New California Laws Requiring Employer Action in 2014

Below is a summary of the employment-related bills that were signed or vetoed by Governor Brown. Changes to the law are effective January 1, 2014, unless otherwise specified.  Among the legislation Governor Brown signed are bills increasing the minimum wage, extending overtime protections to certain domestic workers, and expanding protections against discrimination and harassment under the Fair Employment and Housing Act. Governor Brown also vetoed bills addressing “union-agent” communications and prevailing wages.

Signed Bills

AB 10 (Dem. Alejo) Minimum Wage: Annual Adjustment. This bill increases the minimum wage to $9.00 per hour beginning July 1, 2014, and further increases the minimum wage to $10.00 per hour beginning January 1, 2016. Employer Action: Employers must take note of the increase and take necessary steps to ensure employees are paid at least the minimum wage for each hour worked. Employers should also keep in mind the effect on other laws tied to the minimum wage. Exempt executive, administrative and professional employees must be paid a salary equivalent to two times the minimum wage. This means employers will have to pay exempt employees a minimum salary of $37,440.00 when the minimum wage becomes $9.00/hour and $41,600 when it becomes $10.00/hour. Exemptions for commissioned employees and the requirement to provide hand tools to employees will also be affected.

AB 11 (Rep. Logue) Employees: Reserve Peace Officers and Emergency Rescue Personnel. This bill amends Section 230.4 of the Labor Code to require employers to permit an employee who performs emergency duty as a volunteer firefighter, reserve peace officer, or as emergency rescue personnel to take temporary leaves of absence, not to exceed an aggregate of 14 days per calendar year, for the purpose of engaging in fire, law enforcement, or emergency rescue training. Employer Action: Employers must recognize the expansion of such leave and amend their policies if addressed.

AB 60 (Dem. Alejo) Driver's Licenses Eligibility: Required Documentation. This bill adds section 12801.9 to the California Vehicle Code and requires the issuance of an original driver's license beginning January 1, 2015, to a person who is unable to submit satisfactory proof that the applicant's presence in the United States is authorized under federal law if he or she meets all other qualifications for licensure and provides proof of his or her identity and State residency. The licenses will bear the following notice: “This card is not acceptable for official federal purposes. This license is issued only as a license to drive a motor vehicle. It does not establish eligibility for employment, voter registration, or public benefits.” The bill also makes it a violation of law to discriminate against a person because he or she holds or presents a license issued under section 12801.9. Employer Action: Californians should start to see these licenses in 2015. To clear up any confusion with regard to completion of I-9’s, federal law required that the driver’s licenses specify on their face that they are not sufficient to establish eligibility for employment.

AB 241 (Dem. Ammiano) Domestic Work Employees: Labor Standards, aka Domestic Worker Bill of Rights. This bill mandates overtime pay at one and one-half times an employee’s regular rate of pay to any nanny, housekeeper, maid or personal attendant who works more than nine (9) hours in any workday or more than forty-five (45) hours in any workweek. The new overtime requirement does not apply to babysitters or family members who provide babysitting services, nor does it apply to personal attendants who provide services to low-income individuals through the state’s In Home Support Services program. A.B. 241 will remain in effect until January 1, 2017, unless extended by the Legislature. Employer Action: Those employing domestic workers should review the employment arrangement to determine if such employees should be paid overtime as a result of this bill. Such employees remain eligible for exemption from meal and rest period and day of rest requirements under Wage Order 15, but employers must review the exemptions closely to ensure the requirements are satisfied.

AB 263 (Dem. Hernandez) Employment: Retaliation: Immigration-Related Practices. Labor Code section 98.6 prohibits employers from retaliating against any applicant or employee because he or she engaged in protected conduct and also provides reinstatement and reimbursement of lost wages as available remedies. This bill amends section 98.6 to make clear that written or oral complaints regarding wages the employee believes are owed him or her are protected conduct for purposes of the prohibition on retaliation. The bill also adds sections 1019 et seq. to the Labor Code, delineating certain unfair and unlawful immigration-related practices. “Unfair immigration practices” include requesting more or different documents of an applicant than are allowed under federal I-9 rules; refusing to honor documents that appear genuine on their face; using the federal E-verify program to check authorization status of a person at a time or in a manner not required or authorized under the program procedures; and threatening to file or filing a false police report. The bill further prohibits retaliation against applicants and employees and provides for a rebuttable presumption that adverse action taken against an employee within 90 days of such protected activity is retaliatory.

