CALIFORNIA EMPLOYMENT LAW Steptoe & Johnson LLP Katessa C. Davis and Edward Gregory

Last Updated: September 2013 CALIFORNIA EMPLOYMENT LAW Steptoe & Johnson LLP Katessa C. Davis and Edward Gregory Table of Contents 1. Overview 2. General Issues 3. Employment Policies and Employee Handbooks 4. Hiring Process 5. Compensation and Benefits 6. Termination of Employment 7. Immigration 8. Federal Employment Law 9. State Employment Law 10. Employment Law Resources 1. Overview It is critical that social sector organizations familiarize themselves with the employment laws that affect their employees and organization. Often, social sector organizations begin with like-minded persons informally coming together to address a challenging social problem. Regardless of the ties between those who work together on a social mission, the organization must obey applicable employment laws and implement compliant policies and procedures. The following is an overview of state and federal employment laws that apply to social sector organizations located in California. This overview does not provide a comprehensive analysis of every law that might apply to California employees and should not be acted upon without specific legal advice based on a particular situation. Employment laws can differ greatly by state and even by municipality and county. If your organization and employees are located in a different state, you should consult the employment law pages of LawForChange for that state. 1

2. General Issues a. At Will Employment The conventional relationship between an employer and an employee hired for an indefinite period of time is called employment at will. Under this arrangement, either the employer or employee may terminate the employment relationship at any time, with or without cause, and with or without advance notice. In the absence of a written contract or other evidence indicating an agreement that an employee may be terminated only for cause, employment is generally presumed to be at will. Many California employers choose not to rely on this general presumption and require their new hires to acknowledge in writing that their employment is at will and agree that nothing will change that arrangement other than a written agreement signed by the employee and the head of the organization. In addition to for cause contracts, it is important to remember that there are a number of special state and federal laws, many of them discussed below, that limit an employer s unfettered right to terminate at will employees. These laws prevent employers from firing employees, whether at will or not, for unlawful reasons like discrimination or retaliation for whistleblowing or complaining about discrimination. b. Temporary Employment and Consulting Relationships Many employers use the services of temporary employees, independent contractors, or consultants (and of independent contractors and consultants employees) to supplement their regular workforce. When an employer hires an employee for a temporary period (e.g., for seasonal work or a short-term need), the temporary employee is still an employee of the employer, and the relationship is governed by the same laws that apply to other employees. Because temporary employment is sometimes limited to a specified term, the at will presumption may not automatically apply so it is best for employers to exercise caution, take the same approach as for employees generally, and have temporary workers agree in writing their employment is at will. As with any employee, legally-mandated benefits, such as workers compensation and unemployment insurance, must be offered to temporary employees. Optional benefits, such as 401(k) plans, may or may not extend to temporary employees, depending on the terms of the documents governing those plans. A true independent contractor or consultant is not considered an employee of the employer. Instead, such an individual is considered self-employed and payments made to him or her are considered contract payments, rather than wages. However, it is important to make sure that the arrangement between the organization and the worker passes the applicable legal test for independent contractor status. The Internal Revenue Service ( IRS ) and 2

other governmental agencies use various tests for determining whether a worker is an employee or an independent contractor. Despite variations among the tests, they tend to share the same primary factors. As a practical matter, workers who perform the same job and report to the same supervisors as regular employees are typically deemed to be employees, no matter what their title is or what their contract with the organization says. Additional factors used in determining a worker s status include: the degree of control the organization exercises over the worker s hours and manner of performance; whether the organization provides the worker s tools and/or employee benefits (e.g., medical insurance, vacation benefits, etc.); the worker s length of service; and the method by which the worker is paid (e.g., on an hourly versus project basis). The consequences of incorrectly classifying an employee as an independent contractor can be far-reaching and expensive for an employer (e.g., liability for unpaid payroll taxes and corresponding penalties, liability for unpaid unemployment insurance and workers compensation premiums, and increased exposure to governmental audits, employmentrelated civil suits and administrative claims). c. Employment Agreements While it is not legally necessary to sign formal employment agreements with employees generally, social sector organizations may wish to enter into written employment agreements with one or more employees in vital positions. Such an agreement typically spells out the terms of employment such as duties, compensation, and benefits. The agreement may include an at will provision like that described above, or, for a particularly vital employee, may describe the circumstances under which either party may terminate the employment. Vital employees are often required to agree they will keep certain information confidential even after they leave employment. Whether any such agreement should be used, and, if so, whether its terms should be tailored to fit a specific situation, should be discussed with an employment attorney before it is presented to any employee or prospective employee. d. Government Contractors A number of laws impose specific requirements on employers who contract with the government or a government-funded agency and on employers who receive grants or other funding from the government. These laws include special equal opportunity laws, affirmative action laws, prevailing wage laws, and drug-free workplace laws. The application of the laws depends on the value of the contract or funding and/or the number of employees in the company. 3

e. Employee Records At least seven state and federal laws mandate different lengths of time various employment records must be kept. For practicality s sake and to protect an employer in the event of a lawsuit by the employee, many employers keep the bulk of an employee s personnel file and other records for the duration of employment plus four years. This covers nearly every law, except for three types of records that must be removed before a file is discarded and retained for a longer time: Pension and welfare plan records (six years for general information and as long as needed for information used to determine individual benefits); Records of on-the-job injuries causing loss of work time (five years); and Safety and toxic/chemical exposure records, including Material Safety Data Sheets (30 years). State law - Under state employment laws, a California employer is either required to or should maintain the following records on each employee: At least 2 years applications, personnel records or files, membership records (for labor organizations), employment referral records and records of sexual harassment training and education. At least 3 years dates of hire, re-hire, or return to work after some period of separation; the ages of any minors employed; beginning and end dates for each pay period; hours worked by and wages paid to all employees; records of itemized wage statements for each employee, showing the name and address of the legal entity that is the employer, the employee s name and identification number (only the last four digits, if Social Security number is used), the dates for which the employee is being paid, gross wages earned, total hours worked, number of pieces/units and applicable piece/unit rate (if paid on piece rate), the hourly rates in effect during the pay period and the number of hours worked at each, all deductions, and net wages earned after deductions. At least 4 years written employment contracts. Federal law - In general, under federal laws, an employer is either required to or should maintain the following records on each employee: 1 year documents related to hiring, accommodations, promotions, discipline, and discharge, including: job applications, resumes, or other employment inquiries responding to advertisements or job opening notices, including records pertaining to failure or refusal to hire any individual; records relating to promotion, demotion, transfer, selection for training or apprenticeship, layoff, recall, or discharge of any employee; job orders 4

submitted to an employment agency or labor organization for recruitment of personnel; test papers completed by applicants or candidates for any position; any physical examination results considered in connection with personnel actions; advertisements or notices relating to job openings, promotions, training, or opportunities for overtime work; requests for reasonable accommodation for disability or religious observance and records of any accommodation granted. (One year will cover the limitations period for most claims under Title VII of the Civil Rights Act of 1964 ( Title VII ), the Americans with Disabilities Act ( ADA ) and the Age Discrimination in Employment Act ( ADEA ). See Section 8 below for summaries of these and other federal laws). 3 years Payroll records listing each employee s full name, home address, date of birth, sex (for Equal Pay Act purposes), occupation/job title; time of day and day of week on which each employee s workweek begins, his or her regular rate of pay, the basis for determining his or her regular rate (including any payments excluded from the regular rate), as well as his or her straighttime earnings, overtime premium earnings, additions/subtractions from wages for each pay period; each employee s total wages for each pay period, and date of payment and pay period covered by each payment; employment contracts, employee notices, plans, trusts, and collective bargaining agreements. 2 years Supplemental payroll records such as basic time sheets or production records reflecting individual employees daily starting and stopping times and/or daily amount produced; records of additions to, or deductions from wages of individual employees; wage rate tables for computing piece rates or other rates used in computing straight-time earnings, wages, salary, or overtime; and any records needed to explain the wage rate differentials between males and females within the establishment (e.g., production, seniority, or other bona fide business criteria). (Such information may be necessary in responding to claims under the FLSA, including the Equal Pay Act.) 6 years or longer Records of the background data supporting filings, reports, and other required disclosures pertaining to pension and other employee benefits plans covered by ERISA must be retained for six years. Organizations must also retain records sufficient to determine the plan benefits due or that may become due to employees or beneficiaries as long as such benefits may be payable. 3 years Records related to family and medical leaves including: basic payroll and employee data (used to determine qualification for protection under the Family and Medical Leave Act ( FMLA )), dates and hours FMLA leave is taken, hours worked in the 12 months before the start of leave, copies of employee notices furnished to employer, copies of notices provided to employee of rights and responsibilities under FMLA, employer polices 5

