Webinar Series Employment Laws Around the Globe California June 13, 2012 Lew Clark Michael Kelly Thomas Liu Stacie Yee 37 Offices in 18 Countries
Today s presenters Lew Clark Partner and today s Moderator lew.clark@squiresanders.com Michael Kelly Partner michael.kelly@squiresanders.com Thomas Liu Partner thomas.liu@squiresanders.com Stacie Yee Senior Associate stacie.yee@squiresanders.com 2
Sources of Law United States Constitution Federal Statutes and Regulations Title VII (Discrimination) Fair Labor Standards Act (Wage and Hour) Americans with Disabilities Act (ADA) Family and Medical Leave Act (FMLA) And many more OSHA, WARN, ADEA, OWBPA,etc. California Constitution State Statutes and Regulations Fair Employment and Housing Act (FEHA) Labor Code Industrial Welfare Commission Wage Orders DLSE Enforcement Manual Municipal Ordinances 3 Federal and State Court decisions
CALIFORNIA IS DIFFERENT Daily Rules regarding Pay Minimum wage ($8/hr) different from federal law Cities: San Francisco ($10.24/hr) Nonexempt employees Overtime Meal Breaks and Rest Breaks Only applicable to California employees? Anyone who comes to CA to work for full days/weeks must be paid in accordance with CA law Undocumented workers 4
CALIFORNIA WAGE & HOUR Vacation and Payroll Deductions Vacation Earned and vested on a daily basis No use it or lose it policies But caps are okay Paid Time Off or PTO = vacation Employee Business Expenses Lab. Code 2802 Employers responsible for all costs incurred in normal operation of business Except gross negligence, willful misconduct, or dishonesty burden is on employer Payroll deductions, including final paycheck Generally not allowed May not deduct for unpaid debts (loan, cash advance) Maybe be able to if agreed upon in writing 5
CALIFORNIA WAGE & HOUR Termination Rules Final Pay Due upon termination or within 72 hours notice of quit Includes vacation, certain commissions Employee Access to Information Payroll records, personnel files, signed documents California Private Attorney General Act ( PAGA ) Employees can step into the shoes of the California Labor Commissioner to collect penalties for noncompliance 6
Unique Employee Benefits in California California requires employers to provide certain benefits to employees. The specific benefits may depend on where your employees work. Registered Domestic Partners California Insurance Equality Act: plans, policies must provide benefits to registered domestic partners, equal to those offered to spouses CFRA leave applies equally as to spouses But leave does not apply against FMLA leave Result: domestic partner can take up to 24 weeks leave, while spouse eligible for only 12 7
Unique Employee Benefits in California (cont d) Eff. Jan. 1, 2012: Employers must maintain group health benefits for employees for duration PDL (4 months rather than 12 weeks under FMLA) Paid Family Leave Despite title, not a leave of absence; it is a benefit that runs concurrent with FMLA and CFRA Kin Care Paid Sick Leave (San Francisco) Paid Leave for Organ, Bone Marrow Donation 8
Variations on Federal Laws - Cal-WARN California has adopted its own version of the federal Workers Adjustment and Retraining Notification Act (WARN), a complex law governing mass layoffs and plant closings Applies to any industrial or commercial facility at which 75+ full or part-time employees are employed within the preceding 12 months (as opposed to 100 full-time employees under federal law). Requires 60-days notice to all employees (notice to a union will not suffice) of a mass layoff (50+ employees during any 30-day period at a covered establishment), relocation 100+ miles away, or cessation of facility s operations. 9
Variations on Federal Laws - Cal-COBRA The California Continuation Benefits Replacement Act of 1997 (Cal-COBRA) is an expansion of the federal Consolidated Omnibus Budget Reconciliation Act (COBRA) coverage. Requires insurance carriers and Health Maintenance Organizations (HMOs) to provide COBRA-like coverage to employees of smaller companies (two to 19 employees) in California who are not subject to federal COBRA provisions. The coverage period under Cal-COBRA is 36 months (not just 17 months) If employees have exhausted their 18 months of federal COBRA, Cal-COBRA may provide an extension up to 36 months 10
The Hiring Process Wage Theft Prevention Act Requires written notice to hired employees of certain pay information Must have written agreements with California employees paid under commission agreements Limitations on pre-employment inquiries Arrests, convictions, marijuana use HIV testing, genetic characteristics testing Medical and psychological exams 11
Guidelines for Use of Background Checks California laws differ from the federal Federal Fair Credit Reporting Act California Consumer Credit Reporting Agencies Act (rev. eff. Jan. 1, 2012) restricts when employers can use consumer credit reports in connection with hiring/personnel decisions California Investigative Consumer Reporting Agencies Act Employer must obtain authorization from employee, and provide copy of report whether or not it is relied upon for an adverse action Must provide detailed disclosures to the employee Cannot contain conviction reports more than 7 years old 12
