Articles

2010 California Employer Update

January 20, 2010

FEDERAL LAWS

Genetic Information Nondiscrimination Act

On November 21, 2009, the Genetic Information Nondiscrimination Act (GINA) became effective.  GINA applies to employers of 15 or more employees, and makes it illegal to discriminate against applicants or employees on the basis of genetic information.  The law also limits an employer’s acquisition and disclosure of such genetic information.

Genetic Information can include (1) an applicant’s or employee’s genetic tests, such as analysis of DNA or chromosomes that detects genotypes, mutations or chromosomal changes; (2) the genetic tests of an applicant’s or employee’s family members; or (3) the manifestation of a disease or disorder in an applicant’s or employee’s family members.

Genetic Information does not include medical information about an applicant’s or employee’s manifested disease, disorder or pathological condition.  Such information may, however, be protected under other laws such as the Americans with Disabilities Act (ADA) or the California Medical Information Act (CMIA).

GINA prohibits:

  • Intentional discrimination on the basis of an applicant’s or employee’s Genetic Information in any aspect of employment;
  • Harassment due to or based on an employee’s Genetic Information;
  • Retaliation against an applicant or employee for opposing discrimination due to or based on Genetic Information;
  • Acquisition of Genetic Information with respect to an employee or an employee’s family member, unless an exception applies.

There are many ways employers may unintentionally acquire Genetic Information.  GINA does not prohibit the acquisition of Genetic Information in the following situations:

  • Where an employer inadvertently acquires Genetic Information, such as overhearing an employee talking about a family member’s illness;
  • Where an employee requests time off to care for a family member with a serious health condition, and discloses Genetic Information while going through the family medical leave certification process;
  • Where an employee discloses Genetic Information as part of a wellness program offered by the employer, where participation is voluntary (and other conditions are met);
  • Where an employee discloses Genetic Information through a program that monitors the biological effects of toxic substances in the workplaces (provided defined conditions are met).

Employers must keep any Genetic Information they receive or acquire in a separate, confidential medical file.  This information must not be kept in the employee’s regular personnel file.  It is unlawful for an employer to disclose any Genetic Information about applicants or employees except under very limited circumstances.

Applicants or employees must file administrative charges with the Equal Employment Opportunity Commission before pursuing civil litigation.  GINA makes available the remedies and enforcement procedures prescribed under Title VII of the Civil Rights Act of 1964 and the Americans with Disabilities Act.

DOD Bill Expands Federal COBRA

The American Recovery and Reinvestment Act (ARRA) expanded an employer’s obligations under COBRA.  ARRA put into place a subsidy program under which employers who are covered by COBRA were to (1) identify employees involuntarily terminated during the period of September 1, 2008 and December 31, 2009; (2) reduce the COBRA premium for eligible individuals and their eligible dependents by 65%; (3) extend the COBRA election period for eligible employees who did not enroll in COBRA prior to February 17, 2009, and notify these employees that they can now enroll in COBRA at reduced rates; and (4) update their COBRA notification and election forms.

On December 19, 2009, Congress passed the Fiscal Year 2010 Department of Defense (DOD) Appropriations Act (the “DOD Bill”), and President Obama signed it into law the same day. 

The DOD Bill extends and expands the COBRA subsidy program that was enacted under ARRA as follows:

  • The period during which employers must subsidize 65% of COBRA premiums is expanded from nine to fifteen (15) months.
  • The eligibility period, originally set to expire on December 31, 2009, has been extended to February 28, 2010.
  • Those eligible individuals whose subsidy period expired on November 30, 2009 now have a retroactive period of sixty (60) days to receive payment of premiums.
  • Employers are to provide a special notice outlining these changes within sixty (60) days to all eligible individuals who applied for COBRA on or after October 31, 2009, or those who were terminated after October 31, 2009.
  • The DOD Bill clarifies ARRA’s COBRA subsidy program to note that eligibility and notice are based upon the timing of the qualifying event.

