On September 25, 2016, California Governor Jerry Brown signed into law two bills strengthening protections for employees.
AB 2899 – Bond Posting Requirement When Contesting Labor Commissioner Rulings
The first bill, AB 2899, requires employers to post a bond when contesting the Labor Commissioner's assessment of unpaid wages. Under existing law, any employer or other person acting either individually or as an officer, agent, or employee of another person, who pays or causes to be paid to any employee a wage less than the minimum fixed by applicable state or local law or an order of the Industrial Welfare Commission, is subject to a civil penalty, restitution of wages, liquidated damages payable to the employee, and any applicable specified penalties, as provided. Existing law provides notice and hearing requirements under which a person against whom a citation has been issued can request a hearing to contest proposed assessment of a civil penalty, wages, liquidated damages, and any applicable penalties. Existing law further provides that after a hearing with the Labor Commissioner, a person contesting a citation may file a writ of mandate, within 45 days, with the appropriate superior court. AB 2899 requires a person seeking a writ of mandate contesting the Labor Commissioner's ruling to post a bond with the Labor Commissioner in an amount equal to the unpaid wages assessed under the citation, excluding penalties. The bill requires that the bond be issued in favor of the unpaid employees and ensure that the person seeking the writ makes prescribed payments pursuant to the proceedings. The bill provides that the proceeds of the bond, sufficient to cover the amount owed, will be forfeited to the employee if the employer fails to pay the amounts owed within 10 days from the conclusion of the proceedings.
SB 1241 - Choice of Law and Forum Selection in Employment Contracts
The second bill, SB 1241, deals with choice of law and forum in employment contracts. For contracts entered into, modified, or extended on or after January 1, 2017, SB 1241 would prohibit an employer from requiring an employee who primarily resides and works in California, as a condition of employment, to agree to a provision that would require the employee to adjudicate outside of California a claim arising in California or deprive the employee of the substantive protection of California law with respect to a controversy arising in California. However, the bill does not define what constitutes "primarily resides and works in California."
The bill makes any provision of a contract that violates these prohibitions voidable and would require a dispute over a voided provision to be adjudicated in California under California law. The bill specifies that injunctive relief is available and authorizes a court to award reasonable attorney's fees. The bill provides that adjudication includes litigation and arbitration for purposes of these provisions.
The bill excepts from these provisions a contract with an employee who was represented by legal counsel in negotiating the terms of an agreement to designate either the venue or forum in which a controversy arising from the employment contract may be adjudicated or the choice of law to be applied.
Employers who use employment agreements with non-California forums and venues should consult employment counsel on the continued usage of those agreements.
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