We wish all of our clients and friends a happy and prosperous New Year. This annual report from Greenberg Glusker’s Employment Department summarizes the new laws that will affect California employers in the upcoming year. We look forward to working with you in 2011.

1. JUDICIAL AND LEGISLATIVE DEVELOPMENTS UNDER CALIFORNIA LAW

Important Decision Regarding Arbitration Agreements

A California Court of Appeal issued a decision which requires new protections for employees who agree to arbitrate legal disputes with their employers. Specifically, the Court of Appeal in Trivedi v. Curexo Technology Corporation noted:

• An arbitration provision contained within an employment agreement should be conspicuous and prominent (i.e., in a different typeface or font size);
• Employers must provide employees with a copy of the arbitration rules to which an employee would be bound;
• An arbitration agreement cannot provide for broader remedies to the employer than are otherwise available by statutory or common law (in this case it did so by expanding the employer's right to attorneys' fees if it prevailed in arbitration); and
• An arbitration agreement may not allow for provisional injunctive relief to be sought in a court of law.

The Trivedi decision is another example of the way in which California employment laws operate to protect employees. It is also a warning to all California employers that any agreements to arbitrate which do not comply with this decision may be unenforceable in California. For these reasons, all employers currently using such arbitration agreements are urged to have them reviewed by legal counsel.

New Leave of Absence for Organ and Bone Marrow Donors

California law now requires all employers with 15 or more employees to permit an employee to take a protected leave of absence for organ or bone marrow donation. The duration of the protected leave extends between five and 30 days depending on the circumstances. While employers may require an affected employee to use a certain amount of accrued sick or vacation time, such time off may not be counted against the employee's benefits pursuant to the federal Family and Medical Leave Act or the California Family Rights Act.

Health Insurance for Medicare-Eligible Retirees

A new law expressly states that employers will not violate the protections in the Fair Employment and Housing Act ("FEHA") for individuals of advanced age if the health benefits that they provide to retirees are altered, reduced or eliminated when the retiree becomes eligible for Medicare benefits.

Unemployment Compensation Benefits for Domestic Violence Survivors

Eligibility for unemployment compensation benefits has been extended to claimants who leave their employment voluntarily in order to protect themselves or their family from domestic violence abuse.

New Workers' Compensation Notice Must Be Provided to California Workers

California's Department of Worker's Compensation released regulations that require all employers within the state to post a new "Notice to Employees - Injuries Caused by Work" notice. Updated Workers' Compensation pamphlets containing the current notice can be obtained through the California Chamber of Commerce.

Meal Periods for Construction Workers, Commercial Drivers, Security Officers and Electrical and Gas Employees

Existing law prohibits employers (subject to certain exemptions) from requiring an employee to work more than five hours in a day without providing a meal period. A new law exempts employees in a construction occupation, commercial drivers, employees in the security services industry employed as security officers, and employees of electrical and gas corporations or local publicly owned electrical utilities so long as those employees are covered by a valid collective bargaining agreement containing specific terms, including meal period provisions.

Appeal from a Labor Commissioner Judgment

The Labor Commissioner has the authority to investigate employee complaints and hold administrative hearings to decide certain employment-related disputes. Decisions made by the Labor Commissioner may be appealed to the Superior Court by either party. A new law expressly provides that an employer wishing to appeal an administrative judgment by the Labor Commissioner must first post a bond in the amount of the judgment rendered in the administrative hearing.

2. LEGISLATIVE AND AGENCY DEVELOPMENTS UNDER FEDERAL LAW

Health Care Reform

The passage of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act (collectively, the "PPACA") will impact employers in the coming years as new regulations and requirements impose additional obligations on the benefits provided to employees. By 2014, employers must comply with new mandates regarding what needs to be included in their group health plans, new reporting and disclosure requirements, new subsidies and tax credits, and new penalties. Fortunately, only certain aspects of the law go into effect in 2011. We summarize here only those issues that require your immediate attention:

• A special early retiree "reinsurance" program became available in June 2010 that subsidizes plans and programs that provide coverage to retirees and their families who are not yet Medicare-eligible. Employers that cover such individuals under their plans should consider applying and qualifying for the program. Click on the link for information about the Early Retiree Reinsurance Program.
• Unless an employer has a "grandfathered" plan, certain limiting provisions in health care plans must be removed and preventive benefits must be included. The limitations include:
  • removing lifetime benefit limits on core benefits;
  • removing the right to rescind coverage for reasons other than fraud;
  • eliminating overly restrictive annual limits;
  • extending coverage to children who are under 26 years of age; and
  • eliminating pre-existing condition exclusions for dependent children under the age of 19

In addition, if such benefits have not been offered in the past, plans must begin offering certain preventive services (such as immunizations and preventative screenings).

• Employers are now required to report to the IRS the cost of the health, accident and sickness coverage provided to employees. 

We will keep our clients apprised as regulations and guidance become available from the federal government regarding the implementation of the PPACA, and will provide information regarding employer obligations in future years in a timely manner.

IRS Mileage Reimbursement Rate

The IRS increased the standard mileage reimbursement rates for business travel to 55.5 cents per mile effective July 1, 2011.

Payroll Taxes

Tax rates for Social Security (FICA) decreased as of the beginning of the year, but tax rates for California's State Disability Insurance (SDI) increased as of January 1, 2011. Be sure to check that you are using the proper rates before processing paychecks in the new year.

Members of Greenberg Glusker’s Employment Law Group are available to answer any questions you may have regarding these important legal developments. Your questions may be directed to Nancy Bertrando or Diane Crumpacker at (310) 553-3610.