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Summary of New California (And One Federal) Employment Laws

January 2003
By Larry L. Hines

LAWS GENERALLY APPLICABLE TO ALL EMPLOYERS

1. REFERENCES AND BACKGROUND CHECKS (AB 2868) (AB 1068) (EFFECTIVE IMMEDIATELY)
   These two new laws revise the consumer reporting process and will impact how employers conduct workplace investigations, background checks and reference checks. Current law provides that if an employer conducted background or reference checks on applicants or employees (and did not use a consumer reporting agency) an employer had to report the information to the applicant or employee. Under these new laws, employers are no longer required to give applicants or employees reports on their internal background or reference checks. The only exception to this rule is when an employer collects information that is a matter of public record, i.e., an arrest or conviction. In this case, the employer must provide a copy of the public record to the applicant/employee.
   
   The new laws reaffirm an employer’s right to keep internal reference check information in a file separate from an employee’s personnel file. In addition, an employer cannot be held liable for defamation if that employer told a prospective employer whether the employer would rehire a former employee, as long as the employer did so without malice.
   
   The new laws make changes to an employer’s obligations when using a consumer reporting agency to prepare an investigating consumer report. An employer must do the following: (1) prior to requesting a report, provide the agency with a signed certificate stating the purpose of the report; (2) provide a disclosure notice to the applicant/employee requesting the employee’s authorization; and (3) provide a copy of the report to the applicant/employee if requested. If an employer is considering an adverse action based on an a report, there are additional disclosure requirements.
2. WORKFORCE GENDER AND ETHNICITY REPORT (AB 1309) (EFFECTIVE 1/1/03)
   This bill requires employers with 100 or more employees to annually file a report showing by gender, ethnicity and job classification the composition of its employees with the Department of Fair Employment and Housing. Employers may comply with this reporting requirement by filing with the Department a copy of any report the employer submits to a federal agency, such as the EEO-1 form. Employers are also required to maintain and preserve all personnel records for a minimum of two years after the initial creation of such records.
3. DISCRIMINATION PROHIBITION FOR FAMILY CARE SICK LEAVE (AB 1471) (EFFECTIVE 1/1/03)
   Employers who provide sick leave must allow employees to use one-half of that leave to take care of an ill child, parent, spouse or domestic partner. This bill bars employers from taking discriminatory actions against employees who use or attempt to use sick leave for this reason. This bill specifies that an employer’s absence control policy that counts this authorized use of sick leave as an absence that may result in discipline, discharge, demotion or suspension is a violation of law.
4. AGE DISCRIMINATION PROHIBITION (AMENDS FEHA, SECTION 12940) (AB 1599) (EFFECTIVE 1/1/03)
   This bill makes it unlawful for an employer, because of age, to refuse to hire, discharge, select a person for a training program that would lead to employment, or otherwise discriminate against a person in compensation, terms, conditions or privileges of employment. This bill does not prohibit an employer from refusing to hire or discharging an employee with a physical or mental disability where the employee is unable to perform his or her essential duties. This bill does not prohibit an employer from refusing to hire or discharging an employee who, because of the employee’s medical condition, is unable to perform his or her essential duties even with reasonable accommodation.
5. STATE WARN ACT (MASS LAYOFF NOTIFICATION) (AB 2957) (EFFECTIVE 1/1/03)
   This bill precludes employers of an industrial or commercial facility employing 75 or more people within the last 12 months from ordering a mass layoff, relocation or termination, without first giving 60 days’ notice to affected employees and specified government agencies. If an employer is required to give such notice of a mass layoff (of 50 or more employees during a 30-day period) relocation or termination, the notice shall include the elements required by the federal WARN Act (including notice to the EDD, local elected officials and the local Work Force Investment Board). An employer would not be required to comply with the 60-day notice requirement if the employer was actively seeking capital or business that would enable the employer to avoid or postpone a relocation or termination. Another exception would be if the layoff was the result of completing a particular project of an employer that is covered by Wage Order 11 (broadcast industry), Wage Order 12 (Motion Picture Industry) or Wage Order 16 (On-Site Construction). This bill further provides for civil penalties against an employer who fails to provide the required notices.
6. WORKPLACE PROTECTIONS/LEAVE FOR VICTIMS OF SEXUAL ASSAULT (AB 2195) (Effective 1/1/03)
   This bill amends recent legislation protecting victims of domestic violence, now to include victims of sexual assault. Employers are prohibited from discharging or discriminating against an employee who engages in specified activities related to attending court, or seeking help or other assistance on account of being a victim of sexual assault. This bill authorizes an employee who is a victim of sexual assault to use paid or unpaid leave in order to attend to such activities. An employee may file a complaint within one year of the occurrence of an employer’s violation of the provisions of the bill with the Labor Commissioner.
7. RIGHT TO COPIES OF PAYROLL RECORDS (AB 2412) (EFFECTIVE 1/1/03)
   This bill requires that, within 21 days of receiving a written or oral request from a current or former employee, an employer must provide copies (at cost) or permit the employee to inspect his or her payroll records. This bill prescribes a penalty of $750 for an employer that fails to comply with an employee’s request to review or copy payroll records. The bill also authorizes an employee to bring action for injunctive relief to obtain access to payroll records.
8. PRIVATE EMPLOYMENT: WORKING CONDITIONS; WHISTLEBLOWERS (AB 2895) EFFECTIVE 1/1/03)
   This bill prohibits employers from taking discriminatory or coercive actions to prevent employees from disclosing information about their working conditions. The bill is unclear as to whom employees would disclose such information, but it is safe to assume this would include co-workers.
9. FAMILY TEMPORARY DISABILITY LEAVE (FTDI) (SB 1661) (NOT EFFECTIVE UNTIL 7/1/04)
   This bill concerns all employers, regardless of the number of employees. It allows employees to take up to 6 weeks of paid leave during any 12-month period, even immediately after the employee starts work.
   