applicable to use of family and medical leave, documents verifying premium payments of employee benefits (both employer-paid and employee-paid portions of such premiums), records of any disputes with employees over use of FMLA leave. These documents will assist in showing compliance with FMLA. 3 years or 1 year after termination I-9 Employment Eligibility Verification Forms. These forms must be kept for a minimum of 3 years or 1 year after the employee s employment ends, whichever is longer. 4 years Tax records related to income tax withholdings. This is required by the Federal Insurance Contribution Act and the Federal Unemployment Tax Act. 5 years Occupational illness or injury records. These records, required by OSHA, should be kept for 5 years after the year in which the injury was sustained or treatment ended, whichever is longer. If the employer is a federal contractor, it should maintain records of its employment outreach efforts to people with disabilities for 5 years. 30 years Records of employee exposure to toxic substances. Such records are required by the Occupational Safety and Health Act ( OSHA ). At a minimum, social sector organizations should maintain one or more personnel files for each employee, containing any offer letters and agreements signed by the employee, required wage and hour records, records regarding promotion, transfer, compensation, termination, and disciplinary action, and any documents used to determine the employee s qualifications for employment. Immigration information and other confidential documents, such as reference checks and investigative files for harassment claims, should be kept separate from an employee s regular personnel file and should be kept confidential. In its role as an employer, an organization should generally not have access to medical records. Medical records are subject to special state and federal privacy laws and regulations and no organization should receive or maintain them without first consulting an attorney. 3. Employment Policies and Employee Handbooks Written policies serve to clarify expectations, reduce risk and, in some cases, comply with statutory requirements, such as those in the Family and Medical Leave Act ( FMLA ). In addition, both state and federal law require that legal notices be posted in an area accessible to all employees. For example, an employer must post notices describing employees rights under family and medical leave laws, antidiscrimination laws, and the Uniformed Services Employment and Reemployment Rights Act ( USERRA ); identifying its workers 6

compensation insurer, detailing its anti-harassment policy and state and federal wage and hour laws. There are organizations that provide updated posters containing these notices (e.g., the California Chamber of Commerce at www.calchamber.com). Policies for any employment manual or handbook should include: a. Anti-discrimination Federal laws prohibit employers from discriminating based on race, color, religion, sex, national origin, veteran status, pregnancy, age, disability, or genetic information. California law imposes more stringent requirements with respect to many of these protected categories and adds to the list of protected categories by prohibiting discrimination based on ancestry, medical condition, sexual orientation, and marital status. These anti-discrimination laws prohibit an employer from making employmentrelated decisions such as hiring, firing, promoting, demoting, giving pay raises, and setting other employment terms or conditions based on a person s protected status. Besides mandating equal treatment, anti-discrimination laws bar retaliation against employees who complain about or seek protection from discrimination directed at themselves or others. Employers must also be aware of their obligation to make reasonable accommodations for employees whose disabilities or religious beliefs conflict with employment requirements. These obligations, which exist under both federal and state law, are unlike other equal employment opportunity laws in that treating all employees equally will not satisfy the obligations. Instead, employers must take positive steps to reasonably accommodate employees with disabilities or specific religious practices. Failure to comply with anti-discrimination laws can result in expensive lawsuits or government agency investigations and hearings. For further information, see the antidiscrimination laws described in the Federal Employment Law and California Employment Law sections below. b. Harassment Both federal and California anti-discrimination laws prohibit workplace harassment of employees protected under those laws. Two types of conduct constitute harassment in the workplace. The most obvious occurs when a supervisor makes a job promotion or benefit dependent on the receipt of sexual favors, so-called quid pro quo harassment. The other type occurs when an employee has to endure comments, touching, physical gestures, or other behavior creating a pervasive hostile environment. While harassment is often thought of as sexual, sexually harassing conduct need not be motivated by sexual 7

desire under California law. It is also important to note that harassment based on race, disability, age, or other protected categories is also prohibited. An employer is required to take all reasonable steps necessary to prevent the occurrence of either type of harassment. An appropriate and comprehensive policy that expressly prohibits harassment and provides more than one avenue for employees to report harassing behavior is a must in any workplace. Employees should be encouraged to report any harassing behavior to their supervisor, or either a human resources representative or senior manager designated to investigate such reports. Reasonable steps to prevent harassment include periodic dissemination of the harassment policy, harassment training (particularly for supervisors), prompt investigation of complaints, and prompt and effective remedial action, if harassment is found to have occurred. Managers who observe or learn of conduct that violates the anti-harassment policy must act to stop the conduct and bring the matter into the investigation process, whether or not an aggrieved employee has come forward. As with discrimination, employers cannot retaliate against individuals who complain about harassment or participate in harassment investigations. Organizations with 50 or more employees must ensure California-based supervisors receive two hours of sexual harassment training within six months of hire or promotion, and every two years thereafter. c. Injury and Illness Prevention The Occupational Safety and Health Act ("OSHA") regulates work place safety for employers in businesses which affect commerce. Under OSHA, employers are required to furnish their employees with a place of employment free from recognized hazards that are causing, or are likely to cause, them death or serious physical harm. Employers must also comply with occupational safety and health standards which are issued under the Act. "Right to Know" regulations issued under OSHA require that employees in certain industries be warned about hazardous materials and chemicals to which they may be exposed. OSHA sets forth a detailed procedure for adopting safety and health standards and provides for inspection, investigation and enforcement. Citations issued for noncompliance can result in civil and criminal penalties, including fines and, for violations causing the death of an employee, imprisonment. States are allowed to develop and enforce their own plans setting and enforcing occupational safety and health standards. Some industries have specific statutes which regulate employee safety and health. Also, see the California OSHA sections in the California Employment Law section. 8

d. Workplace Violence Employers should take steps to prevent violence in the workplace. These may include policies against bringing weapons into the workplace, taking prompt and appropriate action against any acts or threats of violence, and creating an environment that will reduce the likelihood of workplace violence. State law provides time off for employees who are victims of domestic violence. See California Law, below. 4. Hiring Process The hiring process includes inviting and reviewing applications, interviewing and checking references for potential candidates, all leading to selecting and offering a job to the successful candidate. Federal and state laws limit what employers can ask and require of candidates and mandate affirmative steps to ensure disabled candidates have a fair chance to qualify. a. Applications, Interviewing and Reference/Background Checks The application process generally includes publishing the open position and accepting applications. Every help-wanted advertisement should contain an equal opportunity statement. Anti-discrimination laws prohibit certain questions on the application, particularly those that might elicit information about an applicant s protected status and those that are not job-related. As with applications, federal and state anti-discrimination laws prohibit certain inquiries when employers interview candidates and check their references or backgrounds. Again, questions likely to elicit information about a person s age, disability, child bearing decisions or plans, or other matters related to protected status are prohibited unless they are directly related to legitimate job requirements. Those who interview candidates and check references should have a working knowledge of the laws governing those activities. Employers who use outside organizations to conduct background checks must comply with federal and state credit-reporting laws, which require that applicants be given certain written information and sign specially-worded consent forms. Federal and California disability laws oblige employers to take affirmative steps to ensure disabled persons receive a fair opportunity in the hiring process. If a pre-employment test is given, reasonable accommodation must be made for an applicant who requires it. Testing or other criteria not related to the essential functions of the position may not be used if they have discriminatory impact on applicants. 9

