Just a reminder: As of January 1, 2012, California employers must notify new hires of a laundry list of information about their job and the company. For current employees, if any of these items change (for example, due to a promotion), you must give written notice. The Labor Commissioner had planned to have a template available by mid-December, but it still isn’t posted. A representative from the Commissioner’s office has stated that they hope to post it by the end of the year. We recommend you check the agency’s website for the template before making any new hires in 2012, or implementing any changes that would require the notice. The notice must include employees’ rates of pay (including their overtime rates), any allowances claimed against the minimum wage (generally meals or lodging), your regular payday, the name of the employer (including any “doing business as” names), the physical and mailing addresses of the main office, your phone number, the name and contact information for your workers’ comp carrier, and any other information the Labor Commissioner may require (AB 469, also called the Wage Theft Prevention Act of 2011).

Question: We use Craigslist to post job openings and accept resumes. Are there any legal or practical risks involved with hiring people off Craigslist?

Answer: Many companies are taking advantage of the ability to post job openings for free on Craigslist, but there are some things to think about before using the website as your main source of recruiting and hiring. If people are submitting their resumes via Craigslist, you may be missing out on gathering vital information about the candidate that you would generally get through the application process. For example, job applications often ask about criminal convictions, relevant work experience, technical skills or training, and other information specific to the job being filled. Along the same lines, an individual responding to a Craigslist posting may give you more information than you were looking for. Without any quality control on the information coming in, people may send responses containing information about marital status, religion, disabilities, or a range of other information that you simply don’t want from a job candidate.  If you’re just getting emails or resumes from interested job seekers, you may be missing out on useful information while at the same time subjecting yourself to potential legal exposure.

Perhaps a better approach would be to post the job opening on Craigslist, but direct all applicants to your company website where they can fill out an online application. That way you’re gathering the same information from all candidates rather than the inconsistent information you may get through the resume solicitation process.

Finally, you should also ask yourself whether you’re getting the best candidates for a position by posting on Craigslist. Posting in a single location may make sense for an unskilled labor or temporary position, but is it the best place to locate your next electrician or accountant? If you’ve been posting online but coming up short on quality applicants, try reaching out to your local employment office to see if they have any ideas on where to post your job openings to optimize access to the right job seekers. This is an especially important step if you are a federal contractor because posting all open positions with the state is a requirement of your affirmative action plan, other than exempt executive jobs and jobs lasting three days or less.
 
Still have questions about whether posting on Craigslist is right for your company? Call your Vigilant staff representative for more discussion.

Governor Jerry Brown recently signed into law a number of bills that affect the workplace. They all take effect on January 1, 2012.

No mandatory E-Verify: Employers cannot be required by the state of California or any city or county in California to participate in the federal E-Verify program (AB 1236). E-Verify is an online program that allows employers to check the employment eligibility of new hires. It can be a useful tool, but only if the employer is willing to commit the staff time to learn and follow the E-Verify procedures.

Health insurance coverage for pregnant employees: Employees who take leave under California’s pregnancy disability leave law are entitled to continue their group health insurance coverage under the same terms and conditions as if they had continued to work (SB 299). This type of leave is available for up to four months in a 12-month period. From a legal standpoint, Vigilant believes this law is preempted by ERISA, a federal law regulating group health plans. The reality, however, is that it is unlikely an employer will want to be the test case to challenge the new law. In related legislation that was signed by the governor, both individual and group health insurance plans must provide coverage for “maternity services,” which includes pretty much all aspects of pregnancy and childbirth, from prenatal care all the way up through delivery and postpartum care (SB 222 and AB 210).

No interference with CFRA or pregnancy leave: This clarifies existing law to say that it is an unlawful employment practice to interfere with, restrain, or deny an employee’s attempt to take leave under the California Family Rights Act (CFRA) or California pregnancy disability leave law (AB 592).

Limits on looking into credit history: Employers’ ability to request credit history (financial information) for employment purposes will be strictly limited to certain types of jobs (AB 22).  In the private sector, the jobs where you may request credit history for employment purposes will be limited to managerial positions (executives who are exempt from overtime under state law); positions where the report is required by law; positions (other than retail positions involving routine solicitation and processing of credit card applications) that involve regular access to bank or credit card account information, social security numbers, and dates of birth; positions where the person is a named signatory on the employer’s bank or credit card account, or is authorized to transfer money or enter into financial contracts on the employer’s behalf; positions that involve access to confidential or proprietary information that is economically valuable and reasonable to keep secret; positions involving regular access to cash totaling $10,000 or more during the workday; and positions in financial institutions subject to the Gramm-Leach-Bliley Act regarding safeguarding of personal information. In addition, the notice that you give to the individual informing them that you will be requesting a credit report will have to identify the specific exemption that allows you to request the report.

