The Advantage

January 2000

New Employment Laws in California Start in January

1999 was a banner year for employment legislation in the State of California. For the first time in decades, the state had a legislature controlled by one party, and a governor who belongs to the same party. With that combination, you might expect an uncontrolled rush to pass and implement new laws, and you would be right. The state legislature considered hundreds of bills, most of which were designed to shore up the controlling party's agenda. Many bills were proposed to reward political support from the past. At the beginning of the year, it showed all the earmarks of being a runaway legislature.

Employers were fearful that so many new requirements favoring employee benefits would be passed and implemented that they might actually have to consider the possibility of going out of business.

As you can imagine, when the dust cleared at the end of the legislative year, Californians saw new employment requirements on the horizon, but the horizon was still there. It hadn't vanished as some had feared. Governor Gray Davis vetoed more new laws than he approved, taking a stance against his own party's wishes as he did so.

Here then, are those that made it through the process, and will become effective January 1, 2000. Any employer with workers in California will have to be compliant with these new requirements. This is obviously not a complete list, simply an accumulation of information about the new requirements that have drawn the greatest attention over the course of the year.

[] Return to 8-hour Workday Overtime Requirement

(A.B. 60) This was one of the key campaign promises of Governor Gray Davis ... returning to the 8-hour workday overtime requirement. For years it has been a controversial topic among employers and politicians in the state. Of course, union support was strong.

So, beginning January 1, 2000, MOST California employers will be required to pay for overtime after 8 hours in any single workday. That will be in addition to any overtime required by an employee working more than 40 hours in any one workweek. There are still some details to be worked out about coverage of some employee segments. You can expect that to be resolved by mid-year 2000.

A second major provision of this new law will hold supervisors and payroll clerks personally liable for mistakes in calculating overtime pay. Not only will employers be liable for overtime due, and penalties, but individuals will be held accountable for paying penalties for each instance of incorrect overtime computation. (Anyone interested in becoming a payroll clerk?)

Don't Forget: New employment posters will be required reflecting these new rules.

[] Sexual Harassment of Independent Contractors Prohibited

(A.B. 1670) Employers subject to the Fair Employment and Housing Act (FEHA) (with 5 or more employees) will now be subject to liability for sexual harassment of independent contractors by regular direct employees. This bill also increased the fines that can be levied by the Fair Employment and Housing Commission (FEHC) from $50,000 to $150,000.

[] Sexual Orientation Protections Strengthened

Since 1993, sexual orientation has been protected from employment discrimination in California, but under the Labor Code, not under the Fair Employment and Housing Act. All in all, it was a lesser protection than that enjoyed by other protected classes.

As of January 1, 2000, that will change. Sexual Orientation will become a specific protected category in the Fair Employment and Housing Act. Enforcement will be undertaken by the Department of Fair Employment and Housing. Charges of discrimination can be filed up to 300 days after the most recent alleged incident of employment discrimination.

[] Employer Testing for Genetic Characteristics Prohibited

Earlier in the legislative year, the Governor signed a new law adding "genetic characteristics" to the state's protections against workplace discrimination based on "medical condition." As of January 1, 2000, employers will no longer be able to conduct employment-related medical tests on employees or job applicants that are designed to identify individual propensity for expensive diseases. In the past these tests had been used as the basis for not hiring individuals who were thought to have high risk of expensive genetically-triggered diseases. By screening in such a way, employers attempted to reduce their financial exposure for health care costs. Use of such tests will now be considered employment discrimination.

[] Age Discrimination as Disparate Impact

There are only two types of employment discrimination under the law. One is disparate treatment ... illegally treating one or more individuals wrongly. The other is disparate impact ... illegal impact on protected groups from policies or practices that seem to be neutral. Disparate treatment is usually demonstrated by hard evidence like documentation and testimony that directly link the illegal employment action to bias in the decision making process. Disparate impact has evolved through case law over the years to rely on statistical testing of data showing what groups were "screened out" of the selection process at grossly unfavorable rates.

Up to now, age discrimination has been treated by federal courts and California courts as "disparate treatment" discrimination. Rulings have universally leaned away from allowing "disparate impact" cases when the basis was age.

