California

The California legislative forecast is becoming increasing clear now that the May 31st deadline for bills to pass the legislative chamber in which they were originally introduced has now expired.  Not surprisingly given the current legislative composition, a number of employment-related bills have cleared this first hurdle and are now pending in the second legislative chamber, where most will likely also pass.  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.

Listed below are some of the more significant employment-related bills that have cleared this first major hurdle and are now pending in the Second Legislative Chamber.  A more comprehensive Legislative Forecast, which includes a more detailed overview of pending bills and on bills that failed passage, is available here: The California Legislative Forecast in 2013

Minimum Wage Increase Proposed (AB 10)

This bill would increase California’s minimum wage by specified amounts for three consecutive years beginning in 2014, with annual adjustments tied to inflation thereafter.  Specifically, this bill would increase California’s minimum wage to $8.25 beginning on January 1, 2014, to at least $8.75 in 2015, and to at least $9.25 in 2016.  This bill would also provide for annual adjustments beginning in 2017 to maintain employee purchasing power calculated by using the California Consumer Price Index.  The bill would also prohibit the Industrial Welfare Commission from adjusting the minimum wage downward in years with negative inflation levels.

While similar versions of this bill have stalled in recent years (ex. AB 196 [2012]), several California municipalities and other states have recently increased their minimum wage and California has not recently had a minimum wage increase.  These facts, coupled with President Obama’s call for the national minimum wage to increase to $9.00, suggest a minimum wage increase is likely in 2013.

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.”  “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 age 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 an employee’s 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.

Last year, the Legislature passed but Governor Brown 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 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.

Payroll Records Inspections (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 section 226 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 wage-related claims.

In 2012, an unpublished decision suggested the employer, not the employee, decided which mechanism it would allow and upon receiving an inspection or copying request, could decide whether to permit inspection or provide copies.  This bill would legislatively nullify this decision by slightly amending Labor Code section 226 to specify the employee, not the employer, makes the election whether they will inspect or copy, or receive a copy of, or any combination thereof, regarding payroll 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.”

Successor Liability for Farm Labor Contractor Wage and Hour Violations (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.

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.  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, thus enabling 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.  The bill’s proponents argue there has been an increase in cases where employees have had payroll taxes removed from their checks but the struggling employer fails to remit the taxes and instead pockets them.

Labor Commissioner Lien Rights against Employer Property (AB 1386)

Labor Code section 98.2 presently requires the Labor Commissioner to file a final order with the superior court clerk 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.  This final order would then 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 bill’s 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.

Although similar bills had failed passage, this version unanimously passed the Assembly suggesting it will likely also pass the Senate. 

Liquidated Damages 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 during its investigation 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 during its investigation.

The Assembly unanimously passed this bill suggesting it faces no meaningful opposition.

Limits on Attorneys’ Fees for Prevailing Employers (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. 

However, this bill 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 already utilizes a separate one-way attorney fee provision for minimum wage and overtime claims.

Paid Family Leave Expansion (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 bill’s 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 already covered by the FMLA/CFRA, thus creating a de facto new form of leave.

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, a 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.

New Limits Proposed for Criminal Background Checks by Public Employers 
(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 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.

If enacted, this bill would not take effect until July 1, 2014.

“Familial Status” Protections for FEHA Passes Senate (SB 404)

This bill would include “familial status” to the list of protected categories under the 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 it is intended to correct a discrepancy wherein the FEHA 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 the FEHA which applies to all employers with more than five employees, it potentially burdens small employers with costly litigation.

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 Definition Amendment (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 harasser’s sexual orientation.  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.

The Senate unanimously passed this bill suggesting it will likely also pass the Assembly.

Additional Remedies Proposed for Employees in Mixed Motive Cases (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.  (Harris v. City of Santa Monica (2013) 56 Cal.4th 203.)  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.  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 back pay.

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.

FEHA to Prohibit Military and Veteran Discrimination (AB 556)

This bill would amend the FEHA 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 while the USERRA presently prohibits discrimination against “military and veterans,” but California’s Military and Veterans Code only applies to active duty military.  However, rather than simply amending California’s Military and Veterans Code, this bill amends the 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, United States Armed Forces Reserve, the United States National Guard, and the California National Guard.”  The bill would specifically provide that it would not prohibit employers from identifying members of the military or veterans for purposes of awarding a veteran’s preference as permitted by law. 

The Assembly unanimously passed this bill suggesting it is essentially unopposed.