The DOD Bill also expands unemployment benefits.  Specifically:

  • The end date by which individuals may apply for Federal Emergency Unemployment Compensation (EUC) is extended to February 28, 2010 (from the original end date of December 31, 2009).
  • The period during which individuals may claim and be paid EUC is extended from May 31, 2010 to July 31, 2010.
  • The period during which individuals may qualify for the Federal Additional Compensation (FAC), the $25 weekly benefit amount added to state and federal unemployment compensation, is extended from the current end date of January 1, 2010 to February 28, 2010, with weekly payment provided during the phase-out period for weeks ending June 30, 2010 to August 31, 2010.

Small employers in California are impacted by these changes, too.  In May 2009, California’s legislature enacted AB 23, which extended ARRA to employers with fewer than 20 employees, who are not covered by COBRA, but Cal-COBRA.

STATE LAWS

Cal-COBRA Premium Assistance

AB 23:  On May 13, 2009, the Governor signed a bill which extends the federal COBRA premium subsidy (introduced by the American Reinvestment and Recovery Act (ARRA) of 2009), available to “assistance eligible individuals” (i.e., employees involuntarily terminated between September 1, 2008 and December 31, 2009).  While the federal subsidy program under COBRA covers employers with more than 20 employees, the California law requires that employees with fewer than 20 employees give notice of ARRA’s benefits.  This California bill requires health care plans and insurers to notify “qualified beneficiaries” about the premium assistance available under ARRA to subsidize Cal-COBRA coverage. 

Alternative Workweek Schedules

AB 25:  Effective May 21, 2009, the California Legislature passed and the Governor signed a bill amending the Labor Code Section 511 affecting alternative workweek arrangements.  Section 511 permits employers to propose and employees to approve alternative workweek schedules (such as a four-day, ten-hour workweek).  Prior law specified that employee approval required a secret ballot election of at least 2/3 of the affected employees in a “work unit,” but failed to define “work unit.”  The amended section 511 specifies that a “work unit” includes “a division, a department, a job classification, a separate physical location or a recognizable subdivision.”  It also specifies that it may include an individual employee if that employee otherwise satisfies the criteria of a “reasonably identifiable work unit.”  The bill also authorizes employees, with their employer’s consent, to move on a weekly basis from one work schedule to another on the adopted menu of work schedule options.

Electronic Discovery Act/Document Retention

AB 5:  This bill amended California’s Civil Discovery Act to establish procedures for the discovery of “electronically stored information.”  A party seeking production of electronically stored information may specify the format to be produced, but if no particular format is requested, the responding party may produce the information in the manner it is ordinarily kept or in a reasonably usable format.  California law now permits discovery by means of copying, testing, or sampling, in addition to inspection.  In addition, trial courts may award monetary sanctions against parties and attorneys who fail to comply with the new provisions.  The new law does not permit monetary sanctions where electronically stored information was lost, damaged, or overwritten as a result of the routine, good faith operation of an electronic information system. 

Updated Wage Withholding Tables

AB 17:  This new law requires employers to use increased wage withholding tables.  The new withholding tables took effect on November 1, 2009.  For wages paid after November 1, 2009, the bill increases the applicable withholding rates on employee wages by 10%.  The bill also increases the withholding rates on supplemental wages, stock options and bonus payments. 

Hate Crimes: Nooses

AB 412:  California’s Hate Crimes Law prohibits the display of certain symbols with the intent to terrorize other persons.  For example, the law bans the display of swastikas and burning crosses.  Effective January 1, 2010, AB 412 expands the Hate Crimes Law to prohibit the hanging of a noose, knowing it to be a symbol representing a threat to life, in certain places, including a place of employment, for the purpose of terrorizing an occupant of that place.  Violation of this law could result in imprisonment and civil fines up to $5,000 for the first offense. 

Civil Air Defense Patrol Permitted Leave

AB 485:  California law now requires employers of more than 15 employees to provide not less than 10 days’ leave per year, in addition to any leave benefits otherwise available, to those employees who are volunteer members of the California Wing of the Civil Air Patrol, and who have been duly directed and authorized to respond to an emergency operational mission.  Leave is only available if the employee has been employed for at least 90 days immediately preceding the commencement of leave.  The employee is required to give the employer as much notice as possible of the intended dates upon which the leave is to begin and end.  Upon expiration of the leave, the employer is required to restore the employee to the position he or she held when the leave began or a position with equivalent seniority status, employee benefits, pay, and other terms and conditions of employment, unless the employee is not restored because of conditions unrelated to the exercise of the leave rights by the employee. 

