California Mid-Year Legislative Update 2013

1. Presentation to the Employers’ Advisory Council – EDD July 16, 2013 California Mid-Year Legislative Update 2013 Audrey Gee. Brown Church & Gee. 925.291.4452. agee@bcglegal.com. 100 Pringle Ave., Suite 310 Walnut Creek, CA 94596. 925.943.5000. www.bcglegal.com

2. SENATE ASSEMBLY Deadlines First Reading 2/22/2013 First Reading Rules Committee/Fiscal Committee vote Rules Committee/Fiscal Committee vote Varies Second & Third Readings vote Second & Third Readings vote 5/31/2013 Repeat Process Repeat Process 9/13/2013 GOVERNOR 10/13/2013 Sign or allow without signature Veto LAW LAW if approved by 2/3 vote of each house

3. Bills Proposed • AB 10 – Minimum Wage: Annual Adjustment • SB 404 – Fair Employment – Familial Status • SB 292 – Fair Employment – Sexual Harassment • SB 400 – Employment – Discrimination Against Victims of Domestic Violence, Sexual Assault, and Stalking • SB 770 – Unemployment compensation – Disability Benefits – Paid Family Leave • SB 462 – Employment Compensation – Attorneys’ Fees • AB 25 – Employment – Social Media • AB 155 – Employment – Payroll Records • AB 218 – Employment Applications – Criminal History • SB 390 – Employee Wage Withholdings – Failure to Remit • AB 442 – Employees - Wages • SB 713 – Liability: Good Faith Reliance on Administrative Ruling • AB 263 – Employment: Retaliation: Immigration-Related Practices • AB 729 – Evidentiary Privileges: Union Agent – Represented Worker Privilege • SB 554 – Employment: Overtime Compensation • AB 241 – Domestic Work Employees: Labor Standards • SB 168 – Farm Labor Contractors: Successors: Wages and Penalties

4. AB 10 Minimum Wage; Annual Adjustment • Amends Labor Code Section 1182.12 to increase the hourly minimum wage. For the next five years, the hourly minimum wage will be increased to fixed amounts. Amendments eliminate the proposed annual adjustments on a formula using the percentage of inflation occurring in the prior year.

5. AB 10 Minimum Wage; Annual Adjustment - Opposed by Cal Chamber as job killer - Join letter Current minimum wage $8.00/hour (effective 2008) Proposed by AB 10: • January 1, 2014 increase to$8.25/hour • January 1, 2015 increase to$8.75/hour • January 1, 2016 increase to $9.25/hour • January 1, 2017 increase to $9.50/hour • January 1, 2018 increase to $10.00/hour • Compare to Federal Fair Minimum Wage Act of 2013 – if passed would raise federal minimum wage from $7.25 to $10.10/hr by 2015 and thereafter would annually adjust on cost of living.

6. SB 404 Fair Employment: Familial Status The FEHA protects and safeguards the right and opportunity of all persons to seek, obtain, and hold employment without discrimination or abridgment on account of race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, or sexual orientation. SB 404 includes “familial status” as an additional basis upon which the right to seek, obtain, and hold employment cannot be denied

7. SB 404 Fair Employment: Familial Status • In connection with unlawful employment practices, “familial status” means an individual who provides medicalor supervisory care to a family member. “family member” means any of the following: a child, a parent, a spouse, a domestic partner, or parent-in-law.

