California Labor and Employment Legislation Update

This August 31, 2012, marked the last date for bills to pass out of the Legislature for the 2011-12 Regular Session. Below is Seyfarth's summary of notable labor and employment-related bills for the second half of the 2011-12 session that the Governor has signed into law or are awaiting his action. To date, the Governor has signed into law bills that will reorganize the Department of Fair Employment and Housing, include religious dress and grooming practices as FEHA-protected beliefs and observances, and impose further restrictions on multiple employment welfare arrangements and the entertainment industry's employment of children. Among those bills awaiting his attention are bills that address "unemployed" as a protected status, employers' use of social media passwords, employee inspection of personnel records, itemized wage statements and the wage theft notice, workers' compensation reform, and disability access lawsuits. The Governor has until September 30, 2012 to act on these pending bills.

Bills The Governor Signed

Religious Discrimination: Grooming and Dress Practices
AB 1964 Yamada

This bill includes a religious dress practice or religious grooming practice as a "belief" and "observance" covered by Fair Employment and Housing Act protections against religious discrimination. The bill broadly defines "religious dress practice" to include the wearing or carrying of religious clothing, head or face coverings, jewelry, artifacts, and any other item that is part of the observance by an individual of his or her religious creed, and "religious grooming practice" to include all forms of head, facial, and body hair that are part of the observance by an individual of his or her religious creed.

The bill specifies that an accommodation of an individual's religious dress practice or religious grooming practice that would require that person to be segregated from the public or other employees is not a reasonable accommodation. Finally, the bill would provide that no accommodation is required if it would result in the violation of certain laws protecting civil rights.

In signing the bill, the Governor stated: "Sikh Americans are loyal citizens who have been targeted because of widespread ignorance of their religion and culture…The bills I sign today aim to ensure that Californians learn about our Sikh citizens as well as protect all of us from job discrimination based on religious observances."

Amends Sections 12926 and 12940 of the Government Code.
Signed by the Governor on September 8, 2012.

Employment of Infants: Entertainment Industry
AB 2396 Committee on Arts, Entertainment, Sports, Tourism and Internet Media

Existing law prohibits the employment on a motion picture set or location of an infant under the age of one month unless board-certified pediatric physician and surgeon certifies that the infant is at least 15 days old, was carried to full term, was of normal birth weight, is physically capable of handling the stress of filmmaking, and the infant's lungs, eyes, heart, and immune system are sufficiently developed to withstand the potential risks. Violation of this provision is a misdemeanor punishable by a fine of $2,500 to $5,000, 60-day jail term, or both. The certification must be provided to the Labor Commissioner, who will consent to the minor's employment through issuance of a permit.

This bill would require the medical certification be provided before a temporary permit for the employment of the infant may be issued.

Amends Section 1308.10 of the Labor Code.
Signed by the Governor September 8, 2012.

Department of Fair Employment and Housing: Reorganization and Revision
SB 1038 Committee on Budget and Fiscal Review

In relevant part, this budget trailer bill reorganizes and reduces the Department Fair Employment and Housing, to streamline the Department and cut costs to the State. Specifically, effective January 1, 2012, the bill eliminates the Fair Employment and Housing Commission and creates a Fair Employment and Housing Council within the Department of Fair Employment and Housing. The Council will consist of seven members appointed by the Governor and will have the power to issue regulations. The DFEH will now be able to go directly to court and seek all remedies available there, but must first engage in mandatory dispute resolution, with the DFEH's internal Dispute Resolution Division, free of change. The bill would also establish a Fair Employment and Housing Enforcement and Litigation Fund in the State Treasury for purposes of depositing attorney's fees and costs awarded to the DFEH in certain civil actions, which will then be appropriated by the Legislature to offset the costs of the Department.

