This year, as in years past, the Legislature presented Governor Schwarzenegger with a number of workplace-related bills. The Governor chose to veto a number of bills that would have significantly impacted employers, and signed a few about which employers should be aware. We summarize the key laws below.

Retired Employee Health Benefits — Assembly Bill 1814

This law clarifies state age discrimination law regarding the provision of health benefits to retirees. Many of California’s public and private sector employers provide some form of continued medical benefits to retirees before they are Medicare-eligible. This new law amends the state’s anti-discrimination statute, the Fair Employment and Housing Act (“FEHA”), to specifically permit employers to alter, reduce or eliminate these so called “bridge plans” to retired persons when they become eligible for Medicare, and clarifies that such acts will not be considered acts of age discrimination. This law now brings California in conformity with existing law under the federal Age Discrimination in Employment Act (“ADEA”) on the topic of retiree health benefits.

Meal Period Exemptions — Assembly Bill 569

Labor Code section 512 generally prohibits employers from requiring an employee to work more than five hours per day without providing a meal period, or ten hours per day without providing a second meal period. For some unionized employers, a new law may alleviate these burdensome and often times difficult-to-enforce requirements.

AB 569 exempts from the meal period requirements employees in a construction occupation, commercial truck drivers, employees in the security services industry employed as security officers, and employees of electrical and gas corporations and local publicly owned electric utilities, as defined, if : (1) those employees are covered by a valid collective bargaining agreement; (2) the agreement expressly provides for wages, hours of work, working conditions, meal periods, final and binding arbitration of disputes concerning application of the agreement’s meal period provisions, and premium wage rates for all overtime hours worked; and (3) the employee’s regular hourly rate of pay is not less than 30 percent more than the state minimum wage rate (currently $10.40/hour based on the $8.00/hour minimum wage).

To take advantage of this new law, qualifying employers should pay close attention to the statute’s prerequisites during their next round of collective bargaining negotiations. However, the law’s meal period exceptions will be narrowly construed, and employers should consult with qualified legal counsel before relying on its protections. Unfortunately, for non-unionized and other non-qualifying employers, the law does not clarify the existing uncertainties relating to state meal period requirements—such as what it mean for employers to “provide” employees with meal period breaks—which matters are currently before the California Supreme Court.

Organ Donor/Bone Marrow Donation Leave — Senate Bill 1304

California’s private employers with at least 15 employees must now provide limited paid leave to certain employees who act as medical “donors.” Under the Michelle Maykin Memorial Donation Protection Act, employees who have exhausted all available sick leave may take a paid leave of absence, not exceeding 30 days, for the purpose of organ donation, and not exceeding five days for bone marrow donation. The statute says this leave does not run concurrently with employee leave rights under the Family and Medical Leave Act (“FMLA”) or the California Family Rights Act, although it is unclear whether FMLA leave indeed will apply. Public employees are already entitled to similar paid organ and bone marrow donor leave.

Under the new law, private employers must restore employees returning from organ or bone marrow donation leave to the same or equivalent position held be the employee when the leave began. Additionally, the new law protects employees from retaliation. Finally, the new law creates a vehicle for aggrieved employees to seek enforcement of these provisions. Employers should consider revising their employee handbooks and leave policies to include these new leave rights for organ and bone marrow donation.

Background Checks — Senate Bill 909

Effective January 1, 2012, this law requires additional disclosures by an employer to an applicant or employee when conducting background checks through a third party “investigative consumer reporting agency.” Designed as another measure to combat identify theft, the law requires that employers disclose the website address for the agency’s privacy practices, and weather the applicant’s or employee’s personal information will be sent out of the Unites States. To comply with this law, employers should update their background check consent forms to reflect these new requirements, prior to the law’s January 1, 2012 effective date.

Domestic Violence Victims — Assembly Bill 2364

This law revises the Unemployment Insurance Code by revising it to specify that a claimant is eligible for benefits where he or she left employment to protect his or her family from domestic violence abuse. This law brings California law into compliance with federal eligibility guidelines, and makes California eligible to receive federal funding for unemployment insurance benefits.

Labor Commissioner Appeals — Assembly Bill 2772

Employees sometimes bring claims against their employers for unpaid wages and other Labor Code violations before the Division of Labor Standards Enforcement (“DLSE”). Under existing law, an employer has a right to appeal an adverse order or decision by the DLSE to the local superior court, who then hears and decides the matter anew. To do this, however, a new law clarifies that employers must first post a bond in the superior court, in the amount of the judgment rendered by the DLSE. This law overturns the 2006 Court of Appeal decision in Progressive Concrete, Inc. v. Parker, which had held that the posting of a bond was not a mandatory condition precedent for appeal.

