AB 469 - Read Our Article

We've summarized AB 469 - California's Wage Theft Prevention Act in an article here. This one will require employers' attention soon.


Employer Who Sues Ex-Employee Does Not Have to "Indemnify" Ex-Employee for His Attorney Fees

Nicholas Laboratories, LLC sued its former employee, Chen.  Ultimately, the parties resolved the case. Chen sought reimbursement of his fees under Labor Code Section 2802.

Section 2802, subdivision (a), states: "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, or of his or her obedience to the directions of the employer, even though unlawful, unless the employee, at the time of obeying the directions, believed them to be unlawful."
Chen's claim was that the fees he incurred defending himsel was a business expense that arose because of my work for my former employer.

No sale.
Thus, we conclude the attorney fees incurred by Chen do not fall within the domain of section 2802. We are not persuaded that the Legislature, in drafting section 2802, intended to depart from the usual meaning of the word "indemnify" to address "first party" disputes between employers and employees. The Legislature could have specifically provided in section 2802 that attorney fees incurred defending an action by the employer were recoverable by a prevailing employee. The fact that the Legislature did not do so suggests disputes between employers and employees are subject to the ordinary rules applying to the recovery of attorney fees in California litigation.
The court also decided Corporations Code Section 317, containing another indeminification provision, does not apply to LLCs.

The case is Nichols Laboratories, LLC v. Chen and the opinion is here.


AB 469 -California Adopts NY "Wage Theft" Law

When I covered some of Governor Jerry Brown's last minute bill signings, I left out perhaps the most obnoxious new law.  That's what I get for hurrying. 

Effective 1/1/12, employers are going to have to begin complying with Labor Code Section 2810.5.  This law requires employers to provide new hires with a written notice of various items of information:

(A) The rate or rates of pay and basis thereof, whether paid by the hour, shift, day, week, salary, piece, commission, or otherwise,including any rates for overtime, as applicable.
(B) Allowances, if any, claimed as part of the minimum wage, including meal or lodging allowances.
(C) The regular payday designated by the employer in accordance with the requirements of this code.
(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 telephone number of the employer.
(G) The name, address, and telephone number of the employer's workers' compensation insurance carrier.
(H) Any other information the Labor Commissioner deems material and necessary.

The good news is that the law requires the Labor Commissioner to prepare a template and make it available.
More good news - this provision does not apply to exempt employees (although if someone claims to be "misclassified" then there will be a dispute over whether this notice was due.) So, employers may want to provide the notice to exempt employees anyway.

Mostly bad news though - If an employer makes changes to the above listed information, the employer must provide notice of the change within seven days either by providing a written amendment, a whole new notice, or via paycheck stub if that information is contained in the paycheck stub.

Naturally, even though items C and G are already covered by required posters, the law does not repeal the poster requirement.

Public employers need not worry about this because they are exempt from the requirement!
Most employees covered by a valid collective bargaining agreement also are not entitled to the notice (if they make more than 30% more than minimum wage).

This provision is contained in AB 469. This new law contains other provisions, such as increasing a variety of penalties.  It also imposes more disclosure requirements on Farm Labor Contractors.

Of significance, it increases the statute of limitations for the DLSE to collect penalties from 1-3 years. That new statute of limitations does not appear to apply to private enforcement actions, though.

Again, this applies only to new hires, but it takes effect on 1/1/12. Employers will have to put in place procedures very quickly.  However, employers already operating in New York will recognize that this new law is quite similar to a NY law enacted a year or two ago.

Yep, I can smell the number of jobs this one is going to create. At the DLSE and law firms!  OK, I kid, I kid. ::cough:::

We will have more information about this as it becomes available...

AB 469 is here.

Governor Jerry Brown's Actions on Pending Workers' Compensation Legislation

Our friends at the California Chamber of Commerce prepared a nice summary of what became of the proposed workers' compensation bills this year:  Your can find the roundup here

California Governor Brown Signs Employment Bills at Last Minute

In my last post, I said that Governor Jerry Brown vetoed a bunch of ill-conceived laws.  Well, I posted too soon, and I take that back.