California has broken that precedent with a new law (S.B. 26) that modifies the Fair Employment and Housing Act to permit age discrimination claims to be brought for disparate impact. The new law also prohibits employers from using salary as a criteria when implementing force reduction programs, or other termination decisions, if the result would disparately impact workers over 40 years of age. So, beginning January 1, 2000, employers will have to begin doing statistical significance and probability analysis on data representing forecasts of impacted workers over 40 caught in termination programs.

[] "Kin Care" Leave

(A.B. 109) While attempts to expand coverage of family leave programs to employers with smaller work groups did not pass, a requirement for what is being called "Kin Care" leave did.

Employers are not required to offer paid-time-off programs for illness. Neither are employers required to offer paid vacations or other benefits. It is only when they do create such programs that the state and federal laws step in to regulate how they are administered. In California, starting January 1, 2000, all employers who offer paid sick leave or paid illness time off for employees will be required to allow employees paid time off for the care of sick family members.

Specifically, the requirement is that eligibility is limited to paid hours that have actually accrued in an employee's sick-time account. Unaccrued (or future) sick leave time is not eligible for consideration. The new law requires employers to allow up to half of an employee's accrued sick leave time to be used for care of ill children, spouse or parents. There is no requirement for carryover from one benefit year to the next.

[] Cal-OSHA Penalties Increased

(A.B. 1127) One provision of the proposed legislation didn't make it through the entire consideration process. In its final form, the new Cal-OSHA law has dropped the provision that employers were to be considered guilty until proven innocent. As it is, there are substantial increases in fines and other penalties for violations of workplace safety regulations.

For example: 1) Serious violation citations will carry a maximum penalty of $25,000 up from $7,000 currently. 2) If an employer fails to correct a violation, the penalty can be up to $15,000 per day, compared to $5,000 today. 3) Criminal enforcement authorizes prosecution of an individual manager or supervisor for either a misdemeanor or felony. Fines can reach $250,000 for individuals and prison terms up to three years. Corporations can be fined up to $2,000,000. The current fine limit is $5,000. 4) All state and local government employees are covered under the new law. 5) OSHA standards will now be admissible in civil proceedings to establish or define standard of care.

OFCCP Now Collecting Pay Data With AAPs

All federal contractors, with written affirmative action plans, should be advised that the Department of Labor's (DOL) Office of Federal Contract Compliance Programs (OFCCP) has received approval from the Office of Management and Budget (OMB) to change its compliance review scheduling letter. That change would add compensation data to the list of information OFCCP auditors demand in the desk audit phase of their review.

OMB's approval came on December 3, 1999, following an aborted OFCCP attempt to "sneak through" approval at the end of 1998 during the holiday season. Contractors were so outraged at the back door method used by the enforcement agency that they responded with condemnation of the proposal. Employers also objected strongly to the initial request for detailed compensation data by employee name. Rather than risk rejection, the OFCCP's strategy was to withdraw its request from OMB consideration. It was quite clear that the tide had turned against the DOL agency's request in early 1999. More recently, the OFCCP returned to OMB with another proposal for changing its compliance review scheduling letter. This one requests a compilation of data "by salary range, rate, grade, or level showing total number of employees by race and gender and total compensation by race and gender." So, contractors, get ready. The approval isn't even two weeks old at this writing, and the agency is already sending the new version of its scheduling letter to contractors containing the compensation data demand.

While employers and employer groups continued to object to release of compensation data, over half of the 40 public comments received by OMB during the latest comment period supported the OFCCP proposal. Those came from labor unions, women's groups and civil rights organizations.

The issue of data confidentiality continues to be in the forefront of employer thinking. Shirley Wilcher, Deputy Assistant Secretary of Labor and head of the OFCCP, dismisses these concerns with a cavalier comment about employers always being notified when a Freedom of Information Act request is received asking for release of their data. She says the agency has never released data without first notifying the employer to allow an objection if the employer wishes to challenge the request. Concern among employers is that compensation information can give competitors an easy view into their strategic planning. Ms. Wilcher says that is irrelevant to her agency's actions. She further says that employers are entitled to sue the agency to prevent release if they wish to over ride an administrative decision. Parenthetically, she points out that she does not know of a single instance when an employer sued to prevent release of its data.

