Up-to-date information for employers on topics and issues that may affect workplace operations. The posts are current as of the date of the posting.


by D. Gregory Valenza | The Daily Journal | Nov 9, 2010

Elections have consequences for employers and their lawyers. Governor Brown may turn out to be a pro-business governor, sensitive to the delicate economic conditions employers face, persistent high unemployment, and the incredible patchwork of laws and regulations already daunting employers. Sure, and the Easter Bunny is on his short list for Labor Commissioner.

Past performance and political party are not a guarantee of future conduct. But it’s not much of a stretch to assume Governor Brown will be less employer-friendly than his predecessor. What does a Brown administration mean for employment law in California?

My bold prediction is that the legislature will pass a number of new and different employment laws that Governor Schwarzenegger has been vetoing for years.

Governor Brown’s political leanings aside, consider that he holds the record for the fewest number and percentage of bills vetoed. (In fact, he owns the top three spots). In contrast, according to a state Senate Local Government Committee report, Governor Schwarzenegger vetoed the highest percentage of bills during his terms.

The previously rejected bills cover a variety of subjects, from hiring to termination. Regarding the hiring process, Assembly Bill 482 would have prohibited employers from requiring applicants or employees to submit to “credit checks” except in limited circumstances, such as for law enforcement jobs, or when an employee’s duties involve access to cash or other valuable property or information. Vetoed Assembly Bill 3063 would have codified additional restrictions on pre-employment inquiries regarding criminal convictions. Assembly Bill 1043, vetoed in a prior session, would have invalidated venue and choice of law provisions in employment contracts imposed as a condition of employment.

There are a number of new leave laws that could reach the governor’s desk, too. For example, previously vetoed Assembly Bill 2340 would have required employers to provide paid bereavement leave of up to three days. The legislature in the past also has sought to expand the California Family Rights Act to smaller employers (25 employees instead of 50).

The legislature’s zeal for imposing new penalties for wage and hour violations may find a more receptive audience come January. Assembly Bill 1881 would have doubled the amount of liquidated damages that can be assessed against employers for violating the state’s minimum wage laws. Governor Schwarzenegger vetoed this bill because there was “no information to show that the existing enforcement and protections of California minimum wage laws are insufficient.”

Another rejected bill, Assembly Bill 2187, would have imposed criminal sanctions 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.

AB 1707, which reached the governor’s desk in 2007, would have required employers to provide current and former copies of personnel files, impose a three-year retention requirement, and fine employers up to $750 per incident of non-compliance.

California courts have proved they are less than friendly to mandatory arbitration of employment law claims. The legislature in the past has attempted to ban such agreements altogether, which plainly would violate federal law. Last term, however, the legislature passed a bill outlawing arbitration for “hate crimes,” including in employment settings. Regardless of this bill’s fate under the Federal Arbitration Act, Governor Brown may see this or a similar bill on his desk.

Both Congress and the states are focusing on mis-classification of independent contractors. Senate Bill 1583, vetoed in a prior session, would have imposed significant penalties on (non-lawyer) consultants who advise employers on independent contractor classifications that turn out to be erroneous. Other measures could tighten the legal standard for independent contractor status that courts and agencies apply.

Congress expanded anti-discrimination laws’ reach with the passage of the Lily Ledbetter Fair Pay Act of 2009. This measure overturned the U.S. Supreme Court’s decision in Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 (2007). Governor Schwarzenegger vetoed Assembly Bill 793 (and 437 in the prior year), which would have expanded the statute of limitations in state law claims of discrimination based on compensation practices.

Voters rejected Proposition 19, which would have legalized personal use of marijuana and restricted employers’ rights to take action against marijuana smokers. Although Governor Brown and most politicians came out in opposition to Proposition 19, the “Compassionate Use Act,” decriminalizing certain marijuana use for medical purposes, remains on the books.

Assembly Bill 2279, vetoed in 2009, would have overturned the California Supreme Court’s decision in Ross v. RagingWire Telecommunications, Inc., 42 Cal.4th 920 (2008), in which the Court ruled that there is no duty under the Fair Employment and Housing Act to “reasonably accommodate” medical marijuana use as treatment for a “disability.”

The foregoing list merely surveys some of the employment law bills that Governor Schwarzenegger vetoed. There are many more bills that did not make it to his desk. Naturally, an emboldened legislature could pass untold additional measures, such as further toughening the California WARN Act, adding “bullying” to the Fair Employment and Housing Act, and more.

New legislation aside, the Brown administration also will affect employment law through administrative agencies, such as the Division of Labor Standards Enforcement, the Department of Fair Employment and Housing, the Workers’ Compensation Appeals Board, Cal-OSHA, etc. He, of course, will have the prerogative to appoint agency heads, such as the Secretary of Labor, the Labor Commissioner, and others.

The electorate approved Proposition 22, allowing the legislature to pass a budget with a simple majority instead of the previous 2/3 supermajority. That means the legislature theoretically may more easily budget for increasing administrative agencies’ funding.

On the other hand, the voters approved Proposition 26, which makes it harder for the legislature to raise revenue via “fees” and taxes. Therefore, it is unclear whether the budget for these agencies can be increased without new sources of revenue to pay for it. Assuming the new government will successfully increase funding to enforcement agencies, employers may anticipate more aggressive agency action. Naturally, the governor will appoint judges who are expected to interpret laws in keeping with his ideals.

Based on the above, my second prediction is that the Jerry Brown administration will create jobs. I know this for certain because Shaw Valenza is hiring. I imagine other employment law firms will do the same. Employment lawyers at our firm and others will be busy helping employers comply with new legislation and regulations, and defending against lawsuits.

What can employers do now? First, employers need to make their case to the governor and legislature that increased burdens will not assist the economic recovery. That is, new laws and more lawsuits may mean less hiring and more layoffs. Governor Brown has stated his intention to foster a business climate that stimulates job growth. He may well listen to employers’ input regarding employment laws that will deter employers from growing. There’s that bunny again.

Employers betting against a sympathetic state government must stay aware of the new mandates coming and anticipate increased enforcement. It will be important to ensure policies and other employment-related documents are modified to comply with any new laws. Employers also must allow for training costs to increase, particularly in the human resources department. By the time the law firms schedule their annual legal updates at the end of 2011, it may be too late to plan for compliance.

Shaw Law is Hiring!