   This bill provides for disability compensation for any individual who is unable to work due to the employee’s own sickness or injury, the sickness or injury of a family member and/or domestic partner, or the birth, adoption or foster care placement of a new child. This benefit will be funded entirely by employee contributions. Each employee in the state will be required to contribute up to $70 a year to special family disability funds that will be administered by California’s State Disability Insurance Fund (SDI). Employees will receive 55% of their base wages, but no more than $728 a week. Employers may require an employee to use up to two weeks of accrued, paid vacation before becoming eligible for benefits. Employers need not hold jobs open for workers on FTDI leave.
10. IMMIGRATION STATUS IRRELEVANT TO EMPLOYEES’ RIGHTS (SB 1818) (EFFECTIVE 1/1/03)
This bill states that all protections, rights and remedies available under state law, except as prohibited by federal law, are available to individuals who have applied for employment, or who are or who have been employed, in this state regardless of immigration status. For the purposes of enforcing state labor, employment, civil rights and employee housing laws, a person’s immigration status is irrelevant to the issue of liability and no inquiry shall be permitted into a person’s immigration status except when necessary to comply with federal immigration law. This bill is contrary to a recent U.S. Supreme Court ruling on the subject.
11. ARBITRATION AGREEMENTS STILL VALID (SB 1538 VETOED)
    SB 1538 would have prevented employers from requiring employees to sign mandatory arbitration agreements as a condition of hire or continued employment. It was vetoed by the Governor. Therefore, we continue to provide clients with arbitration agreements that contain the language required by the California Supreme Court.
12. TIME FOR DISCRIMINATION LAWSUITS EXTENDED (AB 1146) (EFFECTIVE 1/1/03)
    This bill tolls the current one-year requirement within which a person must file a lawsuit after receiving a right-to-sue notice from the Department of Fair Employment and Housing. The bill outlines specific requirements to be met before the extension can be applied. For example, (1) a charge of discrimination or harassment must be timely filed concurrently with the EEOC and the DFEH; (2) the investigation of the charge must be deferred by the DFEH to the EEOC; and (3) a right-to-sue notice must be issued to the person claiming to be aggrieved.
13. WORKERS’ COMPENSATION: LIMITATION ON TIME TO REVIEW DOCTOR BILLS (AB 1179) (EFFECTIVE 1/1/03)
    This bill provides that employers must submit payment for an employee’s medical treatment within 60 days after receipt of the doctor’s billing and other reports. If an employer contests the doctor’s billing, the employer is required to notify the doctor in writing that the billing is being contested within 30 working days after receipt of the billing.
14. EXTENSION OF COBRA TO 36 MONTHS (AB 1401) (EFFECTIVE 9/1/03)
    This bill will require a health care service plan to offer an enrollee who has exhausted continuation coverage under COBRA the opportunity to continue coverage for up to 36 months from the date the enrollee’s continuation coverage began. (Note, however, this applies to individuals who begin receiving COBRA coverage on or after January 1, 2003.) The bill will also extend continuation of coverage of specified individuals under Cal-COBRA to 36 months.
15. EXTENSION OF TIME TO RECONSIDER DISABILITY BENEFITS (AB 1932) (EFFECTIVE 1/1/03)
    Existing unemployment insurance law allows the Employment Development Department for good cause to reconsider any determination with respect to a disability benefit claim prior to filing an appeal therefrom. This bill will extend the reconsideration to within 30 days after an appeal to an administrative law judge is filed.

