When did you begin to work and why? This question can tell you a lot about your candidate’s work ethic. “The best responses are those where the candidate began doing a job such as cutting grass, shoveling snow, or working retail in high school or before,” says Bill Humbert, owner of the recruitment website RecruiterGuy.com. Research shows that an individual’s work ethic is typically developed during childhood, so early jobs are a good indicator that the candidate will be a dedicated worker. If the interviewee didn’t do paid work, ask what he or she did instead. If he spent 20 hours a week at football practice or caring for four younger siblings while his mother worked, he’ll likely have the drive you’re looking for. If he tells you he watched I Love Lucymarathons every afternoon, he’s probably not the one you want.

What is the biggest mistake you’ve
 ever made on the job? Anyone can brag about past successes, but an employee who learns from her mistakes is a valuable asset. Thus, it’s important to be able to discuss failures openly and honestly. Ask the candidate for details about what she did wrong, and encourage her to reflect on what she’d do differently next time around. If a candidate can’t come up with a response, “they are either lying or they have never taken chances — and thus are unlikely to
 help grow the business,” says Guy Smith, principal and chief consultant for Silicon Strategies Marketing.

What do you 
find most and least attractive about this position? To best fill that open position, you want a candidate who isn’t looking for a job — he’s looking for this specific job. This question will help you determine how well the candidate understands your company, what’s required in the role, and his attitude toward it. “If the 
least attractive thing is one of the job’s main functions, it probably won’t
be a good fit down the road,” says Crissy Gershey, vice president of sales and marketing for Parties That Cook, a company that stages team-building cooking parties for Fortune 500 companies.

How many windows are there in New York City? Sara Schoonover, vice president of the legal service TicketKick, asks this question to potential employees, knowing that they can’t answer it on the spot. However, their responses provide valuable insight into how they approach difficult questions. “It gives 
the interviewer a way to see how the candidate deals with [solving] problems,” she says. “Did they
 attempt to figure it out at all, or did they immediately give up?” These types of questions are legendary in Silicon Valley for helping to measure how well candidates think on their feet.

by Kathryn Hawkins

Menendez v. Halliburton, Inc.

In late 2005, Anthony Menendez confidentially filed a complaint with the Securities and Exchange Commission (SEC) stating concerns about Halliburton, Inc.’s (the Company) alleged accounting practices.  In early 2006, he e-mailed a complaint to the Company’s internal audit committee raising essentially the same issues and he included his name and contact information in that message.  The Company’s Assistant General Counsel allegedly forwarded the complaint to internal audit committee members, the General Counsel and Chief Financial Officer.  The SEC subsequently informed the Company that it was opening an investigation into its accounting practices.  Shortly thereafter, the General Counsel allegedly informed several managers by e-mail that the SEC “opened an inquiry into the allegations of Mr. Menendez.”  The Chief Accounting Officer also allegedly passed on this e-mail to members of Menendez’s department.  Menendez then took a paid administrative leave, and resigned before he was scheduled to return.

Menendez filed suit under Section 806, alleging that the Company retaliated against him because of his complaints to the audit committee and the SEC, stressing that the Company violated his expectations of confidentiality by identifying him as a whistleblower.  The ALJ dismissed Menendez’s complaint, finding that he failed to demonstrate that the Company had taken adverse actions against him.  The ARB, however, found that the ALJ erred in finding that Menendez did not suffer an adverse action.

The ARB’s decision principally focused on whether Menendez suffered an adverse action.  It initially noted that Section 806 “explicitly proscrib[es] non-tangible activity … bespeaks a clear congressional intent to prohibit a very broad spectrum of adverse action against SOX whistleblowers.”  Further, although the ARB recognized that the Supreme Court’s landmark decision in Burlington Northern & Santa Fe Railway Co. v. White, 548 U.S. 53 (2006) was instructive, it stressed that Burlington Northern involved the standard under Title VII, and concluded that Section 806 affords greater protections than Title VII.  Thus, the ARB instead relied on Williams v. American Airlines, Inc., No. 09-018 (ARB Dec. 29, 2010), which held (in the context of an AIR 21 retaliation claim), that adverse action “refers to unfavorable employment actions that are more than trivial.”  The ARB went further to conclude that Section 806’s reference to the “terms and conditions of employment” does not limit SOX’s protections to “economic or employment-related actions.”