Ms. Wilcher says she wants her agency to have the compensation data as a means of determining whether or not it should conduct a full-blown compensation analysis at the establishment. The OFCCP says it does not want the data to determine if a contractor has discriminated based on compensation. That is in direct contrast with messages Ms. Wilcher has issued in the recent past, and flies in the face of agency actions around the country. She has made various comments about her agency's actions and intentions, then demonstrated something different at the Compliance Officer level of the organization.

One thing is crystal clear about the OFCCP ? you cannot rely on anything you hear from the agency. We are recommending to all of our clients that they get all communication in written form. If the agency demands (they no longer request) information that the employer questions their authority to obtain, the agency representative should be asked to put the demand in writing, showing their authority for obtaining the information.

The OFCCP still has a request at OMB awaiting approval. It would require federal contractors to submit an annual "EEO Survey" showing both head count and compensation data for each EEO category by race and gender. The public comment period for that proposal has closed, but OMB has not yet released its decision on the request. If OFCCP has its way, the surveys would be distributed beginning in April 2000, to contractors across the country. OMB received over 110 comments on the EEO Survey proposal.

Federal contractors need to be aware that they will be asked to provide information, data and remedies to the OFCCP that the agency often has no authority to request. The current tactic involves an approach much like a school yard bully. The only defense a contractor can use against such tactics is knowledge and calm management of the situation. If necessary, we suggest contractors escalate their objections to unwarranted demands to successively higher levels of the agency. There are valid reasons for not buckling under to such bullying behavior, not the least of which is financial.

AARP Offers Web Resources

The American Association of Retired Persons (AARP) is offering some job-related resources on its web site. Titled, "Working Options," the organization is offering some guidance for mid life and older workers. http://www.aarp.org/working_options/

Visit this site and you will find articles on subjects such as:

HR Manager Personally Liable for FMLA Damages

KnowledgePoint, in its Personnel Law Update, reports that a state of Maryland personnel officer has been held personally liable for all of a $375,000 federal trial award. The case was Knussman v. Maryland.

Knussman was a paramedic employed by the state police department. He applied for a leave under the Family and Medical Leave Act (FMLA) so he could care for his new baby. The employer denied his leave request because he was the father and not the mother. The jury held the state and three of its employees liable in their official capacities and also found the department's personnel officer personally liable.

Because Knussman's damages resulted from emotional injury, which is not compensable under the FMLA, he was prevented from collecting any damages from the state. As a result, the trial judge let the judgment stand and levied the entire penalty against the personnel officer as a personal liability.

(Source: KnowledgePoint Personnel Law Update, November 1999, Volume 2, Number 10, 1-800-942-4494)

Hot New Job Opportunity for Computer Experts

One of today's hottest new job opportunities is for computer experts who can recover electronic messages that their authors thought had been erased or deleted. It is apparently true that many employees still believe that their personal email messages can be deleted by using the delete feature on their local computer terminal. What they might not realize is the network computer usually retains copies of all messages, and that the network machine memories are backed up at regular intervals.

So far, no one has been able to explain why people are seemingly more candid when writing email messages than when writing letters or talking on the telephone. Nor is it clear why some people believe they can ignore the rules of courtesy and normal business etiquette. Yet, they do. Sometimes, folks even send messages without signing them, believing they will be anonymous transmissions. Little do they realize that electronic trails can lead right back to them.

For employers, this has become a significant problem. Particularly with regard to sexually harassing messages transmitted through company machines and over company networks. In some cases, employees have been discovered selling company information to competitive organizations, completing the transactions over company networks.

Now, computer experts are being hired by employers and by attorneys to retrieve these "deleted" messages from backup records. There is even a book on the subject, written by California attorney Michael Patrick. It is titled, "An Attorney's Guide to Protecting, Discovering, and Producing Electronic Information." (LRP Publications, 1-800-341-7874 X310)

These errant electronic messages that were supposed to have been deleted long ago are showing up in court as evidence of employer liability. They are also being used to show employee misbehavior in discipline cases.

