2005 LEGISLATIVE SUMMARY

Dear Clients and Friends of the Firm:

The California Legislature was busy in 2004 passing several new employment laws. Overall, the news for employers on this front is mixed. One of the new laws actually decreases some of the burdens recently created on California businesses, while several anti-employer bills were vetoed by Governor Arnold Schwarzenegger. However, the Governor also signed several bills which create new legal obligations for employers.

We have prepared this summary of new laws to assist you in your compliance efforts. Unless otherwise indicated, all of these laws take effect on January 1, 2005. Employers with specific questions about any of these laws should consult their contact at the Firm. If you don't have a specific contact, please call our main number at (818) 508-3700 and ask to speak with one of the Firm's partners.

• Mandatory Sexual Harassment Training for Supervisors. AB 1825 (Reyes) imposes new anti-harassment training requirements on every employer with 50 or more employees. These employers must provide all supervisory employees with at least two hours of "interactive" sexual harassment training and education during the 2005 calendar year, unless the employer already has provided such training after January 1, 2003. Thereafter, these employers must provide the required training to each supervisor once every two years after January 1, 2006.

The new law establishes minimum standards for anti-harassment training and education. Many employers are opting to exceed those standards in an effort to insulate the firm from possible claims before they become costly lawsuits. Notably, the new law specifically states that compliance with the training standard does not insulate employers from sexual harassment lawsuits. Nor does the failure to comply mean that the company is automatically liable, though we expect enterprising plaintiffs counsel to argue as such whenever the requisite training is not completed.

Ballard Rosenberg Golper & Savitt LLP is proud to continue its long tradition of offering dynamic highly interactive and informative sexual harassment training sessions to business executives. Over 15,000 people have received this training. We are already busy scheduling training into the First and Second Quarters 2005. If you are interested in discussing this mandatory training, call or email your contact at the firm or our Training Coordinator Linda Gibson (lgibson@brgslaw.com) to discuss our availability and pricing.

• Expansion of Job Bias Protections. AB 2900 (Laird) adds new anti-discrimination provisions to several state laws. These protections are identical to those in the state's general job bias law, the Fair Employment and Housing Act (FEHA). As a result, AB 2900 expands the number of laws which prohibit discrimination based on race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, marital status, sex, age and sexual orientation. For employers, perhaps the most notable of these amendments is to the Unemployment Insurance Code. Under existing law, employees who voluntarily quit their jobs for "good cause" are eligible to collect unemployment insurance. AB 2900 clarifies an employee has "good cause" to quit where the employer deprives him or her of equal employment opportunities in violation of the State's job bias law.

• New Unemployment Insurance Penalties For False Statements. Existing law makes employers liable for a penalty for willfully making a false statement or representation, or a willful failure to disclose facts, to the Employment Development Department (EDD) regarding an employee's termination in the context of a claim for unemployment benefits. Under AB 2412 (Yee), similar penalties now apply to employers' willfully false statements or representations, or failure to disclose, in connection with a "reasonable assurance" of employment or re-employment made by an employer to an employee or job applicant. For any of these violations, the penalty may range from two to ten times the weekly benefit paid to the unemployment insurance claimant.

• WARN Act Violations. AB 2028 (Koretz) coordinates the WARN Act and California's unemployment insurance law. The new law states that monies received by a laid-off employee from an employer under WARN for not providing the requisite sixty day advance layoff notice do not count as "wages" for purposes of determining whether the employee is eligible for unemployment benefits. This means that such penalties may not be used to reduce or deny unemployment benefits.

• Child Support Obligations. Existing law bars certain types of discrimination against employees or job applicants who are subject to a court order enforcing child support. This order is generally known as an "assignment order". The new law AB 1706 (Judiciary Committee) expands the law to prohibit employers from using the fact that the employee has an assignment order as a basis for any type of adverse employment action, including a promotion denial.

• Employee Paychecks. SB 1618 (Battin) addresses issues related to identity theft. The new law will prohibit all employers from placing an employee's Social Security number on paychecks issued on or after January 1, 2008. At most, only the last four digits of the Social Security number may be included. This is a direct reversal of existing law, which requires Social Security numbers to be placed on employee paychecks, except for government employees.

