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California Law Changes Employers' Work-Sharing Plans

By Michael S. Kalt  9/18/2013

The deadline for the California Legislature to pass bills expired on Sept. 13, 2013, and there are a number of legislative developments potentially impacting employers and employees. In fact, even before this deadline, the Legislature had passed and Gov. Jerry Brown had signed into law several employment-related bills including:

Changes Regarding Work-Sharing Plans Used by Employers to Avoid Layoffs (AB 1392)

California and federal law allows employers to participate in the work sharing unemployment compensation benefits program which makes employees eligible to receive a reduced amount of unemployment compensation benefits if their work hours are reduced by more than 10 percent. (For example, employers have used these programs to effectuate a 20 percent reduction of the workforce by reducing full-time employees to four-day workweeks rather than laying off 20 percent of its employees).

This newly enacted bill applies to work sharing plans that became effective before July 1, 2014, and is intended to conform California’s work sharing program to the federal requirements contained in the federal Middle Class Tax Relief and Job Creation Act of 2012. For instance, this bill reduces the maximum cut in employee hours permitted in work sharing programs from 90 percent to 60 percent of the employee’s usual weekly hours. It also requires participating employers providing health or retirement benefits to continue those benefits for the duration of the program as if the affected employees were working normal hours.

It also imposes new reporting obligations for employers to obtain approval for the work sharing plan, including (a) disclosing how the employer will notify employees of the work sharing plan, (b) estimating the layoffs averted by implementing a work sharing plan, and (c) certifying their participation in the work sharing plan is consistent with the employer’s obligations under state and federal law.

This new law also allows employees in the work sharing program to participate in training approved by the Employment Development Department, including employer required training or training funded through the Workforce Investment Act.

Other enacted laws include:

*A revised definition of “sexual harassment” under the Fair Employment and Housing Act (SB292).

*A new limit on attorney’s fees for prevailing employers in certain wage and hour disputes (SB 62).

*Expanded time off for training purposes for reserve peace officers and emergency rescue personnel (AB 11).

*A new limit on employer credits against prevailing wage obligations (SB 776).

A number of other significant employment-related bills have been sent to Gov. Brown for signature or veto including:

*An increase in California’s minimum wage (AB 10).

*Limits on criminal background checks for public employers (AB 218).

*Fair Employment and Housing Act (FEHA) amendments to protect military and veterans (AB 556) and to specify remedies available in so-called “mixed motive” case (AB 655).

*Additional protections, including accommodation obligations, for victims of stalking and certain serious crimes (SB 288 and SB 400).

*New retaliation safeguards, particularly for “immigration-related practices” (AB 263 and SB 666).

*A new privilege protecting communications between employees and their union representatives (AB 729).

Most of these measures passed the Legislature with overwhelming support, which suggests many of these bills may soon be signed into law. Indeed, Gov. Brown has already stated his support for increasing California’s minimum wage, and the final version forwarded to him included his office’s suggested amendments.

The deadline for Gov. Brown to sign or veto any of these bills is Oct. 13, 2013.

Below is a list, organized largely by subject matter, of the key employment-related bills potentially affecting private employers, along with a status update:

Bills Signed Into Law

New Limits on Attorneys’ Fees for Prevailing Employers in Certain Wage and Hour Disputes (SB 462)

Labor Code section 218.5 previously provided that a prevailing party in an action for the “nonpayment of wages, fringe benefits, or health and welfare or pension fund contributions” was entitled to recover reasonable attorneys’ fees. Notably, unlike some other attorneys’ fees provisions, this particular statute did not specifically impose different standards upon prevailing employees and employers who sought to recover attorneys’ fees. A recent California Supreme Court decision (Kirby v. Immoos Fire Protection Inc. (2012) 53 Cal.4th 1244) also left open the possibility that prevailing employers may have the same right as prevailing employees to recover attorneys’ fees under section 218.5.
Gov. Brown signed this new law, which is intended to foreclose that possibility by amending section 218.5 to permit a prevailing party that is not an employee (presumably an employer) to recover attorneys’ fees and costs only if the court finds that the employee brought the action in “bad faith.” In effect, this bill makes Labor Code section 218.5 consistent with some other attorneys’ fees provisions wherein prevailing employees are entitled to recover fees as a matter of right, and prevailing employers may only recover by demonstrating the action was essentially frivolous. This bill does not affect Labor Code section 1194, which utilizes a separate one-way attorney fee provision for minimum wage and overtime claims.

FEHA Sexual Harassment Need Not Be Motivated by Sexual Desire (SB 292)

California’s FEHA precludes harassment based on certain statutorily-enumerated bases, including “sex.” Government Code section 12940(j)(4)(C) previously defined “harassment because of sex” to include “sexual harassment, gender harassment, and harassment based on pregnancy, childbirth or related medical conditions.”

This new law amends this definition to specify that “sexually harassing conduct need not be motivated by sexual desire.” This bill was intended to clarify the legal standard for demonstrating sexual harassment following a recent appellate court decision (Kelley v. Conco Companies (2011) 196 Cal.App.4th 191), which had dismissed a same-sex harassment case because the plaintiff could not demonstrate his supervisor was sexually interested in him. According to the bill’s authors, it returns California law to the pre-Kelley standard wherein a plaintiff may demonstrate harassing conduct was of a sexual nature through three evidentiary routes: (1) by showing sexual intent or desire on the harasser’s part towards the plaintiff; (2) by showing general hostility by the harasser towards a particular sex of which the plaintiff is a member; or (3) through comparative evidence about how the alleged harassment treated members of both sexes in a mixed-sex workplace.

Expanded Time Off for Training for Firefighters, Reserve Peace Officers and Emergency Rescue Personnel (AB 11)

This new law corrects a slight discrepancy between Labor Code sections 230.3 and 230.4 regarding time-off for reserve emergency personnel for training purposes.

