"Work In - Employment Law: California employers should familiarize themselves with significant labor and employment laws passed by the Legislature in 2000"
by Richard S. Rosenberg, John J. Manier and Adrian J. Guidotti

The year 2000 saw several significant new labor and employment bills passed by the California Legislature and signed into law by Governor Gray Davis. Most of these laws will take effect January 1, 2001. All California employers will need to acquaint themselves with the wide array of additional legal obligations under these new laws. The most notable of these new provisions are summarized below.

´ Labor Code Violations And Remedies. AB 2509 broadens the scope and remedies of our state's wage-hour laws and related provisions of the Labor Code. Among other things, AB 2509 provides that: (1) employers appealing an award by the Division of Labor Standards Enforcement (DLSE) must post a surety bond or cash deposit; (2) employers can no longer recover attorneys' fees and costs in direct civil actions brought for unpaid minimum wages or overtime; (3) employers cannot receive any part of a gratuity belonging to any employee, regardless of the employee's base wage rate, and all gratuities paid by credit card must be paid to the employee by the following regular payday; (4) all employers are liable for a penalty of up to 30 days' wages and fringe benefits for dishonored wage checks, unless the employer can show that the violation was unintentional; (5) employers must reflect the hourly rate and hours worked for hourly workers in itemized pay statements, but need not do so for salaried employees who are exempt from overtime pay requirements; and (6) employers are subject to enhanced penalties for violations of wage-hour, meal period and recordkeeping requirements.

The passage of AB 2509 comes on the heels of last year's enactment of the "Eight-Hour-Day Restoration and Workplace Flexibility Act of 1999" (AB 60). Notably, the Industrial Wage Commission (IWC) recently implemented AB 60 by issuing regulations embodied in a series of new Wage Orders which took effect October 1, 2000. The IWC also has raised California's minimum wage from its current level of $5.75 per hour to $6.25 per hour effective January 1, 2001, and to $6.75 per hour effective January 1, 2002.

However, certain employees who work with computers qualify are now exempt from California's overtime pay laws pursuant to SB 88, which took effect immediately when Governor Davis signed it on September 19, 2000. SB 88 applies only to highly-skilled computer professionals who are primarily engaged in intellectual or creative work requiring the exercise of discretion and independent judgment, engage in specified job duties and are paid $41.00 per hour or more (to be adjusted annually for inflation). Most management information systems and other computer functions in a typical office setting will not meet these requirements.

´ Disability Discrimination. AB 2222 dramatically expands the provisions of the Fair Employment and Housing Act, Gov. Code ÛÛ 12900 et seq. (FEHA), and the Unruh Act, Civil Code ÛÛ 51 et seq., which prohibit discrimination based on disability and require "reasonable accommodations" for disabled persons. As a result of AB 2222, these disability laws are now far broader than the federal Americans with Disabilities Act, 42 U.S.C. ÛÛ 12100 et seq. (ADA).

Specifically, AB 2222 eliminates the existing requirement that a disabling condition "substantially limit" one or more "major life activities." See, e.g., Cassista v. Community Foods, 5 Cal. 4th 1050 (1993). Instead, any "limitation" will do - perhaps even minor or trivial limitations, such as mild nearsightedness. In contrast to the ADA, mitigating measures (such as eyeglasses) shall not be considered in determining whether a person is "disabled" under FEHA.

AB 2222 also states that the term "'major life activities' shall be broadly construed and includes physical, mental, and social activities and working." It now appears most, if not all, Californians may have at least one physical or mental "disability" protected under this broad new law.

AB 2222 also specifies that employers must conduct a "timely, good faith interactive process" to determine "reasonable accommodations" for disabled employees, thus codifying the Court of Appeal's decision in Prilliman v. United Air Lines, 53 Cal. App. 4th 935 (1997).

Moreover, AB 2222 prohibits employers from making any medical, psychological, or disability related inquiries of employees or job applicants, unless the employer can show that the inquiry is "job-related and consistent with business necessity." This provision is also far more restrictive of employers than existing state or federal law.

´ Workplace Harassment. AB 1856 makes non-supervisory co-employees personally liable for committing workplace harassment in violation of the FEHA. This bill legislatively overrules last year's unanimous decision by the California Supreme Court in Carrisales v. Department of Corrections, 21 Cal. 4th 1132 (1999), which found against co-employee liability for harassment.

However, AB 1856 does not expand employer liability for non-supervisory, co-employee harassment. No such liability exists unless the employer knew or should have known of the harassment and failed to take corrective action. This means there may be cases where an individual co-employee is liable for harassment but the employer is not.

´ Interest On Indemnification For Employee Losses. SB 1305 amends Labor Code Û 2802 to require employers to pay interest on all awards made by a court or by the DLSE for reimbursement of necessary expenditures or losses by the employee incurred within the course and scope of employment. The interest rate on indemnification awards will be same as the rate that applies to judgments in civil actions, currently 10% per annum.

