LEGISLATIVE SUMMARY
Not surprisingly perhaps, a flurry of activity occurred as the Legislature prepared for the summer recess starting July 3rd.
First, and perhaps most importantly, a number of bills enacted in 2013 finally took effect on July 1, 2014. These included employment-related bills that:
The Legislature also passed and Governor Jerry Brown signed into law two employment-related bills from the 2014 session. The first bill (SB 1360) is immediately effective and clarifies that time spent during legally-required rest and recovery periods counts as hours worked and shall not be deducted from an employee’s wages. The second bill (AB 2751) takes effect January 1, 2015 and makes several clean-up-type changes to last year’s bills (AB 263 and SB 666) regarding immigration-related retaliation (i.e., it clarifies the $10,000 penalty is payable to the employee, etc.). The Legislature also unanimously passed the “Child Labor Protection Act” (AB 2288), which modifies the statute of limitations and penalties for wage-related claims involving minors, and Governor Brown will likely sign it soon.
Not unexpectedly, a number of employment bills that previously passed the first legislative chamber have now also passed initial committee votes in the second legislative chamber. Some of the more significant employment bills that continue to move through the legislative process include:
Somewhat surprisingly, however, the Assembly’s Labor and Employment Committee voted down a bill (SB 935) that would have increased California’s minimum wage to $13.00 by 2017.
Looking ahead, the Legislature will return from recess on August 4th, and will be extremely busy considering bills before the August 31st deadline to send bills to the Governor for signature or veto. Listed below, largely by subject matter, are the bills that may affect private sector employers we are currently tracking.
LAWS THAT TOOK EFFECT JULY 1, 2014
First Part of Two-Step Minimum Wage Increase Takes Effect (AB 10)
In 2013, California passed a law (AB 10) increasing California’s hourly minimum wage from $8.00 to $9.00 effective July 1, 2014, and increasing again to $10.00 on January 1, 2016. The first part of this minimum wage increase took effect as scheduled on July 1st, and since there are significant penalties for failure to pay the minimum wage, employers should review their pay records and practices to ensure compliance.
While this hourly minimum wage increase most directly impacts non-exempt employees, it also has implications for other employees, including:
1. One requirement to meet the California executive, administrative or professional exemptions from overtime is that the employee receives a monthly salary that is no less than two times minimum wage for full-time employment. The current monthly minimum is $2,774. As of July 1st, this minimum monthly salary requirement increased from $2,773 to $3,120 (and will increase to $3,467 in January 2016.) Similarly, the minimum annualized salary has now increased from $33,280 to $37,440 (and will increase again to $41,600 in January 2016.)
2. One requirement for inside commissioned salespersons to be exempt from overtime is that the salesperson’s total earnings result in an effective hourly rate that is one and one-half times the state minimum wage. As of July 1st, this minimum rate increased from $12.00 per hour to the current $13.50 per hour (and will increase to $15.00, effective January 1, 2016.)
3. Employers are generally required to provide and maintain the tools needed for employees to perform their jobs. Employees may be asked to furnish their own hand tools if they receive at least twice the minimum wage. As of July 1st, this increased from $16.00 per hour to $18.00 (and will increase to $20.00 per hour on January 1, 2016).
4. Employers must also ensure they are now displaying updated posters or notices concerning this increased minimum wage. An updated version of the Department of Industrial Relations’ “Official Notice” for the 2014 and 2016 minimum wage increases is available at: http://www.dir.ca.gov/iwc/MW-2014.pdf
As discussed below, a bill proposing to further increase California’s minimum wage (SB 935) failed passage in the Assembly’s Labor and Employment Committee.
Expanded Basis to Receive “Paid Family Leave” Benefits Now Effective (SB 770)
Since 2004, California has provided up to six weeks of wage replacement benefits to workers who take time off work to care for a seriously ill child, spouse, parent, domestic partner, or to bond with a minor child within one year of the birth or adoption of the child. (See Insurance Code § 3301). While often referred to as “paid family leave,” this program is funded by additional worker contributions to the Unemployment Compensation Disability Fund and essentially provides “wage replacement” benefits during an already-provided leave.
Last year, California enacted SB 770, which took effect on July 1, 2014, and enables employees to also receive these partial-wage-replacement benefits to care for seriously ill grandparents, grandchildren, siblings or parents-in-law, as defined. Please note, this change does not provide new bases for employees to take leave from their employer, but simply expands the types of leaves for which employees can seek wage replacement benefits if their leave is approved.