Previously, Labor Code section 230.3 protected reserve firefighters, peace officers or emergency rescue personnel who took time off for emergency duty, but Labor Code section 230.4 only entitled reserve firefighters to job-protected leave for firefighting training. This bill amends Labor Code section 230.4 to require employers with 50 or more employees to permit an employee who performs emergency duty as a volunteer firefighter, reserve peace officer, or as emergency rescue personnel, as defined, to take up to 14 days of job-protected leave per calendar year for the purpose of engaging in fire, law enforcement or emergency rescue training.  

New Limits on Employer Credits on Prevailing Wage Obligations (SB 776)

Labor Code section 1773.1 enumerates various credits employers may claim against their obligation to pay per diem wages, including payments for pension, health and welfare, and vacation. Section 1773.1 specifies these credits do not reduce the employer’s obligation to pay the hourly straight time or overtime wages found to be prevailing, and no credit is permitted for benefits required by state and federal law.

This law establishes an additional restriction on credit granted for employer payments made to monitor and enforce public works. Specifically, it prohibits credit from being granted for employer payments made to monitor and enforce laws related to public works if those payments are not made to a program or committee established under the federal Labor Management Cooperation Act of 1978.

This bill also conforms state law to federal law by providing that qualifying fringe benefit payments may constitute a credit, even if not made during the same period for which the credit is taken, if the employer regularly makes those payments on no less than a quarterly basis.

Bills Sent to Gov. Brown

The following bills have passed the Legislature and been sent to Gov. Brown for veto or signature by Oct. 13, along with, where applicable, some insights regarding the likelihood of the bills being enacted into law.

Minimum Wage to Increase by $2.00 by January 2016 (AB 10)

This bill increases California’s minimum wage from $8.00 to not less than $9.00 as of July 1, 2014, and from $9.00 to not less than $10.00 as of Jan.1, 2016. When originally introduced, this bill contemplated annual adjustments beginning in 2017 based upon the California Consumer Price Index, but subsequent amendment omitted this provision.  (If enacted, this increase in the hourly minimum wage would increase the monthly and annual salary needed to maintain the “salary basis” portion of the test for exempt employees).

While similar versions of this bill have stalled in recent years (ex. AB 196 [2012]), several California municipalities and other states have increased their minimum wage and California has not increased its minimum wage for several years. Governor Brown has also stated he supports this bill suggesting it will soon be signed into law. .

Successor Liability for Farm Labor Contractor Wage and Hour Violations (SB 168)

Presently, a “farm labor contractor” (FLC) must be licensed by the Labor Commissioner, and those who fail to comply with specified employment laws may be guilty of a misdemeanor punishable by statutorily-enumerated fines or imprisonment, or both. This bill would make a successor to any farm labor contractor that owed wages or penalties to a former employee of the predecessor farm labor contractor liable for those wages and penalties if the successor meets any of certain specified criteria. These criteria would include (a) using substantially the same or similar physical facilities or workforce as the predecessor, (b) sharing common management or interrelation of business operations with the predecessor, or (c) employing predecessor managers responsible for controlling wages, hours, or working conditions of employees owed wages or penalties by the predecessor.

A recent amendment would provide that a successor that has operated with a valid license for at least the preceding three years shall have an affirmative defense to liability for using substantially the same workforce, if all of the following apply: (a) the individuals in the workforce were not referred or supplied for employment by the predecessor FLC; (b) the licensed FLC asserting the defense has not had any interest in, or connection with, the operation, ownership, management or control of the business of the predecessor FLC within the preceding three years; and (c) the licensed FLC asserting the defense has not been determined to have violated any Labor Code provisions within the preceding three years.

The bill’s proponents argue it is intended to prevent non-compliant contractors from simply reorganizing to avoid liability, and that it would essentially adopt the same “successor liability” factors used in the car washing and garment industries to prevent wage theft (e.g., Labor Code section 2066 authorizing successor liability for predecessor wage violations in car washing industry [scheduled for repeal in 2014]). Opponents argue this bill is well-intentioned but over broad and ambiguous, and suggest using the “bona fide successor” standard for liability, which requires the successor had adequate notice of the predecessor’s potential liability.

This bill passed the Legislature along party-line votes.

Rest Period Protections to be Expanded, Including to Employee “Recovery Periods” (SB 435)

Labor Code section 226.7 presently prohibits employers from requiring employees work during meal and rest periods mandated by the Industrial Welfare Commission (IWC), and identifies a penalty of one additional hour of pay at the employee’s regular rate of pay for each violation. In addition to the IWC Orders and Labor Code section 226.7, the Heat Illness Prevention regulations adopted by the Occupational Safety and Health Standards Board (OSHA) in 2005 have an additional requirement regarding a “recovery period” applicable to all outdoor places of employment. (See, 8 CCR § 3395.) These regulations, which are codified at 8 CCR § 3395, allow and encourage outdoor employees to take a cool-down rest in the shade for a period of no less than five minutes at a time when they feel the need to so to protect themselves from overheating. Although employers are increasingly complying with these heat illness prevention regulations, employee groups note that presently the only remedy for denial of a recovery period is a citation by the Department of Occupational Safety and Health (DOSH).

To further increase compliance, this bill amends Labor Code section 226.7 to prevent employers from requiring employees to work during any “recovery period” mandated by any applicable statute, regulation, standard or order of OSHA or DOSH. This bill defines “recovery period” as “a cool down period afforded an employee to prevent heat illness.” This bill further specifies that the provision requiring an employer to pay an additional hour of pay at the employee’s regular rate of pay for each day that a meal or rest period is not provided will also apply to work days that a “recovery period” is not provided.

A recent amendment clarifies that amended section 226.7 would not apply to an employee who is exempt from meal or rest or recovery period requirements pursuant to other state laws, including a statute, regulation or IWC order.