Cal-OSHA Violations — Assembly Bill 2774

Under California law, the state Division of Occupational Safety and Health (“DOSH”) may issue citations to employers for violations of law affecting the health or safety of employees. Civil penalties may be issued, in amounts commensurate to the severity of the infraction. The civil penalty may be up to $25,000 for a “serious violation.”

This new law establishes a rebuttable presumption as to when an employer commits a “serious violation” of state workplace safety provisions. Under the new language, a serious violation will be presumed to exist if the DOSH demonstrates that there is a “realistic possibility” that death or serious physical harm could result from the actual hazard created by the employer’s violations. Under the previous version of the law, a “serious violation” existed only if the DOSH demonstrated a “substantial probability” of death or serious physical harm. The new law also, for the first time, defines the term “serious physical harm,” and likewise establishes certain procedures to be followed by the DOSH in investigating alleged workplace health or safety violations before issuing a citation. An employer may rebut the presumption of a serious violation by “demonstrating that the employer did not know and could not, with the exercise of reasonable diligence, have know of the presence of the violation.”

Workers’ Compensation for Contractors — Senate Bill 1254

This law amends the Business and Professions code by authorizing the state registrar of contractors to issue stop orders to employer contractors who do not have workers’ compensation coverage for his or her employees, and makes violation of these orders a crime. This law also provides procedures that must be followed for the payment of employees during a work stoppage subject to a stop order, and sets forth a process for the employer contractor to timely challenge any such stop order.

Expedited Civil Jury Trials — Assembly Bill 2284

A new statute presents civil litigants (not just employers and employees) with an alternative to full-blown jury trials. To combat the ever-rising costs of litigation, parties can now voluntary elect to proceed with a shortened civil jury trial by eight or fewer jurors. The process envisions a jury trial being completed in one day, with each side being given only three hours to present their cases (including making opening statements and closing arguments). Under this new scheme, both post-trial motions and rights to appeal are significantly limited. Also, the parties are permitted to agree in advance of trial to set the parameters for maximum and minimum recoveries, about which limits the jury is not told. Unless renewed earlier, this new law is operative only until January 1, 2016.

This law presents an intriguing alternative for parties desiring to “have their day in court” without the attendant time commitment and high costs normally associated with civil jury trials. However, as a practical matter, this expedited procedure may not be the “right fit” for all employment cases, including those “high stakes” matters, where the right to appeal an adverse verdict may be too significant to give up.

Employment-Related Legislation Vetoed in 2010

The Governor also vetoed several employment-related bills. We may see these again, however, in the future, so stay tuned.

Mandatory Bereavement Leave — Assembly Bill 2340

This legislation would have required employers to provide up to three days of unpaid bereavement leave to an employee for the death of a spouse, child, parent, sibling, grandparent, grandchild or domestic partner. The three days of leave would not have to be taken consecutively and could be taken up to 13 months following the death. The bill would also have allowed an employee to sue or file a complaint with the state for perceived mistreatment resulting from asking for bereavement leave.

Consumer Credit Reports — Assembly Bill 482

Should employers be banned from using information found in consumer credit reports in making employment decisions? This bill would have prohibited employers from requiring applicants or employees to submit to “credit checks” except in limited circumstances, such as for jobs in law enforcement, or where the employee’s job duties involved access to cash, financial assets, or other confidential information.

Liquidated Damages for Unpaid Wages — Assembly Bill 1881

This bill would have doubled the amount of liquidated damages that can be assessed against employers for violating the state’s minimum wage laws. In rejecting this legislation, the Governor stated his finding that there is “no information to show that the existing enforcement and protections of California minimum wage laws are insufficient.”

Criminal Penalties for Untimely Final Wages — Assembly Bill 2187

If passed, this law would have instituted criminal penalties for a person’s or employer’s failure to pay all wages owed to a departing employee within 90 days of the employee’s last day of work. Again, the Governor vetoed this legislation based on his finding that there are already mechanisms in place (such as waiting time penalties) sufficient to enforce an employer’s obligation to timely pay an employee’s final wages.

Outlawing Mandatory Arbitration for “Hate Crimes”— Assembly Bill 1680

This bill would have prohibited employers from requiring mandatory pre-dispute arbitration for employee claims involving statutorily defined “hate crimes.” The Governor’s veto is consistent with vetoes of prior legislation aimed at outlawing arbitration agreements involving disputes arising from employment, including employment-based discrimination, harassment and retaliation claims.

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