Employment Law Update - 2011
WITH a new year there comes the implementation of new employment laws. This year, in California, there are a number of new laws that have been put in effect. Not all of these new laws will apply to all employers. However, we wish to provide you with a brief outline of the more significant new employment laws so that you may plan accordingly for those which pertain to you and your business.
Below you will find a brief summary of the new California Employment Laws, with a more detailed description later in this update.
Organ and Bone Marrow Donation – California now requires employers to provide a paid leave of absence of thirty (30) days for organ donation and five (5) days for bone marrow donation.
Meal Breaks - Certain construction workers, commercial drivers, security officers and employees of gas and electrical corporations are exempted from meal break requirements.
Workers' Compensation Poster – There is a new poster that employers using Managed Professional Networks to treat for workers' compensation claims are required to display.
Roofing Contractors – All roofing contractors are required to carrier workers' compensation insurance, even if they have no employees.
Stop Orders – The Registrar of Contractors may issue a stop order, effective immediately, to any contractor who has failed to secure workers' compensation for his/her employees.
New Heat Safety Precautions – New safety precautions must be taken in providing employees protection from the sun and heat in order to prevent heat illness.
GINA – Employers cannot utilize genetic information to make decisions regarding health insurance and employment.
Appealing a Wage Claim – Employers must now post a bond, in the amount of the award rendered, when appealing a wage claim.
Serious Safety Violation – There is now a presumption that a serious safety violation has occurred if Cal/OSHA can demonstrate a realistic possibility that serious physical harm could result due to the violation.
Health Clubs – An employee trained in utilizing a defibrillator must be present in order for a health club to avoid liability for civil damages for actions rendered during emergency care.
Law Enforcement Death Benefits – Death benefits for children of a law enforcement officials will continue until the youngest child reaches 19 under certain conditions.
ADA – New regulations were published including new standards for accessible design.
Minimum Wage – San Francisco increased its minimum wage to $9.92 an hour.
Payroll Tax – The Annual Reconciliation Statement and the Quarterly Wage and Withholding Report will be replaced by New Quarterly Contribution Return and Report of Wages.
Payment of Final Wages – Employees have three (3) years to file a claim for an employers failure to promptly pay final wages and three (3) years to file a claim for penalties after the failure to pay final wages occurred.
The detailed description for the above brief summary follows.
SB 1304 - Michelle Maykin - Memorial Donation Protection Act
Previously, state employees who used all of their sick leave could take leaves of absence with pay for up to thirty (30) days for the purpose of organ donation or a leave for up to five (5) days for bone marrow donation. SB 1304, signed into law by the Governor, Schwarzenegger requires private employers to allow employees to take similar paid leaves of absence for organ and bone marrow donation. Under the new law, employees returning from organ or bone marrow donation leave must be returned to the same position that they held when the leave began, or to an equivalent position. The law also prohibits private employers from interfering with employees who take organ or bone marrow donation leaves. Employers may not retaliate against employees for taking such leave or for opposing an unlawful employment practice related to organ or bone marrow donation leave.
Employers may require that employees use up to five (5) days of available sick or vacation leave for a bone marrow leave and up to two (2) weeks of available sick or vacation leave for organ donation, unless doing so would violate a collective bargaining agreement. This leave does not run concurrently with leave taken pursuant to either the Family and Medical Leave Act ("FMLA") or the California Family Rights Act ("CFRA"). SB 1304 also creates a private right of action for an aggrieved employee to seek enforcement of these provisions.
AB 569 - Exemptions to Meal Breaks
This new law exempts construction workers, commercial drivers, certain security officers and employees of electrical and gas corporations or local publicly owned electric utilities from California's meal break requirements if those employees are covered by a valid collective bargaining agreement containing specified terms, including meal period provisions.
Workers' Compensation Notice Requirements
The posting and notice requirements were amended in 2010 to require additional information about Managed Professional Networks ("MPNs"). Employers with MPNs that provide treatment for workers' compensation claims must display the required workers' compensation poster
(Notice to Employees - Injuries Caused by Work) as well as additional information about the MPN(s) that the employer uses. The workers' compensation pamphlet must also include information about MPNs.
Workers' Compensation for Roofing Contractors
AB 2305 extends the requirement that contractors with a C-39 roofing classification obtain and maintain workers' compensation insurance, even if they have no employees. This requirement was set to expire on January 1, 2011, and is now extended until January 1, 2013. Additionally, after January 1, 2011, any active license will be suspended if the C-39 roofing classification was removed and the licensee is found to have employees and lack a valid certificate of workers' compensation insurance.
