Last May, our Employment Law Commentary described the major employment bills moving through the Legislature. At the time, with a Democratic Legislature and Democratic Governor for the first time in 16 years, many thought sweeping changes would occur. While the changes are very significant, they have been tempered. Many of the bills moving through the Legislature in May have been modified and some even vetoed. Still, it was a very significant year for employment legislation. This Commentary describes the major bills that were enacted and vetoed in the employment field, including the bill that has received the most attention, the restoration of daily overtime.

Restore Daily Overtime

On January 1, 1998, the Industrial Welfare Commission (IWC) eliminated the daily overtime requirement. Now, only two years later, AB 60 overturns the IWC and restores daily overtime. As California law required prior to January 1, 1998, effective this January, employees must once again be paid time-and-a-half after 8 hours of work in one day and 40 hours in one week and double-time after 12 hours of work in one day. The bill also creates new rules and procedures for employees to vote on alternative workweek schedules, and, unlike prior law, permits alternative schedules of only 10 hours without payment of overtime. Pre-1998 alternative workweek schedules adopted under Orders 1, 5, 7, or 9 are null and void if they provided for more than 10 hours a day. 10-hour schedules adopted under these orders, however, may legally continue.

AB 60 also includes provisions unrelated to daily overtime. For instance, AB 60 allows employees, subject to employer approval, to make up hours lost due to personal obligations. In addition, AB 60 provides that in order to qualify for the executive, administrative, or professional employee exemptions, employees must not only be "primarily" engaged in exempt activities, but also earn at least twice the minimum wage. Thus, AB 60 raises the salary test to $23,920.

Allow Employees To Use Sick Leave To Care For A Child, Parent, Or Spouse

AB 109 requires all employers who provide sick leave to allow employees to use at least one-half of their accrued sick leave each year to attend to the illness of a child, parent, or spouse. Any restrictions placed on an employee's ability to take sick leave will also be applied to leave taken pursuant to this bill. The bill also prohibits employers from discriminating against employees for exercising this right.

Permit Claims For Lawful Activity Outside The Workplace

AB 1689 authorizes the Labor Commissioner to take assignments of claims for loss of wages due to employer demotion, suspension, or discharge for lawful conduct occurring during nonworking hours away from an employer's premises. Sponsors assert that the bill is intended to allow the Labor Commissioner to address demotion or discharge for activities such as circulating initiative petitions. The only remedy now is court action. However, the bill could also apply to discharge for smoking or even, it has been suggested, living with someone while unmarried. Proponents argue that the bill will reduce court congestion by providing employees with an alternative administrative remedy to recover wages.

Strengthen Cal/OSHA

AB 1127 increases both civil and criminal penalties for violation of the Cal/OSHA Act. For example, knowing or negligent violation of any standard will now be punishable by a fine of up to $5,000, incarceration in the county jail for up to 6 months, or both imprisonment and fine. Serious violations can now draw a citation from Cal/OSHA with a fine of up to $25,000. In addition, the bill provides that employers who fail to correct a violation within the time period permitted for correction shall be assessed a penalty of up to $15,000 for each day in which the violation continues. The bill also imposes vicarious liability upon employers when employees are exposed to hazards on multiemployer worksites. For example, a "non-employing" employer may be cited if employees of vendors or contractors who enter a worksite are exposed to unsafe conditions.

AB 1127 extends from 30 days to 6 months the time within which a person may file a complaint of discrimination with the Labor Commissioner. In addition, it increases the extent to which safety and health standards may be admitted into evidence and extends the period in which a violation would constitute a repeat violation from 3 to 7 years. Finally, the bill reaffirms the Occupational Safety and Health Standard Board's duty to adopt standards for ergonomics in the workplace designed to minimize the instances of injury from repetitive motion.

Move The Prohibition Of Discrimination On The Basis Of Sexual Orientation From The Labor Code To The Fair Employment And Housing Act

AB 1001 moves the provisions prohibiting discrimination on the basis of sexual orientation from Section 1102.1 of the Labor Code to the California Fair Employment and Housing Act (FEHA). Thus, allegations of discrimination on the basis of sexual orientation will now be treated similarly to other discrimination claims under FEHA. For example, individuals claiming sexual orientation discrimination will now be required to exhaust administrative remedies prior to filing suit and may be entitled to several forms of relief, including back pay, front pay or future earnings, injunctive relief, compensatory damages, punitive damages, prejudgment interest, attorneys' fees, and costs.