The ARB proceeded to analyze Menendez’s claim that the Company’s outing of his identity breached a right to confidentiality under Section 301 of SOX, which requires publicly-traded companies to establish procedures for confidential, anonymous submissions of employee complaints.  The ARB found that Section 301 “effectively establishes a ‘term and condition’ of employment within the meaning of Section 806’s whistleblower protection provision,” and concluded that outing Menendez as a whistleblower thus constituted an adverse action.  The ARB ultimately remanded the case for a determination of causation issues.

Kim v. The Boeing Co.

Michael Kim was as a Business Analyst tasked with consolidating cost data for The Boeing Company’s (the Company) financial statements.  From December 2006 through spring 2008, Kim complained of alleged financial irregularities to his managers and director, the Company’s ethics office, and the Senior Vice President of Internal Governance.  The Company investigated his complaints and found that his allegations were unfounded.  In November 2007, Kim told the Company’s Equal Employment Opportunity representative that he was being retaliated against and that his work environment became “incrementally more hostile and appeared designed to discourage him from pursuing his concerns about SOX non-compliance.”

In August 2008, Kim’s manager instructed him to transfer job duties with his co-worker due to concerns with his performance.  Kim refused and was suspended for insubordination.  He took a medical leave and the Company informed him that he would be terminated from his position immediately when he returned to work.  While on leave, and before he was terminated, he was selected for layoff in a reduction-in-force.  Kim filed suit under Section 806, alleging that the threatened termination and ultimate layoff were retaliatory.

The court initially noted that the ARB’s decision in Sylvester did not abrogate the Ninth Circuit ruling in Van Asdale v. International Game Tech., 577 F.3d 989 (9th Cir. 2009), that an employee’s disclosures must “definitively and specifically relate to one of the six listed categories of fraud or securities violations listed in 18 U.S.C. §1514A(a)(1)” (emphasis added).  Driving this point home, the court stated that “[t]he Ninth Circuit Court of Appeals has joined other circuits in adopting this ‘reasonable interpretation of the statute.’” (citing Van Asdale, 577 F.3d at 997).

The court’s decision, however, ultimately focused on issues of causation rather than protected activity.  More specifically, the court granted the Company summary judgment because it established that it would have terminated Kim’s employment for insubordination regardless of whether he engaged in protected activity.  In so ruling, the court noted that Kim was warned that he would be discharged if he refused to comply with his manager’s order that he transition to the new position.  Moreover, the court emphasized that the transition would not have changed his compensation or benefits.

Implications

The ARB’s decision in Menendez is a substantial departure from the standard the ARB and federal courts have applied in determining whether an employee suffered an adverse employment action.  And the ARB’s novel ruling that an employee’s ability to file a complaint anonymously pursuant to Section 301 of SOX amounts to a term and condition of employment illustrates the risk that this new standard may be applied to yield liberal results.  It remains to be seen whether federal courts will defer to this new standard.

Moreover, the Kim court’s statement that the ARB’s Sylvester decision did not abrogate the federal appellate court decisions embracing the “definitively and specifically” test for whether conduct constitutes protected activity is noteworthy.  It reflects a lack of deference to the ARB’s recent decisions that are at odds with established lines of federal decisions, and it is possible that other federal courts will take the Kim court’s lead.  The Kim decision also is consistent with a trend of federal courts granting employers summary judgment in SOX whistleblower cases on causation grounds.

