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Written By: Ericka L. Ackeret, Esq. &  Tonya D. Hubinger, Esq.

Buchman Provine Brothers Smith LLP

San Francisco, California

Employment Law Alert - November 2012

As California employers have come to expect this time of year, a new wave of employment laws are ready to take effect. The following bills have been signed by Governor Brown and will become law on January 1, 2013. Please note that certain laws take effect immediately and others will take effect later in 2013.

FEHA's Definition of "Sex" Discrimination Expanded to Protect Breastfeeding

The California Legislature has taken another step to expand the definition of "sex" under the California Fair Employment and Housing Act (FEHA), Government Code section 12926, which prohibits specified discriminatory practices in employment. Under existing law, "sex" discrimination includes discrimination based on gender, gender identity and expression, pregnancy, childbirth, and medical conditions related to pregnancy or childbirth. AB 2386 clarifies that the definition of "sex", in the context of unlawful discrimination, includes breastfeeding and medical conditions relating to breastfeeding. The bill itself proclaims that this amendment is declaratory of existing law; thus, it may be applied retroactively and takes effect immediately.

Religious Accommodation under FEHA Enhanced

Currently under the FEHA, employers are required to reasonably accommodate the religious beliefs and observances of their employees unless the accommodation would create an undue hardship for the employer. AB 1964 extends and clarifies the FEHA (Government Code sections 12926 and 12940), by stating that religious dress and religious grooming practices constitute "beliefs and observances" which are encompassed in the protections against religious discrimination. AB 1964 specifies further that segregating an employee in order to accommodate an individual's dress or grooming practice will no longer be an acceptable reasonable accommodation. In addition, the new law states that FEHA's "significant difficulty or expense" definition of undue hardship, not the narrower federal Title VII standard, applies to the FEHA religious discrimination section.

Employee Social Media Privacy Interests Protected

AB 1844 will add California Labor Code section 980, which prohibits an employer from requiring or requesting an employee or applicant for employment to disclose a username or password for the purpose of accessing personal social media, to access personal social media in the presence of the employer or to divulge any personal social media. The bill also prohibits an employer from discharging, disciplining, threatening to discharge or discipline, or otherwise retaliating against an employee or applicant for not complying with a prohibited request. Importantly, this law does not affect an employer's existing right to request access to social media reasonably believed to be relevant to investigate suspected employee misconduct or a violation of law. Employers may also continue to request or require passwords in order to access an employer-provided electronic device, e.g., Blackberry or iPhone.

"Social media" is defined broadly to include any "electronic service or account, or electronic content, including, but not limited to, videos, still photographs, blogs, video blogs, podcasts, instant and text messages, email, online services or accounts, or Internet Web site profiles or locations."

Employee Rights To Inspect Personnel Files Clarified

While existing California law already provides employees with the right to inspect their personnel files, AB 2674 strives to eliminate some of the confusion that Labor Code section 1198.5 has caused. AB 2674 amends the Labor Code to require specifically that employers retain personnel files for at least three (3) years following termination of employment, and to permit current and former employees (or their representatives) to inspect and receive a copy of their personnel records within 30 calendar days of a written request for such copies.

The bill provides that if a current or former employee files a lawsuit against the employer regarding a personnel matter, his or her right to inspect or copy personnel records ceases during the pendency of the lawsuit. The bill provides further that an employer may: (1) designate the person to whom records requests are made, (2) take reasonable steps to verify the identity of the employee or representative making the request and (3) redact the names of nonsupervisory employees contained in the records. If an employer fails to permit inspection or copying of records within the times required, the employee or Labor Commissioner may recover from the employer a $750 penalty. The employee also may obtain injunctive relief, costs and attorneys' fees.

The new law specifies also that an employer is not required to comply with more than 50 requests for copies of personnel records by "a representative or representatives of" employee(s) in one calendar month. In addition, the new law requires that employers develop, and provide upon request, a written form that employees may use in order to request access to, and a copy of, records in their personnel file.

Separately, AB 2674 also amends Labor Code section 226 with respect to the obligation for employer retention of wage statements. Existing law requires employers to keep copies of wage statements for at least three (3) years, either at the employment site or a central location within the state. This bill clarifies that "copies" may include duplicates of the statements provided to the employee or computer-generated records that accurately show all information required to be included on the wage statement.

