Audits/Due Diligence - Page 22 of 24

New Year, New Laws for California Employers – Right to Inspect and Receive Employment Records and Right to Inspect and Copy Wage Records

Next in our series, “New Year, New Laws for California Employers,” we take a look at the rights of the right to inspect and receive employment records and the right to inspect and copy wage records. Prepared by Mark Terman, partner in the Los Angeles office, this series looks at some of the significant new regulations becoming law in 2013 affecting private employers doing business in California.

Right to Inspect and Receive Employment Records

Under existing law, an employee has the right to inspect the personnel records relating to the employee’s performance or to any grievance concerning the employee, and has a right to copies of documents the employee has signed. AB 2674 requires employers to provide a current or former employee—or the employee’s representative authorized by the employee in writing—an opportunity to inspect and receive a copy of those records at reasonable intervals and at reasonable times. Deliverance of these papers is not to exceed 30 days of a written request, except during the pendency of a lawsuit filed by the employee or former employer relating to a personnel matter.

Employers are also required to create a records request form, but information requestors are not required to use it. Current and former employees can bring legal action to recover a $750 penalty from the employer and their attorney’s fees, and obtain court orders compelling compliance.

This new law also adds some employer protections. Employers are not required to comply with more than 50 requests from a representative in one calendar month, may redact names of non-supervisory employees before producing records, and may charge no more than the actual cost of reproduction and, if mailed, postage. The new law generally does not apply to employees covered by a valid collective bargaining agreement. And it does not apply to: “(1) Records relating to the investigation of a possible criminal offense. (2) Letters of reference. (3) Ratings, reports or records that were: (A) Obtained prior to the employee’s employment; (B) Prepared by identifiable examination committee members; (C) Obtained in connection with a promotional examination.”

Right to Inspect and Copy Wage Records

Labor Code Sec. 226(a) continues to require employers to provide an itemized statement or paystub with timely wage payment that states gross wages, total hours worked and rates of pay for the hours of a nonexempt employee, all deductions, net wages earned, payroll period dates and other mandatory information. (See, paystub requirements: http://leginfo.legislature.ca.gov/faces/codes.xhtml, click on “LAB” and “226”).

Employers are required to keep a copy of these wage records for at least three years at the place of employment, or at a central location within California. Current or former employees may inspect or copy these records upon 21 days written or oral notice. An employee suffering injury as a result of a knowing and intentional failure by an employer to comply with its Labor Code Sec. 226(a) paystub requirements is entitled to recover the greater of all actual damages or a specified sum, not exceeding an aggregate penalty of $4,000, and is entitled to an award of costs and reasonable attorney’s fees.

AB 2674 clarifies that the term “copy,” for purposes of wage record retention, includes a duplicate of the itemized statement provided to an employee or a computer-generated record that accurately shows all of the information existing law requires to be included in the itemized statement.

SB 1255 makes it easier to pursue penalties against employers by presuming injury when wage statements do not have all required information. Under the new law, an employee is deemed to suffer injury if the employer fails to provide:

1. A wage statement; or

2. Accurate and complete information required (the employee cannot promptly and easily determine from the wage statement alone the amount of the gross or net wages paid to the employee during the pay period or other specified information, the deductions the employer made from the gross wages to determine the net wages paid to the employee during the pay period, the name and address of the employer or legal entity that secured the services of the employer and other specified information).

Links to the other posts from this series are below.

New Year, New Laws for California Employers – Employer Access to Social Media

New Year, New Laws for California Employers – Religious Dress and Grooming Protected and Breastfeeding Further Protected

New Year, New Laws for California Employers – Added Whistle-blower Protections, With Whom Will the EDD Share Employer Reports and Contracts with Commission Employees

Continuing with our series “New Year, New Laws for California Employers,” we take a look at newly added whistle-blower protections, with whom the EDD will share employer reports and contracts with commission employees. Prepared by Mark Terman, partner in the Los Angeles office, this series looks at some of the significant new regulations becoming law in 2013 affecting private employers doing business in California.

Added Whistle-blower Protections

The California False Claims Act prohibits submission to the government of a false claim for money, property or services, and authorizes actions for treble damages and penalties. An example could be charging a government entity for goods or services that were not provided.

Employees, as “relators,” can inform the government or law enforcement, participate in these actions after satisfying certain requirements and share in the recovery. Employers cannot prevent employees from disclosing information to the government or law enforcement agency, or from acting in furtherance of a false claims action. There are similar statutes under federal law.

AB 2492 provides that contractors and agents can also be whistle-blowers under Cal-FCA. The new law also makes clear that retaliation for trying to prevent a false claim is prohibited, and that relief in a whistleblower or “Qui Tam” action can include reinstatement, double back-pay, interest on the back pay, special damages, punitive damages and attorneys’ fees.

With Whom Will the EDD Share Employer Reports?

Existing law requires employers to provide employee wage information, new employee information and new independent contractor information to the Employment Development Department for use in the administration of tax and unemployment insurance.