In addition to backup files, some new software programs are designed to automatically make several copies of key files and "stuff" them into various hidden places within the computer system. Enter the computer sleuth. For $50 to $150 per hour (sometimes a great deal more), these new specialists are uncovering those "hidden" repositories of electronic messages their authors had thought were long gone.

If you need to hire an email detective, or you would like to become one, you can get more information from the following sources:

Workplace Violence: Preventing the Unthinkable

1. Overall plan guidelines: The department of labor OSHA division
http://www.dol.gov/

2. Pre-employment screening:
http://www.pre-employ.com

3. Physical security devices:
http://www.siaonline.org

4. Employee training:
http://www.management-advantage.com/products/violence.htm

By addressing the issue of workplace violence and how to prevent it, an employer can prevent the unthinkable from happening in its establishment.

(Wes Franks is a national account manager with http://www.pre-employ.com He can be reached 1-800-300-1821 or by email at eis4@snowcrest.net)

Computing the Cost of Turnover

With the employment market as tight as it is today, employers sometimes believe that they don't have to worry about employee turnover. They reason that there will always be someone else to take over the empty desk. And, the waiting period for that replacement won't be very long either.

Well, that may be true for some employers. But, for most, losing an employee can be a costly experience, even if there are several other folks waiting in the wings to take the empty job. It may seem obvious that it is costly when "stars" walk away, but it can also cost plenty when ordinary employees decide to leave, only to require replacement.

How can we measure the cost of turnover? It's not too difficult. And what you determine will be deducted from the profit of your enterprise. Reduce turnover, and you will be able to reduce the drain on the bottom line. If you want to prove to the boss that human resource organizations have value, show that you have saved actual dollars by cutting turnover expense.

* Worksheet for Computing Employee Turnover

Pick one job in your organization that has experienced employee losses during the past year. Then complete the worksheet to determine the cost of that turnover to your employer.

Raw Data:
Annual job wage: _________________
Number of employees who left during 12 months: ____

Direct costs: $_____________
(Add the costs of advertising, agency fees, search and placement fees, internal referral bonuses, relocation expenses, employment office overhead, recruiter's expenses, pro-rated recruiter salary, social security & medicare costs for new employee, etc.)

Indirect costs: $_____________
(Add supervisor and management time per new hire, orientation and training per new hire, cost of lost productivity or learning curve per new hire, etc.)

Total costs: $_____________
(Add Direct costs and Indirect costs)

Example:
Clerical assistant position paid $30,000 per year. 8 employees have left that job title in the past year, each requiring replacement.

1. Direct cost: $4,250
(Advertising @ $1,200, Recruiter salary for 10 days @ $1,550, Payroll taxes - UI, State - @ $1,000, Employee referral bonus @ $500)

2. Indirect cost: $7,750
(Applicant processing costs per new hire @ $500, Management/Supervisor interview costs @ $1,500, New employee orientation cost @ $750, Job training/Ramp-up costs @ $5,000)

3. Total cost per employee: $12,000

4. Total cost for company: $12,000 x 8 = $96,000

If you could reduce your turnover of clerical employees by only 25%, you could show a savings of $32,000. Most CEOs would like that.

A Gentle Word on Behalf of Our Business

When you need help developing your affirmative action program, give us a call. We specialize in AAP development, implementation training and compliance review support for clients all over the country.

You wouldn't go to an IRS audit alone. Why think about going into a Department of Labor compliance review without professional support? The stakes are just as high either way.

We are ready to give you the support you need.

And while you're at it, think about ordering a copy of our reference and training book on preparing affirmative action plans and managing compliance reviews. You will find it an invaluable resource at a price that just can't be beat.

"Secrets of Affirmative Action Compliance," new 3rd edition, contains 500 pages of the latest and current regulation requirements and practical suggestions for your organization. Includes new Federal Regulations. $99.95 plus $7. shipping/handling and CA sales tax for CA destinations. Credit Card Orders ... Call Toll Free:

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We can help with your other human resource management needs as well. Think of the next time you need:

Employee Handbooks

Management Training in Compliance Issues

Affirmative Action Plan Development

Affirmative Action Statistical Analysis

Disparate Impact Testing for New Hires, Promotions, Transfers, Terminations

Expert Witness

Books, Software or Other Support Materials for HR Professionals

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