The Court of Appeal has construed Labor Code Û 2802 broadly to require employers to indemnify employees for attorneys' fees and other costs of successfully defending harassment lawsuits under the FEHA - even where the employee engaged in sexually inappropriate conduct on the job - except where the individual is actually found liable for harassment. Jacobus v. Krambo Corp., 78 Cal. App. 4th 1096 (2000). Taken together, AB 1856 and SB 1305 will thus make it more expensive for employers to defend against FEHA harassment lawsuits, whether they are meritorious or frivolous.

´ Domestic Violence Victims. The Victims of Domestic Violence Employment Leave Act (AB 2357) amends Labor Code Û 230 to increase the rights of employees who are domestic violence victims to take time off from work. Such employees now have the right to take leaves of absence to seek medical attention, recover from injuries, obtain services from a domestic violence program and/or counseling or participate in safety planning. This is in addition to employees' existing rights under a 1999 amendment to Labor Code Û 230 to take a leave to go to court in connection with domestic violence cases.

Employers are prohibited from discharging, discriminating or retaliating against employees who take time off for any of the reasons specified in Labor Code Û 230, as amended by AB 2357. Employees must give reasonable advance notice of their need for this type of leave.

´ Reserve Peace Officers and Emergency Rescue Personnel. Labor Code Û 230.3, which was enacted in 1989, makes it a misdemeanor for any employer to discharge or discriminate against an employee for taking time off to perform emergency duty as a volunteer firefighter. SB 1353 now extends these protections to reserve peace officers and emergency rescue personnel.

´ Influencing Unionization. AB 1889 prohibits employers from using state funds or state facilities to discourage or encourage employees from supporting unionization. The same prohibition also applies to state contractors that receive $50,000 or more under a state contract. In addition, AB 1889 includes onerous paperwork requirements and civil penalties of $1,000 per violation. These provisions are contained in new Gov. Code ÛÛ 16645 et seq.

´ Inspection Of Personnel Files. SB 1327 completely revises Labor Code Û 1198.5, relating to employee inspection of personnel files. The statute now states that every employee has the right to inspect personnel records relating to their performance or to any employee grievances.

Employers must make the contents of such personnel records available to employees at reasonable times and intervals. Employers must either: (1) keep a copy of each employee's personnel records at the employee's place of work; (2) make the records available at the employee's place of work within a reasonable time after the employee's request; or (3) allow the employee to inspect the records at some other location where they are stored, with no loss of pay to the employee.

These requirements do not apply to records relating to investigations of possible criminal offenses, letters of reference, or certain records obtained prior to the employee's employment and obtained in connection with a promotional examination. For the first time, all public employers are now subjected to the laws regarding inspection of personnel files. Additional requirements apply to employees of public school and community college districts, pursuant to revised versions of Education Code ÛÛ 44031 and 87031, respectively.

´ Confidentiality of Medical Information Act. A provision of the Confidentiality of Medical Information Act, Civil Code Û 56.17, prohibits any person from making an unauthorized disclosure of the results of a test for a genetic characteristic contained in an applicant's or enrollee's medical records by a health care service plan. SB 1364 amends this section to incorporate the definition of "genetic characteristic" under Health & Safety Code Û 1374.7, which broadly includes any "inherited characteristic" that causes or increases the risk a disease or disorder in a person or his or her offspring and that is "presently not associated with any symptoms of any disease or disorder."

´ Whistleblower Protections. Under AB 2472 and newly-added Education Code ÛÛ 44110 et seq. and 87160 et seq., employees of public school and community college districts are now protected from retaliation for filing a written complaint about "improper governmental activity." Persons who violate this new law may be held individually liable and may be subject to a fine of up to $10,000 for intentional violations. These provisions are similar to those in the California Whistleblower Protection Act.

´ Proposition 36. In addition to the bills passed by the Legislature and signed by the Governor, California voters imposed new legal obligations on employers when they overwhelmingly approved Proposition 36 on Nov. 7. This law provides that first and second-time offenders convicted of "nonviolent" drug possession crimes shall be sentenced to probation and drug treatment, rather than incarceration.

A little-noticed provision of Proposition 36 also gives special protection to persons who successfully complete an approved drug treatment program. The law now prohibits employers from using any record pertaining to an arrest or conviction resulting in successful completion of a drug treatment program under Proposition 36 in any way that could result in the denial of any employment or benefit.

In addition, persons who complete such treatment programs are allowed to represent that they were not arrested or convicted for the underlying drug offense. These provisions do not apply to persons applying for public office, for peace officer positions, for licensure by any state or local agency, for contracting with the California State Lottery or for jury duty.