Workers' Compensation Stop Orders
SB 1254 authorizes the registrar of contractors to issue a stop order (effective immediately on service of the order) to any contractor (licensed or unlicensed) who failed to secure workers' compensation coverage for his/her employees. Additionally, employees affected by the work stoppage must be paid by the employer for lost
time, up to 10 days, while the employer seeks to comply with the law.
Failure to observe the stop order is punishable by a misdemeanor (up to 60 days in county jail) and/or a fine of up to $10,000. The legislation also implements a means by which the employer may protest the stop order and request a hearing on the matter.
Heat Illness Regulations Revised
A revised heat illness standard went into effect as of November 4, 2010. In addition to revisions related to shade and other safety precautions, the new standard includes changes to training requirements for both supervisory and nonsupervisory employees. Such training is now required to be given before employees begin work that "should reasonably be anticipated to result in exposure to the risk of heat illness."
GINA Regulations Finalized
The U.S. Equal Employment Opportunity Commission ("EEOC") issued final regulations on November 9 that implement the employment provisions (Title II) of the Genetic Information Nondiscrimination Act of 2008
("GINA"). GINA prohibits the use of genetic information to make decisions about health insurance and employment, and restricts the acquisition and disclosure of genetic information. GINA applies to private employers with 15 or more employees and generally prohibits employers from requesting an applicant's or employee's genetic information, even if the employer never uses that information.
Wage Claim Appeal — Bond Requirement
According to AB 2772, an employer filing an unpaid wage claim appeal must post a bond with the court, in the amount of the award rendered in the administrative hearing. Employers must also provide written notification to the other parties and the Labor Commissioner of the bond posting.
Investigating Serious Safety Violations
A revision to the California Labor Code establishes new procedures and standards for an investigation of a serious violation in the workplace and establishes a rebuttable presumption as to when a serious violation has been committed by an employer.
Under previous law, a serious violation was "deemed to exist if there was a substantial probability that death or serious physical harm could result from a violation." The change creates a "rebuttable presumption that a serious violation exists if Cal/OSHA demonstrates that there is a realistic possibility that death or serious physical harm could result from the actual hazard created by the violation."
Health Clubs and Defibrillators
Under current law, health clubs must acquire an automatic external defibrillator and meet specific training and maintenance standards. Under current law, when a health club uses an automatic external defibrillator, the owners, managers, employees or others are not liable for civil damages resulting from an act of omission in the course of rendering emergency care/treatment. The new law eliminates that exemption if health club members have access to the facility during hours that trained employees are not in the facility. For facilities larger than 6,000 square feet, members must be denied access to the facility if a trained employee is not present.
Death Benefits for Minor Children
AB 1696 permits continuation of death benefits until the youngest child reaches 19 years of age if:
• The child is still attending high school; or
• The child is receiving the death benefits as a child of an active member of a police or fire department of a public or municipal entity or political subdivision killed in the performance of duty.
The benefit continuation does not apply to a child of an employee whose principal duties are clerical or otherwise do not fall within the scope of active law enforcement or active firefighting services.
Providing Access for Persons with Disabilities
On July 23, 2010, Attorney General Eric Holder signed final regulations revising the Justice Department's Americans with Disabilities Act ("ADA") regulations, including the ADA Standards for Accessible Design. The official text was published in the Federal Register on September 15, 2010.
San Francisco Ordinance — Minimum Wage
The San Francisco 2011 city minimum wage will increase to $9.92 per hour, effective January 1, 2011. The ordinance requires a poster that must be displayed in each workplace in English, Spanish, Chinese and any other language spoken by at least five percent (5%) of the workforce. The poster is updated annually by the San Francisco Office of Labor Standards Enforcement. The ordinance further provides that a notice containing the employer's name, address and telephone number must also be given to every employee at the time of hire.
San Francisco Health Care Security Ordinance
An employee who is a manager, supervisor or confidential employee who earns at or above an annual salary of $81,450 (or $39.16/hour) in 2011 is exempt from coverage under the San Francisco Health Care Security Ordinance.
California Payroll Tax Changes in 2011
Effective January 1, 2011, employers will report total subject wages, Unemployment Insurance ("UI") and Disability Insurance ("DI") taxable wages and contributions, by filing a New Quarterly Contribution Return and Report of Wages (Form DE 9) quarterly instead of annually.
Employers will continue to report employee wages and personal income tax withheld quarterly on the New Quarterly Contribution Return and Report of Wages ("Continuation") (Form DE 9C). These forms will replace the Annual Reconciliation Statement (Form DE 7) and the Quarterly Wage and Withholding Report (Form DE 6).
NOTE: Years 2010 and prior, employers will file the DE 7 and DE 6.
