California Legislative Update
Governor Davis recently signed into law AB 60, which will reinstate the eight-hour workday. He also recently signed SB 26, allowing disparate impact age discrimination claims, and AB 109, allowing the use of sick leave for family members. The California Legislature is considering over 30 other bills that could also have an impact on employers.
The following is a summary of a number of bills that would significantly change employer liability in California. This summary is based on the August 2, 1999 version of the bills. Other than AB 60, SB 26 and AB 109, the pending bills are subject to revision by the Legislature and must be signed by Governor Davis before they become law.
- AB 60: Overtime After Eight Hours Per Day Reinstated.
- The Senate and Assembly passed AB 60 on July 8, 1999 and Governor Davis approved the bill on July 20, 1999. AB 60 re-writes California's overtime laws, requiring, as of January 1, 2000, overtime pay after eight hours per day and 40 hours per week for nonexempt employees in most industries, unless an alternative workweek schedule (of not more than ten hours of work in one day without overtime compensation) has been approved in a "secret ballot election" by two-thirds of the affected employees in a given work unit. AB 60 also allows the California Industrial Welfare Commission ("IWC") to make significant changes to the exemption criteria for executive, administrative and professional employees. Among other things, AB 60 also:
- Prohibits employers from reducing a nonexempt employee's regular rate of hourly pay as a result of the adoption, repeal or nullification of an alternative workweek schedule.
- Codifies existing requirements regarding rest breaks and meal periods for nonexempt employees and further requires a second meal period of not less than 30 minutes if an employee works more than 10 hours per day. Provides the IWC with authority to adopt Wage Orders governing working conditions such as meal periods and break periods.
- Makes an employer, or other persons acting on behalf of an employer, subject to civil penalties for violation of the Labor Code or IWC Wage Orders.
- Allows the IWC to review, retain or eliminate existing overtime exemptions or to establish additional exemptions. Requires the IWC to review the duties that meet the test for exemption of executive, administrative, and professional employees. Allows the IWC to adopt or modify regulations regarding which duties meet such exemptions by convening a public hearing, as opposed to a new wage board. Requires that employees who are engaged in duties that meet the test of the exemptions be paid a monthly salary equivalent of no less than two times the state minimum wage for full-time employment. The current state minimum wage is $5.75 per hour. Therefore, exempt employees will have to be paid at least $1,993.33 per month.
- Requires registered nurses to individually meet the criteria for the exemptions established for executive or administrative employees.
- Allows a nonexempt employee, based on a specific written request and consent of the employer for each occurrence, to take time off for a personal obligation and make up the lost time within the same workweek without payment of daily overtime compensation for the extra hours worked on the makeup days. Employers would be prohibited from encouraging or soliciting employees to make such requests. Employees could not work more than 11 hours per day or 40 hours per week under this "comp. time" arrangement.
- Repeals, as of July 1, 2000, certain minimum wage and/or overtime exemptions relating to employees of ski establishments, hospitals, commercial fishing enterprises and stable employees engaged in the raising, feeding or management of racehorses. Allows the IWC to adopt new regulations relating to these types of employees, as well as pharmacists and outside salespersons.
- SB 26: Disparate Impact Age Discrimination Claims Allowed.
Governor Davis signed SB 26 on August 2, 1999. It provides that using salary as a basis for selecting employees for termination may constitute age discrimination if it adversely impacts older workers, and the bill rejects the ruling in Marks v. Loral Corp., 57 Cal. App. 4th 30 (1997), to the contrary. The bill further provides that the disparate impact theory of proof may be used in age discrimination claims.
- AB 109: Use of Sick Leave for Family Members.
Governor Davis signed AB 109 on July 23, 1999. Effective January 1, 2000, an employer who provides sick leave to its employees will be required to permit such employees to use half of their accrued sick leave to attend to the illness of a child, parent or spouse of the employee. AB 109 prohibits discrimination in any manner against an employee who uses or attempts to exercise the right to use accrued sick leave to attend to a child, parent or spouse of the employee who is ill. An employee aggrieved by a violation of this statute will be entitled to reinstatement and the greater of actual damages or one day's pay whichever is greater, and to appropriate equitable relief. This statute does not extend the maximum period of leave permitted by the FMLA or the California Family Rights Act.
- SB1016: Employers Cannot Secretly Monitor E-Mail; Policies Required.
SB 1016 would prohibit an employer from "secretly monitoring" the electronic mail or other personal computer records generated by an employee. If an employer intends to monitor such items, it would be required to distribute a computer use policy. Violation of this statute would be a misdemeanor.
- AB858: Arbitration Could Not Be Required in Employment Agreements.
Absent a collective bargaining agreement, AB 858 would prohibit employers from requesting or requiring pre-dispute arbitration agreements. In particular, it would prohibit employers from requesting or requiring employees to, as a condition of employment or continued employment, waive any legal protection against discrimination, privileges under the California Evidence Code, the right to a jury trial and the right to access to a judicial forum. Any agreement obtained in violation of the bill would be declared void, and any person or entity that violates the bill would be subject to a civil penalty in the amount of $5,000 per violation.
