California Legislative Season Impacts Employment Laws For 2017 and Beyond
The 2016 California legislative session closed September 30, 2016, with Governor Jerry Brown waiting until the last days of the session to sign several bills affecting employers. Below is a summary of the employment-related bills that were signed into law by Governor Brown. Unless otherwise noted, changes to the law are effective January 1, 2017.
AB 1066 removes the overtime exemption for agricultural employees by phasing in overtime requirements. Beginning January 1, 2019, employers with 26 or more employees will be required to pay agricultural workers overtime for hours worked in excess of 9.5 hours in a workday or 55 hours in a workweek. Increased overtime requirements will phase in over the following years. For employers with 25 or fewer employees, the requirements of this law will be delayed until January 1, 2022 when the new requirements will start to phase in for the next three years. AB 1066 also removes the exemption from meal periods for agricultural employees effective January 1, 2017.
Employer Action: This is the second year in a row agricultural employers were impacted with a major new law. Agricultural employers should become familiar with the new requirements and plan accordingly.
AB 1311 requires a temporary services employer to pay an employee who is a registered security officer his or her wages at least once a week, regardless of when the employee’s assignment ends. Further, a temporary services employer must pay a registered security officer’s wages for the workweek no later than the regular payday of the following workweek. The Legislature introduced AB 1311 in response to a decision in Huff v. Securitas Security Services, Case No. 1-10-CV-172614 (2015), where a California court decided that security guards with assignments longer than 90 days were not subject to the weekly pay requirements under Labor Code Section 201.3. The Legislature enacted AB 1311 as urgency legislation and AB 1311 took effect on July 22, 2016.
Employer Action: Temporary services employers must pay registered security officers at least once a week and ensure that all wages earned in the workweek are paid no later than the following workweek.
AB 1676 & SB 1063
These bills further expand California’s Equal Pay Act. SB 1063 expands the Equal Pay Act to require employers to provide equal pay for “substantially similar work” on the basis of race and ethnicity. AB 1676 amends the Equal Pay Act to prohibit employers from using “prior salary,” by itself, to justify paying different wages based on sex, ethnicity, or race.
Employer Action: Employers who conducted audits pursuant to the expansion of the Equal Pay Act in light of last year’s SB 358 may consider expanding such audits to include an analysis of race and ethnicity pay discrepancies. Notably, one draft of AB 1676 would have prohibited employers from asking about salary history in employment applications, but the Legislature backed off from that position due to lobbying efforts.
Effective March 1, 2017, businesses in California with single-user restrooms will be required to label such restrooms as “all gender” facilities.
Employer Action: The requirement applies to facilities with no more than one “water closet” and one urinal, and with a locking mechanism controlled by the user. Employers should make arrangements to change all signage for single-user restrooms ahead of next year’s March 1 deadline.
AB 1843 prohibits an employer from asking an applicant to disclose, in writing or otherwise, juvenile convictions for employment purposes. Special rules will apply to healthcare facilities under the new law.
Employer Action: Employers should review their applications to ensure they do not solicit information pertaining to an applicant’s juvenile records. Further, healthcare facilities should carefully review the information requested during the hiring process to ensure that questions inquire into only the listed offenses under Penal Code Section 290 or Health and Safety Code Section 11590.
This bill will impact property service employers that employ janitors, including any individual working as an employee, an independent contractor, or a franchisee. Such employers will be required to register annually with the Labor Commissioner and pay set application and renewal fees for such registration. Such employers will also be required to maintain for three years records of: names and addresses of all employees; hours worked daily by each employee; the wages and rate paid each payroll period; the ages of all minor employees; and any other conditions of employment.
As of July 1, 2018, such employers will be required to provide employees a pamphlet from the DFEH on sexual harassment, until the Division of Labor Standards Enforcement creates a more formal training program regarding sexual violence and harassment (scheduled to take place by January 1, 2019). The bill does not apply to individuals whose work duties are predominantly final cleanup of debris, grounds, and buildings near the completion of a construction, alteration, demolition, installation, or repair work project, including, but not limited to, street cleaners.
Employer Action: Property service employers need to prepare to register with the State program by July 1, 2018, and renew registration annually thereafter. Special rules will apply to predecessor and successor employers in the property service industry. Businesses involved in the buying and selling of such businesses or contracts will need to review and follow these new rules.
Under current law, private school elementary and secondary school teachers may be considered exempt from overtime if they satisfy certain duties and are paid a salary equivalent to two (2) times the State minimum wage. AB 2230 will suspend the earnings standard until July 1, 2017 and then impose new, lower salary standards for such teachers. Starting July 1, 2017, the minimum salary that may be paid to a private school elementary or secondary school teacher will be no less than the lowest salary offered by any school district in the State, or no less than 70 percent of the lowest schedule salary offered by the school district or county in which the private school is located.
Employer Action: The bill provides some welcome relief to private schools that were facing significant increases to required salaries for exempt teachers due to the scheduled increases to the California minimum wage. Private schools will need to obtain the state and local data on teacher compensation to determine what benchmarks will apply in their particular location.