SB 666 (Dem. Steinberg) Employment: Retaliation. This bill suspends or revokes an employer’s business license for threatening to retaliate or retaliating against an employee based on citizenship or immigration status. The bill also provides for the suspension, disbarment, or other discipline of an attorney who threatens to report the immigration status of a witness or party to a civil or administrative action because the witness or party exercises or has exercised a right related to his or her employment. The bill establishes a civil penalty up to $10,000.00 for violations of its provisions. Employer Action for AB 263 & SB 666: Employers (and their attorneys) should be mindful of any immigration related activity contemplated following an employment claim by employees. Employers should also review employment eligibility procedures for compliance with the law.

AB 442 (Dem. Nazarian) Employment: Wages. Liquidated Damages for Wage Order Violations. Current law authorizes the Labor Commissioner to investigate and enforce the payment of wages by employers and provides for criminal and civil penalties for violations regarding payment of wages. Existing law also authorizes the Labor Commissioner to recover liquidated damages for an employee who brings a complaint alleging payment of less than the minimum wage and subjects any employer, who pays any employee a wage less than the minimum, to a citation that includes a civil penalty and the payment of restitution of wages to the employee. This bill expands that penalty and restitution provision for a citation to also subject the employer to payment of liquidated damages to the employee.

AB 1386 (Committee on Labor & Employment) Employment: Employee Complaints: Final Orders. This bill amends Labor Code section 98.2 to require that the amount due under a Labor Commissioner order, decision, or award that becomes final and has become a Superior Court order shall be a lien on the employer’s real property, which will continue for 10 years unless satisfied or released. Employer Action for AB 442 & AB 1386: The Labor Commissioner is becoming increasingly active. Employers must not ignore citations and other notices from the Labor Commissioner as strict deadlines and procedures exist to appeal adverse findings.

AB 556 (Dem. Salas) Fair Employment and Housing Act: Military Veterans. This bill amends the Fair Employment and Housing Act, Government Code section 12940(a), to add “military and veteran status” to the list of categories protected from discrimination. “Military and veteran status” is defined 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 does not prohibit employers from identifying members of the military or veterans for purposes of awarding a veteran’s preference as permitted by law. Employer Action: This bill adds to the 16 existing categories of protected classifications under California law. Employers should review their equal employment opportunity, harassment and other non-discrimination policies, posters and employee handbooks for compliance.

AB 1384 (Committee on Labor & Employment) Garment Manufacturing: Civil Penalties. This bill adds section 2676.55 to the Labor Code and subjects any person registered as a garment manufacturer to a civil penalty for failing to display his or her name, address, and garment manufacturing registration number on the front entrance of his or her business. Employer Action: Starting January 1, 2014, garment manufacturers will need to post the required information at their business’ front entrance.

SB 168 (Dem. Monning) Farm Labor Contractors: Successors: Wages and Penalties. Under existing law, farm labor contractors who fail to comply with specified employment laws may be guilty of a misdemeanor punishable by fines, imprisonment, or both. This bill makes a successor to any farm labor contractor that owed wages or penalties to a former employee of the predecessor liable for those wages and penalties, so long as the successor meets one or more of the following criteria: using substantially the same facilities or workforce to offer substantially the same services as the predecessor; sharing common management or interrelation of business operations with the predecessor; employing predecessor managers responsible for controlling wages, hours, or working conditions; or is an immediate family member of the predecessor or a person who had a financial interest in the predecessor. Employer Action: Farm labor contractors taking over contracts will need to carefully review the circumstances of the transaction to determine whether successor obligations exist.

SB 292 (Dem. Corbett) Employment: Sexual Harassment. The Fair Employment and Housing Act (“FEHA”), Government Code section 12940(j)(4)(C), prohibits “harassment because of sex.” This bill expands the FEHA’s definition of “harassment because of sex” to specify that sexually harassing conduct need not be motivated by sexual desire. Employer Action: The bill expands the circumstances under which an employee may allege sexual harassment. Harassment training for supervisors and employees should be updated accordingly.

