CALIFORNIA LEGISLATIVE UPDATE
Summer vacation is almost over, meaning the California Legislature will soon return to address the approximate thirty-five employment-related bills that remain pending. Not surprisingly, there are a number of bills with potentially substantial implications for California’s employers, including the following (all of which are discussed in greater detail below):
Looking ahead, the next major legislative deadline is September 13th, by which bills must pass the second legislative chamber and be forwarded to Governor Brown for signature or veto.
Below is a list, organized largely by subject matter, of the key employment-related bills potentially affecting private employers, along with a status update:
PENDING BILLS
Minimum Wage to Increase by $2.00 per Hour over Next Five Years? (AB 10)
This bill would increase California’s minimum wage by specified amounts for five consecutive years beginning in 2014. Specifically, this bill would increase California’s minimum wage to $8.25 beginning on January 1, 2014, to at least $8.75 in 2015, to at least $9.25 in 2016, to at least $9.50 in 2017 and to at least $10.00 after January 1, 2018. Notably, however, this bill also contemplated annual adjustments beginning in 2017 based upon the California Consumer Price Index, but a recent amendment has omitted this portion.
Status: This bill has passed the Assembly and following amendment, has recently passed the Senate’s Labor and Industrial Relations Committee. It is presently pending before the Senate’s Appropriations Committee and will likely soon pass there and in a full floor vote, before being sent back to the Assembly to concur in the recent amendments. Similar versions of this bill have stalled in recent years (ex. AB 196 [2012]), but several California municipalities and other states have recently increased their minimum wage and California has not increased its minimum wage for several years.
Labor Protections Proposed for Domestic Workers (AB 241)
Titled the Domestic Worker Bill of Rights, this bill would specially regulate the wages, hours and working conditions of “domestic work employees.” The bill would also define a number of provisions for this act. In this regard, and somewhat interestingly perhaps, the bill originally proposed to extend Wage Order 15-2001 to “domestic work employees” but a recent amendment suggests it already applies, and that it or this new bill applies depending upon which provides greater protections upon the issue presented.
“Domestic work employees” would be defined as individuals providing services related to the care of persons in private households or maintenance of private households or their premises, and would include childcare providers, caregivers, housekeepers, housecleaners and other household occupations. This definition includes numerous exceptions such as persons providing services through the In-Home Supportive Services (IHSS) program, family members, babysitters under the ages of 18, “casual babysitters” ( as defined), and persons employed by a licensed health facility.
“Domestic work employers” would be defined as persons who, including through the services of a third-party employer, employ or exercise control over the wages, hours, or working conditions of a domestic work employee. This definition would not include, however, the State of California, individuals receiving domestic work services through the IIHS program, employment agencies that operate solely to procure or attempt to provide work to domestic workers, or licensed health facilities.
The bill also specifies that domestic work employees would be entitled to overtime under Labor Code section 510, with certain exceptions for live-in employees or workers required to be on duty for 24 consecutive hours. For personal attendants accompanying disabled individuals during out-of-town travel, it further defines “compensable hours worked” to include time spent accompanying the person in transit and attending to or carrying out the directives of the person.
The bill specifies that existing meal and rest requirements apply to personal attendants. Regarding meals, domestic work employees shall be permitted to prepare and eat their own meals without charge/deduction for using the employer’s kitchen.
For live-in employees, the bill also enumerates new regulations concerning sleep periods, and sets minimum standards for these employees’ on-site lodging. The bill specifies they shall be provided sleeping accommodations that are adequate, decent, and sanitary according to usual customary standards, and shall be separate from any household resident and bed-sharing is prohibited.
The bill would also expressly apply Industrial Welfare Commission Wage Order No. 15-2001 to domestic work employees, except where this new bill provides more specific protections, in which case it would govern. The bill would also require the Division of Labor Standards Enforcement to enforce these provisions, and would provide domestic work employees a private right of action to enforce these provisions.
When originally introduced, this bill also contemplated that domestic work employees would accrue “paid days of rest” depending on their length of employment, and it would have removed the Workers’ Compensation exclusion for domestic work employees. However, amendments in May 2013 omitted these provisions.
Status: This bill passed the Assembly by a party-line vote and is pending in the Senate, where it was recently slightly amended before passing the Senate’s Labor and Industrial Relations Committee. It is presently pending in the Senate’s Appropriations Committee. Last year, the Legislature passed but the Governor vetoed AB 889 which would have required the Department of Industrial Relations (DIR) to adopt by January 2014 regulations concerning the working conditions of “domestic work employees.” The Governor’s veto message cited a concern about adopting extensive new regulations concurrently with the DIR’s plan to conduct studies regarding the regulations impact, and he cited a preference for the studies to be conducted first. The fact a similar bill has previously passed suggests this version likely will pass again, but it remains to be seen if Governor Brown will veto it again.