By: Steven J. Pearlman, Dawn Mertineit and Rachel S. Urquhart

Inasmuch as the resigning employee has a duty of loyalty to the enterprise by which she is still employed, a garden leave provision may compel the resigning employee to refrain from advising customers as to the identity of her prospective employer.  Even if that is not the case or the resigning employee breaches that obligation through some form of “off the record” communication, the enterprise has a better opportunity to maintain business than is the case in the ordinary restrictive covenant setting because the resigning employee remains in suspense and not immediately settled in at her new employment.  While there may be situations in which a customer chooses to redirect business to the resigning employee’s prospective employer pending the resigning employee’s arrival, more often than not a customer will be reluctant to put its business in the care of complete strangers when the familiar face upon which it has relied is absent.  Instead, customers will be more likely to stick with the company for which the resigning employee worked, which has some familiarity with the customer, and which has demonstrated a commitment toward transition of the customer to one of the resigning employee’s colleagues.

The other key instance in which a garden leave clause makes sense is when a manager or executive has familiarity with the company’s strategic plans.  Although the higher salary that managers or executives earn can be a deterrent to using garden leave clauses, it makes sense to sideline a manager or executive despite the substantial cost of doing so if that delay in her commencement of employment with a competitor can be the difference between the company’s success and failure in the marketplace.  Although former personnel are bound by a duty of loyalty to refrain from disclosing the company’s confidential, proprietary information, common sense suggests that this is one of the greatest perils of executive turnover.  Moreover, as we previously discussed here, in most jurisdictions, there are considerable obstacles to enjoining competition by way of the inevitable disclosure doctrine.  As a result, a garden leave clause may be the best tool for delaying a competitor from availing itself of a resigning employee’s knowledge and expertise.

By Jedd Mendelson

At issue are critical issues of interpretation that plague California businesses daily, and have sparked literally thousands of lawsuits, most brought as class actions seeking to recover the one hour “premium pay” owed for every missed meal or rest period.

• What does it mean to “provide” an uninterrupted 30 minute off-duty meal period—is it sufficient to make that meal period “available” to the employees and allow the employee to decide whether to take that time off, or must the employer “ensure” that the employee in fact did no work for 30 minutes?
• When must that meal period be taken to be legally compliant—could Brinker require employees to take that meal period within the first two hours of their shifts so they would be available to service customers during busy periods?
• “Must a meal period be provided every five hours? If an employee takes an early meal period after the second hour, would the employee be entitled to two meal periods in one eight-hour shift?”
• Must a rest period be offered within the first four hours of a shift, or could Brinker delay the rest period until after 4 hours had been worked?
• Must that rest period be offered before the meal period is made available?

What Does It Mean to “Provide” a Meal Period?

Counsel for the employees, Kimberly Kralowec, argued that California law protects employees by requiring affirmative steps to be taken by the employers to ensure that work stops for the required 30 minutes for meal periods. She was immediately pummeled with questions by most of the justices regarding this position, particularly the practical effect on both employees and employers. A majority of the court seemed inclined to interpret the statutes and wage orders to give employees the flexibility to decide whether to work through meal periods.

Justice Goodwin Liu asked plaintiffs’ counsel, “isn’t the hallmark of a meal period that the employer suspends control? Shouldn’t the employee be allowed to work if he wants?” When plaintiffs’ counsel responded, “no, the employee can’t work; the employer exercises control over the employee to prevent the employee from working,” Justice Liu followed up by asking “isn’t this coercive? Isn’t the most worker-friendly interpretation that the employee can do what he or she wants?” Plaintiffs’ attorney disagreed.

Justice Kennard similarly inquired “how does the employer enforce that standard? Isn’t that tantamount to an “ensure” standard? Why not give the employee the flexibility?” Justice Baxter asked how it could be “protective” of the employee to require the employer to discipline or terminate the employee if that employee disregards the employer’s instructions and works during a meal period? Justice Werdegar skeptically asked plaintiffs’ counsel, “you’re saying in order to protect the employee, if the employee freely chooses to work he should be disciplined?” Plaintiffs’ counsel responded, “yes,” because the off-duty meal period is mandatory, the employer is in control and therefore should discipline the employee if he or she works during the meal. This standard, Ms. Kralowec contended, is the same as with overtime, where an employee can be fired for working without authorization but still must be paid.

