EMPLOYMENT LAW ROUND-UP: NEW EMPLOYMENT LAWS YOU NEED TO KNOW

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1 EMPLOYMENT LAW ROUND-UP: NEW EMPLOYMENT LAWS YOU NEED TO KNOW Newport Beach Marriott Hotel & Spa 900 Newport Center Drive Newport Beach, CA Jeffery A. Morris, Esq. Melissa A. Lewis, Esq Historic Decatur Road, Suite 200 San Diego, CA (619) ; Fax (619)

2 Table of Contents Harassment and Discrimination Updates Religion and Reasonable Accommodation Sex Harassment Sex Discrimination and Breastfeeding Pregnancy Disability Disability Discrimination and Accommodation Intellectual Disabilities... 3 Wage and Hour Updates Penalties for Wage Statement Violations Commission Agreements Fixed Salaries and Overtime Wage Garnishment Prevailing Wage... 5 Updates Specific to Public Employers Public employees' health insurance premiums Public employee pension benefit changes... 6 Miscellaneous Updates Social Media and Personal Passwords Inspection of Personnel Records FEHC Eliminated, Duties Transferred to the DFEH Unemployment Insurance: Overpayment and Penalties California False Claims Act ( CFCA )... 8 Laws Held Under Submission Family Leave under California Family Rights Act ( CFRA )... 9

3 Employment Law Round-Up: New Employment Laws You Need to Know This year there were several new employment laws that will affect your dayto-day operations and may require policy revisions. Here are the highlights by category: Harassment and Discrimination Updates 1. Religion and Reasonable Accommodation AB 1964 amends Government Code sections and This bill amends section to include a religious dress practice or a religious grooming practice as a belief or observance covered by the protections against religious discrimination, and section now 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. Note, this new law is in response to a common practice where employers, as an accommodation, were allowing such employees to wear their religious garb and adhere to religious grooming standards, but required them to work only in back areas such as kitchens or stock-rooms where they would be out of sight, see U.S. Equal Employment Opportunity Commission v. Abercrombie & Fitch Stores, Inc. (N.D. Cal., Sept. 3, 2013, 11-CV YGR) 2013 WL Under this revision, this practice will be actionable as discrimination. 2. Sex Harassment SB 292 amends Government Code section Existing law protects and safeguards the right and opportunity of all persons to seek, obtain, and hold employment without discrimination, abridgment, or harassment on account of race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, or sexual orientation. This amendment specifies, for purposes of the definition of harassment because of sex under 1 Proposed Legislation: AB 556, SB 404, and SB 655.

4 Stutz Artiano Shinoff & Holtz Page 2 these provisions, that sexually harassing conduct need not be motivated by sexual desire. Note, case law has suggested that sex harassment need not be based on sexual desire, see Oncale v. Sundowner Offshore Services, Inc. (1998) 523 U.S. 75, but this change solidifies this in California. 3. Sex Discrimination and Breastfeeding AB 2386 changes the definition of "sex" under Government Code section for purposes of discrimination protections to include breastfeeding and related medical conditions. Further, this makes breastfeeding a protected activity. Note, based on this change in definition there is a mandatory update to the Discrimination and Harassment Notice. 4. Pregnancy Disability Register 2012, No. 48, amends pregnancy disability regulations, California Code Regulations title 2, sections 7291 and 7292, effective December 30, The revised pregnancy disability regulations make significant changes to state law, including: A change to the definition of "four months." An expanded definition of when a woman is "disabled by pregnancy." Clarification of an employer's responsibilities regarding the reasonable accommodation or transfer of employees affected by pregnancy, childbirth or related medical conditions. An expansion of protections to include that it is unlawful to discriminate against or harass an applicant or employee based on "perceived pregnancy." 2 Proposed Legislation: AB 556, SB 404, and AB 5

5 Stutz Artiano Shinoff & Holtz Page 3 Note, the regulations also make mandatory changes to Notices "A" and "B," which provide information for employees about their rights and responsibilities under pregnancy disability leave (Notice "A") and the California Family Rights Act (Notice "B"). These notices can be found at: Notice A: ; and Notice B: 5. Disability Discrimination and Accommodation Register 2012, No. 52 amended disability discrimination and accommodation regulations, California Code Regulations title 2, sections 7293 and 7294, effective December 30, The changes to the disability regulations include an expansion of the definitions of "mental" and "physical" disability and a detailed description of the interactive process and the obligations of both the employer and the employee during that process. The amended regulations include specific examples of what constitutes a reasonable accommodation, including a discussion of when a leave of absence might be an appropriate accommodation. 6. Intellectual Disabilities AB 2370 and SB 1381 substitute the term "intellectual disability" for the outdated term mental retardation in many statutes and regulations. Wage and Hour Updates 7. Penalties for Wage Statement Violations SB 1255 amends Labor Code section 226 to state that an employee is deemed to suffer injury for purposes of the penalty under this section if the employer fails to provide a wage statement. The bill would also provide that an employee is deemed to suffer injury for that penalty if the employer fails to provide accurate and complete information, as specified, and the employee