b. Payroll Information California Labor Code 2810.5, which went into effect in 2012, equires employers to provide employees upon hire a written notice of: The rate or rates of pay, including any rates for overtime, as applicable; Allowances, if any, claimed as part of the minimum wage; The regular payday designated by the employer; The name of the employer, including DBA; The physical address of the employer's main office and a mailing address, if different; The telephone number of the employer; the name, address, and telephone number of Workers Compensation insurance carrier; and Any other information the Labor Commissioner deems material and necessary. A form for this purpose can be found at: https://www.dir.ca.gov/dlse/lc_2810.5_notice.pdf. c. Immigration In order to verify new hires are either U.S. citizens or authorized to work here, an employer must require every employee to complete an Employment Eligibility Verification (I-9) Form and produce required documentation within three business days of hire. Failure to follow the I-9 process can result in penalties and an audit by Immigration and Customs Enforcement ( ICE ). In August 2010, regulations implementing the electronic Form I-9 were approved. These regulations now require employers to use electronic Form I-9s. Guidance may be found in U.S. Citizenship and Immigration Services ( USCIS ) publication M-274: Handbook for Employers, available at http://www.uscis.gov/files/form/m-274.pdf. Once eligibility to work in the U.S. is established, the employee s immigration status should not be used in other employment decisions. An employer cannot discriminate against an employee based on immigration status or nationality. 5. Compensation and Benefits A number of federal and California laws regulate employment compensation and benefits. Each social sector organization should adopt a compensation scheme that is compatible with the organization s mission and furthers its human resources goals. 10

a. Wages Most private California employers regardless of size are governed by both federal and state wage and hour laws. Federal and state wage and hour laws differ in a number of ways, and, when they do, employers must follow the provision more favorable to employees. For example, both the U.S. and California require employees be paid a minimum wage rate. But, while the federal minimum wage rose to $7.25 per hour in July 2009, California s minimum wage has been $8.00 per hour since January 2008. Note: The San Francisco city minimum wage increased to $10.55 per hour, effective January 1, 2013. The city minimum wage applies to employees who work within San Francisco s boundaries. Guidance may be found at http://sfgsa.org/index.aspx?page=411. California employers must pay $8.00 per hour and employers with San Francisco employees must pay $10.55 per hour, the higher of the two. Payment of the minimum wage is one of two major requirements under federal and state wage and hour laws. The other is payment for overtime work. Here is a basic summary of California s overtime pay requirements: An employer must pay one-and-one-half an employee s regular rate of pay for: All hours worked beyond eight in a single workday; Any work in excess of 40 hours in any one workweek; and The first eight hours worked on the seventh consecutive day worked in a single workweek. An employer must pay double the employee s regular rate of pay for: All hours worked beyond 12 in a single workday; and All hours worked beyond eight on the seventh consecutive day worked in a single workweek. There are industry-specific exceptions to these requirements. Please consult with legal counsel for further information. Overtime laws are not limited to hourly employees. Unless certain limited exemptions apply to make a particular employee exempt from overtime laws, employees paid in other ways, such as salary or commission, must also be paid one-and-a-half or double their regular pay rate for overtime hours. 11

b. Bonuses Bonuses can improve employee retention and provide employees extra incentives to reach targets. Employers who pay bonuses (other than certain irregular, entirely discretionary gift bonuses neither announced nor expected before they are paid) should adopt a written bonus plan to ensure clarity and consistency. Consult with counsel before paying bonuses to overtime-eligible employees some bonuses must be adjusted based on overtime earnings. c. Taxes An employer must have each new employee complete an IRS W-4 certificate and withhold appropriate federal and state income taxes and social security taxes from the wages it pays him/her. Under federal law, funds withheld must be deposited in certain depositories accompanied by a Federal Tax Deposit Coupon (IRS Form 8109) or through the Electronic Federal Tax Payment System (EFTPS). An employer s Quarterly Federal Tax Return (IRS Form 941) must be filed before the end of the month following each calendar quarter. Willful failure to collect, account for, and pay withholding taxes will subject the employer to a significant monetary penalty, and in some cases will result in personal liability for those responsible for remitting the withholding taxes. Most employers, including nonprofit organizations that are not 501(c)(3) organizations, must also file an Employer s Annual Federal Unemployment (FUTA) Tax Return (IRS Form 940) and pay any balance due on or before January 31 of each year. Details may be found in IRS Circular E, available at http://www.irs.gov/publications/p15/index.html. Employers who are 501(c)(3) organizations, however, are not required to file a FUTA Tax Return. If payment of tax is required, any balance is due on or before January 31 of each year. Details may be found in IRS Circular E, available at http://www.irs.gov/publications/p15/index.html and in Publication 15A. California law requires personal income tax withholding and employers should have each new employee complete a DE 4 certificate for that purpose. Further Guidance may be found in the California Employment Development Department s DE 44 publication, available at http://www.edd.ca.gov/pdf_pub_ctr/de44.pdf. d. Mandatory Benefits Workers Compensation. Every private employer in California must either maintain workers compensation insurance or obtain a certificate of selfinsurance. Workers compensation benefits are the only benefits available to an employee who is injured in an on-the-job accident or who becomes ill from 12

on-the-job conditions. This means employees cannot sue their employers for workplace injuries or illnesses the workers compensation system provides their exclusive remedy. Unemployment Insurance. Employers must contribute to an unemployment insurance ( UI ) fund. When an employee is granted unemployment benefits, those payments may or may not be counted against the employer s UI account, depending on several factors. One factor is how long the employee has worked for the employer. Employee eligibility for unemployment benefits can be quite complex. Detailed information and examples can be found on the California Employment Development Department s website at www.edd.ca.gov. EDD publication DE 44 explains employers withholding obligations and can be found at http://www.edd.ca.gov/pdf_pub_ctr/de44.pdf. State Disability Insurance and Paid Family Leave. California s State Disability Insurance ( SDI ) program provides temporary benefit payments to workers who experience wage loss because they are unable to perform their regular or customary work due to non-work related injury or illness or because of pregnancy or childbirth. Paid Family Leave ( PFL ) is a component of SDI. That extends benefits to those unable to work because they need to care for a seriously ill family member or bond with a new child. Employees pay for these benefits by wage deductions, which employers are required to withhold and pay to California s Employee Development Department. Again, see the EDD s DE 44 publication, available at http://www.edd.ca.gov/pdf_pub_ctr/de44.pdf. Federally Mandated Benefits. Traditionally, apart from Social Security, federal law has not mandated benefits in most employment settings. Under the Patient Protection and Affordable Care Act ( ACA ) enacted in March 2010, however, beginning January 1, 2015, employers with 50 or more fulltime employees will have to pay tax penalties to help offset costs to the extent their employees need federal healthcare assistance (for example, where the employer does not offer affordable healthcare coverage to its full-time employees and an employee reaches out to an insurance exchange to obtain coverage). Smaller employers, on the other hand, may receive tax credits to help them provide employee healthcare benefits. And employers who provide retiree healthcare benefits may be eligible for reimbursements to help defray the costs of covering retirees not yet eligible for Medicare. e. Leaves of Absence. Several federal and California laws either require or govern leaves of absence, depending on the reason for the leave. Two of the more complex leave laws, governing state and federal Family and Medical leave, do not apply to small employers. 13