Defense counsel Rex Heinke argued that an employer has an affirmative duty to provide an opportunity to take a 30-minute meal period relieved of all duty, but agreed with Justice Kennard that the statutory language provides some flexibility because the employee decides whether to take that time as an off-duty period.

When Must a Meal Period Be Provided?

Another issue raised by this appeal is when the employer must provide a meal period—in the middle of the shift or anytime within the shift? Brinker employees did not necessarily wait until the middle of their shifts to take a meal period and thus might work more than five hours before receiving a second meal period or ending their shifts. Plaintiffs contended that Labor Code section 512 requires employees to be provided a meal before the end of the fifth hour and at least once every five hour “work period.”

Justice Kennard interpreted the plaintiffs’ argument as providing no flexibility on this issue, summarizing that “after five hours you stop work.” She read a long passage from a Labor Commissioner’s hearing in which restaurant workers, truck drivers, nurses and other employees objected to being forced to take meal breaks by the end of the fifth hour. She thus seemed sympathetic to Brinker’s position that meal periods can be offered anytime within the shift.

Brinker’s attorney argued that the wage order does not say that an employee earns a meal period for each consecutive five hours of work. The statute says only that those employees working “more than 10 hours per day” are entitled to two meal periods, and that plaintiffs’ interpretation renders the language requiring a second meal after ten hours a day “mere surplusage.” The Industrial Welfare Commission, moreover, specifies that rest periods shall, insofar as practicable, be offered in the middle of the work period, but makes no similar requirement for meal periods, except in the wage order governing the entertainment industry. To the extent the Wage Orders require meal periods for every five hours of consecutive work, even if the Wage Order would give employees “greater protections”—that interpretation conflicts with the Labor Code and should be disregarded, according to Brinker’s attorneys.

Justice Liu, however, differed with that interpretation, contending that the language of the Wage Order instead means that after any work period of five hours—including one taken after a 30-minute meal—gives the employee the right to a meal period, even a second meal period in an 8- or 9-hour day. For instance, if the employee started work at 8 a.m., took a meal period from noon to 12:30 p.m., and then worked until 6 p.m., he would be entitled to a second meal because he worked more than 5 hours after lunch. Mr. Heinke responded that the commission that issued the wage orders specifically deleted language that would have so required, and adopted the words “per day” to specify the obligation as to provide one meal period per day unless the employee worked 10 or more hours in that day. Since the other justices did not offer an opinion, it is unclear which way the court will go on this issue.

Rest Periods

The parties’ positions were just as much at war with respect to the interpretation of the employer’s obligation to authorize and permit rest periods. Plaintiffs in their briefs characterized the court of appeal’s ruling as entitling an employee working an eight hour shift to only one rest break because the first rest break would be granted only “after” the first four hours of work. Brinker retorted that the appellate court found that such an employee would be entitled to two rest breaks in one eight-hour period.

In oral argument before the California Supreme Court plaintiffs focused on their contention that Brinker’s policies discouraged or impeded employees from taking rest breaks. Brinker never paid the one hour’s wage to any employees, never conducted a compliance audit, and did nothing to determine or monitor compliance, they argued. Plaintiffs claimed that Brinker’s policies impeded, frustrated or dissuaded employees from taking rest breaks because their tips were not pooled, so they would lose tips when they took rest breaks. Justice Corrigan inquired whether plaintiffs were arguing that the employer “must” use a tip-pooling policy, and plaintiffs’ counsel responded, no, but the court erred in not allowing plaintiffs as a class to challenge the practice of penalizing employees who took rest breaks. Justice Liu seemed incredulous, asking why can’t the employer structure tips as it chooses, and how is this unlawful? Plaintiffs responded that Brinker’s practice of denying tip pooling created a “coercive atmosphere” that in their view violated the Labor Code and the Wage Orders.

