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Winter 2014

Lawsuit Prevention for Employers


The following represent some of the most significant new California labor laws that have been enacted, most of which took effect January 1, 2014.

“Veteran” A New Protected Class
(AB 556; Effective: 1-1-14)
Military and veteran status has been added to the list of protected classifications. New law also provides an exemption allowing employers to inquire about military or veteran status in order to provide “veteran’s preference” as allowed by law.

Protection For Stalking EmployeeVictims
(SB 400; Effective: 1-1-14)
Prohibits employers from taking adverse action against employee-victims of “stalking.” Also prohibits employers from firing or discriminating/retaliating against employees who are victims of domestic violence, sexual assault or stalking, if the victim provides notice to employer, or employer otherwise has actual knowledge. Requires employers to reasonably accommodate such victims.

No Retaliation, Accommodation For Victims
(SB 288; Effective: 1-1-14)
Prohibits employers from firing, or discriminating/retaliating against employees who are victims of listed offenses, for taking time off at the victim’s request to appear in court, to be heard at any proceeding, including delinquency proceedings, involving a postarrest release decision , plea, sentencing, postconviction release decision or any proceeding which may affect the rights of a victim.

Failure to Remit Withholdings Is Now A Crime
(SB 390; Effective: 1-1-14)
Employers who fail to remit amounts withheld from employee wages to taxing agencies are now guilty of a crime.

Employers Must Pay For Missed Breaks
(SB 435; Effective: 1-1-14)
For any meal, rest or recovery break that is not provided as required by law, employer must pay the employee who was deprived of the break one additional hour’s wages at the employee’s regular rate. Previously, employers were required to pay only for the break time that was missed.

Employers May Not Punish Government Informers
( SB496; Effective: 1-1-14)
Employers are now prevented from enacting, adopting or enforcing any rule or policy preventing employees from disclosing information to a government or law enforcement agency, if the informer reasonably believes that the information discloses a violation of law, or regulation. New law also prohibits employers from retaliating against employees for reporting, or refusing to participate in activity that would result in, a violation of law or regulation.

Family Disability Leave Protection Expanded
(SB 770; Effective: 7-1-14)
Recently-enacted (2013) family temporary disability leave benefits are now available to an expanded list of family members, including: seriously ill grandparents, grandchildren, siblings and parents-in-law. This law does not require employers to grant leave, but makes state benefits available to qualifying employees who are already on leave.

Suspension Of Business License For Immigration-Related Retaliation
(AB 263; Effective: 1-1-14)
Employers are prohibited by new law from retaliating against persons for exercising rights under the Labor Code. The law authorizes courts to allow the suspension of certain business licenses for violation. The new law expands protected conduct to include complaints of unpaid wages, and prohibits retaliation for engaging in protected activity related to enforcing an employee’s or applicant’s rights.

Reporting Immigration Status Made Unlawful
(SB666; Effective: 1-1-14)
Makes unlawful reporting, or threatening to report, the immigration status of an employee, former employee or prospective employee, or that of their family members, because such person exercised a legal right, or engaged in legally protected conduct.

Firefighters, Emergency Rescue Personnel And Peace Officers Must Be Accommodated
(AB 11; Effective: 1-1-14)
Employers must permit employees who perform emergency duty to take leave of absence for such activities, as well as emergency rescue training.

California Supreme Court Holds That Labor Commissioner Claims Are Subject To Arbitration

Among the most important protections that employers can have against employment lawsuits and administrative claims are: 1) a potent employee handbook that is revised annually and 2) a written, carefully-drafted mandatory arbitration policy.

In the authors’ experience, Labor Commissioner claims are the most common claims filed against California employers, placing employers at the mercy of an enforcement agency that is infamously proemployee.

As a result, employers are fighting an uphill battle to win a case before the Labor Commissioner. An employer that loses may appeal the decision. PROBLEM: The employer loses “the appeal” in a later trial de novo, the employee/claimant is entitled to recover his/her attorneys’ fees. This award can often dwarf the amount in controversy in the case, and will be awarded even if the claimant in actuality paid no fees, but was represented by the Labor Commissioner’s staff attorneys!

A significant and very recent California Supreme Court decision provides hope that employers can avoid this problem in the future. After its earlier ruling was vacated by the U.S. Supreme Court, the California Supreme Court ruled that an employer’s properly-drafted arbitration policy can force the removal of a wage claim from the Labor Commissioner’s jurisdiction to that of a neutral arbitrator.

Previously, Labor Commissioner claims were one of a very small class of disputes that were exempted from coverage of even a carefully drafted arbitration policy.

This is a very important development for employers, because it removes these claims from a forum widely perceived to be unfair to employers, to that of a truly-neutral arbitrator. This accomplishes a result similar to removing wrongful termination cases from juries, which statistics show, year after year, are even more biased against employers than the Labor Commissioner is. This is explained by the preponderance of employees that typically comprise juries.

CAVEAT: While arbitration policies can be very helpful in creating an even playing field, they must be very carefully drafted.


Jay G. Putnam is a Petaluma labor lawyer who has specialized in representing California employers for over three decades. His practice is devoted to preventing lawsuits against his clients, without sacrificing workplace authority or management prerogatives.

While no one can guarantee a future free of lawsuits, Putnam has compiled a remarkable record of success: Not one employer-client has been sued in 36 years with his system of precautions in place.

For those clients who have arrived with pending lawsuits, Putnam has established an excellent track record of success as well. 

You are invited to visit Mr. Putnam’s website, where you will find in-depth discussion of the most common mistakes made by California employers, and how to avoid them.

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