2007-1 -- Special Alert

NEW CALIFORNIA EMPLOYMENT AND LABOR LAWS FOR 2007

      The California legislature has once again added to the already burdensome labor laws and regulations that California employers must follow. Here is our annual rundown of the most significant changes for 2007.As always, if you have any questions, do not hesitate to call your contact at the Firm. We look forward to being of service in 2007.

      1. Increase in California Minimum Wage
AB 1835. This new law increases California’s minimum hourly wage and exempt salary standards for all California employers. As of January 1, 2007 the new minimum wage is $7.50 per hour. On January 1, 2008, the minimum wage will increase again to $8.00 per hour.

      Since overtime exemptions are keyed to the state minimum wage, the minimum required salary has increased accordingly. Exempt employees must earn a salary of at least twice the state minimum wage. With the January increase, the new threshold for the exemption will be an annualized salary of $31,200 ($7.50 x 2 = $15.00 x 2080 = $31,200).

      Employers who require employees to provide and maintain hand tools and equipment customarily required by the trade or craft have always been required to pay such employees at least two times the minimum wage. Accordingly, employers must now pay such employees at least $15.00 per hour before imposing such a requirement.

      The new law also requires the Department of Industrial Relations to adjust upwards the permissible meals and lodging credits by the same percentage as the increases in the minimum wage, and to amend and republish the Industrial Welfare Commission’s wage orders. Every employer will be required to post amended copies of the applicable wage order.

      2. New Sexual Harassment Training Regulations

      The California agency responsible for enforcing the state’s mandatory sexual harassment training law has finally completed its long awaited regulations governing the training. These regulations interpret Government Code section 12950.1 and will be effective around February 1, 2007 if they pass the final approval hurdle. Here are some highlights of the regulations:

            A. Who must be trained? The term “supervisor” defined

      Employers are responsible for training all supervisors. The term supervisor is defined as “any individual having the authority, in the interest of the employer, to hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or discipline other employees, or the responsibility to direct them, or to adjust their grievances, or effectively to recommend that action, if, in connection with the foregoing, the exercise of that authority is not merely of a routine or clerical nature, but requires the use of independent judgment.” This is the same test the National Labor Relations Board uses to determine whether an individual is a supervisor and, therefore, cannot be represented by a union. Under this definition, whether an individual actually holds the title of “supervisor” is not determinative of that person’s supervisory status. Rather, the actual authority the individual possesses determines whether he or she is a supervisor and, therefore, must undergo supervisory training. It is recommended that employers train anyone that might meet this definition. In addition, the regulation clarifies that only those supervisors “located in California” must be included in that training.

            B. How many California based employees must a company             have to be covered under this regulation?

      Only two. The final version of the regulation is expected to reiterate the state’s view that so long as the business has at least 50 employees and/or contractors somewhere in the US, the mandatory training must be done if there is at least one employee and one supervisor working in the state.

            C. Frequency of Training

      Every supervisor must undergo harassment training once every two years. An employer may use either an individual tracking method or a “training year” tracking method for calculation. Under an individual tracking, a supervisor must be trained two years from the date of completion of his or her last individual training. Under a training year tracking, an employer may designate a training year in which it trains some or all of its supervisors, and must thereafter train these same supervisors by the end of the next training year, two years later. Newly hired or promoted supervisors, trained within six months of their hire or promotion, may be included in the next group training year even if it occurs sooner than two years. New supervisors, whether hired or promoted, must be trained within six months of assuming their supervisory position and thereafter must be trained once every two years, measured either on an individual basis or by a training year tracking method.

      A supervisor who has previously received harassment training (which was in compliance with this section) from a prior or joint employer within two years of being hired is only required to read and acknowledge receipt of the employer’s harassment policy within six months of assuming the new supervisory position or within six months of the employer’s eligibility. The supervisor should then be put on a two year tracking schedule based on this last harassment training. However, the current employer has the burden of establishing that the prior training was legally compliant with this section.

             D. Interactivity

      Most educational experts believe that in-person training has the most lasting impact and is best suited for compliance matters. In recognition of this fact, the legislature and the state’s compliance agency have mandated that the training be “interactive.” Though in-person training may be best, the state recognizes that advances in technology allow for other remote training vehicles like web based seminars (“webinars”) and computer based training.

      For those employers that opt for some kind of on-line training (referred to as “e-learning” in the regulations), we recommend that you ensure that the provider can verify in writing that the program meets all of the state’s requirements and that the sessions be a minimum of two hours in length without the capability of an attendee clicking through in a shorter length of time. Such programs must have definitive audio files that add up to at least two hours to complete. Also, to satisfy the interactivity requirement, on-line courses must contain links permitting the supervisors to contact the trainers and ask them questions. For an e-learning program, trainers must answer questions within two business days. Whereas, when using a “webinar” program, supervisors must have the opportunity to ask questions and have them answered during the program.

