• Equal Treatment By Insurance Companies For Domestic Partners
• Sexual Harassment Training Is Now Required
• Employer-Friendly Vetoes By The Governor
• Revisions To California’s Unfair Competition Act
• 2005 IRS Mileage Rate Increase
• Employers Get Some Relief From California's "Sue Your Boss" Law
• Electronic Storage Of I-9 Forms To Be Permitted Soon
• Californians Reject Mandatory Health Insurance Proposal
• New Federal Overtime Regulations
• Proposed Emergency Revisions To Meal And Rest Period Laws
  

Equal Treatment By Insurance Companies For Domestic Partners

The California Insurance Equality Act, or AB 2208, goes into effect January 1, 2005, and prohibits discrimination against registered domestic partners by insurance providers.

All insurance providers regulated by the Department of Insurance, which include health, auto, rental, disability, life and others, are prohibited from treating registered domestic partners differently from married spouses. Thus, insurance companies are required to “provide registered domestic partner coverage equal to that provided to spouses.” Previously, insurers were only required to offer domestic partners coverage equivalent to a dependent.

Domestic partners who have filed a valid Declaration of Domestic Partnership with the State of California are guaranteed coverage under the new law. The Declaration establishes that the partners are unmarried, share a common residence, are not related by blood, are capable of consenting, and are both the same gender unless at least one of them is eligible for Social Security benefits for the aged and is older than age 62. Partners who have not filed a Declaration with the California Secretary of State may still be eligible for guaranteed health insurance coverage if they have an equivalent document issued by a local agency of California or by another state (or local agency of another state) under which the partnership was created.

AB 2208 does not require employers to provide insurance coverage for spouses or registered domestic partners. However, if an employer does choose to provide coverage for spouses, it will only be able to purchase health insurance providing coverage for their employees’ spouses if the plan provides identical coverage for their employees’ domestic partners.

Sexual Harassment Training Is Now Required

The California Fair Employment and Housing Act will now require employers with 50 or more employees to provide two hours of sexual harassment training and education to supervisory employees by January 1, 2006. This new law does not apply to employees who have been trained since 2003. After January 1, 2006, supervisors must be trained at least once every two years, and new supervisors must be trained within six months of assuming a supervisory position.

The new law does not require the employer’s 50 employees to be located in California. Thus, an employer with 50 total employees may be covered by the law, even if only a few are located in California.

The training must be presented by “trainers or educators with knowledge and expertise in the prevention of harassment, discrimination, and retaliation” and must be “effective and interactive.” A video presentation alone is probably insufficient. Live training by employment law counsel or professional consultants is probably superior to in-house training in most cases. Employers must track which employees are trained and when.

Employer-Friendly Vetoes By The Governor

Gender Pay Equity Penalties: AB 2317 would have increased the penalties and damages an employee could obtain in an equal pay claim against an employer. In vetoing this bill, Governor Schwarzenegger emphasized that the civil penalty for violation of the equal pay requirement was doubled just last year.

Minimum Wage Increase: The Governor vetoed AB 2832 which would have raised California’s minimum wage by $1.00 to $7.75 by 2006, giving California the highest minimum wage in the nation. The California Chamber of Commerce estimates that passage of this bill would have increased employers’ costs by over $2 billion annually.

Electronic Monitoring: SB 1841 would have prohibited employers from monitoring employee activity on electronic devices such as computers, telephones, radios, etc., without first providing notice to the employee. In vetoing the bill, the Governor emphasized that it placed an unfair and unrealistic burden on employers wishing to monitor the electronic activity of their workers.

Anti-Offshoring Bills: A number of anti-offshoring bills were presented in the California Legislature this year, but were ultimately rejected. Governor Schwarzenegger vetoed Assembly Bill 1829, which would have restricted government contracts to entities that used only employees in the United States for the contract, except in special circumstances. Senate Bill 1453, which sought to amend California's Labor Code to add notice requirements for California companies that outsourced jobs, died in committee.

Revisions To California’s Unfair Competition Act

Proposition 64, a ballot initiative to revise California’s Unfair Competition Act (“UCA”), was approved by California voters and became effective on November 3, 2004. Prior to Proposition 64, the plaintiff in an unfair competition case did not have to prove he/she suffered any injury but could, instead, sue on behalf of the general public. Now, under Proposition 64, a plaintiff must establish that he/she “has suffered injury in fact and has lost money or property as a result of a violation” as a prerequisite to bringing suit under the UCA.

Proposition 64 provides that even a plaintiff who meets the above standing requirement may not bring a representative action to vindicate the rights of others without obtaining class certification. Under the initiative, only the California Attorney General or local government prosecutors may sue on behalf of the general public. Prior to the passage of Proposition 64, some attorneys had used/misused the UCA in targeting employers with hyper-technical Labor Code violations and in extracting nuisance settlements.