16. LOCAL PROSECUTION OF CAL-OSHA VIOLATIONS (AB 2837) (EFFECTIVE 1/1/03)
    This bill requires the local registrar of births and deaths to transmit a copy of each certificate of death for which the death has been marked as work-related to the State Registrar. This bill will impose a civil penalty of not less than $5,000 against any employer who fails to file a report involving serious injury, illness or death with the Division of Occupational Safety and Health. An employer, officer, management official or supervisor who knowingly fails to report a death to the Division or knowingly induces another to do so is guilty of a misdemeanor. This bill would prescribe a penalty of up to one year in jail, a fine of up to $15,000, or both. If the violator is a corporation or a limited liability company, this bill would impose a fine of up to $150,000.
17. GARNISHMENTS FOR EDD OVERPAYMENTS (AB 2929) (EFFECTIVE 1/1/03)
    Existing law provides that the levy of execution upon the earnings of an employee to satisfy a debt is to be made by service of an earnings withholding order upon the employer of the employee. This bill authorizes the state to issue an earnings withholding order directly, without the use of a levying officer, for purposes of collecting overpayments of unemployment compensation or disability benefits made to a person.
18. WAGE AND HOUR ENFORCEMENT STUDY (AB 2985) (EFFECTIVE 1/1/03)
    This bill directs the Labor and Workforce Development Agency to contract with a research organization to study the enforcement of wage and hour laws, including the identification of federal and state resources that may be utilized to enforce wage and hour laws. This bill provides that the study shall be completed by December 31, 2003.
19. CORPORATE CORRUPTION LAW/SARBANES-OXLEY ACT (NEW FEDERAL LAW)
    This act protects employees of public companies who disclose information or assist in an investigation into activities the employee reasonably believes violate federal securities laws or are a fraud against shareholders. The law covers employees who complain to a federal agency or to anyone at the company – including a supervisor – with authority to investigate or stop the misconduct. Employers cannot retaliate against an employee for making this kind of complaint. Illegal retaliation includes termination, suspension, harassment or discrimination. A company’s officers, employees, contractors, subcontractors or agents can be held personally liable for retaliation. This law requires publicly traded companies to set up new internal complaint procedures allowing employees to confidentially and anonymously submit their concerns about corporate accounting and auditing matters. Violations of this law can carry criminal fines of up to $250,000 plus 10 years in jail. This new penalty applies to retaliation against any employee, whether at a public or private company, who has truthfully informed a law enforcement officer about any possible federal crime, not just securities fraud. For example, the penalty could apply to retaliation against an employee who blows the whistle on a workplace health and safety issue.