Unions for agricultural workers: It will be easier for agricultural workers to form a union under California state law (SB 126). The federal National Labor Relations Act (NLRA) doesn’t apply to agricultural workers.

Gender identity and gender expression protected: Employees and applicants will be protected from discrimination on the basis of gender identity or gender expression (AB 887). You should consider updating your employee handbook to include these in your equal employment opportunity policy.

Health insurance coverage for same-sex spouses and domestic partners: Group health care service plans and policies offered in California must treat same-sex spouses and domestic partners the same as opposite-sex spouses and domestic partners (SB 757). There is an exception for policies issued outside of California to employers whose principal place of business and majority of employees are located outside the state.

Penalties for misclassifying employees as independent contractors:  Anyone who willfully misclassifies an employee as an independent contractor is subject to civil penalties between $5,000 and $15,000 per violation ($10,000 to $25,000 if the misclassification is deemed to be a consistent pattern or practice). The same penalties apply if you charge the misclassified individual a fee or deduct from their wages for something that you wouldn’t have been able to deduct if they were properly classified as an employee. Also, an individual who receives payment in exchange for advising an employer to misclassify a worker is jointly and severally liable (i.e., they share the employer’s responsibility for paying the penalties and could be on the hook for the full amount if the employer doesn’t pay it). There are two exceptions: individuals (such as HR people) who are advising their own employer, and attorneys who are providing legal advice (SB 459).

A jury should decide whether an employer’s sabbatical program was actually vacation in disguise, ruled a California court of appeal. If so, then the sabbatical would be considered part of wages under California law. This means it is earned day by day, and must be paid out pro rata with a final paycheck if the employee ends employment before working long enough to be eligible to take the sabbatical. If not, then the partially earned sabbatical has no value upon termination.

Since 1987, the state Department of Labor Standards Enforcement (DLSE) has followed a four-part test to determine whether a sabbatical program in private industry is a true sabbatical and not equivalent to vacation (wages). The court considered the DLSE’s opinion, but came up with its own test. First, the sabbatical must be granted infrequently (typically seven years or longer). Second, the length of leave should be longer than the normal vacation period, in order to do more than just provide rest, as a vacation does. Third, the sabbatical must be in addition to regular vacation, which should be comparable to the average vacation benefit in the relevant labor market. Fourth, the program should incorporate some feature to show that the employee is expected to return to work after the sabbatical ends. The real question, said the court, is whether the time off is intended to retain the most experienced employees and enhance their value to the company when they return (a true sabbatical) or to compensate employees for their work performed (vacation) (Paton v. Advanced Micro Devices, Inc., Cal App, Aug 2011).

Tips: If you offer a sabbatical program to your employees, and you’re not currently paying out a pro rata share of the sabbatical upon termination, review your program to determine whether adjustments need to be made. Contact your Vigilant staff representative for assistance. For more information on final paycheck obligations, see our Legal Guide, “Final Paychecks” (1648).

Nonexempt employees who work in California for a full day or a full week are covered by California overtime law, even if they reside in another state, ruled the California Supreme Court. The U.S. Ninth Circuit Court of Appeals came to the same conclusion in 2008, but later withdrew their opinion and asked the California Supreme Court to weigh in (Sullivan v. Oracle Corp., Cal, June 2011).

The employees in this case lived in Arizona and Colorado, but periodically were sent to California to train customers on how to use the company’s software. California has very strict rules on daily and weekly overtime, including the obligation to pay most nonexempt workers one and a half times the regular rate after eight hours in a day and twice the regular rate after twelve hours in a day.

Tips: If an out-of-state employee is in California for only part of a workday, you’re safe from worrying about California overtime rules. It’s when the employee spends the full workday or a full workweek in California that these overtime rules apply. For more information, see our Legal Guide, “Daily Overtime in Oregon and California” (4063).

It’s risky to automatically terminate an employee who has exhausted their protected leave, that’s what you can take away from a recent case from a California district court. An employee suffering from lupus was placed on leave under the federal Family and Medical Leave Act (FMLA) and was out for 12 weeks. Since she was unable to return to her position following the end of her FMLA leave, her employer terminated her without exploring any further accommodation options. That may have been a violation of California’s Fair Employment and Housing Act (FEHA) according to the court.

