LEGISLATIVE SUMMARY
The August 31st deadline for bills to pass the Legislature saw the usual flurry of activity, with a number of critical votes being cast. As expected, there were also a number of employment bills that passed and have been sent to Governor Jerry Brown for signature or veto, including bills that would:
Governor Brown has until September 30th to sign or veto any bills that made it to his desk.
There were also several bills that failed passage but might resurface next year, including bills that would have:
Discussed below are the key employment bills of potential general application that the Governor is reviewing, followed by an overview of new laws that have already been enacted or have taken effect in 2016:
BILLS SENT TO GOVERNOR BROWN
Job-Protected “Parental Leave” for Employees of Smaller Employers (SB 654)
Entitled the New Parent Leave Act, this bill would add new Government Code section 12945.6 to require, beginning January 1, 2018, employers to provide up to six weeks of job-protected parental leave for an employee (male or female) to bond with a new child within one year of the child’s birth, adoption or foster care placement.
Unlike the California Family Rights Act (CFRA, Government Code section 12945.2) and the Family Medical Leave Act (FMLA), which apply only to employers with more than 50 employees, this bill would define “employer” as either (a) an entity employing 20 or more persons within 75 miles of the worksite where an employee (presumably seeking leave) is employed “to perform services for a wage or salary;” or (b) the state of California or any of its political or civil subdivisions, except for specified school districts. However, as with CFRA and the FMLA, an employee would need to have worked more than 12 months for the employer, and to have worked at least 1,250 hours during the previous 12-month period.
The bill also specifies that employees eligible for “parental leave” are also entitled to take leave under Government Code section 12945 (pregnancy disability, child birth and related conditions) if otherwise qualified for such leave. However, a recent amendment provides that this new law would not apply to an employee subject to both the CFRA and the FMLA.
As with CFRA, an employer shall be deemed to have refused to provide this job-protected leave unless on or before the leave’s commencement the employer guarantees reinstatement in the same or comparable position. This bill would also authorize the employee to use accrued vacation pay, paid sick time, other accrued paid time off, or other paid or unpaid time off negotiated with the employer during this parental leave. The basic minimum duration of the leave shall be two weeks, but an employer would be permitted to grant requests for additional occasions of leave lasting less than two weeks.
Employers would also be required to maintain and pay for medical coverage under a group health plan for an eligible employee who takes parental leave during the duration of the leave, not to exceed six weeks over the course of a 12-month period, commencing on the date the parental leave commences, and at the level and conditions that would have existed if the employee continued working. Notably perhaps, SB 654 does not contain the language contained in CFRA authorizing the employer to recover these medical premiums if the employee failed to return from leave, if certain conditions are present.
It also provides that if the employer employs two employees who are entitled to leave for the same event otherwise entitling them to “parental leave,” the employer may, but is not required to, grant simultaneous leave to both employees. However, and again in contrast with the CFRA, SB 654 does not contain language suggesting that where both parents work for the same employer, the employer may limit the overall leave to the maximum amount a single employee could use.
Lastly, it provides this leave shall run concurrently with parental leave taken under Education Code section 44977.5 for certain certificated school employees.
Status: This bill initially failed passage as SB 1166, but resurfaced in a late-session “gut and amend” of a hazardous waste bill. It rocketed through the Legislature in a very short time period, passing on a straight party-line vote, and faces heavy opposition. It is presently unclear if Governor Brown will sign.
Prohibition on Inquiring About Juvenile Court Actions (AB 1843)
Consistent with the “ban the box” trend advancing nationwide, Labor Code section 432.7 prohibits employers from requesting applicants to disclose, or from using as a factor in determining employment conditions, information concerning an arrest or detention that did not result in a conviction, or information concerning a referral to or participation in a pre- or post-trial diversion program. Since 2014 (SB 530), California employers have also generally been prohibited from inquiring about or using information related to a conviction that has been judicially dismissed or ordered sealed.
This bill would amend Labor Code section 432.7 to provide similar protection related to juvenile-related arrests as it currently provides for adult criminal histories. Specifically, new subsection (a)(2) would preclude employers from requiring applicants to disclose, verbally or in writing, or from utilizing as a condition of employment, information concerning an arrest, detention, processing, diversion, supervision, adjudication or court disposition that occurred while the person was subject to the process and jurisdiction of juvenile court law.
New subsection (a)(3) would further provide that “conviction,” for both subsections (a)(1) dealing with adults and (a)(2) dealing with juvenile courts, shall not include any adjudication by a juvenile court or any other court or action taken with respect to a person who is under the process and jurisdiction of juvenile court law.
