WILSON TURNER KOSMO LLP LEGISLATIVE REPORT MAY 2014

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LEGISLATIVE RECAP

            Like the weather, California’s legislative session is heating up as we approach the May 30^th deadline for bills to pass their chamber of origin, and a number of key initial committee votes have occurred providing further clarity into which bills will likely proceed.  Unfortunately, but not altogether unexpectedly, bills to provide increased flexibility under California’s rigid alternative workweek schedule process (AB 2448) or to provide a “cure” period before facing a PAGA representative action for minor wage statement discrepancies (AB 2079) failed along party-line votes at the committee stage.

            In contrast, a number of bills that would expand current laws or provide additional remedies continue to proceed or are scheduled for upcoming votes, including the following:

• AB 1522 which would require all employers provide up to three days of paid sick leave annually;
• AB 2030 which would require employers provide paid time off for employees to attend school or day-care related events;
• SB 404 and AB 1443 which would amend FEHA to prohibit discrimination based on “familial status” or against unpaid interns, respectively;
• AB 2053 which would require employers discuss “abusive conduct” in sexual harassment training currently required under AB 1825;
• SB 1407 and AB 2617 which would impose new requirements for FEHA-related settlement agreements and essentially prohibit arbitration agreements for employment claims, respectively;
• SB 935 which would raise California’s minimum wage beyond the just-enacted raises in AB 10, to $13.00 hourly by 2017;
• AB 2416 which would allow employees to file liens against an employer’s real or personal property in wage disputes;
• AB 2688 which would provide a partial affirmative defense to employers who rely upon DLSE opinion letters;
• AB 2271 which would preclude employers from advertising in a manner suggesting that unemployed applicants need not apply; and
• AB 2604 which would increase penalties in the workers’ compensation context.

Listed below, largely by subject matter, are the bills that may affect private sector employers, that we are currently tracking.

PENDING CALIFORNIA BILLS

Paid Sick Leave Bill (AB 1522)

Known as the “Healthy Workplaces, Healthy Families Act of 2014,” this bill would implement a number of new Labor Code provisions (section 245 et seq.) requiring employers to provide paid sick leave for their employees.  This bill would apply to all employers regardless of size, including public employers, the state, and municipalities.

Employees who work in California for seven or more days in a calendar year would accrue paid sick leave at a rate of no less than one hour for every 30 hours worked.  Exempt employees would be deemed to work 40 hours per week for accrual purposes, unless their normal workweek schedule is less than 40 hours, in which case they would accrue paid sick leave based upon that normal workweek.  Employees would be entitled to use accrued paid sick days beginning on the 90th calendar day of employment, after which they may use paid sick days as they are accrued.  Employers would also have the discretion to lend paid sick days to an employee in advance of accrual.

While accrued paid sick days shall carry over to the following calendar year, employers may limit an employee’s use of paid sick leave to 24 hours, or three days, in each calendar year.  Employers would not be required to compensate employees for unused sick days upon employment ending, but they would be required to reinstate the previously unused balance if they rehired the employee within one year.

Employees would be entitled to use paid sick time for preventive care for themselves or a family member, as well as for the diagnosis, care, or treatment of their or their family member’s existing health condition.  For purposes of this bill, “family member” means (1) a child (as defined), (2) parent (as defined), (3) spouse, (4) registered domestic partner, (5) grandparent, (6) grandchild, or (7) sibling.  The employer shall also provide paid sick days for an employee who is a victim of domestic violence, sexual assault, or stalking, as discussed in Labor Code sections 230 and 230.1.

The bill states it is not intended to preclude employers from implementing more generous policies.  Also, an employer shall not be required to provide additional sick pay under this bill if the employer already has a paid leave or paid time off policy that permits accrual at at least the same rate, and the accrued time is to be used for the same purposes and under the same conditions as in this bill.

Like many other recent Labor Code amendments, this bill also contains carve-outs for employees covered by collective bargaining agreements (CBAs) with certain provisions.  Specifically, this bill would not apply to employees covered by CBAs that expressly provide for the wages, hours of work, and working conditions of employees, as well as for paid sick days (with final and binding arbitration for any disputes regarding paid sick days), premium wage rates for all overtime, and a regular hourly rate of not less than 30 percent more than the state minimum wage.

Similarly, construction industry employees covered by a CBA with these provisions would also not be covered by this bill if the CBA was entered into before January 1, 2015, or if the CBA expressly waives the requirements of “this article” in clear and unambiguous terms.

