In October 2011, California Governor Jerry Brown approved 22 new employment laws which will impact employers with employees in California. The most significant of the 22 are summarized below:

New Penalties for Worker Misclassification

SB 459 – SB 459 is arguably the most significant of the California employment laws recently passed. Effective January 1, 2012, SB 459 imposes penalties on employers for willful misclassification of employees as independent contractors. Where a willful misclassification is found by the California Labor and Workforce Development Agency or a court, civil monetary penalties of not less than $5,000 and not more than $15,000 may be assessed, in addition to other penalties and fines permitted by law. Where a pattern or practice of willful misclassification is found, civil penalties of not less than $10,000 and not more than $25,000 may be assessed for each violation, in addition to other penalties and fines permitted by law. Moreover, employers are now required to display a notice stating: (1) that it has committed a serious violation of the law by engaging in willful misclassification of employees; (2) that it has changed its business practices in order to avoid committing similar violations and; (3) that any employee who believes that he or she is being misclassified as an independent contractor may contact the California Labor and Workforce Development Agency. The notice must be displayed prominently on the employer’s Internet Web site. If the employer does not have a Web site, the notice must be displayed prominently in an area that is accessible to all employees and the general public at each location where the violation occurred. Additionally, SB 459 authorizes the assessment of monetary, administrative, and disciplinary penalties against employers who charge a fee to an individual who has been willfully misclassified as an independent contractor, or makes any deductions from compensation, for any purpose, if any of those fees or deductions would have violated the law had the individual not been misclassified. Because the penalties for willful misclassification are so severe, employers should be wary of using the independent contractor designation for persons who in fact should be designated as employees. SB 459 adds §§ 226.8 and 2753 to the Labor Code, relating to employment. Click here to view the full text.

New Pregnancy and Other Leave Laws

SB 299 – Current law requires employers (with five or more employees) to allow female employees to take Pregnancy Disability Leave (“PDL”) for a reasonable time of up to four months. An employee is entitled to PDL where she is disabled by pregnancy, childbirth, or a related medical condition. Effective January 1, 2012, SB 299 makes it mandatory for employers to also maintain and pay for health care coverage for the duration of the employee’s PDL, at the same level and under the same coverage conditions that would have been provided had the employee continued in employment continuously for the duration of the leave. Also, employers can recover from employees the health care premiums it paid, where the employee fails to return from leave, so long as the failure to return is not due to the employee taking leave under the Moore- Brown-Roberti Family Rights Act or because of circumstances beyond the employee’s control. SB 299 amends § 12945 of the Government Code, relating to employment. Click here to view the full text.

AB 592 – Effective January 1, 2012, AB 592 makes it an unlawful employment practice for employers to deny eligible employees rights under the Moore-Brown-Roberti Family Rights Act. Such rights include the right to take leave for a reasonable period of time for disabilities related to pregnancy, childbirth, and related medical conditions. Furthermore, AB 592 makes it an unlawful employment practice for employers to refuse to provide reasonable accommodation for an employee who otherwise qualifies for reasonable accommodation. AB 592 amends §§ 12945 and 12945.2 of the Government Code, relating to employment. Click here to view the full text.

New Wage & Hour Laws

AB 469 – Current law requires employers to post specified wage and hour information in a conspicuous location where employees can see it. Effective January 1, 2012, AB 469 requires employers to provide a notice that specifies such information to each newly hired employee, at the time of hiring. The information required to be disclosed includes: the rate and basis of employee pay, whether paid by the hour, shift, day, week, salary, piece, commission, or otherwise; allowances claimed as part of the minimum wage, if any; the employer’s designated payday; the name of the employer; the physical address of the employer’s main office or principal place of business; the employer’s telephone number; the name, address, and telephone number of the employer’s workers’ compensation insurance carrier; and any other information the Labor Commissioner deems necessary. Employers should note that the Labor Commissioner will create a template for the notice which will be available to them in a manner determined by the Labor Commissioner. Under AB 469, employers must also provide written notice to employees of any changes to the information disclosed in the notice within seven calendar days of the changes, unless the changes are reflected in another writing. Furthermore, the new law imposes more stringent penalties and requirements on employers with respect to wage violations than those imposed by current law. AB 469 adds § 2810.5 to the Labor Code, relating to employment. Click here to view the full text.

AB 1396 – Effective January 1, 2013, AB 1396 states that where an employee renders services within the state and is compensated by commission, employers must provide that employee with a signed a written contract that sets forth the method by which the commissions will be computed and paid. The employer must obtain a signed receipt for the contract from each employee. Where a contract expires and the employee continues to work under its terms, the terms are presumed to remain in effect until the contract is superseded or the employment relationship terminates. AB 1396 amends § 2751 of the Labor Code, relating to employment, and repeals § 2752. Click here to view the full text.

New Laws Related to Discrimination

SB 757 –SB 757 mandates that employers are prohibited from discriminating between spouses or domestic partners of a different sex and those in same-sex marriages or same-sex domestic partnerships in regards to health care coverage. SB 757 amends § 1374.58 of, the Health and Safety Code and adds § 1367.30. It also amends §§ 10112.5 and 10121.7 of the Insurance Code, relating to discrimination. Click here to view the full text.

AB 887 – AB 887 amends the California Fair Employment and Housing Act (“FEHA”) to explicitly prohibit discrimination based on “gender identity” and “gender expression.” “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.” Thus, under AB 887, employers must allow employees to dress or appear consistent with that employee’s gender identity and gender expression. Discrimination policies should be updated accordingly. Click here to view the full text.

New Employee Screening Law

AB 22 – Effective January 1, 2012, AB 22 prohibits employers and prospective employers from using consumer credit reports to screen applicants or to make other employment decisions. Eight positions are excepted from this requirement including managerial and law enforcement positions, and positions that involve sensitive information or access to $10,000 or more of cash. Prior state law permitted employers to request credit reports for employment purposes so long as written notice was presented to the person for whom the report was sought. AB 22 amends § 1785.20.5 of the Civil Code and adds Chapter 3.6 to Part 2 of Division 2 of the Labor Code, relating to employment. Click here to view the full text.

Limitation on Employer Use of E-Verify

AB 1236 – AB 1236 states that California employers cannot be required by the state or local government, or by special districts, to use federal electronic employment verification systems, specifically E-Verify, to verify that their employees are authorized to work in the United States. However, employers may be required to use E-Verify when required by federal law or as a condition of receiving federal funds. One of the goals of AB 1236 is to save employers the cost, technological demands, staff time, litigation, and investigation expenses associated with employment verification systems. AB 1236 adds Article 2.5 to Chapter 2 of Division 3 of the Labor Code, relating to employment. Click here to view the full text.