8. SB 404 Fair Employment: Familial Status Tidal Wave of Claims? Increased Liability Exposure Cal Chamber identifies SB 404 as a job killer. Join Letter. Broadly encompasses almost all employees in the workforce and hampers employers ability to manage their business Any adverse employment action could be challenged on the basis of familial status • Revamp policies. • Consider familial status if • Taking adverse action (discipline, demotion, changing work hours or shifts, termination) • Choosing others for promotion, pay raises, projects • Granting leave, time off, flexible work schedules FEHA applies to employers of 5+ employees

9. SB 292 Employment: Sexual Harassment SB 292 adds to the FEHA an expanded definition of sexual harassment In 2011, the California Court of Appeal (First District) in Kelley v. Conco Companies, (2011) 196 Cal.App.4th 191, held that a plaintiff in a same-sex harassment case must prove that the harasser harbored a sexual desire for the plaintiff in order to survive summary judgment. Apprentice ironworker. Complained that male supervisor made sexually demeaning, rude, crude taunting comments. Physical threats in retaliation for compliant. No evidence plaintiff was targeted based on his sex

10. SB 292 Employment: Sexual Harassment The Kelley ruling created a split in authority as other courts (Singleton v. United States Gypsum – 2nd Dist. 2006) had found that sexual harassment does not require sexual desire. • SB 292 resolves the split in authority as it eliminates sexual desire as a factor to be considered in a sexual harassment lawsuit.

11. SB 292 Employment: Sexual Harassment Under the currently existing law ““harassment” because of sex includes sexual harassment, gender harassment, and harassment based on pregnancy, childbirth, or related medical conditions.” • SB 292 adds additional language specifying : • “sexually harassing conduct need not be motivated by sexual desire” Investigate and actively respond to complaints about bosses or co-workers who are yellers, jokesters, rude & crass.

12. SB 400 Employment Protections: Victims of Domestic Violence, Sexual Assault, or Stalking Existing law prohibits employers from taking adverse employment action against victims of domestic violence and sexual assault who take time off from work to attend to issues arising as a result of the domestic violence or sexual assault, as long as the employee complies with certain conditions. SB 400 extends time off protections to victims of stalking. • Employee must provide advance noticeof time off, if possible. • If the employee does not provide advance notice, the employee may provide certification in the form of documents (police reports, court orders, etc.) to the employer to avoid adverse action. • Employers must maintain the confidentiality of the employee-victim

13. SB 400 Employment Protections: Victims of Domestic Violence, Sexual Assault, or Stalking Employer may not discharge, discriminate or retaliate against an employee because of the employee’s status as a victim of domestic violence, sexual assault or stalking • Victim provides notice to employer of status • Or employer has actual notice of status

14. SB 400 Employment Protections: Victims of Domestic Violence, Sexual Assault, or Stalking Employers must make reasonable accommodations, if requested, for the employee’s safety at work Reasonable accommodations include: implementation of safety measures, including a transfer, reassignment,modified schedule,changed work telephone, changed work station, installed lock, assistance in documenting domestic violence, sexual assault, or stalking that occurs in the workplace, an implemented safety procedure, or another adjustment to a job structure, workplace facility, or work requirementin response to domestic violence, sexual assault, or stalking, or referral to a victim assistance organization. The employer is not required to undertake an action that constitutes an undue hardship on the employer’s business operations In determining whether the accommodation is reasonable, the employer shall consider an exigent circumstance or danger facing the employee.

15. SB 400 Employment Protections: Victims of Domestic Violence, Sexual Assault, or Stalking PENALTIES: Employee is entitled to reinstatementand reimbursementfor lost wages and benefits, along with equitable relief if an employer discharges, discriminates, or retaliates against employee-victims. This includes adverse action taken in response to a request for a reasonable accommodation. An employer who willfully refuses to rehire, promote, or otherwise restore an employee or former employee who has been determined to be eligible for rehiring or promotion by a grievance procedure or hearing authorized by law is guilty of a misdemeanor. Employee is entitled toattorney’s fees and costs if he or she prevails in a suit against his or her employer for failure to comply with the above law.