Class Certification

Equally important given the flood of class actions being brought, the California Supreme Court has been asked to decide some difficult and important issues involving the standards for certifying classes alleging missed meal and rest periods, particularly what evidence can establish liability on a class-wide basis:

• Did individual issues predominate over common issues, thereby precluding class certification?
• Could Brinker’s meal policy coupled with records of workers’ shift lengths establish violations of Labor Code section 226.7, supplemented with representative employee evidence and survey/expert testimony—even assuming that meal periods only had to be “made available” to employees?
• Could plaintiffs establish liability for rest period violations through common corporate policies, corporate time records, representative employee testimony and/or survey evidence?
• Did plaintiffs’ expert survey and statistical evidence prove common issues sufficient to support class certification?
• Did the appellate court reweigh the evidence in overturning class certification?

The trial court certified a class back in 2006, finding that a common legal question of whether Brinker must force employees to take meal breaks predominated despite the individualized questions Brinker raised to defend against a finding of liability. The appellate court reversed, and plaintiffs now seek to reinstate that class.

Unfortunately, the parties did not have sufficient time to address these issues in oral argument. Plaintiffs’ counsel did argue that class certification was appropriate based on what he characterized as common issues regarding Brinker’s asserted policies or practices to dissuade, impede or discourage taking rest breaks. Justice Liu asked how rest periods could be susceptible to class treatment when the employer is not required to keep records showing that they were in fact taken, particularly without a written policy that proved that rest periods were denied or impeded. Justice Werdegar followed with her own question that suggested that she agreed that at least this issue was amenable to class certification. Justice Liu returned to this issue by challenging plaintiffs’ counsel as having no basis to show that Brinker acted unlawfully if it allowed each waiter to keep his/her own tips rather than pooling them.

We now will await the court’s decision, due out by early February 2012.

By: Alison Hightower

Credit Check

AB 22 prohibits employers and prospective employers, not including certain financial institutions, from obtaining and using consumer credit reports (credit information) about applicants or employees.

The prohibition does not apply to “managerial positions,” defined as those who qualify for the executive exemption from overtime. This exception reinforces the need to make the correct exempt/nonexempt classification at the time you decide to recruit for an open position.

The prohibition against obtaining and using credit reports also does not apply to the following:

• Law enforcement positions and positions for which the information is required by law
• Positions that involve regular access (other than in connection with routine solicitation and processing of credit card applications in a retail establishment) to bank or credit card information, Social Security numbers, and date of birth
• Positions in which the person is, or would be, a named signatory on the employer’s bank or credit card account, or authorized to transfer money or enter into financial contracts on behalf of the employer
• Positions that involve access to confidential or proprietary information, as defined
• Positions that involve regular access to cash totaling $10,000 or more of the employer, a customer, or client during the workday

Pregnancy Disability Leave

SB 299 requires all employers with five or more employees to continue to maintain and pay for health coverage under a group health plan for an eligible female employee who takes Pregnancy Disability Leave (PDL) up to a maximum of four months in a 12-month period. The benefits are at the same level and under the same conditions as if the employee had continued working during the leave period.

Under current law, employers were only required to provide benefits for pregnancy leave to the same extent and for the same length of time as they would for other temporary disability leaves. If the employer was covered by the federal Family and Medical Leave Act, it had to provide continuing coverage during the twelve weeks of FMLA leave.

The new law requires group health insurance continuation coverage for all employers with five or more employees regardless of how they treat other temporary disability leaves and regardless of FMLA coverage. Employers should review their policies to ensure compliance with this new law.

Willful Misclassification of Independent Contractors

SB 459 provides new penalties of between $5,000 to $25,000 for the “willful misclassification” of independent contractors. Willful misclassification is defined as: “avoiding employee status for an individual by voluntarily and knowingly misclassifying that individual as an independent contractor.”

The law also imposes joint liability on non-attorney outside consultants who knowingly advise an employer to treat an individual as an independent contractor to avoid employee status.

Written Commission Agreement

AB 1396 requires employers who have commission pay arrangements to put those agreements into a signed written contract. The written contract must set forth the method by which the commissions will be computed and paid. If the contract expires but the parties keep working under the expired contract, the contract terms are presumed to remain in effect unless superseded by a new contract or the employment relationship is terminated. The bill is effective January 1, 2013. Employers have the entirety of 2012 to bring their commission agreements into compliance.

