Mr. Croley

Hospitality Law

Ten New California Employment Laws For 2004

By Daniel Croley, Labor and Employment & Litigation, Futterman & Dupree

Wage and Hour Lawsuits (Private Attorney General)

While employee rights under the Labor Code abound, an employee may not bring a lawsuit against his employer for a wide variety of violations. Under SB 796, however, they will have a private-right-of-action and the possibility of collecting attorneys' fees for any Labor Code violation for which the Labor Commissioner could impose monetary sanctions. Any damages recovered shall be allocated: 50% to the state; 25% to the employee and 25% to a state educational agency. SB 796 also provides that any misdemeanor violation of the Labor Code shall also be subject to monetary penalties. In the case of employers who have employees at the time of the violation, the penalty will be $100 per employee per pay period for the first infraction up to three years and $200 per employee per pay cycle for each following violation up to three years. For more information, see http://info.sen.ca.gov/pub/bill/asm/ab_0251-0300/ab_276_bill_20030908_chaptered.pdf

Careful employers should audit their wage and hour practices in conjunction with labor counsel to assure that they miss the next wave of wage and hour class actions.

Paid Family Leave

Who's Covered and What's the Benefit?

The same employers covered by State Disability Insurance (SDI) will be covered by "Family Temporary Disability Insurance" (FTDI) and this includes most employees of private employers, regardless of size. Eligible employees will get the greater of 55% of their base pay or $728 weekly for 2004 and $840 for 2005, up to six weeks of leave in any rolling 12 month period. Unlike FMLA and CFRA leave, there is no length of service period, though there is a one week waiting period.

Employees who are unable to work due to the serious health condition of a family member or the birth or adoption of a child or placement of a foster child are eligible for FTDI benefits, provided they submit a proper medication certification and are not simultaneously receiving short-term disability, temporary disability or unemployment insurance benefits. Starting January 1, 2004, SDI withholding percentages will be increased to pay for this benefit. An employee, however, is ineligible if another family member is free to provide at the same time the same care requested and needed.

Since this system is employee-financed, there is no direct cost to employers. The real cost to employers will be in terms of increased leave entitlements and managing the maze of leave obligations.

Can Employers Require Use of Other Paid Leaves?

Employers may require employees to use up to two weeks of vacation prior to starting FTDI paid leave, though such time shall count against the one week waiting period. Employers cannot require use of sick leave before employees apply for FTDI.

Employer Notification Obligation

The Employment Development Department ("EDD") will distribute by January 1, 2004, brochures advising employees of the FTDI program and benefits. And, employers must provide the EDD notices to all employees hired from and after January 1, 2004, and to all employees beginning FTDI or SDI leaves from and after July 1, 2004. And, employees taking FTDI leave for child bonding must receive the EDD's child bonding certification form before starting their leave. For informational purposes, the EDD has published a FTDI brochure available at http://www.edd.ca.gov.

Liability for Sexual Harassment by Non-Employees

Dispensing with the California Court of Appeal decision in Salazar v. Diversified Paratransit, Inc., which held employers were not liable for sexual harassment by employees with whom they do business under the Fair Employment and Housing Act (FEHA), new legislation makes employers directly liable for sexual harassment by the employees or agents of the entities with whom it does business (e.g., customers, clients, and so on). Also under the new law, an individual servicing an "employer" pursuant to a contract is protected from sexual harassment to the same extent as an employee.

In addition to reviewing their non-harassment policies, careful employer should review outsourcing contracts to ensure that contractors are aware that they must refrain from unlawful harassment. Appropriate strategies can be developed, in conjunction with labor counsel, to provide this awareness while at the same time not enhancing the risk that the employer shares some liability in relation to employment law violation against the contractor's employees (e.g., under the single employer or joint employer doctrines).

"Pay or Play" Health Insurance

Covered Employers

Under SB2, employers with 20 or more employees in California must provide medical insurance for their employees, directly or via the state insurance fund. Employers with at least 200 California employees must do so by January 1, 2006; between 50 and 100 by January 1, 2007; and between 20 and 49 will not be required to participate unless a 20% tax credit is adopted. This law does not apply to employers with less than 20 California employees.

Covered Employees

Provided the employee has worked 100 or more hours per month for any employer and worked for the current employer at least three months, the individual would be covered and, in addition in the case of big employers (e.g., over 200 California employees), their dependents must also be covered.

For more details about how this plan will be administered and exemption for plans pursuant to collective bargaining agreements and federal labor laws, see:
http://info.sen.ca.gov/pub/bill/sen/sb_0001-0050/sb_2_bill_20031006_chaptered.pdf

Transgender Discrimination

California's already long list of protected categories will be even longer in 2004. AB 196 amends the FEHA's definition of sex to include a person's "gender." Cal Gov't Code SSSS 12926, 12949. By incorporating the definition under SS 422.76 of the Penal Code, the FEHA now protects employees and applicants from discrimination because they look or act differently from what the employer considers to be traits stereotypically associated with the employee's sex at birth. (e.g., transsexuals and transvestites). The legislative history states that the law is designed to prohibit sexual stereotypes. AB 196 Assembly Bill - Bill Analysis. Thus, an employee whose personality, hairstyle, clothing, speech, mannerisms or demeanor are considered too feminine or too masculine for his or her gender will now be protected under the FEHA. Recognizing the likely impact of this law on employer dress and grooming policies, this law expressly notes that it does not prohibit reasonable dress, appearance, and grooming codes that are otherwise lawful, provided the employee may "appear or dress consistently with the employee's gender identity." AB 196 Assembly Bill - ENROLLED. Gov't Code SS 12949.