16. SB 770 - Unemployment compensation – Disability Benefits – Paid Family Leave • Broadens the definition of family with the Paid Family Leave program to allow workers to receive the partial wage replacement benefits • Expands California’s Paid Family Leave insurance program to include time off to care for a seriously ill grandparent, grandchild, sibling, or parent-in-law Previously covered only care for: parent, spouse, child domestic partner

17. SB 770 - Unemployment compensation – Disability Benefits – Paid Family Leave Current law (CRFA & FMLA) permits eligible employees to take up to 12 weeks of leave in 12 months period for: • Baby bonding • Caring for a family member with serious health condition (parent, spouse, child, registered domestic partner, same sex spouse); or • Employee’s own serious health condition • Paid Family Leave Act provides up to • 6 weekswage replacement for: • Baby bonding • Caring for a seriously ill family member SB 770 - Expansion of “family member” CA has the 2nd highest percentage of multi-generational households

18. SB 462 Employment: Compensation (Attorneys Fees Awards) Existing Labor Code Section 218.5 requires a court to award reasonable attorney’s fees and costs to the prevailing party if any party to the action requests attorney’s fees and costs upon the initiation of the action in any action brought for the nonpayment of wages, fringe benefits, or health and welfare or pension fund contributions. • SB 462 awards attorneys fees to the employer only on a finding that the employee brought the action in bad faith.

19. SB 462 Employment: Compensation (Attorneys Fees Awards) • Provides essentially a one-sided attorney’s fee provision • Bad faith is difficult to prove and will limit employer’s ability to recover fees • Flood of claims? • Incentivizes meritless wage and hour litigation • No downside for employees to bring claims Currently, for OT and min wage claims if employee loses, employee does not have pay the employer’s attys fees. Bill 462 applies to unpaid straight time wages, fringe benefits, Health and welfare, & pensions and conforms to the OT/min wage fee awards.

20. AB 25 Employment: Social Media Extends existing social media standards to public employers As used in this chapter, “public employer” means the state, a city, a county, a city and county, or a district. A publicly traded company is considered a private employer.

21. AB 25 Employment: Social Media Existing law: Labor Code Section 980 prohibits a private employer from asking employees or applicants to: • Disclose their user name of password for the purpose of accessing personal social media • Access personal social media in the presence of the employer • Divulge any personal social media Section 980 also prohibits retaliation AB 25 applies these laws to public employers

22. AB 25 Employment: Social Media Exceptions: • Employers retain the right to request that an employee disclose personal social media reasonably believed to be relevant to an investigation of allegations of employee misconduct or employee violation of applicable laws and regulations, provided that the social media is used solely for purposes of that investigation or a related proceeding. • Employer can require or request an employee to disclose a username, password, or other method for the purpose of accessing an employer-issued electronic device

23. AB 155 – Employment – Payroll Records • Provides that a current or former employee has a right to receive a copy of their payroll records. • Employee may elect to inspector copypayroll records, or to receive a copy of the records, or any combination • Former employee terminated for workplace violence or harassment can only receive copies of records • Employer can charge employee for the costs

24. SB 390 – Employee Wage Withholdings – Failure to Remit • Bill enables the Labor Commissioner to enforce a violation for an employer who willfully, or with the intent to defraud, fails to remit to the proper agency any withholdings made from a worker’s wages pursuant to state or federal law. • Written to address some employer’s practice of withholding the tax and social security taxes from the employee’s paycheck and pocketing those withholdings. • Currently, there are no specific criminal penalties that specifically target this practice

25. AB 442 – Employees - Wages • AB 442 authorizes the Labor Commissioner to collect liquidated damages from an employer who pays an employee less than minimum wage • Currently, employees may obtain liquidated damages. This law would permit the Labor Commissioner to seek recovery of liquidated damages for workers in an amount equal to the total amount of their unpaid minimum wages. • Has passed in the committee and the house of origin with 0 Noes.