2005 IRS Mileage Rate Increase

The 2005 IRS mileage rate for business use is 40.5 cents per mile, up from 37.5 cents for 2004. This 3-cent increase in the IRS mileage reimbursement rate is the largest ever. Each year the IRS commissions a study to determine the costs of automobile operation. According to the IRS, recent increases in fuel costs and new vehicle prices warranted the big jump in the standard IRS mileage rate. Employers should modify their vehicle reimbursement policies accordingly.

Employers Get Some Relief From California's "Sue Your Boss" Law

In January of this year, employers were exposed to the specter of frivolous private lawsuits for any violation of the Labor Code, however minor. SB 796, signed by Governor Davis in the closing days of his administration and dubbed the "Sue Your Boss Law," established penalties for violation of any Labor Code section, provided a private right of action for employees, and allowed employees to share in civil penalties and collect attorneys' fees, even without showing they suffered actual harm or damages.

On August 11, 2004, Governor Schwarzenegger signed into law SB 1809, which offers significant relief to employers. The law took effect August 12, 2004, and is retroactive to January 1, 2004 in certain respects. Most Labor Code violations that involve posting, notice, agency reporting or filing requirements no longer carry the penalties established by SB 796, and can no longer be enforced by private actions. In addition, courts must now review and approve penalties in connection with any settlement agreement.

SB 1809 creates significant new procedural requirements that must be followed before an employee can file suit for various types of Labor Code violations. The procedural requirements differ substantially, depending on which Labor Code section is allegedly violated. In general, employees now must give advance notice to employers and various governmental agencies (depending on the type of violation). In certain types of cases, employees are precluded from suing if the government agencies take action against the offending employer, and in some cases employers can avoid a private lawsuit by curing the alleged violation and providing "make whole" relief to any aggrieved employee.

Employers still must be vigilant against Labor Code violations. Significant monetary penalties established by SB 796 remain, and can be as large as $100 to $200 per employee, per pay period. SB 1809 also prohibits discrimination or retaliation against employees who give notice of alleged violations or testify against employers regarding such violations.

Electronic Storage Of I-9 Forms To be Permitted Soon

There is good news for employers wishing to reduce their volume of paper records storage. On October 30, 2004, President Bush signed into law H.R. 4306, which amends the Immigration Reform and Control Act ("IRCA"), to permit electronic completion, signature and storage of I-9 forms for all employees. The law will go into effect either when the Department of Homeland Security issues final regulations implementing the law, or 180 days after the law was signed, whichever is sooner.

I-9 forms are the mandatory process by which employers prove they have verified that every new employee is legally authorized to work in the United States. Federal law requires that I-9 forms be stored by employers for three years from the hire date, or one year from the separation date, whichever is longer. Because the forms may be audited during various kinds of compliance reviews, employers must keep I-9 forms organized and available for inspection. Once the new law takes effect, employers will be able to scan and store existing I-9 forms electronically, and dispose of the paper originals.

Californians Reject Mandatory Health Insurance Proposal

SB 2, the Health Insurance Act of 2003, would have required companies of 200 or more employees to provide health insurance coverage to their workers and their families by January 2006 and would have required companies of 50 or more employees to comply by January 2007. It would also have required all medium to large size employers to pay at least 80% of the cost of the premiums for health benefits. Proposition 72, a November ballot initiative to overturn SB 2, narrowly passed. Accordingly, as of this date, the California Legislature's attempts to mandate employer-provided health insurance coverage have proven unsuccessful.

New Federal Overtime Regulations

The regulations for the federal overtime laws were substantially revised this year for the first time in decades. While these revised federal regulations do not change California's state law overtime requirements (which have some unique requirements, particularly for computer professionals), there are some significant changes for employees working in states that do not have more stringent overtime laws than the federal Fair Labor Standards Act imposes. Among other things, a new exemption has been created for employees earning $100,000 or more. The regulations also revised the requirements for computer professionals under federal law.

Democrats in Congress have introduced legislation to block the enforcement of the new regulations, but it appears that the regulations will remain in effect at least for the near term. Because of the complexity of the various categories of employees potentially exempt from overtime, employers should consult with counsel regarding the impact, if any, of the new federal overtime regulations on their business.

Proposed Emergency Revisions To Meal And Rest Period Laws

On December 10, 2004, the Division of Labor Standards Enforcement ("DLSE") proposed to adopt emergency regulations that would drastically reform the current meal and rest period laws. The proposed regulations would: (1) establish criteria to determine if an employer has met the requirement of providing a meal period; (2) clarify that the initial meal period in a workday may commence at any point prior to the start of the sixth hour of work; and (3) clarify that the one hour of pay an employer must pay an employee for each workday in which a meal or rest period is not provided is considered a penalty and subject to a one year statute of limitations. If the proposed regulations are not approved by the DLSE as an emergency provision, the DLSE has indicated that it will attempt to promulgate the proposed regulations through the normal rule-making process.