Two fairly similar versions of this bill (SB 1538 and AB 755) passed the Legislature but were vetoed by Gov. Schwarzenegger in 2004 and 2005.

Liquidated Damages Proposed for Labor Commissioner Investigations (AB 442)

Labor Code sections 98, 1193.6 and 1194 collectively authorize an employee paid less than the statutorily-required minimum wage to recover these wages through a civil action or an administrative hearing. An employee successful through either such a civil action or an administrative hearing is also entitled to recover liquidated damages equal to the wages unlawfully unpaid plus interest.

In addition to these civil actions or administrative proceedings, Labor Code section 1197.1 authorizes the Labor Commissioner to issue a citation during its own investigation directing an employer or person to pay any minimum wages not properly paid. However, through an oversight in Legislative drafting, the Labor Code does not presently authorize the Labor Commissioner to award the liquidated damages for violations it uncovers during its investigation that it could award if an employee initiated a civil action or administrative proceeding. This bill closes this loophole by slightly amending sections 1194.2 and 1197.1 to allow employees to recover liquidated damages for citations issued by the Labor Commissioner for Labor Code violations.

This bill overwhelmingly passed the Legislature and is likely to be signed into law by Gov. Brown.

Expansion for “Paid Family Leave” Benefits (SB 770)

Since 2004, California has provided up to six weeks of wage replacement benefits to workers who take time off work to care for a seriously ill child, spouse, parent, domestic partner, or to bond with a minor child within one year of the birth or adoption of the child. (See Insurance Code § 3301).  While often referred to as “paid family leave,” this program is funded by additional worker contributions to the Unemployment Compensation Disability Fund and essentially provides “wage replacement” benefits during an already-provided leave.

This bill would, beginning on July 1, 2014,expand the scope of the family temporary disability program to allow workers to receive these partial-wage-replacement benefits while caring for seriously ill grandparents, grandchildren, siblings or parents-in-law, as defined. The bills proponents argue the current definition of “family” is too narrow and fails to reflect California’s changing demographics. Opponents argue this bill would provide wage replacement benefits for leaves beyond those leaves already covered by the Family and Medical Leave Act/ California Family Rights Act, thus creating a de facto new form of leave, and create a significant increase in claims to the Disability Insurance Trust Fund.

This bill passed the Legislature largely along party-line votes. A similar bill (SB 727) passed in 2007 but was vetoed by then-Gov. Schwarzenegger.

Extended Statute of Limitations and Additional Remedies Proposed for Prevailing Wage Violations (AB 1336)

Labor Code section 1771.2 authorizes the Labor Commissioner or a “joint labor-management committee” to bring an action against employers who fail to pay prevailing wages as required by state law. This bill would extend the current deadline from 180 days to 18 months for the Labor Commissioner to serve a civil wage and penalty assessment and a joint labor-management committee to bring an action against an employer who fails to pay the prevailing wage.

The bill would also revise the available remedies, and authorize the court in such civil actions to award restitution to an employee for unpaid wages plus interest, liquidated damages equal to the amount of unpaid wages owed, and other specified civil penalties, injunctive relief or any other appropriate form of equitable relief. The court would also be required to award a prevailing joint labor-management committee its reasonable attorneys’ fees and costs in maintaining the action, including expert witness fees. Liquidated damages would only be awardable, however, if the complaint alleges with specificity the wages due and unpaid to the individual workers, including how that amount was calculated, and the defendant fails to pay or deposit these wages within 60 days of service of the complaint.

Newly amended section 1771.2 would also specify that an action brought pursuant to this section shall not be based on the employer’s misclassification of the craft of a worker in its certified payroll records.

This bill would also make slight amendments to Labor Code section 1776 regarding the certified payroll record information employers must provide upon request by a joint labor-management committee or a multi-employer trust fund. For instance, employers providing a copy of certified payroll records to a joint labor-management committee would only redact the individual’s social security number, but not the name as presently permitted. Proponents argue preventing employers from redacting the worker’s name will make it easier for the committee to investigate and prevent wage theft.

Similarly, employers providing such payroll records to a multi-employer Taft-Hartley trust fund would no longer redact the full social security number, but instead would redact all but the last four numbers of an individual’s social security number. Proponents argue this change will make it much easier to track and ensure the correction allocation of health benefit and pension contributions to workers for which the contributions were made.

Penalties for Employer’s Failure to Remit Employee Wage Withholdings (SB 390)

Currently, Labor Code section 227 makes it a crime for an employer to fail to make agreed-upon payments to health and welfare funds, pension funds, or various benefit plans, with violations exceeding $500 deemed a felony, and those below $500 a misdemeanor. Due to a concern many employers were withholding but not remitting these payroll taxes, this bill would expand section 227 to specify that it will also be a crime for employers to fail to remit withholdings from an employee’s wages that were made pursuant to state, local or federal law. This expansion would thus enable the Labor Commissioner to pursue criminal misdemeanor prosecution against employers who fail to remit payroll taxes.

Violations of this new provision shall be punishable by imprisonment in a county jail for a period of not more than one year, by a fine of not more than $1,000, or both. A recent amendment provides that in any such criminal proceeding, the recovered withholdings shall be forwarded to the appropriate plan or fund, and if restitution is imposed, the court shall direct to which agency, person or entity it shall be paid.

Labor Commissioner to File Liens Against Employer’s Real Property (AB 1386)

This bill is intended to streamline the collection process for final orders issued by the Labor Commissioner for unpaid wages. Previously, Labor Code section 98.2 required the Labor Commissioner to file a final order with the clerk of the superior court of the appropriate county within 10 days of the order, decision or award becoming final (as defined). This provided a judgment in the employee’s favor (i.e., a legal determination the employee was the prevailing party), but the judgment by itself did not create a legal obligation to pay the amounts owed.

