This article is Part 1 of a two-part series providing an overview of new federal and California employment laws.
New federal and California laws affecting California employers will take effect on January 1, 2013. Employers should begin preparing for changes to their policies and practices in advance of the new year.
New Federal Laws
Updated Federal Credit Reporting Act (“FCRA”) Notices
Effective January 1, 2013, employers and consumer reporting agencies must use the updated “FCRA Summary of Rights,” “Notice to Users of Consumer Reports of their Obligations under the FCRA” and “Notice to Furnishers of Information of their Obligations under the FCRA” forms for their background check programs.
Upcoming Changes Resulting from The Affordable Care Act’s “Employer Mandate”
With the election behind us, employers should prepare for the new requirements of the Patient Protection and Accordable Care Act’s “employer mandate.” which imposes certain requirements on employers to provide health care insurance to employees.
Beginning in 2013, employers will be required to report the value of group health plan benefits on employees’ annual W-2 forms. The new information is required for the 2012 tax year. Additionally, employees will be allowed to allocate a maximum of $2,500 annually for their Flexible Spending Accounts (“FSA”). The Act also eliminates reimbursement to the employer of health care expenses through the Medicare Part D subsidy program. The statute will also increase the amount of Medicare tax withheld from employees making more than $200,000 annually (or $250,000 for married couples filing jointly).
Beginning in 2014, employers with 50 or more full-time employees must offer a minimum level of health insurance to employees, after a 90-day waiting period. Employees are considered “full-time” if they work at least 30 hours in a workweek. Employers that do not offer health insurance to its employees are subject to a penalty of $2,000 per employee for every employee above 30 workers.
New California Laws
Itemized Wage Statements – AB 1744 and SB 1255
AB 1744 and SB 1255 require temporary service employers, such as staffing agencies, to provide itemized wage statements that include employees’ rate of pay and total hours worked for each temporary services assignment. This provision is effective July 1, 2013. Temporary service employers must also provide employees with the Wage Theft Notice and include the name of the legal entity for which employees will perform work, the physical address of its main office, the mailing address of its main office, and its telephone number. Employees are deemed to suffer an injury for purposes of the damages set forth in Labor Code 226(e) if temporary service employers do not provide a wage statement or fail to provide one with accurate and complete information.
Penalties for Failing to Pay Labor Commissioner Awards – SB 1144
SB 1144 increases the fine for employers who have the ability to pay, but who willfully fail to pay a final court judgment or final order from the Labor Commissioner for all wages due to an employee terminated within 90 days of the date that the judgment was entered or the order became final. Employers who violate the statute are guilty of a misdemeanor. For awards over $1000, the minimum fine will be $10,000.
No “Belo” Contracts – AB 2103
AB 2103 clarifies that payment of a fixed salary to a non-exempt employees provides compensation only for the employees’ regular, non-overtime hours. Employers and employees cannot enter into an enforceable agreement to the contrary. This law overrules a court decision last year that permitted employers and non-exempt employees to agree on a salary that includes overtime.
Contracts with Warehouse Contractors – AB 1855
AB 1855 prohibits employers from entering into an agreement with janitorial, farm labor, security, or warehouse contractors if the agreement does not include funds sufficient to comply with applicable laws or regulations. Employers must ensure the fee paid for the services includes enough to cover minimum wages, overtime, and compliance with other laws (e.g., the Workers’ Compensation Act). The new law contains a “safe harbor” for employers whose contracts are in writing, signed, and contain detailed information including the contractor’s tax identification information, the contractor’s workers’ compensation carrier and policy information, information about the contractor’s vehicle and vehicle insurance policy, the total number of workers, the total wages to be paid, the fee to the contractor, and other items.
The new law requires employers to provide a copy of the agreement and documents related to the agreement upon a request for the Department of Labor Standards Enforcement (“DLSE”) upon the agency’s request.
Personnel Files – AB 2674
This new law amends Labor Code Section 1198.5, which governs employees’ right to inspect and receive copies of personnel records. Employers must now provide copies of personnel files to current or former employees. The employer must also keep former employees’ records. This provision does not apply during employment litigation filed by the employee in question. There are more details to this significant change in current law. The DLSE may assess fines of $750 for each violation.
Commissions – AB 1396
AB 1396 requires employers who pay employees commissions to: (1) have a written contract with employees regarding commissions; (2) include the method for calculating the commissions; and (3) require employees to sign a “receipt” retained by the employer. “Commissions” includes employee bonuses that are factored as fixed percentages of sales or profits.
In our next column, we will review additional federal and state developments for 2013.