LAWS APPLICABLE TO EMPLOYERS WITH PUBLIC WORKS CONTRACTS

1. PREVAILING WAGE LAWS: VIOLATIONS (AB 1448) (EFFECTIVE 1/1/03)
   This bill makes permanent the current provisions of law that assign to the subcontractor of a public works project responsibility for maintaining payroll records for his or her own employees and for providing certified copies of these records as required by law. Subcontractors will continue to be liable for penalties for failure to provide copies of payroll records in a timely manner or to pay overtime wages due their employees.
2. LOCAL EMPLOYMENT LAWS FOR STATE-FUNDED PROGRAMS (AB 2509) (EFFECTIVE 1/1/03)
   This bill provides that where a local jurisdiction expends funds provided to it by a state agency, or operates a program or engages in an activity that has received assistance from a state agency, and the local jurisdiction has established its own labor standards, those standards apply with regard to the expenditure, program or activity so long as the local standards do not conflict with and are not preempted by state law. This bill prohibits state agencies from requiring that a local jurisdiction refrain from applying its own labor standards in order to receive state funds or assistance.

LAWS APPLICABLE TO PUBLIC SECTOR EMPLOYERS ONLY

1. GARNISHMENTS FOR PUBLIC EMPLOYEES (AB 1243) (EFFECTIVE 1/1/03)
   This bill provides that a public agency may establish payroll deduction programs for (a) the support, maintenance or care of an employee’s children, family or former spouse; (b) the payment of an employee’s legal judgment; (c) the garnishment or deduction of an employee’s wages pursuant to court order; or (d) the payment of an employee’s loan or obligation to a commercial lending institution.
2. WORKERS’ COMPENSATION/BIOCHEMICAL EXPOSURE (AB 1847) (EFFECTIVE 1/1/03)
   This bill will allow peace officers or firefighters to qualify for disability benefits if, in the course of their employment, they develop an illness from exposure to biochemical substances.
3. EXTENSION OF PROBATION FOR DISABLED GOVERNMENT WORKERS (AB 1950) (EFFECTIVE 1/1/03)
   This bill will give disabled state employees an extended probationary period of up to six months to allow the appointing power to provide reasonable accommodation to the employee. This time period will give the employee the opportunity to demonstrate the ability to satisfactorily perform the essential functions of his or her position.
4. PROTECTION OF HR INFORMATION OF PRISON WORKERS (AB 2203) (EFFECTIVE 1/1/03)
   This bill requires the Director of Corrections to ensure that all documentation containing personal information of prison employees is not to be removed from any state prison without proper authorization. The bill prohibits the knowing removal of employee personal information, without proper authorization, and would require notice to be given if removed personal information is lost or stolen, or can no longer be accounted for.
5. PUBLIC EMPLOYEES’ RIGHT TO DISPLAY FLAG (SB 1359) (EFFECTIVE 1/1/03)
   This bill provides that a local government agency (or private entity) may not adopt any policy or regulation that prohibits or restricts an employee of that agency from displaying a flag of the United States, or a pin of that flag, on his or her person, in his or her workplace, or on a local government agency vehicle operated by that employee. However, employers are not prevented from imposing reasonable restrictions as to the time, place, and manner of placement or display of a flag of the United States when necessary for the preservation of the order or discipline of the workplace.