With certain exceptions, the federal Family and Medical Leave Act ( FMLA ) requires employers with 50 or more employees to provide unpaid family or medical leave of up to 12 weeks in a 12-month period for the birth or adoption of a child, for the serious health condition of the employee or spouse, parent or child of the employee, or for a qualifying exigency arising out of the fact that a spouse, child or parent of the employee is on active duty (or has been notified of an impending call or order to active duty) in the Armed Forces in the support of a contingency operation. In addition, eligible employees may receive up to 26 weeks of leave in a 12-month period to care for a service member or veteran family member with a serious illness or service-related injury. A serious health condition includes inpatient hospitalization and subsequent treatment therefore as well as continuing treatment by a health care provider, including pregnancy. To be eligible for FMLA leave, the employee must have worked 12 months or longer, performed at least 1,250 hours of service for the employer in the 12 months prior to the date of leave, and must work at a site within 75 miles of which the employer has 50 or more employees. If the employee s need for leave is foreseeable, the employee must provide his or her employer with 30 days notice before taking leave. When the need for leave is unforeseeable, the employee is required to provide notice as soon as practicable. For purposes of FMLA, the term spouse now includes a same-sex spouse where the employee resides in a state such as California, which recognizes same-sex marriage. The California Family Rights Act (CFRA) is similar to the FMLA. CFRA and FMLA leaves run concurrently for all purposes other than: Leave due to disabling pregnancy or pregnancy-related conditions (a separate, state source of leave rights, runs concurrently with FMLA, but not CFRA, leave); Leave to care for a registered domestic partner (available under CFRA only); Leave for a qualifying exigency related to a family member s military service (FMLA only); and Leave to care for an ill or injured service member (FMLA only). Other state leave laws, such as California s Domestic Violence Leave law, are described in the California Employment Law discussion, below. Leave laws generally do not require paid leave. f. Voluntary Benefits Many employee benefits are not required by law, but employers choose to provide them in order to attract and retain the most qualified workers. For example, an employer is not required to provide retirement, healthcare, long-term disability or severance benefits (except as discussed above with respect to certain employer penalties that will apply under the ACA, beginning January 1, 2015). If an employer chooses to establish such 14

benefits, however, federal laws like the Employee Retirement Income Security Act ( ERISA ), the Consolidated Omnibus Budget Reconciliation Act of 1985 ( COBRA ), the Health Insurance Portability and Affordability Act ( HIPAA ), and the Mental Health Parity and Addiction Equity Act of 2008 ( MHPAEA ) provide certain protections to employees and beneficiaries, impose detailed administrative procedures for benefit claims, and subject many such plans to complex governmental agency regulations. Likewise, employers are not required to pay for vacations. But an employer who elects to do so should follow a uniformly applied written policy to help ensure compliance with federal and state law. California wage and hour law requires that vacation pay be treated like wages once vacation hours are earned or accrued, they cannot be forfeited just because a new year begins or an employee leaves employment (i.e., no use it or lose it rules allowed). As reiterated in the Termination of Employment discussion, below, accrued, unused vacation must be paid at termination. Sick pay is different accrued benefits can be forfeited unless employers choose to combine vacation, sick leave, personal days, and floating holidays into a single paid time off or PTO policy. PTO may easier to administer than time off for vacation, sick pay and various other reasons, but, in California, all PTO leave must be treated like vacation. 6. Termination of Employment As discussed in the General Issues section, above, absent an employment contract providing otherwise, a social sector organization may ordinarily terminate an employee with or without cause, provided there is no violation of anti-discrimination laws or other expressions of public policy (e.g., whistleblower protection laws). Before termination, an organization should thoroughly review all records concerning the employee in question, and carefully assess the risks of litigation. Advance notice of termination should normally be given. In most cases, the organization should consult with legal counsel before terminating an employee. a. Wage Payment At Termination Where the employer is the moving party in the termination or an employee gives more than three days notice before resigning, the employer must pay all wages and accrued vacation benefits immediately at the time of discharge. When an employee quits and gives fewer than 72 hours notice, the employer must pay all wages and accrued vacation benefits within 72 hours after notice is given. An employee who gives fewer than 72 hours notice is entitled to receive his/her final wage 15

payment by mail if he/she so requests and designates a mailing address. The date of the mailing is considered the date of payment for purposes of the 72-hour rule. b. Severance Agreements/Releases Employers are generally not required to provide severance pay, unless they have agreed to do so. If an employer offers severance pay, it may condition payment on the employee s signing a release and waiving all legal claims against the employer. If an employer seeks such a release, the payments or benefits offered as severance must be over and above what the employee is already entitled to receive without the release (e.g., employee is already entitled to be paid all wages earned and all accrued but unused vacation). Federal law contains specific statutory requirements for waivers of age discrimination claims and prohibits waivers of certain wage and hour claims. Due to the complexities involved, employers should consult an attorney to draw up a severance and release agreement. c. Unemployment Insurance Unemployment insurance provides benefits to those who are unemployed through no fault of their own. A discharge for misconduct may disqualify a claimant from receiving unemployment compensation benefits. To be eligible for payments, an applicant generally must: Make a claim for benefits in accordance with the regulations; Be unemployed through no fault of his/her own; Earned $1,300 in one quarter, or must earn $900 in one quarter and total base period earnings of 1.25 times that amount; Be able to work and available for work; Be actively looking for work; and Have registered for work and conducted a search for suitable work as directed. Unemployment benefits are financed through employer contributions. Under the experience rating provisions of the state unemployment insurance law, most employers pay contributions at a rate of 1.6 to 6.2% of their total payroll. The employer s contribution rate depends on its individual benefit ratio (benefits charged to its account for a certain period divided by its total payroll for the same period) as well as the level of funding of California s Unemployment Compensation Fund. d. Continuing Health Care Requirements The Consolidated Omnibus Budget Reconciliation Act of 1985 ( COBRA ) requires employers who establish medical benefits plans to notify employees and their 16

beneficiaries they have the right to continue their plan coverage at the time of a qualifying event that would otherwise end such coverage. Termination of employment is a qualifying event, unless it results from gross misconduct. COBRA applies to employers with 20 or more employees and requires those who elect to continue their medical plan coverage to pay for it at a rate slightly above (102%) the sum of the employer s and employee s premiums. Insurance companies providing group health insurance coverage to California employers with fewer than 20 employees are generally obliged to permit terminating employees and their qualified beneficiaries to continue coverage under state law. 7. Immigration (Federal Law) With globalization and the increasing benefits of a diverse workforce, social sector organizations located in the United States often seek to employ foreign personnel. This is particularly true with organizations that are already working and addressing problems not just in the United States but around the world. A variety of permanent and temporary visas are available, depending on factors such as the job proposed for the alien, the alien s qualifications, the availability of certain visas, and the relationship between the U.S. employer and the foreign employer. Permanent U.S. residents are authorized to work where and for whom they wish. Temporary visa holders have authorization to remain in the United States for a temporary time and any employment authorizations they obtain are often limited to specific employers, jobs, and even specific work sites. When planning to bring foreign personnel to the United States, U.S. employers should allow several months for processing by the U.S. Citizenship and Immigration Services ( USCIS ), as well as by the Department of State and the Department of Labor. Furthermore, employers should be aware that certain corporate changes, including stock or asset sales, job restructuring, change of job sites, and changes in job duties, may dramatically affect (if not invalidate) the employment authorization of foreign employees or require the filing of an amended petition. a. Permanent Residency (the Green Card ) Permanent residency is commonly based on either family relationships, such as marriage to a U.S. citizen, or offers of employment. Permanent residency gained through employment often involves a time-consuming process known as PERM, which can take several years. Employers considering permanent residency as an avenue for an alien employee should always analyze the requirements for a permanent residency filing before bringing the prospective employee to the United States. Employers rarely sponsor someone from abroad for permanent residency. Usually the individual is here in nonimmigrant status already. 17

b. Temporary Visas Examples of commonly used temporary visas are set out below. i) B-1 Business Visitors, and B-2 Visitors for Pleasure/Medical Treatment. These visas are used for brief visits to the United States of six months or less. Neither visa authorizes employment in the U.S. except in very specific situations. B-1 business visitors are often sent by overseas employers to negotiate contracts, attend business conferences or board meetings, or fulfill contractual obligations such as repairing equipment located in this country. B-1 or B-2 visitors cannot be on a U.S. payroll or receive U.S.-source remuneration. ii) F-1 Academic Student Visas Including Practical Training. Foreign students can come to the United States in F-1 status for academic training or M-1 status for vocational training. Students in F-1 status can engage, within certain constraints, in on-campus employment and/or off-campus curricular or optional practical training for limited periods of time. Vocational students cannot obtain work authorization but may sometimes receive practical training after completing their training courses. iii) J-1 Exchange Visitor Visas. These visas are for academic students, scholars, researchers, and teachers traveling to the United States to participate in an approved exchange programs. Potential employers should note that some J-1 exchange visitors and their dependents are subject to a two-year foreign residency requirement before being allowed to change status and return to or remain in the United States. iv) TN Professionals. Under the North American Free Trade Agreement, Canadians and Mexicans who qualify and fill specific defined professional positions can qualify for TN status. Such professions include certain medical/allied health professionals, engineers, computer systems analysts, and management consultants. TN holders are granted three-year stays for specific employers. Other employment is not allowed without prior USCIS approval. Particularly with regard to Canadians, paperwork required for filing these requests is minimal. v) E-1 Treaty Trader and E-2 Treaty Investor Visas. These are temporary visas for persons in managerial, executive or essential skills capacities who are generally employed by companies that engage in substantial trade with or investment in the United States. E visas are commonly used to transfer managers, executives or engineers with specialized knowledge about a foreign company s proprietary processes or practices to that company's U.S. operations. Generally, E visa holders receive a five-year visa stamp, but are approved for entry two years at a time. A visa treaty must exist between the 18

