2010 Human Resources Law Update
Increased Penalties for Employers without Workers' Compensation
Effective January 1, 2010
California Senate Bill 313 increases the penalties against employers who fail to secure workers' compensation coverage for their employees. Under the new law, the penalty has been increased to $1,500 per employee or twice what the employer would have paid in workers' compensation premiums the previous three years, whichever is greater. While most employers would ignore this change as workers' compensation is so basic, in the event “independent contractors” are found to have been misclassified, this penalty can now become significant.
Designated Medical Treatment Under Workers' Compensation
Effective Jan. 1, 2010
Senate Bill 186 indefinitely preserves the right of employees (who properly pre-designate) to be treated by their own physician for a work-related injury. Specific requirements must be met, including the requirement that the physician agrees to be pre-designated. California employers are also responsible for tracking proper pre-designations and implementing a system of notification for front line supervisors in the event of a workplace injury.
Alternative Workweek Schedule Amendment
Effective May 21, 2009
Current California Labor Code has provided a detailed process by which employers, through an employee election, may adopt an alternative workweek schedule which can avoid daily overtime for work in excess of 8 hours. Assembly Bill X2-5 amends the Code to give employers increased flexibility in implementing alternative workweek schedules. The amendment permits employers to offer a regular schedule of five, eight (8) hour days in a workweek with daily overtime available after eight hours as one of a “menu options” offered. Further, the amendment includes a provision stating that a single employee may qualify as a “work unit”. This means that employees may now, with their employer's consent, move from one schedule option to another on a weekly basis. In order to implement an alternative workweek schedule, an employer must follow proper statutory and regulatory procedures to adopt a proper and valid alternative workweek. (SharedHR can assist California employers in selecting and implementing these alternate work week options).
Recent Opinion Permits Furlough of Exempt Employees
Effective August 19, 2009
In an attempt to clarify its stance on the furlough of exempt employees, the California Division of Labor Standards Enforcement issued a position statement indicating that employers may furlough exempt employees. (Previously under state and federal law, such a reduction in pay would have disrupted the exempt status of the worker). Now California employers may reduce an exempt worker's workweek from five to four days in an attempt to cope with significant (but temporary) economic difficulties, without losing the employees' exempt status. In addition, employers may reduce the salary of their furloughed employees, proportionately, while maintaining exempt status, as long as the reduced salary does not fall below the minimum salary rate required for exempt employees. (This amount is current two times the state minimum wage for full-time employment.
Unruh Civil Rights Act Discrimination
Effective November 2, 2009
In another patch to state law due to the economic downturn, California Senate Bill 367 clarifies that a business which offers discounts or other incentives to employees who have had their salaries reduced, been furloughed, or lost their jobs, are not engaging in “arbitrary discrimination” under the Unruh Civil Rights Act.
Recognition of Out-of-State Marriages
Effective January 1, 2010
Even while Proposition 8 is being argued in court, the implications of its passage remain the current law. Senate Bill 54 was passed to clarify California to recognize and validate same-sex marriages performed out of state before November 5, 2008. Same-sex couples who married out of state on or after November 5, 2008, will receive all the rights, benefits, and responsibilities of marriage equal to traditional marriages. The law also recognizes same-sex marriages performed in California between June 16 and November 5, 2008. The law carries many implications for employers regarding employees' healthcare plans and other employment benefits. Employers should also refer to this law in connection with handling family leave requests.
California Increases State Withholding Tax
Effective November 1, 2009
In response to the state's emergency budget crisis, Sacramento lawmakers authorized a 10% increase in the amount of taxes withheld from worker paychecks starting November 1, 2009, through 2010. In addition, the state imposed a 0.6% increase in supplemental wage withholding and a 1.20% increase on stock options and bonus payments. The withholding rates have been increased in order to accelerate tax collections by the State and to prevent under withholding by employees.
Family and Medical Leave Act Amendments Pertaining to Military Exigency Leave
Effective January 1, 2010
The 2010 National Defense Authorization Act (“NDAA”) expanded coverage for military exigency leave and military caregiver leave under the FMLA. The 2010 changes provide exigency leave coverage to the family members of a service member in the Regular Armed Forces who is deployed to a foreign country, including reservists who are on duty during deployment with the Armed Forces to a foreign country or are notified of an imminent call to active duty. The provisions also expand caregiver leave to family members assisting veterans undergoing therapy, treatment, or recuperation for a serious injury or illness incurred within a five year window before leaving military service.
Defense Appropriations Act Limits Arbitration of Employment Claims
Effective December 19, 2009
This new legislation includes the "Franken Amendment," which takes the unusual step of prohibiting covered contractors and subcontractors from requiring employees and independent contractors to arbitrate certain employment claims. Covered employers should ensure they are in compliance with this new law by: (1) modifying employment or independent contractor agreements going forward to omit terms requiring arbitration of claims under Title VII or any tort related to or arising out of sexual assault or harassment; (2) refraining from enforcing existing contracts requiring arbitration of such claims (on its face, the Franken Amendment does not appear to require modification or reissuance of existing contracts); and (3) ensuring their covered subcontractors do not impose or enforce agreements requiring arbitration of such claims.
Consolidated Omnibus Budget Reconciliation Act (COBRA) Extended
Congress has passed a bill extending the COBRA subsidy which helps unemployed individuals continue their health insurance coverage. With the enactment of the economic stimulus package, many laid-off workers qualified to receive healthcare coverage assistance through federal COBRA subsidies. The bill extended the number of months covered by the subsidy from nine to fifteen months. Before the extension, the employee or family member qualified if involuntarily terminated from employment between September 1, 2008, and December 31, 2009. That period of eligibility has been extended to February 28, 2010. The subsidy will apply to COBRA payments made on or after February 17, 2009. Employees who are eligible will be required to pay only 35% of their COBRA premium while employers will subsidize the remaining 65%. The annual income of the individual must be less than $125,000 if single, or $250,000 if married. Once the employee qualifies for coverage under another group health plan or Medicare, his or her eligibility for this coverage will end.
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 exeception” to covenants not to compete and employers should carefully review thee 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.
*This summary of recent employment law changes is a guide and should not be relied on as definitive in all cases. This is not a substitute for competent legal counsel or consulting advice.
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