Accordingly, this bill amends Labor Code section 98.2 to create a lien upon real property as an alternative to the judgment lien under prior California law. If enacted, the Labor Commissioner would be able to record a certificate of lien for amounts due under the final order with the county recorder of any county in which the employer’s real property may be located based upon information the Labor Commissioner obtains concerning the employer’s assets.  This lien would attach to all interests in real property of the employer located in the county where the lien is created to which a judgment lien may attach, and unless satisfied or released, shall continue for 10 years from the lien’s creation. If the employer pays the amounts due, the Labor Commissioner shall issue a certificate of release, which may be recorded at the employer’s expense.

Overtime Compensation for Personal Attendants and Labor Protections Proposed for Domestic Workers (AB 241)

Last year, the Legislature passed, but Gov. Brown vetoed, AB 889 which would have required the Department of Industrial Relations (DIR) to adopt by January 2014 regulations concerning the working conditions of “domestic work employees.” The Governor’s veto message cited a concern about adopting extensive new regulations concurrently with the DIR’s plan to conduct studies regarding the regulations impact, and he cited a preference for the studies to be conducted first.

Titled the Domestic Worker Bill of Rights, this bill would until January 2017 regulate the hours of work and provide an overtime compensation rate for certain “domestic work employees,” albeit on a considerably narrower basis than when originally introduced. For example, when originally introduced, this bill broadly proposed to regulate many aspects of domestic worker employment, including creating a right to overtime compensation, creating meal and rest period requirements for personal attendants and creating sleep and lodging guidelines for live-in domestic employees. However, in response to substantial opposition, this bill has been pared back considerably, although it is foreseeable that many now-omitted portions of this bill may resurface.

As amended, this bill currently defines various terms for purposes of a future more comprehensive “Domestic Worker Bill of Rights.” For instance, it defines “domestic work employees” as individuals who perform domestic work and includes live-in domestic work employees and personal attendants. “Domestic work” in turn is broadly defined as services related to the care of persons in private households or maintenance of private households or their premises, and would include childcare providers, caregivers, housekeepers, housecleaners and other household occupations. This definition includes numerous exceptions such as persons providing services through the In-Home Supportive Services (IHSS) program, family members, babysitters under the ages of 18, “casual babysitters” (as defined), and persons employed by a licensed health facility.

“Domestic work employers” is also broadly defined as persons, including corporate officers or executives, who directly or indirectly, or through an agent or any other person, including through the services of a third-party employer or staffing agency, employs or exercise control over the wages, hours, or working conditions of a domestic work employee. This definition would not include, however, the State of California, individuals receiving domestic work services through the IIHS program, employment agencies that operate solely to procure or attempt to provide work to domestic workers, or licensed health facilities.

As mentioned, while the final version of this bill retains these definitions for potential future use, it omits almost all of the substantive labor protections contemplated by the original version. Instead, it requires the governor to convene a committee composed of personal attendants and their employers (and their respective representatives) to study and report on the effects of this new law on personal attendants and their employers.

The bill does contain one substantive change, contained in new Labor Code section 1454, entitling a domestic work employee who is a personal attendant to overtime at one-and-a-half times their regular rate of pay for all hours worked beyond nine hours in a day and forty-five hours in a workweek. “Personal attendant” would be defined in new Labor Code section 1454(d) as a “person employed by a private household or by any third-party employer recognized in the health care industry to work in a private household, to supervise, feed, or dress a child, or a person who by reason of advanced age, physical disability, or mental deficiency needs supervision.” This section notes this status applies when the personal attendant did not spend a “significant amount of work” (exceeding 20 person of the total weekly hours worked) on other tasks.

FEHA Amendment to Prohibit Harassment or Discrimination Based on Military and Veteran Status (AB 556)

This bill amends the Fair Employment and Housing Act to protect active duty military and veterans, and largely is intended to make current state law more consistent with federal law. For instance, whereas previously the federal law (USERRA) prohibited discrimination against “military and veterans,” California’s Military and Veterans Code only applied to active duty military. However, rather than simply amending California’s Military and Veterans Code, this amends FEHA to add “military and veteran” status to the list of protected classifications, meaning it will be unlawful to harass or discriminate because of an individual’s military or veteran status. Notably also, while the Military and Veterans Code only prohibited discrimination by “employers,” by amending FEHA this bill also prohibits labor organizations, employment agencies or apprenticeship training programs from discriminating or harassing because of military and veteran status.

“Military and veteran status” would be defined in new subsection (k) of Government Code section 12926 as “a member or veteran of the United States Armed Forces, United States Armed Forces Reserve, the United States National Guard, and the California National Guard.”  The bill also specifically provides that it does not prohibit employers from identifying members of the military or veterans for purposes of awarding a veteran’s preference as permitted by law.

This bill unanimously passed the Legislature and is expected to be signed into law.

New Protections, Including Accommodation Obligations, Proposed for Victims of Stalking, Domestic Violence or Sexual Assault (SB 400)

Labor Code sections 230 and 230.1 provide protections to victims of domestic violence and sexual assault, including prohibiting employers from taking adverse employment action against such individuals who take time off from work to attend to issues arising as a result of the domestic violence or sexual assault. These sections also currently permit an employee who has been discriminated or retaliated against for taking such time off to file a complaint with the Division of Labor Standards Enforcement (DLSE). This bill extends these provisions to a new group of employees, and includes new accommodation requirements.

First, this bill amends both sections to specify they also apply to victims of stalking, meaning employers cannot discriminate or retaliate against employee because of their known status as a victim of domestic violence, sexual assault or stalking. Whereas sections 230 and 230.1 had previously prohibited any such discrimination against such victims, this bill specifies this discrimination must be knowing either because the victim provides notice to the employer of the status or the employer has actual knowledge of the status.

