Labor & Employment Update: January 2000

YEAR 2000 EMPLOYMENT LEGISLATION: A SUMMARY OF NEW OBLIGATIONS

On January 1, 2000, a number of new California laws went into effect which will have far-reaching consequences on employment policies and practices. What follows is a brief overview of those laws, including a summary of compliance points to help ensure that your company is operating within the law.

I. California's New Overtime Rules

Entitled the "Eight-Hour-Day Restoration and Workplace Flexibility Act of 1999," AB 60 resurrects daily overtime pay provisions. The law requires overtime pay after eight hours per day and 40 hours per week in most industries, unless a permissible alternative workweek schedule 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. The IWC is required to issue new wage orders on or before July 1, 2000. Among other things, AB 60 also:

• Prohibits employers from reducing a nonexempt employee's regular rate of hourly pay because an alternative workweek schedule has been adopted, repealed or nullified.

  • Formalizes 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.
  • Allows a nonexempt employee who makes a specific written request and receives the consent of the employer to take time off for a personal obligation and make up the lost time within the same workweek without payment of daily overtime for the extra hours worked on the makeup days. Employers cannot encourage or solicit employees to make such requests. Employees can not work more than 11 hours per day or 40 hours per week under this arrangement without being penalized.
  • 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.

    Compliance Checklist:

    • Update your overtime policy. Modify your overtime policy to spell out that as of January 1, 2000, time and a half is earned after eight hours in a day, for the first eight hours on the seventh day of work in a workweek, and after 40 hours in a week. Double time is earned after 12 hours in a day or after eight hours on the seventh day worked in a workweek.

      • Adjust work schedules. Make changes to ensure that employees won't work unnecessary overtime after January 1, 2000. q Revise timecards and timesheets. Update your forms to track overtime after eight hours. Also be sure to reprogram timekeeping systems.
      • Implement make-up time policy. Make sure your policies cover when employees can make up lost work time without daily overtime pay. Create a make-up time request and approval form and be sure employees know that such forms must be filled out each time.

        • Update meal period policy. Add a new rule allowing employees to waive a second meal period after 10 hours, with your consent, as long as the total hours worked don't exceed 12 and the first meal period was taken.

          • Train supervisors and payroll staff. Ensure that they understand the basic rules as well as your policies. Managers should also be made aware that they can be personally liable for violations of the overtime law.

            • Verify exempt salaries and set up a reminder system. The new law requires a $1,993.33 minimum monthly salary for exempt employees. This minimum is pegged to two times the California minimum wage, so it's a good idea to set up a tickler to remind you to review exempt employees' salaries when the state minimum wage goes up.

              • Obtain consents for voluntary alternative workweeks. This applies if you do not have a formal alternative workweek schedule but have certain employees who, as of July 1, 1999, were working alternative schedules of no more than 10 hours a day. These employees should be informed that they can voluntarily continue working those schedules without daily overtime after January 1, 2000. But they must fill out a written request.

                • Implement a formal alternative workweek schedule. If you have a regular alternative workweek program in effect that was not adopted in a secret ballot by two-thirds of the workers in a work unit, you must hold an election by January 1, 2000, or begin paying daily overtime.

                  • Monitor developments in the law as to exempt/nonexempt status to assure proper classification.

              • II. Discrimination, Harassment, and Changes to FEHA

                1. Age discrimination
                SB 26 reverses Marks v. Loral, a court holding which permitted employers to take salary into account when making layoff decisions. Following SB 26's passage, a California employer with 5 or more employees would violate the law by using salary as a consideration in terminations, if doing so would disproportionately affect workers of 40 years or more. In essence, the Bill declares that employees can sue under the Fair Employment and Housing Act (FEHA) not only for individual discrimination, but for a neutral policy which has an adverse impact on older workers.