Strengthen The California Fair Employment And Housing Act

AB 1670 makes several amendments to FEHA. The bill extends protections under FEHA to include not only persons discriminated against because they are in a protected class, but also those discriminated against on the basis of being perceived to be in a protected class and those discriminated against for associating with a member of a protected class. The bill also extends harassment protections under FEHA to contract workers and outlaws genetic testing of both employees and job applicants. In addition, the bill provides that an employer may not refuse to provide reasonable accommodations requested by an employee, with the advice of a health care practitioner, for conditions relating to pregnancy and childbirth.

AB 1670 also expands remedial protections under FEHA. The bill increases the maximum damages that may be awarded by the Fair Employment and Housing Commission from $50,000 per aggrieved employee to $150,000. It allows courts to award the prevailing party with his or her expert witness fees in any action brought under FEHA. Finally, the bill authorizes courts hearing administrative actions under FEHA to require employers found to be in violation of the Act to conduct training regarding the requirements of the Act.

Reverse Pro-Employer Age Discrimination Decision

SB 26 rejects the decision in Marks v. Loral Corp., 57 Cal. App. 4th 30 (1997). In that decision, the court held that employers, when making termination decisions, could retain employees with lower salaries and fire those with higher salaries despite the fact that this might result in terminating older employees. The bill asserts that the decision does not affect existing law and that using salary as a basis for differentiating employees may be found to constitute age discrimination if the criterion adversely impacts older workers as a group.

Increase Unemployment Disability Benefits

SB 656 increases the maximum weekly state disability insurance benefit from $366 to $490 per week, making it equal to weekly benefits for workers' compensation temporary disability. In addition, the bill indexes state disability levels to future workers' compensation temporary disability increases. The estimated cost of the increase is $279 million between 2000 and 2001.

Limit Liability Of Organizations For Unlawful Acts Of Members During Labor Disputes And Restrict Issuance Of Injunctive Relief During Labor Disputes

AB 1268 provides that no association or organization participating in a labor dispute may be held liable for the unlawful acts of individual officers, members, or agents absent clear proof of actual participation in or actual authorization of those acts. The bill also limits the authority of courts to issue temporary or permanent injunctive relief during labor disputes. For example, a court may not issue an injunction during a labor dispute unless it hears live testimony from witnesses who are under oath and subject to cross examination. The bill also establishes that courts may not grant injunctive relief if the parties to a labor dispute have failed to make all reasonable efforts to settle their dispute through negotiation, mediation, or voluntary arbitration.

Vetoed Bills

Prohibit Use Of State Funds To Discourage Unionization

AB 442 would have prohibited employers who receive state funds from using the funds to discourage the unionization of employees. If signed, the bill would have required employers found to be in violation of the bill to keep detailed records, to file quarterly reports with the Labor Commissioner, and to certify compliance with the bill under penalty of perjury. Governor Davis vetoed the bill because he found that its recordkeeping requirements would place an unreasonable burden on businesses and because it would be difficult to verify the accuracy of employer reports.

Amend Wage Claim Process And Strengthen Penalties For Violations Of Wage And Hour Laws

AB 1652 would have revised the wage claim process administered by the Labor Commissioner and amended various wage and hour statutes. For example, the bill required employers who appeal an order or decision to post a bond, increased penalties for requiring employees to work during meal periods, and increased penalties for willful failure to maintain payroll records. In addition, the bill required employers found by the Labor Commissioner to have engaged in a pattern and practice of violating wage and hour laws to post a notice at their place of employment containing a description of the violation, a declaration that they would not engage in future unlawful acts, and the address and telephone number of the Labor Commissioner. Governor Davis vetoed the bill on the grounds that it contained excessive penalties, duplicated existing efforts, and was overly broad.

Prohibit Secret Monitoring Of Employees' Computer Records

SB 1016 provided that employers could not monitor employees' electronic mail and personal computer records without first distributing to employees the employer's workplace and electronic monitoring policies and practices which employees would be required to sign. Governor Davis vetoed the bill on the basis that today's employees understand that computers, as company property, may be monitored by employers. Thus, the bill would have placed unnecessary and costly obligations on employers and hindered an employer's legitimate need to monitor company property. Despite Davis' veto, it is a wise idea to draft and distribute such a policy prior to viewing employees' computer records.

Increase Workers' Compensation Benefits

SB 320 would have increased workers' compensation benefits by approximately 2.5% per year over a 6-year period. The bill would have also revised the process for adjudication of workers' compensation claims. Governor Davis, in his veto message, asserted that although he would support a modest increase in workers' compensation benefits, this bill "fails to meet the test of moderation" and would negatively impact California's economy.

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With an activist legislature and a Governor who will sign at least some of the bills, it is likely that next session will see continued activity on employment legislation. Copies of these bills may be obtained from any of the lawyers listed in the side bar and/or from the editor.