New Limits in Effect for When – But Not Whether – Public Employers May Conduct Criminal Background Checks (AB 218)
To reduce employment barriers to individuals who have previously been convicted of a crime, in 2013, California enacted a law (AB 218) imposing new conditions concerning when – but not whether – a state or local agency may obtain an applicant’s criminal history. This bill took effect July 1st and amends Labor Code section 432.7 to generally prohibit a state or local agency from inquiring about criminal convictions until after the applicant’s qualifications for the position have been determined to meet the position’s requirements. It also specifies that a state or local agency would be permitted to conduct a criminal history background check after the applicant has been deemed to meet the position’s requirements.
These new conditions do not apply to positions for which a state or local agency is required by law to conduct a criminal history background check; to any position within a criminal justice agency (as defined by Penal Code section 13101); or to any individual working for a criminal justice agency on a contract basis or on loan from another government agency.
As a reminder, these so-called “Ban the Box” initiatives have been enacted or are being considered in many municipalities and other states, and many propose to enact similar limitations on the ability of private employers, not just public employers, to consider criminal history information. For example, and as a reminder, San Francisco has passed the Fair Chance Ordinance, which enacts new restrictions on a private employer’s ability to obtain and use criminal history information. This Ordinance applies to employers with more than 20 employees, regardless of the employees’ locations, and takes effect August 13, 2014. More information about the Fair Chance Ordinance is available on the website of the City and County of San Francisco Office of Labor and Standards Enforcement at: http://sfgsa.org/index.aspx?page=6615.
Pre-designation of Physicians in Workers Compensation Proceedings (SB 863)
In 2012, California enacted a law (SB 863) amending numerous workers’ compensation-related provisions. While a number of these amendments became effective in January 2013, on July 1, 2014, new requirements took effect concerning an employee’s ability to pre-designate a personal physician or medical group for work-related injuries or illnesses. More information about these new requirements is available on the Department of Industrial Relations’ website at:
http://www.dir.ca.gov/DIRNews/2014/2014-16.pdf.
Changes Regarding Work Sharing Plans Used by Employers to Avoid Layoffs (AB 1392)
California and federal law allows employers to participate in the work sharing unemployment compensation benefits program which makes employees eligible to receive a reduced amount of unemployment compensation benefits if their work hours are reduced by more than ten percent. For example, employers have used these programs to effectuate a 20 percent reduction of the workforce by reducing full-time employees to four-day workweeks rather than laying off 20 percent of its employees.
In 2013, California enacted a law (AB 1392) amending California Unemployment Insurance Code section 1279.5 regarding work-sharing plans enacted after July 6, 2014. More information about these changes, as well as the general procedure to obtain the requisite approval from the California Employment Development Department for plans enacted prior to July 5, 2014 and after July 6, 2014, is available at http://www.edd.ca.gov/Unemployment/Work_Sharing_Program.htm.
NEW BILLS SIGNED INTO LAW
New Law Clarifies Rest and Recovery Periods are to be Counted as Hours Worked (SB 1360)
Labor Code section 226.7 presently precludes employers from requiring employees to work during any meal, rest, or recovery period, and to pay an additional hour of pay at the employee’s regular rate of pay for each workday such a meal, rest, or recovery period is missed. (In 2013, California enacted SB 435 adding the language regarding “recovery periods” to the then-existing version of section 226.7.) Responding to concerns that employers were not sure if rest or recovery periods needed to be paid, this law amends section 226.7 to specify that rest or recovery periods required under state law shall be counted as hours worked for which there shall be no deduction from wages. The bill’s proponents state that this language was mistakenly omitted from SB 435 during the 2013 legislative session.
Status: This bill has been signed into law, and because it specifically states it is declarative of existing law, it is immediately effective and likely applies retroactively.
Clarifying Amendments Enacted Regarding “Immigration-Related” Retaliation Protections (AB 2751)
This “clean up” bill makes relatively-minor changes to several measures enacted last year to protect immigrant workers against unlawful retaliation. For instance, in 2013, California enacted AB 263 and SB 666 which, in turn, enacted Labor Code section 1019, prohibiting employers from engaging in various “immigration-related practices” against persons who had exercised certain rights protected under state labor and employment laws. These immigration-related practices included threatening to file or filing a false police report. This bill expands this particular provision to also include the threatening to file or the filing of a false report or complaint with any state or federal agency, not just the police.
