2008 California Employment Law Round-up
California labor and employment law saw significant changes on January 1, 2008. However, Governor Schwarzenegger vetoed several bills that would have placed significant obligations on California employers in such areas as wage and hour, bereavement leave, health care tax, employment records and retention, wage discrimination, familial status discrimination and family and medical leave. The following is a summary of the new laws that took effect:
- Minimum Wage and Salary Level: The minimum wage in California increased from $7.50 per hour to $8.00 per hour. Accordingly, the minimum salary level for exempt employees increased to $2,773.33 per month. The minimum wage for employees in San Francisco increased from $9.14 per hour to $9.36 per hour.
- Civil Rights Act of 2007: Various California anti-discrimination statutes contained differing lists of protected classifications. The Civil Rights Act of 2007 has been enacted to conform those provisions with the Unruh Civil Rights Act and Government Code section 11135. The provisions now prohibit discrimination based on race, color, religion, ancestry, national origin, ethnicity, age, disability, medical condition, marital status, sex (including gender identity), and sexual orientation.
- Health Care Whistleblower Protection: Health care facilities are prohibited from discriminating or retaliating against any patient, employee, members of the health care facilities’ medical staff, including physicians and surgeons, or other health care worker because the individual presented a complaint to a governmental entity or participated in an investigation or administrative proceeding related to the quality of care, services or conditions at the facility.
- Employee SSNs: Employers can only include the last four digits of the employee’s social security number or an employee identification number other than a social security number on itemized wage statements.
- Computer Professional Exemption: The hourly rate of pay requirement for employees exempt from overtime under the computer professional exemption has been decreased by 27.65%, from $49.77 per hour to $36 per hour. Current non-exempt employees may now fall under this exemption if they meet the new pay rate and other requirements.
- Military Leave for Spouses: Employers with 25 or more employees must provide an eligible employee who is the spouse of a qualified member of the U.S. Armed Forces, National Guard or Army Reserve with up to ten days of unpaid leave when the spouse is on a leave from deployment.
- Receipt of Temporary Disability Payments: For an injury occurring on or after January 1, 2008, employees may now receive 104 weeks of temporary disability payments within 5 years of the date of injury. Employees were previously allowed to receive the payments within 2 years after the first date on which the temporary disability was paid.
- Unemployment Insurance: Employers who are required to provide unemployment insurance to their employees must notify employees of their right to take an Earned Income Tax Credit on their federal tax returns. Employers must provide the written notice by first class mail or by directly handing the notice to employees within one week before or after, or at the same time as, the annual wage summary (i.e., Form 1099 or Form W-2) is provided. This requirement cannot be met by posting the notice at the workplace or by delivering the notice through the office mail. A downloadable PDF of the IRS Notice 797 “Possible Federal Tax Refund Due to the Earned Income Credit” is available at www.irs.gov.
- No Use of Hand-Held Devices While Driving: Employers that provide employees with cell phones or hand-held devices should be aware that effective July 1, 2008, individuals caught using a hand-held device while driving will be fined up to $50 per violation. Employers should update any related policies to reflect this new provision.
- San Francisco Health Care Security Ordinance: While the Ninth Circuit has yet to decide the validity of the San Francisco Health Care Security Ordinance, it has allowed the HCSO to take effect on January 9, 2008 while the appeal is pending. Thus, San Francisco employers with 50 or more employees must begin making contributions towards employees’ health care expenditures. Employees exempt from coverage include managers, supervisors and confidential employees earning more than $76,851. Employers with 100 or more employees must pay $1.76 for every hour paid. Employers with 20 to 99 employees must pay $1.17 for every hour paid. Those employers with 20-49 employees must begin making contributions on April 1, 2008. Employers with fewer than 20 employees are exempt from this law. In 2009, the health care expenditure rate will increase by 5%.
- Wages Not A Penalty: A three-year statute of limitations, not one year, applies in cases where employers fail to provide meal and/or rest breaks. As a result, employers may be liable for up to three/four years of back pay, waiting time penalties, interest and attorneys’ fees and costs. The California Supreme Court’s decision in Murphy v. Kenneth Cole Productions, Inc., 40 Cal. 4th 1094 (2007), turned on finding that the "additional hour of pay" due an employee under Labor Code section 226.7 is a premium wage and not a penalty.
- Lump-Sum Payment for Expenses Permissible: In Gattuso v. Harte-Hanks Shoppers, Inc., 42 Cal. 4th 554 (2007), employees challenged the validity of Harte-Hank’s lump-sum method of paying its outside sales representatives for work-related automobile expenses. The California Supreme Court held that Labor Code section 2802 permits an employer to pay increased wages or commissions instead of indemnifying actual expenses incurred by employees in the course of their duties where the employer is able to identify the portion of overall compensation intended as the reimbursement and provided the amounts are sufficient to fully reimburse the employees for all expenses actually incurred.
- Class Action Waivers: Employers may be unable to avoid class actions by relying on such waivers in arbitration agreements. The California Supreme Court in Gentry v. Superior Court of Los Angeles County, 42 Cal. 4th 443 (2007), held that the validity of the class arbitration waiver clause will depend on whether "class arbitration is likely to be a significantly more effective practical means of vindicating the rights of the affected employees than individual litigation or arbitration.”
- Form I-9: California employers should also be aware that the U.S. Citizenship and Immigration Services issued a revised Employment Eligibility Verification Form I-9 for employers. The most significant change to the revised form is the elimination of five documents from the list of documents acceptable to confirm identity and work eligibility. The new Form I-9 is available as downloadable PDF at www.uscis.gov.
For additional information concerning these new laws or any other employment-related issue, please contact any of the attorneys in our San Francisco or Los Angeles offices.
This publication is available to KM&M’s clients and friends. It is not intended to provide legal advice or opinion on a particular situation.