• Protection of Personal Information. AB 1950 (Wiggins) requires most businesses which own or license personal information about California residents to adopt reasonable security measures to protect the information against unauthorized access, destruction, use, modification, or disclosure. The law does not apply to certain business which already are regulated under existing confidentiality laws, such as health care providers, financial institutions, and entities covered by federal medical privacy and securities rules or the state Vehicle Code.

• Revisions To "Sue Your Boss" Law. SB 1809 (Dunn) takes some of the bite out of the Labor Code Private Attorneys General Act of 2004, otherwise known as the "Sue Your Boss" or "Bounty Hunter" law. The original version of this controversial law exposed employers to lawsuits by employees, on behalf of themselves and current or former co-employees, for numerous Labor Code violations. The new law gave employees a strong incentive to file lawsuits based on the most trivial or technical of violations, because they could recover civil penalties which formerly could be collected only by the state.

The good news is that SB 1809 makes it somewhat more difficult and less lucrative for employees and their lawyers to file these "bounty hunter" lawsuits. For example, these suits are barred altogether where the employer only commits relatively minor violations, such as failure to comply with posting or notice requirements, or filing or reporting requirements except for payroll or workplace injury reports. One of these technical requirements - the filing of copies of job applications with the state Labor and Workforce Development Agency (LWDA) - has been eliminated altogether under SB 1809.

For more serious violations, employees now have to initially give written notice of the alleged violation to the employer and the State. Employers served with this notice should immediately inform employment counsel to ensure that any violations will be investigated and cured.

SB 1809 separates the more serious allegations into three different categories. The first category is safety. The state Division of Occupational Safety and Health must investigate all alleged violations of workplace safety standards under Cal-OSHA. Under the new law, the employee may sue privately as a bounty hunter only if the Division fails to issue a citation.

The second category is a collection of over 160 other statutes specified in SB 1809 (including many wage-hour laws and Cal-OSHA's anti-retaliation provisions). If the employees notice alleges a violation of these laws, then the State agency has 33 days to decide whether to investigate the violation, and an additional 120 days in which to issue any appropriate citation. The employee may not sue as a bounty hunter unless the agency declines to investigate the violation or decides not to issue a citation to the employer.

The third group involves still other Labor Code violations. For these notices, the employer has 33 days from the postmark date of the notice in which to notify the employee that the violation has been "cured." The employer's notice of cure must be in writing and sent by certified mail. Notably, the employer may only use this procedure three times within a 12-month period for any violation alleged by an employee. The statute defines "cure" to mean that the employer has abated each violation and is in compliance with the relevant laws, and that the employee has been "made whole" for any violation. If the employer does not send the required notice of cure, the employee may file a civil bounty hunter lawsuit. If the employer sends a notice of cure and the employee disputes the bona-fides of the notice, the employee must send a notice of dispute to the LWDA and the employer. The LWDA then has 17 days in which to investigate whether the employer has cured any violation. The employee may sue as a bounty hunter only if the LWDA determines that the employer hasn't cured the violation or if LWDA fails to issue any determination within the 17-day period. If the LWDA finds that the employer has indeed cured the violation, the employee cannot sue as a bounty hunter. The employee's only resort is to appeal that decision in Superior Court.

In addition, SB 1809 provides that employees may only recover 25 percent of penalties charged to employers as a result of "bounty hunter" lawsuits. The remaining 75 percent must be paid to the LWDA. The new law also gives courts discretion to give less than the maximum penalty award for any violation. However, employees still may recover their attorneys' fees in proving the "bounty hunter" lawsuits. SB 1809 also adds new protections to employees against retaliation for exercising their rights under the "bounty hunter" law.

SB 1809 was an "urgency" statute and took effect immediately upon approval by Governor Schwarzenegger, on August 11, 2004. Its provisions are retroactive to January 1, 2004.

• Summary of 1999-2003 Labor and Employment Laws. The State has prepared a 40-page summary of a whopping 477 labor and employment laws which were passed by the Legislature and signed by former Governor Gray Davis from 1999 to 2003. This summary is available on the LWDA's website at:

http://www.labor.ca.gov/lwdalaborlaw99-03.pdf.