2003 LEGISLATIVE AND DECISIONAL CHANGES IMPACT CALIFORNIA EMPLOYERS

As if California employers did not have enough to worry about as this year comes to a close with the continuing stumbling economy, employers now have to contend with all the new laws and revised interpretations of wage and hour issues. Below is a summary of some of the recent changes signed into law by Governor Davis which will become effective January 1, 2003 (unless otherwise stated) and the revised interpretation of wage and hour issues:

I. LEGISLATIVE CHANGES

Age Bias/Discrimination Protection: In June, 2002 the California Supreme Court held it was not age discrimination to deny a 53 year old employee the same educational benefits that were provided to younger employees. California law provides that it is illegal to fire or deny employment based on age, yet the law did not extend this protection to employee benefits or “terms, conditions and privileges of employment”.

New legislation (AB 1599) nullified the Supreme Court’s decision, and now the Fair Employment and Housing Act provides that age is a protected class for which there can be no discrimination in the terms, conditions or privileges of employment in addition to hiring and or firing decisions. Employee Access to Payroll Records: Labor Code §226 currently requires an employer to provide each employee with an itemized written statement that provides the following:

a) Gross and Net wages earned;
b) Total hours worked if paid hourly;
c) All deductions made;
d) Inclusive dates for the payroll period;
e) Number of piece rate units earned and the rate of pay; and
f) All applicable hourly rates.

In addition, each employee or former employee has the right, upon reasonable request to review a copy of their payroll records. The law is now amended to:
a) Require employers to comply within 21 calendars days of a request of a current or former employee to inspect or copy their payroll records;
b) Provide a potential affirmative defense for an employer’s inability to comply with the requirements of the Code;
c) Impose a $750.00 penalty for failure to permit the inspection and/or copying of records within the statutory time period.
d) Permits an employee to bring a civil action for injunctive relief to enforce compliance and permits an employee to recover an award of costs and reasonable attorneys fees.

Employee’s Right to Disclose their Wages: An employer may not discharge, formally discipline or otherwise discriminate in terms of job advancement against an employee who discloses the amount of their wages. AB 2895 adds Labor Code §232.5 to remove the restriction that the “adverse employment action” must affect job advancement, and further to apply the restrictions currently set forth in Labor Code §232 to the right of an employee to disclose “working conditions”.

Family Temporary Disability Insurance (FTDI) bill signed into law: SB1661will provide paid family leave for up to six weeks for employees who are unable to work due to the illness or injury of a child, spouse, parent or domestic partner or for the birth, adoption or foster care placement of a child of the employee or domestic partner (who has registered their domestic partner status as required by law).

FTDI will be available to those employees who are covered by California’s SDI program as of July 1, 2004. FTDI is an entitlement to pay and not an entitlement to a leave of absence or guaranteed reinstatement. FMLA, CFRA and PDL provide those entitlements to leave and reinstatement. There is much that is still unknown about this law but since it’s application does not become effective until January 1, 2004 there is time for the details to be specified.

Plant Closures and Lay offs: The Federal WARN Act requires employers with 100 or more employees to provide 60 days advance written notice of a lay off involving 50 or more employees. California had no such similar law. This new law establishes requirements for employers (those with 75+ employees) to provide 60 days advance written notice of a mass layoff, relocation or plant closing to affected employees and selected state and local agencies. There are several exemptions, notice requirements and penalties built into this law which require detailed analysis to determine it’s application to any plant closure or lay off. Sick Leave Policies: While California law does not require employees to provide sick leave to employees, Labor Code §233 does require that an employer must allow the employees to use 50% of the leave to care for an ill child, parent or spouse or domestic partner. Now, SB 1471 adds Labor Code § 234 which prohibits an employer from using any type of an absence control policy to penalize employees for taking sick leave authorized under §233.

Workplace Investigations: Two new laws, AB 1068 and AB 2868 take effect immediately as urgency legislation and will lessen the burden of employers and prospective employers on pre-hire background checks and potential allegations of defamation relating to performance evaluations and inquiries regarding potential for rehire.

Under AB1068, applicants may now check off a box on employment application to indicate their desire to obtain a copy of the credit report or other public records reviewed by the potential employer during the application process. If the employer only checks references and does not access any public records or credit reports for the pre employment background screening, any information gathered need not be provided to the applicant.

Under AB2868, a “privileged communication” under Civil Code § 47 shall now include a communication regarding the job performance of a former employee and whether the former employee is eligible for rehire. This will ease the burden of background checks considerably and should lessen the threat of litigation over bad references on a theory of defamation.

II. New Labor Commissioner Policies

Individuals Liable for Wages: The Division of Labor Standards Enforcement (DLSE) issued an opinion concluding that an individual can be an “employer” so that managers, officers, directors who are directly involved in the hiring, firing and compensation of employees, could be liable for employee wages. “Employer” is not specifically defined in the Labor Code dealing with wages, hours and working conditions. The DLSE looked to the wage orders which defined employer as “any person” who directly or indirectly or through an agent employs or exercises control over the wages, hours or working conditions of any person. DLSE Expands Interpretation of Non Discrimination provisions in Labor Code Section 98.6: Labor Code §98.6 provides that an employee cannot be disciplined, discharged or discriminated against due to their lawful off duty conduct, filed a bona fide complaint or claim; filed a claim with the Labor Commissioner’s office or participated in any proceeding before the Labor Commissioner or exercised any other rights afforded the employee.

The DLSE recent opinion provides that an employer cannot discrimination nor engage in a retaliatory discharge against an employee who merely complains to the employer regarding a potential violation of the Labor Code - without actually having to have filed a complaint or claim with the Labor Commissioner. Since the legislative intent behind the Code does not indicate an intent to protect employees other than those who actually file a claim, it is likely that this amendment may be challenged in court proceedings.

Use of PTO and Vacation Time May be Mandated by Employer: Employers may require employees to use their accrued vacation and/or PTO time during specific times during the year only if NINE MONTHS advance notice is provided to the Employee. Therefore, if an employer wishes for an employee to use their PTO or vacation accrual during a week of shut down between Christmas and New Year’s, the employees must be notified of this at least 9 months prior to the week off.

Compensation for Exempt Employees Performing “Work” while on Vacation: If an exempt employee performs any work during time designated as “vacation” such as checking and responding to emails or voice mails, the Labor Commissioner stated that there is no exception to the rule that any work performed during any workday would entitle the exempt employee to the salary for that day. The Labor Commissioner’s opinion further stated that unless the employer “requires” the exempt employee to perform the work on a day the employee is absent, the employer may dock the employee’s salary (or vacation balance) for the full day absence less a pro rata share of the day when work was performed. If the employer does either directly or indirectly require the employee perform work (as minor as checking voice and/or emails may be), on any day when the employee is out for Vacation or PTO, the employees salary may not be docked.

In Summary: California employers face hurdles every day to comply with laws, rules and regulations to avoid employment based litigation. Employers should review their handbooks, policies, practices and procedures and train their supervisors and managers to ensure that their personnel functions comply with these new laws.

2003 New Cases - Updated