Meal and Rest Period Protections Proposed for Piece-Rate Workers (SB 435)
Labor Code section 226.7 presently prohibits employers from requiring employees work during meal and rest periods mandated by the Industrial Welfare Commission (IWC), and identifies a penalty of one additional hour of pay at the employee’s regular rate of pay for each violation. This bill would amend section 226.7 to extent these rest period protections to workers paid on a “piece-rate basis” (as to be defined in amended section 226.7) as well as make them applicable during an employee’s “recovery period” (defined as the cool-down period afforded an employee to prevent heat illness).
“Piece-rate basis” will be defined as “a method of payment based on units of production, earned by an employee during a work day or a pa period, or any fraction thereof.” The bill further specifies that piece-rate workers denied these rest periods shall be entitled both to the one-hour statutory penalty as well as “his or her unpaid average piece-rate wage for each rest or recovery period in any pay period in which a violation occurs.”
This bill specifies that it does not apply to exempt employees or to employees whose wages, hours and working conditions are covered by a collective bargaining agreement that expressly addresses rest or recovery periods for employees paid on a piece-rate basis.
The bill’s proponents argue it is intended to protect agricultural workers paid on a piece-rate basis who forego rest periods as well as the “cool down” periods authorized by California’s Heat Illness Prevention Programs, so as to not lose time working. Opponents argue this bill will initiate another round of meal and rest period litigation in California.
Status: This bill passed the Senate and is presently pending before the Assembly’s Labor and Employment Committee. Two fairly similar versions of this bill (SB 1538 and AB 755) passed the Legislature but were vetoed by Governor Schwarzenegger in 2004 and 2005 respectively.
Employees, Not Employers, to Decide Whether They Will Obtain a Copy of or Inspect Payroll Records (AB 155)
Labor Code section 226 requires employers to provide itemized wage statements containing specific statutorily-enumerated items, to maintain copies of these statements for three years at specific locations, and to permit current or former employees to inspect or obtain a copy of these payroll records. While this section has long-permitted a right of inspection, it was amended in 1988 (SB 2155) to include a right to “copy” payroll records to address concerns by low-wage employees they needed the actual records to prosecute any wage-related claims.
In 2012, an unpublished decision suggested the employer, not the employee, decided which mechanism it would allow and could, upon receiving an inspection or copying request, decide whether it would permit inspection or provide copies. This bill would legislatively nullify this decision by slightly amending Labor Code section 226 to specify that the employee, and not the employer, makes the election whether they will inspect or copy, or receive a copy of, or any combination thereof, regarding his or her employment records.
However, in response to employer concerns about potentially dangerous former employees being allowed on premises, a very-recent amendment specifies that former employees terminated for workplace violence or harassment would only be entitled to receive a copy of their records, and not entitled to inspect. For purposes of this exception, however, the employer would not be entitled to charge the actual cost of reproduction it otherwise could charge for employees requesting a copy of their records. This bill also defines the term “actual cost of reproduction” (which had been undefined in prior versions of section 226) to mean “only the per page cost to the employer for the physical duplication of the records.”
Status: This bill passed the Assembly and is now pending in the Senate’s Labor and Industrial Relations Committee.
Successor Liability for Farm Labor Contractor Wage and Hour Violations Advances (SB 168)
Presently, “farm labor contractors” must be licensed by the Labor Commissioner, and those who fail to comply with specified employment laws may be guilty of a misdemeanor punishable by statutorily-enumerated fines or imprisonment, or both. This bill would make a successor to any farm labor contractor that owed wages or penalties to a former employee of the predecessor farm labor contractor liable for those wages and penalties if the successor meets certain criteria. These criteria would include using substantially the same or similar physical facility or workforce as the predecessor, sharing common management or interrelation of business operations with the predecessor, or employing predecessor managers responsible for controlling wages, hours, or working conditions.) This bill is intended to prevent non-compliant contractors from simply reorganizing to avoid liability and would essentially adopt the same “successor liability” factors used in the car washing and garment industries to prevent wage theft. As drafted, a successor farm labor contractor could be liable for the predecessor’s obligations regardless of whether the predecessor was licensed.
