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A Look Ahead: New California Employment Laws for 2006

November 29, 2005

Relatively few pieces of employment legislation were signed into law this year by California Governor Arnold Schwarzenegger.  Instead, much political attention was focused on eight initiatives placed on the ballot for the special election in November 2005, four of which were sponsored by the Governor as part of his reform campaign.  None of the eight initiatives was approved by the voters.  In addition, Governor Schwarzenegger vetoed legislation that would have increased the state minimum wage, required employers to disclose severance offers to groups of employees, increased damages for equal pay violations, and restricted employers’ right to appeal decisions of the Labor Commissioner concerning wage claims.

However, there are a number of changes for California employers in the works.  The following new employment laws affecting private-sector employers will take effect on January 1, 2006, unless otherwise specified:

Use of Social Security Numbers or Employee Identification Numbers (SB 101)

Current law provides that by January 1, 2008, employers may not display more than the last four digits of an employee’s Social Security number or an existing alternate identification number on any check provided to an employee.  This law was enacted in 2004 for the purpose of reducing identity theft, but led to confusion for employers and payroll processing companies.  SB 101 was enacted in 2005 to clarify two ambiguities in the 2004 law.  First, Labor Code section 226 now provides that, effective January 1, 2008, employers may either display the last four numbers of an employee’s Social Security number or an alternate employee identification number other than a Social Security number.  The deletion of the word “existing” from the statute allows employers to create new alternate employee identification numbers to comply with the requirement that full Social Security numbers not be displayed on pay stubs.  Second, SB 101 amended Labor Code section 226 to provide that the last four digits of the Social Security number or the alternate employee identification number need not be placed on the paycheck itself but may instead appear on the employee’s itemized wage statement, draft, or voucher.

Service of Workplace Protective Orders by Law Enforcement Officers (AB 429)

AB 429 amends the Workplace Violence Safety Act (Code of Civil Procedure section 527.8) to make it easier for employers to serve temporary restraining orders and injunctions, by allowing law enforcement officers to verbally serve the defendant rather than requiring the employer to personally serve the defendant.

Under existing law, an employer may seek a temporary restraining order or injunction on behalf it its employees against anyone who has committed a violent act or made a credible threat of violence.  This procedure is typically used to protect employees from disgruntled former employees or customers, or to protect an employee who is the victim of domestic violence from attacks by the spouse in the workplace.  However, a defendant must be given notice of a temporary restraining order or injunction for it to be enforceable.

AB 429 eases the service requirement by allowing a law enforcement officer to give the defendant verbal notice of the terms of the order, after which the employer must mail an endorsed copy of the order to the defendant within one day.  This procedure is presently allowed for similar orders relating to domestic violence and elder abuse; AB 429 expands the list to include workplace violence orders as well.

Direct Deposit of Final Wages; Overtime Exemption for Certain Computer Software Employees (AB 1093)

AB 1093 changed two separate provisions of the Labor Code.  First, existing law provides that an employee’s authorization for direct deposit of his or her wages is deemed to be revoked if the employee resigns or is terminated.  As a result, employers are prohibited from paying an employee his or her final wages by direct deposit, even if the employee previously authorized direct deposit.  AB 1093 amends Labor Code section 213 to permit employers to pay final wages by direct deposit if the employee has voluntarily authorized this form of payment.  Employers must still comply with the provisions of Labor Code sections 201 and 202, which require immediate payment of final wages for employees who are involuntarily terminated or who voluntarily resign with more than 72 hours’ notice, and payment within 72 hours for employees who voluntarily resign with fewer than 72 hours’ notice.

The second change made by AB 1093 is to Labor Code section 515.5, which governs the exemption from overtime compensation for certain highly-skilled employees in the computer software field.  (Note that state regulations in this area vary from, and are more stringent than, the federal Fair Labor Standards Act.)  Existing law provides that such employees are exempt from overtime compensation if certain job criteria are met, provided that the employee is paid at least $41 per hour.  AB 1093 clarifies the compensation requirement to permit the exemption if the employee is paid at least $41 per hour or the annualized full-time salary equivalent of that rate.  This hourly rate or annualized equivalent is indexed to the California Consumer Price Index for Urban Wage Earners and Clerical Workers, and is adjusted on January 1st of each year.  The indexed hourly rate for 2005 is $45.85 per hour; this figure will be adjusted again on January 1, 2006.  See the California Industrial Welfare Commission’s website for details:  http://www.dir.ca.gov/iwc/iwc.html.

Substitute Service of Labor Commissioner’s Pleadings (AB 1311)

AB 1311 expands the permissible forms of service of complaints, notices, and decisions by the Labor Commissioner to include “substitute service.”  This permits the Labor Commissioner to serve a person by leaving a copy of the document at the home or office of the party being served and by mailing a copy of the same document to the person at the address where the copy was left.  The same procedure is used for service of process in civil lawsuits.

Time Extended for Employees Under Age 18 to File Complaints with the California Department of Fair Employment and Housing (AB 1669)

Under current law, the statute of limitations for any employee wishing to file a complaint of discrimination, harassment or retaliation in violation of the California Fair Employment and Housing Act (FEHA) is ordinarily one year from the date of the allegedly unlawful employment practice.  AB 1669 creates an exception for employees under the age of 18, by allowing them one year from the time they become adults to file a complaint with the Department of Fair Employment and Housing.  This law amends Government Code section 12960 to provide that minor employees may file a complaint under the FEHA for an unlawful employment practice up to one year from the date that they attain the age of majority.

Meal Periods in the Motion Picture and Broadcasting Industries (AB 1734)

AB 1734 amends Labor Code section 512, which requires covered employers to provide meal periods at specified times, to exempt the motion picture and broadcasting industries under certain conditions.  If an employee in the motion picture industry or the broadcasting industry (subject to Wage Orders 11 or 12) is covered by a valid collective bargaining agreement that provides for meal periods and includes a monetary remedy if the employee does not receive a meal period required by the agreement, the provisions of the collective bargaining agreement will control.