            E. Trainer Expertise

      The regulations require those conducting the training to be experienced trainers and experts in the field. To be a subject matter expert, the trainer must have practical experience in harassment, discrimination and retaliation training, and knowledge of relevant California and federal laws. We recommend that you use your labor counsel, provided he or she has the requisite experience. Our BRG&S trainers have the requisite experience and knowledge to do this training. If you go another route, be certain that the provider will certify in writing that the trainer has the requisite experience, and that the trainer provides the company with an indemnity agreement just in case the company is sued over the adequacy of the training.

            F. Keep Records of the Training

      The regulation requires that an employer keep documentation of the harassment training to track compliance, including the name of the supervisory employee trained, the date of the training, the type of training and the name of the training provider. Such records must be retained for a “minimum of two years.”

      3. Reporting of Overtime Hours

      AB 2095. This new law provides for how an employer may report overtime on an employee’s pay stub when the overtime pay is paid in a different pay week. This typically occurs with the employee being paid their overtime in the pay period following the pay period in which it is earned. The new law accounts for how this must be stated on the pay stub of the second pay period when the overtime is actually paid. Under the new law, an employer has complied with payroll law if overtime hours worked in the current pay period are itemized as “corrections” on the pay stub for the next regular pay period, and the next pay stub also identifies the dates of the pay period to which the overtime payment refers.

      4. New Standard Mileage Rate for Reimbursements

      Beginning January 1, 2007, the standard mileage rates for the use of a car (including vans, pickups, or panel trucks) will be 48.5 cents per mile for business miles driven; 20 cents per mile driven for medical or moving purposes; and 14 cents per mile driven in service to a charitable organization. This is important for California employers because the California Labor Code section 2802 provides: “An employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties.” Under this section, a California employer must pay an employee for the cost of the use of his or her vehicle within the course and scope of employment. This does not include the commute driving to and from work. The Division of Labor Standards Enforcement has stated that use of the IRS mileage allowance for business miles is presumed to satisfy the expenses incurred in use of an employee’s car in the absence of evidence to the contrary.

      5. Employers Liable for Assisting Employees in Evading Child       Support Obligations.

      AB 2440. This new law imposes a penalty on an employer that assists an employee or contractor in evading child support obligations, including failure to file reports upon hiring. This law imposes liability upon any person or business entity that knowingly assists a child support obligor who has an unpaid child support obligation to escape, evade, or avoid current payment of those unpaid child support obligations. The penalty can be huge. It is set at three times the value of the assistance to have been provided, up to the total amount of the entire child support obligation due. The penalty will not apply if the unpaid obligation is satisfied.

      Prohibited actions, when an individual or entity knows, or should have known of the child support obligation, include: (1) hiring or employing a child support obligor without timely reporting to the EDD New Employee Registry; (2) retaining an independent contractor who is a child support obligor and failing to file a timely report of such engagement with the EDD; or (3) paying wages or other forms of compensation, (including cash, barter, or trade) that are not reported to the EDD.

      In light of this penalty, employers are cautioned to make an inquiry of all future job applicants and contractors to be sure the employer does not unwittingly run afoul of this new law. Employers may also wish to make an inquiry of current employees and contractors, and then document the findings. This will protect the company from financial responsibility under this statute, provided the employer truly did not know about the child support obligation.

      6.Employers Have an Affirmative Duty At the Time of Hire To       Instruct Employees of Workers’ Comp Rights

      According to a new Workers’ Compensation Appeals Board decision, Knight v. United Parcel Service; and Liberty Mutual Insurance Company (October 10, 2006), an employer or insurer who fails to notify employees of their rights under a Medical Provider Network (“MPN”) will be liable for costs of medical treatment employees secure on their own, outside the MPN, pursuant to Labor Code section 4600(a). Section 4600(a) obligates an employer or its insurer to provide all medical treatment “that is reasonably required to cure or relieve the injured worker from the effects of his or her injury.” An MPN is a network of providers, including physicians, created by an employer or workers’ compensation carrier to provide medical treatment for work injuries of employees in California.

      The required MPN information informs employees about their rights in an MPN and how to receive appropriate medical treatment from an MPN in a timely manner. Under California workers’ compensation laws, employers with an MPN have an affirmative duty to, among other things, offer treatment to injured employees and instruct employees at the time of hire, and when an injury occurs, as to how to choose a doctor within the MPN. We recommend that this item be added to the new employee orientation program and checklist, and that employees be asked to confirm in writing that they have indeed been provided this information.

