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Sunday, January 01, 2012

Existing labor laws updated for 2012

All employers should begin the new year by considering the changes that have been made, as usual, to California employment laws.

Although none of the new laws that come into effect this year represents a sea change in the world of labor, and many involve obscure issues that will likely not effect the average employer, there are a number of important revisions to existing laws that need to be considered.

Perhaps the biggest change is AB 469, which requires employers, as of today, to provide new hires with written notice of their pay rate, the amount of any allowances (such as meals or lodging), the designated payday, the employer’s name and any fictitious business names, the physical address and telephone number of the employer's main office, information regarding the employer's workers' compensation insurance carrier and any other information the California labor commissioner might determine is necessary.

Fortunately, the law only applies to non-exempt employees and the labor commissioner will prepare a template for employers to follow in making this disclosure.

However, the law allows employees to now collect attorneys’ fees to enforce a judgment for unpaid wages, increases the statute of limitations for the Department of Labor Standards Enforcement to collect unpaid wages from one to three years and makes it a misdemeanor if an employer willfully fails to pay wages within 90 days after a final judgment for wages is issued.

In addition, SB 299 requires employers with five or more employees to maintain and pay for health care coverage under a group health plan for females employees who take pregnancy disability leave. On a related subject, AB 592 revises language within the California Family Rights Act and the Pregnancy Disability Leave law that makes it unlawful to interfere with the exercise of those rights.

Another issue that has endlessly vexed employers, and more than a few lawyers, is whether a worker should be treated as an employee or an “independent contractor.”

The general rule tends to fall within the realm of “you know it when you see it” as California law looks at a series of somewhat subjective factors to determine how a worker should be classified.

The single most important factor is whether the employer has the right to control “the manner and means of accomplishing the result desired.” In other words, does the employer ultimately “call the shots” or is it left to the discretion of the person doing the work.

Secondary factors include whether the person is treated the same or nearly the same as the regular employees of the company (do they receive, for example, the same pay or benefits) and do both the employer and employee believe they have created an employer-employee relationship.

The question of whether to treat a worker as an independent contractor has always been fraught with risk for employers. There are serious tax implications involved, and in California there are potentially expensive wage and hour violations if a person is paid as an independent contractor when they should have been treated as an employee.

New SB 459 adds to the seriousness of the issue by imposing significant penalties on employers who “willfully misclassify” employees as independent contractors. Penalties of $5,000 to $25,000 per violation are now possible under this new statute.

The key issue in the statute is, of course, what does “willfully misclassify” mean? The statute defines the term as “avoiding employee status for an individual by voluntarily and knowingly misclassifying that individual as an independent contractor.”

This doesn’t tell us much other than the courts will apparently look not only at whether a potential employee has been misclassified but also at the employer’s intent in arriving at a classification. Thus, as with all of these new laws, the possibility of getting into serious trouble always exists and employers must tread as carefully as possible.


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