Registered Domestic Partners

Under AB 205, effective January 1, 2005, registered domestic partners will have the same rights and duties as spouses. In relation to one important aspect of employment law, this means that registered domestic partners will be entitled to CFRA leave in connection with a serious health condition of their partner. For more details about this legislation, see http://info.sen.ca.gov/pub/bill/asm/ab_0201-0250/ab_205_bill_20030922_chaptered.pdf

Workers' Compensation

IIPP Review

SB 228 amends Labor Code SS 6401.7, requiring an Injury and Illness Prevention Program (IIPP) to require the workers' compensation carrier to review IIPPs within 120 days from the beginning of the initial insurance policy term. The review will test if the IIPP was implemented, is effective, and followed up with appropriate training at all levels. The insurer must specify its conclusions and suggestions in a written report.

Prudent employers will consider reviewing their IPPP's for compliance.

Unpaid Leave For Crime Victims and Their Families

Labor Code Section 230.2 has expanded leaves of absence for victims of sexual assaults as well as parents of children who suffered sexual assaults. As amended, Labor Code Section 230.2 will extend such leave to victims of a serious felony or a felony involving embezzlement or theft and to immediate family members or registered domestic partner of a victim or a registered domestic partner's child who suffers such an act to attend a legal proceedings associated with the unlawful act. Employers may allow, but not mandate, that employees use any type of earned paid time off (e.g., vacation, paid time off, and sick time) in connection with such leave time.

Prevailing Party Wage and Hour Appeals

Dispensing with Smith v. Rae-Venter Law Group, 29 Cal. 4th 345 (2002), where the California Supreme Court interpreted Labor Code Section 98.2 to mean an employee had to do better monetarily in court than at the Labor Commissioner where they began the matter to collect attorneys' fees in a subsequent appeal/lawsuit from the Labor Commissioner's decision, the Legislature enacted AB 223.

The effect of this law is to promote employee, but discourage employer, appeals where there is a reasonable chance of the employee obtaining even a small award. Additionally, employers can also expect such employees to be accompanied by an attorney given the attorneys' fee provision.

Careful employers will want to invest more efforts at the Labor Commissioner stage to assure the best result and deter employee appeals.

Contractor Compliance with Labor Laws

Unions were rewarded with more ammunition to attack the alleged practices of employers entering into "lowball" contracts which do not reasonably provide the funds needed for outsourcing contractors to comply with laws regulating employment. Some unions are currently attacking Walmart directly based on its janitorial and security contracts, but cannot win unless they show Walmart conspired with the contractors or is a joint or integrated employer. SB 179, however, outlaws an employer contracting for services with a "construction, farm labor, garment, janitorial, or security guard contractor," (collectively, "Services") to the extent that it knew or reasonably should have known that the contract does not offer the contractor enough "funds" to meet all laws regulating employment or the services provided (e.g., paying wages and overtime, providing a safe workplace, providing workers' compensation insurance, etc.). Cal. Labor Code SS 2810. As an additional reward to unions, SB 179 does not apply to contractors if the employees providing the services are subject to a collective bargaining agreement.

Employers will have a rebuttable presumption of compliance with SB 179 if the contract with the contractor to provide Services (as well as any material change thereto) consists of one written document specifying all of the following minimum details:

Cal. Labor Code SS 2810 (d)(1)-(10).

1) "Name, address and telephone number" of each of the contracting parties and the contractors' workers compensation carrier;

2) Contractor's tax employer identification number issued by the Franchise Tax Board;

3) A "description" of the services to be provided and a "statement" of when the services will begin and end;

4) Contractor's workers compensation insurance policy number;

5) Liability insurance policy number and insurer's name, telephone number, and address and the vehicle identification number in respect to all contractor owned vehicles used for transportation in relation to the services;

6) Address of any contractor supplied housing to employees;

7) Aggregate employees to be used in the contract and wages that will be paid in relation to the services and schedule of paydays;

8) Aggregate payment to contractor for agreeing to do the work;

9) Aggregate number of independent contractors to be used by the contractor, with all of the outsourcing company's contractor license numbers required by law to perform the services; and

10) Executed, dated signatures of parties to the agreement.

Employees of "under-funded" contractors who suffered injuries in connection with laws regulating employment or the services may bring a lawsuit directly against the entity hiring the contractor, provided the "shelter" does not apply. Cal. Labor Code SS 2810 (g). An employer, not entitled to the shelter under Labor Code SS 2810 (d), will be liable for the greater of actual damages or $250 per employee for the first violation and $1,000 per later violations in respect to injuries resulting from the contractor's noncompliance with laws regulating the work under the contract. And, a prevailing employee will collect his attorneys' fees. For more details about this law, see:
http://info.sen.ca.gov/pub/bill/sen/sb_0151-0200/sb_179_bill_20030828_enrolled.html

Daniel Croley specializes in Labor and Employment & Litigation at Futterman & Dupree. He advises employers on employment law with emphasis on difficult terminations, drafting and implementing company policies, non-compete agreements, protecting proprietary information, and non-solicitation issues.He is a graduate of University of Minnesota Law School, a Member of State Bar of California, and is admitted in U.S. Supreme Court; 9th Circuit and the District of Columbia U.S. Courts of Appeal; and Northern and Eastern U.S. District Courts of California, and Eastern District of Washington. Mr. Croley can be contacted at 650-867-0197 or dcroley@dfdlaw.com Extended Bio...

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