This bill would also require the employer to engage in a good faith interactive process to identify potential reasonable accommodations for stalking, domestic violence, or sexual assault. Employees seeking such accommodation would, at the employer’s request, be required to submit a signed written statement signed by the employee or an individual acting on the employee’s behalf certifying the accommodation is related to the employee’s status as a victim of domestic violence, sexual assault or stalking. The bill specifies an employer is not required to provide a reasonable accommodation to an employee who has not disclosed his or her status as a victim of domestic violence, sexual assault or stalking.

This bill also requires employers to provide reasonable accommodation, which may include implementing safety measures such as a transfer/reassignment or modified schedule, a changed work telephone or work station, installation of a lock, or assistance in documenting the employee’s status. Recent amendments specify an employee would have the obligation to notify an employer if a new accommodation is needed because of changed circumstances, or if the employee no longer needs an accommodation.

As in the disability context, employers would not be required to implement accommodations constituting an “undue hardship,” which would include an action that would violate an employer’s duty to furnish and maintain a safe and healthful workplace for all employees as required under Labor Code section 6400.  

This bill originally contemplated creating a private right of action for violations of sections 230 and 230.1, in addition to the current right to file a charge with the DLSE, but this provision was omitted by amendment. Employees who are discriminated or retaliated against because of their status as victims of domestic violence, sexual assault or stalking, or for requesting reasonable accommodation, shall be entitled to reinstatement, reimbursement for lost wages and benefits, “as well as appropriate equitable relief.” (This entitlement to “appropriate equitable relief” is not available to employees who file a DLSE charge for discrimination for taking time off work for jury duty or judicial proceedings related to a crime).

Finally, this bill makes several minor changes to current subsection (d)(1) which identifies the type of certification an employee may provide to justify an unscheduled absence within a reasonable time after the absence. Specifically, whereas this subsection currently identifies “medical professionals, domestic violence advocates or advocates for victims of sexual assault” as being able to supply this documentation, this amendment would tighten this list and require it be provided by a “licensed” medical professional or by a “domestic violence counselor” or a “sexual assault counselor” satisfying the definitions in Evidence Code sections 1037.1 and 1035.2 respectively.

This bill appears well-intentioned, but faces some significant opposition including on the grounds the accommodation obligations appears ambiguous. Similar bills (SB 1745 and AB 1740) failed passage in 2006 and 2012.

Employees Permitted to Take Time Off for Judicial Proceedings Related to Additional Serious Crimes (SB 288)

Labor Code section 230 also precludes employers from discharging or discriminating against employees who take time off to serve on a jury, or who is a victim of a crime and must attend court proceedings, or who need time off for court-related proceedings concerning domestic violence and sexual assault.

This bill would add a new Labor Code section (section 230.5) to provide similar protections to employee victims who take time off at the victim’s request to appear in court proceedings for additional specified offenses. These specified offenses would be (1) vehicular manslaughter while intoxicated; (2) felony child abuse likely to produce great bodily harm or a death; (3) assault resulting in the death of a child under eight years of age; (4) felony domestic violence; (5) felony physical abuse of an elder or dependent adult; (6) felony stalking; (7) solicitation for murder; (8) a serious felony, such as kidnapping, rape or assault; (9) hit and run causing death or injury; or (10) felony driving under the influence causing injury.

For purposes of this bill, a “proceeding” includes any delinquency proceeding, involving a post-arrest release decision, plea, sentencing, post-conviction release decision or any proceeding in which a right of the victim is at issue. This bill also defines “victim” as any person who suffers direct or threatened physical, psychological or financial harm as a result of the enumerated crime or delinquent act. The term “victim” specifically includes the employee’s spouse, parent, child, sibling or guardian.

This new section would also incorporate many of the requirements from section 230 (relating to time off for jury duty or domestic violence/sexual assault), including its notice requirements and remedy provisions.

The bill’s proponents state it is intended to correct an anomalous situation whereby crime victims have a constitutional right in California to attend and be heard at such proceedings, but enjoy no employment protections if they exercise this constitutional right.

This bill overwhelmingly passed the Legislature and is likely to be signed into law.

Various Retaliation Provisions, Including for “Immigration-Related Practices” or Involving Consumer Credit Reports Proposed (AB 263)

This bill is intended to protect low wage workers from wage-theft and proposes to amend a number of Labor Code provisions regarding retaliation as well as the new Consumer Credit Report protections enacted in 2012. (In this regard, this bill is somewhat similar to SB 666 (discussed below), although both versions provide some additional unique protections.)

For instance, Labor Code section 98.6 presently prohibits employers from discharging or discriminating against an employee or applicant because they have engaged in identified protected conduct relating to the enforcement of their rights. This bill would expand this protected conduct to include “a written or oral complaint by an employee that he or she is owed unpaid wages.” It would also expand these protections to specifically prohibit retaliation and/or taking adverse action (as well as discharging or discriminating), thus entitling employees subjected to retaliation or adverse action to reinstatement and reimbursement for lost wages. While section 98.6 presently states violations constitute a misdemeanor, this bill would also subject the employers that are corporations or limited liability companies to a civil penalty up to $10,000 per employee per violation.

This bill would also add Labor Code sections 1019 and 1019.1 to prevent an employer from engaging in “unfair immigration related practices” (as defined) against any employee who exercises a “right protected under this code or by any other local ordinance applicable to employees.” “Exercising a right protected by this code” is fairly broadly defined and includes, but is not limited to, the following: (1) filing a good-faith complaint alleging an employer’s violation of the Labor Code or local ordinance; (2) seeking information concerning whether an employer or other party is in compliance with the Labor Code or local ordinance; or (3) informing a person of their potential rights and remedies under the Labor Code or local ordinance, and assisting them in the assertion of those rights.