                To avoid such lawsuits, use caution when using salary as a basis for employment decisions. Efforts to save money by laying off employees at the higher end of your wage scale will now be riskier because these workers may tend to be older. If you are considering terminating workers who are 40 or over, the following approaches can help cut costs and avoid age bias claims:

                • Stick to skill-sets, seniority or performance. Base terminations on factors such as objective qualifications, seniority, and performance, not salary.
                • Offer voluntary incentives first. Instead of terminations, many employers try thinning their workforce by offering a voluntary severance program. Obtain a signed release of potential age discrimination claims from older workers who participate, and be sure to follow the special rules that apply to such waivers.
                • Avoid actions that suggest age bias. Train everyone involved in the layoff process that age-related comments-such as wanting to bring in "young blood" or "fresh faces"-are fraught with danger. Make sure managers and supervisors always understand the legitimate business reasons for your actions so they can properly communicate them to employees. Also, since disputes are common when older employees are replaced with workers under 40 with equal or lesser qualifications, always carefully document the objective reasons for your decisions.

          • 2. Sexual Orientation as a Protected Class
            AB 1001 amends the Fair Employment and Housing Act to include sexual orientation as a protected class. The bill repeals provisions of the Labor Code that dealt with the prohibition of discrimination based on sexual orientation, instead bringing sexual orientation into the same legislative rubric as other California protected classes. The law applies to employers with 5 or more employees. As an initial step toward compliance, ensure that your anti-harassment, EEOC, and other anti-discrimination policies reference sexual orientation.

            3. Reasonable Accommodations for Pregnant Employees
            AB 1670 extends California's pregnancy-related disability protections by creating a right of action for a pregnant employee who requests, but is denied, reasonable accommodation during her pregnancy. Prior law required employers only to transfer the employee to a less strenuous or hazardous position when such an option was feasible and medically necessary. AB 1670 now requires that employers with 5 or more employees provide reasonable accommodation in much the same manner as for long-term disabilities under the ADA. Use the following guidelines to assist in your company's compliance:

            • Treat a request for accommodation as you would an ADA accommodation. The employee must still be able to perform essential job functions, and the accommodation must be reasonable. Apply your existing ADA policies and procedures to the pregnant employee's situation.
            • As with the ADA, reasonableness depends on a amalgam of factors. In the case of a software developer working solely on one project, working from home might be reasonable. For a line manager, on-site presence might be essential. If you can shift non-essential duties, or provide a requested transfer, you must do so. But you need not create a new position, eliminate essential job functions, or bump other employees to comply.
            • You may ask for a medical certification stating the nature of the required accommodation, that the accommodation is medically necessary, and the date on which the accommodation should start and will likely end if you follow such a practice for other types of short-term disabilities.
            • Review your pregnancy and short-term disability policies to ensure compliance.

          4. Other Changes to FEHA
          AB 1670 revised and supplemented numerous provisions of Fair Employment and Housing Act to afford employee's greater protections. Below are other important effects of AB 1670:

          • Extends protections against harassment (but not discrimination) to independent contractors.
          • Prohibits genetic testing of employees.
          • Expands the class of employers subject to FEHA's prohibition against discrimination on the basis of mental disability to those employing five or more employees.
          • Prohibits discrimination based on a victim's perceived membership in a FEHA protected class and clarifies that FEHA's protections against discrimination cover the right to freely associate.
          • Attaches a broad definition to "supervisor" for the purposes of assessing employer liability in discrimination and harassment claims. The new definition includes 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.
          • Increases 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.
          • Authorize courts to award expert fees to the prevailing party in the FEHA cases and allows courts to require employers found to be in violation of the FEHA to conduct training of employees, supervisors and managers regarding FEHA's requirements.

    • III. Employee Time Off

      1. Off-Duty Conduct
      In a surprise bill that received little public attention or discussion, the passage of AB 1689 created a right for employees to seek redress from the Department of Labor Standards Enforcement in the event they are penalized for off-duty, legal, conduct. Specifically, the law bars demotion, discipline or discharge for "lawful conduct occurring during non-working hours away from the employer's premises."
      

