Since becoming governor of California in January 2011, Jerry Brown has signed a number of significant employee-friendly laws, placing an ever-growing burden on California employers. This article will briefly summarize many of the laws.

Misclassification of Independent Contractors (Effective January 1, 2012)

This law prohibits any employers from willfully misclassifying employees as independent contractors and provides civil penalties of not less than $5,000 and not more than $15,000 for each willful misclassification. The law also provides that the civil penalties can be even greater if the employer has engaged in a pattern or practice of misclassification. The law further authorizes the California Employment Development Department (EDD) to process requests for advice regarding classification of independent contractors, called Advice Memos. Employers must maintain, for at least two years, the records of all independent contractors hired. Lastly, any consultants, or any other person (other than attorneys), who knowingly advise an employer to treat a worker as an independent contractor to avoid employee status for the worker shall be jointly and severally liable with the employer if the worker is not found to be an independent contractor.

Wage Theft Protection Act of 2011 (Effective January 1, 2012)

This law requires that all employers provide each non-exempt employee eligible for overtime pay (except public employees and some employees whose employment is covered by a collective bargaining agreement) with a written notice at the time of hire that contains the below-noted information and must be provided in the language the employer normally uses to communicate employment-related information to employees:

  1. The job rate or rates of pay and whether the employer pays by the hour, shift, day, week, salary, piece, commission, or otherwise, including any rates for overtime
  2. Any allowances claimed as part of the minimum wage, such as for uniforms, meals, and lodging
  3. The employer's regular payday
  4. The employer's name, including any “doing business as” names used, address of employer's main office or principal place of business, mailing address, if different, and telephone number
  5. The name, address, and telephone number of the employer’s workers’ compensation insurance carrier

The law also requires employers notify employees of any changes in the above information within seven days of the change. Additionally, the law provides for increases in civil and criminal penalties for wage-related violations, as well as an increase from one to three years for the Department of Labor Standards Enforcement to seek wage-violation-related penalties, but no change in the one-year limit for seeking penalties in private enforcement actions.

It is anticipated that a template that complies with notice requirements will be made available by the labor commissioner by mid-December 2011.

Prohibition on Use of Credit Reports in Most Employment Decisions (Effective January 1, 2012)

This law prohibits employers and prospective employers, except certain financial institutions, from obtaining or relying on consumer credit reports regarding employees or job applicants, unless the position occupied or sought is:

  • A managerial position
  • A position in the state Department of Justice
  • A sworn peace officer or other law enforcement position
  • A position for which the information contained in the report is required by law to be disclosed or obtained
  • A position that involves regular access to specified personal information for any purpose other than the routine solicitation and processing of credit card applications in a retail establishment
  • A position in which the person is or would be a named signatory on the employer’s bank or credit card account, or authorized to transfer money or enter into financial contracts on the employer’s behalf
  • A position that involves access to confidential or proprietary information
  • A position that involves regular access to $10,000 or more of cash  

In addition, to the extent an employee or applicant falls within one of the above categories, an employer must provide written notice to an employee or applicant outlining the basis for requesting the report, identifying the source of the report, and providing an opportunity for the employee or applicant to request a free copy of the report.

Gender Identity and Expression Added to Protected Categories (Effective January 12, 2012)

This law amended the Fair Employment and Housing Act to prohibit discrimination in the workplace based on both gender identity, meaning how the person sees him or herself, and gender expression, meaning how other people view the person. This law further provides that employees be allowed to dress consistently with both the employee’s gender identity and gender expression and that new employee handbooks and trainings explicitly mention that California law does not tolerate any type of gender discrimination.

Genetic Information Added to Protected Categories (Effective January 1, 2012)

This law amended the Fair Employment and Housing Act to prohibit discrimination in hiring or employment based on an individual employee's genetic tests, the genetic tests of the employee's family members, and the manifestation of a disease or disorder in the employee's family members. It has more detailed requirements than those defined in the federal GINA.

Medical Debts Exempt From Wage Garnishment (Effective January 1, 2012)

This law exempts debt that is incurred as a result of hospital services and other medical debts from wage garnishment.

Commission Agreements Must Be in Writing by 2013 (Effective January 1, 2013)

The law requires any employer, regardless of whether the employer is located in California, who enters into a contract of employment to be performed within California involving commissions as a method of payment put the contract in writing. The written agreement must set forth the method by which commissions are computed and paid. Short-term productivity bonuses and bonus and profit-sharing plans, unless the employer offers to pay a fixed percentage of sales or profits as compensation for work performed, are not commissions.

The law also requires the employer to provide a signed copy of the employment agreement to each employee who is a party to it.