foreign national s country of origin and the United States. Spouses of E visa holders are eligible to apply for work authorization. vi) E-3 Treaty Alien in a Specialty Occupation Visas for Australian Citizens. E-3 visas are for Australian citizens who will be employed in the United States in specialty occupations requiring at least a bachelor s degree. A U.S. employer must pay its E-3 workers the higher of the actual wages it pays its U.S. workers or the prevailing wage for U.S. workers in the local commuting area, based on the Department of Labor s ( DOL s ) online wage library or another valid salary survey. These temporary visas are granted for a period of two years and are renewable indefinitely. Spouses of E-3 visa holders are eligible to apply for work authorization. vii) H-1B Specialty Occupation Visas. H-1B visas are for persons in specialty occupations that require at least a bachelor s degree. Examples include computer programmers, engineers, architects, accountants, and, on occasion, business persons. H-1B temporary workers are granted initial, three-year temporary stays, with possible extensions limited to an aggregate of six years. H-1B visas are employer- and job-specific. A U.S. employer must pay its H-1B workers the higher of actual wages it pays its U.S. workers or the prevailing wage paid to U.S. workers in the local commuting area, based on the DOL s or other valid salary studies. viii) L-1 Intra-company Transferee Visas. These visas are most often used to transfer executives and managers (L1-A) or persons with specialized knowledge (L-1B) from international companies to U.S.-related companies. L-1 visas provide employer-specific work authorization for an initial three-year period, with possible extensions of up to seven years in certain categories. Some L-1 managers or executives may qualify for shortcuts in permanent residency filings. Spouses of L-1 visa holders are eligible to apply for work authorization. ix) O-1 and O-2 Visas for Extraordinary Ability Persons. O-1 and O-2 visas are for persons who have extraordinary abilities in the sciences, arts, education, business or athletics and enjoy sustained national or international acclaim. Persons who assist in O-1 artistic or athletic performances are also eligible. x) P-1 Athletes/Group Entertainers and P-2 Reciprocal Exchange Visitor Visas. These temporary visas allow certain athletes who compete at internationally recognized levels to come to the United States to work. Entertainment groups who have been internationally recognized as outstanding for a substantial period of time may also be included in this category, as may essential support personnel. 19

c. Immigration and Nationality Act ( INA ) The INA bars employers with four or more employees from discriminating based on citizenship or immigration status. Employers may not treat individuals differently because they are or are not U.S. citizens, recent permanent residents, temporary residents, asylum seekers, or refugees. U.S. citizens and work-authorized immigrants are protected from document abuse employers may not demand more or different documentation than required to verify identity and employment eligibility; nor may they reject reasonably genuine-looking documents or specify certain documents over others. d. Immigration Reform and Control Act ( IRCA ) IRCA requires employers, regardless of size, to inspect and verify documentation establishing the identity and eligibility to work in the United States of every newly hired employee and makes it unlawful to hire ineligible aliens. The employer must verify the identity and employment eligibility by having all new hires complete Employment Eligibility Verification Forms ( I-9 ) forms. Employers risk significant fines and penalties for failing to comply with these documentation requirements or hiring workers who are not authorized to work in the U.S. 8. Federal Employment Law Described below are some of the more significant federal laws and regulations, not pertaining to immigration, that affect the employment relationship. a. Title VII of the Civil Rights Act of 1964 ( Title VII ) Title VII prohibits employment discrimination based on race, sex, color, national origin, or religion. The law applies to all employers with 15 or more employees and prohibits discrimination in areas of job advertising, recruiting, hiring, promotion, compensation, benefits administration, and termination. Title VII also prohibits harassment based on an individual s protected characteristics, as well as retaliation for engaging in conduct protected by Title VII. To recover damages, an individual who has suffered injury as a result of a Title VII violation must file a complaint with the Equal Employment Opportunity Commission ( EEOC ) within 180 days of the alleged discrimination. If the employee elects to file charges initially with a state or local fair employment agency, the EEOC charge must be filed within the earlier of (i) 300 days after the alleged discrimination, or (ii) 30 days after receiving notice that the state or local agency has terminated the proceeding under state or local law. (If California s Department of Fair Employment and Housing ( DFEH ) accepts a discrimination complaint for investigation and determines the matter also falls within the EEOC s jurisdiction, the DFEH will dual file the complaint with the EEOC and continue its investigation. DFEH findings are usually accepted by the EEOC.) 20

Once the EEOC investigates the allegations and makes a determination regarding the sufficiency of the evidence to prove the alleged violation, it will notify the employee in writing of his/her right to bring a civil action. Regardless of the EEOC s determination, the employee may, within 90 days of receipt of the notice, bring a legal action based on his/her allegations. Possible remedies under Title VII include compensatory and punitive damages, back pay and front pay, reinstatement, and attorneys fees. b. Age Discrimination in Employment Act ("ADEA") The ADEA makes it unlawful for employers to fail or refuse to hire, to discharge, limit, to segregate or classify, or to otherwise discriminate against employees, with respect to their compensation, terms, conditions or privileges of employment, because of their age. The ADEA protects employees who are at least 40 years old and applies to all employers with 20 or more employees. There are limited exceptions to the ADEA where age is a "bona fide occupational qualification" necessary to the particular business, or where older job seekers or employees receive different treatment based on reasonable factors other than age. Employees may file charges of discrimination with the EEOC, which enforces the ADEA. The employee or the EEOC may then sue in federal court for damages and other relief. Remedies under the ADEA include reinstatement or front pay, back pay, liquidated damages, and attorneys fees. c. Americans with Disabilities Act ( ADA ) The ADA makes it unlawful for an employer to discriminate against a qualified individual based on the existence of a disability, a record of a disability, or on the employer s perception that the individual is disabled. The ADA applies to employers with 15 or more employees and requires them to take reasonable steps to accommodate disabled applicants and employees in the workplace unless such measures would constitute an undue hardship. The procedures for pursuing an ADA claim, as well as the remedies available for a violation, are similar to those provided by Title VII. d. Rehabilitation Act of 1973 The Rehabilitation Act applies to social sector organizations receiving federal financial assistance and prohibits much the same discrimination and imposes much the same reasonable accommodation obligations as the ADA. The federal appeals court with jurisdiction over California has held the Rehabilitation Act s protections extend to independent contractors as well as employees. e. Pregnancy Discrimination Act of 1978 ( PDA ) The PDA prohibits discrimination based on pregnancy and related conditions. 21