Under existing law an employer is prohibited from discriminating against an employee who is a victim of domestic violence, sexual assault, or stalking, for taking time off for certain purposes related to addressing the domestic violence, sexual assault, or stalking. AB 2337 will require employers to inform each employee of his or her rights to take such leave. The notice requirement will take effect once the Labor Commissioner develops and publishes the notices. At that time, employers will be required to inform all new hires of these rights, and will be required to inform current employees of these rights upon request.
Employer Action: The Labor Commissioner may post the required form on its website any time between now and July 1, 2017. Once the Labor Commissioners posts the form, employers should include the form in documents provided to new hires, and have this form available for current employees, if requested.
AB 2535 amends California Labor Code Section 226 to clarify wage stub reporting requirements for exempt employees. Under the prior version of Section 226, wage statements were required to show an employee’s total hours worked, unless that employee was paid a salary and exempt from payment of overtime. AB 2535 expands Section 226, which will now provide that an itemized wage statement is not required to show total hours worked by the employee if: (1) the employee’s compensation is solely based on salary and the employee is exempt from payment of overtime; or (2) the employee is exempt from the payment of minimum wage and overtime under a specified statute or applicable Wage Order.
Employer Action: The Legislature passed AB 2535 in light of a federal court decision, Garnett v. ADT LLC, 139 F. Supp. 3d 1121, 1129 (E.D. Cal. 2015), that held Section 226(a) required the reporting of total number of hours worked for exempt outside sales employees. Employers should carefully review their payroll procedures and work with their payroll processing company to ensure the itemized wage statements provided to California employees comply with State law.
SB 1001 adds a provision to the Labor Code prohibiting an employer from requesting more or different documents than required under federal law relating to verification that an individual is authorized to work in the United States. SB 1001 also prohibits an employer from committing other forms of “document abuse” under the Immigration Reform and Control Act of 1986. An employer who violates this section may be subject to a penalty up to $10,000 per violation under State law.
Employer Action: Although California law already prohibits document abuse if it is retaliatory in nature, the Legislature determined there were no State law protections for individuals during the hiring process. Similarly, the Legislature determined federal protections against document abuse were insufficient. Employers should ensure employees in charge of hiring know the type of documents an employer may request when verifying an individual’s eligibility to work in the United States.
The Legislature passed the Domestic Worker Bill of Rights effective July 1, 2014. The law changed wage and hour rules for domestic workers who provide services related to the care of people in the home, or who maintain private households or their premises. The law was set to expire on January 1, 2017. SB 1015 renewed the Domestic Worker Bill of Rights, making it a permanent fixture of California law.
Employer Action: Domestic workers include nannies, childcare providers, caregivers, personal attendants, housekeepers, cooks, and other household workers. Domestic worker lawsuits and administrative claims are on the rise. Employers of such employees are expected to comply with many of the same technical laws required of more traditional and formal employers. Employers of domestic workers should become familiar with the Domestic Worker Bill of Rights and the requirements applicable to such employees.
SB 1167 expands heat illness protections and regulations to indoor workplaces effective January 1, 2019.
Employer Action: The Legislature first introduced heat illness legislation in 2005. As a result, Cal-OSHA implemented heat illness prevention regulations that apply to the agricultural industry and employees working outdoors under specified conditions. Employment law practitioners who worked closely with Cal-OSHA saw this expansion as inevitable with the expanded focus by Labor on targeting California’s logistics and warehousing industries. Accordingly, employers with indoor workplaces will need to adjust their policies to address recovery periods and other requirements imposed by Cal-OSHA.
SB 1234 will require private employers with five or more employees that do not offer a 401(k) plan or similar retirement savings plan to enroll their employees in the new California Secure Choice Retirement Savings Program. Employers will not be required to make contributions, but eligible employees will be automatically enrolled unless they elect to opt out of the program. Employers that fail to offer the program to eligible employees will be assessed a penalty by the Employment Development Department (“EDD”). The initial penalty will be $250 per eligible employee if noncompliance extends beyond 90 days, and will increase to $500 after 180 days of noncompliance. Employers with fewer than five employees will have the option to participate in the program.
Employer Action: The date of implementation of the program is unknown at this time, but likely will be within the next year. Employers should watch for updates from the EDD as to when the program becomes operative.
SB 1241 prohibits employers from requiring an employee who primarily resides and works in California to agree to, as a condition of employment, a provision that would require the employee to litigate or arbitrate employment disputes: (1) outside of California or (2) under the laws of another state. The law applies only to contracts entered into, modified, or extended on or after January 1, 2017. The law does not apply to an employee individually represented by a lawyer in negotiating an employment contract.
Employer Action: Employers utilizing arbitration agreements, severance agreements, and other employment agreements with arbitration provisions should ensure that such agreements do violate this new law. An employee who successfully sues to have a forum selection or choice of law provision stricken from an arbitration agreement can recover reasonable attorneys’ fees under the law.
The Governor vetoed SB 654, which would have required employers with 20 to 49 employees to provide up to 6 weeks of baby bonding leave. Bills addressing the “gig” economy (AB 1727), double pay on holidays (AB 67), and advanced scheduling requirements (SB 878), did not make it to the Governor’s desk, but may be signs of bills to come in the next legislative session.
If you have any questions regarding implementation or application of any of these new laws, please contact one of the authors, or your usual employment law counsel.