Currently, section 432.7 authorizes health facilities to inquire of applicants seeking specific types of positions for information about certain crimes, notwithstanding this general prohibition applicable to most employers. This bill would retain this ability for convictions but would impose new limits regarding inquiries about juvenile-related offenses. Specifically, new subsection (f)(2) would prohibit inquiries about health facilities about juvenile-related arrests, detentions, adjudications, etc. unless the information relates to a juvenile court conviction of a misdemeanor or felony for specific crimes within five years of the application. An employer seeking such disclosures would be required to provide the applicant with a list of the specific offenses under Health and Safety Code section 11590 or Penal Code section 290 for which disclosures are sought. However, even health providers would be precluded from inquiring into an applicant’s juvenile offense history that has been sealed by the juvenile court.
Status: This bill passed both Legislative chambers, albeit with some bi-partisan opposition, and has been sent to Governor Brown.
Employers to Provide New Hires with Written Information about Time-Off Related to Sexual Assault, Domestic Violence or Stalking (AB 2337)
Labor Code section 230.1 prohibits employers with more than 25 employees from discriminating or retaliating against employees who are victims of domestic violence, sexual assault, or stalking from taking time off from work for specified purposes to address the domestic violence, sexual assault, or stalking. This bill would add new subsection (h) to require employers to provide written information regarding these rights under section 230.1 and rights under Labor Code section 230, subsections (c), (e) and (f) prohibiting retaliation and requiring employers to reasonably accommodate victims of domestic violence, sexual assault or stalking. Employers will be required to provide this written information to new employees upon hire and to other employees upon request.
The bill also requires the Labor Commissioner, by July 1, 2017, to develop a form employers could use and to post it on its website, and specifies that an employer need not comply with these notice requirements until the Labor Commissioner posts the form. Alternatively, employer’s may develop and use its own notice provided it is “substantially similar in content and clarity” to the Labor Commissioner’s form.
Status: This bill unanimously passed the Assembly and Senate, and has been forwarded to Governor Brown for signature or veto. It does not appear meaningfully opposed, and is likely to be signed into law.
Non-California Venue Provisions in Employment Agreements (SB 1241)
This bill would add new Labor Code section 925 prohibiting 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 California a dispute arising in California, or deprive the employee of the protection of California law with respect to a controversy arising in California.
Any such choice of law or venue provision would be voidable at the request of an employee. If the court invalidated such a provision, the matter would be adjudicated in California and under California law, and the prevailing employee would be entitled to recover reasonable attorneys’ fees incurred enforcing this provision.
This section would not apply to an employee who is individually represented by legal counsel in negotiating the terms of an agreement to designate either the choice of venue or law provisions.
If enacted, this section would apply to any contract entered into, modified or extended on or after January 1, 2017.
Status: This bill passed the Legislature on party-line votes. Governor Brown vetoed a similar bill in 2011 (AB 267) citing a concern about not wanting to dissuade non-California companies from hiring California employees.
Salary History by Itself not a Bona Fide Factor Justifying Gender-Based Wage Differential (AB 1676)
In 2015, California enacted SB 358, substantially revising its Equal Pay Act protections, including materially revising the standard when attempting to justify a gender-related wage differential. Citing a concern that salary history potentially institutionalizes prior discriminatory pay practices, this bill originally proposed to add new Labor Code section 432.3 to prohibit any employer from seeking salary history information about an applicant for employment.
However, facing substantial opposition and since Governor Brown had vetoed a very similar bill in 2015 (AB 1017), this bill has recently been materially amended. Specifically, rather than creating a new Labor Code provision prohibiting salary history discussions, this bill would instead amend California’s Equal Pay Act (Labor Code section 1197.5) to provide that “prior salary shall not, by itself justify any disparity in compensation.”
Status: This bill passed the Assembly on a party-line vote, but following amendment it passed the Senate unanimously and with overwhelming support in the Assembly. It has been sent to Governor Brown and enactment looks likely.
Equal Pay Regardless of Race or Ethnicity (SB 1063)
Following up on last year’s amendments to California’s Equal Pay Act regarding gender-based wage differentials (SB 358), the Wage Equality Act of 2016 would enact nearly identical language to preclude wage differentials based on race or ethnicity. Specifically, it would amend Labor Code section 1197.5 to prohibit employers from paying an employee at wage rates less than the rates paid to employees of another race or ethnicity for substantially similar work when viewed as a composite of skill, effort, and responsibility and performed under similar working conditions.
