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eAlert - New CA Employment Laws Effective January 1, 2012

The California Legislature had a busy legislative session on the employment law front, presenting Governor Brown with numerous employment-related bills.  Although Governor Brown vetoed a number of these bills, he also signed into law several important measures, which take effect on January 1, 2012.   These new laws include the following:

AB 22:  Prohibition on Use Of Credit Reports For Employment Purposes

AB 22 prohibits the use of credit reports for employment purposes except in very limited circumstances.  Notably, this law does not apply to certain federally and state regulated financial institutions.  All other employers and prospective employers are prohibited from obtaining or relying on consumer or credit reports in making employment decisions about employees or applicants for employment. The only exception is where the position at issue is one of the following:

  • a position in the California Department of Justice;
  • a managerial position, defined as one that qualifies for the executive exemption from overtime;
  • a sworn peace officer or other law enforcement position;
  • a position for which the information contained in the report is required by law to be disclosed or obtained;
  • a position that involves regular access to specified personal information (bank or credit card account information, social security number, and date of birth) for any purpose other than the routine solicitation and processing of credit card applications in a retail establishment;
  • a position in which the person is or would be a named signatory on the employer’s bank or credit card account, or authorized to transfer money or enter into financial contracts on the employer’s behalf;
  • a position that involves access to confidential or proprietary information that qualifies as “trade secrets” under Civil Code Section 3426.1(d); or
  • a position that involves regular access to cash totaling $10,000 or more of the employer, a customer, or client during the workday. 

AB 22 also requires that an employer provide written notice to the applicant or employee when it seeks a consumer credit report under one of the exceptions above, specifying the permissible basis for requesting the report and also providing a box to check off to request a copy of the report.  In that circumstance, a copy of a the report must be provided free of charge at the same time as the employer receives a copy of the credit report.  As is currently the law, if the employer makes an adverse employment decision based on information in the credit report, it must notify the applicant or employee of that fact and provide the contact information of the credit reporting agency. 

AB 469:  New Hire Information

Under this legislation, employers will now be required to provide newly hired employees with specific information in writing relating to numerous topics:

  • rate and basis of pay (whether hourly, salary, commission, or otherwise), and the overtime rate
  • official name of the actual employer, including any “doing business as” names used by the employer
  • regular paydays
  • what, if any, allowances will be claimed as part of the minimum wage (i.e., meals or lodging)
  • the physical address and telephone number of the employer’s main office or principal place of business (as well as a mailing address if different)
  • the name, address and telephone number of the employer’s workers’ compensation carrier. 

The employer must also inform all employees in writing of any changes to the above information within seven days, unless the changes are noted elsewhere on a timely wage statement (i.e., changes to rate of pay).

SB 459:  New Penalties for Independent Contractor Misclassification

This new law imposes enhanced penalties on employers who willfully misclassify individuals as independent contractors.  Penalties include civil penalties ranging from $5,000 to $25,000 per violation, which could presumably be assessed not only by the Labor Commissioner but also in private actions under the Private Attorney General Act (PAGA).  Other remedies include requiring an employer to display on its website, or other area accessible to employees and the general public, a notice that explains that the employer has been found guilty of committing a serious violation of the law by willfully misclassifying employees, along with other required information.  The law also prohibits charging misclassified independent contractors fees or deductions from compensation (such as rental fees for space or equipment), if those fees and deductions would not permissible to charge an employee.   

Other New Laws

  • AB 887:  Amends the California Fair Employment and Housing Act to clarify that gender identity includes “gender expression” and to prohibit discrimination on that basis.  (This amendment is retroactive because it is a clarification rather than a change in the law.)
  • AB 1236:  Prohibits state employers from using E-Verify to verify that employees or applicants are authorized to work in the U.S.  Does not apply to public employers generally or to private employers.

Vetoed Employment Legislation:  Governor Brown vetoed numerous bills presented to him, including:  SB 931 which would have imposed new requirements for the use of “payroll cards;”AB 267 which would have precluded and/or invalidated forum selection and choice of law provisions in employment contracts with California employees; and AB 325 which would have required California employers to provide employees with bereavement leave.   
For further information on the new laws and their implications for your organization’s policies and procedures, please contact Felicia R. Reid at, resident in our San Francisco, CA office, or Olivia Perry at, resident in our Santa Monica, CA office.

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