Even when an employee has exhausted leave under the FMLA, the FEHA still requires that employers engage in the interactive process with the employee to determine if there are any reasonable accommodations that could be made to allow them to continue working. Among the accommodation options is providing a further leave of absence, which may give the employee more time to recuperate and eventually return to work. The employee will now present her case to a jury (Lafever v. Acosta, Inc., ND Cal, May 2011).

Tips: Having a rigid termination policy following exhaustion of FMLA could get you in trouble under the FEHA or the federal Americans with Disabilities Act (ADA) if an employee missed work due to their own illness. Be sure to evaluate each case individually and examine whether you have an obligation to engage in the interactive process under the FEHA or ADA before you terminate an employee who can’t return from leave.

Good news for employees who cover their nondependent adult children on their employer’s health plan: thanks to the passage of AB 36, the value of the health benefits is no longer subject to state income tax. AB 36 brings California tax law in line with federal law, which has permitted tax-free benefits for adult children (through the end of the year in which the child turns 26) since March 30, 2010. Previously, dependent benefits were only tax-free if the child was under 24, a fulltime student, maintaining the same principal residence as the parent for at least half of the year and receiving more than one half of his or her annual financial support from the parent. (Children who are permanently and totally disabled, regardless of age, could also receive benefits tax-free to the employee.) The changes brought about by AB 36 apply retroactively to March 30, 2010, which means that employers who have been reporting imputed income will now need to make amended tax filings for 2010. California’s Employment Development Department has posted online guidance for employers. Consult your payroll or tax adviser with questions.

Rest and meal period violations just got pricier, thanks to a recent decision by a California Appeals Court. Labor Code section 226.7 assesses a penalty of one hour of pay (called a “premium payment”) against an employer who fails to provide rest or meal periods to its employees. In a recent court case, a group of UPS employees sued the company for rest and meal period violations. This case resulted in a decision by the court that for each day of violation of the rest and meal period rules, the employer could be penalized up to two premium payments per day—one for the rest period violation and one for the meal period violation (United Parcel Service, Inc. v. Superior Court, Cal App, Feb. 2011).

Tips:  This decision means that rest and meal period violations can be twice as expensive as we initially thought and if the violations span multiple employees over a period of time, an employer can face some significant financial penalties. To make sure you are complying with your rest and meal period obligations, check out Vigilant’s Legal Guide, “Breaks and Meal Periods—California” (2499) and contact your Vigilant staff representative with questions.

Although last year’s health care reform law made coverage available to employees’ adult children up to age 26, and provided a federal income tax exclusion for the coverage, California employers should be aware that California’s tax law does not provide such an exclusion from income for adult child coverage. If passed by the California legislature, AB 36 would change that by providing an income tax exclusion that parallels federal law. However, unless and until that bill is passed, employers must add the value of the coverage for children from the ages of 19 through 25 to the employee’s gross income for state payroll tax purposes. The amount would be the difference between the insurance premiums paid to cover the adult child and the amount that would have been paid had the adult child not been covered.

Here’s an example: The employee covers himself, his spouse and his adult child, for a family premium of $1000. If he did not cover his adult child, the employee plus spouse rate under this employer’s plan would be $750. In this example, the adult child’s coverage creates $250 in taxable income for the employee under California law. In some cases the value of the coverage could be equal to zero. For example: the employee covers herself, her spouse and her three children, including one adult child, for a family rate of $1000. If she did not cover her adult child, the family rate would still apply to cover her spouse and the remaining two children. In this example, there is no taxable income attributable to the adult child’s coverage because it cost the employee nothing to cover the adult child. Questions? Contact your tax adviser.

A California Appeals court recently set aside a signed settlement between an employer and employee because they failed to get the approval of the California Workers’ Compensation Appeals Board (WCAB) beforehand. Although the settlement agreement related to a disability discrimination claim, it included global language that the employer believed also settled the pending workers’ compensation claim. However, the court determined that the California Labor Code (5001 and 5002) actually requires the approval of the WCAB or a referee before the parties can compromise or release a claimant’s workers’ compensation claim (Steller v. Sears, Roebuck and Co., Cal App 4th, Oct. 2010). Thus, the portion of the settlement agreement that related to the workers’ compensation claim needed to be reviewed by the WCAB or referee before it could be enforced.

Tips: When settling a workers’ comp claim where the individual won’t be returning to work, employers often want to also obtain a release of all other employment claims. Typically this is done with a separate agreement that is signed at the same time. As this case illustrates, you need to get approval for the workers’ comp portion of your settlement agreement. One way to handle this is to make both agreements contingent on that approval. Contact your Vigilant staff representative for assistance.