This bill would also prohibit discrimination or retaliation against employees for using sick days, or for filing a complaint regarding any sick day policy violation.  However, similar to last year’s protections against “immigration-related practices” (AB 263), this bill would create a rebuttable presumption of unlawful retaliation if an employer takes an adverse employment action (including denying the right to use sick days) within 90 days of an employee engaging in a protected legal activity (as defined).

Under Labor Code section 248.5, the Labor Commissioner would be entitled to enforce this article by awarding reinstatement, back pay, and payment of sick days unlawfully withheld, plus the payment of an additional (currently unspecified) sum in the form of an administrative penalty to an employee whose rights were violated.  Where paid sick leave was unlawfully withheld, the employee shall recover the greater of $250 or the dollar value of the paid sick days withheld, multiplied by three.  To encourage such reporting, the Labor Commissioner would be permitted to keep the reporting employee’s identifying information confidential.

The Labor Commissioner, the Attorney General, or an employee would be able to file a civil action in court against the employer or any person violating this article.  A prevailing employee would be entitled to appropriate legal and equitable relief, including reinstatement, back pay, the payment of sick days improperly withheld, and liquidated damages of $50 to each employee for each violation each day, plus reasonable attorneys’ fees and costs.

New Labor Code section 247 would also require the employer to provide employees written notice of these paid sick leave rights in English, Spanish, Chinese, Tagalog, Vietnamese, and Korean, as well as any other language spoken by at least 5 percent of its employees.  An employer will also be required to display a poster (which the Labor Commissioner will create) in a conspicuous place notifying employees of these paid sick leave rights.  Employers who willfully violate the notice and posting requirements will be subject to a civil penalty of not more than $100 per offense.

New Labor Code section 247.5 would also require employers to retain, for at least five years, records documenting the hours worked, paid sick days accrued, and paid sick days used by each employee.  These records may be inspected by the Labor Commissioner or by an employee, and if an employer fails to maintain adequate records, it shall be presumed that the employee is entitled to the maximum number of hours accruable under this new article, unless the employer proves otherwise by clear and convincing evidence.

Lastly, this bill would amend Labor Code section 226 to require employers to include on the itemized wage statements accompanying paychecks, the “paid sick leave accrued and used” during each pay period.

This bill is very similar to bills that have repeatedly been introduced but stalled, although this version is less far-reaching as it only requires three days of sick leave per year rather than up to nine days of annual sick leave.

Status:  This bill has passed the Assembly’s Labor and Employment and Judiciary Committees, but no hearing has been scheduled in the Appropriations Committee.  Notably, a recent fiscal report suggested this bill would result in substantial ongoing costs to the Department of Industrial Relations, and would impose significant costs to the state and local governments through paid sick leave accruals for in-home supportive services employees.

Bill Proposing Individual Alternative Workweek Schedules Dies in Committee

(AB 2448)

While California authorizes so-called “alternative workweek schedules,” whereby non-exempt employees can work up to ten hours daily without receiving overtime (see Labor Code section 510), as a practical matter, it is often difficult to obtain the requisite two-thirds work unit approval for such schedules.  Known as the Workplace Flexibility Act of 2014, this bill would have enacted Labor Code section 511.5 to permit an individual non-exempt employee to request an “employee-selected flexible work schedule,” providing for workdays up to ten hours within the forty-hour workweek, and would have allowed employers to implement this schedule without the obligation to pay overtime compensation for the ninth and tenth hours in a workday.

In short, this bill would have allowed individual employees to request such schedules without requiring the employers to follow the complicated “work unit approval” pursuant to section 510.  In this regard, the bill would essentially have utilized a procedure similar to that used in two other states requiring daily overtime (Alaska and Nevada).

Employers still would have been required to pay overtime at the rate of one-and-a-half times the regular rate for daily hours worked in excess of ten hours, and weekly hours worked in excess of forty hours.  Employers also would have been required to pay double-time for work performed in excess of twelve hours per workday, and in excess of eight hours on a fifth, sixth, or seventh day in the workweek.

Either the employee or employer would have been able to discontinue this “employee-selected flexible work schedule” at any time by giving written notice to the other party.  Such a request would have been effective the first day of the next pay period, or the fifth day after the notice was given if there were fewer than five days before the start of the next pay period, unless otherwise agreed to by the employer and the employee.