Newly-enacted section 1019 also authorizes the court to order, upon application of a party or upon its own motion, the appropriate government agencies to suspend certain business licenses held by the violating party for prescribed periods based on the number of violations. These amendments clarify that the licenses to be affected would be “specific to the business location or locations where the unfair immigration-related practice occurred,” rather than potentially state-wide.
Last year’s bills also added subsection (b)(3) to Labor Code section 98.6 to authorize a $10,000 penalty against an employer per employee for each violation. Since last year’s amendment did not specify to whom this penalty would be awarded, this new law specifies these penalties shall be “awarded to the employee or employees who suffered the violation.”
In 2011, AB 22 enacted Labor Code section 1024.5 limiting an employer’s ability to use consumer credit reports, and in 2013 AB 263 enacted Labor Code section 1024.6 prohibiting employers from retaliating against employees who update their “personal information.” Because AB 263 did not define “personal information,” this law further amends section 1024.6 to specify that employers may not discharge or discriminate against employees who update their personal information “based on a lawful change of name, social security number or federal employment authorization document.” Responding to employer concerns, these amendments also specify that “an employer’s compliance with this section shall not serve as the basis for a claim of discrimination, including any disparate treatment claim.”
Status: In contrast to last year’s bills which passed along strictly party-line votes, these clean up amendments enjoyed considerable support and will take effect January 1, 2015.
CURRENTLY PENDING BILLS
Paid Sick Leave Bill Continues to Advance (AB 1522)
Known as the Healthy Workplaces, Healthy Families Act of 2014,” this bill would implement a number of new Labor Code provisions (section 245 et seq.) requiring employers to provide paid sick leave for their employees. This bill would apply to all employers regardless of size, including public employers, the state, and municipalities.
After July 1, 2015, employees who work in California for thirty or more days in a calendar year would accrue paid sick leave at a rate of no less than one hour for every 30 hours worked. Exempt employees would be deemed to work 40 hours per week for accrual purposes, unless their normal workweek schedule is less than 40 hours, in which case they would accrue paid sick leave based upon that normal workweek.
Employees would be entitled to use accrued paid sick days beginning on the 90th calendar day of employment, after which they may use paid sick days as they are accrued. Employers would also have the discretion to lend paid sick days to an employee in advance of accrual, and employers could not require employees to locate a replacement worker to cover days on which an employee uses paid sick days.
While accrued paid sick days shall carry over to the following calendar year, employers may limit an employee’s use of paid sick leave to 24 hours, or three days, in each calendar year. Employers would not be required to compensate employees for unused sick days upon employment ending, but they would be required to reinstate the previously unused balance if they rehired the employee within one year.
Employees would be entitled to use paid sick time for preventive care for themselves or a family member, as well as for the diagnosis, care, or treatment of their or their family member’s existing health condition. For purposes of this bill, “family member” means (1) a child (as defined), (2) parent (as defined), (3) spouse, (4) registered domestic partner, (5) grandparent, (6) grandchild, or (7) sibling. The employer shall also provide paid sick days for an employee who is a victim of domestic violence, sexual assault, or stalking, as discussed in Labor Code sections 230 and 230.1.
The bill states it is not intended to preclude employers from implementing more generous policies. Also, an employer shall not be required to provide additional sick pay under this bill if the employer already has a paid leave or paid time off policy that permits accrual at the same rate or more, and the accrued time is to be used for the same purposes and under the same conditions as in this bill.
Like many other recent Labor Code amendments, this bill also contains carve-outs for employees covered by collective bargaining agreements (CBAs) with certain provisions. Specifically, this bill would not apply to employees covered by CBAs that expressly provide for the wages, hours of work, and working conditions of employees, as well as for paid sick days (with final and binding arbitration for any disputes regarding paid sick days), premium wage rates for all overtime, and a regular hourly rate of not less than 30 percent more than the state minimum wage.
Similarly, construction industry employees covered by a CBA with these provisions would also not be covered by this bill if the CBA was entered into before January 1, 2015, or if the CBA expressly waives the requirements of “this article” in clear and unambiguous terms.
