FAMILY TEMPORARY DISABILITY INSURANCE (FTDI)
Family Temporary Disability Insurance becomes effective in 2004, although it went into law in 2002. It provides employees with partial wage replacement for up to six (6) weeks when an employee misses work due to the injury or illness of a child, parent, spouse or domestic partner or for bonding following a birth, adoption or foster placement of a child. FTDI follows the model of SDI (State Disability Insurance) utilizing employee deductions which are paid into a state fund for a particular purpose, administered through the Employment Development Program (EDD).
Starting January 1, 2004, employers are required to do three things. First, at the end of each payroll cycle, all employers in the State of California must take a deduction from the employee's pay for FTDI, similar to SDI. Secondly, each employer must post a specific notice to employees explaining FTDI which is called "Paid Family Leave" on the poster provided by the EDD. A copy of the poster can be found at the EDD website www.edd.ca.gov. Finally, each employer must provide a copy of the EDD brochure entitled "Paid Family Leave" to each newly hired employee after January 1, 2004. This same brochure must be given to all employees leaving work to care for a seriously ill family member or to bond with a new child beginning July 1, 2004. This brochure can also be downloaded from the EDD website and is provided for you at the end of this booklet along with the required poster and a fact sheet prepared by the EDD.
Starting July 1, 2004, availability of the partial wage replacement begins. Employees who miss work due to the injury or illness of a child, parent, spouse or domestic partner or for the purpose of bonding following a birth, adoption or placement of a foster child may apply for FTDI benefits with the Employment Development Department. A doctor's certificate as to the injury or illness will be required and a waiting period of seven (7) days is necessary before benefits are paid out by the EDD. The process is similar to administration of SDI. However, the employer has the duty to notify each employee missing work to care for a loved one or to bond with a new child of the availability of FTDI by providing the "Paid Family Leave" brochure prepared by the EDD.
It is very important to keep in mind what this new law does not require. It does not require that employers with less than fifty (50) employees (not subject to Federal Family Medical Leave Act "FMLA" and California Family Rights Act "CFRA") to allow employees to take a leave to care for a loved one. This new law is merely one for partial wage replacement for those who miss work for this purpose but does not require an employer to give time off unless they are required to do so by other laws covering employers with more than fifty (50) employees. This was a compromise bill which is entirely funded by employee contributions rather than paid by the employers.
NEW EMPLOYER LIABILITY FOR SEXUAL HARASSMENT OF EMPLOYEES BY NONEMPLOYEES INCLUDING CUSTOMERS AND STRANGERS
The State Legislature moved quickly to fill a loophole in the sexual harassment law when a California Court held that an employer was not liable for harassment by a customer or a client not employed by the employer. Now employers may be liable for the sexual harassment of any of its employees by a customer, client or other third party. However for liability to begin, the employer must actually know of the harassment, or have facts where a reasonable employer should have known of the harassment, followed by failure to take immediate and appropriate corrective action.
This change in the law is retroactive which is quite unusual. The California Legislature declared that it was clarifying the prior law rather than enacting a new one, thus allowing retroactivity.
NEW DAMAGES LIMITATIONS ON SUPERVISOR SEXUAL HARASSMENT
In California, an employer is strictly liable for hostile environment sexual harassment by a supervisor. However a new case (McGinnis) can severely limit the damages against an employer when the victim employee fails to take advantage of the employer's internal complaint processes designed to prevent and eliminate sexual harassment. The employer is still on the hook for the first comprehensible harm but not subsequent damage suffered after a reasonable employee would have reported the harassment so that the employer could investigate and take corrective action.
This is called the Avoidable Consequences Doctrine which is one of two complete defenses for employers under Federal Law. Now in California the Avoidable Consequences Doctrine may be used to substantially limit harassment damages but not completely eliminate them.
This new law makes it imperative for employers to have a comprehensive policy prohibiting illegal harassment and an "internal complaint procedure appropriately designed to prevent and eliminate sexual harassment." To utilize this defense, an employer must plead and prove that (1) it took reasonable steps to prevent and correct workplace sexual harassment, (2) the employee unreasonably failed to use the preventive and corrective measures that the employer provided and (3) reasonable use of the employer's procedures would have prevented at least some of the harm that the employee suffered.
Tredway, Lumsdaine & Doyle can help you write an enforceable illegal harassment policy and procedure or review and advise those who already have one. This new limitation on damages can really help employers but only those who help themselves by having an "appropriately designed complaint procedure."
LABOR CODE PRIVATE ATTORNEYS GENERAL ACT
This new law gives an employee a "bonus" for suing his or her employer on behalf of "himself or herself or other current or former employees" to recover civil penalties for any alleged Labor Code violation. The Plaintiff employee may recover up to twenty five (25%) percent of any penalties imposed on the employer with fifty (50%) percent of the penalties going to the State's General Fund and twenty five (25%) percent to the California Training Fund. Some have called this the Bounty Hunter Law because it can put money in an employee's pocket, even if the Labor Code violation did not directly impact them.