Notice of Pay Details

AB 469 requires employers to provide nonexempt employees, at the time of hire, a notice that specifies:

• The rate of pay and the basis, whether hourly, salary, piece commission or otherwise, including any overtime rate
• Allowances, if any, claimed as part of the minimum wage, including meal and lodging allowances
• The regular pay day designated by the employer as required under the Labor Code
• The name of the employer, including any “doing business as” names
• The physical address of the employer’s main office or principal place of business and any mailing address, if different
• The telephone number of the employer
• The name, address and telephone number of the employer’s workers’ compensation carrier

The law also requires notice of any other information the Labor Commissioner deems material and necessary. The Labor Commissioner is to provide a template.

If there is any change to the information in the notice, the employer must notify each employee, in writing, within seven calendar days of the changes, unless such changes are elsewhere reflected on a timely wage statement or other writing required by law.

The new law only applies to nonexempt employees, which again highlights the need for properly classifying employees at the time of hire.

This legislation also increases penalties for wage violations and makes further changes regarding collection of such penalties, including an increase in the statute of limitations.

Organ and Bone Marrow Donor Leave

SB 272 clarifies the implementation of California’s organ and bone marrow donor leave law (Labor Code sections 1508-1512). Existing law provides up to 30 days of leave in a one-year period for organ donation and up to five days of leave in a one-year period for bone marrow donation.

The new legislation clarifies that the days of leave are business days, not calendar days, and that the one-year period is measured from the date the employee’s leave begins. Existing law states that employers can require use of sick and vacation leave, but does not mention PTO. The new legislation clarifies that employers can require the use of a specified number of earned but unused days for paid time off (PTO).

Genetic Information

SB 559 amends the Fair Employment and Housing Act (FEHA) to state that employers are prohibited from discriminating against employees on the basis of genetic information. The legislature noted that the range of protection provided by the federal Genetic Information Nondiscrimination Act (GINA) is not complete for California.

Genetic information is defined as information about any of the following:

• The individual’s genetic tests
• The genetic tests of family members of the individual
• The manifestation of a disease or disorder in family members of the individual

Genetic information includes: any request for, or receipt of, genetic services, or participation in clinical research that includes genetic services, by an individual or any family member of the individual. Genetic information does not include information about the sex or age of any individual.

This prohibition against discrimination on the basis of genetic information is in addition to the existing state law prohibiting discrimination based on a medical condition, including a genetic characteristic.

Gender Expression

AB 887 amends the Fair Employment and Housing Act to further define “gender” to include both gender identity and “gender expression” and to make clear that discrimination on either basis is prohibited. Current law only uses the term gender identity. AB 887 also amends Government Code section 12949 relating to dress codes to include that an employee must be allowed to dress consistently with both the employee’s gender identity and gender expression.

“Gender expression” is defined as “a person’s gender-related appearance and behavior whether or not stereotypically associated with the person’s assigned sex at birth.” This definition is not a change from existing law relating to gender identity.

E-Verify

AB 1236 relates to the E-verify program; a federally created program that allows employers to use an Internet-based system to electronically verify the employment eligibility of newly hired employees. E-Verify compares Form I-9 documentation against federal government databases to verify employees’ employment eligibility.

AB 1236 allows employers to continue to choose to use E-Verify, but prohibits California state agencies and local governments from passing mandates that require employers to use E-Verify.

Several cities in California passed local ordinances requiring the use of E-Verify in certain circumstances. For example, a Mission Viejo city ordinance requires the city and certain employers with city contracts to verify the eligibility of new employees through E-Verify. This new law prohibits such state or local mandates, unless required by federal law or as a condition of receiving federal funds.

Interference With Rights Under Leave Laws

AB 592 adds language to the California Family Rights Act (CFRA) and the Pregnancy Disability Leave law (PDL) that makes it unlawful to interfere with or in any way restrain the exercise of rights under these laws. This added language should not be a change to existing employer obligations since this is already a requirement under the federal Family Medical Leave Act.

