In September 2012, California Governor Jerry Brown signed into law several bills that will impact all employers with California employees. Employers should review these new laws and adjust their policies and practices as needed to ensure compliance by January 1, 2013, when many of the new laws become effective. Below are overviews of the new requirements.

Employment contract requirements, AB 1396

On January 1, 2013, AB 1396 will take effect. AB 1396 provides that when an employee renders services within the state and is compensated by commission, employers must provide that employee with a signed 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. When 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and the employee continues to work under its terms, the terms are presumed to remain in effect until the contract is superseded or the employment relationship terminates.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 Section 2751 of the California Labor Code, relating to employment, and repeals Section 2752.

Employment contract requirements, AB 2675

As of January 1, 2013, California Labor Code Section 2751 will be amended such that any employment agreement involving commission payments will have to be put into writing with a signed copy of the agreement be given to the employee. AB 2675 clarifies that “commissions,” as used in Section 2751, does not include“[t]emporary, variable incentive payments that increase, but do not decrease, payment under the written contract.”

Employee compensation: itemized statements, AB 1744

On July 1, 2013, AB 1744 will take effect and amend California Labor Code Section 226, imposing additional requirements on temporary service employers for itemized wage statements and notices of hire. First, AB 1744 will require temporary services employers to include in their employees’ itemized statements the rate of pay and the total hours worked for each assignment, with a specified exception. It will also require temporary services employers to include in the California Labor Code 2810.5 notice given at the time of hire the name, the physical address of the main office, the mailing address if different from the physical address of the main office, and the telephone number of the legal entity for whom the employee will perform work, and any other information the Labor Commissioner deems material and necessary.

Unemployment insurance: use of employer reports: reporting and payroll: enforcement, AB 1794

AB 1794 makes it a misdemeanor for a licensed contractor or a qualifier for a license to fail to notify his or her worker’s compensation insurance carrier within 15 days of hiring an employee. On or after January 1, 2013, this bill will also require any contractor’s workers’ compensation insurers to require the contractor to report the hiring of new workers within 15 days. These provisions will extend until January 1, 2015.

Employer use of social media, AB 1844

Effective January 1, 2013, AB 1844 prohibits employers from requiring or requesting that an employee or applicant disclose usernames or passwords for the purpose of accessing personal social media; accessing personal social media in the presence of the employer; or divulging any personal social media. However, where the information is reasonably believed to be relevant to an investigation of allegations of employee misconduct or illegal conduct, an employer may request or require such information so long as it is used solely for purposes of that investigation or a related proceeding.

Employment: contractors: sufficient funds, AB 1855

Effective January 1, 2013, AB 1855 amends California Labor Code Section 2810 to extend to warehouse contractors, existing law prohibiting parties entering into a contract or agreement for labor or services if the person or entity knows or should know that the contract or agreement does not include sufficient funds to allow the contractor to comply with all local, state, and federal laws or regulations governing the provided labor or services. AB 1855 also requires the person entering into a written agreement or contract to provide a copy of the provisions of the contract or agreement to the Labor Commissioner as well as any other specified documentation, if the Labor Commissioner so requests. Documents received by the Labor Commissioner pursuant to this requirement from the California Public Records Act are exempt.  

FEHA amendment, AB 1964

Effective January 1, 2013, FEHA will be amended to clarify that the standard for undue hardship under California law is “significant difficulty or expense” not the lower “de minimis” standard which is applied under federal law. Also, an employer will be required to reasonably accommodate the religious clothing and hairstyles of an individual, unless the accommodation would be an undue hardship on the conduct of the business of the employer or other entity. Lastly, an employer will be prohibited from segregating an employee from customers and the public to accommodate an employee’s religious beliefs.

Employment: wages and hours: overtime, AB 2103

Effective January 1, 2013, AB 2103 amends California Labor Code Section 515 and states that payment of a fixed salary to a non-exempt employee will be deemed compensation only for the employee’s regular, non-overtime hours, notwithstanding any contrary private agreement.

Employment and housing discrimination: sex: breastfeeding, AB 2386

Effective immediately, AB 2386 revises the definition of “sex” under FEHA to include breastfeeding or medical conditions related to breastfeeding.

Employment records: right to inspect, AB 2674

Effective January 1, 2013, AB 2674 expands current law by requiring that employers maintain personnel records for a minimum of three years after termination of employment. It also mandates that employers provide current and former employees with the opportunity to inspect those records within 30 calendar days from the date the employer receives a written request. An employer who fails to comply with the new law may be penalized $750 to be recovered by the Labor Commissioner, in addition to injunctive relief and reasonable attorney fees.

State government, SB 1038

Effective January 1, 2013, SB 1038 eliminates the Fair Employment and Housing Commission, transfers its duties and powers to, and creates the, Fair Employment and Housing Council within the Department of Fair Employment and Housing (“DFEH”). It expands the DFEH’s powers related to complaints, mediations, and prosecutions, including, but not limited to that it authorizes the DFEH to prosecute actions under FEHA in civil court. It also provides for mandatory, free dispute resolution for the parties involved in a lawsuit.

Employee compensation: itemized statements, SB 1255

Effective January 1, 2013, SB 1255 provides that an employee is deemed to suffer injury under California Labor Code Section 226’s penalty provision—which entitles employees to recover the greater of all actual damages or a specified sum, not exceeding an aggregate penalty of $4,000 and an award of costs and reasonable attorney’s fees— if the employer fails to provide a wage statement. This penalty also applies if an employer fails to include accurate and complete information in the wage statement including the amount of the gross or net wages paid to the employee during the pay period or other specified information, deductions from the gross wages to determine the employee’s net wages for the pay period, the name and address of the employer or legal entity that secured the services of the employer, the name of the employee, and only the last 4 digits of his or her social security number or an employee identification number other than a social security number.