Think Ahead! 2005 Employment Law Update

By David Goldman and Jeanine DeBacker

Despite the fiscal emergency and the numerous statewide initiatives in 2004, the California Legislature managed to find enough time to pass a number of important employment-related laws that will impose new obligations and responsibilities on California employers in 2005. The following is a brief summary of some of these laws.

Mandatory Anti-Harassment Training
Employers with 50 or more employees or independent contractors must provide two hours of sexual harassment prevention training and education to their supervisory employees. All supervisory employees as of July 1, 2005, must receive this training by January 1, 2006. If a supervisor is hired, or an employee is promoted to a supervisory position after July 1, 2005, the training must be completed within six months of hire or promotion. An employer is exempt from providing sexual harassment prevention training and education to supervisory employees that received such training and education after January 2003.

After January 1, 2006, sexual harassment prevention training and education must be provided to supervisors every two years. The training must be interactive and must be at least two hours long and cover harassment prevention, discrimination, retaliation and the remedies available to employees under state and federal law. The course must be delivered by educators or trainers with knowledge and expertise in these areas.

Employers should begin taking steps to prepare for the required training program. Employers must identify the employees who are to be considered "supervisors" and should create a tracking system to ensure that such existing supervisors, and newly hired or promoted supervisors, timely receive the initial and future training programs. Written policies and procedures should be updated to include this new training requirement.

"Sue Your Boss" Reforms
Last August 11, 2004, Governor Schwarzenegger signed into law amendments to the "Sue Your Boss" law. The "Sue Your Boss" law allows individual employees and their attorneys to bypass state agencies and sue employers for alleged violations of the California Labor Code. The "Sue Your Boss" law created immediate controversy and litigation because it allowed for penalties to be awarded for every Labor Code violation (even if the Code did not provide for monetary penalties), and the employee who sued was allowed to share in any penalty awarded by the court, plus attorneys' fees.

The amendments, effective as of the date the Governor signed the bill, create better balance and fairness to employers. Now, the courts have discretion to award lesser penalties to avoid unjust results. The amendments eliminate many of the violations for posting, notice, agency reporting and filing requirements, except those relating to mandatory payroll or workplace injury reporting, from the Sue Your Boss private enforcement law. In addition, courts now must review and approve penalties to be imposed in connection with any settlement agreement arising from a Sue Your Boss lawsuit.

The amendments also create procedural steps for certain Labor Code violations before a lawsuit can be filed. First, an employee must notify the employer and the appropriate state agency of the alleged Labor Code violation and identify the specific code provisions alleged to have been violated, and the basis to support the allegation of violation. The State agency then will have a relatively short period of time to notify the employer and employee whether it intends to investigate the alleged violation. If the agency decides it will not investigate, or no notice is provided within the required time period, only then may the employee file a lawsuit. The precise procedures and notice periods vary depending upon the type of violation that is alleged.

While the new law gives courts the discretion to reduce penalties that would be unjust, it still provides that 25% of any penalty imposed by the court will go to the employee, in addition to payment of his or her attorneys' fees. Since the penalties that exist could be substantial ($100 to $200 per employee multiplied by number of pay periods during which the violation occurred), great attention and care must be given to compliance with the provisions of California employment law. It is even more critical now that employers train managers, supervisors and other employees who are responsible for human resource and payroll responsibilities in the requirements of California law. Likewise, it is increasingly important for human resource decisions to be documented and properly maintained to avoid potentially costly litigation.

Payroll Information
The California Legislature made an effort to address issues relating to "Identity Theft" by authorizing the elimination of social security numbers on payroll statements. Existing law requires employers to give employees an itemized statement at the time of each wage payment showing the employee's name and his or her social security number, among other things. An intentional violation of this law is a misdemeanor. As of January 1, 2008, employers must adopt new payroll procedures so that only the last four digits of the employee's social security number are disclosed or an employee identification number is used instead. This legislation will minimize the opportunity that personal social security numbers could be inadvertently disclosed or accessed.

Health Plans Must Cover Registered Domestic Partners of Employees
Starting in January 2005, all insurance companies must provide coverage to the registered domestic partner of an employee that is the same as the coverage it provides to the spouse of an employee. In order to instill equality and fairness, insurance companies may require proof of registered domestic partnership status, or termination of that status, but only if it also requires such verification of marital status from the employee whose spouse is provided coverage. The new law applies to insurance policies issued, amended, delivered or renewed in California after January 1, 2005, and all group health service and group health insurance policies issued, amended, delivered or renewed on or after January 1, 2005.

Generally, employer-provided health insurance plans are covered by a federal law known as ERISA, so some uncertainty exists as to the applicability of California's domestic partner laws on employer-sponsored plans. An experienced employment attorney can advise you concerning your compliance obligations in this increasingly complex area of law.

Family Medical Leave Extended to Domestic Partners of Employees
As a reminder, starting January 1, 2005, an employee may take time off to care for the serious health condition of the employee's registered domestic partner. This change only expands the California Family Rights Act and not the federal Family Medical Leave Act (FMLA). Therefore, employers should be aware that there may be situations where an employee would be entitled to take up to 24 weeks of federal job protected leave in a year because the leave to care for a partner under California law does not run concurrently with FMLA leave. For example, an employee could take 12 weeks for their own serious health condition and then 12 weeks to care for the serious health condition of their registered domestic partner.

While this summary shows that there are several new rules for which California businesses must prepare, more changes are coming. In late December, Governor Schwarzenegger's administration proposed changes to the rules regarding meal breaks, which will be subject to debate and consideration in the coming days. Additionally, President Bush is expected to sign a law modifying the rules regarding employees on military leave.

Don't be caught off guard. A proactive approach to human resources management can save you money and headaches in the future. Wendel Rosen's employment attorneys can help you to review your current policies, comply with new and existing laws, and offer training programs for your employees. We encourage you to give us a call if you have questions regarding any of these most recent changes.