Status: This bill passed the Senate and has recently passed the Assembly’s Labor and Employment Committee, and is now pending before the Assembly’s Appropriations Committee.
Penalties for Employer’s Failure to Remit Employee Wage Withholdings (SB 390)
Currently, Labor Code section 227 makes it a crime for an employer to fail to make agreed-upon payments to health and welfare funds, pension funds, or various benefit plans, with violations exceeding $500 deemed a felony, and those below $500 a misdemeanor. Due to a concern many employers were removing but not remitting these payroll taxes, this bill would expand section 227 to specify that it will also be a crime for employers to fail to remit withholdings from an employee’s wages that were made pursuant to state, local or federal law. This expansion would thus enable the Labor Commissioner to pursue criminal misdemeanor prosecution against employers who fail to remit payroll taxes.
Violations of this new provision shall be punishable by imprisonment in a county jail for a period of not more than one year, by a fine of not more than $1,000, or both. A recent amendment provides that in any such criminal proceeding, the recovered withholdings shall be forwarded to the appropriate plan or fund, and if restitution is imposed, the court shall direct to which agency, person or entity it shall be paid.
Status: This bill passed the Senate and the Assembly’s Labor and Employment Committee and is pending before the Assembly’s Appropriation’s Committee. There does not appear to be any significant opposition to this bill, suggesting it may also soon pass the Assembly.
Labor Commissioner to be Entitled to File Lien against Employer Property? (AB 1386)
Labor Code section 98.2 presently requires the Labor Commissioner to file a final order with the clerk of the superior court of the appropriate county within 10 days of the order, decision or award becoming final (as defined). This bill would amend Labor Code section 98.2 to also authorize the Labor Commissioner to file a certified copy of the order within 10 days of it becoming final with the county recorder of any county in which the employer’s property may be located. If so filed, this final order would be a lien on the employer’s personal and real property (as specified) and would require the county recorder to record and index the order as a mortgage on real estate and to file and index the order as a security interest. The bills proponents argue this amendment would speed up the collection process and protect employees from employers who essentially wind up operations and liquidate assets between the time the Labor Commissioner decision becomes final and before the Superior Court issues an abstract of judgment.
Status: Although similar bills had failed passage, this version unanimouslypassed the Assembly, and has also passed the Senate’s Labor and Industrial Relations Committee and is pending before the Appropriations Committee.
Liquidated Damages Proposed for Labor Commissioner Investigations (AB 442)
Labor Code sections 98, 1193.6 and 1194 collectively authorize an employee paid less than the statutorily-required minimum wage to recover these wages through a civil action or an administrative hearing. An employee successful through either such a civil action or an administrative hearing is also entitled to recover liquidated damages equal to the wages unlawfully unpaid plus interest.
In addition to these civil actions or administrative proceedings, Labor Code section 1197.1 authorizes the Labor Commissioner to issue a citation during its own investigation directing an employer or person to pay any minimum wages not properly paid. However, through an oversight in Legislative drafting, the Labor Code does not presently authorize the Labor Commissioner to award the liquidated damages for violations it uncovers that it could award if an employee initiated a civil action or administrative proceeding. This bill closes this loophole by slightly amending sections 1194.2 and 1197.1 to allow employees to recover liquidated damages for citations issued by the Labor Commissioner for Labor Code violations.
Status: This bill unanimously passed the Assembly and has also recently passed the Senate’s Judicial and Labor and Industrial Relations Committees. It is now pending in the Senate’s Appropriations Committee, and this bill seems likely to pass and be enacted into law.
Limits on Attorneys’ Fees for Prevailing Employers Proposed (SB 462)
Labor Code section 218.5 currently provides that a prevailing party in an action for the “nonpayment of wages, fringe benefits, or health and welfare or pension fund contributions” is entitled to recover reasonable attorneys’ fees. Notably, unlike some other attorneys’ fees provisions, this particular statute does not impose different standards upon prevailing employees and employers who seek to recover attorneys’ fees.
This bill is supported by the plaintiff’s employment bar and would amend section 218.5 to permit a prevailing employer to recover attorneys’ fees and costs only if the court finds that the employee brought the action in “bad faith.” In effect, this bill would make Labor Code section 218.5 more consistent with other attorneys’ fees provisions wherein prevailing employees are entitled to recover fees as a matter of right, and prevailing employers may only recover by demonstrating the action was essentially frivolous. This bill would not affect Labor Code section 1194 which utilizes a separate one-way attorney fee provision for minimum wage and overtime claims.