The bill also defines prohibited “unfair immigration-related activities” as any of the following undertaken for retaliatory purposes: (1) requesting more or different work eligibility documents than those required under federal law, or refusing to honor work-eligibility documents that on their face reasonably appear to be genuine; (2) using the federal E-verify system to check an employee’s or applicant’s employment authorization status at a time other than required under federal law; (3) threatening to file or the filing of a false police report; or (4) threatening to contact or contacting immigration authorities. The bill specifies an “unfair immigration-related practice” does not include conduct undertaken at the express and specific direction or request of the federal government. The taking of any “unfair immigration-related practice” within 90 days of the person’s exercise of rights protected under the Labor Code or local ordinance would create a rebuttable presumption it was retaliatory.

The bill also outlines fairly severe penalties for unlawful “immigration-related practices.” For instance, as with many other Labor Code provisions, the bill would authorize an employee subjected to an unfair immigration-related practice to pursue civil action to recover damages, equitable relief and reasonable attorneys’ fees and costs, However, it would also allow a court to order the appropriate government agencies to suspend the business license of a person who violates these provisions, with the length of the suspension depending on the number of prior violations and in consideration of statutorily-enumerated factors (e.g., up to 14 days for a first violation, up to 30 days for a second violation, and up to 90 days for a third or any subsequent violation). (An earlier version of this bill proposed a permanent suspension upon a fourth violation but this was omitted in a recent amendment). The bill defines “license” to mean any agency permit, certificate approval, registration, or charter that is required by law and that is issued by an agency for purposes of operating a business in this state, but it does not include a professional license. (An earlier version of this bill defined “license” to include articles of incorporation, certificates of partnership or transaction privilege tax licenses, but this was omitted by amendment). The bill defines “violation” as “each incident when an unfair immigration practice was committed, without reference to the number of employees involved in the incident.”

This bill also proposes several amendments to Labor Code section 1102.5, which presently precludes any employer from making, adopting or enforcing any rule, regulation or policy precluding an employee from disclosing certain violations to a state or federal agency. First, whereas section 1102.5 presently prohibits retaliation for disclosing information to outside agencies, this bill would also prohibit discrimination or retaliation against employees who disclose information internally to a person with authority over the employee or to another employee who has the authority to investigate, discover or correct the violation or non-compliance. This bill would also prohibit discrimination or retaliation against employees who provide information or testify before “any public body conducting any investigation, hearing or inquiry.” As amended, section 1102.5 would specify these anti-retaliation provisions protect employees who engage in such acts “regardless of whether disclosing the information is part of the employee’s job duties.”

Further, whereas section 1102.5 presently only prohibits employers from discriminating or retaliating, this bill would also prohibit “any person acting on behalf of the employer” from making such rules or engaging in retaliation or discrimination.

Lastly, as a reminder, on Jan. 1, 2012, Labor Code section 1024.5 became effective placing limits on most employers from obtaining consumer credit reports for employment purposes. This bill would add a new Labor Code section (section 1024.6) to prohibit an employer from discriminating or retaliating against an employee who updates or attempts to update their personal information. As drafted, the bill does not specifically state these changes must relate to information contained in a consumer credit report, but this appears to be the intent given the proposed addition of subsection 1024.6. The bill states this new section would not prohibit an employer from taking action against an employee for changes that “are directly related to the skill set, qualifications, or knowledge required for the job.”

Various Retaliation Protections, Including Related to Reporting Immigration Status, Proposed (SB 666)

As with AB 263, this bill proposes several measures intended to prevent retaliation based on an employee’s citizenship or immigration status. For instance, this bill would amend Business and Professions Code section 494.6 to specify that a business license regulated by this code is subject to suspension or revocation if the licensee has been determined by the Labor Commissioner or the court to have violated new Labor Code section 244 (discussed below) and the court of Labor Commissioner has taken into consideration the impact of such discipline upon the licensee’s employees and the licensee’s good faith efforts to resolve any alleged violations after receiving notice.

This bill would also add Labor Code section 244 prohibiting the reporting or threatening to report of the suspected citizenship or immigration status of an employee, former employee, prospective employee, or their “family member” because they have exercised a right under the Labor Code, Government Code or Civil Code. 

This bill would also add Business Code section 6103.7 to specify that an attorney may be suspended or disbarred if they report or threaten to report the suspected immigration status of a witness or a party (or their family member) to a state, federal or local agency because the witness or party has exercised a right related to their employment, which is to be “broadly interpreted.”

For purposes of both new Labor Code section 244 and Business Code section 6103.7, “family member” would mean a spouse, parent, sibling, uncle, aunt, niece, nephew, cousin, grandparent, or grandchild related by blood, adoption, marriage or domestic partnership.

This bill also proposes changes to several other more-generally applicable Labor Code provisions preventing retaliation and would potentially streamline the process to bringing civil claims. For instance, it would add language to proposed new Labor Code section 244 that would specify employees are not required to exhaust administrative remedies prior to initiating civil action unless the Labor Code provision at issue specifically requires such exhaustion. A recent amendment clarifies this non-exhaustion requirement would not affect the requirements of Labor Code section 2699.3 as it relates to Private Attorney General Act claims.

Labor Code section 98.6 presently prohibits employers from discharging or discriminating against an employee or applicant because they have engaged in identified protected conduct relating to the enforcement of their rights. Similar to AB 263, this bill would expand these protections to specifically prohibit retaliation and would also expand the identified forms of protected conduct to include written or oral complaints that they are owed unpaid wages. While section 98.6 presently states violations constitute a misdemeanor, this bill would also subject the employers that are corporations or limited liability companies to a civil penalty up to $10,000 per violation.

This bill would also make identical amendments to Labor Code section 1102.5 as AB 263 (discussed above).

Revisions to California’s Whistleblower Protection Act (SB 496)

To highlight the Legislature’s focus on protecting whistleblowers, this bill would make the same amendments to Labor Code section 1102.5 as proposed in AB 263 and SB 666 discussed above (i.e., to expand the definition of protected activity to include reporting perceived violations to a supervisor or other employee with responsibility for investigating). This bill would also slightly amend California’s Whistleblower Protection Act to modify the deadlines for the State Personnel Board to render its decision in consolidated proceedings. If enacted, this bill would require the State Personnel Board to render its decision on a consolidated matter within six months of the date of the order of consolidation, as specified.

