accurate and complete information such that the employee cannot promptly and easily ascertain the required information from the statement.
  • Wage Garnishment Exemption:  Effective January 1, 2013, AB 1775 increases the amount of wages exempt from garnishment to $320/week.  Wages over $320/week may be garnished up to a limit of 25% of the debtor’s disposable income.
  • Unemployment Insurance Reimbursements:  Effective January 1, 2013, AB 1845 provides that if the Employment Development Department (“EDD”) determines that an employer makes overpayments to the EDD’s unemployment insurance reserve account due to the employer’s failure to respond to or provide adequate information to the EDD, the EDD will not reimburse the employer for the overpayments.  AB 1845 is applicable to overpayments made on or after October 22, 2013.

Illinois

  • Protection of Social Media Usernames and Passwords:  Effective January 1, 2013, amendments to the Illinois Right to Privacy in the Workplace Act prohibit employers from requesting or requiring that employees or applicants provide passwords or related account information, or provide access to their account or profile on a social networkingWeb site. “Social networking website” is defined as an Internet-based service allowing individuals to construct a public or semi-public profile, create a list of other users with whom they share a connection, and view and navigate a list of connections. E-mail is not a “social networking website,” and employers are not precluded from monitoring and maintaining policies governing the usage of their electronic equipment or from obtaining information about employees or prospective employees that is in the public domain.
  • Prevailing Wage Notification:  Effective January 1, 2013, public bodies or other entities covered under the Illinois Prevailing Wage Act may discharge their duty to notify contractors and subcontractors of revised prevailing wage rates by inserting a stipulation in the contract that the prevailing rate of wages are revised by the Illinois Department of Labor and are available on the Department's Web site.  Model language for such statement can be found on the Illinois Department of Labor Web site.
  • Monthly Wage Reporting for Certain Illinois Employers: Under the 2012 Save Medicaid Access and Resources Together (“SMART”) Act, starting in 2013, Illinois employers who are required to report wage reports electronically under the Illinois Department of Employment Security (“IDES”) regulations (currently employers of 250 or more) will be required to file electronic wage reports monthly. The IDES proposes to phase in this requirement to smaller employers during 2013 and 2014. 

Georgia

  • E-Verify:  Effective July 1, 2013, employers with more than 10, but fewer than 100 employees are required to register with and use E-Verify under Section 12 of HB87.   (The deadlines for employers with 100 or more employees occurred in 2012.)  Before issuing or renewing any business license or other document required for doing business in Georgia, counties and municipalities will require employers to submit affidavits that they are registered with and using E-Verify or are exempt from the requirements.

New York

  • Social Security Number Protection:  Effective December 12, 2012, a new section 399-ddd to the General Business Law of the Empire State, prohibits private entities, including employers, from requiring a person to disclose or furnish his or her social security number in connection with almost any activity.
  • Wage Deductions: Effective November 6, 2012, legislation amending New York Labor Law §193 went into effect expanding the scope of permissible deductions from employee wages.  The new law provides two exceptions to the general prohibition on making deductions from wages:  (1) deductions that are required by law or (2) deductions that are expressly authorized by the employee in writing and that “are for the benefit of the employee.” According to the New York State Department of Labor, the second exception permits deductions for insurance premiums, pension or health benefits, charitable contributions, and dues for labor organizations, as well as other limited deductions.
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Schiff Hardin represents management in labor matters and employment-related litigation, and provides counsel to employers with respect to all legal aspects of employer-employee relations. Our firm's labor law practice encompasses both the private sector and the public sector for large and small employers in a broad range of markets and industries. Our Labor and Employment Group works cooperatively with attorneys in our Employee Benefits and Executive Compensation Group to provide our clients with comprehensive assistance in every aspect of the employer-employee relationship.

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