Employee Remedies for Failure to Provide Accurate Itemized Wage Statements

SB 1255 amends Labor Code section 226(e) in order to specify the circumstances under which employees may recover penalties pursuant to that statute for failure to receive accurate itemized wage statements. Section 226 requires generally that employers provide employees with accurate wage statements setting forth nine (9) specific categories of information, e.g., gross and net wages earned, deductions and inclusive pay period dates. If an employee suffers "injury" as a result of an employer's "knowing and intentional" failure to comply with these requirements, the employee may recover certain penalties for each violation, together with costs and attorneys' fees. SB 1255 specifies that, for purposes of entitlement to these penalties, an employee is "deemed to suffer injury" in two (2) instances: (1) if the employer fails to provide a wage statement; or (2) if the employer fails to provide accurate and complete information for any of the nine (9) categories required, and the employee cannot promptly and easily determine the information from the wage statement alone. Thus, if an employee establishes a "knowing and intentional" violation of the wage statement requirements, the employee may now be presumptively entitled to collect Section 226(e) penalties, even if he/she did not suffer any actual injury.

Temporary Services Employers Must Provide Extra Detail on Wage Statements

Beyond the extensive wage statement requirements already in place for California employers under sections 226 and 2810.5 of the California Labor Code, AB 1744 will add to the Code section 226.1, requiring that temporary services employers (with the exception of certain security services companies) include additional information on employee wage statements. Under the existing Wage Theft Prevention Act of 2011, employers are required to provide their non-exempt employees with a written notice at the time of hiring that contains specified information, such as the rate and basis of the employee's wages, and the employer's name, address and telephone number. AB1744 provides that temporary service employers will also be required to include the rate of pay for each separate assignment, the name and address of each entity that secured the temporary employee's services and the total hours worked for each such entity. Unlike the other bills signed into law by Governor Brown, these new requirements for temporary services employers will not take effect until July 1, 2013.

Written Contracts for Commission Pay: Exceptions

AB 2675 amends Labor Code section 2751, which requires a written contract of employment for services rendered in California and paid for by commissions. The current statute excludes from its obligations two (2) types of compensation: (1) short-term productivity bonuses such as are paid to retail clerks; and (2) bonus and profit-sharing plans, unless the employer offers to pay a fixed percentage of sales or profits as compensation for work to be performed. This bill adds a third exclusion category for "temporary, variable incentive payments that increase, but do not decrease, payment under the written contract." Employers are advised to set forth in a writing to employees the material terms of all types of compensation paid, including the rates and methods of computation.

Wage Garnishment

AB 1775 increases the amount of wages protected from garnishment. Under existing law, the maximum amount of wages exempt from garnishment was the lesser of 25% of an individual's weekly disposable earnings or 30 times the federal minimum hourly wage (i.e., 30 x $7.25). Under the new law, the maximum amount of wages exempt from garnishment will be the lesser of 25% of an individual's weekly disposable earnings or 40 times the California minimum wage (i.e., 40 x $8.00).

In addition to signing several new bills into law, Governor Brown vetoed two (2) employment-related bills bringing some relief to California employers.

Governor Brown Vetoes "Unemployed Need Not Apply" Bill

Governor Brown vetoed AB 1450, which would have attempted to curb discrimination based on unemployment status by prohibiting job advertisements stating that current employment is a requirement for consideration for a specific position.

Wage-and-Hour Protections Not Extended

AB 889 would have had a state agency develop regulations with regard to overtime and meal breaks for nannies, maids and other domestic workers.

Finally, one employment-related bill is being held by the California Senate.

Expansion of CFRA Held under Submission

AB 2039 proposed significant expansion of the California Family Rights Act (CFRA). Currently, AB 2039 is being held under submission in the California Senate so that its fiscal impact may be studied. Under CFRA, an employer with 50 or more employees must permit an eligible employee to take up to twelve (12) weeks of leave in a twelve (12)-month period to care for the serious medical condition of a child (under 18 years of age or adult dependent), spouse or parent. The current definition of "parent" includes stepparents and individuals who act as a parent ("in loco parentis") to the child.

AB 2039 would expand the circumstances under which CFRA leave may be taken by (1) eliminating current age and dependency requirements for children, thereby permitting an employee to take leave to care for an adult child; (2) expanding the definition of "parent" to include parents-in-law; and (3) permitting an employee to take leave to care for a grandparent, sibling or grandchild. The bill also clarifies that employees have the same rights to care for a seriously ill domestic partner as they do for a seriously ill spouse. For now, however, the future of AB 2039 remains uncertain.

Given the constantly and rapidly changing employment arena in California, it is imperative that all businesses that operate within the state review and update regularly their employment practices, handbooks and agreements.

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