We are entering an era of enhanced information sharing designed to make government agencies more effective in enforcing tax and other laws, including billions of dollars that state agencies believe are lost in tax revenue due to improper classification of independent contractors. AB 1794 now permits the EDD to share employer and employee information with the Joint Enforcement Strike Force on the Underground Economy for the purposes of auditing, investigating and prosecuting violations of tax and cash-pay reporting laws and other agencies.

The strike force includes the EDD; Department of Industrial Relations, Division of Labor Standards Enforcement and Division of Occupational Safety and Health; Contractors’ State License Board; Department of Insurance, State Compensation Insurance Fund; and Department of Justice (see www.edd.ca.gov/payroll_taxes). Information sharing is also permitted with the California Department of Health Care Services, the California Health Benefit Exchange, the Managed Risk Medical Insurance Board, county departments and agencies, the Agricultural Labor Relations Board, the Franchise Tax Board and the State Board of Equalization.

Contracts with Commission Employees

Enacted in 2011, Labor Code Sec. 2751 becomes effective Jan. 1, 2013. It requires an employer, when entering into a contract of employment calling for commissions as a method of payment, to create a contract that must be in writing and that describes the method of computation and payment of commissions. The employer must give a signed copy of the contract to the employee and obtain a signed receipt for the contract from the employee. If the contract expires and the parties nevertheless continue to work under the terms of the expired contract, the contract terms are presumed to remain in full force and effect until the contract is superseded or employment is terminated by either party.

“Commissions” generally mean the same as in Labor Code Sec. 204.1: “Compensation paid to any person for services rendered in the sale of such employer’s property or services and based proportionately upon the amount or value thereof.”

Commissions do not include: short-term productivity bonuses (such as are paid to retail clerks) and bonus and profit-sharing plans— unless there has been an offer by the employer to pay a fixed percentage of sales or profits as compensation for work to be performed. AB 2675 adds that temporary, variable incentive payments that increase commissions but do not decrease payment are not covered.

Links to the other posts from this series are below.

New Year, New Laws for California Employers – Employer Access to Social Media

New Year, New Laws for California Employers – Religious Dress and Grooming Protected and Breastfeeding Further Protected

Next in our series, “New Year, New Laws for California Employers,” we take a look at new protections given to Religious Dress and Grooming and Breastfeeding under the California Fair Employment and Housing Act. Prepared by Mark Terman, partner in the Los Angeles office, this series looks at some of the significant new regulations becoming law in 2013 affecting private employers doing business in California.

Religious Dress and Grooming Protected

California employers should know that the Fair Employment and Housing Act protects the right of individuals to seek, obtain and hold employment without discrimination on account of religions creed, observance and belief. Similarly, employers are required to reasonably accommodate religious belief or observance of an individual unless the accommodation would be an undue hardship to the employer.

AB 1964 extends these protections to “religious dress practice” and “religious grooming practice.” Religious dress practice includes the wearing or carrying of religious clothing, head or face coverings, jewelry, artifacts and any other item that is part of the individual’s observance of his or her religious creed. Religious grooming practice includes all forms of head, facial and body hair that are part of the individual’s religious observance.

This law may cause some employers to act with more tolerance of religious practices than in the past. For example, the law also states that an accommodation is not reasonable if it requires segregation of the employee from the public or other employees. As such, employees who interface with clients or customers may not be disqualified from those positions based upon their religious dress or grooming. Because the bill does not state that it supersedes existing health and safety laws and regulations, workplace safety rules—such as dress and grooming required of employees who operate machinery—should not be affected by the new law.

Breastfeeding Further Protected

The FEHA also protects against discrimination in employment on the basis of sex, which includes gender, pregnancy, childbirth and medical conditions related to pregnancy and childbirth. AB 2386 adds breastfeeding and medical conditions related to breastfeeding to the FEHA’s definition of “sex.” This clarification in the law, also dovetails with Labor Code secs. 1030-1033, which require reasonable amounts of break time and an adequate private place for mothers to express breast milk at work.

See our earlier post in this series here.

New Year, New Laws for California Employers – Employer Access to Social Media

California employers received more attention in 2012 with 554 bills introduced in the legislature mentioning “employer,” compared to 346 in 2011. Fortunately, most bills do not become law. However, those that do bring with them new challenges for California employers. As 2013 draws near we begin our series, “New Year, New Laws for California Employers. Prepared by Mark Terman, partner in the Los Angeles office, this series will take a look at some of the significant new regulations affecting private employers doing business in California.

Employer Access to Social Media

Social media is everywhere. Facebook, for example, claims 1 billion users with more than 140 billion friend connections among them. For some employers, this may be too attractive a source of information about employees and job applicants. Balancing employee expectations of privacy against employer business protection needs, AB 1844 prohibits employers from requiring or requesting an employee or applicant to disclose a username or password for the purpose of accessing personal social media or to access personal social media in the presence of the employer or to divulge any personal social media.

It also prohibits employers from discharging, disciplining (or threatening to do so) or retaliating against an employee or applicant for refusing a demand or request by the employer that violates this law.

Excepted from this new law are employer requests 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.

Nothing in this law limits an employer from requiring or requesting an employee to disclose a username, password or other method for the purpose of accessing an employer-issued electronic device.