Confidentiality of Medical Information

AB 681:  Existing law prohibits providers of health care, health care service plans, and contractors from releasing medical information to persons authorized by law to receive that information if the information specifically relates to a patient’s participation in outpatient treatment with a psychotherapist, unless the requester of the information submits a specified written request for the information to the patient and to the provider of health care, health care service plan, or contractor.  However, existing law excepts from those provisions specified disclosures that are made for the purpose of diagnosis or treatment of a patient.  This bill amends Civil Code §56.104 to also except from these provisions disclosures that are made to prevent or lessen a serious and imminent threat to the health or safety of a reasonably foreseeable victim or victims.

Workers’ Compensation/Pre-Designation of Physician

AB 186:  Existing workers’ compensation law generally requires employers to secure the payment of workers’ compensation, including medical treatment, for injuries incurred by employees that arise out of or in the course of employment.  Former Labor Code section 4600 provided that, through December 31, 2009, an employee has the right to be treated by his or her personal physician from the date of injury if specified requirements are met, including a requirement that the physician agree to be pre-designated.  The amended Section 4600 deletes the December 31, 2009 repeal date.

Workers’ Compensation/Treatment Authorization

AB 361:  Existing workers’ compensation law authorizes an employer or insurer to establish or modify a medical provider network for the provision of medical treatment to injured employees, and to enter into contracts for the provision of medical services to injured employees with a health care organization that has been certified by the administrative director for this purpose.  This bill added Section 4610.3 to the Labor Code, which provides that an employer who authorizes medical treatment with a medical provider network or health care organization shall not rescind or modify the authorization for the portion of medical treatment that has already been provided, for any reason, even if the employer subsequently determines that the physician who treated the employee was not eligible to treat.  The employer may transfer treatment of an injured employee into a medical provider network or organization, or establish that a provider of authorized medical treatment is the primary care physician for specified purposes.

ADMINISTRATIVE DEVELOPMENTS

Division of Labor Standards Enforcement (“DLSE”) Opinion Letters

Temporary Reduction in Workweek and Salary for Exempt Employees

2009.08.19:  Reversing its 2002 opinion on the subject, the DLSE issued an opinion letter stating that employers may temporarily reduce the salaries of their exempt employees along with a matching reduction in work schedules during periods where the employer operates shortened workweeks due to economic conditions, without the presumption that such a change destroys the exempt status of those employees. 

In the new opinion letter, the DLSE stated that federal regulations and relevant federal court decisions have determined that reducing salaries of exempt employees during periods the employer used shorter workweeks due to economic conditions does not necessarily violate the salary basis test for exemption.  Nor does the Labor Code or the Industrial Welfare Commission’s wage order provisions prohibit employers from simultaneously reducing work schedules and salaries of exempt employees.

As a result, California employers may, for example, temporarily reduce employee salaries by 20 percent and implement a temporary 4-day workweek, without calling into question the exempt status of the employees.  However, the reductions must due to economic conditions, be temporary in nature, employers must not use the salary and correlating scheduled reduction to circumvent the requirement that the employees be paid their full salary in any week in which they perform work, and the reductions must be applied prospectively, not retroactively.

The full text of the opinion letter can be found at www.dir.ca.gov/dlse/opinions/2009-08-19.pdf.

Approval of Alternative Workweek Schedule

2009.03.23:  This Labor Commissioner opinion letter authorizes employers to adopt alternative workweek schedules for summer months, provided that they comply with all regulations otherwise applicable to the adoption of such schedules (i.e., election procedures, notice requirements, etc.).  In the facts presented to the Labor Commissioner, it was permissible for a manufacturing employer to adopt a summer schedule of four 9-hour days and one 4-hour day, without incurring overtime for non-exempt employees working this schedule, and to maintain a normal schedule of five 8-hour days for the rest of the year.

This opinion letter clarified the issue of whether alternative work week schedules during only a particular time of year would satisfy the requirement that the schedules be “regularly recurring,” or whether employers would have to maintain such schedules for the entire year. 

