Labor laws: what employers and their advisers need to know for 2011.

• Author: Terman, Mark E.

With the election of Jerry Brown as governor, California will have the same political party in majority control of the Legislature and the governor's office. When that alignment last occurred with Gov Gray Davis in office, it seemed like employer regulation increased every 10 minutes. Despite the stale budget and the economy commanding much of the Legislature's attention in 2010, employers continue to draw legislative scrutiny with 604 of the bills introduced in the 2009-10 legislative session mentioning "employer." However, relatively few made it past the governor's desk this year.

For example, Gov. Schwarzenegger this year vetoed the following bills, among others, passed by the Legislature:

* AB 482: Would have increased exposure to liability for hiring decisions by restricting the ability of employers to base employment decisions on the evaluation of all legally available information, including consumer credit reports.

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* AB 2187: In addition to existing civil monetary penalties, the bill could have criminalized an employer's failure to pay all wages to an employee who was discharged or who quit within 90 days of the date of the wages becoming due.

* SB 1121: This bill may have placed California farms at a competitive disadvantage by removing overtime exemption for agricultural employees.

Odds arc high that these bills will be reintroduced and passed in similar form in the next, legislative session for the governor-elect's signature.

Looking ahead, many employers can only hope that the voters' apparent mandate to Sacramento to pass balanced state budgets, strengthen California's economy reduce the state's unemployment rate and not raise taxes may help avoid any deluge of new employer regulation. An overview of new state and federal laws affecting private (non-governmental) employers follows.

Independent Contractor Scrutiny

With federal and state governments facing massive deficits, it should not be a surprise that incorrect independent contractor classification is seen as a vein of gold to mine for tax revenue.

The federal government's 201 1 budget includes "$25 million and 100 additional enforcement personnel for the Labor Department, in conjunction with Treasury, to identify and penalize employers who improperly misclassify employees as independent contractors." (www.calcpa.org/factsheet).

According to White House officials, those enforcement efforts seek to increase 'Treasury receipts by more than $7 billion over 10 years.

California is one of at least 29 states that has entered into information-sharing arrangements with the IRS in the area of contractor classification. In time, incorrect contractor classification will probably be detected and challenged with more frequency. Among the concerns for an employer who engages independent contractors is that the classification, if valid, can avoid much employment and tax regulation. Yet that contractor classification itself can be a magnet for litigation by multiple government agencies and workers.

It would be wise for employers to evaluate the propriety and risks of contractor classification with their professional advisers before they may be forced to by others.

Prop. 19 Up in Smoke

California voters rejected California Proposition 19, which would have legalized marijuana use in California and created a legal quagmire for employers.

California law permits medicinal marijuana use prescribed by a physician. However, the California Supreme Court has...