NO DISCIPLINE FOR EMPLOYEE'S USE OF SICK LEAVE FOR CHILD, SPOUSE, DOMESTIC PARTNER OR PARENT
For the last few years, California Labor Code Section 233 provided that any employer who provides sick leave must permit employees to use one-half of that sick leave to care for an ill child, parent, spouse or domestic partner. Now, Labor Code Section 234 prohibits any discipline or other retaliation for the use of such leave. Specifically, discipline for any use of sick leave to care for a sick child, parent, spouse or domestic partner is a per se violation of Labor Code Section 233. An employer who violates this law is liable to the employee for legal and equitable damages. Employers are also prohibited from disciplining employees for missing work for their own disability or workers' compensation leaves.
Sick leave is not required by law. Thus, the amount of sick leave is within the control of the employer. However, if the employer provides sick leave, it must allow employees to use it for their own disability, work related or not, and to care for a sick child, parent, spouse or domestic partner. This is a good time to review your sick leave policy, as well as your policy regarding excessive absenteeism to verify they conform to California law.
COBRA COVERAGE EXTENDED IN CALIFORNIA TO 36 MONTHS
COBRA is a federal law allowing employees who have been terminated, or other qualifying events, to pay for their own continued health insurance coverage. Federal law allows up to 18 months of continuation coverage. This new California law allows California employees to pay for continued coverage up to 36 months, double the federal requirement. Cal COBRA also applies to employers with 2 or more employees, whereas federal COBRA only applies to employers with 20 or more employees.
EMPLOYEE OR FORMER EMPLOYEE HAS A RIGHT TO A COPY OF HIS/HER PAYROLL RECORDS WITHIN 21 DAYS OF REQUEST
An employer must allow an employee or former employee to inspect all of his/her payroll records and provide a copy within 21 days of a request. The employer is allowed to charge the actual cost of the copying. Failure to comply may result in a civil penalty for $50 for the first pay period in which the violation occurs and $100 per pay period for each subsequent violation up to a maximum of $4,000. Additionally, a penalty of $750 may be charged by the labor commissioner.
WORKERS' COMPENSATION BENEFITS SPIRAL UP
The maximum weekly benefit went to $602 from $490 for work-related injuries occurring on or after January 1, 2003. The maximum weekly benefit goes to $728 on January 1, 2004, and to $840 for injuries occurring on or after January 1, 2005. Starting in 2006 and thereafter, the maximum weekly benefit increases by an amount equal to the percentage increase in the state average weekly wage. This, of course, will continue the substantial increase in the cost of workers' compensation insurance.
Under the new "Treating Physician Rule", the opinions of a pre-injury designated physician or chiropractor are conclusive unless specifically rebutted by opposing evidence from an examining or reviewing physician. This rule will make it much more difficult for employers to win cases.
On a more positive note, the new law doubles the civil penalties for workers' compensation fraud and adds criminal penalties for a fraudulent statement or perjury in workers' comp claims. Additionally, the prohibition of disclosing to the employer the mental or physical condition for which workers' compensation is claimed and the treatment for that condition have been repealed. This, of course, is good news to employers.
TWO YEARS TO SUE FOR PUBLIC POLICY WRONGFUL TERMINATION
The statute of limitations for wrongful termination, discrimination and harassment was one year. Now that time period has been doubled allowing former employees up to 2 years to sue employers for public policy wrongful termination which may include claims for discrimination or harassment.
This new California law requires employers of 75 or more persons (without distinguishing full-time from part-time employees and possibly including independent contractors) to give 60 days notice to employees of any layoff of 50 or more employees, the relocation of operations to more than 100 miles away, or the shutdown of operations. Notice also must be given to the Employment Development Department ("EDD"), any local workforce investment board and the chief elected official of each city and county government involved. Failure to give the proper notice may result in a civil penalty of up to $500 per day. Additionally, laid off employees may bring a lawsuit seeking back pay and benefits for up to 60 days, which is the notice period. Attorneys' fees may also be requested in that lawsuit.
This California law also known as "Baby WARN," is more stringent than the federal WARN law, which requires a threshold of 100 full-time employees. Since California employers must follow both federal and California law, we suggest you seek assistance from legal counsel before any large layoff, relocation or discontinuance of operations.
The surprise of last year in employment law was AB655, which required all California employers to provide job applicants with notice and a copy of all investigative background reports within 7 days of receipt. Effective October of 2002, emergency legislation changed some of the most oppressive parts of this law. The notice and disclosure requirements were eliminated for investigation of suspected misconduct or wrongdoing. No longer are employers required to provide internally prepared documents to applicants, unless they include public records. Additionally, applicants who wish to obtain background reports may indicate so by checking a box. The preparer of the report can now send a copy directly to the job applicant, much like credit reports.