Amends Sections 56, 138.7, 150, 151, 152, 153, 156, 511, 515.5, 515.6, 1202, 1773.3, 1776, 1777.5, 1777.7, 2012, 2013, 2686, 3072, 3073, 6332, 6401.7, 6409, 6409.1, 6410, 6411, 6413, and 6413.2 and the heading of Chapter 7 (commencing with Section 150) of Division 1 of the Labor Code. Adds Chapter 4.5 (commencing with Section 108) to Division 1 of the Labor Code. Repeals Sections 65, 3099, 3099.2, 3099.3, 3099.4, and 3099.5, and Chapter 9 (commencing with Section 1137) of Part 3 of Division 2 of, the Labor Code.

Approved by the Governor and Chaptered on June 27, 2012. Chapter 46 of the Statutes of 2012.

Multiple Employer Welfare Arrangements: Benefits.
SB 615 Calderon

Commencing January 1, 2014, the federal Patient Protection and Affordable Care Act (PPACA), requires a health insurance issuer that offers coverage in the small group or individual market to ensure that such coverage includes the "essential health benefits package.".

Existing state law places certain requirements on a self-funded or partially self-funded multiple employer welfare arrangement (MEWA), for the MEWA to provide benefits to any California residents with benefits. Existing law limits those MEWA's to providing certain benefits, including medical, dental, and surgical.

This bill would, commencing January 1, 2014, prohibit a MEWA from offering, marketing, representing, or selling any product, contract, or discount arrangement as minimum essential coverage or as compliant with the essential health benefits requirement under the federal Patient Protection and Affordable Care Act, unless it meets the applicable requirements under that PPACA.

Amends Section 742.40 of the Insurance Code.
Signed by the Governor September 8, 2012.

Written Commission Agreements
AB 1396 Committee on Labor and Employment

This bill was signed into law in 2011, but bears repeating here as a reminder, since it goes into effect on January 1, 2012. As of that date, an employer who enters into an employment contract with an employee involving commissions as a method of payment must put the employment contract in writing and set forth the method by which the commissions will be computed and paid.

In other words, in practice, this bill requires that commission agreements (1) be in writing; (2) set forth the method by which the commissions are required to be computed and paid; and (3) contain a signed receipt for the contract from each employee.

Amends Section 2751 and repeals Section 2752 of the Labor Code.
Approved by the Governor and Chaptered on October 7, 2011. Chapter 556 of the Statutes of 2011.

Bills Sent To The Governor

Employment Discrimination: Unemployed Status
AB 1450 Allen

This bill would make it unlawful, unless based on a bona fide occupational qualification or any other provision of law, for an employer or employment agency to knowingly or intentionally refuse to consider for employment or refuse to offer employment to an individual because of the individual's status as unemployed, publish an advertisement or announcement for any job that includes provisions pertaining to an individual's status as unemployed, or direct or request that an employment agency take an individual's status as unemployed into account in screening or referring applicants for employment.

This bill would subject an employer or employment agency who violates the above provisions to civil penalties that increase as the number of violations increase. This bill would not create a private cause of action.

Opponents argue this bill could severely restrict employers from inquiring about the individual's most recent employer, including dates of employment and reasons for the separation of employment.

This bill is one of many similar bills throughout the country, including bills approved in New Jersey and Oregon. Protection for the unemployed was also included President Obama's 2011 federal jobs bill.

Adds Chapter 3.95 (commencing with section 1045) to Part 3 of Division 2 of the Labor Code. Adds section 10285.6 to the Public Contract Code.
Introduced January 5, 2012. Sent to enrollment on August 30, 2012.

Employer Use of Social Media
AB 1844 Campos

This bill would prohibit an employer from requiring or requesting an employee or applicant for employment to (1) disclose a user name or account password to access a personal social media account, (2) access personal social media in the employer's presence, or (3) divulge any personal social media. However, the bill would permit an employer to request that an employee divulge personal social media reasonably believed to be relevant to an investigation of allegations of employee misconduct or employee violation of applicable laws and regulations, as long as the social media is used solely for that on a related investigation or proceeding. The above provisions do not restrict an employer from requesting or requiring an employee disclose username, password, or other method of accessing an employer-issued electronic device.