As with gender, the employer would bear the burden to demonstrate that the wage differential is based upon one or more of the following factors: (a) a seniority system; (b) a merit system; (c) a system that measures earnings by quantity or quality of production; or (d) a bona fide factor other than race or ethnicity, such as education, training, or experience. As with the “bona fide factor” exception following SB 358’s enactment, the employer would be required to demonstrate that the factor is not derived from a race or ethnicity-based differential, is job-related to the position in question, and is consistent with a business necessity (i.e., an overriding legitimate business purpose that cannot be achieved through an alternative business practice). The employer would be required to demonstrate that each factor relied upon is applied reasonably and the one or more factors relied upon account for the entire wage differential.
Lastly, because SB 1063 amends section 1197.5 generally, it would also prohibit employers from discriminating against employees who report or assist with concerns about race/ethnicity-based wage differentials, it would provide the same enforcement mechanisms, and it would incorporate its protections for employees to disclose, inquire, or discuss wages.
Status: This bill passed the Legislature on party-line votes in both chambers and has been sent to Governor Brown.
Equal Pay Certifications for Certain State Contractors (AB 1890)
Entitled the Equal Pay for Equal Work Act of 2016, this bill would amend Government Code section 12990 which presently identifies criteria for employers who wish to become a contractor for public works, including agreeing to California’s non-discrimination laws and submitting a non-discrimination program to the Department of Fair Employment and Housing (DFEH) for approval and certification. This bill would require employers with a state contract amounting to more than $50,000 that is either required by federal regulations to submit a federal non-discrimination report or has more than 100 employees in the state, to submit its non-discrimination program to the DFEH and to submit periodic reports, no more than annually on a schedule to be determined by the department, of its compliance with this program. The DFEH will also have the discretion to require employers not meeting these requirements to submit a non-discrimination program, in which case those employers must comply with the same requirements.
A non-discrimination program would need to include policies and procedures designed to ensure equal employment opportunities for applicants and employees, a description of employment selection procedures, and a workforce analysis. This workforce analysis would need to include: (a) the total number of workers within a specified job category identified by race or national origin, and sex; (b) the total wages required to be reported on a W-2 for all workers within that job category identified by race, ethnicity, and sex; and (c) the total hours worked on an annual basis for all workers in a specific job category identified by race, ethnicity, and sex. Exempt employees would be presumed to work 40 hours a week and part-time employees would be presumed to work 20 hours a week, unless the employers utilizes a different standard number of hours per week for exempt employees, in which case the employer shall report total hours worked on an annual basis by those employees based on that standard number.
A recent amendment clarifies, however, that employers with a state contract that are required to submit a federal nondiscrimination report (e.g., an EEO-1 Report) may submit a copy of that report to the DFEH and be deemed in compliance with these requirements.
These proposed reporting changes appear similar to the August 2014 federal Department of Labor OFCCP’s Notice of Proposed Rulemaking to require covered federal contractors and subcontractors with more than 100 employees to submit an annual equal pay report on employee compensation. As a reminder, the federal Equal Employment and Opportunity Commissioner is presently considering proposed changes to its EEO-1 Report, which would apply to all employers with more than 100 employees (not just federal contractors) and would require the submission of payroll data broken down by race/ethnicity, not just gender.
Status: This bill has passed the Legislature and been sent to Governor Brown, who vetoed a fairly similar bill (AB 1354) in 2015.
“Immigration-Related Practices” Protections Expanded (SB 1001)
California has made immigration-related abuses a legislative priority, including last year’s bill enacting a new $10,000 penalty for E-Verify violations (AB 622), the 2014 amendment to FEHA prohibiting discrimination against drivers licenses issued to undocumented workers (AB 1660), and the 2013 bills prohibiting retaliation for “immigration-related practices” (AB 263 and SB 666). This bill would add new Labor Code section 1019.1 to broaden the protections from “unfair immigration-related practices” beyond the retaliation context and extend them to any employee or applicant regardless of whether they have made a complaint. The bill’s author states it is intended to expand the current law to include applicants, and also to provide a state law remedy in addition to the currently-existing federal remedy for such violations which, in the author’s estimation, operate too slowly.
Lastly, the bill’s author has expressed concern that immigrant workers who have been provided temporary legal status and the ability to apply for work authorization under President Obama’s Executive Orders, including the Deferred Action for Parents of Americans of United States Citizens (DAPA) and the Deferred Action for Childhood Arrivals (DACA), may be subject to abuse.