New Disclosure Requirements for Foreign Labor Contractors (and Employers Who Use Them) (SB 516)

In recent years, California has implemented regulations concerning “foreign labor contractors” as part of its efforts to prevent human trafficking and to safeguard foreign workers from abusive working condition after relocating to the United States. This bill would expand these protections by imposing new registration and disclosure requirements on “foreign labor contractors,” which in turn, would impose some additional obligations on employers utilizing foreign labor contractors” in their recruitment efforts.

“Foreign labor contractors” would be defined as persons engaging in “foreign labor contracting activity” which would be defined as “recruiting or soliciting for compensation a foreign worker who resides outside of the United States, in furtherance of that worker’s employment in California.” Notably, however, and in response to employer concerns, this bill specifies foreign labor contracting activity “does not include the services of an employer, or employee of an employer, if those services are provided directly to foreign workers solely to find workers for the employer’s own use.” It also would not include talent agencies or entities or persons that have obtained designation under specified federal law related to work and study-based exchange visitor programs.

Amongst other things, this bill would require foreign labor contractors to register with the Labor Commissioner by July 1, 2015, and provide statutorily-enumerated information and deposit a surety bond based upon their gross receipts. To “register” with the Labor Commissioner, the foreign labor contractor would need to provide detailed information, including individuals (other than bona fide employees) financially interested in the foreign labor contractor and a designation consenting to service of process. On or after Aug. 1, 2015, the Labor Commissioner would be required to post on its web site the names and contact information for all registered foreign labor contractors.

After July 1, 2015, employers knowingly using the services of foreign labor contractors to procure foreign workers would need to disclose to the Labor Commissioner certain specified information in accordance with the procedures the Commissioner must establish by January 1, 2015. These employer disclosures will include the name of the employee designated by the employer to work with the foreign labor contractor and a declaration consenting to the Commissioner to serve as an agent for service of process if the person has left the jurisdiction or is otherwise unavailable. (When originally introduced, this bill imposed upon employers the same stringent disclosure and surety bond requirements as imposed upon foreign labor contractors but these were omitted by subsequent amendment). This bill would also prohibit employers from knowingly entering into a contract for the services of a foreign labor contractor that is not registered with the Labor Commissioner.

The bill also requires foreign labor contractors disclose in writing specified information to each foreign worker recruited for employment that may impact their employer clients. Specifically, this bill adds new Business and Professions Code section 9998.2.5 requiring the foreign labor contractor to disclose in writing in the foreign worker’s primary language and in English the identity of the employer and person conducting recruiting on the employer’s behalf, a signed copy of the work contract from the prospective employer (with material specified terms include), information regarding any work visas needed, and an itemized list of costs or expenses to be charged the foreign worker (i.e., for housing, medical examination, etc.).

This new section prohibits any foreign labor contractor or employer from assessing to the foreign worker any fee, including visa fees, processing fees, legal expenses, placement fees or other costs to a worker for employment services. It also prohibits foreign workers from being required to pay any costs or expenses that are not customarily assessed against all workers similarly employed, as specified. It also prohibits a foreign labor contractor or an employer using their services from intimidating, discharging or otherwise discriminating against a foreign worker or their family member in retaliation for the worker’s exercise of rights under this law.

This bill also identifies fairly significant civil penalties (i.e., between $1,000 and $25,000) against persons who violate its provisions. This bill specifies employers shall not be jointly and severally liable for a foreign labor contractor’s violations if the foreign labor contractor was registered with the Labor Commissioner when the engagement began.

New Limits Proposed for When, But Not Whether, Public Employers May Conduct Criminal Background Checks (AB 218)

California law presently precludes public and private employers from asking an applicant for employment to disclose either in writing or verbally any information concerning an arrest or detention that did not result in a conviction. To reduce employment barriers to individuals who have previously been convicted of a crime, this bill would impose new conditions concerning when, but not whether, a state or local agency may obtain an applicant’s criminal history. Specifically, this bill would generally prohibit a state or local agency from inquiring about criminal convictions until after the applicant’s qualifications for the position have been determined to meet the position’s requirements. The bill specifies that a state or local agency would be permitted to conduct a criminal history background check after the applicant has been deemed to meet the position’s requirements.

As presently drafted, this bill does not apply to private employers. If enacted, these new conditions would also not apply to positions for which a state or local agency is required by law to conduct a criminal history background check, to any position within a criminal justice agency (as defined by Penal Code section 13101) or to any individual working for a criminal justice agency on a contract basis or on loan from another government agency.

The author notes that this bill is intended to reduce the recidivism rate by not dissuading applicants with prior convictions from applying for public employment. Since similar limits for public employment purposes have been enacted in six states and forty United States cities (including San Diego, Oakland, San Francisco), this bill appears to have considerable support and a good chance of being enacted.

If enacted, this law would not take effect until July 1, 2014.

Workers Injured Under Prevailing Wage Payments Entitled to Workers’ Compensation Benefits Calculated Under Prevailing Wage Entitlement (AB 454)

California’s Workers’ Compensation system establishes certain methods for compensating an employee injured in the course of their employment depending on the nature of the injury (ex. permanent total disability, temporary total disability, etc.) This bill would add new Labor Code section 4454.5 to require that when temporary disability benefits or permanent disability benefits are determined for average weekly earnings on a public works projects, the calculations will be made based on the greater of the wages actually paid or the prevailing wage that was applicable to the work performed by the employee.

In effect, this bill will generally require calculation of certain benefits based on the prevailing wage, not the actual wages paid, where prevailing wages should have been but were not paid. This bill is intended to prevent employers from benefiting by withholding prevailing wages otherwise owed, and to address an anomaly whereby workers denied the prevailing wage have a wage remedy to recover monies owed, but where injured workers denied the prevailing wage were limited to actual wages paid for benefit calculation purposes.