Administrative Penalties

AB 240 allows an employee that alleges a minimum wage violation to recover liquidated damages pursuant to any complaint brought before the Division of Labor Standards Enforcement. Existing law allows such damages in any complaint before a civil court, but not in an administrative proceeding before the Labor Commissioner. This new law allows the Labor Commissioner to also award such damages. Under the new liquidated damages provision, the employee will be entitled to recover an amount equal to twice the wages unlawfully unpaid, plus interest.

Wage Penalties

AB 551 increases the maximum penalty from $50 to $200 per calendar day for each worker paid less than the determined prevailing wage and increases the minimum penalty from $10 to $40 per day for violations of prevailing wage obligations. These obligations apply to certain state or federal contracts and generally require a set wage that is significantly higher than minimum wage.

It also increases the penalty from $25 to $100 per calendar day, per worker, against contractors and subcontractors that fail to respond to a written request for payroll records within 10 days.

Insurance Non-Discrimination Act

Existing California law requires health care service plans and health insurance policies to provide group coverage to the registered domestic partner of the employee or insured equal to the coverage provided to the spouses of employees. SB 757 closes an existing loophole and prevents employers that operate in multiple states from discriminating against same-sex couples by not providing the same insurance coverage for domestic partners as they do for spouses.

The new law provides that every group health care service plan contract and every group health insurance policy that is marketed, issued, or delivered to a California resident is subject to the requirement to provide equal coverage to domestic partners as is provided to spouses, notwithstanding any other provision of law. Under the new law, even if the employer’s principal place of business and majority of employees are located outside of California, no policy or certificate of health insurance marketed, issued or delivered to a California resident shall discriminate between spouses or domestic partners of a different sex and spouses or domestic partners of a same sex.

A willful violation of this provision by a health care service plan is a crime.

State Contracts – Gender or Sexual Orientation Discrimination

SB 117 outlaws the state of California from entering into contracts of more than $100,000 with companies that discriminate against the employees on the basis of gender or sexual orientation with regard to benefits. Existing law prohibits discrimination between employees with spouses and employees with domestic partners. The new law makes it clear that companies doing business with the state of California cannot deny equal benefits to same-sex spouses.

Apprentice Programs

SB 56 changes the audit requirements for apprenticeship programs. Currently, the Division of Apprenticeship Standards within the Department of Industrial Relations is required to randomly audit all apprenticeship programs during each five-year period to ensure compliance with specified requirements, including industry-specific training criteria. This new law eliminates the mandate of random audits during five-year increments, and instead directs the Division to conduct audits of apprenticeship programs generally. It also creates requirements for applications for building and construction trades programs for approval of a new or expanded apprenticeship program.

Safe Lifting – Hospitals

AB 1136 provides that general acute care hospitals must maintain a safe patient handling policy for patient care units, including trained lift teams or training in safe lifting techniques for staff. The safe patient handling policy must be kept in accordance with the California Occupational Safety and Health Act and should be part of the Injury Illness and Prevention Program (IIPP) of these specific employers.

Farm Labor Contractors – Wage Notices

AB 243 amends Labor Code section 226 to expand the information that must be included on pay statements, but only for farm labor contractors. Employers that are farm labor contractors must now disclose on the itemized payroll statement furnished to their employees, the name and address of all legal entities (for example other growers or other farm labor contractors) that secured the employer’s services. The bill provides that this listing would not create any legal liability on the part of the legal entity.

Agricultural Labor Relations

SB 126 affects certification of bargaining representatives for agricultural employees. Existing California law prohibits agricultural employers from engaging in unfair labor practices with regard to agricultural employees electing their labor representatives. Under current law, the Agricultural Labor Relations Board (ALRB) can refuse to certify an election if it determines that employer misconduct affected the election result.

The new law, SB 126, provides that if the ALRB finds employer misconduct that “in addition to affecting the outcome of the election, would render slight the chances of a new election reflecting the free and fair choice of employees,” then the ALRB can certify the labor union as the exclusive bargaining agent for employees.

Workers’ Compensation Legislation

The governor signed five workers’ compensation bills that were supported by CalChamber.

