FOR IMMEDIATE RELEASE

December  28th, 2011

EMPLOYMENT LAW UPDATE 2012

By Gerald D. Bloch, Attorney at Law

1.         Use of Credit Reports in Hiring - AB 22.

            -  Summary:  Narrowly restricts an employer’s ability to use credit reports in hiring. Private employers will only be able to use credit reports for individuals applying for positions that (i) are "managerial”, (ii) give the applicant access to information of others that is private (e.g., credit card, bank account, social security numbers, dates of birth), confidential or proprietary, (iii) require the applicant to be a bank or credit card signatory, authorized to transfer money or enter into financial transactions, or (iv) give the applicant access to $10,000 or more of the employer’s funds. The employer is also required to notify the applicant of which of the above reasons justifies its use of a credit report for the applicant in addition to current notice requirements.

            -  Effective Date:  January 1, 2012

            -  Comment/Action:

                        -  Change all handbook policies on background checks and credit reports to conform to new requirements;

                        -  Make sure the appropriate reason exists for requiring credit reports and document it.

                        -  Watch for additional legislation from Congress that will further restrict the use of credit reports in employment.

2.        Independent Contractor Penalties – SB 459.

            -  Summary:  Fines that can be imposed on businesses for misclassifying employees as independent contractors have been increased from $5,000 to $15,000 per violation if the misclassification is "willful” and to $25,000 if there is a "pattern and practice” of willfully misclassifying employees.

            -  Effective Date:  January 1, 2012.

            -  Comment/Action:  Expect regulators to focus more on this issue as a way to increase government revenues. Carefully review any independent contractors you employ to determine whether you can legitimately justify that status. If not, make them employees.

3.         "Wage Theft Law” (Disclosures to New Hires) – AB 469.

            -  Summary:  The following information must be disclosed in writing to all, non-exempt employees when they are hired:

                        -  The rate and basis of pay, including any rates for overtime.

                        -  Allowances claimed, including meal or lodging allowances.
                        -  The regular payday designated by the employer.

                        -  The name of the employer, including any "dba" names used.
                        -  The physical address of the employer's main office or principal place of business, and a mailing address, if different.

                        -  The telephone number of the employer.

                        -  The name, address, and telephone number of the employer's workers' compensation insurance carrier.

            Payroll records must be retained for 3 years instead of 2.

            -  Effective Date:  January 1, 2012.

            -  Comment/Action:  A template for the disclosure will be (but is not yet) available on the Labor Commissioner’s website. Most of the disclosures are already required in poster form but that is no substitute for the new requirements. If any of the disclosed information changes, a new disclosure must be made within 7 days. Change record retention policies to cover the increased retention period. 

4.         Written Commission Agreements Required – AB 1369 (Labor Code §2751)

            -  Summary:  Commission arrangements used to compensation employees who perform services must be in writing stating how the commission will be calculated and paid. Compensation will be considered a commission if it is based proportionally on the value or amount of the property or services sold. The requirement will not apply to "short term productivity bonuses” or profit sharing plans unless based on a fixed percentage of sales or profits. The employer must give a signed copy of the agreement to participating employees and must get back a "signed receipt for the contract”.

            -  Effective Date:  January 1, 2013.

            -  Comment/Action:  Since it has always been good practice to put commission arrangements in writing, this requirement will be beneficial to employees by eliminating potential disputes, especially those relating to whether commissions should be paid after termination of employment, a common source of litigation.

5.         Prohibition Against Discrimination Based on Gender Identity and Expression – AB 887.   

            -  Summary:  Existing law (Govt Code §12926, part of the Fair Employment & Housing Act or "FEHA”) protects individuals against employment discrimination and harassment based on gender. Although "gender” has been defined to include "gender identification” and "gender expression”, those terms were not explicitly included in FEHA. This legislation expands FEHA (and other anti-discrimination laws) to add "gender identification” and "gender expression” as protected characteristics.

            -  Effective Date:  January 1, 2012.

            -  Comment/Action:  Though this legislation does not substantively change existing law, it serves as a reminder that transgender individuals are protected from discrimination. Employers may still impose reasonable appearance, grooming or dress code standards but may want to review their dress code policies to make sure they do not discriminate against transgender individuals.

6.         Prohibition Against Discrimination Based on Genetic Information (SB 559, Govt Code §12921, 12926).

            -  Summary:  FEHA has been expanded to prohibit discrimination on the basis of an individual’s "genetic information”. That means (i) an individual’s genetic tests, (ii) the genetic tests of the individual’s family members, or (iii) the manifestation of a disease or disorder in the individual’s family members. It includes requests for genetic services or participation in clinical research that includes genetic services by an individual or any family member.

            -  Effective Date:  January 1, 2012.

            -  Comment/Action:  The new law is consistent with federal law, called GINA or the Genetic Information Nondiscrimination Act of 2008.

7.         Payment of Health Coverage to Women on Pregnancy Disability Leave (SB 299 - Govt Code §12945).

            -  Summary:  Employers must continue to pay the premiums for group health insurance coverage for female employees who are on pregnancy disability leave (who can take up to 12 weeks in a 12 month period). The employer may recover the cost if the employee fails to return to work after the leave.

            -  Effective Date:  January 1, 2012.

            -  Comment/Action:  This will increase labor costs and may be hard to budget.

Contact:

CSSA - Erin King - (949) 783-4130

SSA - Tim Dietz - (949) 587-0300