To address these concerns, this new section would specify that it shall be unlawful for an employer, in the course of satisfying federal law requirements for eligibility determinations (8 U.S.C. § 1324(b)) to: (1) request more or different documents than required under federal law to verify eligibility; (2) to refuse to honor documents that on their face reasonably appear to be genuine; (3) refuse to honor documents or work authorization based upon the specific status or term of status that accompanies the authorization to work; or (4) attempt to reinvestigate or re-verify an incumbent employee’s authorization to work using an “unfair immigration practice” (defined in Labor Code section 1019).
This section would also authorize an employee or applicant (or their representative) to file a complaint with the Division of Labor Standards Enforcement, and would authorize the Labor Commissioner to award a penalty up to $10,000 and equitable relief.
Status: This bill has passed the Legislature and been sent to Governor Brown for signature or veto. Passage appears likely.
Removing the Wage/Hour Exemption for Agricultural Employees (AB 1066)
Known as the Phase-In Overtime for Agricultural Workers Act of 2016, this bill would phase-in additional daily and weekly overtime requirements for agricultural workers (as defined in Wage Order 14-2001) over the course of four years, beginning in 2019 (but with a three-year delay for employers with less than 25 employees). If enacted, under new Labor Code section 862, employers with more than 25 employees would have to pay daily and weekly overtime under the following schedule: (1) beginning January 1, 2019, agricultural workers would be entitled to one-and-a-half times their regular rate for hours worked over nine and one-half hours daily or 55 hours weekly; (2) beginning January 1, 2020, agricultural workers would be entitled to one-and-a-half times their regular rate for hours worked over nine hours daily and 50 hours weekly; (3) beginning January 1, 2021, agricultural workers would be entitled to one-and-a-half times their regular rate of pay for hours worked over eight and one-half hours daily and 45 hours weekly; and (4) beginning January 1, 2022, agricultural workers would be entitled to one-and-a-half times their regular rate for hours worked over eight hours daily and 40 hours weekly. Beginning January 1, 2022, agricultural workers would be entitled to double their regular rate of pay for hours worked beyond twelve hours daily.
As mentioned, employers with fewer than 25 employees would have a three-year grace period, meaning these phase-in requirements would not commence until January 1, 2022, and the requirement to pay double-time would commence January 1, 2025.
Beginning January 1, 2017, and except as otherwise expressly specified, all other existing California provisions regarding overtime compensation shall apply to agricultural workers.
The Governor would have the discretion to temporarily suspend a phased-in overtime requirement if the Governor also suspends a scheduled phased-in increase in the state minimum wage for specified “economic conditions” (as defined in SB 3). If the Governor temporarily suspended a phased-in increase, all implementation dates will be postponed by an additional year, and the Governor’s suspension authority shall end upon no later than January 1, 2022.
Lastly, the law directs the Department of Industrial Relations to update IWC Wage Order 14-2001 regarding agricultural workers to be consistent with this new law’s requirements, except that any existing provisions providing greater protections to agricultural workers shall continue to apply.
Status: This bill passed the Legislature despite heavy opposition, and its prospects with Governor Brown are not clear. Governor Schwarzenegger vetoed a similar measure in 2010.
Overtime Provisions for Domestic Worker Employees (SB 1015)
In 2013, California enacted the Domestic Worker Bill of Rights (AB 241) which added Labor Code section 1454 and amended Wage Order 15-2001 to entitle a domestic work employee working as a personal attendant (as defined) the right to daily overtime after nine hours worked and weekly overtime after 45 hours worked. Entitled the Domestic Worker Bill of Rights of 2016, SB 1015 would remove the current January 1, 2017 sunset provision for section 1454, thus making those overtime provisions permanent.
Status: This bill passed both the Senate and Assembly on party-line votes, and has been sent to Governor Brown.
Expanded Protections for Janitorial Service Workers (AB 1978)
Known as the Property Service Workers Protection Act, this bill would enact numerous measures to protect janitorial industry employees from sexual assault and other Labor Code violations. Amongst other things, it would require the Department of Industrial Relations to develop by July 1, 2018 training materials, for both supervisors and workers, regarding sexual harassment and sexual violence, and to establish requirements for such training. It would also direct Cal-OSHA to require janitorial industry employers to include this training as part of its injury and illness prevention plans. Additionally, it would establish a system of janitorial contractor registration to encourage labor standards compliance and to establish prompt and effective sanctions for violating this part.
Status: This bill passed the Legislature with some bi-partisan support, and has been sent to Governor Brown.