Illinois and Maryland have enacted different forms of social media password protections, and legislation is still pending in many other states.

Adds Chapter 2.5 (commencing with section 980) to Part 3 of Division 2 of the Labor Code.
Introduced February 22, 2012. Sent to enrollment on August 29, 2012.

Personnel Records: Inspection Procedures, Time, and Penalties
AB 2674 Swanson

Labor Code section 1198.5 currently provides an employee the right to inspect, within a reasonable time after a request, his or her personnel records that the employer maintains relating to the employee's performance or to any grievance concerning the employee. This bill would require the employer to make the personnel records available for inspection, or provide a copy, to the current or former employee or employee's representative within 30 calendar days of the employer's receipt of the employee's written request. The employee and employer may agree in writing to a date longer than 30 days, but not to exceed 35 days, from the employer's receipt of the employee's request. The bill requires the employee to make the request to inspect or copy in writing, but provides that it may be on an employer-provided form and that the employer may designate the person to whom a request must be made. The employer may redact the name of any nonsupervisory employee contained in the personnel records prior to inspection or copying.

The bill specifies the location for provision of the records, and authorizes the employer to, for an employee who was terminated for violation of law or an employment-related policy, to make the records available at a location a reasonable driving distance from the former employee's residence or to mail the records to the employee. The employer is only required under this bill to comply with one request per year by a former employee, and only 50 requests per month by representative(s) of employees. These provisions do not apply during the pendency of a lawsuit an employee files relating to a personnel matter against his or her employer. The above provisions do not apply to an employee covered by a valid collective bargaining agreement that provides for hours, wages, and working conditions, a procedure for copying and inspection of personnel records, and a regular rate of pay not less than 30 percent more than state minimum wage.

The bill's changes to section 1198.5 would also require employers to maintain a copy of the employee's personnel records for a minimum three years after termination of the employee's employment.
An employer who does not timely comply with the above inspection and copying requirements is liable to the employee or the Labor Commissioner for penalty of $750, plus injunctive relief and attorneys' fees. The bill specifically allows impossibility of performance as an affirmative defense to an alleged violation of this provision. These penalty provisions mirror those of section 226.

Finally, this bill clarifies that an itemized wage statement "copy", for purposes of Labor Code section 226's requirement that an employer to keep a copy of the statement on file for at least 3 years at the place of employment or at a central location within the State of California, can include a computer-generated record rather than an actual duplicate copy.

This bill contains amendments that are contingent upon the approval, and order of approval, of this bill, AB 1744, and AB 1255. Those contingent amendments are the changes noted under the summaries of those bills.
Amends sections 226 and 1198.5 of the Labor Code.
Introduced March 5, 2012. Sent to enrollment on August 29, 2012.

Temporary Services Employers: Itemized Wage Statements and Wage Theft Notice
AB 1744 Lowenthal

This bill would require, in addition to existing requirements in Labor Code section 226 for itemized wage statements, on and after July 1, 2013, that the itemized statement issued by temporary services employers include the rate of pay and the total hours worked for each temporary services assignment.

This bill would require temporary services employers to include in the mandatory Labor Code section 2810.5 Wage Theft Notice 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.

The bill excludes from the above requirements a security services company that is licensed by the Department of Consumer Affairs and that solely provides security services.

This bill contains amendments that are contingent upon the approval, and order of approval, of this bill, AB 2674, and AB 1255. Those contingent amendments are the changes noted under the summaries of those bills.

Amends Sections 226 and 2810.5 of the Labor Code. Adds Section 226.1 to the Labor Code.
Introduced February 17, 2012. Sent to enrollment on August 31, 2012.

