The following is a synopsis of the notable changes in California and federal employment laws that were enacted or modified in 2009.
AB 5 – Electronic Discovery
Not specifically an employment bill, but it could dramatically affect employers’ costs of engaging in employment litigation. Amends California’s Civil Discovery Act to establish procedures for the discovery of electronically stored information (“ESI”). The party seeking production of ESI may specify the particular format. If no format is specified, the party producing the ESI may use any reasonable format when supplying the information. Further, the bill allows discovery through copying, testing, or sampling, as well as inspection.
AB 23 – Cal-COBRA
Extends the federal COBRA premium subsidy to smaller employers (between two and nineteen employees) covered by Cal-COBRA. The bill imposes the following additional notice requirements on healthcare service plans, contract administrators, and insurers of small California employers:
• Notify qualified beneficiaries regarding the premium assistance available under the Federal American Recovery and Reinvestment Act of 2009 (ARRA) to subsidize Cal-COBRA coverage.
• Provide written notice after certain qualifying events (occurring between September 1, 2008 and May 13, 2009) within fourteen calendar days of the bill’s effective date, or seven business days after receiving notice of the qualifying event, whichever is later.
AB 361 – Limitations on Employer’s Ability to Rescind Medical Treatment Authorization
Prevents an employer, regardless of whether it established a medical provider network or entered into contracts with health care providers, from rescinding an authorization made for workers’ compensation medical treatment if authorization was made before the treatment was provided.
AB 412 – Nooses Prohibited in Workplace
Expands the protections of California’s Hate Crimes Law to prevent anyone, who knows a noose to be a symbol representing a threat to life, from hanging one in a place of employment for the purpose of terrorizing an employee. A violator is subject to imprisonment and civil fines up to $5,000 for the first offense.
AB 485 – California Civil Air Patrol Military Leave
Employers with more than 15 employees must provide at least ten days of leave per year, beyond other legally required leave benefits, to employees who are volunteer members of the California Wing of the Civil Air Patrol (the civilian auxiliary of the U.S. Air Force) if the employee is called to respond to an emergency operational mission.
AB 1093 – Worker’s Compensation Coverage for Third-Party Torts
Labor Code § 3600 has been amended to provide that injuries or death inflicted by third parties at the worksite because of an employee’s protected characteristic (race, religious creed, color, national origin, age, gender, disability, sex, or sexual orientation) will not be disqualified from worker’s compensation coverage.
AB X2 5 – Alternative Workweek Schedule
Labor Code § 511 has been amended to define a “work unit” as “a division, a department, a job classification, a separate physical location or a recognizable subdivision.” A “work unit” may also include an individual employee if the employee satisfies the criteria of a “reasonably identifiable work unit.” The bill further specifies that employers may include as an alternative work-week arrangement the option of a regular schedule of eight-hour days and allows employees who have adopted a menu of schedule options to move from one schedule to another on a weekly basis with employer consent.
AB X4 17 – Wage Withholding Tables
Effective November 1, 2009, employers must use a new state income tax withholding table to increase the amount of income taxes withheld based on existing claimed exemptions by 10%. Additionally, the bill increases the withholding rates to 6.6% for supplemental wages and to 10.23% for stock options and bonus payments paid on or after November 1, 2009. The bill further accelerates quarterly estimated tax payments of corporations and individuals with non-wage income to 30% due in April, 40% in June, zero in September, and 30% in December. Of note, the new accelerated payment schedule begins for installments due in tax years starting on January 1, 2010.
SB 54 – Same Sex Out-Of-State Marriages Recognized as Legal
Effective January 1, 2010, a valid marriage between persons of the same sex that was entered into outside of California prior to the effective date of Proposition 8 (November 5, 2008) will be recognized as a valid marriage in California. Such couples will be entitled to all the same rights, protections, obligations and duties in California that are granted upon spouses.
SB 313 – Increased Workers’ Compensation Penalties
Increases the penalty against employers who fail to carry workers’ compensation insurance to $1,500 per employee who is employed during the time the employer was uninsured. The bill further restructures the laws governing penalties for noncompliance with payment of workers’ compensation.
SB 367 – Price Discounts for Unemployed Consumers
Effective November 2, 2009, this bill establishes that discounts offered to or conferred on a consumer because of loss of employment (including a furlough) would not be considered discrimination in violation of the Unruh Civil Rights Act.