      7.Banning the Use of Cell Phones While Driving.

      SB 1613. Effective July 1, 2008, drivers may not use cell phones while driving unless they are using a hands-free device. This will impact a very wide segment of workers who are in the field and expected to remain in contact with the office, coworkers and customers. We envision wrongful termination claims by employees that allege they were fired or disciplined when they refused to succumb to pressure to ignore the new law for the sake of efficiency. Managers and supervisors should be trained on how this law impacts their ability to direct the workforce.

      The only exception for most drivers is where the caller uses the cell phone to contact law enforcement or a public safety agency. The law also does not apply to a person driving a school bus or transit vehicle that is subject to certain existing wireless telephone usage, emergency service professionals operating an authorized emergency vehicle, or to a person while driving a motor vehicle on private property. Also, for certain commercial vehicles, the effective date is postponed to July 1, 2011. These persons include people driving a motor truck or truck tractor, an agricultural vehicle, tow truck or a commercial vehicle when using a digital 2-way radio service that utilizes so-called “push to talk” wireless transmission and the phone does not require immediate proximity to the user’s ear. This offense is punishable by a fine of $20 for a first offense and $50 for each subsequent offense.

      8.New OSHA Avian Flu Guidelines

      The U.S. Department of Labor’s Occupational and Health Administration (“OSHA”) has developed new safety and health guidance for protecting workers from avian flu, which updates the 2004 guidance. This guidance can be found at the following web site: http://www.osha.gov/dsg/guidance/avian-flu.html. The guidance also includes links to Web sites with additional information and a list of technical articles and resources, including a history on flu pandemics, symptoms and outcomes of various strains of the avian flu, a summary of the bird importation regulations, and details on the transmission of the virus.

      9.San Francisco Requires Employers to Offer Paid Sick Days

       Under an ordinance approved by the city’s voters last November, San Francisco employers must provide paid sick leave to employees, including part-time employees, temporary workers and participants in Welfare-to-Work Programs, within the geographical limits of the City and County of San Francisco. (Note that this new law does not apply to employees working at San Francisco International Airport.)

      Under the Sick Leave Ordinance, employers must provide one hour of paid sick leave to an employee for every 30 hours worked. The Ordinance limits the amount of paid leave to a maximum of 40 hours of paid leave for “small businesses,” which are defined as employers who employ fewer than 10 employees. For those with 10+ employees, the amount is increased to 72 hours of paid leave. Accrued unused paid leave carries over from year to year up to the maximum leave limits. However, employers are not required to pay out accrued unused paid sick leave to a terminating employee. Moreover, the Ordinance does not require an employer to offer additional paid sick leave where the employer already has a paid leave policy sufficient to meet the requirements for accrued paid sick leave under the Ordinance.

      The Sick Leave Ordinance allows employees to take paid sick leave for their own illness or to provide care for an ill child, parent, sibling, grandparent, grandchild, spouse, a registered domestic partner or a “designated person” if the employee has no spouse or registered domestic partner. Conceivably, this could be a friend or someone else without any familial connection to the employee, making tracking and accounting for the use of the new benefit a human resources nightmare! The Ordinance includes relationships resulting from adoption, step-relationships, foster care relationships and children of domestic partners or legal guardians and wards.

      Employers must provide employees who have no spouse or registered domestic partner an opportunity to designate one person as to whom employees may use paid sick leave to aid or care for such person once the employees become eligible for paid leave. There is no requirement of a biological relationship. Employees have 10 work days to make the designation. Thereafter, employers must permit such employees to make or change their designations annually.

      Employers cannot require employees to find a replacement worker to cover the hours during which the employee is on paid sick leave. Employers can require employees to give “reasonable notification” of an absence from work for which paid sick leave is or will be used. Employers “may only take reasonable measures” to verify or document that the use of paid leave is lawful. It remains to be seen whether the San Francisco Office of Labor Standards Enforcement will issue guidance regarding the meaning of “reasonable notification” or “reasonable measures.”

      The Sick Leave Ordinance requires employers to post a notice regarding employees’ rights to take paid sick leave in English, Spanish, Chinese, and in any language spoken by at least 5% of the employees at the workplace or job site. The Ordinance calls for the City’s Office of Labor Standards Enforcement to publish and make available to employers a suitable notice by February 5, 2007, the operative date of the Ordinance.

      10.Sexual Orientation Discrimination

      SB 1441.This is a new measure prohibiting discrimination based on sexual orientation and gender identity in state operated or funded services, activities and programs. Though this has been the law for a year for all private employers in California, this new law adds sexual orientation to existing classifications protected from discrimination by recipients of state funds. Thus, any employer receiving State funding must adhere to this new requirement.

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