Employment Law Advisory Bulletin
New California Employment Laws and Developments for 2007
By John P. LeCrone
[December 2006]
Whether it was Governor Arnold Schwarzenegger's ’s re-election campaign, or the Legislature seeking to cooperate with the executive branch, the legislative agenda for 2007 was far less rancorous than in past years. Here are several significant new laws impacting California employers that take take effect Jan. 1, 2007.
- Minimum Wage. AB 1835 raises the state’s minimum wage from $6.75 per hour to $7.50 per hour effective Jan. 1, 2007, with another increase to $8.00 per hour effective Jan. 1, 2008. California’s minimum wage, now the eighth-highest in the country, will move to fourth place in 2007 and first place in 2008 barring comparable increases in other states.
- Supervisory Harassment Training. AB 2095 clarifies the existing law that went into effect last year, mandating supervisory harassment training for employers with 50 or more employees (not all of whom need to be in California). As it was previously unclear whether supervisors outside of California had to be trained, the new law provides that only supervisors located in California are subject to the training requirement. Additionally, the Fair Employment and Housing Commission is poised to issue final regulations on harassment training requirements, which should be effective February 2007 if approved by the Office of Administrative Law. Among other provisions, the final regulations allow employers to track compliance by designating a “training year” in which supervisors are trained and then retrained two years later. The final regulations also allow for on-line and so-called “webinar” training, as long as they meet certain requirements for access to a qualified “subject matter” expert on harassment prevention. We will issue a summary of the regulations once approval is granted.
- Pay Stub Requirements. AB 2095 also eases pay stub reporting requirements for overtime premiums paid in consecutive pay periods. Existing law (Labor Code Section 204) provides that overtime be paid no later than the payday for the next payroll period. The new law allows employers more latitude in reporting such extra hours, permitting employers to record overtime hours worked in the current period on their employees’ itemized pay stubs for the next payroll period. When recorded in the next payroll period, the overtime hours must be itemized on the pay stubs as “corrections” and include the dates of the pay period for which the correction is being made.
- Sexual Orientation Discrimination. While sexual orientation discrimination has long been prohibited in employment, SB 1441 adds “sexual orientation” to existing law that prohibits discrimination in the conduct or operation of state or state-funded programs and activities. The new law applies to any program operated or funded by the state, or that receives any financial assistance from the state, such as workers’ compensation and paid family leave.
- Cell Phones. SB 1613 bans the use of hand-held cell phones while driving a motor vehicle. Although this new law does not go into effect until July 1, 2008, employers may want to consider revising or adding policies for employees who drive as part of their job duties.
Employers avoided several proposed employment-related bills, which the governor vetoed.
- SB 141 would have required employers with 10,000 or more employees to pay a specified percentage (6 percent for non-profits and 8 percent for for-profit employers) of total wages for employee health care.
- AB 2555 would have increased penalties for gender-based wage discrimination.
- AB 1884 would have allowed employees who are “locked out” during a strike to obtain unemployment benefits.
- SB 1745 would have added protections from discrimination for victims of domestic violence.
Although none of these proposals will become law this year, they remain on the Legislature’s radar screen for 2007. The governor also has made clear his intent to focus on health care reform during the 2007 legislative session.
California Supreme Court Grants Review of Edwards v. Arthur Anderson
In our September 2006 advisory bulletin, we reported on Edwards v. Arthur Anderson , in which the California Court of Appeal rejected the “narrow restraint” exception to employee non-competition agreements, concluding that any such agreement that attempts to limit an ex-employee’s ability to work is “invalid even if the restraints imposed are narrow and leave a substantial portion of the market open to the employee.” The Court of Appeals further held that a release intended to waive an employee’s claims under the California Labor Code (typical release agreement wording) was void as against public policy absent an express exception for claims of indemnification. Now, the California Supreme Court has granted review of Edwards . This has the immediate effect of depriving the Court of Appeals’ decision of any legal effect, pending the Supreme Court’s decision. We will report again on the Edwards case once the California Supreme Court issues its decision.
For further information about new California employment laws and legal developments for 2007, please contact:
Davis Wright Tremaine has employment and labor lawyers in Alaska, Oregon, Washington state, California and Washington, D.C. We represent many clients nationally. For a specific referral for a DWT employment and labor attorney in your state, please contact the above attorneys. Thank you.
This Advisory is a publication of the Employer Services Department of Davis Wright Tremaine LLP. Our purpose in publishing this Advisory is to inform our clients and friends of recent developments in employment law. It is not intended, nor should it be used, as a substitute for specific legal advice as legal counsel may be given only in response to inquiries regarding particular situations.
Copyright © 2006, Davis Wright Tremaine LLP.
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