Employers who do not hire an applicant due to a background check must follow adverse action requirements, including supplying the applicant with the name and address of the company preparing the report. The purpose of this is to allow the applicant to challenge any of incorrect information, just like negative information on a credit report. Remember originally, this law came into effect because of the legislature's concern of identity theft.
Information provided by employers to a potential employer about job performance or qualification of a past or present employee, as long as it is based upon credible evidence and made without malice is privileged and cannot be the basis for a defamation lawsuit. This new law specifically protects an employer's statement as to whether or not the current or former employee is eligible for rehire.
NO DISCIPLINE FOR EMPLOYEE'S DISCLOSURE OF HIS/HER OWN PAY OR WORKING CONDITIONS
Labor Code Section 232 states that an employee cannot be disciplined, including terminated or otherwise discriminated against for disclosing his/her wages to anyone. Section 232 has been amended to include an employee's statements regarding employer's working conditions. Therefore, if you ask an employee to keep something confidential, this new law says you cannot discipline the employee if she/he does not do so.
HEALTH BENEFITS FOR EMPLOYEES ON WORKERS' COMPENSATION LEAVE, LIKE OTHER KINDS OF LEAVE, MAY BE TERMINATED IF CORRECTLY DONE
Once an employee has been on leave for a substantial time (usually 12 weeks is recommended), health benefits for that employee may be terminated. There was a question as to whether this was true for employees on workers' compensation leave for fear of a potential 132(a) claim of retaliation. The California Workers' Compensation Appeals Board, in the case of Navarro v. A&A Farming answered this question in favor of the employer. Therefore, employees on workers' compensation leave, as their counterparts on other kinds of leave, may have their health benefits terminated if the employer's policy treats all employees, who have not been actively working for a certain period of time, the same. We recommend no reference to workers' compensation or disability in the policy. We would be happy to write such a policy for you.
WAGE HOUR LAWSUITS CONTINUE AGAINST EMPLOYERS WHO INCORRECTLY CLASSIFY EMPLOYEES AS EXEMPT
These lawsuits have proven to be quite costly to employers because of the availability of 4 years of overtime pay, interest and attorneys' fees if exempt employees are determined not to be properly classified. The liability is for exempt employees who work more than 8 hours a day, or 40 hours a week, or have in the last 4 years. Typically, these lawsuits are filed as class actions.
To avoid liability for overtime pay, there are three major exemptions. The professional exemption only applies to employees who are individually licensed with the State of California, such as doctors, dentists, attorneys, accountants and architects. Therefore, most employees to be properly classified as exempt must meet the four criteria of either the executive or administrative exemptions. For either exemption there is a threshold monthly wage of $2,340, and for the executive exemption, the employee must supervise at least 2 employees. The more difficult analysis is whether the employee spends more than 50 percent of his/her average work day doing managerial or administrative work, rather than the production work of the employer.
We strongly urge you to work with an experienced attorney or consultant to determine whether your exempt employees are properly classified. We do not want your company to learn the hard way, given the substantial verdicts and settlements in the millions of dollars which continue to make headline news.
HOURLY RATE FOR COMPUTER PROFESSIONAL EXEMPTION HAS BEEN RAISED
Another exemption to the overtime laws which has more limited application is the computer professional exemption. To qualify, an employee must make the equivalent of $56.21 per hour. The employee also must be performing primarily high-level design and system configuration work.
More commonly, your IT personnel may fall within the administrative exemption. The criteria for the administrative exemption are:
Remember each one of these criteria must be met for exemption from the overtime pay law.
BEING UNDOCUMENTED DOES NOT BAR EMPLOYEES FROM RECOVERY IN EMPLOYMENT LAWSUITS
Now, under California state law, California employees who are not lawfully allowed to work in the United States, are entitled to the legal protection of all state labor, employment, civil rights and employee housing laws. This means, that undocumented status will not bar a lawsuit against a California employer. Further, an employee's immigration status is irrelevant to the issue of liability and no inquiry will be allowed. Thus, alien workers enjoy the same protection of California employment laws, as all others, with the exception of reinstatement to a job in a legal or union proceeding.
CALIFORNIA PAID FAMILY LEAVE ACT
California has become the first state in the United States to provide partial wage reimbursement to employees who take family leave to care for a child, parent, spouse or domestic partner or to bond with a new child. The effect date of this law is July 1, 2004.