Itemized Wage Statements: Injury
SB 1255 Wright

This bill would define what constitutes an injury for purposes of a violation of Labor Code section 226's itemized wage statements requirements. Specifically, the bill would provide that an employee is deemed to suffer injury if the employer fails to provide a wage statement, or fails to provide accurate and complete information and the employee cannot promptly without reference to other documents or information determine the following from the wage statement alone: (1) gross or net wages paid during the pay period, (2) deductions, (3) the employer's name and address, (4) the employee's name, and (5) the employee's last 4 digits (only) of his or her social security number or employee identification number. The bill further provides that a "knowing and intentional failure" does not include an isolated and unintentional payroll error due to a clerical or inadvertent mistake. The bill authorizes the fact finder to consider, in reviewing for compliance with these provisions, whether the employer, prior to an alleged violation, has adopted and is in compliance with a set of policies, procedures, and practices that fully comply with section 226.

This bill contains amendments that are contingent upon the approval, and order of approval, of this bill, AB 1744, and AB 2674.
Amends Section 226 of the Labor Code.
Introduced February 23, 2012. Enrolled and presented to Governor on September 6, 2012.

Wage and Hour: Compensation Agreements
AB 2103 Ammiano

California law generally requires the payment of overtime to nonexempt employees for hours worked over 8 in a day, 40 in a workweek, and on the seventh consecutive day of work. This calculation is simple for nonexempt employees paid an hourly wage, but not for nonexempt employees paid a fixed salary. Existing law therefore specifies, for purposes of computing the overtime rate of compensation, that a nonexempt full-time salaried employee's regular "hourly" rate of pay is 1/40th of the employee's weekly salary.

This bill provides that payment of a fixed salary to a nonexempt employee includes compensation only for the employee's regular, non-overtime hours. The bill effectively invalidates any private agreement to the contrary. In other words, parties who enter into "explicit mutual wage agreements" may only, through those agreements, provide for regular compensation, not overtime compensation. The stated intent of the bill is to overturn Arechiga v. Dolores Press (2011) 192 Cal.App.4th 567, in which the Court of Appeal held an "explicit mutual wage agreement", between an employer and employee that provided a fixed salary for 66 hours of work each week, complied with California overtime laws and that no further overtime compensation was owed to the employee.

Amends section 515 of the Labor Code.
Introduced February 23, 2012. Enrolled and presented to the Governor on August 20, 2012.

Contractors: Sufficient Funds, Warehouse Workers
AB 1855 Torres

This bill includes warehouse contractors in existing prohibitions on a person or entity from entering into a contract or agreement for labor or services with specified types of contractors if the person or entity knows or should know that the contract or agreement does not include funds sufficient to allow the contractor to comply with all applicable local, state, and federal laws or regulations governing the labor or services to be provided.

This bill would require that upon the request of the Labor Commissioner, the person entering into the written agreement or contract to provide to the Labor Commissioner a copy of the provisions of the contract or agreement, and any other documentation. The bill would exempt any documents received by the Labor Commissioner pursuant to this requirement from the California Public Records Act.

Amends Section 2810 of the Labor Code.
Introduced February 22, 2012. Enrolled and presented to the Governor August 31, 2012.

Workers' Compensation Reform
SB 863 De Leon

SB 863 addresses issues with liens, shortens the medical-legal process, implements an independent medical review system and streamlines the permanent disability schedule. According to the Department of Industrial Relations, these changes are expected to provide $740 million a year in new benefits for permanently disabled workers, starting next year, while reducing overall medical and compensation costs by 4 percent.

Although the bill has not yet been signed, its approval is all but certain, as the Governor was responsible for its passage through the Legislature. In an August 31 news release, Governor Brown commended the Legislature for "an extraordinary workers' compensation reform bill that helps injured workers and averts an imminent crisis of skyrocketing rates. Again, Republicans have joined Democrats to work together—perhaps, a portent of good things to come."

