Changes to California Employment Law for 2012

Changes to California Employment Law for 2012

By Dane J. Bitterlin

The California legislature was as productive as ever in 2011, churning out a host of new employment-related regulations to take effect in 2012. Many of these regulations will have a negligible impact on the daily operations of local businesses, but there are a few that could prove problematic for the uninformed employer.

Assembly Bill 22 is a new law that will further impact the way employers screen current and prospective employees. AB 22 amends Civil Code section 1785.20.5 and adds Labor Code section 1024.5. The changes prohibit credit checks for employment purposes unless the position of the person for whom the report is being sought falls into one of the following categories:
  1. A managerial position;

  2. A position in the state Department of Justice;

  3. That of a sworn peace officer or other law enforcement position;

  4. A position for which the information contained in the report is required by law to be disclosed or obtained;

  5. A position that involves regular access, for any purpose other than the routine solicitation and processing of credit card applications in a retail establishment, to bank or credit card information, social security numbers, and dates of birth;

  6. A position in which the person is, or would be, a named signatory on the employer’s bank or credit card account, authorized to transfer money on behalf of the employer, or authorized to enter into financial contracts on behalf of the employer;

  7. A position that involves access to confidential or proprietary information; and

  8. A position that involves regular access to cash totaling $10,000 or more. 

Furthermore, any employer who wishes to run a credit check for an employee or prospective employee must first provide written notice to that person identifying the permitted reason for obtaining the credit report.
 

Senate Bill 909, which augments Civil Code section 1786.16, is another new law aimed at the pre-employment screening process. The changes to section 1786.16 focus on employee background checks as opposed to credit checks, and will arguably impact a much broader swath of California employers. The new rules will require employers who use third-party investigative companies to provide the consumer, along with the written disclosures previously required by law, the website address or, if no website exists, the telephone number of the third-party investigative consumer reporting agency where the consumer may find additional information about that agency's privacy practices. The remedies available to the consumer for a violation of this provision include not just actual damages, but also costs and attorney’s fees, making noncompliance with this new disclosure requirement a potentially costly mistake. Employers would be wise to review their background check consent forms to ensure they contain the necessary disclosures.

Another new law worth discussion is Senate Bill 459, which adds section 226.8 to the Labor Code and imposes new penalties on employers who improperly classify employees as independent contractors. Section 226.8 provides penalties of between $5,000 and $10,000 per violation, and up to $25,000 per violation if it is determined the employer has engaged in a pattern or practice of violating the new law. Moreover, any employer found to violate the new law will be required to post this information prominently on its website, or, if it does not have a website, in an area of its business accessible to employees and the public. Notice of the violation must be posted for an entire year and must set forth that the employer: 1) has committed a serious violation of the law by engaging in the willful misclassification of employees; 2) has changed its business practices in order to avoid committing further violations; 3) that any employee who believes he or she has also been misclassified may contact the Labor and Workforce Development Agency; and 4) the notice is being posted pursuant to state order. In light of the stiff fines imposed by SB 459, not to mention the potentially embarrassing notice requirements in the event of a violation, it would behoove employers to seek the advice of legal counsel in those situations where the distinction between employee and independent contractor is unclear.


This article appeared in the April 2012 issue of the Valley Business Journal

Dane Bitterlinis an associate at Neil Dymott. His areas of practice include professional liability, business and employment matters and general civil litigation. For further information, Mr. Bitterlin may be reached at dbitterlin@neildymott.com

 

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