On October 9, the final day he could do so, Governor  Brown signed some employment law bills that make significant changes to employment law for California employers -

AB 22 - available here.  This new law bans most employers (not financial institutions or businesses required by law to perform credit checks) from obtaining credit information about applicants or employees, except in limited circumstances.  The law does not preclude criminal background checks, references, etc. - only credit information.  It does not apply to managers covered by the executive exemption (creating another basis for liability where there is a dispute / lawsuit over misclassification).  There are a few other exceptions as well. This is a huge issue for many employers who will have to change their practices.

AB 592 - available here.  This law adds an express prohibition of  "interference" with California Family Rights Act leave, similar to what is contained in the FMLA's text.  This is not a big change.

SB 299 - available here.  This provision seems to overlap AB 592, but also requires employers to extend group health coverage to employees taking PDL for the entire four month duration of PDL.  The extension of health coverage will apply even if there is no FMLA entitlement.  Between 592 and 299, it appears that the 12-week cap on employer paid benefits that applied to combined PDL/CFRA leave is gone.  Will ERISA preempt this provision?  Does the health care reform law affect it?  Stay tuned.  If this provision holds, get ready to modify all your policies again.

 AB 1236 - available here - allows employers to choose to use E-Verify, but prohibits cities or counties from requiring private employers to do so.  So, this is not a ban on E-Verify.  Breathe. 

AB 887 - available here - further defines "gender" in a variety of laws, including the Fair Employment and Housing Act.  Here's new Section 12940(p) - which already prohibited discrimination and harassment based on "gender."  This law specifically defines "gender" some more.
(p) "Sex" includes, but is not limited to, pregnancy, childbirth, or medical conditions related to pregnancy or childbirth. "Sex" also includes, but is not limited to, a person's gender. "Gender" means sex, and includes a person's gender identity and gender expression. "Gender expression" means a person's gender-related appearance and behavior whether or not stereotypically associated with the person's assigned sex at birth.
SB 459 - Available here - This new law imposes a fine of between $5000 and $25,000, for "willfully" misclassifying someone as an independent contractor, and makes it a crime and imposes joint liability for a non-attorney consultant to advise an employer to do so.  Employers also will not be able to make deductions from contractors' pay that they would not have been able to make had the contractors been employees.  What's "willful" misclassification? 
"Willful misclassification" means avoiding employee status for an individual by voluntarily and knowingly misclassifying that individual as an independent contractor.
This is going to be big.  I wish I had one of those Drudge Report siren thingies. 

OK, that's all the valuable information I can impart for now. (There may be more bills that I missed, which I will cover later.) But I have to go to work and get ready for all these laws! 


New CA Law Requires Written Commission Agreement

Governor Brown has mercifully vetoed many of the loony ill-conceived employment law bills that the legislature passed this term. But he signed AB 1396, which is going to impose a serious burden on employers who pay employees via commission.

The new law requires employers who pay employees via commission to (1) have a written contract with the employee regarding commissions (2) include the method for calculating the commissions (3) require the employee to sign a "receipt" retained by the employer. 

Also, the contract remains in effect until a new commission plan has superseded it or employment terminates, even if the old plan expires.

Finally, the law attempts to define commission and excludes bonuses, but then includes bonuses that are a percentage of sales or profits. Now, commissions aren't percentages of profits. So, some bonuses will be included in this provision.

I predict a lot of work for SV drafting commission plans in 2012.

The law takes effect 1/1/13. The text is here. 


NLRB Poster Implementation Delayed Until 1/31/12.

Poor poster companies!  The NLRB has decided to delay implementation of the new poster. (See post here).  The new implementation date is 1/31/12.  The NLRB says the delay is due to the Whitehouse freaking out about the 2012 election? the abysmal jobless economy? lawsuits? its desire to conduct outreach and education among members of the business community.
See the press release here.

H/T Ross Runkel

Brinker!! Argument is 11/08/11

The California Supreme Court will hear arguments in Brinker v. Superior Court (see a bunch of posts here) regarding employers' obligations to provide meal periods.  Argument is November 8 in San Francisco.  I'm so excited, I need a rest period.  Docket is here.