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Public Policy

2004 California Employment Law Alert

by Heather M. Sager, Esq.
of Carlton, DiSante & Freudenberger LLP

January 2004

With every new year comes new statutory rights for California employees. 2004 is no exception. In fact, with Governor Davis facing the recall election, he signed more pro-employee employment law bills this year than in past years. Below is a brief summary of the major new employment laws that California businesses will have to contend with beginning January 1, 2004.

SB 796 - Wage and Hour Private Actions

This bill allows employees and their attorneys to bypass the Labor Commissioner claims process and sue employers directly for alleged violations of the California Labor Code. More importantly, the bill allows employees to prosecute claims on behalf of themselves and their fellow employees and collect attorneys' fees and penalties. The bill, therefore, sanctions company-wide litigation and damages on wage and hour claims brought by a single employee. This bill is sure to lead to increased litigation in the wage and hour field.

AB 276 - Labor Code Penalties

This bill increases (and in many cases doubles) the penalties that are recoverable for various Labor Code violations.

AB 76 - Third Party Harassment

This bill makes the employer liable for sexual and other forms of illegal harassment perpetrated by customers, clients, suppliers, or other third parties against employees if the employer knew or should have known of the harassing conduct and did not take appropriate steps to prevent it from occurring, and/or implement immediate and appropriate corrective action once it learned of the conduct. This bill overturns a previous court case finding that the employer could not be liable for such action or inaction when the harassment is perpetuated by a non-employee.

AB 196 - Gender Identity Discrimination

This bill modifies the Fair Employment and Housing Act by making it illegal for an employer to discriminate or harass an individual because they are a transsexual, cross-dresser or trans-gender. The bill specifically permits employers to require employees to comply with reasonable workplace appearance and dress codes.

Workers' Compensation Reform

Various bills were passed to reform the California workers' compensation system. A number of reforms were enacted including certain mandated medical fee schedules and limits on physical therapy and other treatments. However, these bills were not the type of comprehensive reforms that the California business community was hoping for. Look for Governor Schwarzenegger to push for more sweeping reforms during the next legislative session.

SB 777 - Whistleblower Protection

This bill expands protections for whistleblowers and shifts the burden to employers who take adverse action against whistleblowers to prove by clear and convincing evidence that the adverse action was taken for legitimate business reasons in order to avoid liability. Finally, the bill increases penalties for violations of the whistleblower protections.

AB - 223 - Attorneys' Fees For An Appeal of a Labor Commissioner Ruling

This bill makes it easier for an employee to recover attorneys' fees when a labor commissioner wage and hour decision is appealed to the superior court for de novo review. The bill is likely to increase the number of appeals filed by employees in cases where the employee is not satisfied with the award/decision of the California Labor Commissioner/DLSE.

SB 1661 - Paid Family Leave

This bill was actually passed in 2002 but goes into effect in 2004. Paid family leave benefits are available fore leaves taken after June 30, 2004. The bill allows eligible employees to receive up to 55% of their regular wages up to a maximum of $728 per week (increasing maximum each calendar year) for six (6) weeks. The payments are administered by EDD as part of the state's disability insurance program. In order to be eligible the employee must be on leave to care for a new child or to care for a seriously ill member of their immediate family (parent, child, spouse, or domestic partner). Notably, paid leave is not available for an employee's own health condition. Leave is available for all employees full-time and part-time and is applicable to all California employers. There is a one-week waiting period before leave benefits kick in. The statute does not specify any specific reinstatement rights once the leave expires. Notably, Governor Schwarzenegger has frozen the proposed regulations governing implementation of this law. Look for further action and possible revisions to exempt small businesses from the paid leave requirement.

SB2 - Mandatory Healthcare Legislation

This bill, signed into law in October is not operative until 2005. However, because of the major ramifications this bill will have on many California employers, efforts are already underway to stop the bill from becoming operative.

SB2 is commonly referred to as a "pay or play" bill, because it mandates that California employers either cover 80% of their employees' (and, in some cases, their dependents') health care costs or pay a fee into a new state fund that would purchase health care for certain employees. Large California employers (200 or more employees) must comply with the Act by January 1, 2006 and provide health insurance for employees and dependents or pay a tax into a state insurance pool managed by a state agency to provide insurance for employees of employers that did not provide the required insurance.

Medium sized California employers (50-199 employees) must provide coverage for employees or pay into the same pool by January 1, 2007. Employers of between 20 and 49 employees may also be required to comply at this time, if the state enacts certain tax credits prior to January 1, 2007. All employees who work at least one hundred hours per month must be covered.

The bill provides for severe penalties against employers who attempt to avoid liability by reducing hours, turning employees into independent contractors, or engaging in other similar tactics to avoid coverage of the Act. If you want to learn more about efforts now underway to stop SB2 before it becomes operative go to www.stopthehealthtax.org.

If you have questions about your obligations under any of these laws, or want more information about how this legislation will affect your business, please contact NAWBO Member Heather M. Sager of Carlton, DiSante & Freudenberger LLP's San Francisco office. Ms. Sager can be reached at 415.981.3233 or by e-mail at [email protected].

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