2010 Employment Law Update: Get Ready for the New Year
California’s fiscal crisis deterred the Legislature from taking much substantive action in the employment area this year, but a number of important employment-related laws and rulings emerged from the courts, administrative agencies and Congress that impose new obligations and responsibilities on California employers in 2010. The following is a brief summary of some of the changes.
Wage & Hour
California’s Labor Commissioner announced that under certain circumstances an employer may reduce an exempt employee’s workweek with a corresponding reduction in salary to reduce payroll expenses if the minimum exempt salary requirements are still met.
The Commissioner also confirmed that an employer may deduct from an exempt employee's leave balances due to partial day absences for vacation or sickness. It remains impermissible to deduct from salary for such absences.
Employers may implement Alternative Workweek Schedules for part of a year; for example, for the summer months.
California’s Supreme Court confirmed that commute time is generally not compensable, but that work-related activities an employee must perform before starting her commute or after she returns home may or may not be compensable, depending upon the specific work performed.
The Court also confirmed that the terms of written commission plans govern the payment of post-termination commissions and clarified how overtime must be considered when calculating formula-based bonus payments.
A lower court confirmed that tip pooling arrangements are legal, so long as the employer does not keep any of the money or disburse the tips to employees who have authority to act on behalf of the employer relating to hiring, discipline, and firing.
California’s Minimum Wage for Exempt Computer Professionals ($37.94/hour) and Licensed Physicians ($69.13/hour) is unchanged.
The Federal Minimum Wage increased in July to $7.25 per hour. (California’s minimum wage is $8.00 per hour.)
Discrimination and Retaliation
The United States Supreme Court clarified that an employee is protected from retaliation after participating in a harassment investigation. Also, in the “New Haven Firefighter Case” that was discussed extensively in the media during new Justice Sonia Sotomayor’s confirmation hearing, the Court found that a fear of litigation over an employment test that impacted one group over another did not justify the decision to throw out the test. Throwing out the test meant the successful test-takers were discriminated against.
The Lilly Ledbetter Fair Pay Act of 2009 clarifies that a pay discrimination claim is timely as long as the employee received at least one discriminatory paycheck within the filing period. This means that employees’ deadlines for filing certain claims under federal anti-discrimination laws (Title VII, ADEA and ADA) have changed.
The EEOC issued a new “Employer Best Practices for Workers with Caregiving Responsibilities” providing guidance to employers seeking to adopt flexible workplace policies. Such policies may help reduce complaints of unlawful discrimination based on family responsibilities.
In November, portions of the Genetic Information Nondiscrimination Act (GINA) took effect. Under GINA, it is illegal to discriminate against employees or applicants because of genetic information. GINA prohibits the use of genetic information in making employment decisions, restricts acquisition of genetic information by employers and other entities, and strictly limits the disclosure of genetic information. Employers should confirm their posters include GINA and should revise the EEO policies in their handbooks.
Employee Privacy
California’s Supreme Court confirmed that employees have a protected expectation of privacy in the workplace but that employers have the power, under certain circumstances, to pierce those protections.
The United States Supreme Court agreed to review a California case to determine whether a police department violated the constitutional privacy rights of an employee when it inspected his personal text messages sent and received on a government pager (and which turned out to be mostly sexually explicit and unrelated to work).
Employers should review their privacy policies, and their computer/internet/social networking policies in order to confirm the company is sufficiently protected.
COBRA Premium Assistance Extension
The COBRA premium assistance program requires employers to pay 65% of the COBRA premium for employees who suffer an involuntary termination. Legislation signed in late December by President Obama extends the period of eligibility for the COBRA premium assistance subsidy and the length of the subsidy.
The program is now effective for involuntary terminations through February 28, 2010. The termination from employment is the trigger date, not the date coverage is lost.
The subsidy period is extended from nine months to fifteen months. If an individual was previously eligible for the subsidy and used the entire nine months, he may extend the coverage at the subsidized rate for an additional six months. Such an employee is entitled to either a refund or a credit of the amount paid after the nine-month period was exhausted.
Before February 17, 2010, new notices are required to let individuals know about the extension: a notice must be sent to any individual who was eligible for the prior subsidy on or after October 31, 2009 and a notice must be sent to any individual who was eligible for the subsidy but was dropped from coverage for failure to pay the premium or who paid the full premium after exhausting the nine months of subsidy.
Leaves of Absence
In October, President Obama signed into law a bill that increases protections for families of military personnel who wish to take leave from work under the Family and Medical Leave Act of 1993 ("FMLA").
“Exigency Leave” whereby an employee may take leave because of a qualifying exigency arising out of the fact that the spouse, son, daughter, or parent of the employee is on covered active duty was formerly available only to employees whose family members were in the Reserves or the National Guard. The amendment expands the FMLA to include employees whose family members are in the regular Armed Forces. The amendments further specify that the military family member must be deployed or deploying to a foreign country for the employee to qualify for leave.
“Leave for Serious Injury or Illness” permits an employee to take a leave of absence to care for a servicemember with a serious injury or illness incurred in the line of duty while on active duty. Before the amendments, the ill or injured servicemember had to be a current member of the Armed Forces (including the National Guard and Reserves). The amendment expands coverage to employees whose family member is a veteran, so long as the veteran was a member of the Armed Forces in the preceding five years. The definition of serious injury or illness was also expanded to include conditions that predate a servicemember's active duty and that were aggravated by active duty. Employee Handbooks should be revised to reflect these changes.
Starting in January, an employer with more than 15 employees must provide at least 10 days of leave per year for voluntary members of the California Wing of the Civil Air Patrol in order for such volunteers to respond to an emergency operational mission.
California’s CFRA regulations have not yet been modified to completely track the changes made by the FMLA Regulations issued earlier this year.
And. . .
Last year, California’s Supreme Court confirmed that non-competition agreements are unenforceable. That ruling did not prohibit agreements that protect trade secrets or confidential information. This year, however, a California Court of Appeal expressed serious doubts regarding the validity of non-competition clauses under the so-called “trade secret exception” to covenants not to compete and employers should carefully review these clauses to determine if they are necessary and, if so, whether they can be carefully tailored to the facts pertinent to the agreement.
In July, California’s E-Discovery law took effect. These changes could potentially affect any employer and its maintenance, destruction and production of electronic information.
The IRS Standard Mileage Rate was decreased for 2010 to $0.50 (down from $0.505). An employer may meet its business expense obligations to employees in one of three ways: (1) the actual expense method; (2) the mileage reimbursement method (now at $0.50 per mile) or (3) a lump sum payment. We have seen an increase in the past year of claims by employees for expense reimbursement and employers should review these policies.
Federal contractors and subcontractors are required to use the E-Verify system to verify employee eligibility to work in the U.S.
The New Form I-9, revised in August 2009, contains a revised list of acceptable documents that an employee must present upon hiring. These documents must not be expired. In November, U.S. Immigration and Customs Enforcement announced plans to audit thousands of employers in order to actively deter unlawful employment practices and to uncover illegal alien workers. This is a huge increase over prior years.
More Changes Are Coming
We are monitoring federal Health Care Reform, the Employee Free Choice Act, and the potential of either a California or federal mandate for paid sick leave. We’ll keep you updated on these issues, and others, and their potential impact on you and your business.