The DLSE also noted that to if the alternative workweek schedule remains the same each year after it has been properly adopted by the employer under Labor Code §511, the employer does not need to conduct further elections in following years.

The full text of the opinion letter may be found at  http://www.dir.ca.gov/dlse/DLSE_OpinionLetters.htm.

Deductions from Accrued or Banked Vacation and Sick Leave

2009.11.23: Elaborating on the California court’s dicta in the 2005 Conley v. PG&E case, this DLSE Opinion Letter addresses the issue of when an employer may deduct from an exempt employee’s vacation and/or sick leave for partial or full day absences due to either illness or personal reasons without destroying his/her exempt status.  The DLSE states that in reviewing any deductions from leave balances, it first determines whether the company had a bona fide plan, practice or policy and if such deduction is made in accordance with the plan, practice or policy.

Assuming that an employer’s policy expressly permits the application of accrued vacation and sick time for absences from work, the DLSE has detailed the rules and regulations regarding what can be used and when.  First, the employer is always obligated to compensate an exempt employee with his/her salary for any day during which the employee performs work.  Although an employer may not deduct from an employee’s salary for a partial day absence, the employer may deduct from the employee’s leave balances for a partial day absence.  An employer may deduct from an employee’s leave balances or from an employee’s pay when the employee is absent for one or more full days and such deductions will not have an adverse effect on the employee’s status as exempt. 

Where an employee is absent from work for a full day and he/she has a sufficient leave balance, the employer may, in accordance with its plan, practice or policy, deduct the time from the applicable accrued leave. 

Where an employee is absent from work for a portion of a day for personal reasons, the employer may deduct (in accordance with the employer’s policy, plan or practice) from the employee’s vacation leave balance, to the extent that there is a balance; however, once the vacation leave balance is exhausted, the employer may not deduct pay for the hours during which the employee was absent.  Where an employee is absent from work for a portion of the day due to illness, the employer may deduct (in accordance with the employer’s policy, plan or practice) from the employee’s sick leave balance (and once sick leave has been exhausted from the employee’s vacation leave balance), but may not deduct from the employee’s salary.  The important thing to remember is that an employer must ensure that the exempt employee, who works a partial day, is compensated for a full day of work.  Such compensation can be made through a combination of deductions from leave balance(s) and paid leave.

The full text of the opinion letter may be found at  www.dir.ca.gov/dlse/DLSE_OpinionLetters.htm.

Meal Periods for Hazardous Waste Drivers

2009.06.09:  In this opinion letter, the DLSE discussed the application of California’s meal period requirements to those employees who are engaged in the transportation of hazardous explosive materials.  The issue was whether truck drivers, who are prohibited by federal regulations from leaving the trucks unattended, would be so restricted that any meal period could not considered an off-duty meal period.  The DLSE concluded that the restrictions imposed upon the drivers during deliveries – not leaving the truck unattended and staying within certain visual distance of the truck at all times – were such that the employee would not be considered sufficiently relieved of all duties to have an off-duty meal period. 

The DLSE concluded that the application of the federal regulations may, in some circumstances, satisfy the requirements for an on-duty meal period: (1) the nature of the work prevents an employee from being relieved of all duty; (2) the employer and employee have agreed in writing to an on-the-job paid meal period; and (3) the written agreement states that the employee may, in writing, revoke the agreement at any time. 

The full text of the DLSE opinion letter may be found at www.dir.ca.gov/dlse/opinionletters.

Recouping Wage Overpayments

2008.11.25.-1:  The DLSE held that Labor Code section 221 does not prohibit periodic deductions for overpayment of wages provided the employee has expressly authorized in writing these deductions and the employee still receives no less than the minimum wage for all hours worked in the pay period.  In these circumstances, the employer is not reducing the standard wage but is simply implementing an agreed-upon overpayment recovery system for a readily ascertainable amount (i.e., the hours not worked).  However, the employee must give written authorization for these deductions, and merely submitting a time sheet reflecting fewer hours worked does not constitute such authorization.  Further, an employee still may not deduct prior overpayments from a final paycheck, even if the employee authorizes deductions from other paychecks.