f. Employee Polygraph Protection Act ( EPPA ) The EPPA prohibits private employers from using polygraph machines to determine whether to hire applicants or promote or terminate employees. The EPPA applies to most private employers, except those engaged in security operations, public protection, activities impacting national security, or the manufacture or distribution of controlled substances. The EPPA permits the use of a lie detector by any employer when the employer sustains an economic loss, the employee to be tested had access to the property that is the subject of the investigation, the employer reasonably suspects the employee was involved in the incident being investigated, and the employer obtains a statement from the employee authorizing the test. But even in these limited circumstances, the employee being tested can terminate the examination at any time. Either the Secretary of Labor or an aggrieved employee can bring an action against an employer for violating the EPPA. Remedies include reinstatement, promotion, back pay, and attorneys fees. The Department of Labor may also impose a fine up to $10,000. g. Equal Pay Act of 1963 ( EPA ) The EPA requires employers to pay men and women equal wages for equal work. Equal pay is required for any jobs "the performance of which require equal skill, effort and responsibility and which are performed under similar working conditions." There are exceptions for seniority systems, merit systems, pay systems based on quantity or quality of production, or other pay differences based on factors other than sex. The EPA applies to employers with two or more employees. An employee who believes his/her employer has violated the EPA may bring an action in federal court. Alternatively, the employee can file a charge with the EEOC, but need not do so before suing in court. Remedies include back pay, attorneys fees, and court costs. h. Fair Labor Standards Act ("FLSA") The FLSA regulates wages and hours of certain covered employees. Employers must keep accurate records of hours worked by covered employees and employees must receive a regular rate of pay for each hour they work up to 40 hours in a week. The regular rate must be at least equal to the federally-mandated "minimum wage," which was increased to $7.25 in July 2009. California employers must pay the state minimum wage of $8.00 per hour and employers with San Francisco employees must pay the higher city minimum of $10.55 per hour. Unless an employee s duties satisfy one of the narrow exemptions for executives, administrators or professionals, every hour an employee works beyond 40 hours in a workweek is considered "overtime" under the FLSA. Each non-exempt employee must be paid a premium rate of one and one half times his/her regular rate of pay for every overtime hour. These protections may not be waived by individual agreement or in a union contract. The FLSA is subject to many 22

regulations, exceptions, interpretations and exemptions, beyond the scope of this outline. For example, some occupations and industries have special minimum wage provisions. Employers who violate the FLSA are subject to civil penalties, including fines, and prevailing employees may recover unpaid wages, unpaid overtime compensation, liquidated damages, and attorneys fees. i. Family and Medical Leave Act ( FMLA ) The FMLA allows eligible employees working for organizations with 50 or more employees to take up to 12 weeks unpaid leave per year for the birth or adoption of a child, the serious health condition of the employee or a spouse, parent, or child of the employee, or a qualifying exigency arising out of a spouse, child, or parent of the employee being on active duty (or on notice of an impending call or order to active duty) in the Armed Forces. In addition, eligible employees may receive up to 26 weeks of leave in a 12-month period to care for a service member or veteran family member with a serious illness or service-related injury. A serious health condition includes not just inpatient hospitalization and subsequent treatment, but can also be continuing treatment by a health care provider for any number of conditions, including pregnancy. To be eligible for FMLA leave, the employee must work at least 12 months, perform at least 1250 hours of service in the 12 months before the date of leave, and work at a site where the employer has at least 50 employees within a 75-mile radius. If the need for leave is foreseeable, the employee must give his/her employer 30 days notice before taking leave. When the need for leave is unforeseeable, the employee is required to notify the employer as soon as practicable. The term spouse includes a same-sex spouse where the employee resides in a state such as California, which recognizes same-sex marriage. An individual who believes his/her FMLA rights have been violated can sue in court. Remedies include lost compensation, liquidated damages, other out of pocket expenses, equitable relief, and attorneys fees. j. The Employee Retirement Income Security Act of 1974 ("ERISA") ERISA regulates employee benefit plans maintained by employers. The statute contains specific requirements governing the creation, modification, maintenance and reporting of pension and retirement plans, as well as welfare benefit plans. Welfare plans include, for example, plans providing medical, dental, vision, disability, death, or other insurancetype benefits, as well as severance and other employment-related benefits. A detailed regulatory scheme mandates certain reports and disclosures; provides exemptions for religious and other institutions; specifies fiduciary standards and, for most retirement plans, requires detailed coverage, vesting and funding protections. ERISA does not 23

require employers to offer any particular level of severance, insurance, pension or welfare benefits, nor does it require such benefits be provided at all. The employer is left to decide those matters, or, if it is unionized, to bargain with its employee s collective bargaining representative about them. However, if benefits are offered, they must comply with regulations prohibiting discrimination in favor of highly-compensated employees, must be administered in compliance with the terms of written benefit plans, and must be summarized in written plan descriptions distributed to employees and periodically updated to reflect material modifications to the plan. Federal law generally preempts state laws relating to employee benefits covered by ERISA. However, certain exceptions apply, for example, with respect to certain state insurance laws where an employer provides medical coverage to its employees through an insurance contract. k. Consolidated Omnibus Budget Reform Act of 1985 ( COBRA ) COBRA requires employers who employ 20 or more employees and offer healthcare benefits to offer continuation coverage to employees and covered dependents upon occurrence of certain qualifying events, like termination of employment, that would otherwise end such coverage. COBRA applies whether employees leave voluntarily or involuntarily and sets out detailed procedures for notifying employees and dependents of their coverage continuation rights. Employers may generally require those who elect COBRA continuation coverage to pay for it the entire premium for healthcare coverage (including any portion previously paid by the employer) plus a two percent administrative charge. COBRA generally extends for up to 18 months, but in certain circumstances, like the disability of those covered or the occurrence of additional qualifying events, coverage can continue for a longer period, up to 36 months in some cases. [As noted above, small employers who are exempt from the federal COBRA continuation coverage requirements may be obligated to provide similar coverage to employees and their dependents based on a loss of coverage event, under Cal-COBRA state laws.] l. Patient Protection and Affordable Care Act ( ACA ) The ACA requires certain group health plans and health insurance contracts to include patient protections, such as limitations on preexisting condition exclusions, lifetime and annual coverage limits, and rescissions of coverage. Plans that are subject to these rules are required to notify affected employees (and their dependents) of certain of the ACA coverage requirements. The applicability dates for each of these protective provisions vary and some (but not all) of the requirements do not apply to plans that were in place as of March 23, 2010, that meet grandfathering rules under the ACA. As noted above, beginning January 1, 2015, large employers, defined as those with 50 or more full-time employees, will be subject to employer penalties if they do not provide health coverage to full-time employees as required under the ACA. These rules are complex and constantly evolving as the agencies responsible for oversight of ACA compliance release new interpretive guidance and regulations regarding the various compliance requirements and 24

deadlines. Due to the complexities involved, employers should consult an attorney regarding compliance with these new rules. m. Health Insurance Portability and Accountability Act ( HIPAA ) Prior to passage of the ACA in 2010, HIPAA s portability rules limited the use of preexisting condition exclusions by group health plans or health insurers. HIPPA bars preexisting condition exclusions of more than 12 months (18 months for late enrollees) for any condition present during the six-month period ending on the individual's enrollment date. Under HIPAA, preexisting condition exclusions generally may not be imposed on newborns, adopted children under age 18, or expecting mothers pregnancy. The preexisting condition exclusion period must be reduced by periods of creditable coverage during which the individual was covered under another health plan. Under the ACA, group health plans and health insurance issuers are generally prohibited from imposing pre-existing condition exclusions on plan participants who are under age 19. These restrictions will be further extended to all group health plan participants, regardless of age, effective for plan years beginning on or after January 1, 2014. Note that these rules apply to health plans that are grandfathered for purposes of health care reform. As a result, the limitations historically imposed by HIPAA will, in many cases, be superseded by the more stringent preexisting condition exclusion limitations applicable under the ACA. HIPAA also requires plans, providers and other covered entities in the healthcare industry, as well as business associates that perform administrative and other functions on behalf of a covered entity, such as a third party service provider to a health plan, to safeguard the privacy of all types of protected health information held by them.the HIPAA security rules impose requirements with respect to safeguarding and protecting the confidentiality, integrity and availability of protected health information held by such covered entities and business associates. In addition, group health plans subject to HIPAA are required to extend special enrollment rights to employees and dependents who lose coverage based on certain events, such as where an employee s spouse who was eligible to enroll in the plan initially declined coverage based on coverage available under his or her own employer s plan, but the spouse ceases to be covered under that plan. In cases where HIPAA special enrollment rights apply to a plan, the plan is required to provide notice of such rights to employee and dependents eligible to participate in the plan. The notice requirements were updated in 2009, to include provision of a notice regarding special enrollment opportunities where an employee or dependent who is otherwise eligible to enroll in a group health plan loses eligibility for coverage under a State Medicaid or Children s Health Insurance Program ( CHIP ) program or becomes eligible for State premium assistance under Medicaid or CHIP. 25