The bill further provides that a Workers’ Compensation Appeals Board determination of whether a project was a public work or of the applicable prevailing wage, or both, has no effect in any other judicial or administrative proceedings.

Privilege Proposed for Discussions with Union Representatives (AB 729)

California’s Evidence Code presently recognizes certain privileges (e.g., attorney-client, psychotherapist-patient, etc.) which limit the discoverability or admissibility of covered communications. This bill would create a new evidentiary privilege relating to union agents and represented employees. Specifically, Evidence Code section 912 would recognize a “union agent-represented worker privilege” which under newly created Evidence Code section 1048 would allow a union agent or represented work to refuse to disclose in any court or administrative proceeding any confidential communications between the employee and the union agent while acting in his or her representative capacity. The employee or former employee would also have a privilege to prevent others from disclosing a confidential communication.

Like most other privileges, this new privilege would have a number of potential exceptions, including the requirement that the communication actually be made in confidence to a union agent acting in that capacity when the statement was made. An appointed employee steward would not be considered a “union agent” for purposes of this privilege except to the extent a represented current or former employee communicated to the steward regarding a grievance or potential grievance and the appointed employee steward was a steward when the communication was made. The union agent would also be permitted to disclose these communications in any action directly against the union or the agent, or upon the employee’s consent or under court order. Similarly, the privilege would not apply if the union agent reasonably believes disclosure is needed to prevent a criminal act likely to result in death or serious bodily injury, or if the communication is made to commit a fraud or crime.

Social Media Password Prohibitions to Extend to Public Employers (AB 25)

Last year, AB 1844 was enacted creating a new Labor Code section 980 prohibiting private employers from requiring or requesting an employee or applicant for employment to disclose a username or password for the purpose of accessing personal social media. Labor Code section 980 also prohibits private employers from retaliating against an employee for not complying with an employer request that violates its provisions.

This bill would amend newly-enacted Labor Code section 980 to specify that its various prohibitions apply to both public and private employers. “Public employer” would be defined to include the state, city, a city and county or a district. Many assumed AB 1844 already applied to public employers, but this bill is intended to address a concern that Labor Code provisions do not apply to public employers unless specifically stated.

California to Strengthen Commitment to Workforce Investment Systems (SB 118)

California’s Workforce Investment Board is currently responsible for assisting the Governor in the development, oversight and continuous improvement of California’s workforce investment system. This bill would specify that this board would also be responsible for assisting the Governor in the alignment of the education and workforce investment systems to the needs of the 21st century workforce and the promotion and development of a well-educated and highly-skilled 21st century economy and workforce. This bill would require the board to assist the Governor in targeting resources to specified industry clusters that provide economic security (defined as allowing an employee sufficient wages to support their family and save for retirement, etc.) and leverage state and federal funds to ensure that resources are invested in activities that meet the needs of specified industry sectors.

As part of California’s strategic workforce plan, this bill would also require the creation of a California Industry Sector Initiative to accomplish specified tasks, including aligning and leveraging state, federal, and local Workforce Investment Act funding streams, identifying specified industry sectors and clusters, providing skills-gap analysis, and establishing specified eligibility criteria for the Workforce Investment Act eligible training provider list.

Additional Remedies Proposed for Employees after Employer Prevails on Mixed-Motive Affirmative Defense (SB 655)

In February 2013, the California Supreme Court issued an important ruling regarding the causal standard needed for an employee to prove discrimination or retaliation concluding the employee must demonstrate the protected characteristic was a “substantial motivating factor,” not simply a “motivating factor” as suggested by the then-applicable jury instructions. The Court also generally upheld the employer’s ability to assert the so-called “mixed motive” affirmative defense, whereby the employer argues that even if an employee’s protected classification partially motivated the challenged decision, the employer would have made the same decision for legitimate, non-discriminatory reasons. (Harris v. City of Santa Monica (2013) 56 Cal.4th 203) The Court held these mixed-motives would not provide a complete defense against FEHA liability, but would preclude certain types of remedies including economic (e.g., lost wages) and non-economic (e.g. emotional distress) damages.

This bill attempts to codify Harris and adds a new FEHA provision (Government Code section 12940.5) specifying that the employee shall prevail in discrimination or retaliation cases if they prove a protected characteristic was a “substantial motivating factor” in the challenged adverse employment action. This new section would further define “substantial motivating factor” to mean “a factor that actually contributed to the employment action or decision. It must be more than a remote or trivial factor, but need not be the only or main cause of the employment action or decision.” This section would also specify that “evidence that the person claiming to be aggrieved had a protected characteristic at the time of the employment action or decision is not, by itself, sufficient proof that the protected characteristic was a substantial motivating factor.”

If the employee meets this standard, the employer would still be entitled to plead and prove the “mixed motive” affirmative defense to limit damages, but this bill specifies the employee would still be entitled to the remedies contained in newly proposed section 12965(b)(2). In Harris, the Court held the remedies in a mixed-motive case would be limited to declaratory relief, injunctive relief, and attorney’s fees and costs, but the employee could not obtain damages or reinstatement. This bill codifies that in the mixed-motive context, a prevailing employee would not be entitled to reinstatement, back pay, compensatory damages, or even the declaratory relief Harris suggested might be permitted. However, the bill also authorizes the court to award a statutory penalty up to $25,000 directly to the employee, and the legislative comments suggest “it is expected that courts will impose a $25,000 penalty unless there are overriding factors militating against it.” This bill also specifies a prevailing employee may recover injunctive relief (pursuant to already existing section 12965(c)) and that the employee may recover reasonable attorneys’ fees and costs, including expert witness fees.

Michael Kalt is the government affairs director for CalSHRM, and is a partner at Wilson Turner Kosmo LLP in San Diego.

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