6 Stutz Artiano Shinoff & Holtz Page 4 cannot promptly and easily determine from the wage statement alone the amount of the gross or net wages paid to the employee during the pay period or other specified information, the deductions the employer made from the gross wages to determine the net wages paid to the employee during the pay period, the name and address of the employer or legal entity that secured the services of the employer, and the name of the employee and only the last four digits of his or her social security number or an employee identification number other than a social security number, as specified. Note, previously an employee had to demonstrate that they actually suffered an injury from the lack of information or from misinformation, Price v. Starbucks (2011) 192 Cal.App.4th 1136 (holding the former employee was not entitled to the penalty under section 226 because he did not suffer any injury from allegedly noncompliant wage statement). Now it will be much easier for employees to collect this penalty. 8. Commission Agreements AB 1396 amends Labor Code section 2751 and repeals Labor Code section 2752 effective January 1, Section 2751 now requires that whenever the contemplated method of paying an employee involves commissions, there must be a written contract that sets forth the method by which the commissions will be computed and paid. Employers must also provide the employee with a signed copy of the contract and obtain a signed receipt for the contract from him or her. Further, if the contract expires but the employee continues to work under its terms, the terms will be presumed to remain in full force and effect until the contract is superseded by a new contract between the parties or either party terminates the employment relationship. The repealed section, 2752, provided that an employer who violated this requirement could be liable in a civil action for triple damages. AB 2675 amends Labor Code section 2751 to exempt from the above requirement temporary, variable incentive payments that increase, but do not decrease, payment under the written contract. This means short-term spiffs or sales contests that only add to payment are not required to be in writing.

7 Stutz Artiano Shinoff & Holtz Page 5 9. Fixed Salaries and Overtime AB 2103 amends Labor Code section 515. Existing law, with certain exceptions, establishes 8 hours as a day s work and a 40-hour workweek, and requires payment of prescribed overtime compensation for additional hours worked. Existing law also provides that for the purpose of computing the overtime rate of compensation required to be paid to a non-exempt full-time salaried employee, the employee s regular hourly rate shall be 1/40th of the employee s weekly salary. This amendment provides that payment of a fixed salary to a non-exempt employee shall be deemed to provide compensation only for the employee s regular, non-overtime hours, notwithstanding any private agreement to the contrary. Note, previously an employer and employee could enter an agreement that a set salary that compensated the employee for a week in excess of 40 hours that included overtime, Arechiga v. Dolores Press (2011) 192 Cal.App.4th 567, (holding a weekly payment for 66 hours enforceable)(overruled by AB 2103). Now, such agreements are invalid and a weekly salary only compensates an employee s regular non-overtime hours. 10. Wage Garnishment AB 1775 amends Code of Civil Procedure sections and effective July 1, 2013, by increasing the amount of wages that are exempt from garnishment, redefining disposable income and stating the levy may not exceed 25%. 11. Prevailing Wage AB 2677 amends Labor Code section and adds section to provide that increased employer payment contributions that result in a lower hourly straight time or overtime wage do not constitute a violation of the applicable prevailing wage determination as long as certain specified conditions are met and increased employer payment contribution that result in a lower

8 Stutz Artiano Shinoff & Holtz Page 6 taxable wage is not a violation of the applicable prevailing wage determination if specified conditions are met. Updates Specific to Public Employers 12. Public employees' health insurance premiums AB 2142 amends Government Code sections , 22864, and 22911, and authorizes the California Public Employees' Retirement System (CalPERS) to equalize premiums more broadly than presently is the case. Currently, employee groups are insured through many different contracts, with premiums being more or less expensive depending on the group's demographics, the geographic area of the group, and other factors. The new law requires that premiums reasonably reflect the costs of providing the services, authorizes multiple forms of cost-containment programs, and forbids CalPERS from contracting with or approving health plans that vary rates based on the geographic location of the employees in the plan. 13. Public employee pension benefit changes AB 340 amends and adds various sections of the Government Code 4 making changes to the pension benefits that may be offered to public employees hired 3 Proposed legislation: SB Proposed Legislation: Amend Sections (has proposed bill) and (has proposed bill) of, and to add Sections (has proposed), (has proposed), (has proposed), (has proposed), and to, the Education Code, to amend Sections , , , (had proposed), *, 21076, and * of, to amend and renumber Section 1243 of, to add Sections , , (has proposed), 20791, , 31542, , 31543, 31631, and to, to add Article 4 (some has proposed) (commencing with Section 7522) to Chapter 21 of Division 7 of Title 1 of, to add a heading to Article 1 (commencing with Section 7500), to add a heading to Article 2 (commencing with Section 7515), and to add a heading to Article 3 (commencing with Section 7520) of Chapter 21 of Division 7 of Title 1 of, to add and repeal Sections (has proposed) and (has proposed) of, and to repeal the headings of Chapter 21.4 (commencing with Section 7515) and Chapter 21.5 (commencing with Section 7520) of Division 7 of Title 1 of, the Government Code, relating to public employees' retirement, and making an appropriation therefor.

