Gov. Jerry Brown has had his first opportunity (this time around) to weigh in on changes to California’s employment laws. Not surprisingly, he has signed into law several bills that expand the protection of employees—some of which previously had been vetoed by Gov. Schwarzenegger. Key areas affected include credit checks, notices to new hires about pay rates, paid health benefits during pregnancy leave, e-verification, and genetic information discrimination.  

EFFECTIVE JAN. 1, 2012

Credit Checks Prohibited for Most Positions - AB 22

With few exceptions, employers are banned from obtaining or using credit information (so-called “consumer reports”) about applicants and employees for any employment purpose. The only exceptions are:

  • Positions that qualify for the “executive” exemption from overtime;
  • Positions for which credit information is required by law to be disclosed or obtained;
  • Positions that involve regular access to people’s bank or credit card account information, social security numbers, and dates of birth (other than in connection with routine solicitation of credit card applications in a retail establishment);
  • Positions where the employee would be a named signatory on the employer’s bank or credit card account, authorized to transfer money on behalf of the employer, or authorized to enter into financial contracts on behalf of the employer;
  • Positions that involve regular access during the workday to cash totaling $10,000 or more belonging to the employer, a customer, or a client;
  • Positions that involve access to “trade secrets” as defined in the California Civil Code.  

Even as to positions where credit checks are permitted, the notice and procedural requirements of California and federal law still must be satisfied.

Employer Information and Pay Rate Notice Mandated for New Hires - AB 469

In addition to lengthening the statute of limitations and strengthening the penalties for certain wage claims, the new Wage Theft Protection Act requires employers to provide a written notice to every newly hired non-exempt employee except those covered by union contracts that meet certain criteria. The notice must contain the following information:

  • The employer’s name, including any “doing business as” names, physical address of the main office or principal place of business and mailing address if different, and telephone number;
  • The employee’s rate or rates of pay, including overtime rates, and the basis of the employee’s pay (that is, by the hour, shift, day, week, piece, commission, or otherwise);
  • Any allowances claimed by the employer against the minimum wage, including meal or lodging allowances;
  • The employer’s regularly established payday;
  • The name, address, and telephone number of the employer’s workers’ compensation insurance carrier; and
  • Any other information the Labor Commissioner deems material and necessary.

The Labor Commissioner is instructed to prepare a template that complies with these notice requirements.

Employees who receive this notice must be notified of any changes to the information within seven calendar days, either in a separate writing or on the employee’s paystub.

Payment of Premium for Health Insurance Required During Pregnancy Leaves - SB 299

Currently, employers must continue to pay the premium for health insurance coverage for employees on leave under the Family Medical Leave Act (FMLA) and/or the California Family Rights Act (CFRA) to the same extent as the employer pays for such insurance for active employees. This new law extends the requirement to employees on leave for pregnancy disability under the Pregnancy Disability Act (PDA). The impact of this law is as follows:

  • FLMA and CFRA apply only to employers having 50 or more employees; the PDA applies to employers having only five or more employees.
  • Only employees who have been employed for at least a year and have worked at least 1,250 hours during the previous 12 months are eligible for FMLA and CFRA leave; all employees disabled by pregnancy are eligible for leave under the PDA.
  • FMLA and CFRA protection extends only for 12 weeks during a 12-month period; the new law extends the health insurance premium obligation for up to four months. The 12 weeks of FMLA and CFRA protection is subsumed within the four-month PDA obligation, however, so the obligation is for a total maximum of four months per 12-month period.  

Anti-Retaliation Protection for Leaves of Absence Strengthened - AB 592

This law makes it clear that employers are prohibited from interfering with employees’ rights to take leaves of absence under the Pregnancy Disability Act and the California Family Rights Act, including by restraining or attempting to restrain them from taking a leave, and by retaliating against them when they do.

Prohibition Against Genetic Discrimination Expanded - SB 559

The protection against discrimination on the basis of genetic characteristics is expanded to include discrimination based on “genetic information,” which is defined as:

  • An individual’s genetic tests;
  • Genetic tests of the individual’s family members; and
  • Any manifestation of a disease or disorder in a family member of the individual.

Prohibition Against Gender Discrimination Expanded - AB 887

The definition of “gender” as used in anti-discrimination laws is expanded to include “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.” California employers will be required to allow employees to appear and to dress consistently with their gender expression regardless of their physical gender.

Penalties for Willful Misclassification of Independent Contractors Enhanced - SB 459

In addition to previously existing fines and penalties, an employer that willfully (defined as voluntarily and knowingly) misclassifies an employee as an independent contractor is subject to stiff new penalties: fines of up to $25,000 per violation, and the obligation to “display prominently on its Internet website, in an area accessible to all employees and the general public,” a notice that includes certain specific information, including the assurance that the employer has “changed its business practices” to avoid future violations of the law. Liability extends not only to employers, but also to non-lawyer consultants who knowingly advise the employer to make what turns out to be an erroneous independent contractor classification.

State Agencies and Local Government Prohibited from Requiring E-Verify - AB 1236

This law prohibits California state agencies and local governments from requiring employers to use an electronic employment verification system, such as the federal E-Verify program, for any purpose. Employers may choose to use such programs, but no California ordinance, licensing requirement, law, or regulation can require it.

Work Permit Program for Minors in the Entertainment Industry - AB 1401

Previously, written consent from the Labor Commissioner was required before a minor under the age of 16 could take part in certain types of employment in the entertainment industry. This new law establishes a program, administered by the Labor Commissioner, enabling the minor’s parent or guardian to obtain a temporary work permit for the minor prior to the minor’s first employment, in anticipation of such employment.

EFFECTIVE JAN. 1, 2013

Commission Pay Arrangements Require Written Contract - AB 1396 

Employers who pay commissions must put the commission arrangement into a written contract stating the precise method by which commissions will be computed and paid. A signed copy of the contract must be provided to each employee covered by it, and the employer must obtain a signed receipt from the employee. If the contract expires and the parties continue working under it, the terms will remain in effect until superseded or terminated in writing. “Commissions” do not include short-term productivity bonuses or profit-sharing plans unless the employer intends to pay a fixed percentage of sales or profits.

Mandatory Safe Patient Handling Policy - AB 1136

The California Occupational Safety and Health Act will require employers of health care employees to adopt training programs and injury prevention plans to protect those employees from back and musculoskeletal injuries. In addition, acute care hospitals must provide trained lift teams or other support staff trained in safe lifting techniques.

Advice/Counseling

If you have questions about how any one of these new laws may impact your company’s operations, our experienced team of California-based employment lawyers, in San Francisco and Los Angeles, is ready to assist you.