This bill would also prohibit discrimination or retaliation against employees for using accrued sick days, or for filing a complaint regarding any sick day policy violation. However, similar to last year’s protections against “immigration-related practices” (AB 263), this bill would create a rebuttable presumption of unlawful retaliation if an employer takes an adverse employment action (including denying the right to use sick days) within 30 days of an employee (1) filing a complaint with the Labor Commissioner or in court alleging violations of this article; (2) cooperating with an investigation or prosecution of an alleged violation of this article; or (3) opposing a policy, practice or act that is prohibited by this article. (A proposed 90-day presumption was reduced to the current 30-day presumption in a recent amendment).
Under Labor Code section 248.5, the Labor Commissioner would be entitled to enforce this article by awarding reinstatement, back pay, and payment of sick days unlawfully withheld, plus the payment of an additional (currently unspecified) sum in the form of an administrative penalty to an employee whose rights were violated. Where paid sick leave was unlawfully withheld, the employee shall recover the greater of $250 or the dollar value of the paid sick days withheld, multiplied by three. To encourage such reporting, the Labor Commissioner would be permitted to keep the reporting employee’s identifying information confidential.
The Labor Commissioner or the Attorney General would be able to file a civil action in court against the employer or any person violating this article. The Labor Commissioner or Attorney General would be entitled to appropriate legal and equitable relief, including reinstatement, back pay, the payment of sick days improperly withheld, and liquidated damages of $50 to each employee for each violation each day, plus reasonable attorneys’ fees and costs. (A provision authorizing employees to file civil actions was deleted by recent amendment while another amendment clarifies that these administrative actions would be maintained on “behalf of the aggrieved,” suggesting any penalties would ultimately be awarded to the employee.) Another recent amendment which would add section 245(b) clarifies that the provisions of this new article “are in addition to and independent of any other rights, remedies or procedures under any other law.
New Labor Code section 247 would also require the employer to provide employees written notice of these paid sick leave rights in English, Spanish, Chinese, Tagalog, Vietnamese, and Korean, as well as any other language spoken by at least 5 percent of its employees. An employer will also be required to display a poster in a conspicuous place notifying employees of these paid sick leave rights. The Labor Commissioner will be responsible for preparing this written notice and the required poster. Employers who willfully violate the notice and posting requirements will be subject to a civil penalty of not more than $100 per offense.
New Labor Code section 247.5 would also require employers to retain, for at least five years, records documenting the hours worked, paid sick days accrued, and paid sick days used by each employee. These records may be inspected by the Labor Commissioner or by an employee, and if an employer fails to maintain adequate records, it shall be presumed that the employee is entitled to the maximum number of hours accruable under this new article, unless the employer proves otherwise by clear and convincing evidence.
Lastly, this bill would amend Labor Code section 226 to require employers to include on the itemized wage statements accompanying paychecks, the “paid sick leave accrued and used” during each pay period.
This bill is very similar to bills that have repeatedly been introduced but stalled, although this version is less far-reaching, as it only requires three days of sick leave per year rather than up to nine days of annual sick leave.
Status: This bill passed the Assembly along a party-line vote, and has similarly already passed the Senate’s Labor and Industrial Relations and Judiciary Committees. It is scheduled to be heard in the Senate’s Appropriations Committee on August 4th, and since it appears to be a legislative priority but one that faces significant opposition, further amendments seem likely.
Time Off for Emergency Rescue Personnel (AB 2536)
Labor Code section 230.3 prohibits an employer from discharging or in any manner discriminating against an employee for taking time off to perform emergency duty as a volunteer firefighter, reserve peace officer, or emergency rescue personnel. Section 230.3 presently defines “emergency rescue personnel” to include an officer, employee, or member of a political subdivision of the state, or of a sheriff’s department, police department, or a private fire department. This bill would expand this definition of “emergency rescue personnel” to include an officer, employee, or member of a disaster medical response entity sponsored or requested by the state.
This bill would also require an employee who is a health care provider (as defined by the Business and Professions Code) to notify their employer at the time they become designated as an emergency rescue personnel, and when the employee is notified they will be deployed because of that designation.
Status: This bill unanimously passed the Assembly and the Senate’s Labor and Industrial Relations Committee, and likely will soon pass the Senate’s Appropriations Committee and ultimately be enacted into law.
