December 20, 2012

 Compliance Matters

CA Enacts New Employment Laws

 

          The California State Legislature has enacted a series of new employment-related laws that will affect a wide range of areas, including wage-and-hour compliance and California's anti-discrimination laws. Except as noted below, these new laws go into effect on January 1, 2013.

 

Inspection of Personnel Records

 

 

          AB 2674 amends Labor Code section 1198.5 to expand an employer's existing duties with respect to the maintenance and inspection of employee personnel files. Under AB 2674, employers must now:

  • Document Retention. Maintain a copy of employee personnel records for at least three years after termination of employment;

  

  • Make Copies for Employees and Their Counsel. Provide current and former employees (or their representatives) with copies of personnel records within 30 days from receipt of a written request, or if the parties agree in writing, within no more than 35 calendar days. The employer may redact the name of any non-supervisory employees referenced in the records, prior to making them available for inspection;
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  • Request Form. Employers must create a written form that the current or former employee (or their representative) can use to make the inspection request;

 

  • Copy/Inspection After Suit Filed.  The new law provides that if a current or former employee files a lawsuit against the employer regarding a personnel matter, his or her right to inspect or copy personnel records ceases during the pendency of the lawsuit;

 

  • Limitations.  The new law limits employees to one request to inspect or copy their personnel records per year. Further, an employer is not required to comply with more than 50 requests for copies of personnel records by employee representatives in one calendar month;

 

  • Penalties for Non-Compliance.  If an employer fails to permit inspection or copying within the time required, the employee or Labor Commissioner may recover a $750 penalty. The employee may also obtain injunctive relief, costs and attorney's fees;

 

  • Itemized Wage Statements.  AB 2674 also amends Labor Code section 226, which requires employers to provide a copy of an employee's itemized wage statement for at least three years. The law clarifies that "copies" may include duplicates of the statements provided to the employee, or computer-generated records that accurately show all information required to be included on the hard-copy wage statement.

 

                   Itemized Wage Statement Remedies

 

          AB 1255 amends Labor Code section 226, which requires employers to provide accurate wage statements to employees showing nine categories of specified information. Employees who have suffered an "injury" as the result of a knowing and intentional failure to comply with the requirements of section 226 can recover statutory penalties not to exceed $4,000, plus costs and attorney's fees.

          Under the new law it will be easier for employees to prove "injury" for itemized wage statement violations. Beginning on January 1, 2013, an employee will be deemed to suffer an "injury" if: 1) the employer fails to provide a wage statement; or 2) the employer fails to provide accurate and complete information as required by section 226(a) and the employee cannot promptly and easily determine from the wage statement alone one or more of the required items of information.

  

Itemized Wage Statements for

Temporary Service Employees

 

          AB 1744 amends Labor Code section 226 to require "temporary service employers" to include on itemized wage statements the employee's rate of pay and total hours worked at each temporary assignment.

 

          The bill also amends Labor Code section 2810.5, which, pursuant to the Wage Theft Prevention Act of 2011, requires that employers must provide their non-exempt employees with a written notice at the time of hiring that contains specified information, such as the rate and basis of the employee's wages, and the employer's name, address and telephone number. The new law will require temporary service employers (defined in Labor Code section 201.2) to include the name, physical and / or mailing address, and telephone number of the legal entity for whom they will perform work.

 

          Finally, beginning on July 1, 2013, this bill further provides that temporary service employers must include on itemized wage statements the employee's rate of pay and total hours worked for each temporary assigned (in addition to other information required under Labor Code section 226). This new requirement does not apply to licensed security services companies.

 

                                   Breastfeeding

 

          AB 2386 expands the Fair Employment and Housing Act to prohibit discrimination against breastfeeding mothers. Existing law prohibits employment discrimination on the basis of "sex," which is defined to include pregnancy, childbirth, or medical conditions related to pregnancy or childbirth. The new law explicitly adds "breastfeeding" and "medical conditions related to breastfeeding" to the statutory definition of "sex." Although the amendment is effective January 1, 2013, AB 2386 provides that its changes are declaratory of existing law.

 

    Overtime Rate for Nonexempt Salaried Employees

 

          AB 2103 amends Labor Code section 515 to preclude private agreements that attempt to modify the overtime regular rate calculation required for non-exempt full-time salaried employees. The new law specifies that payment of a fixed-salary to a non-exempt employee must be deemed compensation only for regular, non-overtime hours worked, "notwithstanding any private agreement to the contrary."   This bill was the legislature's response to the Court of Appeal's decision in Arechiga v. Dolores Press (2011), in which the Court held that California Labor Code section 515 permitted an employer and a non-exempt salaried employee to enter into a fixed wage agreement covering both regular non-overtime hours worked and overtime hours the employee was expected to work.

 

Overtime Rates for Computer Software Employees and Licensed Physicians Have Changed

 

          Under Labor Code sections 515.5 and 515.6 computer software employees and licensed physicians and surgeons are exempt from the overtime requirements of Labor Code section 510, if certain criteria are met, including a minimum statutorily-defined rate of pay.

 

          Effective January 1, 2013, for computer software employees that meet all of the criteria of the exemption, they will remain overtime exempt only if they receive not less than $39.90 per hour (or if the employee is paid on a salaried basis, the employee earns an annual salary of $83,132.93, which is paid once a month and in a monthly amount of not less than $6,927.75).

 

          Effective January 1, 2013, for licensed physicians and surgeons that meet all of the criteria of the exemption, they will remain overtime exempt if they receive not less than $72.70 per hour.

 

          Determining whether an employee's duties qualify for the overtime exemption is a complex endeavor, and employers should consult with counsel before treating an employee as overtime exempt..

 

Exceptions to Written Contracts for Commission Pay

 

          AB 2675 amends Labor Code section 2751 by refining the definition of "commissions" under California's new law requiring commission plans to be in writing.

 

          Under existing law, employers of employees who are paid on a commission basis must have a written agreement in place by January 1, 2013 setting forth the method by which the commissions will be computed and paid.

 

          Under the changes brought forth by AB 2675, three types of commission payments will now be excluded from the written contract requirement: 1) short-term productivity bonuses, such as those paid to retail clerks; 2) bonus and profit-sharing plans, unless the plan provides for payment of a fixed percentage of sales or profits as compensation for work to be performed; and 3) "temporary, variable incentive payments that increase, but do not decrease, payment under the written contract."

 

                              Wage Garnishment

 

          AB 1775 increases the amount of wages that are exempt from garnishment. The new law will prohibit the amount subject to levy under an earnings withholding order from exceeding the lesser of 25% of an individual's weekly disposable earnings or the amount by which the individual's disposable earnings for the week exceed 40 times the California minimum hourly wage. This law will take effect on July 1, 2013.

 

                        What Employers Should Do

 

  • Review work rules, employee handbooks or operating manuals which include wage and hour and anti-discrimination policies and procedures;
  • Create a request form for inspection or copy of personnel records. Employers should create a method to track the date on which requests are made to ensure compliance, and a system to track the number of requests made by employee representatives;
  • Educate managers and employees alike on the anti-harassment provisions in the FEHA;
  • Check that employee wage statements contain all required information, and that such wage statements can be reproduced upon request, whether the statements were initially produced in hard-copy of electronic form;
  • Keep in mind that the method of calculating overtime for salaried non-exempt employee cannot be changed by any agreement between the employer and the employee.
     

 

 

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