2012 Employment Law Update

Effective January 1, 2012, several new laws will affect the way many employers do business in California. The following is a brief summary of these key employment laws.

Health Coverage During Pregnancy Disability Leave

Senate Bill 299

Government Code section 12945(a), the Pregnancy Disability Leave Law (PDLL), prohibits an employer from denying an employee disabled by pregnancy, childbirth, or a related medical condition from taking up to four months of job-protected leave. Currently, an employer has no obligation to continue health care coverage for employees during their PDLL leave (unless the PDLL leave runs concurrently with an employee’s Family Medical Leave). This Bill amends section 12945 to prohibit employers from refusing to maintain and pay for coverage under a group health plan for an employee who takes a qualified job-protected leave under the same conditions that coverage would have been provided if the employee had remained in continuous employment during the leave. Employers may recover the cost of premiums paid on behalf of employees covered by this Bill if the employee fails to return to work after the PDLL leave expires, except for those employees who take a California Family Rights Act leave following a PDLL leave.

Amendment to Bone Marrow/Organ Leave Law

Senate Bill 272

This Bill clarifies provisions of California Labor Code section 1510 that governs leaves of absence for organ and bone marrow donors. The Bill clarifies that an employee is entitled to take 5 paid business (not calendar) days in a one-year period (measured as twelve consecutive months) for bone marrow donations and thirty business (not calendar) days of leave in a one-year period (measured as twelve consecutive months) for organ donations. The leave does not constitute a break in service for purposes of paid time off. Employers are entitled to condition bone marrow/organ donation leave upon use of unused PTO.

Interference With California Family Rights Act, Pregnancy Disability Leave

Assembly Bill 592

California Family Rights Act (CFRA) and Pregnancy Disability Leave Law (PDLL) prohibit employers from refusing to grant leave to an eligible employee for statutorily enumerated reasons. This Bill amends both statutes to codify that it is an unlawful employment practice for an employer to interfere with, or restrain the exercise of, any right provided by CFRA or PDLL. The purpose of this Bill is to incorporate protections offered by the federal Family Medical Leave Act (FMLA) into both CFRA and PDLL.

Prohibited Health Insurance Coverage Discrimination Based On Partnership

Senate Bill 757

California requires Health Care Service Plans and Insurers to provide group coverage to an employee’s registered domestic partner equal to coverage provided to an employee’s spouse. This Bill clarifies that Health Care Service Plans and Insurers may not discriminate in coverages offered to spouses or registered domestic partners of a different or same sex.

Discrimination Based On Genetic Information

Senate Bill 559

This Bill amends California laws prohibiting discrimination, most notably the Unruh Civil Rights Act (California Civil Code section 51, et seq.) and the California Fair Employment and Housing Act (California Government Code section 12940, et seq.), to prohibit discrimination on the basis of “genetic” information.

Genetic information is defined to include “with respect to any individual, information about any of the following: (a) the individual’s genetic test; (b) the genetic tests of family members of the individual; and (c) the manifestation of a disease or disorder in family member of the individual.” While this Bill duplicates the Federal Genetic Information Non-discrimination Act of 2008 (GINA), attention should be given to any promulgated regulations that may extend the application of California law beyond GINA.

Gender Identity And Expression Protections Under FEHA

Assembly Bill 887

Presently, California Government Code section 12940 prohibits discrimination and harassment against individuals because of ‘sex,’ which is defined to include gender and gender identity and behavior (through the incorporation of Penal Code section 422.56). This Bill clarifies that gender, gender identity, and gender expression are protected characteristics under the FEHA. ‘Gender expression’ is defined as “a person’s gender-related appearance and behavior whether or not stereotypically associated with the person’s assigned sex at birth.”

Mandatory Use Of E-Verify

Assembly Bill 1236

The E-Verify Program of the United States Department of Homeland Security, in partnership with the United States Social Security Administration, enables participating employers to verify that their employees are authorized to work in the United States. In contrast to states that have adopted Arizona’s requirement to use E-Verify, this Bill prohibits a State or local entity from requiring a non-governmental employer to use E-Verify except when required by federal law or as a condition of receiving federal funds.

Credit Reports

Assembly Bill 22

Federal and California law authorize employers to obtain and use consumer credit reports for employment purposes, provided certain statutory procedures are maintained. This new law limits an employer’s ability to obtain such reports by prohibiting employers, other than certain specific financial institutions, from obtaining consumer credit reports for employment purposes unless the person for whom the report is sought works in a statutorily-enumerated position.

Under California Labor Code section 1024.5, the position for whom the report is sought must be: (1) a managerial position, as defined; (2) a position of the state Department of Justice; (3) that of a sworn peace officer or other law enforcement position; (4) a position for which the information contained in the report is required by law to be disclosed or obtained; (5) a position that involves regular access to  personal information other than for the routine solicitation and processing of credit card applications in a retail establishment; (6) a position in which the person is or would be a named signatory on the employer’s bank or credit card account; (7) a position that involves access to confidential or proprietary information; or (8) a position that involves regular access to $10,000 or more of cash.

