Modernize California Civil Rights Act

New legislation makes sweeping changes to the state Fair Employment and Housing Act (FEHA) and significantly transforms the role of the Department of Fair Employment and Housing (DFEH) in civil rights enforcement in the state. To streamline the enforcement of employment and housing discrimination protections under the FEHA, the new law (SB 1038) eliminates the Fair Employment and Housing Commission and replaces it with a Fair Employment and Housing Council within the DFEH, effective January 1, 2013.  

SB 1038 ends administrative adjudication of FEHA claims and authorizes the DFEH to file cases directly in court and collect attorney’s fees and costs, including expert witness fees, when it is the prevailing party in FEHA litigation. Before filing an action, the DFEH will require the parties to participate in mandatory dispute resolution in the Department’s internal Dispute Resolution Division, free of charge.  

In the case of a failure to eliminate an unlawful employment practice through conference, conciliation, mediation, or persuasion, the DFEH has the discretion to bring a civil action in the name of the Department on behalf of the aggrieved claimant. However, the Department must bring such an action in cases involving unlawful housing practices.

Religious Discrimination Protections are Expanded

Under legislation (AB 1964), the protections against religious discrimination under California’s Fair Employment and Housing Act (FEHA) are expanded to include religious dress and grooming practices. FEHA now defines such practices as a protected religious belief or observance that an employer must reasonably accommodate, unless doing so would impose an “undue hardship” on the employer. Undue hardship is defined as an action requiring “significant difficulty or expense” when considered in light of several factors, including the overall financial resources of the facilities involved and the number of employees. AB 1964 also specifies that an accommodation requiring that person to be segregated from the public or other employees is not a reasonable one.  

Commission Agreements Must Comply with New Law

Effective January 1, 2013, AB 1396 requires that all California employers (including both those who have and those who do not have a permanent and fixed place of business in the state) provide written employment contracts to employees providing services within California whenever the employer enters into a contract with the employee and “the contemplated method of payment of the employee involves commissions.” The contract must describe the method by which commissions are computed and paid. Employers must provide a copy of the signed contract to each employee who is a party to the contract, and must obtain a signed receipt for the contract from each employee. Where a contract expires but the parties nevertheless continue to work under its terms, the contract terms are presumed to remain in full force and effect until the contract is superseded or employment is terminated by either party.  

Existing statutory law, which was invalidated on Constitutional grounds by a federal district court (Lett v. Paymentech, Inc.), applies only to employers that do not have a permanent and fixed place of business in California. Additionally, existing Labor Code Section 2752 (making an employer that violates the writtencontract requirement liable in a civil action for triple damages) is repealed by the new law.  

California Labor Code Section 204.1 defines “commission” as “compensation paid to any person for services rendered in the sale of such employer’s property or services and based proportionately upon the amount or value thereof.” But the new law excludes short-term productivity bonuses, such as those paid to retail clerks, as well as bonus and profit-sharing plans, unless the employer has offered to pay a fixed percentage of sales or profits as compensation for work to be performed. Employers should review their commission, bonus and sales incentive plans to assure their commission agreements comply with the new law.

Other Key California Bills Signed into Law

The following chart lists the major pieces of employment legislation introduced in the California State Senate and Assembly during 2012 that were signed into law by Governor Jerry Brown. All of the bills listed become effective January 1, 2013. For more information about a particular bill, see www.leginfo.ca.gov or contact a Jackson Lewis attorney.

Click here to view table.

Updated Minimum Wages and OT Rates

Effective January 1, 2013, the minimum wage rate for employees working in the City of San Francisco will increase to $10.55 per hour, up from $10.24.  

Passing ballot measures, voters also authorized minimum wages in San Jose and Long Beach to increase. The San Jose resolution amends the city’s municipal code to raise the minimum wage from $8.00 to $10.00 per hour beginning March 1, 2013. Starting on January 1, 2014, San Jose’s minimum wage will be adjusted for inflation once a year.  

The Long Beach resolution establishes a minimum wage of $13.00 per hour for employees of nonunionized, large hotels with at least 100 rooms. The measure also requires hotels to provide their employees with at least five days of paid sick leave each year.  

Finally, the voters of Albuquerque, New Mexico, have passed a ballot measure to increase the minimum wage from $7.50 to $8.50 starting January 1, 2013, and increase the cash wage for tipped workers.  

Of course, an increase in the minimum wage means an increase in the corresponding overtime rate as well.  

Arizona’s hourly minimum wage rate will increase to $7.80 (up from $7.65). Colorado’s rate will increase to $7.78 (up from $7.64).  

Overtime Exemption for Software Workers

Section 515.5 of the California Labor Code provides that certain computer software employees who satisfy specific criteria will be exempt from the overtime pay requirements of Labor Code Section 510. One of the required criteria is that the employee’s hourly rate of pay meet a certain threshold. Effective January 1, 2013, the Division of Labor Statistics and Research adjusted the computer software employee’s minimum hourly rate of pay for exemption from $38.89 to $39.90, the minimum monthly salary for exemption from $6,752.19 to $6,927.75, and the minimum annual salary for exemption from $81,026.25 to $83,132.93.

Social Media: Potential Minefield for Employers

As use of social media sites continues to rise, employer attempts to access social media content and passwords from current employees and applicants have come in for mounting criticism. By appearing to threaten private communications, this employer practice has triggered a strong legislative reaction.  

Three states (California, Illinois, and Maryland) have enacted laws that limit when employers may ask for social media passwords and account information from employees and job applicants. Under California’s law, employers may not ask employees or job applicants to disclose a username or password for the purpose of accessing the individual’s personal social media. The law prohibits employers from discharging, disciplining, threatening to discharge or discipline, or otherwise retaliating against an employee or applicant for not complying with such a request or demand.  

However, employers may request that an employee divulge personal social media activity reasonably believed to be relevant to an investigation of allegations of employee misconduct or employee violation of applicable laws and regulations. This applies so long as the social media is used solely for purposes of that investigation or a related proceeding.  

Furthermore, employer responses to employee activity in social media and employer social media policies are receiving intense scrutiny from the National Labor Relations Board. In recent months, the NLRB has received charges of unfair labor practices against both union and non-union employers related to social media policies. A demand for access to an employee’s social media sites also may be seen to interfere with employee rights protected by the National Labor Relations Act. The NLRB has developed guidelines for the “responsible” and “appropriate” use of social media that employers can distribute to employees. The guidelines supplement the May 2012 memo and are at http://www.nlrb.gov/print/4100.