New California employment laws will be effective as of January 1, 2013. Some of the laws that employers are likely to regularly run into are summarized below. Are you ready?
Commission contracts now must be written, and may survive expiration
Starting January 1, 2013, employers are required to provide commissioned employees with written contracts that set forth the applicable formula for calculating the commissions and method of payment. (AB 1396, AB 2675). The new laws apply to both in-state and out-of-state employers, require that employers provide copies of the signed commission contracts to their employees, and also require that employers obtain signed receipts from the employees for such contracts. Even if a contract governing commissions expires, the terms will “live on” past the contract’s date of expiration until the parties enter into a new agreement or until the employment is terminated.
Action plan: Review your variable compensation contracts to identify those that are commission-based. If the contracts are not spelled out in sufficient detail, prepare compliant agreements to be effective January 1, 2013. Obtain signatures, get receipts and maintain your records. Calendar when existing contracts are set to expire, so that any new terms, if needed, can be added.
Nonexempt salaried employees really do earn overtime pay
In the past, some employment agreements provided a fixed salary to nonexempt employees, with an expectation that overtime would be included in this fixed amount. Per Labor Code section 515(d), the California legislature has clarified that for purposes of calculating overtime, a nonexempt full-time employee’s regular hourly rate is simply 1/40 of the employee’s weekly salary.
Employees now may receive copies of the entire “personnel file”
In the past, under Labor Code section 1198.5, employers were obligated to provide employees an opportunity to inspect their personnel files, but not necessarily to provide copies of the files. Instead, under Labor Code section 432, employers were only required to provide copies of those “instruments” the employee had actually signed “relating to the obtaining or holding of employment.” For many California employers the obligations under section 432 formed the fallback position for the definition of which copies must be provided to employees seeking personnel records.
However, with the passage of AB 2674, starting January 1, 2013, the right to inspect certain personnel records has been clarified to extend to both current and former employees, and requires employers to maintain personnel records for at least three years after termination of employment. The requesting employee may inspect and receive a copy of his or her personnel file within 30 days, 35 with agreement. The employee or his/her representative (e.g., attorney) must make the inspection request in writing, and may request a form from the employer for doing so. Employers are not required to respond to more than 50 such requests a month per “representative.” The employer may redact the names of any non-supervisory employees referenced in the records prior to making them available for inspection and copying, and actual copying charges may be charged to the employee. Interestingly, if a former employee files a lawsuit against the employer as to personnel matters, these inspection rights cease while the lawsuit is pending with the trial court. If the employer fails to comply with inspection and copying requests under section 1198.5, either the employee/former employee or the Labor Commissioner may seek a penalty of $750.
AB 2674 provides no new guidance on what exactly is in a “personnel file,” however. Under section 1198.5 they remain records “relating to” (1) an employee’s performance and (2) any grievance concerning the employee.
AB 2674 also amended Labor Code section 226(a), requiring that employers provide wage statements upon request that are either exact duplicates of those provided to the employees, or records that show all of the information that existing law requires be included in the itemized statement. These copies must be provided within 21 days of the request.
Action plan: Consider consulting with legal counsel regarding the documentation that belongs in a personnel file. Designate HR personnel to receive and track personnel file requests, and set up a process for ensuring compliance with the date requirements. Create a request form. Track requests by representatives if necessary. Employers should be in position to reproduce wage statements as duplicates of those previously provided, or as printouts with all of the required information.
Employees now have only limited obligation to divulge “social media” logins and passwords
AB 1844 prohibits California employers from requiring or requesting employees or applicants to disclose social media usernames or passwords, or require employees to access their personal social media while the employer watches. “Social media” is broadly defined under AB 1844 to include videos, still photographs, blogs, video blogs, podcasts, instant and text messages, email, online services or accounts, or Internet web site profiles or locations.
(These types of inquiries can present undesirable risks anyway. Those involved in hiring decisions may be exposed to an employee’s private information, or information disclosing that the employee or applicant is a member of a protected class. If a negative decision is made regarding the employee or applicant at a later time, and a discrimination claim is made, the employer faces challenges in proving that the information gleaned through access to social media was not a factor in the decision. Even “googling” a prospect or current employee can have the same ramifications.)
Under AB 1844 employers can still require an employee to divulge personal social media reasonably believed to be relevant to an investigation of allegations of employee misconduct or employee violation of applicable laws and regulations, provided that the social media is used solely for purposes of that investigation or a related proceeding. In addition, from an operational perspective, employers may still require an employee to disclose security access information (i.e. username, password, or other methods) to access an employer-issued electronic device.
Action Plan: Check your internal policies and practices regarding social media and bring them into compliance with these new rules. Act accordingly.
* * * * *
We regularly provide litigation and counseling/drafting advice on these issues, including strategic advice directed at our clients’ specific dynamics, needs and concerns. If you would like to discuss these issues further, or have any questions about this blog, please contact us.