The new law requires that before requesting a consumer credit report, the employer must provide written notice to the person for whom the report is sought that a report will be used and informing the person which of the statutorily-enumerated positions the person falls within that authorize obtaining such a report. As under prior law, this notice must also identify the source of the report and provide an opportunity for the employee or applicant to obtain a copy of the report. If the employee or applicant is denied employment in whole or in part because of the report, the employer must advise the consumer of this fact.

AB 22 also amends California Code of Civil Procedure section 1784.2, part of the Fair Credit Reporting Act, to conform to Labor Code section 1024.5.

Misclassification of Workers

Senate Bill 459

Existing law penalizes employers for the misclassification of workers. This Bill adds Labor Code section 226.8 to expressly prohibit the “willful misclassification” of an employee as an independent contractor. The new law prohibits charging mischaracterized workers a fee or making deductions from compensation for any purpose that would not have been lawful if the individual had not been misclassified (for example, charging workers for equipment use or space).

The Labor and Workforce Development Agency (LWDA), Labor Commissioner,  or Court is authorized to award civil penalties ranging from $5,000 to $15,000 per violation, in addition to any other damage or fine. The LWDA, Labor Commissioner, or Court is authorized to award civil penalties ranging from $10,000 to $25,000 per violation, in addition to any other damage or fine, if it finds a pattern and practice of willful misclassification. For one year following a finding of a willful violation, an employer is required to post on its website or by means accessible to all employees or the public a notice signed by an officer of the employer advising of the violation, that the employer has changed its practices, how workers may contact the LWDA, and that the posting is pursuant to State Order.

This Bill also adds Labor Code section 2753 to impose joint and several liability upon persons who advise an employer to misclassify a worker. This liability does not apply to advice provided in the attorney-client context.

Wage Theft Prevention Act

Assembly Bill 469

This Bill amends various statutes within the Labor Code to impose penalties for employer violations of wage laws and to create new notice and document retention requirements for employers.

Among the several changes to penalties and fines, the Bill adds Labor Code section 1197.2 , which makes it a misdemeanor for an employer to willfully violate specified wage statutes or orders, or willfully fail to pay a final court judgment or final order of the Labor Commission relating to an employee who has quit or been discharged. Section 1197.2 imposes fines between $1,000 and $10,000 or up to six months in jail if wages due are less than $1,000; and fines between $10,000 and $20,000 and between six to twelve months in jail if wages due are more than $1,000. Penalties and fines assessed for violations of more than one employee’s rights can be aggregated.

This Bill also enacts Labor Code section 2810.5, which imposes new notice requirements upon employers, including providing written notice to employees upon hire of: (1) the employee’s pay rate and basis for pay rate; (2) allowances, such as meal or lodging; (3) regular paydays; (4) the employer’s name (including any DBA); (5) the physical address and/or mailing address of the employer; (6) the employer’s telephone number; (7) the name, address, and telephone number of the employer’s worker’s compensation carrier; and (8) any other information that the Labor Commissioner deems necessary.

The Commission has developed a template for this new notice requirement that employers can use, which can be accessed at the following link: http://www.dir.ca.gov/dlse/LC_2810.5_Notice.pdf.

Employers are to provide notice of any changes to the information provided within seven days of the change unless the new information is included in a wage statement.

Employers are exempted from this notice requirement only if: (a) the employer is the State or a political subdivision; (b) the employee is exempt from overtime wages by statute or Industrial Welfare Commission Wage Order; or (c) the employee is covered by a collective bargaining agreement that provides for wages, hours, working conditions, premium wages for all overtime, and regular pay at least thirty percent more than the State minimum wage.

Awards Of Liquidated Damages By The Labor Commissioner

Assembly Bill 240

Existing law provides an employee the right to recover unpaid wages through a Civil Complaint in Court or an Administrative Complaint filed with the Labor Commissioner. This Bill clarifies that, in proceedings before the Labor Commissioner for underpayment of minimum wages, an employee is entitled to recover liquidated damages (in the amount of twice the unpaid wages plus interest).

Written Commission Contracts

Assembly Bill 1396

Labor Code section 2751 previously required out-of-state employers with no permanent fixed place of business to put terms of commission payments in written contracts. Labor Code section 2752 imposed treble damages on any out-of-state employer that breached section 2751. This Bill requires all employers, by January 1, 2013, to put the terms of commission payments into written contracts. The Bill, however, eliminates section 2752’s treble damage provision.

For additional information, including steps to implement these new requirements, please contact Jacqueline deSouza at This e-mail address is being protected from spambots. You need JavaScript enabled to view it or (510) 550-0010.

Additional laws for public employers, agricultural employers, and state-wide apprentice programs have been implemented, and summaries can be obtained by contacting Kristen Del Simone at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .