New laws for 2015
How they effect California auto dealerships
Throughout 2014 we have written about the new laws that will affect many California dealerships. As the New Year is here, we wanted to provide you a summary of compliance issues you may want to address in light of the new 2015 laws that will have an impact on your day-to-day operations. Some of these laws went into effect as early as January 1. Some significant liability awaits you if you do not address these compliance issues now. The good news is that if you get ahead of it, neither your compliance budget, nor your litigation budget should be severely affected.
AB 1522: Paid sick leave.
Update your PTO policies and employee handbook to build in at least three days of paid sick leave and adopt the statutory accrual period or add a separate paid sick leave policy.
Beginning July 1, 2015, employees who work in California “for 30 or more days within a year” from the commencement of employment are entitled to accrue paid sick leave at the rate of “not less than one hour per every 30 hours worked.” Under Assembly Bill 1522, employers must provide at least three (3) days of paid sick leave. Usage can be capped at 24 hours or 3 days per year. And annual accrual can be capped at 48 hours or 6 days per year. This law also imposes detailed recordkeeping and notice requirements, as well as penalties for noncompliance.
What does this mean?
Employers should revisit and revise their vacation, sick, and paid time off (PTO) policies to conform to the requirements of AB1522. We have seen many companies combine sick leave and vacation into PTO. For many businesses this is a viable option because, under PTO, employees receive a certain number of days for vacation, sick leave, and personal time. On the other hand, while PTO and vacation time are earned benefits, only PTO can legally count toward the leave for sicknesses or illnesses. Therefore, for those employers who strictly offer vacation time, as opposed to PTO, additional sick leave will need to be provided to employees. We do not recommend that you offer sick leave by reducing vacation, or other non-wage benefits. First, employers may not take away accrued vacation time or wages. Additionally, while there is no legal requirement to have paid vacation time, reducing the offered vacation time may run afoul of the Legislature’s intent. In fact, in Oakland, California, voters passed Measure FF, which expressly precludes an employer from modifying existing leave policies by reducing benefits.
Should you choose to adopt a PTO policy, please note that upon termination of employment this is more expensive than providing pure sick time because PTO is considered wages that must be paid out upon separation from employment, while pure sick leave is not construed as wages and need not be paid-out. For more details on the law, consult a knowledgeable labor and employment lawyer.
AB 2053: Abusive conduct prevention training.
Update your employee handbook and sexual harassment prevention policy. When conducting sexual harassment prevention training, be sure to use a company that includes anti-bullying training.
As you know, if you have fifty or more employees, you are already required to provide two hours of interactive sexual harassment prevention training and education to all supervisory employees every two years and to all new supervisory employees within six months of assuming a supervisory role. You are also required to make your other employees aware of the seriousness of violations of the sexual harassment prevention policy and they should be cautioned against using peer pressure to discourage harassment victims from using an internal grievance procedure.
Effective January 1, 2015, Assembly Bill 2053 extends this mandatory training to include information about bullying. Specifically, the training must “include prevention of abusive conduct.” Abusive conduct includes “conduct of an employer or employee in the workplace, with malice, that a reasonable person would find hostile, offensive, and unrelated to an employer’s legitimate business interests. Abusive conduct may include repeated infliction of verbal abuse, such as the use of derogatory remarks, insults, and epithets, verbal or physical conduct that a reasonable person would find threatening, intimidating, or humiliating, or the gratuitous sabotage or undermining of a person’s work performance.”
What does this mean?
We might want to review your supervisor training program to ensure it addresses not only discrimination and harassment, but also workplace bullying. While the Legislature has not gone so far as to create a private right of action for an employee to seek damages for workplace bullying, employers should not take this new training requirement lightly. Failure to provide this training can still give rise to remedies under the Labor Code.
Moreover, we are seeing several employers who are still not strictly in compliance with Assembly Bill 1825 concerning the training of new supervisory employees. Some dealers either ignore, or are unaware of, the second part of AB1825 requiring new supervisory employees to receive mandatory training within six months of hire. This has caused some problems in sexual harassment lawsuits, depriving the dealer of a defense and increasing the cost of settlement or making the case indefensible. If you are one of those dealers, we strongly recommend that you get compliant now. One way to do that is to Immediately conduct sexual harassment and abusive conduct prevention training in an interactive classroom setting. Conduct the classroom training biennially and either bring the trainer back semiannually for a “mini-session” with the newbies, or use an interactive computer program to train new managers semiannually until the biennial training occurs. We do NOT recommend that you use an interactive computer program for the mandatory biennial training. A dealer is in a much stronger litigation position by providing training to supervisors in multiple media, thereby complying with both the semiannual and biennial requirements of the law.
AB 1443. Unpaid interns.
Provide your anti-discrimination and harassment prevention policies to unpaid interns and volunteers.
Effective January 1, 2015, Assembly Bill 1443 extends the Fair Employment and Housing Act’s protections to unpaid interns and those in apprenticeship training programs.
What does this mean?
For dealers, probably not much, because it is unlikely that dealers employ unpaid interns and volunteers. However, if you are a dealer who does utilize unpaid interns and volunteers, you should be sure to provide your anti-discrimination and harassment prevention policies to them, have them sign off that they received them, and then keep them in a file so you can prove compliance with this law.
AB 1897: Joint employer liability for vendor misfeasance.
Consider taking porter and detail work back in-house or update your vendor agreements to impose strict compliance and indemnity requirements on vendors who provide workers to you in the ordinary course of dealership operations and monitor wage and hour, workers compensation and OSHA compliance of vendors.
Starting January 1, 2015, under Assembly Bill 1897, dealers will be accountable for wage-and-hour violations, failure to maintain worker’s compensation insurance and noncompliance with OSHA regulations when they use vendors, staffing agencies and other contractors who supply workers in the regular and customary operation of the dealership. Under this new law, the dealer will now be a joint employer with the vendor for purposes of meal and rest break compliance, downtime, overtime and failure to pay minimum wage, for noncompliant wage statements, for the vendor’s failure to maintain worker’s compensation insurance and for the vendor’s noncompliance with OSHA regulations. Ignorance of the violations will not save you. And the remedies in this statute are cumulative with other theories of liability against the dealership.
What does this mean?
This raises significant additional liability to dealers in three areas: wage and hour, workers compensation and OSHA compliance. Dealers who use vendors to supply porter and detail workers and others could find themselves responsible for the inaccurate time-keeping, failure to provide meal and rest breaks or have compliant meal and rest break policies, and failure to provide adequate wage statements of its vendors. This is particularly troubling because you have no control over the vendor’s policies, whether they require their employees to sign arbitration agreements with class action waivers in them or otherwise have compliant wage and hour policies. Under this new law, dealers are also responsible for workers compensation violations of third party vendors and for a vendor’s noncompliance with OSHA regulations. Dealers should seriously consider whether it continues to make sense to retain vendors for these services in light of this new law. Written contractual indemnities help, but are not worth the paper they are written on if the vendor has no significant assets.
SB 1360: Cooldown periods are paid time.
Update your break policies to include “cooldown” breaks and create policies for employees to acknowledge they received all cooldown breaks that applied during each pay period.
Senate Bill 1360 creates new employer liability involving employees who work outside and who miss recovery periods. California Labor Code § 226.7 defines “recovery period” as a “cooldown period afforded an employee to prevent heat illness.” This Legislation amends § 226.7 to require that “recovery periods” that are taken due to the heat are included as time worked and therefore, must be paid breaks. The changes will take effect on January 1, 2015. Before SB1360, California law was silent on whether such recovery periods should be counted as paid time.
What does this mean?
Employers may consider revising their employee handbooks so that meal-and-rest-period policies also include recovery periods. Additionally, employers might consider implementing a separate, written policy providing recovery periods and implement procedures for employees to acknowledge receiving each cooldown period and to compensate employees in the event that they miss a recovery period.
AB 2074: Additional penalties for minimum wage claims.
Confirm that your compensation practices comply with minimum wage laws.
Governor Jerry Brown approved Assembly Bill 2074, which modified California labor law concerning minimum wage violations. This bill allows employees to pursue liquidated damages anytime before the expiration of the statute of limitations for bringing the underlying action alleging minimum wage violations, which is three years.
What does this mean?
It is critical that employers confirm that their practices comply with minimum wage requirements because for any action under the labor code seeking wage recovery for minimum wage violations, an employee may recover liquidated damages over a longer period of time (three years of damages, instead of one).
AB 60: Protections for Immigrant Workers from Discrimination.
Audit your Form I-9 process and document retention policies.
Starting January 1, 2015, illegal immigrants will be able to obtain a California driver’s license. Assembly Bill 60 allows people who cannot prove their eligibility to be in the United States the ability to obtain a driver’s license. The California DMV will begin issuing these drivers’ licenses in the beginning of next year and will be marked with the phrase “this card is not acceptable for official federal purposes.”
It is important to note that the California drivers’ licenses issued under AB60 are not valid documentation to prove eligibility to work in the United States. Therefore, we recommend that employers train their personnel who are responsible for verifying documents when completing the Form I-9 to ensure that the documents presented by the worker are valid for I-9 purposes. In addition, it would be a good time for employers to audit their Form I-9 process and document retention policies.
Additionally, Assembly Bill 1660 makes it a violation of law, including, but not limited to, a violation of the Unruh Civil Rights Act, to discriminate against an individual because he or she holds or presents a driver’s license issued under AB60. Furthermore, this Bill states that driver’s license information obtained by an employer shall be treated as private and confidential, and may only be used for the purpose of establishing identity and authorization to drive. Dealers should continue to avoid engaging in any retaliatory actions, including those that involve unfair immigration practices.
AB 1732: Prior history and rebate advertising.
As the result of the passage of Assembly Bill 1732:
- Dealers are prohibited from advertising a vehicle’s prior use or ownership history in an inaccurate manner; and
- Dealers may use the term rebate to advertise rebates offered by captive finance companies, a regulated entity or a governmental entity.
AB 2013 and SB 853: Advertising Green Sticker Availability.
Previous law restricted issuance to 55,000 Green Stickers to vehicles that meet California’s enhanced Advanced Technology Partial Zero Emissions Vehicle requirement or to the transitional zero-emission vehicle standard. No similar restriction applies to the number of White Stickers for qualifying electric and natural gas powered vehicles. These laws increase the cap on Green Stickers to 70,000. But the new limit is expected to be reached in February 2015.
Due to the limited availability of Green Stickers available on January 1, 2015, dealers may continue to advertise their availability but only for a limited time, as the allotment is estimated to run out by February 1, 2015. When the Green Sticker allotment is exhausted, dealers should cease advertising or promoting the Green Sticker’s availability.
SB 1275. Advertising the CVRP rebate.
Under the Charge Ahead Initiative, Senate Bill 1275, changes have been made to the popular and effective Clean Vehicle Rebate Project (CVRP). The CVRP currently provides buyers with a $2,500 rebate for zero-emission purchases. This Bill establishes an income cap to incentivize clean car purchases. Additionally, SB1275 establishes car-sharing programs, deploys charging stations in apartment complexes, provides access to financing options that would lower combined monthly car payments and fuel costs, and offers incentives for new or used electric cars or vouchers for transit and car-sharing.
Dealers who advertise and sell vehicles eligible for CVRP rebates should be aware of ownership and eligibility requirements:
- The CVRP Rebate may be subject to refund on early termination;
- Minimum lease term to which it applies is 30 months;
- Income eligibility and additional incentives for low-income individuals and households; and
- CVRP Rebates are limited to 2 per purchaser for life!
Therefore, you should NOT guarantee the rebate to customers and should continue to monitor changes to CVRP Rebate levels and income eligibility requirements.
AB 2365: Non-disparagement provisions prohibited.
Update your consumer contracts.
Assembly Bill 2365 bans businesses from forcing consumers into contracts in which they waive their right to comment on the services they receive, and it also bars businesses from otherwise penalizing customers for such statements. It imposes fines of $2,500 for the first violation and $5,000 for each thereafter. Therefore, we recommend that dealers’ contracts not include restrictions or waivers intended to censor a consumer’s comments. Please note that this does not apply to settlement agreements.
AB 2617: Prohibiting waivers of civil rights in consumer arbitration agreements.
Review your consumer arbitration agreements.
Everyone has the right to be free from violence or intimidation by threat of violence because of their political affiliation, sex, race, color, religion, ancestry, national origin, disability, or medical condition. People may enforce this right through civil action. AB 2617 prohibits requiring a person to waive these rights in a contract in order to receive goods or services unless the waiver is knowing and intentional. The law specifically bars waivers requiring arbitration of these claims.
Cleanup of Underground Storage Tanks (UST). Effective immediately, owners and operators of single-walled USTs must permanently close their single-wall tanks by December 31, 2025. We recommend that dealers determine whether they own USTs and implement a proper strategy for their closure by 2026.
The Occupational Safety and Health Administration’s (OSHA) Revised Recordkeeping Rule. The rule expands the list of severe work-related injuries that all covered employers must report to OSHA. The revised rule retains the current requirement to report all work-related fatalities within 8 hours and adds the requirement to report all work-related in-patient hospitalizations, amputations and loss of an eye within 24 hours to OSHA.
Other Laws Related to the Automotive Industry
Veteran Driver’s Licenses. Assembly Bill 935 is a measure that gives Veterans the option to have the word “VETERAN” on the face of their California state driver’s license or ID card. This potentially leads to an increase of benefits offered to California’s Veterans. However, it is important to note that the “Veteran” designation on a driver’s license is not sufficient to determine eligibility for rebates offered to Veterans. Therefore, we do not recommend that you rely solely on the driver’s license for that purpose.
Limousine Mandates. Additionally, under Senate Bill 109, limousines carrying fewer than 10 passengers are now required to have two push-out windows and two rear doors, which must be situated on opposite sides of the vehicle. The bill also requires limousine operators to instruct passengers on the safety features of the vehicle before embarking on any trip.
Special interest plates. The California legislature has also approved the following special interest license plates: Breast Cancer Awareness; Salton Sea Restoration; Domestic Violence, Sexual Assault, and Sex Trafficking Prevention; and Kidney Disease Awareness.
Data Security Breaches. Current law requires that a business operating in California that owns or licenses personal information must disclose to the affected individual any known or suspected acquisition of such data if in an unencrypted format. AB 1710 adds to the disclosure requirement an offer to provide appropriate identity theft prevention and mitigation services at no cost for at least 12 months if (1) the business was the source of the breach and (2) the breach exposed or may have exposed specified personal information.
In light of these new developments, all employers should make sure personnel policies and handbooks are up to date. All new employee handbooks should be reviewed by your legal counsel for compliance with federal and state laws and regulations and should be modified to suit your organization’s culture, industry, and practices.
Additionally, advertising practices should be monitored for compliance with the new laws. And consumer contracts should be reviewed for compliance as well. For more information on finding ways to better protect your business, contact a knowledgeable automotive industry attorney.
This alert does not constitute, and is not intended as, legal advice. You are encouraged to have your own knowledgeable automotive attorney review this alert and advise you on the new laws to determine whether they impact you or your business and, if so, how.