New Employment Law Changes for 2012

Last month, Governor Jerry Brown signed into law numerous new addendums and edits to the California Labor Code, effective beginning January 1, 2012 for any entities doing business in the state. We have provided below a brief summary of some of the key provisions of the new laws. Employers may wish to take note of these changes and be prepared to potentially revise their employment practices and policies to comply with the new codes.


“Wage Theft Prevention Act” AB 469 – created Labor Codes §2810.5 and §1197.2; amended Labor Codes §1174 and §243 Employers must provide newly hired non-exempt employees with written notice of information about their pay such as rate and timing of pay, including commissions and overtime, and any allowances claimed as part of minimum wage. Additionally, new hires must be supplied with information about the employer including any “doing business as” names, contact information, and the address and telephone number of the employer’s workers’ compensation insurance carrier. If any changes occur to this information, employers must provide written notice to employees within seven days. The Labor Commissioner is required to create a template for this purpose which employers may use. Additionally, employers are now required to keep employee payroll records for three rather than two years. AB 469 also sets stringent new regulations on employers regarding wage violations. An employer who willfully fails to pay a final court judgment or order for wages within 90 days may be criminally liable for a misdemeanor offense. If convicted, the employer can be fined up to $10,000 or imprisoned for six months if the amount owed is less than $1,000. If the amount exceeds $1,000, the employer may be fined between $10,000 and $20,000 and imprisoned for up to a year. Furthermore, until the employer posts a bond or pays the wages, the court may grant an order prohibiting the employer from conducting business in the state.
Independent Contractor Misclassification SB 459 – created Labor Code §226.8 and §2753 Imposes fines on employers for “willfully” misclassifying a worker as an independent contractor and gives joint liability to any non-attorney consultant who advises an employer to misclassify a worker. The initial fine ranges from $5,000 to $10,000 and repeat violations can be fined from $10,000 to $25,000 per infraction. Additionally, the employer is required to post a notice prominently on its website stating its violation of the code. The Labor and Workforce Development Agency also must report a licensed contractor in violation of this law to the Contractors State License Board, which must then pursue action against the licensee.
Employee Medical Leave AB 592 and SB 299 – amended Labor Codes §12945 and §12945.2 SB 299 requires an employer to provide full health coverage for up to four months during Pregnancy Disability Leave (PDL) at the same level and under the same conditions that would have been provided had there been no leave, regardless of whether or not this worker also qualifies for the California Family Rights Act (CFRA). AB 592 clarifies existing laws against refusal to allow a worker’s right to leave under PDL or CFRA by inclusion of the phrase that it is an unlawful employment practice “to interfere with, restrain or deny the exercise or attempt to exercise” rights to a leave of absence under these laws.

Note: The passage of AB 592 was contingent on the passage of SB 299 – both bills were successfully passed.

Commission Agreements AB 1396 – amended Labor Code §2751 Employers who pay employees commissions must have a written and signed contract containing the method of calculating and paying commissions. This contract, even after expiration, will be presumed to be in full force and effect until termination of employment or until the contract is specifically superseded.

Note: This law does not take effect until January 2013.

Employer Credit Checks AB 22 – created Labor Code §1024.5 Bans most employers from obtaining credit information about applicants or employees (with exceptions for certain positions including law enforcement, some positions at financial institutions, positions involving access to proprietary trade secret information, and others). If a credit report is necessary and legal, the employer must provide written notice to the applicant or employee that a credit investigation is being conducted, citing which specific exception makes it legal to obtain the report. If an applicant is denied a position on the basis of information in a credit report, the applicant must be supplied with the name and contact information of the credit reporting agency that supplied it.
AB 1236 – amended Labor Code  §1391.1
Allows employers to use E-Verify to determine employees’ work eligibility on the basis of I-9 citizenship forms and social security information, but bans counties and cities from requiring private employers to use these checks.
Definition of “Gender” AB 887 – amended Labor Code §3600 Amends California’s antidiscrimination laws to clarify that “gender expression” and “gender identity” are protected classes covered in the definition of the term “gender” already included in these laws.  “Gender expression” refers to a person’s gender-related appearance and behavior and “gender identity” refers to what gender a person identifies with, regardless of the individual’s biological sex at birth. This also strengthens protection for equal health coverage for registered domestic partners and married spouses.

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