- SB 1149: CFRA Would Cover Employers With 20 or More Employees.
Under California's Family Rights Act ("CFRA") it is unlawful for an employer with 50 or more employees to refuse to grant family and medical leave to any employee with more than 12 months of service with the employer and who has worked at least 1,250 hours during the previous 12 month-period. In order to be eligible for leave, there must be 50 or more employees within a 75-mile radius of the worksite where that employee works and leave can only be taken for designated purposes. In addition, the current law defines "child" as a biological, adopted, or foster child, a stepchild, a legal ward, or a child of a person standing in loco parentis who is either under 18 years of age or an adult dependent child.
SB 1149 would redefine the term "employer" as any person who directly employs 20 or more persons to perform services for a wage or salary. In addition, this bill would revise the definition of the term "child" to no longer include an adult dependent child. However, employers covered by the federal Family and Medical Leave Act ("FMLA"), i.e., those with 50 or more employees, would have to continue to provide leave to care for adult dependent children, since this category of family member is protected under the federal act.
- SB 118: CFRA Would Cover Additional Family Members.
SB 118 also amends California's Family Rights Act by expanding those groups for whom an employee can request leave to provide medical care. Specifically, this bill would provide that an employee may take family care and medical leave to care for a grandparent or sibling or domestic partner (as defined) who has a serious health condition or to care for an individual who depends on the employee for immediate care and support, who shares a common residence with the employee, and who has a serious health condition. This would expand existing law which currently allows an employee to request leave in connection with the birth or adoption or serious health condition of the employee's child, or to care for a parent or spouse who has a serious health condition or because the employee's own serious health condition. Employers covered by FMLA would not be permitted to count time taken off to care for these new categories of "family members" against the employee's 12 weeks of FMLA leave entitlement, since they are not covered under the federal Act.
- SB 56: Time Off for Domestic Violence Court.
SB 56 would revise and expand the current prohibition of retaliation and discrimination against employees who take time off work to serve as a juror or witness to include an employee who is a victim of a crime. In addition, this bill would prohibit employers from discharging, discriminating or retaliating against employees who are victims of domestic violence and who take time off work to appear in court to obtain or attempt to obtain any relief to ensure the health, safety or welfare of themselves or their child.
- AB 1670: FEHA Revisions.
This bill would strengthen employee protections afforded by the Fair Employment and Housing Act ("FEHA") and other civil rights statutes. It would extend FEHA's harassment (but not discrimination) provisions to contract workers, require employers to provide reasonable accommodations to pregnant employees, prohibit genetic testing of employees and expand the class of employers subject to FEHA's prohibition against discrimination on the basis of mental disability to those employing five or more employees. It would prohibit discrimination based on a victim's perceived membership in a FEHA protected class and would clarify that FEHA's protections against discrimination cover the right to freely associate. The bill would define "supervisor" to include individuals with authority to hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward or discipline other employees, or those who use independent judgment in directing employees and adjusting their grievances. It would increase the amount of damages that can be awarded by the Fair Employment and Housing Commission ("FEHC") in discrimination cases from $50,000 to $150,000. It would authorize courts to award expert fees to the prevailing party in FEHA cases and would allow courts to require employers found to be in violation of FEHA to conduct training of employers, supervisors and managers regarding FEHA's requirements.
- SB 172: Employee Inspection and Correction of Personnel Files.
Labor Code section 1198.5 requires employers to allow employees to inspect their personnel files during regular business hours. Under SB 172, such inspections would have to be with no loss of compensation. In addition, if an employee believes that any part of the file is not accurate, relevant, timely, or complete, he or she may request that the record be corrected, that the inaccurate part be deleted, or both. The employee must make a statement describing the corrections or deletions requested and his or her reasons. This statement becomes part of the personnel file. Within 21 calendar days of the request, the employer must either grant the request or notify the employee of its decision to refuse the request. If the employer refuses the request, in whole or in part, it must state its reasons in writing and this statement also becomes part of the personnel file. SB 172 further requires employers, at the employee's request, to remove from personnel files all adverse reports, documents, correspondence, or other material that has not been used as part of an official disciplinary act within two years. SB 172 deletes the exemption for public employers in existing law governing the inspection of personnel files. Employees covered by a collective bargaining agreement can bargain for greater protection.
- SB 460: Employee's Claim of Hours Worked Presumed Valid Absent Employer Records.
SB 460 creates a rebuttable presumption, in an action for the nonpayment of wages, that if an employer fails to keep accurate and contemporaneous payroll records or provide the wage deduction statements required by law, then an employee's claim of hours worked will be valid. This provision applies to all employers. SB 460 also makes the entity that contracts with a garment manufacturer liable if the manufacturer does not pay required wages.
- SB 240: Child Support Tracking on Independent Contractors.
Existing law requires employers to file specified information with the state Employment Development Department ("EDD"), including reporting the hiring of any employee who works in this state and to whom the employer anticipates paying wages. This bill would require that employers (including any individual, person, corporation, association or partnership) doing business in California report to the EDD the name, social security number and other information concerning each contractor who performs services in or outside of California. This section of SB 240 would become operative on July 1, 2000.