n. Occupational Safety and Health Act ("OSHA") The federal OSHA statute regulates workplace safety for employers across the United States. The statute is administered by the Occupational Safety & Health Administration ( OSHA ), an agency residing within the United States labor law enforcement department, the DOL. The OSHA agency does not directly regulate occupational safety and health in California. Instead, California has been certified to operate its own Occupational Safety and Health Program, commonly referred to as Cal/OSHA, under an agreement with the federal government. See the discussion in the California Employment Law section, below. o. Fair Credit Reporting Act ( FCRA ) The FCRA limits the ways in which employers may obtain and use credit information in making employment decisions, including hiring and termination. Under the FCRA, employers must disclose they intend to seek and use credit reports and must obtain applicants and employees written consent before doing so. Disclosure and consent forms should be separate documents, not part of the employer s application form. Employers must notify affected applicants or employees before making adverse employment decisions based in whole or in part upon information obtained from a credit reporting agency. Additional requirements apply to investigative consumer reports, which contain more personal information than standard credit reports. (In California, similar requirements apply under state law.) p. Uniformed Services Employment and Reemployment Rights Act ( USERRA ) USERRA prohibits discrimination against persons because of their service in the Armed Forces Reserve, National Guard, or other uniformed services. An employer may not deny any benefit of employment based on membership, application for membership, performance of service, application for service, or obligation for service in the uniformed services. USERRA also permits veterans, reservists, National Guard members, and certain other uniformed services members to reclaim their civilian employment following absences for military service or training. With respect to employer-sponsored retirement plans, certain benefit protections must be extended to plan participants who either return to reemployment after performing qualified military service or die while on a leave of absence related to the performance of qualified military service. q. Genetic Information Nondiscrimination Act ( GINA ) GINA prohibits an employer from discriminating against an individual in hiring, firing, compensation, terms, or privileges of employment based on his/her or his/her family member s genetic information. The law defines genetic information as (1) an individual s genetic tests; (2) an individual s family member s genetic tests; or (3) the 26

manifestation of a disease or disorder in the individual s family member. Subject to a number of narrowly defined exceptions, GINA prohibits employers from requesting, requiring, or purchasing individuals and their family members genetic information. An employer may engage in genetic monitoring of biological effects of toxic substances in the workplace only in certain, narrowly defined situations. Employees alleging GINA violations may sue in court. r. Other Miscellaneous Federal Laws and Notice Requirements Several other federal statutes may impose notice and minimum benefits coverage requirements on employer-sponsored health and welfare plans. For example, if an employer s group medical plan covers mental health and/or substance abuse benefits, the Mental Health Parity and Addiction Equity Act of 2008 ( MHPAEA ) generally prevents the plan from imposing higher financial requirements and stricter limitations on a participant s ability to obtain such benefits than those that apply to general medical and surgical benefits covered under the plan. For example, MHPAEA would not allow a plan to impose a higher copay on a mental health-related doctor s visit than the one that would apply to a regular doctor s visit. A statute known as Michelle s Law requires a group health plan to extend coverage certain adult dependents of an employee while on a medically necessary leave of absence from enrollment in a postsecondary educational institution, to the extent that coverage would not already be required under the ACA. Finally, group health plans that provide maternity benefits and/or benefits related to mastectomies are required to both provide minimum coverage with respect to such benefits and notify plan participants of such coverage, under the Newborns and Mothers Health Protection Act of 1996 and the Women's Health and Cancer Rights Act of 1998. Although each of the requirements discussed above preceded passage of the ACA, some of the minimum coverage requirements may be obsolete for certain group health plans and health insurance issuers, as a result of the new ACA requirements. 9. State Employment Law a. Privacy The California Constitution establishes a right to privacy against intrusion, not only by the government, but by private employers as well. This constrains private employers in a number of ways, such as by limiting the circumstances under which they can conduct employee drug testing. California statutes confer specific privacy protections in the employment setting. Employers may not ask applicants about certain marijuana-related convictions or participation in pre- or post-trial diversion programs. Nor may they demote, suspend, or discharge employees for lawful conduct during nonworking hours, away from the 27

employers premises. Audio monitoring or videotaping of restrooms, locker rooms, or changing rooms is also barred. Employers in California may not ask an applicant or employee to disclose his or her username or password for his or her personal social media accounts or ask to view those accounts, except in limited circumstances related to a misconduct investigation. Other, more general, state privacy laws may impact the workplace, like California s prohibition against unconsented tape-recording of confidential communications. b. Anti-Discrimination As noted in the Employment Policies and Employee Handbooks section, above, California s anti-discrimination laws are generally more protective than federal laws like Title VII, the ADEA, and the ADA. For example, the state Fair Employment and Housing Act ( FEHA ) defines unlawful gender bias to include discrimination based on identity, appearance, or behavior. Unlike the ADA, which requires an individual be substantially limited in a major life activity to be considered disabled, the FEHA requires only that he/she be limited in such an activity. And under the FEHA, selecting more highly-paid employees for a reduction in force may be found to constitute age discrimination if older workers are disproportionately affected. The FEHA forbids English only rules absent business justification and permits employees to wear pants in most situations. c. Whistleblowers The state Labor Code bars employers from adopting rules to prevent employees from giving government or law enforcement agencies information they reasonably believe discloses violations of federal or state statutes or regulations. Nor may employers retaliate against employees who give such information or refuse to engage in activities that would violate federal or state statutes or regulations. Other statutes prohibit retaliation against employees who blow the whistle in specific contexts, like reporting safety hazards. d. Wage and Hour California s minimum wage and overtime rules are set out in the Compensation and Benefits section, above. As with the FLSA (see above, in the Federal Employment Law section), California s wage and hour rules are quite complex and well beyond the scope of this outline. It is critical that every manager responsible for a social sector organization s payroll practices know and comply with those rules, consulting counsel as needed. Lawsuits alleging wage and hour violations are common in California; are often brought as class actions; and can be extremely costly. The state Labor Code includes a 28

bounty hunter provision encouraging employees to prosecute lawsuits on behalf of their coworkers. Employees who sue under that provision can collect not just the unpaid straight and overtime wages, compensation for missed meal and rest periods, and other damages typically sought in wage and hour cases, but also a portion of the civil penalties payable to the state. e. California OSHA The federal government certified California to run its own safety and health program in 1977. The state Department of Industrial Relations specifically its Division of Occupational Safety and Health ( DOSH ) administers Cal/OSHA, which applies to most private and public employers in California. DOSH conducts workplace inspections in response industrial accident reports, occupational safety and health hazard complaints, and under inspection programs targeting industries with high rates of workplace hazards, fatalities, injuries or illnesses. California employers owe a general duty to provide safe workplaces, may be subject to safety rules governing specific activities, and must report serious on-the-job injuries within strict time limits. Every California employer must implement a written and effective illness and injury prevention program. For information and examples, see. http://www.dir.ca.gov/dosh/etools/09-031/index.htm. Beyond fines and civil penalties, employers and sometimes individual managers and supervisors may be subject to criminal liability for safety violations, particularly those resulting in death or serious injury. The state labor standards enforcement division, the DLSE, investigates charges that employees have been retaliated or discriminated against for reporting safety and health concerns or complaining about unsafe conditions. f. State Specific Leave Laws i) California Paid Family Leave ( PFL ) PFL is a state-sponsored insurance program. It provides employees at companies of any size with partial wage replacement for up to six weeks in any 12-month period while they are absent from work to care for a seriously ill or injured family member or for bonding with a minor child within one year of the birth or placement of the child in connection with foster care or adoption. PFL does not create a right to a leave of absence, does not require the employer to create a leave of absence policy, and does not guarantee reinstatement rights other than those already mandated by law. An employee entitled to FMLA/CFRA leave must take concurrent PFL. ii) Sick Leave for Kin Care 29

