Legal Alert: California Rings In 2013 With New Employment Laws

Date   Dec 27, 2012

After the Mayans failed to predict the end of the world on December 21, 2012, it became apparent that California employers would have to comply with a string of new laws that take effect on January 1, 2013.

Executive Summary:  After the Mayans failed to predict the end of the world on December 21, 2012, it became apparent that California employers would have to comply with a string of new laws that take effect on January 1, 2013.  Here is a summary of seven new employment laws to be aware of so you can revise your employment policies accordingly. 

  1. Current and Former Employees Get Access to their "Personnel Files" Within 30 days of Request (AB 2674/Labor Code 226 and 1198.5):  Employers are required to provide current and former employees with copies of their personnel records "relating to the employee's performance or to any grievance concerning the employee" within 30 days of the request.  The new law does not clearly define "personnel records" but some examples of personnel records are: handbook acknowledgment forms; signed arbitration agreements; employment applications; payroll authorization forms; warnings, discipline and/or termination notices; notices of layoff, leave of absence, or vacation; garnishment notices; training notices; performance reviews; and attendance records.  Failure to comply with this new law may subject an employer to a penalty of $750 per violation, as well as attorneys' fees. 
  2. Employers Must Accommodate Religious Dress and Grooming (AB 1964/Government Code 12926 and 12940): Employers must accommodate an employee's or job applicant's "religious dress" or "grooming practices."  Religious dress includes the wearing or carrying of religious clothing, head or face coverings, jewelry, and artifacts.  Religious grooming practices include those pertaining to head, facial, or body hair that are part of the observance by an individual of his or her religious creed.  This new law specifically provides that segregating the employee from the public or other employees is not a reasonable accommodation. 
  3. Mistakes on Wage Statements Can Cost Employers $4,000 Per Employee (SB 1255/Labor Code 226): Existing law requires employers to provide nine categories of information on an employee's wage statement.  This new law makes clear that if an employer fails to provide that information, employees are deemed to suffer an "injury" for the purpose of recovering a penalty: $50 for the initial pay period; $100 for each subsequent pay period with a maximum penalty of $4,000, as well as attorneys' fees.  To avoid any costly mistakes, employers should ensure that the following nine pieces of information appear on each employee's wage statement: (1) gross wages earned; (2) total hours worked (except for exempt employees); (3) piece rate units or piece rates (if applicable); (4) all deductions; (5) net wages earned; (6) the inclusive dates of the period for which the employee is paid; (7) employee name and last four digits of the social security number or employee ID; (8) name and address of the legal entity who is the employer; and (9) all applicable hourly rates in effect during the pay period and corresponding number of hours worked.  
  4. New Regulations Related To Pregnancy Disability Leave:  New pregnancy regulations redefine the number of days that employees may take for pregnancy disability leave.  Instead of the previously defined "four months" of leave, the leave is now defined as 17 1/3 weeks to account for the uneven number of days in certain months.  Employers are also required to notify employees in writing when a medical certification is required for the leave of absence.  In light of these changes, employers are required to post new notices in the workplace that notify employees of the changes.  If you employ 50 or more employees, use this notice:  If you employ fewer than 50 employees, use this notice:
  5. Employers Are Barred From Requesting Social Media Information Unless Needed For An Investigation of Employee Misconduct (AB 1844/Labor Code Chap 2.5):  Employers are prohibited from asking employees or job applicants to disclose any information related to their personal social media accounts, which includes an employee's e-mail account and text messages.  The law also prohibits employers from retaliating against anyone who refuses to provide such information.  However, the law provides an exception where the employer reasonably believes that the employee has engaged in misconduct or has violated the law, and the social media information is used solely for the purpose of an investigation.   
  6. Salaries for Non-exempt Employees Do Not Include Overtime (AB 2103/Labor Code 515):  This law defines a non-exempt employee's "salary" as only including 40 hours per week, not any overtime hours.  The law was enacted to overturn a recent Court of Appeal decision (Arechiga v. Dolores Press) where the employee agreed to a fixed weekly salary that included payment of both regular and overtime hours.  Based on this new law, if any overtime is owed to a non-exempt employee, the employee's hourly rate will be based on 1/40th of any salary paid to calculate owed overtime.  In other words, if the employee's salary is above minimum wage, the employer cannot use the difference in pay to account for owed overtime compensation. 
  7. Employers Must Provide Employees Written Commission Agreements, But Some Exceptions Apply (AB 2675/Labor Code 2751): Employers who pay regular commissions must provide employees with an executed written contract setting forth both the formula for calculating commissions, as well as the method of payment.  Failure to comply with this new law may subject an employer to penalties under California's Private Attorney General Act ("PAGA") in the amount of $100 for each affected employee for an initial violation and $200 per employee for each violation thereafter.  The term "commissions" does not include:  (1) short-term productivity bonuses such as those paid to retail clerks; (2) temporary incentives that increase commissions; or (3) bonus or profit-sharing plans, unless they are based on a fixed percentage of sales or profits. 

Employers' Bottom Line:

California employers will be required to comply with a number of new laws in 2013. If you have any questions regarding these new laws or other labor or employment related issues, please contact the FordHarrison attorney with whom you usually work or the author of this Alert, Michelle B. Abidoye,, who is an attorney in our Los Angeles office.