Revised CFRA Eligibility Definition for Public and Private School Employees (AB 1562)
This bill would amend the California Family Rights Act’s (CFRA) definition of an eligible employee, and make several changes specific to public or private school employees. For instance, under amended Government Code section 12945.2, private or public school employees would be eligible for CFRA leave if they worked 1,250 hours in the preceding 12-month period, or completed at least 60 percent of the hours of service that a full-time employee is required to perform during the previous 12-month period. This new alternative definition is intended to reflect the practical reality that many school employees work a school year rather than a traditional calendar year, and would have to work a much higher percentage of hours (i.e., nearly 95 percent) than non-educational employees to otherwise qualify.
While CFRA generally requires that employers reinstate employees at the same or comparable position, there are several narrow exceptions, including in subsection (r), involving salaried employees who are among the highest paid 10 percent of the employees employed within 75 miles of the worksite at which that employee is employed. This bill would amend subsection (r) to specify that it does not apply to public or private school employees.
Lastly, this bill would designate an eligible employee as an “entitled” employee and amends CFRA to replace the word “eligible” with “entitled” wherever it appears.
Status: This bill passed the Assembly largely along a party-line vote and is pending in the Senate. It has passed the Senate’s Labor and Industrial Relations Committee and is currently on the Appropriations Committee’s “suspense file” to study some financial impact concerns raised by the Department of Fair Employment and Housing.
FEHA Protections for Unpaid Interns and Volunteers (AB 1443)
This bill preemptively amends the Fair Employment and housing Act (FEHA, Government Code section 12940 et seq.) in response to several court rulings in other jurisdictions suggesting interns or volunteers are not employees for purposes of harassment and discrimination laws.
For instance, it would amend Government Code section 12940(c), which presently prohibits discrimination in apprentice training programs, to also preclude discriminating on the basis of any legally protected classification (e.g., race, religion, disability, etc.) in an unpaid internship or another limited duration program to provide unpaid work experience for that person.
It would also amend subsection (j) to prohibit harassment against unpaid interns or volunteers because of a legally protected classification. Lastly, it would extend the existing religious belief accommodation requirements to unpaid interns and volunteer workers.
Status: This bill unanimously passed both the Assembly and the Senate’s Judiciary Committee and is now pending in the Senate’s Appropriations Committee where passage seems likely.
FEHA Prohibition Proposed against Discriminating Against Employees Because of Drivers Licenses Issued to Undocumented Citizens (AB 1660)
In 2013, California enacted AB 60 which authorized the Department of Motor Vehicles to issue an original driver’s license to a person who is unable to submit satisfactory proof that the applicant’s presence in the United States is authorized under federal law. AB 60 had also amended the California Unruh Act (Civil Code section 51 et seq.) to prevent business establishments from discriminating against individuals who hold or present such driver’s licenses.
Amongst other things, this bill would amend Vehicle Code section 12801.9 to make it a violation of the Fair Employment and Housing Act for an employer or covered person to discriminate against a person holding or presenting a driver’s license issued pursuant to that section. It would also make it a FEHA violation for an employer or covered person to require a person to present a driver’s license, unless possessing a driver’s license is required by law or is necessary to perform the position’s duties.
However, recent amendments clarify that this bill would not affect an employer’s rights or obligations to obtain information required under federal law to determine identity and authorization to work. These amendments also provide that actions taken by an employer that are required by the federal Immigration and Nationality Act would not violate this law. (Note: these proposed amendments to FEHA are presently proposed in the Vehicle Code and it remains to be seen if corresponding changes will be proposed to the FEHA itself (Government Code section 12940 et seq.).
This bill would also specify that driver’s license information obtained by an employer shall be treated as private and confidential; and exempt from disclosure under the California Public Records Act; and shall not be disclosed to any unauthorized person or used for any purpose other than to establish identity and authorization to drive.
Status: This bill has passed the Assembly, and has passed the Senate’s Judiciary Committee and has been referred to the Appropriations Committee. The recent amendments resolving an employer’s ability to comply with federal requirements without violating this bill seems to have addressed the opposition’s primary concern so the odds of passage have increased.
AB 1825 Training to Include Prevention of “Abusive Conduct” (AB 2053)
In 2004, California enacted AB 1825, which requires employers with more than 50 employees to provide at least two hours of sexual harassment training for supervisors located in California. Under Government Code section 12950.1, employers must provide this training within six months of an employee’s assumption of a supervisory position, and once every two years thereafter.
This bill would amend section 12950.1 to require that this training include the prevention of “abusive conduct.” Newly proposed subsection (g)(2) would define abusive conduct as “conduct of an employer
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