9 Stutz Artiano Shinoff & Holtz Page 7 on or after January 1, Among the changes are a new maximum benefit and a lower-cost pension formula for newly hired employees, with a requirement to work longer to reach full retirement age and a cap on the amount used to calculate an individual's pension. New employees will also be required to share the costs of pension benefits equally with the employer. In total, new employee contributions will increase to eight percent. Miscellaneous Updates 14. Social Media and Personal Passwords AB 1844 adds Labor Code section 980 5, which prohibits employers from requesting logins or passwords of employee s private social media, or compelling employees to access social media in the employer s presence. There are limited exceptions, including an exception relating to employer investigations and electronic devices issued by an employer. (For more on this see Stutz Artiano Shinoff & Holtz s article in the ACHRO newsletter.) 15. Inspection of Personnel Records AB 2674 amends Labor Code sections 226 and As for section 226, copies of payroll stubs with required data must be kept for three years, but can be retained electronically. Relating to inspection and retention of personnel records under , the new law makes several significant changes, including in the following areas: (1) who has the right to inspect or request copies of personnel files; (2) any deadlines for providing access to files; (3) where and how records must be made available; (4) an employer's obligations to retain files; and (5) penalties for failure to comply. Note, if an employee asks for an employer-provided form to make the inspection request, the employer must provide the employee with such a form. 5 Proposed Legislation: AB 25.

10 Stutz Artiano Shinoff & Holtz Page 8 Further, the personnel record must be provided within 30 days from the time of the request or the employer risks penalties. 16. FEHC Eliminated, Duties Transferred to the DFEH SB 1038 eliminates the California Fair Employment and Housing Commission (FEHC) and assigns duties to the Department of Fair Employment and Housing (DFEH). This bill also creates a new council within the DFEH. The most significant change is the manner in which charges of discrimination or harassment are handled: the administrative hearing process before the FEHC is eliminated and instead, the DFEH will be able to bring civil actions on behalf of a complainant directly in court and require mandatory dispute resolution. 17. Unemployment Insurance: Overpayment and Penalties AB 1845 provides that the Employment Development Department (EDD) can deny reimbursement to an employer for any overpayments made to its unemployment insurance reserve accounts if the EDD determines that the overpayment resulted from an employer's failure to respond to or provide adequate information to the EDD. This new law applies to benefit overpayments established on or after October 22, California False Claims Act ( CFCA ) AB 2492 strengthens whistleblower protections under the Government Code False Claims Act. The False Claims Act currently provides that a person who submits to the state or a political subdivision of the state, a false claim for money, property, or services, shall be liable to the state or political subdivision for certain damages and for a civil penalty. Existing law authorizes a person to bring a civil action for damages resulting from fraudulent claims against the state or a political subdivision, and to share in the recovery. Lastly, existing law prohibits employers from engaging in certain acts that prevent employees from

11 Stutz Artiano Shinoff & Holtz Page 9 disclosing information to the government or law enforcement agency or from acting in furtherance of a false claims action. This amendment defines the term obligation for purposes of these provisions and expands the definition of a claim. The amendment increases the civil penalty for each violation and authorizes a court to award a plaintiff a share of the proceeds of the action. Further, this amendment provides specified relief (reinstatement with the same seniority status, double damages for back pay, interest on back pay, special damages, punitive damages, attorneys fees, and court cost) to any employee, contractor, or agent that is, among other things, discharged, demoted, suspended, or in any other manner discriminated against in the terms and conditions of his or her employment because of certain acts done by the employee, contractor, or agent in furtherance of these provisions or to stop one or more violations. The amendment modifies the statute of limitations of certain civil actions. Note, example of a False Claim: for purposes of the state False Claims Act, if a contractor knowingly presents a false change order proposal and a change order is issued in reliance thereon, each request for progress payment of amounts payable under the change order is a false claim, as will support imposition of civil penalty under the Act. (Fassberg Const. Co. v. Housing Authority of City of Los Angeles (2007) 151 Cal.App.4th 267, 152 Cal.App.4th 720, modified on denial of rehearing, review denied.) Laws Held Under Submission 19. Family Leave under California Family Rights Act ( CFRA ) AB 2039 is currently under submission and, if approved, would amend CFRA (Government Code section ) to include grandparents, grandchildren, parent-in-laws, adult children, and siblings to the list of family members that an employee may take job protected leave under CFRA.

12 Stutz Artiano Shinoff & Holtz Page 10 Note, this change would also means any leave for these family members will not overlap with FMLA because it would not qualify for FMLA. This could mean that an employee may be allowed to take 12 weeks for family leave under CFRA for one of the above family members, then an additional 12 weeks of family leave for an immediate family member that would qualify under FMLA. Watch for case law and development in this area.