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Overview of New California Employment Laws

December 15, 2011

This past fall, California Governor Jerry Brown signed into law a number of bills that impact California employers.  The chart below provides a brief overview of key provisions of these laws.  Except where noted, these laws are effective January 1, 2012.  If you would like more information regarding any of these new laws,  please do not hesitate to contact any of our attorneys.

Wage Notices Required Under the California Wage Theft Prevention Act of 2011

(AB 469)

Private California employers are now required to provide non-exempt employees with written notice of certain wage payment information.  This notice must be provided to these employees: (a) at the time of their hiring; and (b) when changes occur regarding the information disclosed in the original notice. 

Notice is not required for: (a) employees classified as exempt from overtime under California law; (b) an employee directly employed by the state or any political subdivision thereof, including any city, county, city and county, or special district; or (c) an employee who is covered by a valid collective bargaining agreement if the agreement expressly provides for the wages, hours of work, and working conditions of the employee, and if the agreement provides premium wage rates for all overtime hours worked and a regular hourly rate of pay for those employees of not less than 30 percent more than the state minimum wage. 

(For more information, please see our separate alert entitled “Spotlight on Employer Action Required Under the California Wage Theft Prevention Act and New Restrictions on Employers’ Use of Consumer Credit Reports in California”.)

Restrictions on Employer Use of Consumer Credit Reports

(AB 22) 

California employers are now prohibited from using consumer credit reports for employment purposes for many groups of employees. 

(For more information, please see our separate alert entitled “Spotlight on Employer Action Required Under the California Wage Theft Prevention Act and New Restrictions on Employers’ Use of Consumer Credit Reports in California”.)

Willful Misclassification of Independent Contractors

(SB 459) 

This new law prohibits: (a) the “willful misclassification” of an individual as an independent contractor; and (b) charging an individual who has been willfully misclassified as an independent contractor a fee, or making any deductions from such individual’s compensation for any purpose (e.g., for goods, materials, space rental, equipment, fines, etc.) that would be illegal if the individual was properly classified as an employee.  “Willful misclassification” is defined as “avoiding employee status for an individual by voluntarily and knowingly misclassifying that individual as an independent contractor.”

This new law also provides for joint and several liability for any person who, for money or other valuable consideration, knowingly advises an employer to treat an individual as an independent contractor to avoid employee status, if such individual is found not to be an independent contractor.  This provision of the law, however, will not apply to: (a) a person who provides advice to his or her employer; and (b) any attorney licensed in California or another U.S. jurisdiction who provides legal advice in the course of the practice of law.

Violators of the law will: (a) be subject to substantial penalties; and (b) be required to prominently display information regarding their violation of this law on their website (or on a violator’s premises if the violator does not have a website).

Additional Protections Under California’s Pregnancy Disability Leave Law and the California Family Rights Act

(SB 299, AB 592) 

This law clarifies that employers are prohibited from interfering with, restraining, or denying the exercise of, or the attempt to exercise, any right under the California Pregnancy Disability Leave Law and California Family Rights Act. 

Additionally, under the California Pregnancy Disability Leave Law, an employer cannot refuse to maintain and pay for health insurance coverage for individuals who take leave under this law.  (Previously, coverage was only required to be continued if the employee’s leave was also covered under the federal Family and Medical Leave Act or the employer provided continued coverage for other temporary disability leaves.)

Gender Identity, Gender Expression, and Genetic Information Are Protected Classes Under California’s Anti-Discrimination Laws

(AB 887, SB 559) 

Employers are explicitly prohibited under California law from discriminating against employees and applicants on the basis of gender expression and gender identity. 

Employers are also prohibited under California law from discriminating against employees and applicants on the basis of genetic information.  

Enhanced Protection for Equal Health Benefit Coverage for Spouses and Registered Domestic Partners

(SB 757)

Existing California law requires that a policy or certificate of health insurance marketed, issued, or delivered to a California resident, regardless of the situs of the contract or master group policyholder, is generally subject to California’s insurance equality law, except for a policy issued outside of California to an employer whose principal place of business and majority of employees are located outside of California.  Under this new law, every group health care service plan contract and every group health insurance policy that is marketed, issued, or delivered to a California resident must provide equal coverage to registered domestic partners and spouses.

Temporary Work Permit Program for Minors in the Entertainment Industry

(AB 1401)

Existing law regulates the employment of minors in the entertainment industry and requires the written consent of the Labor Commissioner for a minor under the age of 16 to take part in certain types of employment.  This new law establishes a program to be administered by the Labor Commissioner that would enable a minor's parent or guardian, prior to the first employment of a minor performer and under specified conditions, to obtain a temporary permit for the employment of a minor under certain circumstances. 

Commission Plans Must Be Memorialized in Writing

(AB 1396)

Effective January 1, 2013, employers must provide all commissioned employees who provide services within California with a written commission agreement that sets forth the method by which the commissions shall be computed and paid.  The new law refers to the definition of “commissions” set forth in California Labor Code Section 204.1, and generally excludes short-term productivity bonuses such as are paid to retail clerks and bonus and profit-sharing plans, unless there has been an offer by the employer to pay a fixed percentage of sales or profits as compensation for work to be performed.