National Defense Authorization Act of 2010
The National Defense Authorization Act of 2010 (“NDAA”) went into effect on October 28, 2009. This Act expands employers’ duties and family military entitlements of the Family Medical Leave Act of 1993 (“FMLA”). The FMLA applies to public agencies, including state, local and federal employers, schools (public and private), and private sector employers with fifty or more employees. The key changes effected by the NDAA include:
• Qualifying exigency leave is now available to family members of those in the regular components of the armed forces during the servicemembers deployment to a foreign country. Previously, such leave was only available to family of servicemembers in the National Guard or Reserve who had been called to active duty.
• A family member of a veteran undergoing medical treatment, recuperation, or therapy for a serious injury or illness incurred in the line of duty may take caregiver leave if the veteran was a member of the military within five years of receiving such treatment.
• The definition of “injury or illness” is modified to include the aggravation of pre-existing injuries. Therefore, covered employees may now take up to 26 weeks of FMLA leave to care for a service member who had a pre-existing injury that was aggravated in the line of military duty.
American Recovery and Reinvestment Act
On December 21, 2009, President Obama signed into law an extension of the COBRA subsidy created by the American Recovery and Reinvestment Act (“ARRA”). This legislation both extended the period during which involuntary terminations would trigger subsidy eligibility and expanded the duration of the subsidy. The following new rules apply:
• The maximum subsidy period is extended from 9 to 15 months.
• The period during which a COBRA-qualifying event can trigger eligibility for the subsidy is extended from December 21, 2009 to February 28, 2010. Eligibility for the subsidy is conditioned on the timing of the qualifying event, which is the event causing the loss of coverage. Subsequently, if an employee experiences an involuntary termination on or before February 28, 2010, the employee will be eligible for the subsidy regardless of when COBRA coverage would eventually start.
• Employees who exhausted their nine months of subsidized COBRA coverage and did not elect to continue coverage by paying the full premiums are able to continue coverage by paying premiums retroactively. Their employers can apply the same refund rules in the ARRA so that the employees can take advantage of the subsidy for the full 15 months.
• A notice must be issued to all individuals who were or are assistance-eligible or terminated on or after October 31, 2009. Special notice must also be sent to individuals who dropped COBRA or paid the full premiums when their nine-month subsidy expired. The notice must explain their eligibility to either reinstate their coverage retroactively at the subsidized rate or receive a credit.
• To assist employers with the notice effort, the Department of Labor just issued three new Model Notices to advise employees and their dependents of these new rights.
Health Information Technology for Economic and Clinical Health Act
The Health Information Technology for Economic and Clinical Health Act (HITECH Act) was enacted on February 17, 2009 as part of the federal economic stimulus bill. The HITECH Act establishes new notice requirements for employers and health care providers when there is any breach of unsecured protected health information (PHI) of individuals. In the case of such a breach, employers and health care providers must provide notice to the affected individuals, the U.S. Department of Health and Human Services (HHS), and prominent medial outlets in certain circumstances. According to the HITECH Act, any notices are subject to the following requirements:
• The notice must contain a brief description of what happened, the types of unsecured PHI involved in the breach, steps the affected individual can take to reduce the risk of harm from the breach, a description of the entity’s investigation, efforts to mitigate harm and steps taken to prevent recurrence, and the contact information for obtaining additional information.
• The notice must be sent by first-class mail to the affected individual’s last-known mailing address. If unknown, the entity must post the notice on its website.
• If the breach involves 500 or more affected individuals, the entity must also notify HHS. If the breach involves 500 or more individuals from a state or jurisdiction, the entity must notify prominent media outlets serving the state or jurisdiction.
• An individual can prevent a covered entity from disclosing PHI if the PHI pertains to care for that individual that was paid solely out of pocket.
• The exception of not accounting for certain disclosures has been eliminated, thus requiring all disclosures of PHI to be accounted for by the covered entity in the case of a request of accounting.
• Business associates (contractor or other non-workforce member who performs services or activities) of covered entities must amend their agreements with covered entities to reflect the new privacy and security requirements under HITECH that apply to covered entities and are also now subject to same criminal and civil penalties applicable to an entity violating the same provision. Business associations must notify the covered entity if there is a loss of PHI.
• State attorneys general are now authorized to enforce these requirements after Feb. 22, 2010. Moreover, the penalties have gone up to 1.5 million for a breach of PHI that is the product of willful neglect.
Revised I-9 Form for Employers
Effective August 7, 2009, employers were to start using a new I-9 form. The new form includes changes to the types of documents that can be accepted for purposes of identity and work authorization. Expired documents cannot be accepted. Employers need not go back and change or update previously completed I-9 forms.