To pay for this benefit, a new tax, Family Temporary Disability Insurance ("FTDI") will be added to SDI as an employee deduction, starting January 1, 2004. All employees within the State of California will contribute into a fund, which starting July 1, 2004 will pay up to 55% of the weekly wages earned by a qualified employee, to a maximum of $728, for up to 6 weeks of leave. There is no waiting time to become eligible for this new benefit, meaning that a brand new employee immediately qualifies for FTDI. The most an employee will be required to contribute to the fund in 2004 is $55.06.
Although commonly reported as mandatory family leave pay for all employees, the law has no mandatory leave provisions, just wage reimbursement for those on leave. To qualify for leave, the employee must work for a large employer who falls within the Family Medical Leave Act ("FMLA"), or the California equivalent, California Family Rights Act ("CFRA"). Of course, smaller employers can allow such leave if they wish, but are not required to do so. This law mandates payments of FTDI for those employees whose employer provides leaves. Since all employees in the state must contribute to the new tax, but can't use it, remedial legislation is expected.
Effective January 1, 2004, employers are required to provide each employee with a copy of the FTDI notice, which will be prepared by the Employment Development Department. Additionally, after July 1, 2004, a copy of the same notice must be provided to each employee who goes on disability leave, including pregnancy, or takes time off from work to care for a sick or injured child, parent, spouse or domestic partner or to bond with a new child.
This new law contains no requirement that the employer return the employee who receives FTDI to the same job. Of course, those employees covered by FMLA or CFRA already have this protection.
To obtain benefits, employees requesting FTDI will be required to file a medical certification with the EDD, similar to SDI. There is a 7-day waiting period after the request is filed.
Many believe that this new law will continue to make California unattractive to large employers. Others believe that California is just the first to take this step of paid leave and other states will follow.
Employers of 25 or more employees must permit any employee who is a victim of sexual assault to take time off for medical or psychological treatment, to seek legal help or to "participate in safety planning." This protection was already required for domestic violence victims.
There is no time requirement that the sexual assault be recent. Therefore, employers must allow the time off, usually unpaid, even if the assault happened years before. Confidentiality as to these matters is also required of the employer.
FAILURE TO REPORT JOB DEATH OR SERIOUS ACCIDENT
This new law imposes hefty penalties for employers, managers, or supervisors who fail to report a job-related death or serious accident to CAL-OSHA. The civil penalty as to the employer is $5,000. However, if the manager or supervisor knowingly fails to report a work-related death, she/he may be charged with a misdemeanor, which carries a fine of up to $15,000 and/or jail time up to 1 year. A corporate employer who knowingly fails to report a death may be fined up to $150,000.
The obvious message here it to report all job-related deaths or serious accidents to CAL-OSHA. Obviously, you will want to train all of your managers and supervisors in this matter.
An employer may not use age as a factor in making any job- related decision. This invalidates a recent case which allowed an employer to consider age for an employee's eligibility for tuition reimbursement. Additionally, employers may not consider age when deciding whether or not to include an employee in a training program.
EMPLOYMENT ARBITRATION AGREEMENT
Arbitration agreements between employers and employees are legally permissible after years of contradictory court decisions in this regard. However, to be legally enforceable, agreements must meet the requirements set forth in the California Supreme Court case of Armendariz.
The primary advantage of arbitration agreements between employers and employees is to eliminate a jury, which is usually viewed as pro-employee rather than pro-employer. Arbitration is also seen as more cost effective and affords the certainty of the hearing taking place on schedule. Finally, arbitration gives the parties the ability to select the arbitrator, often a retired judge.
If you are considering an employment arbitration agreement, we suggest you discuss the matter at length with legal counsel, including a review of the arbitration agreement for enforceability.
EMPLOYERS NOT LIABLE FOR SEXUAL HARASSMENT OF NON-EMPLOYEES UNDER CALIFORNIA LAW, AT LEAST FOR NOW
A recent California case held that an employer cannot be liable for the sexual harassment of a customer or other non-employee. The law is the opposite, meaning the employer may be liable under federal law. It is expected that the California legislature will invalidate this court decision by changing the sexual harassment law in California in the very near future.
FLAT RATE RAISED ON INCOME TAX WITHHOLDING ON SUPPLEMENTAL WAGES
California employers are required to withhold income tax when paying bonuses, overtime, commissions and back pay, sometimes called "supplemental wages." However, a flat rate, which simplifies withholding calculations, may be used. That flat rate has been raised from 6% to 9.3% of supplemental wages starting January 1, 2003.
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