Status: This bill passed the Senate, and has also now passed the Assembly’s Labor and Employment and Judiciary Committees. It is now pending in the Assembly’s Appropriations Committee, where passage seems likely, and a full floor vote is expected shortly.
Paid Family Leave Expansion Passes Senate (SB 770)
Since 2004, California has provided up to six weeks of wage replacement benefits to workers who take time off work to care for a seriously ill child, spouse, parent, domestic partner, or to bond with a minor child within one year of the birth or adoption of the child. (See Insurance Code § 3301). While often referred to as “paid family leave,” this program is funded by additional worker contributions to the Unemployment Compensation Disability Fund and essentially provides “wage replacement” benefits during an already-provided leave. This bill would expand the scope of the family temporary disability program to allow workers to receive these partial-wage-replacement benefits while caring for seriously ill grandparents, grandchildren, siblings or parents-in-law, as defined. The bills proponents argue the current definition of “family” is too narrow and fails to reflect California’s changing demographics, while opponents argue this bill would provide wage replacement benefits for leaves beyond those leaves already covered by the FMLA/CFRA, thus creating a de facto new form of leave.
Status: This bill passed the Senate and is pending before the Assembly’s Insurance Committee. A similar bill (SB 727) passed in 2007 but was vetoed by then-Governor Schwarzenegger.
Social Media Password Prohibitions to Extend to Public Employers (AB 25)
Last year, AB 1844 was enacted creating a new Labor Code section 980, which prohibits private employers from requiring or requesting an employee or applicant for employment to disclose a username or password for the purpose of accessing personal social media. Labor Code section 980 also prohibits private employers from retaliating against an employee for not complying with an employer request that violates its provisions.
This bill would amend the newly-enacted Labor Code section 980 to specify that its various prohibitions apply to both public and private employers. “Public employer” would be defined to include the state, city, a city and county or a district. Although many assumed AB 1844 already applied to public employers, this bill is intended to address a concern that Labor Code provisions do not apply to public employers unless specifically stated.
Status: This bill has passed the Assembly and the Senate’s Labor and Industrial Relations Committee, and has been referred to the Senate’s Appropriations Committee.
New Limits Proposed for When, But Not Whether, Public Employers May Conduct Criminal Background Checks (AB 218)
California law presently precludes public and private employers from asking an applicant for employment to disclose either in writing or verbally any information concerning an arrest or detention that did not result in a conviction. To reduce employment barriers to individuals who have previously been convicted of a crime, this bill would impose new conditions concerning when, but not whether, a state or local agency may obtain an applicant’s criminal history. Specifically, this bill would generally prohibit a state or local agency from inquiring about criminal convictions until after the applicant’s qualifications for the position have been determined to meet the position’s requirements. The bill specifies that a state or local agency would be permitted to conduct a criminal history background check after the applicant has been deemed to meet the position’s requirements.
As presently drafted, this bill does not apply to private employers. If enacted, these new conditions would also not apply to positions for which a state or local agency is required by law to conduct a criminal history background check, to any position within a criminal justice agency (as defined by Penal Code section 13101) or to any individual working for a criminal justice agency on a contract basis or on loan from another government agency.
The author notes this bill is intended to reduce the recidivism rate by not dissuading applicants with prior convictions from applying for public employment. Since similar limits for public employment purposes have been enacted in six states and forty United States cities (including San Diego, Oakland, San Francisco), this bill appears to have considerable support and a good chance of being enacted.
A recent amendment to this bill provides that if enacted, it would not take effect until July 1, 2014.
Status: This bill passed the Assembly and has passed the Senate’s Judiciary Committee and is pending in the Senate’s Appropriations Committee.
“Familial Status” Protections for FEHA Passes Senate (SB 404)
This bill would include “familial status” to the list of protected categories under FEHA for which the right to seek, obtain, and hold employment cannot be denied. If enacted, “familial status” would be defined as “an individual who provides medical or supervisory care to a family member.” “Family member” would also be broadly defined to include a child, parent, spouse, domestic partner, or parent-in-law, as defined in specified statutes. (This bill had originally proposed including siblings, grandparents and grandchildren in the definition of “family member,” but these were omitted by a late-May amendment).
The bill’s author states this bill is intended to correct a discrepancy since the FEHA presently prohibits “familial status” discrimination in housing, but not employment, and to prevent discrimination against employees for family caregiving responsibilities unrelated to work. The bill’s proponents also argue this is simply an anti-discrimination measure, and does not call for any employee entitlements or any additional leave related to family responsibilities. Opponents argue this bill is overbroad and applies to nearly every employee, and because it amends FEHA which applies to all employers with more than five employees, it potentially burdens small employers with costly litigation.
