Employment Law Basics for Business Lawyers

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Stuart Goldware

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Michelle Ferber

As advisors to business clients and in many instances employers themselves, attorneys face the daunting task of keeping current with numerous employment laws and regulations. The last session of the California legislature added to the mix. What follows is a summary of some newly enacted employment legislation that may affect attorneys and their clients.

Accommodation of Religious Belief or Observance

The California Fair Employment and Housing Act (FEHA) has required employers to provide reasonable accommodation for the religious beliefs and observance of an individual employee, unless doing so would constitute an undue burden on the employer. The new law clarifies that religious dress and grooming practices are subject to these requirements.[1] The new law also specifies that the accommodation cannot require the employee to be segregated from the public or other employees.[2]

Sex Discrimination/Breastfeeding

The law has required all employers to provide reasonable accommodation and breaks for lactating women. The FEHA has prohibited discrimination on the basis of sex. The new law clarifies that under the FEHA, the word “sex” includes breastfeeding or medical conditions relating to breastfeeding.[3] Thus, lactating employees constitute a protected class that may not be discriminated or retaliated against or harassed. The discrimination and harassment notice posted by employers must be updated to include lactating mothers as a protected class on the basis of sex.

Social Media

The law now prohibits employers from requesting or requiring an applicant or employee to disclose his or her social media site user name and/or password. An employer may also not request that the applicant or employee access the social media site in the employer’s presence. The law does not affect an employer’s existing rights and obligations to request an employee to divulge personal social media reasonably believed to be relevant to an investigation of alleged employee misconduct.[4] This emphasis on employee social media privacy mirrors a national trend coming from the National Labor Relations Board.

Personnel Records

The California Labor Code sections relating to an employee’s inspection of his or her personnel records are the subject of significant changes involving the right to inspect or make copies of personnel files, the timing of providing access to those records, where and how they must be made available, the employer’s record retention obligations and penalties for failure to comply. The new law permits current and former employees to inspect and receive copies of their personnel records within 30 days of submitting a records request. Employers must maintain an employee’s personnel records for three years from the date of separation from employment. The law also sets forth rules regarding how many requests per year may be made and requires employers to develop a written form to be used for an inspection request.[5]

Temporary Service Employers

A statute that becomes effective July 1, 2013, requires temporary service employers to include in the itemized wage statements of employees the rate of pay and total hours worked for each assignment. The employee must also be provided with a notice containing the name, physical address of the main office, mailing address if different and telephone number of the legal entity for which the employee will be performing the work.[6]

Fixed Salary/Overtime

In the past, controversy has arisen when a salaried employee whose duties entitled them to overtime pay became eligible for such premium pay based on the number of hours worked. In some situations, employers have resisted paying overtime, claiming that the agreement to pay a fixed salary to the employee included the expectation that the employee may work overtime hours. Newly enacted law now clarifies that the fixed salary paid to a nonexempt employee may not include overtime pay, notwithstanding an agreement between the employer and employee to the contrary.[7] Thus, if a salaried, nonexempt employee works overtime, the employee will be compensated for that overtime worked using the hourly amount calculated from the total salary to establish the overtime rate.

Commission Agreements

Prior law enacted in 2011, but not effective until January 1, 2013, mandated that agreements for commission payments to employees must be in a writing setting forth the method by which the commissions would be computed and paid. That requirement remains in effect, and all agreements for payment of commissions must be in writing, subject to certain exceptions. Law enacted during 2012, also effective January 1, 2013, added as an exception temporary, variable incentive payments that increase, but do not decrease payment under the written contract. Already excepted from the written requirement were short-term productivity bonuses such as those paid to retail clerks and bonus and profit-sharing plans, unless the employer has offered to pay a fixed percentage of sales or profits as compensation for work to be performed.[8] The best practice is always for employers and employees to enter into clearly articulated commission agreements.

Wage Statement Violations

Under prior law an employer was required to provide to the employee an itemized wage statement that included specific categories of information. If an employee did not receive a legally compliant wage statement, the employee could recover penalties of up to $4,000 if the employee could demonstrate “injury” as a result of the employer’s knowing and intentional failure to comply. This law has now been amended to state that the employee is deemed to suffer injury if the employer fails to issue compliant wage statements, thus making it easier for the employee to collect penalties from the employer.[9]

Wage Garnishment

It is not uncommon for an employer to be served with a court order requiring the employer to withhold and pay a third party disposable earnings that would have otherwise been paid to the employee. Newly enacted legislation increases the amount of wages that are exempt from garnishment. This law does not go into effect until July 1, 2013, which will give the court system time to develop new forms instructing employers how much should be deducted from the employee’s disposable income.[10] Commencing July 1, 2013, employers should be careful not to rely on the previous computation made to determine the amount of deduction from the employee’s wages (such as in the case where the amount is the same each paycheck because the pay is the same). Instead, the new amount should be calculated based on the updated legal requirements.

Human Trafficking

Newly enacted law requires off-sale sellers of alcoholic beverages, adult or sexually oriented businesses, airports, intercity passenger rail or light rail stations, bus stations, highway truck stops, acute care hospital emergency rooms, urgent care centers, farm labor contractors and privately operated job recruitment centers to post notices in a specified form advising about resources available to victims of human trafficking.[11]

The above does not constitute a complete list of the new California employment laws, but it does represent some of the major changes. As can be seen, these changes are not limited to the California Labor Code and are often difficult to track. Among the most helpful employment law resources for attorneys and their business clients are those published by the California Chamber of Commerce, including its yearly California Labor Law Digest. Each year, attorneys and their employer clients should review and update their employee handbooks to comply with our evolving law.


The article was co-written by Michelle Ferber and Stuart Goldware, partners at Frankel Goldware Ferber. Michelle specializes in employment and business litigation and Stuart in all aspects of transactional and estate planning work.


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