Fall 2011-2: California Legislative Changes- Part 1


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Pregnancy Leave- Changes Require Payment of Health Insurance Premiums by Employer
(previous e-Update issued)

Governor Brown has signed legislation effective January 1, 2012 which prohibits employers from failing to maintain health coverage for an employee on a statutorily protected pregnancy leave of up to four (4) months. The employer will be required to pay the premiums normally paid by the employer under the same conditions as if the employee was working.

Unlike a similar provision under the Family and Medical Leave Act (FMLA) and California Family Rights Act (CFRA) which apply only to employers with 50 or more employees, these changes to the California Pregnancy Disability Leave Law apply to all employers with five (5) or more employees. Additionally, employers with more than 50 employees will be required to pay for health insurance coverage for up to four (4) months if the employee is disabled by the pregnancy, as compared to the current 12-week requirement under the FMLA. Also, an employee who may not be eligible for FMLA leave would be eligible for pregnancy leave and would be entitled to the payment of premiums by the employer as well.

This new legislation applies only to California Pregnancy Disability Leave so an employee who has been released by her doctor to return to work but chooses to take additional leave to bond with her baby or takes leave under the FMLA or CFRA for another reason would not be eligible for additional payments of insurance premiums by the employer if she has already had 12 weeks of coverage paid by the employer during FMLA or CFRA leave.

A companion bill signed by the Governor makes it an unlawful employment practice for an employer to interfere with, restrain, or deny the exercise of, or the attempt to exercise, an employee’s right to take CFRA or pregnancy disability leave.

Employers not currently covered by the FMLA and CFRA will need to continue health insurance coverage for employees out on pregnancy leave. Employers already required to pay up to 12 weeks of premiums may need to pay additional premiums if the pregnancy leave is longer than 12 weeks. Your leave of absence policy should be updated to reflect this change as of January 1, 2012.

Employer Use of Credit Reports Restricted
In addition to other restrictions and procedures required under federal and state law with regard to background checks, as of January 1, 2012 specific requirements must be met for an employer to obtain a consumer credit report which includes credit-related information such as credit history, credit score or credit record on a prospective or current employee.

An employer, with the exception of certain financial institutions, may not obtain or use such a report unless the position is generally a position involving significant managerial authority or access to personal or company confidential information (e.g., executives or HR managers); a position with access to or authority over the funds and finances of the company (e.g., treasurers, certain financial officers or accountants); or a law enforcement position.

If a credit report is to be obtained for an individual in, or applying for, one of these types of positions that person must be advised, in writing, of the specific basis (as enumerated above) for use of the report.

Many employers have begun routinely obtaining far-reaching background checks that cover criminal, credit and personal histories of the individual. With this legislation, employers will need to carefully consider whether obtaining information on the credit worthiness of an individual is appropriate based on the position involved.

For more information or assistance with the implementation of these new requirements contact Jeanne Flaherty at Employer’s Legal Advisor, Inc.