26. SB 713 – Liability – Good Faith Reliance on Administrative Ruling This bill provides that any person who relieson a written order, ruling, approval, interpretation, or enforcement policy of a state agency or department, except the DLSE, is not liable or subject to punishment for a violation of a civil statute or regulation in a judicial or administrative proceeding if the person pleads and proves to the trier of fact, that at the time of the alleged act or omission, the person, acting in good faith did al of the following: • Sought an applicable written order, ruling, approval, interpretation or enforcement policy from the state agency charged with interpreting that particular area of law; • Provided true and correct information • Relied on and conformed with the order, ruling, approval, interpretation or enforcement policy

27. SB 713 – Liability – Good Faith Reliance on Administrative Ruling With respect to a written order, ruling, approval, interpretation, or enforcement policy of the DLSE, SB 713 provides that a person who takes all of the above acts, is not liable or subject to punishment, except for restitution of unpaid wages. Cal Chamber supports as a job creator CA has over 500 agencies that interpret and enforce its laws. Currently, if employer seeks out guidance from agency and relies on a written determination, they are given no protection or benefit in litigation for such reliance DLSE issues written opinion letters and enforcement manual but there is no current shield from liability if employers for compliance

28. AB 263 Employment: Retaliation. Immigration Related Practices Existing law provides all protections of the law are available to all individuals regardless of immigration status. A person’s immigration status is irrelevant to the issue of liability. This bill adds that is unlawful to retaliate against an employee or applicant for availment of the laws, and authorizes civil penalties up to $10,000 for each violation. Examples of misconduct: Labor Commissioner found employer owed immigrant worker $50,000 unpaid wages and employer harassed worker in his home and threated to report worker to immigration

29. AB 729 – Evidentiary Privileges. Union Agent – Represented Worker Privilege AB 729 creates a privilege between a union agent, and a represented employee or former employee, to permit them to refuse to disclose any confidential communication between employee and the union agent • There is currently no such privilege • Permits a union representative to refuse to testify or produce documents that are communications with the employee • Cal Chamber opposes as one-sided. Bill does not protect management communications

30. AB 218- Employment Applications – Criminal History • Bill prohibits state or local agency from asking an employment applicant to disclose information concerning applicant’s conviction history until agency has determined the applicant meets minim employment qualifications • Exempts employment positions where employer is required by law to conduct conviction history background check, criminal justice agency positions, and individuals working for a criminal justice agency on a contract

31. SB 554 Employment: Overtime Compensation for Employees of Residential Care Facilities Existing law: Payment of overtime for work over: - 8 hours/day or 40 hrs/week (1 ½x hrly rate) - 12 hrs/day (2x hrly rate) SB 554 establishes exemptions for employees working in non-medical residential care facilities, authorizes an overtime pay scale, and fixes the number of hours an employee is permitted to work without an off-duty period.

32. SB 554 Employment: Overtime Compensation for Employees of Residential Care Facilities Employees of 24-hour non-medical out-of-home licensed residential facilities of 15 beds or fewer for the developmentally disabled, elderly, or mentally ill adults may be compensated as follows:

33. SB 554 Employment: Overtime Compensation for Employees of Residential Care Facilities • An employee who works in excess of 40 hours in a workweek shall be compensated at one and one-half times the employee’s regular rate of pay for all hours over 40 hours in the workweek. • An employee shall be compensated at two times the employee’s regular rate of pay for all hours in excess of 48 hours in the workweek. • An employee shall be compensated at two times the employee’s regular rate of pay for all hours in excess of 16 in a workday. • An employee may not work more than 24 consecutive hours until the employee receives not less than eight consecutive hours off-duty immediately following the 24 consecutive hours of work. Time spent sleeping shall not be included as hours worked. Violation of these rules is a misdemeanor. Eliminates daily OT for work over 8 hrs OT – 1 ½ hrly rate for over 40hrs/wk DT – 2x hrly rate for over 48 hrs/wk or 16hr/day 24hrs on duty then 8hrs off duty (non-sleeping)

34. AB 241 Domestic Work Employees: Labor Standards (Domestic Workers Bill of Rights) Gives domestic workers overtime pay, meal and rest breaks, equal worker’s compensation protection. Provides live-in domestic workers uninterrupted sleep rights and rights to use kitchen facilities to prepare own food. Domestic work – care of persons in private households including childcare providers, caregivers for of disabled or elderly, house cleaners, and other household occupations. • Last year, a similar bill, AB 889 was passed in both houses was vetoedby the Governor. • Currently, personal attendants are exempt from overtime, meal and rest break and other wage and hour requirements.