LAWS APPLICABLE TO EMPLOYERS IN SPECIFIC INDUSTRIES

1. BACKGROUND CHECKS FOR MENTAL HEALTH FACILITIES (AB 1454) (EFFECTIVE 1/1/03)
   This bill requires all mental health facilities to provide fingerprint images of persons who operate and/or work in such facilities to the State Department of Mental Health prior to the facility’s initial licensure or first license renewal. The State Department must then submit those fingerprint images to the Department of Justice for purposes of criminal record checks. The Department of Mental Health is required to deny an application for any license or revoke any existing license if the applicant has been convicted of or incarcerated for specified crimes within the preceding 10 years.
2. CRIMINAL RECORD CHECKS OF VOLUNTEERS (AB 1855) (EFFECTIVE 1/1/03)
   Existing law provides that agencies within a human services field in which persons volunteer to provide care and supervision to “vulnerable populations,” such as children, may request the Department of Justice to provide the criminal history information of those volunteers. This bill will extend this provision to include persons who volunteer to transport persons impaired by drugs or alcohol.
3. CRIMINAL RECORD CHECKS OF APPLICANTS (SB 900) (EFFECTIVE 1/1/03)
   This bill consolidates much of the law regarding disclosures of criminal history information for employment, licensing or certification purposes. It states a general rule applicable to those whose criminal history information is authorized to be released for employment, licensing or certification purposes, a rule that limits the release to (1) convictions and (2) arrests for which the applicant is pending trial. It would state special rules for applicants for positions, licenses or certification in law enforcement, in-home care, residential care, child day care, foster care, community care, banking, security services and others. These special rules would detail what information should be disseminated concerning these applicants, according to the nature of the position, license or certification sought, incorporating certain variations in existing laws authorizing the dissemination, while making some substantive and conforming changes.
4. BARBER/COSMETICIAN EMPLOYEE/INDEPENDENT CONTRACTOR REPORT (AB 2449) (EFFECTIVE 1/1/03)
   This bill requires persons licensed under the act to report certain information with respect to their practice status (full-time, part-time, retired) to the Bureau of Barbering and Cosmetology upon license renewal. Such persons are also required to report to the Bureau whether they are an employee, independent contractor, booth renter or a salon owner. The bill would require the Bureau to report on the information collected to the Senate Committee on Business and Professions and the Assembly Committee on Business and Professions within five years after the implementation of this bill.
5. AGRICULTURAL LABOR MEDIATION (SB 2596 and SB 1156) (EFFECTIVE 1/1/03)
   These bills provide for and outline a mediation procedure applicable to specified agricultural employers and a labor organization certified as the exclusive bargaining agent of a bargaining unit of agricultural employees. It would permit either party to file with the Agricultural Labor Relations Board, at any time following 90 days after certification of the labor organization, a declaration that the parties have failed to reach a collective bargaining agreement and a request for an order directing the parties to mandatory mediation and conciliation of their issues. SB 2596 supplements SB 1156 by adding the following provisions:
   • A party is permitted to file a demand for mediation with the Board only in cases which meet the following criteria: (a) the parties have failed to reach an agreement for at least one year after the date the labor organization made its initial request to bargain; (b) the employer has committed an unfair labor practice; and (c) the parties have not previously had a binding contract between them.
   • Parties are not permitted to file more than 75 declarations with the Board in a calendar year.
   • This bill provides that these mediation procedures remain in effect only until January 1, 2008, unless a later enacted statute deletes or extends that date.
6. PRIVATE SECURITY FIRM WHISTLEBLOWERS (AB 2780) (EFFECTIVE 1/1/03)
   This bill allows for any person in the state to file a complaint with the Director of Consumer Affairs alleging that a registered person or a person who applied for registration with the Bureau of Security fails to meet registration or licensure standards. The bill also requires the Bureau to issue a response to the charging or complaining party in accordance with established procedures. This bill also makes it a violation of the Labor Code for a private patrol operator to discharge, demote, threaten or otherwise discriminate against an employee because that employee has disclosed information to a government or law enforcement agency relating to conduct proscribed by this law.
7. WORKERS’ COMPENSATION: TEMPORARY EMPLOYEE AGENCIES (AB 2816) (EFFECTIVE 1/1/03)
   This bill requires temporary employment agencies or other similar entities to pay workers’ compensation premiums, and to be solely responsible for their employees’ workers’ compensation. This bill would also require temporary agencies to report to insurers certain information pertaining to these workers/licensed contractors, such as its payroll on a monthly basis; the licensed contractor’s name, address and experience; and the workers’ compensation classifications associated with the payroll. The bill also allows temporary agencies to pass on any additional costs incurred as a result of this bill to licensed contractors.
8. WORKERS’ COMPENSATION: JOCKEYS AND STABLE WORKERS (AB 293) (EFFECTIVE IMMEDIATELY)
   This bill specifies that the marketing organization that operates for the benefit of promoting thoroughbred and fair horse racing may obtain, provide, or defray the cost of workers’ compensation coverage for stable employees and jockeys of thoroughbred trainers. The marketing organization will be required to annually submit a defrayal plan for thoroughbred and fair horse racing to the board. The bill will permit specified funds distributed to the marketing organization to be used to defray the cost of workers’ compensation coverage for stable employees and jockeys of thoroughbred trainers.