Amends Sections 11435.30 and 11435.35 of the Government Code, Sections 62.5, 139.2, 3201.5, 3201.7, 3700.1, 3701, 3701.3, 3701.5, 3701.7, 3701.8, 3702, 3702.2, 3702.5, 3702.8, 3702.10, 3742, 3744, 3745, 3746, 4061, 4062, 4062.2, 4062.3, 4063, 4064, 4453, 4600, 4603.2, 4603.4, 4604, 4604.5, 4605, 4610, 4610.1, 4616, 4616.1, 4616.2, 4616.3, 4616.7, 4620, 4622, 4650, 4658, 4658.5, 4658.6, 4660, 4701, 4903, 4903.1, 4903.4, 4903.5, 4903.6, 4904, 4905, 4907, 5307.1, 5307.7, 5402, 5502, 5703, 5710, and 5811 of the Labor Code. Adds Sections 139.32, 139.48, 139.5, 3701.9, 4603.3, 4603.6, 4610.5, 4610.6, 4658.7, 4660.1, 4903.05, 4903.06, 4903.07, 4903.8, 5307.8, and 5307.9. Adds and repeals Section 3702.4 of the Labor Code. Repeals Sections 4066 and 5318 of the Labor Code.
Introduced February 18, 2011. Enrolled and presented to the Governor on September 7, 2012.

Agricultural Employee Safety
AB 2346 Butler

This bill would prescribe duties on employers to reduce the risk of heat illness among agricultural employees. The bill would impose civil penalties, and create a private right of action, for violations of these requirements.

Amends Section 6330 of the Labor Code.
Introduced February 24, 2012. Enrolled and presented to Governor on August 29, 2012.

Domestic Workers' Rights
AB 889 Ammiano and V. Manuel Perez

This bill would require the Department of Industrial Relations, by January 1, 2014, to adopt regulations governing the working conditions of domestic work employees.

Adds Part 4.5 (commencing with Section 1450) to Division 2 of, the Labor Code.
Introduced February 17, 2011. Sent to enrollment August 30, 2012.

Disability Access: Liability
SB 1186 Dutton and Steinberg

This bill would give businesses a safe harbor from lawsuits based on violations of the California equivalent of the federal Americans with Disabilities Act. The ADA allows only injunctive relief while California law provides $4,000 as a statutory penalty per occurrence of a violation.

As currently drafted, this bill would reduce a defendant's minimum liability for statutory damages under the Unruh and Disabled Persons Acts from $4,000 to $1,000 for each offense if the defendant has corrected all construction-related violations that are the basis of the claim within 60 days of being served with the complaint and the area is new construction since 2008 that was inspected and approved by the local building department or was CASp-inspected. Alternatively, the bill would reduce minimum liability from $4,000 to $2,000 for each offense if the defendant is a small business and has corrected all construction-related violations that are the basis of the claim within 30 days of being served with the complaint.

Also of note is a provision that requires a court, where the plaintiff alleges multiple claims for the same alleged violation on different occasions, to consider the reasonableness of the plaintiff's need to repeatedly visit the public accommodation in light of the plaintiff's obligation to mitigate damages. The bill specifically states this provision is intended to address misuse of the Unruh and Disabled Persons Acts by lawyers and plaintiffs who allege the same barrier deterred the plaintiff on repeated occasions from visiting the public accommodation, for the purpose of stacking statutory liability and intimidating defendants into settlements.

Adds section 55.4 to the Civil Code. Amends section 4452 of the Government Code.
Introduced February 22, 2012. Enrolled and presented to the Governor on September 7, 2012.

2012 Legislative Calendar

Sept. 30 —Last day for Governor to sign or veto bills passed by the Legislature before Sept. 1 and in the Governor's possession on or after Sept. 1 (Art. IV, Sec. 10(b)(2)).
Oct. 1 —Bills enacted on or before this date take effect January 1, 2013 (Art. IV, Sec. 8(c)).
Nov. 6 —General Election.
Nov. 22–23 —Thanksgiving Holiday.
Nov. 30 —Adjournment sine die at midnight (Art. IV, Sec. 3(a)).

Direct comments and questions to:

Kristina Launey
Seyfarth California Legislative Team Leader
klauney@seyfarth.com