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California Enacts 22 New Employment Laws Impacting All Companies Doing Business In The State

On October 9, 2011, California Governor Edmund G. "Jerry" Brown signed into law 22 bills impacting anyone doing business in the state. The bills range from imposing new penalties upon companies and those that advise them for "willfully misclassifying" workers as independent contractors, to a redefinition of "gender" for the purposes of all California anti-discrimination statutes to include gender identity and transvestitism. Included among the bills Governor Brown signed into law are the following:

Willful Misclassification of Workers as Independent Contractors

Newly enacted Assembly Bill No. 459 prohibits willful mischaracterization of individuals as independent contractors. Currently, the law requires employers to comply with certain policies regarding compensation and working conditions for employees that do not apply to independent contractors. This law also prohibits charging fees to or otherwise deducting compensation from the workers if such fee or deductions are prohibited with respect to employees. AB 459 provides a complaint procedure and for the assessment of liquidated damages against anyone who mischaracterizes someone as an independent contractor and authorizes the Labor and Workplace Development Agency to assess civil penalties against those violating statute. Further, the new law requires that the Agency notifies the Contractors' State License Board of any violation, and the Board must then take action against the licensee. 

In addition, anyone who knowingly advises someone to mischaracterize someone as an independent contractor rather than an employee will be jointly and severally liable with the employer. There are exemptions to joint and several liability for attorneys providing legal advice or someone who provides advice to his or her own employer.

Gender Identity and Gender Expression Discrimination

Assembly Bill No. 887 alters the meaning of gender for the purposes of discrimination laws that define sex as including gender so that California law now prohibits discrimination on the basis of gender identity and gender expression. Gender identity and gender expression include a person's gender-related appearance and behavior whether or not stereotypically associated with the person's assigned sex at birth. This new definition applies to anti-discrimination laws pertaining to education, housing and employment where it would enumerate gender, gender identity and gender expression as protected characteristics. In the employment context, AB 887 requires employers to allow employees to appear or dress consistently with that employee's gender expression.

Prohibition on Use of Credit Reports in Employment

Assembly Bill No. 22 limits the ability of employers to use credit reports for employment purposes. Currently, employers in California can, with prior consent, procure an employee's or applicant's credit report, regardless of the employee's position or the position the applicant is seeking to fill. AB 22, however, limits California employer's to obtaining credit reports for those employees or applicants who are employed or seek to be employed in one of eight position types, including: (1) a position in the state Department of Justice; (2) a managerial position as defined by the stringent exempt status definition; (3) that of a sworn peace officer or other law enforcement position; (4) a position for which the information contained the report is required by law to be disclosed or obtained; (5) a position that involves regular access to specified personal information for any purpose other than the that the routine solicitation and processing of credit card applications in a retail establishment; (6) a position in which the person is or would be 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, as specified; or (8) a position that involves regular access to $10,000 or more, as specified.

Increased Penalties for Wage Violations

Assembly Bill No. 469 requires that an employer provide notice specifying the rate and basis of the employee's wages to each individual employee at the time of hiring, in addition to the prior notice posting requirements. Similarly individualized notice must be provided within 7 days for any changes to the rate or basis of the employee's wages. Moreover, AB 469 imposes more stringent penalties and requirements on employers with respect to wage violations. Currently, the California Labor Commissioner may investigate and enforce wage payment requirements by subjecting employers to civil and criminal penalties. AB 469 imposes an additional requirement that employers pay restitution of wages to the employee. Further, AB 469 makes it a misdemeanor to willfully violate wage statutes, orders, final court judgments or final orders or the Labor Commissioner and sets the minimum penalty for such a misdemeanor as the local minimum. AB 469 also extends the statute of limitation for collecting statutory penalties and fees from to three years from the present one-year period.

Interference with California Family Rights Act Leave  

Assembly Bill No. 592 makes it an unlawful employment practice for any employer to interfere with or otherwise prevent or attempt to prevent an employee from exercising rights under the California Family Rights Act. This existing law makes it an unlawful employment practice to deny an employee's request for parental, pregnancy or medical leave as well as leave to care for an ill family member. Further, the law currently makes it an unlawful employment practice to refuse to allow employees who are pregnant or who have just given birth to take leave; moreover, it is an unlawful employment practice to refuse to provide these employees with a reasonable accommodation. AB 592 additionally prohibits interfering with an employee's exercising her rights or attempting to prevent an employee from exercising her rights under the Act an unlawful employment practice.

E-Verify Limitation

Assembly Bill No. 1236 prevents the state, any city, county, city and county or special district from requiring an employer to use E-Verify or any other electronic employment verification system except as required by federal law or as a condition of receiving federal funds. The government entities above are exempted from this prohibition and may use electronic employment verification systems. E-Verify is a program administered by the United States Department of Homeland Security, in partnership with the U.S. Social Security Administration to verify whether employees hired by a given employer may legally work in the United States; enrollment in the program is voluntary for employers. AB 1236 prevents state and local government bodies from making enrollment mandatory.

Domestic Partner Discrimination in Health Insurance

Senate Bill No. 757 makes it a crime to willfully violate the Knox-Keene Health Care Service Plan Act of 1975 by discriminating in coverage between spouses or domestic partners of a different sex and those in same-sex marriages or domestic partnerships. Group coverage must be provided to spouses and domestic partners in same-sex relationships on the same basis as provided to those in different sex relationships. There is an exception for a policy issued outside of California to an employer with a majority of its business and employees located outside of California. 



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Barnes & Thornburg’s Labor and Employment Law Department is one of the fastest-growing labor groups in the nation. Two qualities set us apart: Our passion for what we do, and the pride we take in helping clients achieve their business goals. To succeed in the competitive global marketplace, our clients must not only meet but exceed their customers’ expectations. We...