This bill also contained some safeguards to ensure employers did not force employees into working more than eight hours a day.  For instance, new section 511.5 would have required that any such schedule be requested by the employee in writing.  Employers could have informed employees they were willing to consider such employee requests, but employers could not have induced a request by promising an employment benefit or threatening an employment detriment.

This bill would not have applied to any employee covered by a collective bargaining agreement or employed by the state, a county, or any political subdivision, since those entities already have the ability to contract for such flexible work schedules.

Status:  This bill died on a party-line 5-2 vote in the Assembly’s Labor and Employment Committee on April 23, 2014.

Paid Time Off Proposed for School or Day Care Visits (AB 2030)

Labor Code section 230.8 presently requires employers with more than 25 employees at the same location to provide up to 40 hours annually (and up to 8 hours in a single month) for specified employees (i.e., parent, guardian, or grandparents with custody) to participate in the child’s school or day care activities.  Section 230.8 also presently requires an employee to utilize existing vacation, personal leave, or compensatory time off for purposes of such a planned absence, and also authorizes an employee to utilize time off without pay for this purpose, to the extent the employer makes such time off available.

Seemingly, this bill would materially amend this section by requiring employers to provide such time off without loss of pay.  In this regard, it would prohibit employers from requiring employees to use existing vacation, personal leave, or compensatory time off for these purposes (unless otherwise provided for by a collective bargaining agreement entered into before January 1, 2015), or from being required to use time off without pay for those purposes.  This bill would also eliminate a current restriction prohibiting employees who are accorded vacation during the same period of time in the calendar year as all other permanent, full-time employees from using that accrued vacation benefit at any other time for school or day care activities.

Status:  This bill is pending in the Assembly’s Labor and Employment Committee, but the hearing was cancelled at the author’s request and has not yet been rescheduled.

Time Off for Emergency Rescue Personnel (AB 2536)

Labor Code section 230.3 prohibits an employer from discharging or in any manner discriminating against an employee for taking time off to perform emergency duty as a volunteer firefighter, reserve peace officer, or emergency rescue personnel.  Section 230.3 presently defines “emergency rescue personnel” to include an officer, employee, or member of a political subdivision of the state, or of a sheriff’s department, police department, or a private fire department.  This bill would expand this definition of “emergency rescue personnel” to include an officer, employee, or member of a disaster medical response entity sponsored or requested by the state.

Status:  This bill unanimously passed the Assembly’s Labor and Employment and Appropriations Committees.

Revised CFRA Eligibility Definition for Public and Private School Employees

(AB 1562)

This bill would amend the California Family Rights Act’s (CFRA) definition of an eligible employee, and make several changes specific to public or private school employees.  For instance, under amended Government Code section 12945.2, private or public school employees would be eligible for CFRA leave if they worked 1,250 hours in the preceding 12-month period, or completed at least 60 percent of the hours of service that a full-time employee is required to perform during the previous 12-month period.  This new alternative definition is intended to reflect the practical reality that many school employees work a school year rather than a traditional calendar year, and would have to work a much higher percentage of hours (i.e., nearly 95%) than non-educational employees to otherwise qualify.

While CFRA generally requires that employers reinstate employees at the same or comparable position, there are several narrow exceptions, including in subsection (r), involving salaried employees who are among the highest paid 10% of the employees employed within 75 miles of the worksite at which that employee is employed.  This bill would amend subsection (r) to specify that it does not apply to public or private school employees.

Status:  This bill has passed the Assembly’s Labor and Employment Committee, but is currently in the suspense file in the Appropriations Committee.

 “Familial Status” Protections for FEHA (SB 404)

Originally introduced in 2013, this bill would include “familial status” to the list of protected categories under the Fair Employment and Housing Act (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 in a subsequent amendment.)

The bill’s author states this bill is intended to correct a discrepancy (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.  Similarly, the bill’s proponents argue that this proposed amendment 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 as it 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]).

Status:  This bill is a holdover from a 2013 bill that passed the Senate and several Assembly committee votes, before stalling.  There has not been much activity on this bill in 2014, but given its prior status, it could be revived fairly quickly.

FEHA Protections for Unpaid Interns (AB 1443)

This bill would amend Government Code section 12940(c), which presently prohibits discrimination against apprentice training programs, to also preclude discriminating against an unpaid intern on the basis of any legally protected classification (e.g., race, religion, disability, etc.).  It would also amend subjection (j) to prohibit harassment against an unpaid intern because of a legally protected classification.  This bill is in response to several court rulings in other jurisdictions suggesting interns are not employees for purposes of harassment and discrimination laws.