Status: This bill passed the Senate, and has passed the Assembly’s Labor and Employment and Judiciary Committee. It is presently pending in the Assembly’s Appropriations Committee, and a full floor vote is expected soon. This bill is similar to several prior versions that either failed passage (AB 1001 [in 2009] and AB 1999 [in 2012]) or that passed but were vetoed (AB 836 [vetoed by then-Governor Schwarzenegger])
FEHA Sexual Harassment need not be Motivated by Sexual Desire (SB 292)
California’s FEHA precludes harassment based on certain statutorily-enumerated bases, including “sex.” Government Code section 12940(J)(4)(C) presently defines “harassment because of sex” to include “sexual harassment, gender harassment, and harassment based on pregnancy, childbirth or related medical conditions.” This bill would modify this definition to also specify that “sexually harassing conduct need not be motivated by sexual desire.”
This bill originally proposed to expand the definition of harassment to include threats of sexual violence and to specify that an act is sexual harassment regardless of the sexual orientation, sexual desire or intent of the harasser. This portion of the bill was deleted by amendment such that the current bill proposes simply to clarify that sexual harassment need not be motivated by sexual desire.
Status: This bill unanimously passed the Senate and Assembly, and has been sent to the Governor for signature or veto. Given the unanimous votes in both chambers, and the fairly minor change to FEHA contemplated, it seems likely to be signed into law.
Additional Remedies Proposed for Employees after Employer Prevails on Mixed Motive Affirmative Defense (SB 655)
In February 2013, the California Supreme Court issued an important ruling regarding the causal standard needed for an employee to prove discrimination, concluding the employee must demonstrate the protected characteristic was a “substantial motivating factor,” not simply a “motivating factor” as suggested by the then-applicable jury instructions. The Court also generally upheld the employer’s ability to assert the so-called “mixed motive” affirmative defense, whereby the employer argues that even if an employee’s protected classification partially motivated the challenged decision, the employer would have made the same decision for legitimate, non-discriminatory reasons. (Harris v. City of Santa Monica (2013) 56 Cal.4th 203.) The Court held these mixed-motives would not provide a complete defense against FEHA liability, but would preclude certain types of remedies including economic (e.g., lost wages) and non-economic damages (e.g. emotional distress).
This bill responds to Harris with the bill’s authors claiming it codifies its holding, and the bill’s opponents arguing it undermines the holding. This bill would include a new provision (Government Code section 12940(a)(6), specifying that the employee shall prevail if they prove a protected characteristic was a “substantial factor” in the challenged adverse employment action. This new section would define “substantial factor” to mean that “a reasonable person would conclude the factor contributed to the harm. It must be more than a remote or trivial factor but need not be the only cause of the harm to the employee.”
If the employee meets this standard, the employer would still be entitled to assert the “mixed motive” affirmative defense to limit damages, but this bill specifies the employee would still be entitled to the remedies contained in newly proposed section 12965(b)(2). Most significantly, this new section would require the court to award, in addition to any other available remedy, a $25,000 statutory penalty directly to the employee. This new remedies provision also authorizes the court to grant as relief any other relief that, in the judgment of the court, will “effectuate the purpose of this part.” This bill also specifies, however, that a prevailing employee would not be entitled to reinstatement or backpay.
This new subsection also retains the previously applicable ability of the court to award a prevailing party reasonable attorneys’ fees and costs, including expert witness fees.
Status: This bill passed the Assembly, largely along a party-line vote, and is now pending before the Senate’s Judiciary Committee.
Prohibition on Military and Veteran Discrimination Proposed for FEHA (AB 556)
This bill would amend FEHA’s discrimination provision (Government Code section 12940(a)) to include “military and veteran status” to the list of categories protected from discrimination. In some respects, this bill would conform California law more closely to federal law since while the federal law (USERRA) presently prohibits discrimination against “military and veterans,” California’s Military and Veterans Code only applies to active duty military. However, rather than simply amending California’s Military and Veterans Code, it amends FEHA to specifically preclude discrimination or harassment by employers, labor organizations or training agencies on the basis of “military and veteran status.”
“Military and veteran status” would be defined in new subsection (k) of Government Code section 12926 as “a member or veteran of the United States Armed Forces, Unit
© 2024 Wilson Turner Kosmo LLP All rights reserved
© 2024 Wilson Turner Kosmo LLP. All Rights Reserved.
Print PDF