This fall, Gov. Jerry Brown signed a flurry of 760 new laws, including several that will directly affect the state’s employers. Here are the most important changes compensation professionals should be aware of.

Independent Contractors—Willful Misclassification (S.B. 459)

S.B. 459 also prohibits an employer that has willfully misclassified an individual from charging that worker a fee or making any deductions from his or her compensation (for example, for goods, materials, space rental, services, licenses, repairs, maintenance, and fines) if the fee or deduction would have been prohibited if the worker were not an independent contractor.

The law authorizes civil penalties from $5,000 to $25,000 per violation.

Use of Credit Reports (A.B. 22)

This law prohibits employers (except certain financial institutions) from obtaining a consumer credit report for employment purposes unless: 1) the information is substantially job-related, and 2) the position of the person for whom the report is sought is a managerial position; a law enforcement position; in the state Department of Justice; or a position for which the information in the report must be disclosed by law or obtained by the employer.

Information will be considered “substantially job-related” if the position sought involves access to money, other assets, or confidential information.

If one of the exceptions applies, the employer must first provide written notice to the applicant or employee, specifying the basis for requesting the report and providing a checkbox for the applicant or employee to request a free copy of the report. The employee must receive the requested report at the same time the employer receives its copy.

Health Insurance—Coverage During Pregnancy Leave (S.B. 299)

Under this law, employers are prohibited from refusing to maintain and pay for coverage under a group health insurance plan for an employee who takes pregnancy disability leave for up to 4 months. Coverage must be continued on the same terms and conditions as if the employee was reporting to work.

Employment Contracts (A.B. 1396)

Section 2751 of the California Labor Code required out-of-state employers that entered into an employment contract involving commissions as a method of payment for services to be rendered within California to put the contract in writing and set forth the method by which the commissions would be computed and paid. A federal court, however, invalidated this provision because it applied only to out-of-state employers.

The new law responds to the court’s ruling by applying the contract requirement to all employers doing business in California that enter into such a contract of employment. It requires compliance by Jan. 1, 2013.

Wages (A.B. 469)

Under this law, an employer must provide each employee, at the time of hiring, with a notice specifying the rate and the basis (hourly, salary, commission, or otherwise) of the employee’s wages. Employers also must notify each employee in writing of any changes to the information set forth in the notice within 7 calendar days of when the changes will be implemented unless such changes are reflected on a timely wage statement or certain other documents.

Besides being subject to a civil penalty, any employer that doesn’t pay minimum wage can be required to pay restitution of wages to the employee, A.B. 469 further provides. This law also makes it a misdemeanor if an employer willfully violates certain wage statutes or orders or willfully fails to pay a final court judgment or final order of the labor commissioner for wages due. The employer will be subject to $1,000 to $20,000 in fines, imprisonment for up to 1 year, or both for each offense.

Also, the law extends the amount of time the state Division of Labor Standards Enforcement has to commence action to collect a statutory penalty or fee from 1 year after the penalty or fee became final to 3 years. It also extends the time the labor commissioner has to require an employer that has been convicted of a subsequent wage violation or that did not satisfy a judgment to post a bond to continue business operations, from 6 months to 2 years.

CFRA/Pregnancy Leave (A.B. 592)

A.B. 592 makes it an unlawful employment practice for an employer to interfere with, restrain, or deny the exercise of—or the attempt to exercise—any right provided under the California Family Rights Act or the Pregnancy Disability Leave Law. Under this law, for example, an employer cannot penalize an employee for taking a lawful leave.

Vetoed Bills

Gov. Brown also vetoed 128 bills, including the following employment-related bills:

S.B. 931 (Payroll cards): The bill would have prohibited employers from paying an employee’s wages by means of a prepaid payroll card unless certain requirements were satisfied.

A.B. 325 (Bereavement leave): The bill would have required employers to provide up to 3 days of unpaid bereavement leave because of the death of a spouse, child, parent, sibling, grandparent, grandchild, or domestic partner.

A.B. 1155 (Workers’ compensation): This bill would have prohibited the consideration of race, religious creed, color, national origin, age, gender, marital status, sex, sexual orientation, or genetic characteristics when apportioning liability for permanent disabilities.

Practice Tip: Unless otherwise noted, the new employment-related laws that Gov. Brown signed take effect January 1. Review your processes and procedures now to make sure you’ll be in compliance in the new year.