SB 435 (Dem. Padilla) Compensation: Meal and Rest or Recovery Periods. Existing law prohibits an employer from requiring an employee to work during any meal or rest period mandated by an order of the Industrial Welfare Commission (IWC) and establishes penalties for an employer’s failure to provide a mandated meal or rest period. This bill makes that prohibition applicable to any meal or rest or recovery period mandated by applicable statute or applicable regulation, standard, or order of the IWC, the Occupational Safety and Health Standards Board, or the Division of Occupational Safety and Health. The bill requires employers to pay employees for any meal or rest or recovery period, one additional hour of pay at the employee’s regular rate of compensation for each workday that the meal or rest or recovery period is not provided. A “recovery period” means a cooldown period afforded an employee to prevent heat illness. Employer Action: Employers must recognize the additional liability for failing to provide recovery periods. Failure to provide recovery periods in compliance with the law will result in penalties of one hour of pay per day.

SB 462 (Dem. Monning) Employment: Compensation. This bill amends section 218.5 of the Labor Code and provides that employers may recover their attorney’s fees and costs in wage cases only if the court finds the employee brought the claim in bad faith. Employer Action: Generally, in order to establish “bad faith,” an employer must prove the employee commenced the lawsuit for an improper purpose, such as harassment. Bad faith does not include actions that merely lack merit, and courts have held that an employee’s sincere belief there was a basis for recovery negates a finding of bad faith. Ultimately, bad faith is a difficult standard for employers to prove.

SB 770 (Dem. Jackson) Unemployment Compensation: Disability Benefits: Paid Family Leave. This bill expands the scope of the family temporary disability program to include time off to care for a seriously ill grandparent, grandchild, sibling, or parent-in-law and also makes conforming and clarifying changes in provisions relating to family temporary disability compensation.  This change takes effect July 1, 2014.  Employer Action: Employers should recognize that this bill expands the individuals from who an employee may receive benefits from the state if they take time off of work to care for them. However, there is no corresponding expansion of the California Family Rights Act (“CFRA”) that obligates an employer to provide such time off for the extended list of family members.

Vetoed Bills

AB 454 (Dem Dickinson) Workers’ Compensation Benefits: Prevailing Wage. 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. This bill would have added a new Labor Code section to require the amount of benefits paid to workers injured while performing work under a contract requiring a “prevailing wage” to be based on the wages actually paid to the employee or the prevailing wage that was applicable to the work performed by the employee, whichever amount is greater.

AB 729 (Dem. Hernandez) Evidentiary Privileges: Union Agent-Represented Worker Privilege. This bill would have amended Evidence Code section 912 to create the “union agent-represented worker” privilege to shield communications between union employees and their agents. Governor Brown vetoed the bill, stating that he did not believe it was “appropriate to put communications with a union agent on equal footing with communications with one’s spouse, priest, physician, or attorney.” He also noted that the bill “could compromise the ability of employers to conduct investigations into workplace safety, harassment and other allegations.”

SB 655 (Dem. Wright) Fair Employment and Housing Act: Unlawful Practices. This bill would have amended section 12965, and added section 12940.5, of the Government Code to provide that, in a claim of discrimination or retaliation under the Fair Employment and Housing Act (“FEHA”), the person claiming to have been aggrieved shall prevail if he or she has proven that a protected characteristic or activity was a substantial motivating factor, as defined, in the employment action or decision. If an employer pleads and proves that it would have made the same employment action or decision at the same time, without considering the protected characteristic or activity, the remedies available to the employee would be limited as specified. If an employer fails to prove that it would have made the same employment action or decision at the same time without considering the protected characteristic or activity, the bill would authorize noneconomic damages, injunctive relief, and attorney’s and expert’s fees against the employer, and would require a specified civil penalty to be paid by that employer to the employee. The bill purported to codify the California Supreme Court's decision in Harris v. City of Santa Monica (2013) 56 Cal.4th 203, on consideration of an employer’s mixed motives in discrimination cases. In his veto message, Governor Brown pointed out that he thought “Supreme Court Justice Goodwin Liu got it right in his well-reasoned opinion in that case and [saw] no reason for further legislative intervention.” The legislature is considering overturning Governor Brown’s veto, but would require a two-thirds majority vote to do so.

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