Heat Illness Prevention Regulations for Indoor Employees (SB 1167)
Since 2006, California’s Division of Occupational Safety and Health (DOSH) has adopted and enforced regulations establishing a heat illness prevention standard for outdoor workers. This bill would require DOSH, by January 1, 2019, to propose for the review and adoption a heat illness and injury prevention standard applicable to workers working in indoor places of employment. This standard shall be based on environmental temperatures, work activity levels and other factors. The DOSH would have the authority to propose high heat provisions limited only to certain industry sectors.
As a reminder, the Division of Occupational Safety and Health has previously produced a flyer entitled “Cal/OSHA Heat Illness Prevention for Indoor Working Environments” which focuses on five key areas of prevention: a written IIPP; frequent drinking of water; rest breaks; acclimation and weather monitoring; and emergency preparedness.
Status: This bill has passed both Legislative chambers, albeit with some bi-partisan opposition, and has been sent to Governor Brown for signature or veto. The Legislature has previously passed two similar bills (AB 838 [2009] and AB 1054 [2007]), but both were vetoed by then-Governor Schwarzenegger.
Employer Participation in State-Sponsored Retirement Program (SB 1234)
In 2012, California enacted SB 1234 to create the California Secure Choice Retirement Savings Program (SCRSP) and to create a feasibility study to determine whether the legal and practical conditions of implementation of SCRSP could be met. Simply summarized, the SCRSP would establish a state administered retirement program for employees that do not have a private retirement plan through their employers, but exempts employees covered under the Railway Labor Act, or provided certain types of pensions, or that have certain enumerated private retirement plans through their employers.
This bill would express legislative approval of the SRSCP and its implementation on January 1, 2017, and would also change the implementation requirements for employers, depending on size. If enacted, employers with 100 or more employees would have to have an arrangement to allow employees to participate in the SRCSP within 12 months after opening of enrollment, employers with 50 or more employees would have to have such an arrangement within 24 months after opening of enrollment, and employers of five or more employees must have an arrangement within 36 months after opening of enrollment. Notwithstanding these deadlines, any employer would have the option to have a payroll deposit retirement savings arrangement early if they prefer.
The Employment Development Department would be required to develop and disseminate to employers information about the SCRSP, which employers would be required to provide to employees at time of hire, and the employee would need to acknowledge receipt of these materials.
Status: This bill passed the Legislature on party-line votes, and it is presently unclear if Governor Brown will sign.
Expedited Release of Prevailing Wage Escrowed Amounts (AB 326)
Labor Code section 1742.1 presently provides that in prevailing wage proceedings, a contractor or subcontractor may avoid certain penalties by depositing the full amount of an assessment or notice with the Department of Industrial Relations (DIR). Responding to concerns the DIR is not required to release these funds within any particular timeframe, this bill would amend section 1742.1 to specify the DIR must release the escrowed funds, plus any interest earned, to the person entitled to those funds “within 30 days” following either the conclusion of all administrative and judicial review, or upon receiving written notice from the Labor Commissioner of a settlement or a final disposition of an assessment issued, or from the authorized representative of the awarding body or a settlement or final disposition.
Status: This bill unanimously passed the Legislature and has been sent to Governor Brown.
Elimination of Some Employment Verification Requirements (AB 2532)
Unemployment Insurance Code sections 9601.5 and 9601.7 require any state or local government agency, and any private employer contracting with a state or local government agency, that provides specified employment services to verify an individual’s legal status or authorization to work prior to providing services to that individual in accordance with federal procedures. This bill would repeal both of these sections and the requirements contained in them.
Status: This bill has passed the Legislature and has been sent to Governor Brown.
Bond Requirements for Minimum Wage Violations (AB 2899)
Labor Code section 1194 prohibits employers from paying employees a wage less than the minimum wage, and allows aggrieved employees to recover lost wages, civil penalties, and liquidated damages for violations. Labor Code section 1197.1 allows a party to contest a citation issued by the Labor Commissioner through the superior court.
This bill would amend section 1197.1 and require a person seeking a writ of mandate contesting the Labor Commissioner’s ruling to post with the Labor Commissioner a bond equal to the unpaid wages, excluding penalties, in favor of the aggrieved employee. This section would also specify the procedures for an appellant to pay any judgment as result of that hearing or the withdrawal of the writ. It would also provide that if the employer fails to pay the amounts owed within 10 days after the proceedings are concluded, the portion of the bond need to cover the amount owed would be forfeited by the employer to the employee.
Status: This bill passed both Legislative chambers along a party-line vote and has been sent to Governor Brown.
NEW LAWS ALREADY ENACTED IN 2016
STATE LAWS
California’s Minimum Wage
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