Status:  This bill appears unopposed and has unanimously passed the Assembly’s Labor and Employment, Judiciary, and Appropriations Committees.

AB 1825 Training to Include Prevention of “Abusive Conduct” (AB 2053)

In 2004, California enacted AB 1825, which requires employers with more than 50 employees to provide at least two hours of sexual harassment training for supervisors located in California.  Under Government Code section 12950.1, employers must provide this training within six months of an employee’s assumption of a supervisory position, and once every two years thereafter.

This bill would amend section 12950.1 to require that this training include the prevention of “abusive conduct.”  Newly proposed subsection (g)(2) would define abusive conduct as “conduct of an employer or employee in the workplace, with malice, that a reasonable person would find hostile, offensive, and unrelated to an employer’s legitimate business interests.”  It further specifies that such abusive conduct “may include repeated infliction of verbal abuse, such as the use of derogatory remarks, insults, and epithets, verbal or physical conduct that a reasonable person would find threatening, intimidating, or humiliating, or the gratuitous sabotage or undermining of a person’s work performance.”  The bill specifies that “a single act shall not constitute abusive conduct, unless especially severe and egregious.”

Notably, this bill only would require such “abusive conduct” prevention training within the already required AB 1825 harassment training, and it does not otherwise amend the Fair Employment and Housing Act to prohibit “abusive conduct” unrelated to an already protected criterion.

Status:  This bill has passed the Assembly’s Labor and Employment and Appropriations Committees and a full floor vote is expected soon.

FEHA Settlement Agreements Targeted (SB 1407)

Citing a concern that employers are routinely forcing employees to waive the FEHA’s protections by signing “inconspicuous” releases or as a condition of receiving compensation already owed, this bill would invalidate any release of FEHA claims unless the release is knowing and voluntary (as defined).  Specifically, this bill would add section 12964.5 to the Government Code and generally invalidate any waiver or release of FEHA claims unless various enumerated criteria similar to those required for age-related releases are present.  For instance, the release would need to be a negotiated agreement, in conspicuous writing, specifically mentioning the FEHA.  Additionally, the employee would need to be advised to consult an attorney, the employee would have at least 21 days to review the agreement, and, after executing the agreement, the employee would have 7 days to revoke his or her consent.  This section would also define “release of claims” to include requiring individuals to execute a statement that they do not possess any claims or injuries against the employer.  It would also specify that a valid waiver would not affect the ability of the Department of Fair Employment and Housing (DFEH) to prosecute any claim or to prevent an individual from filing a charge or participating in a DFEH investigation.

This bill is similar to AB 1715, which was vetoed by then-Governor Schwarzenegger.

Status:  This bill has passed the Senate’s Judiciary Committee and a full floor vote is expected soon.

Arbitration Agreements Targeted (AB 2617)

Employers often utilize arbitration agreements regarding employment disputes for various reasons, including to more expeditiously resolve such disputes, to lower the costs of such disputes, and to avoid the potential for runaway jury verdicts.  This bill would amend Civil Code sections 51.7, 52, and 52.1 to prohibit businesses from requiring an individual to agree to arbitrate future disputes regarding violations of the Ralph Civil Rights Act or the Bane Civil Rights Act rather than litigating them.  This bill would apply to any contracts entered into, modified, or extended after January 1, 2015.

Similar bills have previously stalled during the legislative process, and since this bill singles out arbitration agreements in contravention of the Federal Arbitration Act, it will likely be judicially challenged even if enacted.

Status:  This bill passed the Assembly’s Judiciary Committee, and a full floor vote is expected in May 2014.

Retaliation Protections for Employees Enrolled in Public Assistance Programs

(AB 1792)

Citing the impact poorly-paid employees have on the state budget, this bill would require the Employment Development Department to collaborate with other specified state agencies to compile and publish a list of employers with employees that are enrolled in public assistance programs.  This bill would also prohibit employers from: (1) discharging, discriminating, or retaliating against an employee who enrolls in a public assistance program, or (2) refusing to hire a beneficiary of a public assistance program.  Non-compliant employers would be subject to a criminal penalty.

Status:  This bill has passed the Assembly’s Insurance and Labor and Employment Committees, and is pending in the Appropriations Committee.