Some predict an explosion of litigation based upon this new law as it enables an employee to bring a representative class action against his or her employer, it encourages plaintiffs' lawyers to try rather than settle cases by providing an award of attorney's fees and costs to the prevailing employee and imposes up to two hundred ($200.00) dollars per aggrieved employee or former employee per pay period for a violation of the Labor Code.
It is not hard to imagine what an informed disgruntled employee can do with this new law. Since any violation of the Labor Code is actionable, that means that the employee may not have suffered any damage such as with a failure to post required EDD notices in the workplace. The effects of this new law may be very far reaching.
It is now unlawful for an employer to retaliate against an employee for refusing to participate in any activity that would result in a violation of any state or federal statute, rule or regulation. This is a substantial expansion of the prior Labor Code Section. Employers may now be liable even if the employee has not reported any alleged violation of law or regulation to someone other than the employer. The civil penalty against employers is up to ten thousand ($10,000.00) dollars per violation.
This new law also requires the State of California to establish a Whistleblower Hotline to provide information regarding possible violations of state or federal laws, rules or regulations. Additionally, the law requires yet another new poster to prominently display a list of the employees' rights and responsibilities under the whistleblower laws, as well as the telephone number of the whistleblower hotline. This new whistleblower law along with the Labor Code Private Attorneys General Act makes it look like open season on employers.
MANDATED HEALTHCARE INSURANCE COVERAGE
For the first time California is requiring employers to provide or pay for healthcare coverage for its employees. This new law creates a "pay or play" system which employers must either provide healthcare coverage to its employees who work at least three (3) months and a total of one hundred (100) hours per month or pay into a state fund which will provide such coverage. This new law creates a State Healthcare Purchasing Program which will be administered by the Managed Risk Insurance Board.
Small employers with fewer than twenty (20) employees are exempt from this new law. For other employers, the requirements of this new law will be phased in according to their size. Beginning January 1, 2006, "large" employers, which have two hundred (200) or more employees, must provide health insurance to their qualified employees and their dependants or contribute to the state fund. The following year, on January 1, 2007, "medium" employers, those with twenty (20) to one hundred and ninety-nine (199) employees, must either provide insurance for their qualified employees or contribute to the state fund.
An employer's contribution to the state fund will be based upon the projected number of potential eligible employees and if applicable, dependants within a time frame specified by the EDD. Failure to timely pay will result in a fine of two hundred (200%) percent of any contribution owed plus accrued interest.
Keeping in mind the Labor Code Private Attorneys General Act previously discussed, it is noteworthy that this mandated healthcare act makes a separate unlawful act for an employer 1) to make an employee an independent contractor or temporary employee, 2) to reduce an employee's hours of work or 3) terminate and then rehire an employee, in an attempt to avoid this new law.
Since this new law will not be phased in until January 1, 2006 and with the change in the Governor and perhaps political climate in California, substantial changes to this law may be made before the impact is felt in 2006 and 2007. However, opposition by business to this new law was substantial in 2003.
PROHIBITION OF UTILIZING WORKER'S COMPENSATION COSTS OR CASH SHORTAGES IN COMPUTING ANY EMPLOYEE BONUS
A recent California Appellate case found that a bonus plan violated the Labor Code and Industrial Welfare Commission's orders because the plan was based upon net income figures which took into account Worker's Compensation costs and cash shortages as expenses to offset against revenues. Labor Code Section 3751 prohibits employers from making or taking any deduction from employees' earnings, either directly or indirectly, to cover any part of the costs of Worker's Compensation. This law applies equally to both exempt and nonexempt employees. Subsection VIII of the Industrial Welfare Commission's orders makes it illegal to deduct from employee wages for any cash shortage unless the shortage is due to the employees' dishonest or willful act or culpable negligence. This provision only applies to non exempt employees.
The recent case of Ralph's Grocery Company v. Superior Court of Los Angeles now makes it illegal for an employer to include these two types of expenses to determine net profits as a basis for payment of any profit-based bonus or incentive. It is not unusual for these expense items to be part of the normal computation of net profits. Therefore, employers who use net profits as part of a bonus or incentive plan must no longer use Worker's Compensation costs or cast shortages so as not to be in violation of California Labor Code or Industrial Welfare Commission Orders. To do so may incur liability which has been greatly expanded by the Labor Code Private Attorneys General Act, as discussed above.
The penalties for failure to pay wages and unlawfully withholding wages have been increased to one hundred ($100.00) dollars and two hundred ($200.00) respectfully. This is a one hundred (100%) percent increase. Additionally, the employer penalty for failure to pay minimum wage has also doubled to one hundred ($100.00) dollars per underpaid employee for each pay period. Again, the Labor Code Private Attorneys General Act further increases the liability in this area.
INCREASED LIABILITY FOR ATTORNEY'S FEES ON APPEAL OF LABOR COMMISSIONER DECISIONS
Until January 1, 2004, an employee who appealed a Labor Commissioner decision could only recover attorney's fees when the Judgment on appeal was more favorable to the employee than the Labor Commissioner's Award. Now the law has been amended to permit an employee to recover attorney's fees when the reviewing court awards judgment in the employee's favor for any amount at all. In the case when the employee gets less in court as compared to the decision of the Labor Commissioner, that employee still can recover attorney's fees. This is significant as the employer then is responsible for the employer's own attorney's fees plus the employee's attorney's fees. This change will only further motivate employees to appeal Labor Commissioners' decisions into the court system.