Final versions of the new forms are now available to all employers on the Employment Development Department's ("EDD") Payroll Taxes—Forms and Publications page.
Pineda v. Bank of America, N.A.
In addition to the above-mentioned changes in employment law, on November 18, 2010, in Pineda v. Bank of America, N.A., the California Supreme Court issued an opinion deciding two questions relating to Labor Code section 203 penalties for the late payment of final wages: (1) whether a one (1)-year (as opposed to a three (3) -year) statute of limitations applies in the absence of a claim for unpaid final wages; and (2) whether section 203 penalties are recoverable as restitution under California's Unfair Competition Law ("UCL"), Business and Professions Code section 17200 et seq., meaning a four-year statute of limitations would apply.
The Supreme Court concluded that a three (3) -year statute of limitations applies for the recovery of penalties even when final wages have been paid in full. The Court rejected a potential four (4)-year statute of limitations under the UCL.
Plaintiff Pineda provided his employer Bank of America with two weeks' notice that his last day of work would be May 11, 2006. Bank of America did not pay Pineda his final wages until May 15, 2006.
Pineda filed a complaint against Bank of America seeking to represent a class of former employees, asserting two causes of action: (1) failure to timely pay final wages under Labor Code sections 201 and 202 and seeking waiting-time penalties under section 203; and (2) failure to timely pay wages under the UCL and seeking "restitution" in the form of unpaid section 203 penalties.
Statute of Limitations - Actions - Seeking Section 203 Penalties
Under Labor Code section 203(b), an action for waiting time penalties may be brought "at any time before the expiration of the statute of limitations on an action for the wages from which the penalties arise." A statutory claim for wages is governed by the three-year statute of limitations in Code of Civil Procedure section 338.
Despite the arguments of Bank of America, the Court found that the legislature intended actions for the recovery of section 203 penalties to be governed by the statute of limitations specified in section 203(b). Thus, the three (3) year statute of limitations for unpaid final wages applied to actions to recover penalties. The Court determined that it was necessary to have consistent limitations periods for claims arising out of the same underlying facts. Additionally, the Court reasoned that the longer statute of limitations served the public policy of incentivizing prompt payment of final wages.
Section 203 Penalties Are Not Compensation
The UCL prohibits "any unlawful, unfair or fraudulent business act or practice," which includes non-payment of wages to employees. Private individuals' remedies under the UCL are "generally limited to injunctive relief and restitution."
The Court found that section 203 penalties were not intended to compensate employees for work performed. Rather, section 203 penalties were designed to encourage employers to pay final wages on time and punish those who did not. Employees have no vested interest in section 203 penalties until the penalties are awarded by an adjudicative body. As such, the Court found that section 203 penalties do not qualify as restitution under the UCL.
Impact of Pineda
Pineda is another reminder of the requirement that all employers must pay final wages on time, i.e., generally, either on the last day of employment if notice is given or within 72 hours if no notice was provided. In the Pineda ruling, the Court has confirmed and established that, not only do employees have three (3) years to file a claim for an employers failure to promptly pay final wages, but also that an employee may file a claim for penalties for three (3) years after the failure to pay occurred. The Pineda Court's opinion re-emphasizes the importance of making best efforts to ensure that all final wages are paid timely in accordance with Labor Code sections 201 and 202.
Further Employment Issues
In addition to the above-described changes in California employment Law, we expect to see new issues, and some clarity as to existing issues, to emerge in 2011.
First, the U.S. Labor Department has said that they intend to become increasingly vigilant in investigating allegations of employees who have been misclassified as independent contractors. Penalties for misclassification can generate fines and can lead to an employer being required to offer benefits, pay and other perks to an employee they normally would not.
Also, we expect to get clarity on the infamous meal and rest break law with a ruling by the California Supreme Court in the Brinker case. It is anticipated that the Supreme Court will determine whether it is sufficient if an employer provides time for meal and rest breaks, or whether an employer needs to see to it that employees actually take those breaks.
Finally, as early as January 2011, the Department of Fair Employment and Housing Commission ("DFEH") could make changes to the reasonable accommodations which are required to be provided to pregnant workers. Such accommodations could consist of additional bathroom breaks or rest periods or something more, such as modifying equipment, job duties or work practices. We will be monitoring the DFEH in order to determine and asses the impact of the changes to be implemented.
As always, please contact us if you have any questions regarding any of the new laws outlined in this letter or if you need assistance on any other legal matter.
SHAPIRO BUCHMAN PROVINE BROTHERS SMITH LLP provides its clients, professional advisors and its friends with up-to-date reports on recent developments in business, real estate, employment, estate planning and taxation.
Authored by: Tonya D. Hubinger, Esq.
T: (925) 944-9700