2012 California Employment Law Update
2012 California Employment Law Update
Effective January 1, 2012, employers must provide employees, at the time of hire, a notice stating the rate and basis of their wages. The notice must identify: (a) the rates of pay and whether the employee is paid by the hour, shift, day, week, salary, piece, commission, or otherwise, including rates for overtime, as applicable; (b) allowances, if any, claimed as part of the minimum wage, including meal or lodging allowances; (c) the Labor Code compliant regular payday designated by the employer; (d) the name of the employer, including any “doing business as” names used by the employer; (e) the physical address of the employer’s main office or principal place of business, and a mailing address, if different; (f) the employer’s telephone number; (g) the name, address, and telephone number of the employer’s workers’ compensation insurance carrier and (h) “Any other information the Labor Commissioner deems material and necessary.” It also requires an employer to notify each employee in writing of any changes to the information set forth in the notice within seven calendar days of any changes to the above, unless such changes are timely reflected in a wage statement or other writing. For an example of this notice, please see the California Labor Commissioner approved form found here: http://www.dir.ca.gov/dlse/Governor_signs_Wage_Theft_Protection_Act_of_2011.html. We recommend employers confer with legal counsel prior to creating any wage notices of their own.
This law increases the penalties for the willful misclassification of individuals as independent contractors. Under SB 459, employers may be held liable for a civil penalty ranging from $5,000 to $15,000 per misclassification. If a pattern or practice of misclassification is found, the civil penalty is $10,000 to $25,000 per violation. This law also provides that any person who knowingly advises an employer to treat an individual as an independent contractor to avoid employee status for the individual shall be equally liable for any consequences. Employers should consult legal counsel prior to engaining a potential independent contractor.
Effective January 1, 2012, an employer must maintain and pay for coverage, under a group health plan, for an employee who takes leave due to pregnancy, childbirth, or related medical conditions. Pregnancy disability may continue up to a maximum of four months. We recommend employers update their handbooks and policies to reflect this change in the law.
This law prohibits an employer or prospective employer from using a consumer credit-report for employment hiring purposes, unless the position is: (a) a managerial position; (b) one that the law requires obtaining or disclosing information in the report; (c) one that involves regular access to the following: bank/credit card account information, social security number, and date of birth (not including retail sales); (d) one where the employee is or would be a named signatory on the employer’s bank or credit card account, authorized to transfer the employer’s money, or authorized to enter financial contracts for the employer; (e) one that involves access to certain confidential or proprietary information defined by the law; or, (f) one that involves regular access to cash of $10,000 or more of the employer or customer/client during the workday. This law also requires written notice informing the prospective employee of the specific reason for obtaining a credit report, if such report is requested.
Effective January 1, 2013, employee commission arrangements must be in writing and specify the method by which the commission is calculated and paid. The employer and employee must sign the agreement. Please not that short-term productivity bonuses paid to retail clerks, profit sharing plans (unless based on a fixed percentage of sales or profits) do not constitute commission plans under this law. While this law will not take effect until the next year, we suggest employers draft written plans for all commissioned employees if they haven’t already done so.
* *The information provided in this email is meant to assist in a general understanding of current law. It is not legal advice and should not be construed as such. Companies or individuals with specific questions should seek the advice of legal counsel.* *