New Protections, Including Accommodation Obligations, Proposed for Victims of Stalking, Domestic Violence or Sexual Assault (SB 400)

Labor Code sections 230 and 230.1 presently provide protections to victims of domestic violence and sexual assault, including prohibiting employers from taking adverse employment action against employees who take time off from work to attend to issues arising as a result of the domestic violence or sexual assault.  These sections also currently permit an employee who has been discriminated or retaliated against for taking such time off to file a complaint with the Division of Labor Standards Enforcement (DLSE.)  This bill extends these provisions to a new group of victims, includes new accommodation requirements and expands the remedies potentially available if employers fail to comply.

First, this bill amends both sections to specify they also apply to victims of stalking, meaning employers cannot discriminate or retaliate against en employee because of their known status as a victim of domestic violence, sexual assault or stalking.

This bill also requires employers to provide reasonable accommodation, which may include implementing safety measures such as a transfer/reassignment or modified schedule, a changed work telephone or work station, installation of a lock, or assistance in documenting.  As in the disability context, employers would not be required to implement accommodations constituting an “undue hardship.”

This bill would also require the employer to engage in a good faith interactive process to identify potential reasonable accommodations.  Employees seeking such accommodation would, at the employer’s request, be required to submit a signed written statement signed by the employee or an individual acting on the employee’s behalf certifying the accommodation is related to the employee’s status as a victim of domestic violence, sexual assault or stalking. 

While Labor Code section 230 currently authorizes an employee to file a charge with the DLSE, this bill would also create a private right of action to pursue reinstatement and reimbursement for lost wages or benefits, and potentially equitable relief in the accommodation context.  The bill further specifies that under both sections 230 and 230.1 a prevailing employee may also recover reasonable attorneys’ fees and costs.

This bill appears well-intentioned but faces some significant opposition including on the grounds the accommodation obligations appear ambiguous.  Similar bills (SB 1745 and AB 1740) failed passage in 2006 and 2012.

Expansion of Employee Time Off for Judicial Proceedings (SB 288)

Labor Code section 230 also precludes employers from discharging or discriminating against employees who take time off to serve on a jury, or who need time off for court-related proceedings concerning domestic violence and sexual assault.  This bill would amend Labor Code section 230 to provide similar protections to employee victims who take time off at the victim’s request to appear in court proceedings for additional specified offenses.  These additional specified offenses would be (1) vehicular manslaughter while intoxicated; (2) felony child abuse likely to produce great bodily harm or a death; (3) assault resulting in the death of a child under eight years of age; (4) felony domestic violence; (5) felony physical abuse of an elder or dependent adult; (6) felony stalking; (7) solicitation for murder; (8) a serious felony, such as kidnapping, rape or assault; (9) hit and run causing death or injury; or (10) felony driving under the influence causing injury. 

For purposes of this bill, a “proceeding” includes any delinquency proceeding, involving a post-arrest release decision, plea, sentencing, post-conviction release decision or any proceeding in which a right of the victim is at issue.  This bill also defines “victim” as any person who suffers direct or threatened physical, psychological or financial harm as a result of the enumerated crime or delinquent act.  The term “victim” specifically includes the employee’s spouse, parent, child, sibling or guardian.

The bill’s proponents state it is intended to correct an anomalous situation whereby crime victims have a Constitutional right in California to attend and be heard at such proceedings, but enjoy no employment protections if they exercise this Constitutional right.

The Senate unanimously passed this bill suggesting it will likely also pass the Assembly.

New Retaliation Provisions, Including for “Immigration-Related Practices” or Involving Consumer Credit Reports (AB 263)

This bill states its purpose is to protect wage-theft from low wage workers and proposes to amend a number of Labor Code provisions regarding retaliation as well as the new Consumer Credit Report protections enacted in 2012.  In this regard, this bill is somewhat similar to SB 666 (discussed below), although both versions provide some additional unique protections.

For instance, Labor Code section 98.6 presently prohibits employers from discharging or discriminating against an employee or applicant because they have engaged in identified protected conduct relating to the enforcement of their rights.  This bill would expand these protections to specifically prohibit retaliation and/or taking adverse action (as well as discharging or discriminating), thus entitling employees subjected to retaliation or adverse action to reinstatement and reimbursement for lost wages.  While section 98.6 presently states violations constitute a misdemeanor, this bill would also subject employers that are corporations or limited liability companies to a civil penalty of up to $10,000 per employee per violation.  This bill would also amend section 98.6 to specify that employees need not exhaust administrative remedies or procedures before suing under section 98.6.

This bill would also add Labor Code sections 1019 and 1019.1 to prevent an employer from engaging in “unfair immigration related practices” (as defined) against any employee who exercises a “right protected under this code or by any other local ordinance applicable to employees.”  &l