35. SB 168 – Farm Labor Contractors. Successors. Wages and Penalties Establishes successor liability for farm laborer contractors (FLC). If any successor to any predecessor FLC that owed wages or penalties is liable for those wages and penalties if the successor meets one or more of the following: FLC uses substantially the same facilities or workforceto offer substantially the same services as the predecessor FLC Shares ownership, management, control of workforce, interrelations of business operations with predecessor FLC Employs in a managerial capacity any person who directly or indirectly controlled wages, hours, or working conditions of the predecessor FLC Is an immediate family member of any owner, partner, officer, licensee or director of the predecessor FLC or any person who had a financial interest in the FLC

36. Non-Viable Bills SB 607. (Berryhill R- Twain Harte). California Workplace Flexibility Act of 2013. Current law requires overtime be paid for any work over 8 or over 40 hours in a week, unless 2/3rds of the workers in a unit adopt an alternative schedule of workdays lasting up to 10 hours. Bill permits non-union employees to request a flexible work schedule of up to 10 hours in a day, no more than 40/week before being paid overtime. Lowers costs for employers and provides more flexibility in the workplace. Supported by the Society for Human Resources Management. Labeled by the Cal Chamber as a Job Creator. Failed in Committee 4/24/13 (Ayes 1, Noes 3). AB 907. (Conway – R-Tulare). Allows employee to voluntarily request a flexible work schedule with an opportunity to work 4/10 hour workdays without employee incurring overtime. Supported by Cal Chamber as a job creator. Failed in house of origin.

37. Non-Viable Bills AB 880 – (Gomez; D-Los Angeles). Expansion of Discrimination Litigation with New Health Care Coverage Penalties. - Discourages hiring of entry or re-entry workers, increases discrimination litigation by taking large employers with a penalty if any of their employee who work as little as 12 hours per week enroll in CA’s Medi-Cal program and expands labor code to include a protected classification for any person who is enrolled in Medi-Cal program of the CA Health Benefit Exchange. Failed to pass Assembly 6/27/13. AB 1138 – (Chau; D-Alhambra). Amends Section 1871 of Insurance Code. Massive Exposure to Civil Penalties and Liability. Increases civil penalties on employers by permitting civil action against those employers who fail to conspicuously post a list of every employee covered under the an employer’s workers’ compensation insurance policy and retain this list for five years. Missed deadline to pass from policy committee to fiscal committee in the house in which it was introduced.

38. Non-Viable Bills SB 626 (Beall; D-San Jose). Amends Workers Compensation laws (Sections 75, 4600, 4605.5, 4610, 4610.6, 4616, 4660.1). Massive Workers’ Compensation Cost Increase. Unravels many of the employer cost-saving provision in last year’s workers’ compensation reform package and results in employers paying nearly $1billion in benefit increases to injured workers without an expectation that the increases will be fully offset by system savings. Missed deadline to pass from policy committee to fiscal committee in the house in which it was introduced. SB 761. (DeSaulnier D-Concord). Expansion of Paid Family Leave Program.. Transforms the paid family leave program from a wage replacement program into a new protected leave of absence that will burden small and large businesses by allowing an employee to file litigation for any alleged retaliation or discrimination as a result of their intent, request or use of the paid family leave program. Refused passage in the Senate, 5/29/13. Reconsideration granted. Placed on Senate inactive file, 5/30/13. Missed house of origin deadline.

39. Thank you for attending California Mid-Year Legislative Update 2013 Audrey Gee. Brown Church & Gee. 925.291.4452. agee@bcglegal.com 100 Pringle Ave., Suite 310 Walnut Creek, CA 94596. 925.943.5000. www.bcglegal.com

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