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During the last several months, California's legislature and judiciary have been active on a myriad of issues that affect California employers of all sizes. In that regard, Governor Davis signed several pieces of legislation this past September, some going into affect immediately, the remaining phased in over time. This article will summarize some of that legislation.
Paid Family Leave
On September 25, 2002, Governor Davis made California the first state to provide paid family leave to employees. Senate Bill 1661 will provide qualified employees with up to six months of paid leave for the birth, adoption or foster care placement of a new child or to care for a sick or injured family member. The initially proposed legislation sought joint compensation from the employer and employee to fund the benefit. However, the final bill provides that the benefit will be funded solely by employee contribution. The Act becomes operative on January 1, 2004. Benefits will not be payable until after July 1, 2004.
Age Discrimination
The California State Assembly amended the California Fair Employment and Housing Act ("FEHA") to expand benefits for older workers. The amendments were introduced to overturn the California Supreme Court's 2002 decision in Esberg v. Union Oil Company of California which held that denying tuition reimbursement or other benefits to a worker based on age did not violate the Fair Employment and Housing Act. The bill expands existing FEHA provisions that make it an unlawful employment practice for any person to discriminate in the selection or training of persons in any apprenticeship training program or other training program leading to employment to include age as one of the bases for discrimination. The law requires employers that provide certain training or other educational benefits to younger employees to make the same benefits available to older workers.
Workplace Investigations and Background Checks
Human resource professionals constantly wrestle with the difficulty in obtaining and/or releasing reference information for prior employees. Employers are mindful of potential defamation claims despite the certain privileges contained in California law regarding job performance and qualifications. Assembly Bill 2868 revises the provisions concerning privileged communications regarding job performance and qualifications to expand these privileges to include a former employer's response to an inquiry concerning whether the employer would rehire a current or former employee.
Historically, legislation relating to the Consumer Credit Reporting Agencies Act placed certain burdens on employers who were conducting internal investigations. The law required persons collecting consumer information (even without the services of an investigative consumer reporting agency) to provide certain information to the consumer, or in this case, employee. The new legislation now states that persons collecting or receiving consumer information for employment purposes will need to provide only public record information to the employee. Thus, if the employer merely checks references or obtains information without accessing public records, it need not share the information with the applicant. In addition, employers will be able to use check off boxes on employment applications which will allow applicants to indicate whether they desire a copy of any reports or public records utilized in application or hiring process.
Payroll Records
Assembly Bill 2412 requires employers to comply with requests from current or former employees to inspect or copy payroll records within 21 calendar days from the date of the request. Violation of the requirement is a criminal infraction which may include a $750 fine for non compliance.
Working Condition Retaliation
Section 232 of the California Labor Code precludes an employer from preventing employees from disclosing the amount of their wages or from retaliating against an employee for doing so. The amendment augments this Section's prior prohibitions related to retaliatory conduct in terms of "job advancement," and eliminates the requirement that the adverse employment action affect job advancement. Perhaps more importantly, the bill provides for identical protections relating to disclosure of information about an employee's "working conditions." Thus, Labor Code Section 232 may now give rise to retaliation claims for employees who are terminated following complaints about "working conditions" in employment. Unfortunately, the term "working conditions" is not defined in the legislation.
Plant Closures and Layoffs
Most employers are familiar with the Worker Adjustment and Retraining Notification Act (WARN). Under that federal legislation, certain notice requirements to the Employment Development Department and employees were mandated in the event of mass layoffs. This new legislation establishes requirements under California law similar to those existing under the WARN Act. However, while the threshold for application of the WARN Act is 100 employees, a "covered establishment" under the new California law is:
- an industrial or commercial facility,
- that employs or has employed within the preceding 12 months 75 or more persons.
Mass layoff is defined as a layoff during an 30 day period of 50 or more employees at a covered establishment.
The legislation does contain a limited exception for employers who are actively seeking capital or business that would enable the employer to avoid or postpone the layoff and which the employer reasonably and in good faith believes it would be impaired in its effort to get capital if the notice is provided.
Sick Leave
Current law requires employers who provide sick leave to employees to permit employees to use sick leave to attend to the illness of a child, parent, spouse or domestic partner. The current law also includes protections against retaliation against an employee who uses sick leave for this purpose.
The new amendments to the Labor Code provide that employer "absence control policies" that characterize employee sick leave used to attend to the illness of a child, parent, spouse or domestic partner as a basis for discipline, demotion, discharge or suspension, are per se violations of the law and entitle the employee to "appropriate legal and equitable relief" under Labor Code Section 233. That section provides for reinstatement and actual damages or one day's pay, whichever is greater.
Cal COBRA
This new legislation revises certain provisions of the California COBRA Medical Insurance Continuation Program. One modification allows certain individuals beginning continuation coverage after January 1, 2003, who have exhausted their 18 month continuation coverage under federal law, the ability to extend the term of their continuation coverage to 36 months. In addition, the legislation establishes a new pilot program requiring health care services plans and health insurers to offer a standard benefit plan offered through the California Major Risk Medical Insurance Board.
Failed Legislation
Several bills which would have created more difficulty for California employers were vetoed by the governor, including:
Severance Pay
Assembly Bill 2989 would have mandated severance pay to workers who lost their job as the result of a layoff, plant closure or relocation.
Leased Employees
A senate bill vetoed by the Governor would have allowed contract labor to sue the company that entered into a labor contract with their employer if the company receiving the benefits knew that the contract did not provide sufficient funds to meet requirements of state law.
Arbitration
The Governor also vetoed a bill that would have eliminated the use of mandatory arbitration agreements by employers with respect to claims filed under the Fair Employment and Housing Act.
Retaliation
Assembly Bill 2990 attempted to create a "rebuttal presumption" that any adverse employment action taken by an employer against an employee within 90 days of "protected activity" would be retaliatory.
The State of California has long been perceived as one of the most challenging states for an employer to conduct business. A recent survey showed that the executives polled believed California to have the worst "business climate" in the country. This new/pending legislation, coupled with recent state court decisions, do nothing to dispel that perception, but require, more than ever, a strategic alliance between employer and counsel to traverse this ever-changing legal landscape.
Here at Higgs Fletcher & Mack, we will continue to provide our clients will updated information and practical advice on how to manage this difficult climate.
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