2006 LEGAL UPDATE FOR CALIFORNIA EMPLOYERS
Unlike the two prior years, the 2005 Legislative session resulted in very little activity that directly affected California employers. Although there were a number of laws from prior years going into effect in 2006, Governor Schwarzenegger vetoed virtually all of the employment-related laws that were pushed forward by California's less-than-employer-friendly Legislature. The following is a brief summary of some of the laws either that are going into effect in 2006 from prior years, or that have now been signed into law, and with which employers in California need to be familiar.
1. DIRECT DEPOSIT OF PAYCHECK UPON TERMINATION OF EMPLOYMENT (AB 1093): Labor Code section 213 used to provide that employee direct deposit authorizations would terminate upon separation of employment for any reason, which prevented employers from directly depositing an employee's final paycheck, including accrued but unpaid vacation pay. This new law, AB 1093, amends Labor Code section 213 to permit direct deposits of all final paychecks, as long as the employer submits the final paycheck within the appropriate statutory time (i.e., immediately for involuntary terminations or resignations with more than 72 hours' notice, or within 72 hours for an employee who immediately resigns).
2. NEW OVERTIME RULES FOR COMPUTER SOFTWARE EMPLOYEES (also AB 1093): Federal law requires that all exempt employees be paid on a salary basis. California law has a similar requirement; however, high-level computer professionals (who may not qualify as executive or administrative employees) are allowed to be paid on an hourly basis and still be exempt, provided that the hourly wage exceeds $47.81 per hour. AB 1093 closes this gap between California and federal laws by amending Labor Code Section 515.5, and allowing computer professionals who are paid either on an hourly basis or on an equivalent annualized salary to be exempt as “computer professionals” as opposed to “executive or administrative employees.”
3. EMPLOYEE SOCIAL SECURITY NUMBERS ON PAY STUBS (SB 899 – 2004 session): California has taken various steps to prevent identity theft by restricting use of social security numbers. In a law effective January 1, 2005, employers have until January 1, 2008, to remove employee social security numbers from the itemized portion of an employee's pay stub. Employers have the option of either including just the last four digits of the employee's social security number or an existing employee identification number. Employers may implement the change before January 1, 2008.
4. MORE RULES FOR EMPLOYEE IDENTIFICATION NUMBERS (SB 101): Labor Code section 226 currently prohibits the use of the full social security number on paychecks (no more than the last four digits of the SSN may be included). SB 101 amends section 226 by expanding the types of identification numbers that can be used on paychecks and changes the location of the numbers so that they are on the itemized pay stub in lieu of the paycheck itself.
5. EXPANSION TO THE UNRUH CIVIL RIGHTS ACT (AB 1400): The Unruh Civil Rights Act generally prohibits business establishments from discriminating on the basis of sex, race, color, religion, ancestry, national origin, disability, or medical condition. It also provides civil remedies for violations of its provisions. This bill would further prohibit that discrimination on the basis of familial status, marital status, or sexual orientation, and would define related terms. This bill would integrate those definitions into other related provisions, and would provide that the identification of particular bases of discrimination in those provisions are illustrative rather than restrictive.
6. LIMITATIONS ON COMPENSATION FOR UNEMPLOYMENT (AB 1577): Existing unemployment insurance law provides that an employee cannot receive unemployment benefits if the employee left the employer's employ voluntarily and without good cause, or under one of the specified circumstances. This bill revises the specified circumstances under which an employee cannot receive unemployment benefits to include a situation in which an employee was denied employment or was terminated by an unspecified licensee or facility that was required by law to deny or terminate employment of that employee based on written notification from the department that the employee had a prior criminal conviction or was determined unsuitable for employment.
7. NO MEAL PERIODS REQUIRED FOR CERTAIN EMPLOYEES (AB 1734): Existing law requires employers to provide meal periods to employees during work periods of specified duration. This bill exempts from the meal period requirement certain employees in the motion picture and broadcasting industries who are covered by a valid collective bargaining agreement that contains specified terms.
8. DLSE NOT AUTHORIZED TO PROMULGATE REGULATION RE MEAL AND REST PERIODS (ACR 43): This bill declares that the Division of Labor Standards Enforcement does not have the authority to promulgate a specified regulation relating to meal and rest periods. Instead, said authority rests with the Legislature or the Industrial Welfare Commission, and the regulation specified by the DLSE is inconsistent with existing law.
Carlton DiSante & Freudenberger LLP has prepared an executive summary of a comprehensive list of new laws and developments in new cases employers should be aware of in 2006. To receive a free copy of the executive summary, request a copy via e-mail.