• AB 335 – Lowers Frictional Costs in Workers’ Compensation — Brings an estimated savings of $42 million to the workers’ compensation system by requiring the workers’ compensation administrative director (AD) to work with the Commission on Health and Safety and Workers’ Compensation (CHSWC) to develop regulations regarding notices to injured workers; requires AD and CHSWC to develop and make accessible a booklet written in plain language about the workers’ comp claims process; streamlines and simplifies other notices to employees.
  The new law also states that workers’ compensation notices posted by employers must now include the website address and contact information that employees may use to obtain further information about the workers’ compensation claims process and an injured employee’s rights and obligations, including the location and telephone number of the nearest information and assistance officer. The administrative director is required to make available on the department’s website informational material regarding the workers’ compensation claims process, written in plain English.
• AB 378 – Lowers Pharmaceutical Costs: Lowers workers’ compensation costs by establishing guidelines for dispensing compound drugs, the circumstances under which those drugs would be covered and the reimbursement amount, and removes the incentives for physicians to refer patients to pharmacies in which the physician or physician’s family has a financial interest.
• AB 397 – Ensures Contractors Have Coverage: Seeks to address the underground economy problem by singling out contractors that do not have workers’ compensation coverage but requiring contractors that are exempt from having coverage at the time they are licensed to certify they are still exempt or have gotten coverage at the time of their license renewal.
• AB 1168 – Contains Workers’ Compensation Costs: Lowers costs for employers and insurers by establishing a fee schedule for vocational experts’ services.
• AB 1426 – Streamlines Workers’ Comp System: Streamlines the workers’ comp process and eliminates duplicative bureaucracy and inconsistency by eliminating the court administrator position.

The governor also signed a workers’ compensation related bill that the CalChamber took no position on:

• AB 228 – Out-of-State Workers’ Compensation Coverage: Amends California Insurance Code section 11780.5 to authorize the State Compensation Insurance Fund (SCIF) to provide workers’ compensation coverage to a California employer whose California employees temporarily work outside the state and whose injuries while performing out-of-state work might lead to workers’ compensation liability in some other state.
  Under existing law, SCIF could rightfully deny coverage for out-of-state workers’ compensation claims, creating the risk of personal injury lawsuits by employees as a result of their employer not having workers’ compensation insurance coverage in place for such injury claims. The new law expands coverage through partnerships between SCIF and other qualifying carriers, who insure workers’ compensation risks in California, and the other states where the California employees are temporarily working.

DFEH Procedural Regulations

Effective October 7, 2011, the Department of Fair Employment and Housing (DFEH) has instituted new regulations relating to procedures for filing, investigating and processing discrimination and harassment claims. DFEH is the state agency charged with enforcing the state Fair Employment and Housing Act and handling complaints of discrimination and harassment. Overall, the regulations make it easier for claimants to file their complaints and initiate a DFEH investigation.

For example:

• The statute, as written, requires that a complaint filed with the DFEH be “verified.” The new regulations do not require the claimant to sign the complaint. Instead, the complaint can be signed by the claimant’s attorney or other designated representative.
• The DFEH will accept an unsigned complaint if neither the claimant nor an authorized representative can sign it before the statute of limitations expires. The Fair Employment and Housing Commission, which hears cases brought before it by the DFEH, objected to this regulation on the ground that it contradicts the statutory requirement, but the DFEH disagreed and issued the regulation.
• The new procedural regulations allow for liberal construction of complaints.
  • For example, if a claimant brings a complaint alleging only discrimination, but the DFEH believes the facts could support retaliation, the DFEH will construe the complaint to allege both discrimination and retaliation even though the claimant did not bring any such claim. As a result, it will be harder for employers to dismiss claims on the ground that the employee never raised the claim before the DFEH.
• The new procedural regulations allow the DFEH to accept complaints that appear untimely on their face and investigate whether the complaint actually was brought within the statute of limitations. This makes it easier for claimants and less likely that employers can have the claim dismissed at an early stage.

Visit the DFEH website at www.dfeh.ca.gov for more information on the regulations.

Copyright: HRC/HR California

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