At the same time, the National Labor Relations Board and its counsel continue to opine on when an employer’s policies

or actions regarding employee use of social media interfere with the protection of concerted activity of employees to, for example, discuss wages and working conditions, whether it involves union activity.

The NLRB general counsel’s third and most recent report, which may surprise nonunion employers, is at www.calcpa.org/ NLRBsocialmediapolicies.

NLRB Signals Intent To Scrutinize Facially Neutral Handbook Policies

The Acting General Counsel of the NLRB is apparently rummaging through handbooks and policy statements to charge nonunion employers with unfair labor practices for enacting seemingly innocuous rules that could conceivably be read as interfering with the right of employees to engage in protected concerted activity. And as can be seen from the Board’s recent opinion in Karl Knauz Motors, Inc., 358 NLRB No. 164 (2012), the current Board majority has apparently bought into that misguided theory.

Under existing Board law, employers violate Section 8(a)(1) of the Act by maintaining work rules or policies that “would reasonably” be construed by employees as prohibiting or chilling their right to discuss or object to the terms and conditions of their employment. In this case, the car dealership had a seemingly innocuous and facially neutral “Courtesy” Rule in its employee handbook requiring employees to be “courteous” and “polite” to customers, suppliers and co-workers:

(b) Courtesy: Courtesy is the responsibility of every employee. Everyone is expected to be courteous, polite and friendly to our customers, vendors and suppliers, as well as their fellow employees. No one should be disrespectful or use profanity or any other language which injures the image or reputation of the Dealership.

The rule would reasonably appear to require employees to refrain from being disrespectful and from using language which would reflect poorly on the Dealership when interacting with customers and suppliers, or with one another in the presence of customers and suppliers.

Although the rule was not applied to discipline or discharge any employee, the Acting General Counsel nevertheless charged the employer with an unfair labor practice for maintaining the rule, and the Board majority agreed. Citing its recent social media policy decision in Costco Wholesale Corp., the Board noted that there was no protected activity disclaimer in the handbook and held that the “Courtesy” Rule is unlawful based on the strained conclusion that the Dealership’s employees would reasonably assume that they had been disrespectful in violation of the rule if they objected to or criticized anything concerning their working conditions. The reliance on Costco would appear to be misplaced, however, as that case involved a rule prohibiting employees from posting disparaging comments about the employer on the Internet. In this case, the Board’s majority improperly reads the “Courtesy” Rule as if the sentence prohibiting disrespectful conduct and profanity was a stand-alone requirement as in Costco, ignoring completely the context in which that sentence is part of the overall expectation that employees be courteous to customers and one another in order to maintain the Dealership’s good reputation and image. Context matters, however, and in this context it appears the Board will find rules to be unlawful if they “could conceivably” be read as chilling protected rights, as it strains credulity to think that employees “would reasonably” read a rule addressed to courteous behavior towards customers as interfering with their right to object to working conditions. Because the Acting General Counsel will continue to prosecute nonunion employers for handbook policies that “could conceivably” be read as chilling protected activity, employers need to review and modify their policies to avoid facing unfair labor practice charges.

NLRB Announces its First Formal Ruling on the Legality of Social Media Policies

In line with the series of guidelines issued by the Acting General Counsel over the past year, the NLRB has announced its first formal ruling on social media policies, finding that the social media policy of Costco Wholesale Corp. is unlawful because it broadly prohibits online comments “that damage the Company, defame any individual or damage any person’s reputation, or violate the policies” in the employer’s handbook. 358 NLRB No. 106. The case represents the first ruling by the Board on the legality of social media policies, and follows the Acting General Counsel’s admonition that overbroad policy statements will be held unlawful.

The Board observed in its opinion that in the absence of a disclaimer notifying employees that the rule is not intended to restrict the right to engage in protected concerted activities, the broad prohibition on comments that might “damage the Company” is overbroad and unlawful because “employees would reasonably conclude that the rule requires them to refrain from engaging in” communications that are critical of the company or its supervisors despite the fact that the policy does not appear to address or prohibit critical comments about the company. In this respect, the opinion appears to reflect the Board’s approach that policy statements will be judged not by what they purport to prohibit, but by whether employees could reasonably construe them as restricting their right to communicate about terms and conditions of employment. The Board observed that context matters, however, suggesting that employers might avoid liability by inserting appropriate disclaimers in their social media policies or by tying the prohibition to specific examples of egregious conduct such as the use of profane language, abusive or unlawful statements, or comments reflecting sexual or racial harassment.

The Costco opinion highlights the fact that overbroad social media policy restrictions on negative comments will be found to be unlawful by the Board, and that imposing discipline for making such comments might expose employers to unfair labor practice charges – even for non-union workforces – and the potential for wrongful termination claims. As referenced above, some of this risk can be managed by avoiding using overly broad restrictions, by carefully wording your policy to specifically notify employees that their protected rights are not encompassed by the policy restrictions, and by including examples of prohibited activity to provide context to the restrictions imposed. As have the prior guideline memoranda from the Acting General Counsel, this ruling provides a reminder that all businesses should reevaluate both the language and impact of their internet/social media policies with an eye towards these potential areas of risk.