Employment Law for 2008?
         by John T. Kennedy and Julie E. McComb

California employers must address new employment-related legislation and case law.  This year, employers face a whole host of developments, from the new minimum wage law, to legislation regarding cell phone use while driving, to State Supreme Court decisions on arbitration agreements and meal and rest periods. 

We survey important new legislation, significant employment-related California Supreme Court decisions from 2007, and a few pending State Supreme Court cases. 

California Legislation
Minimum Wage Increase
Effective January 1, 2008, the California minimum wage increased from $7.50 to $8.00.

Hourly Rate Threshold for Computer Professionals Lowered
Prior law exempted computer professionals from overtime requirements if the employee is primarily engaged in work that is intellectual or creative and earns an hourly rate of at least $41.00 per hour, indexed for inflation.  Effective January 1, 2008, the hourly rate was lowered to not less than $36.00 per hour, with the actual amount to be set October 1, 2008, by the Department of Industrial Relations.

California and Federal Military Leave Laws
The California Military leave law requires employers with 25 or more employees to give qualified employees as many as 10 unpaid days off when their spouse is on leave from military deployment. 

Hands Free Cell Phone
Effective July 1, 2008, drivers cannot use a cell phone while driving a motor vehicle unless he or she is using a hands-free device.

Private Medical and Health Care Records
Prior law regarding data breach notification requires employers that own or license computerized data to disclose any breach of security of the system to any California resident whose unencrypted personal information was, or is reasonably believed to have been, acquired by an unauthorized person.  Effective January 1, 2008, this law adds private medical and health care records to the definition of "personal information."

Whistleblower Protections in Health Facilities
Health facilities are prohibited from discriminating or retaliating against any patient, employee, member of the facility's medical staff or any other health care worker of the facility because that person has (1) presented a grievance, complaint, or report to an entity or agency responsible for accrediting or evaluating the facility or to any other government agency; or (2) has initiated, participated, or cooperated in an investigation or administrative proceeding related to the quality of care, services, or conditions at the facility. 

Workers' Compensation Payments
For employee injuries occurring after January 1, 2008, this new law extends the period during which an employee may receive up to 104 weeks of temporary disability from two years to five years. 

Workers' Compensation Audits
Generally, workers' compensation insurers perform payroll verification audits to compare actual premiums to estimated premiums.  Information for these audits is generally supplied by the insured employer.  This law provides that if an employer fails to provide the insurer or its authorized representative access to its records to perform an audit, the employer shall be liable to the insurer 3 times the insurer's then-current estimate of the annual premium on the expiration date of the policy plus specified costs. 

Federal Earned Income Tax Credit Notification
Effective January 1, 2008, California employers who are required to provide unemployment insurance must notify all employees that they may be eligible for the Earned Income Tax Credit ("EITC"). 

Privacy in Employees' Itemized Wage Statements
Prior law required employers to furnish employees with accurate, itemized wage statements showing, among other information, the employees' social security number.  Effective January 1, 2008, these wage statements must include either the last four digits of the employees' social security number or an employee identification number other than a social security number.

California Supreme Court Decisions

Disability Discrimination
Green v. State of California (October 2007) 42 Cal.4th 254
In what is being called the most important employment-related case to come down from the California Supreme Court in 2007, the Court held that to establish a prima facie case under the Fair Employment and Housing Act ("FEHA") for disability discrimination, the employee has the burden of proving that he or she can perform the essential functions of the job with or without reasonable accommodations. 

Bonus Calculation
Prachasaisoradej v. Ralphs Grocery Co., Inc. (August 2007) 42 Cal.4th 217
In another 4-3 decision, the California Supreme Court found an employer's incentive compensation plan ("ICP") did not violate California wage-protection laws simply because ordinary business expenses were figured in to determine the store's profit, upon which the supplementary incentive compensation payments were calculated. 

Expense Reimbursement
Gattuso v. Harte-Hanks Shoppers, Inc. (November 2007) 42 Cal.4th 554
In Gattuso, the California Supreme Court held an employer may satisfy its statutory obligation to reimburse its employees for work-required automobile expenses by paying enhanced compensation in the form of increases in base salary or increases in commission rates, or both, provided there is a means or method to apportion the enhanced compensation to determine precisely what amount is being paid as wages versus business expenses. 

Meal and Rest Periods
Murphy v. Kenneth Cole Productions, Inc.  (April 2007) 40 Cal.4th 1094
In this case, the California Supreme Court held that a three-year statute of limitations applies to claims for missed meal and rest breaks rather than a one-year statute of limitation.  Since this ruling came down, many new wage and hour lawsuits have been filed to recover for missed meals and breaks. 
Arbitration Agreements

Gentry v. Superior Court (September 2007) 42 Cal.4th 443
In this closely watched case, the California Supreme Court held in another 4-3 decision that an employer might not be able to deny employees the ability to bring a class action lawsuit to recover overtime pay even though employees individually waived their right to bring class claims in an arbitration agreement.  The Court further concluded that providing an opt-out provision to an arbitration agreement will not necessarily preclude a finding that the agreement is unconscionable.

Cases Pending Before the California Supreme Court

Statute of Limitations Under FEHA
McDonald v. Antelope Valley Community College District
In McDonald, the California Supreme Court must decide whether the one-year statute of limitations period for filing administrative claims under FEHA is subject to equitable tolling while the employee pursues the employer's internal administrative remedies. 

Personal Liability for Retaliation Under FEHA
Jones v. The Lodge at Torrey Pines Partnership
The issue before the California Supreme Court in Jones is whether an individual supervisor can be held personally liable for retaliation under FEHA. 

Medical Leave
Lonicki v. Sutter Health Central
In Lonicki, the California Supreme Court must determine whether the test that an employee's health condition "makes the employee unable to perform the functions of the position of that employee" must be construed to mean an inability to perform the essential job functions generally, or for a specific employer.