VICTIM OF VIOLENT OR SERIOUS FELONY LEAVE
Employers are now required to permit an employee who is a victim of violent felony, serious felony or a felony involving theft or embezzlement, to take off time from work to attend judicial proceedings related to the crime. The law also requires an employer to permit an immediate family member, registered domestic partner or child of a registered domestic partner of a victim to take time off from work to attend the judicial proceeding related to the crime. There is no requirement that the employee be paid for the time off nor is there a limit to the number of days the employee must be allowed.
An employee is required to give the employer reasonable notice of any scheduled proceeding. However, when advanced notice is not possible, the employer may not take any adverse action against the employee, if the employee provides the employer with documentation as evidence of the judicial proceeding.
Although the employer need not compensate the employee for this time lost from work, the employee may choose to use accrued vacation, personal leave, sick leave, comp time or any other paid leave for the absence. The employer is further prohibited from discriminating, harassing or retaliating against an employee who misses time from work for this purpose. The employee has one year from the date of any alleged discrimination, harassment or retaliation to file a complaint with the Division of Labor Standards Enforcement.
This provision for crime victims leave now joins laws already on the books allowing unpaid leave for employees who are victims of domestic violence or sexual assault. None of these leaves have a time limit as to the number of days which can be taken.
TRANSGENDER DISCRIMINATION AND HARASSMENT PROHIBITED
The California legislature has expanded the definition of "sex" to include a person's gender. "Gender" is defined as an employee or applicant's actual sex or the employer's perception of the employee's or applicant's sex which includes the individual's identity, appearance or behavior which may be different from that traditionally associated with the employee's or applicant's sex at birth. Therefore for the first time, discrimination or harassment against transgender employees is explicitly prohibited under the Fair Employment and Housing Act which is in the Government Code, not the Labor Code. This distinction means that the Labor Code Private Attorneys General Act cannot be used for any violation of discrimination and harassment laws.
This new law, however, clarifies that employers may require their employees to adhere to reasonable workplace appearance, grooming and dress standards as long as employees are allowed to appear or dress consistent with their gender identification.
EXPANSION OF DOMESTIC PARTNERS' RIGHTS
Effective January 1, 2005, registered domestic partners in California shall have the same general rights, protections and benefits as do spouses in California including benefits, hospital visitation rights and rights of survivorship. By the same token, registered domestic partners shall have the same general responsibilities, obligations and duties as spouses in California including the obligation of mutual financial support, community property rules and the requirement to obtain a judgment of dissolution of the partnership by a court of law.
The one year delay in effectiveness of this law is to allow the Secretary of State to provide all new applicants for domestic partnership in California with the notice of their Rights and Responsibilities beginning January 1, 2005. However, since this law was passed and signed into law, a lawsuit has been filed in an attempt to block its effect. There is also an initiative to block this new law which proponents are attempting to qualify for the ballot.
Yet another law requires that companies that have contracts with the State of California of one hundred thousand ($100,000.00) dollars or more must certify that they do not discriminate in the provision of benefits between employees with spouses and employees with domestic partners.
To register, domestic partners must file a form with the California Secretary of State. Couples of the opposite sex must be over the age of sixty-two (62), whereas couples of the same sex must be eighteen (18) years or older. Additionally, domestic partners who register with the State of California must certify that they are sharing a common household and that they are in a committed relationship. Forms are readily available on the Secretary of State website.
COMPUTER SECURITY BREACHES INVOLVING PERSONAL INFORMATION MUST BE DISCLOSED PUBLICLY
Although not specifically an employment law, California companies must disclose publicly any computer security breaches that disclose personal information of a California resident. Personal information may include employment data. Therefore, an employer who goes through a security breach of its computer may have to publicly disclose to its employees that their personal information was disseminated.
EMPLOYEES HAVE BROAD RIGHTS OF FREE SPEECH AND RIGHT TO ENGAGE IN POLITICAL ACTIVITIES
California appellate cases have reaffirmed the expansive nature of Californians' right to free speech and to engage in political activities. In the case of Ali v. L.A. Focus Publications, a former newspaper columnist was terminated after he publicly criticized, outside of the workplace, a U.S. Congressional Representative for supporting a particular candidate. The Court found that the employee was wrongfully terminated in violation of public policy. The public policy involved is found at Labor Code Section 1101, which prohibits an employer from adopting or enforcing any rule or policy forbidding employees from engaging or participating in politics or controlling or directing the political activities or affiliations of their employees. Additionally, Labor Code Section 1102 prohibits an employer from coercing or influencing employers through means of threat of termination to adopt or refrain from adopting any particular course of political action or activity.
The recent case of Glendale Associates v. NLRB reaffirmed an employee's right to free speech explaining that the California constitutional guarantee is "more protective, definitive and inclusive of the rights to expression and speech" as compared to the First Amendment to the United States Constitution. Employers are reminded not to make any policy or engage in any conduct which might be viewed as an interference with employees' rights of free speech or to engage in political activities.
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