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What Businesses With California Employees Should Consider Before January 1, 2013

At Greenberg Traurig, we try to live by our “built for change” model and apply it for the benefit of the businesses we serve. Those of us in the California Labor and Employment Practice appreciate that while California presents opportunity, it also presents a difficult set of employment risks different than the set of risks in other jurisdictions where you may operate. The data you need to manage is neither a stream of “sky is falling” communications, nor a list of developments so comprehensive that the significant and the idiosyncratic blur together.

What may help is input on emerging developments that, if not already addressed, demand some thought prior to year-end. We address these issues and add some thoughts on why we think they may matter to you.

Reassess the employees as to whom California law is a concern. We know this sounds obvious but experience has often shown that it is not as easy as it seems. Obviously a brick and mortar facility to which folks report daily is easy. The regional sales representative, the dispatched teams that visit customer businesses and anyone in the transportation industry present different issues. The California Supreme Court has signaled that it is willing to allow California to regulate the relationship of workers who may live elsewhere but occasionally work in state on temporary assignment. A review of locations of actual work should be performed at each restructuring or acquisition and at least annually.

Review your commission agreements. Labor Code §2751 was adopted in 2011 to be effective this January 1, 2013. There are three key requirements: (1) the commission agreements must be in writing; (2) that writing must describe the method by which commission will be calculated and paid and (3) it must be signed and provided to the employee who must sign a receipt. Why this matters: Unlike some issues where substantial compliance is sufficient, here there is no wiggle room and either the employer can produce the required signed agreement and receipt or it cannot. It is therefore important to verify that someone has in fact laid eyes upon the actual agreement and that it has made its way back to the official personnel record storage location. Mishaps will happen but failure at the policy level creates class action risk.

Re-review your social media policy in the current context, not last year’s. California now expressly bans employers of Californians from asking for employee or applicant user names and passwords. See Labor Code §980. Why this matters: This is the stuff of class actions and is a rule different in California than it is in other jurisdictions. The current tendencies of the NLRB are to protect employee communications in these media as applied to both union and non-union workforces. Among the issues in the financial services industry is that the California rule cannot be reconciled easily, if at all, with federal requirements.

Confirm that your existing protocol for responding to California employee information requests is valid. For a number of years those who represent plaintiffs would make overly broad demands for former employee personnel records citing statues that did not quite support either the demand or that it could be made by a representative. That changed with the passage of AB 2674. Why this matters: The new rules make some significant changes in Labor Code §1198.5 and renders prior advice on what is required obsolete and the new rule comes with a $750 penalty for non-compliance that may well be per request.

Re-review your pay day wage statement policies and data collection methods. California Labor Code §226 has contained a lengthy list of items that must be included, and while penalties for non-compliance existed, there was always an issue as to whether an employee suffered injury. After passage of AB 1744, a new set of rules was put in place and some of those were more employer favorable. Why this matters: Among the reforms was an effort to eliminate “gotcha” violations and one off mishaps from the liability discussion. A provision of the new legislation allows consideration of whether the employer had reviewed and put compliant policies in place. Moreover those in the temporary services and warehouse industry have a new and different set of requirements to meet.

Reassess your overtime payment agreements. AB 2103 amends Labor Code §515 to state that payment of a fixed salary to a nonexempt employee will be deemed to be payment only for the employee’s regular, non-overtime hours, notwithstanding any private agreement or “explicit mutual wage agreement” to the contrary. Why this matters: Any outdated agreements to the contrary could subject employers to significant unpaid overtime, in addition to interest and penalties accrued.

Train payroll personnel on the new California garnishment exemption. In essence, AB 1775 raises the California exemption to $320 per week ($8 per hour times 40 hours per week) and wages above that threshold can be garnished up to 25% of the debtor's disposable income. Why this matters: It is a virtual certainty that it will take time for the courts to learn the new rules and, in light of budget cuts; it is unclear how long it will take. Until that happens the risk of following bad orders and forms will likely fall on the employer honoring the order.

Review Your Dress Code. AB 1964 may be one of those seemingly minor changes that may later cause great mischief. It adds religious dress and grooming practices to the definition of protected religious beliefs and observances and also includes wearing religious clothing and head and face coverings as protected activity. What the governor was aiming at was protection of Sikhs, however it was not and could not be so limited. Why this matters: This is an amendment to California’s Fair Employment and Housing Act (FEHA) that retains its unlimited potential for emotional distress and punitive damages. As has always been the case, religious observance is a potential source of conflict between workers of different faiths. Moreover, this is California with widely divergent notions of what a truly religious practice is and a penchant for activists pushing rights beyond plausible limits.

Review Your Non-Discrimination Policy. We already know that there is a duty to accommodate employees who desire time to express breast milk. AB 2386 now amends the FEHA’s definition of “sex” to include breastfeeding or medical conditions related to breastfeeding. Why this matters: The effect is to make it unlawful for an employer to discriminate against an employee because she is breastfeeding or has medical conditions related to breastfeeding. There is also a mandatory update to the Discrimination and Harassment Notice.

Vetoed Legislation of Potential Relevance to Planning. In prior years, we covered vetoed legislation because the governor was a Republican and the Legislature effectively Democratic and thus how close something came to being law was significant. We resurrect this feature because, at least in theory, the Democratic majority in the senate and assembly could override Governor Brown’s vetoes.

AB 1450—Discrimination Based on Unemployed Status. Originally, the bill was to preclude including in job advertisements that people without current employment need not apply. Given the unemployment rate California has created for itself that would exclude a lot of people. The bill morphed into a bill that would have placed employers at risk for asking about recent employment history or taking it into consideration in making the decision.

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About this Author

James Nelson, Greenberg Traurig Law Firm, Los Angeles, Sacramento, Phoenix, Labor and Employment Attorney

James M. Nelson is Co-Chair of the firm’s National Labor & Employment Practice’s ERISA Litigation team, as well as, Chair of the Sacramento office’s Labor & Employment Practice. He represents employers and ERISA plan fiduciaries in matters concerning ERISA compliance, fiduciary responsibility, collective bargaining, wage and hour, employee benefits, safety, discrimination, wrongful termination, and other labor and employment issues.

His experience includes complex litigation, class action defense, administrative proceedings and appeals,...