      Existing law prevents employer discrimination or retaliation against an employee for certain protected activities such as free speech or political affiliation. However, AB 1689 potentially reaches beyond the scope of constitutionally protected activities to include acts that may be considered a breach of company loyalty-such as moonlighting or violating company non-fraternization policies. A successful employee could receive lost wages, reinstatement, and may be able to pursue a public policy wrongful discharge claim.

      2. Time Off for Domestic Violence Victims
      SB 56 Allows victims of domestic violence to take time off of work to appear in court to obtain a civil restraining order or other legal protection necessary to ensure their health and safety. Specifically, this bill:

      • Prohibits employers from discriminating and retaliating against employees who are victims of domestic violence and must appear in court to obtain restraining orders or other injunctive relief necessary to ensure their health and safety.
      • Requires a victim of domestic violence to provide the employer reasonable notice that he or she is required to appear in court. An exception would be an unscheduled or emergency appearance in court. If notice is not given prior to the appearance, the victim must show proof of the appearance from the court or prosecuting attorney.
      • Grants a victim the right to file a complaint with the Division of Labor Standards Enforcement against an employer who is found in violation.
      • Permits victims to use vacation time, personal leave, or compensatory time off to appear in court.

    3. Employee Sick Leave
    With the passage of AB 109, every employer in California that regularly provides paid sick leave to employees will be required to permit employees to use up to one-half of their annual sick leave accrual to care for ill family members. California's new family sick leave law precludes an employer from terminating an employee for taking family sick leave. Nevertheless, family sick leave absences probably can be counted in determining excessive absenteeism as long as they are not accorded more weight than employee sick days.

    The new family sick leave mandate extends only to an employee's "child, parent or spouse," which includes stepchildren, adopted or foster children, wards, stepparents, foster parents and guardians (but not the parents of the employee's spouse). The term "spouse" is undefined but probably excludes domestic partners.

    An employee who believes that he or she has been denied family sick leave rights or retaliated against for using family sick leave may bring a claim with the Labor Commissioner or file a lawsuit seeking reinstatement, damages, and attorneys' fees. In addition, workers who believe they were fired for using family sick leave might pursue "public policy" wrongful discharge claims, for which they potentially could recover unlimited compensatory and punitive damages. To prepare for the effects of AB 109:

    • Assess your present sick leave policies to determine whether granting family sick leave will result in excessive usage. You have two options if you determine that your current policies are too generous-(1) reduce the annual rate of employee sick leave accruals, which will proportionately reduce the family sick leave you must make available, or (2) Provide all or a portion of sick leave through an exempt sick leave arrangement, such as an insured or ERISA plan.
    • If you do not currently have a "cap" on use of sick leave, create an affirmative policy stating a cap. Consider whether to create a PTO plan which would be unaffected by this law.
    • Decide how to bring your plans into compliance with the new law. For example, do you want to treat domestic partners as family members? Do you want to give family sick leave to employees outside of California?
    • Although the new law does not expressly require employers to advise employees as to their family sick leave rights, employers that must make family sick leave available should notify employees of any changes before they take effect.

    IV. Other Laws

    1. Employer Liability for Safety
    AB 1127 expands both criminal and civil liability of employers that violate California workplace safety rules, and shifts the burden onto an employer to prove that its workplace is safe, rather than on the state to show that the presence of a dangerous condition led to a workplace injury or disability. The legislation aims to increase misdemeanor penalties of fines and jail time. Maximum fines for individuals found at fault for workplace injuries would rise from $10,000 to $70,000. Maximum jail sentences would be doubled to one year.

    Currently, California's Labor Code contains no provisions for felony prosecution of workplace safety violations. Under AB 1127, safety infractions leading to a worker's death, serious injury or permanent disability become felonies, with potential fines imposed on individuals of up to $1 million and jail sentences of up to three years. Corporations would be exposed to fines of as much as $5 million and civil penalties of $25,000 per day for failure to correct in a timely manner any hazards found. This legislation enables injured workers to go outside the workers' compensation system.

    2. Child Support Tracking
    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. SB 240 requires 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 does not become operative

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