Amendments to “Immigration-Related” Retaliation Protections (AB 2751)

In 2013, California enacted AB 263 and SB 666 which, in turn, enacted Labor Code section 1019 prohibiting employers from engaging in various immigration-related practices against persons who had exercised certain rights protected under state labor and employment laws. These immigration-related practices included threatening to file or filing a false police report.  This bill would amend this particular provision to also include the threatening to file or the filing of a false report or complaint with any state or federal agency.

Newly-enacted section 1019 also authorizes the court to order, upon application of a party or upon its own motion, the appropriate government agencies to suspend certain business licenses held by the violating party for prescribed periods based on the number of violations.  This bill would clarify that the licenses to be affected would be “specific to the business location or locations where the unfair immigration-related practice occurred.”

Status:  This bill passed the Assembly’s Labor and Employment Committee and a full floor vote is expected shortly.

Farm Labor Contractors Required to Undergo Sexual Harassment Training

(SB 1087)

California presently has detailed laws regulating “farm labor contractors” (FLC) and the procedures for them to obtain the requisite licenses.  (See Labor Code section 1682 et seq.)  This wide-ranging bill would attempt to address several concerns in the agricultural industry.

First, this bill would attempt to reduce the reported prevalence of inappropriate sexual conduct towards agricultural employees.  Thus, this law would prohibit the Labor Commissioner from issuing a FLC license to any person who, within the preceding 3 years, has been found by a court or an administrative agency to have committed sexual harassment of an employee.  It would also prohibit an FLC license from being issued to any person who, within the preceding 3 years, employed any supervisory employee he or she knew or should have known had been found by a court or an administrative agency, within the preceding 3 years of his or her employment with the applicant, to have committed sexual harassment of an employee.

In addition to denying an FLC license, the Labor Commissioner would also be entitled to revoke, suspend, or refuse to renew an FLC license if either of these criteria is met.

It would also require that the mandatory written examination part of the licensing process cover laws and regulations concerning workplace sexual harassment, and that the annual mandatory 8 hours of educational classes be increased to 12 hours and include sexual harassment training.  An applicant for an FLC license would also be required to execute a written statement attesting that their supervisory employees have been trained in the prevention of sexual harassment.

Secondly, this bill seeks to increase the ability of the Division of Labor Standards Enforcement (DLSE) to enforce applicable laws.  Accordingly, this bill proposes increased funding for FLC enforcement and verification, and aims to increase bonding requirements, increase wage and hour reporting, and increase penalties for violations.

Status:  This bill passed the Senate’s Labor and Industrial Relations Committee, and is scheduled to be heard in the Appropriations Committee on May 19, 2014.

Additional Minimum Wage Increases Proposed (SB 935)

In 2013, the Legislature passed and Governor Brown approved AB 10, increasing California’s hourly minimum wage to $9.00 on July 1, 2014, and to $10.00 on January 1, 2016.  Perhaps in response to President Obama’s proposal to increase the federal minimum wage to $10.10 and to minimum wage increases in over a dozen states, this bill would again increase California’s minimum wage in three separate increments over the next three years.  Specifically, it would increase California’s hourly minimum wage to $11.00 by January 1, 2015, to $12.00 by January 1, 2016, and to $13.00 by January 1, 2017.  After January 1, 2018, the minimum wage would also be annually adjusted based on the California Consumer Price Index (CPI).  Notably, while the rate could be adjusted upwards, it could not be adjusted downwards, even if the CPI was negative for the preceding year.  (An earlier version of AB 10 had included proposed annual future adjustments based on CPI, but this was deleted by amendment before final passage.)

These minimum wage increases would apply to all industries, including private and public employment.

Status:  This bill passed the Senate’s Labor and Industrial Relations Committee but was recently placed on the suspense file in the Appropriations Committee, likely due to a report suggesting the bill’s significant fiscal impact (e.g., the burden on the Department of Industrial Relations to annually update the minimum wage posters).

Senate Passes Bill Clarifying that Rest and Recovery Periods are to be Counted as Hours Worked (SB 1360)

Labor Code section 226.7 presently precludes employers from requiring employees to work during any meal, rest, or recovery period, and to pay an additional hour of pay at the employee’s regular rate of pay for each workday such a meal, rest, or recovery period is missed.  (In 2013, California enacted SB 435 adding the language regarding “recovery periods” to the then-existing version of section 226.7.)  This bill would amend section 226.7 to specify that any rest or recovery period shall be counted as hours worked for which there shall be no deduction from wages.  The bill’s proponents state that this language was mistakenly omitted from SB 435 during the 2013 legislative session.  This bill further provides that this amendment would be declarative of existing law, thus applying retroactively.

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