California employers are not required to provide sick leave. But those who do must generally allow employees to use up to half the sick leave they accrue in a year to care for their sick children, parents, spouses, and registered domestic partners. This is called kin care. Unlike family leave, kin care applies even to small employers and does not require that the individual receiving leave have a serious illness. The kin care law defines sick leave as accrued increments of compensated leave meant for an employee s illness or injury, doctors appointments or other medical needs. An employee may use up to one-half his/her annual sick leave allotment, once it has actually accrued, when he/she needs time off for kin care. Employers who deny employees kin care leave may face civil monetary penalties and lawsuits. iii) Pregnancy Disability Leave ( PDL ) A pregnant employee is entitled up to four months (or 88 working days) PDL if she works for an employer with five or more employees. PDL is generally unpaid by the employer. Though often taken all at once during the few weeks before and after delivery, PDL can be used for morning sickness, prenatal visits, complications, and recovery whenever a doctor certifies the employee is disabled during or following her pregnancy. An employer may require medical certification that the employee is disabled by pregnancy only if it requires medical certification for other types of disability leave. The same is true for a return-to-work medical release. The employer must place a woman returning from PDL in the same job she held before the leave or in a comparable position, depending on the circumstances. An employee unable to return to work after taking four months of PDL may not be terminated if the employer maintains a policy of granting longer leaves for other disabilities. Under the federal FMLA, pregnancy is considered a serious health condition and employees may take leave for pregnancy-related disability. Hence, FMLA leave and PDL run concurrently, provided the employer timely notifies the employee it considers her PDL to be FMLA leave. This means an employee who uses a full four months of PDL will exhaust her 12 weeks of FMLA leave entitlement. However, she may still be able to take advantage of California s family medical leave law, the CFRA. CFRA leave does not run concurrently with PDL, because pregnancy is not considered a serious health condition under the CFRA. CFRA leave can be used for baby bonding, however. As a result, whether or not an employee will be entitled to CFRA leave upon exhausting PDL depends on when she has her baby. A pregnant employee who exhausts her PDL leave after delivery can use CFRA leave to bond with her new baby. On the other hand, if the employee uses up her PDL before delivery, pregnancy does not qualify as a serious health 30

condition under the CFRA and she will not be entitled to CFRA leave, even if her doctor still considers her disabled. The maximum combined leave, for an employee who qualifies for and exhausts both PDL and CFRA leave is approximately seven months (four months, plus 12 workweeks). PDL can run up to four months, if the employee is actually disabled by pregnancy and/or childbirth during that time. And the CFRA provides 12 workweeks for baby bonding leave, which can be taken during the 12 months following the birth of the child. Experience shows such an extended leave is relatively rare. Pregnancies typically do not disable women for an entire four months and many women cannot afford to take 12 weeks of unpaid leave for bonding. iv) Military Spouse Leave All California employers with 25 or more employees must provide a leave of absence for spouses of military personnel. This law does not relieve the employer s obligation under the FMLA to give leave to care for injured or ill service members. To be eligible, employees must work an average of 20 or more hours per week and have a spouse active in the United States Armed Forces (the Army, Navy, Air Force, Marines and Coast Guard), National Guard or Army Reserve who is deployed during a period of military conflict. The leave lasts up to 10 days. Employers can allow employees to use sick and or vacation/paid time off (PTO) during this leave but cannot require them to do so. Employees must provide their employer with notice within two business days of receiving official notice that their spouse will take leave relating to deployment. v) Domestic Violence and Sexual Assault Victim Leave Employers must allow domestic violence and sexual assault victims to take time off for certain purposes. Employers may not discriminate or retaliate against such victims who take time off to help ensure their or their children s health, safety or welfare, by obtaining: a temporary restraining order; a restraining order; or other court assistance. Employers of 25 or more employees may not discharge or discriminate or retaliate against domestic violence or sexual assault victims who take time off to: Seek medical attention for injuries caused by domestic violence; 31

Obtain services from a domestic violence shelter, program or rape crisis center as a result of domestic violence; Obtain psychological counseling related to an experience of domestic violence or Participate in safety planning, or to take other actions to increase safety from future domestic violence, including temporary or permanent relocation. Employees must give reasonable advance notice of their intent to take time off, if feasible. vi) School Activities Leave California employers must permit an employee who is the parent or guardian of a child in kindergarten or grades 1 though 12, or who is the parent or guardian of a child in a licensed day care facility, up to 40 unpaid hours off per school year for the purpose of participating in activities of the school or licensed day care facility. The employee may take up to eight hours for this purpose in any one calendar month of the year, and can be required to use any accrued vacation for this purpose. Documentation from the school or licensed day care facility may be required as proof that the employee participated in the school or facility activity on a specific date and at a specific time. An employee who is the parent or guardian of a child who has been suspended from school must be allowed unpaid time off if requested by the school to appear at the school in connection with that suspension. The employer may require the employee to give reasonable notice to the employer of the request. vii) Jury Duty/Witness Duty. If an employee is called for jury duty or is required to appear as a witness in a court proceeding, the employee must be provided the necessary time off. The employee may be required to provide as much advance notice to employer as possible and to verify his/her need for time off by providing the employer with a copy of his/her jury summons or subpoena or other court order to testify in the court proceeding. Should the employee s supervisor determine that jury duty service would unduly impact the needs 32

of the employer, the employee may be asked to delay service, if allowed by the court. An employer may determine if this type of leave is paid or unpaid, but note that not paying exempt employees for jury duty service can sometimes risk their exempt status for wage and hour purposes. viii) Leave for Organ and Bone Marrow Donors. g. Other State Requirements. i) Smoking. Employers with 15 or more employees working in California must provide up to 30 days of paid leave for employees making organ donations, and up to five days of paid leave for employees making bone marrow donations. Employers may require employees taking organ donation leave to use up to 15 days of accrued paid time off and may require employees taking bone marrow donation leave to use accrued paid time off for the entire leave. During the paid leave, employees are entitled to receive group health coverage and must continue to accrue paid time off and other benefits as if they had continued working. Leave for organ and bone marrow donation does not run concurrently with leave under the Family and Medical Leave Act or the California Family Rights Act. In accordance with California Labor Code section 6404.5, which prohibits smoking in places of employment, an employer should have a policy prohibiting smoking in or near the workplace. ii) Lactation Accomodation. Employers are required to provide a reasonable amount of break time to accommodate an employee desiring to express breastmilk for the employee s infant child. If possible, the break time should coincide with the employee's paid break time. If not, the break time need not be paid. 33

10. Online Employment Law Resources a. Federal i) Federal Agencies US Dept. of Labor, http://www.dol.gov National Labor Relations Board (NLRB), http://www.nlrb.gov U.S. Equal Employment Opportunity Commission (EEOC), http://www.eeoc.gov Dept. of Justice Civil Rights Division, http://www.usdoj.gov/crt U.S. Citizenship and Immigration Services (USCIS) http://www.uscis.gov/portal/site/uscis ii) Federal laws, regulations, compliance assistance. Code of Federal Regulations: http://www.access.gpo.gov/nara/cfr/cfr-tablesearch.html United States Code: http://www4.law.cornell.edu/uscode/ Department of Labor Employment Law Guide: http://www.dol.gov/compliance/guide/ Family and Medical Leave Act (FMLA) Compliance Guide: http://www.dol.gov/esa/whd/regs/compliance/1421.htm b. State Department of Fair Employment and Housing: http://www.dfeh.ca.gov Division of Labor Standards Enforcement: http://www.dir.ca.gov/dise Employment Development Department: http://www.edd.ca.gov c. Additional Materials Employment Law tips: http://employmentlawpost.com Society of Human Resources Management: http://www.shrm.org/pages/default.aspx Bureau of National Affairs (BNA) publications on employment: http://www.emlawcenter.bna.com/pic2/em.nsf/frontpage Publications by the American Bar Association Section on Labor and Employment: http://abanet.org/labor/basics/home.shtml 34