This month, California Governor Jerry Brown signed or vetoed several bills of note for California employers.

Penalties for Misclassification as Contractor

Governor Brown signed into law SB 459, preventing California employers from improperly misclassifying workers as independent contractors. Repeat violations carry stiff penalties of up to $25,000 for each violation.

Continued Health Insurance for Pregnancy Disability Leave

Governor Brown also signed into law SB 299, requiring California employers to continue for up to four months employer-provided health insurance to female employees on pregnancy disability leave. In addition to a leave of absence of up to 12 weeks under the FMLA/CFRA (if the employer has 50 or more employees), the existing California disability laws require employers with five or more employees to provide female employees disabled due to pregnancy a leave of absence of up to four months. Prior to the passage of SB 299, many employers provided healthcare coverage up to 12 weeks. However, effective January 1, 2012, California employers must extend the health coverage continuation period to four months for pregnancy related leave. This new law requires employers to maintain and pay for health insurance coverage for up to four months on the same terms as if the employee continued to actively report to work. If the employer pays the entire premium for employee coverage, it must continue to do so for up to four months of pregnancy disability leave. If the employee fails to return from pregnancy disability leave, the employer may recover from the employee the premium that the employer paid unless the reason the employee did not return to work is due to a continuing disability or because the employee has taken leave under the FMLA or CFRA.

California employers should review their policies and procedures related to pregnancy disability leave to ensure compliance with this new law.  

Three Bills Vetoed

In welcome news for employers, Governor Brown vetoed the following plaintiff-friendly employment bills:

  • AB 267, which would have invalidated forum-selection and choice-of-law provisions in employment contracts with California employees;
  • AB 325, which would have required California employer to provide up to 3 days of bereavement leave; and
  • AB 559, which would have authorized attorneys’ fees in small-award discrimination suits