California-Specific Discrimination/Harassment Issues California Fair Employment and Housing Act protects against discrimination, retaliation, and harassment based on protected categories. Generally applies to employees with 5+ employees (contrast federal law, generally 15 employees) Protects Title VII categories, plus: actual or perceived gender or sexual orientation, genetic characteristics, political affiliation, marital status, testing HIV positive, veteran status Employer must take all reasonable steps necessary to prevent and correct harassment/discrimination Separate cause of action under the FEHA 13
California-Specific Discrimination/Harassment Issues (cont d) Availability of Defenses: Under federal law, a plaintiff s failure to use internal complaint procedures can be a complete defense. In California, the same can only can reduce liability. Unlike federal law, no cap on damages in FEHA cases. Harassment Training California requires employers in the state with 50+ employees to provide 2+ hours of interactive harassment training to supervisors Non-Discrimination Against Alcohol/Drug Users Employers with 25+ employees must reasonably accommodate employees who voluntarily enter alcohol or drug rehab, unless it imposes an undue burden 14 English-only rules prohibited in the workplace absent a business necessity
Accommodating Disabilities FEHA Covers employers with 5 or more employees instead of 15 (ADA) Protects employees who are limited in at least one major life activity instead of substantially limited (ADA) An activity is limited if the mental or physical condition merely makes it more difficult. Employers obligated to engage in a timely, good faith interactive process with applicants or employees with a known (or perceived) disability 15
Leaves of Absence Special Pregnancy Disability Leave ( PDL ) Available regardless of how short the length of employment Up to 4 months long Is not concurrent with California Family Rights Act ( CFRA ) leave to bond with child Return to work rules that do not assess the needs of individual employees are illegal. 16
Employee Privacy State Constitution explicitly includes right to privacy Prohibited from using or disclosing employee medical information without consent (subject to limited exceptions) Special rules for maintaining electronic health records including logging all changes and the identity of whoever accessed the records Leave requests which specify underlying medical conditions, work releases, workers comp. records and other accident records may be treated as health records. 17
Privacy of Personal Information Personal Data is defined as a person s name combined with (a) their SSN; (b) Drivers License or Cal. ID; or (c) account or credit card number combined with password Data breach involving unencrypted Personal Data triggers obligations to provide notice 18
Use of Social Security Numbers May not be posted in any way May not be printed on any card for services May not require transmission over unencrypted Internet channels May not require to access websites unless a PIN is also required May not be printed on any mailed materials unless required by state or federal law May not encode using magnetic strip, bar code, etc. Last four-digits only on pay stubs 19
Drug and Alcohol Testing Generally permitted for applicants as long as uniformly administered Random testing generally prohibited for existing employees Courts often uphold reasonable suspicion testing following accidents where the employer had a reasonable suspicion the employee was impaired due to drugs or alcohol Based on credible observations that the employee was impaired 20
Protecting Employer Information California law prohibits every contract by which anyone is restrained from engaging in a lawful profession, trade or business Exceptions for Trade secret protection Sale of a business to restrict seller from competing against buyer Dissolution of partnership 21
Trade Secrets Information that derives economic value from not being generally known Subject of reasonable efforts to maintain secrecy Information developed at considerable time and expense to employer Inevitable disclosure doctrine does not apply in California Employees may be permitted to notify customers where they are going even before resigning 22
Today s presenters Lew Clark Partner and today s Moderator lew.clark@squiresanders.com Michael Kelly Partner michael.kelly@squiresanders.com Thomas Liu Partner thomas.liu@squiresanders.com Stacie Yee Senior Associate stacie.yee@squiresanders.com 23
Disclaimer The information contained in this presentation is for general information purposes only and should not be construed as giving the ground for any action or omission in connection with the above material. This presentation should not be construed as professional advice on legal or any other matters. The examples given in this presentation are described with a level of detail that does not provide for their implementation without additional comprehensive review with due regard to specific relevant facts and circumstances. The application of laws and statutes may vary depending on particular circumstances. Squire Sanders does not assume liability for any damage that may be caused to anyone as a result of any action (or omission) on the basis of the information contained herein. 24