LEGISLATIVE SUMMARY
The February 19th deadline for new bills to be introduced has expired, thus bringing the 2016 legislative session into greater focus. As expected, there are once again a number of significant employment-related bills under consideration, including bills that would:
- Require almost all employers to provide 12-weeks of job-protected “parental leave” (SB 1166);
- Expand California’s Equal Pay Act to target race or ethnicity-related differentials in wages (SB 1063);
- Require employers to provide double pay for work performed on Thanksgiving (AB 67);
- Amend the Fair Employment and Housing Act to prohibit employment verification-related violations (SB 1001);
- Authorize private employers to utilize a veterans preference during hiring (AB 1383);
- Prohibit hiring-related inquiries concerning juvenile convictions (AB 1843);
- Prohibit inquiries about salary history during the hiring process (AB 1676);
- Substantially limit an employer’s exposure for meal, rest and recovery period violations (AB 1948);
- Amend California’s Private Attorneys General Act (PAGA) (AB 1461-1465);
- Expand California’s heat illness regulations to include indoor employees (SB 1167); and
- Expand the workplace prohibitions against smoking, including to electronic cigarettes (ABx2 6, ABx2 7 and SBx2 6).
There were also numerous “spot bills” introduced which suggest changes are being contemplated to laws governing workplace scheduling, independent contractors, employee indemnification, itemized wage statements, compensatory time off, and domestic violence/stalking protections. The next couple weeks should provide further clarity as to whether these spot bills will move forward, so employers and human resources professionals will want to monitor these developments. The June 3d deadline for bills to pass their house of origin should also help narrow the number of bills likely to make it to Governor Jerry Brown’s desk.
In the interim, discussed below are the key employment bills of potential general application.
PENDING BILLS
Parental Leave Protections (SB 1166)
Entitled the New Parent Leave Act, this bill would add new Government Code section 12945.6 to require employers to provide up to 12 weeks of 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. While the California Family Rights Act (CFRA, Gov. Code section 12945.2) already provides this protection to employees working for employers with more than fifty employees if they work 1250 hours in the preceding 12 months, SB 1166 would extend this benefit to nearly all employees (so long as their employer has at least five employees) and without regard to time served/hours worked. As with CFRA, an employer shall be deemed to have refused 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.
Employers would also be required to maintain and pay for medical coverage for an eligible employee who takes parental leave during the duration of the leave, not to exceed 12 weeks over the course of a 12-month period.
This parental leave would run concurrently with CFRA and the Family Medical Leave Act (FMLA), except for leave taken because of disability due to pregnancy, childbirth or related medical condition. The aggregate amount of leave taken under this new section, CFRA, or the FMLA, or any combination (except for pregnancy/childbirth-related disabilities) shall not exceed 12 workweeks in a 12 month period.
Status: This bill is pending in the Senate but has not yet been referred to a committee.
Assembly Passes Bill Requiring Double Pay on Thanksgiving (AB 67)
Entitled the “Double Pay on the Holiday Act of 2016,” this bill would add Labor Code section 511.5 to require certain large employers (with more than 500 employees) to pay non-exempt employees twice their regular rate of pay for working on Thanksgiving. Unlike last year’s version which would have applied to almost all employers, this law would only apply to employees working in “retail store” or “grocery store” establishments. “Retail store establishments would be defined as those having a physical store within the state with more than 50 percent of its revenue generated from merchandise subject to the state’s sales and use tax, but specifically would not include stores located in a hotel, amusement park or movie theater. “Grocery store establishment” would be defined as those having a physical store within the state that sells primary household foodstuffs for offsite consumption.
This requirement would only apply to non-exempt employees, and would not apply to employees covered by a collective bargaining agreement that expressly provides for the hours of wages, hours of work, and working conditions of employees, and expressly provides for holiday premium pay, premium wage rates for overtime pay, and a regular rate of pay of not less than 30 percent above the state minimum wage.
Status: This bill failed passage last year, but narrowly passed the Assembly despite bi-partisan opposition. It is presently pending in the Senate’s Labor and Industrial Relations Committee.
FEHA Prohibition on Eligibility Verification Violations (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 amend FEHA to add new Government Code section 12952 to specify it would be an unlawful employment practice for an employer to (a) request more or different documents than required under federal law for verification purposes; (b) to refuse to honor documents that appear reasonably genuine; (c) to discriminate against an immigrant with authorization to work based upon their immigrant status or because of their work authorization; or (d) to attempt to reinvestigate or re-verify an incumbent employee’s authorization to work unless legally required to do so.
Status: This bill is pending in the Assembly’s Judiciary Committee.
Veterans Hiring Preference (AB 1383)
Entitled the Voluntary Veterans’ Preference Employment Policy Act, this bill attempts to address the higher-than-normal unemployment rate for returning veterans. Accordingly, new Government Code section 12958 would authorize employers to extend a preference during hiring decisions to honorably discharged veterans. Employers would be permitted to require a veteran to submit United States Department of Defense Form 214 to confirm eligibility for this preference. Section 12958 further specifies that such a preference shall be deemed not to violate any state or local equal employment opportunity law, including the FEHA.
Government Code section 12940(a)(4) presently provides that using veteran status in favor of Vietnam-era veterans shall not constitute sex discrimination (likely in response to EEOC Guidance which had suggested that a veterans’ preference might create a disparate impact in favor of men given the then-existing composition of the United States military). This bill would broaden this exemption by removing the references to “sex” and to “Vietnam-era veterans,” and provide that FEHA’s discrimination provisions would not affect an employer’s ability to use veteran status as a factor in hiring decisions if the employer maintains a veterans’ preference policy in accordance with new section 12958.
Status: This bill unanimously passed the Assembly, and is pending in the Senate’s Judiciary Committee. Notably, similar laws have been enacted in several dozen states in the last couple years.
Equal Pay Regardless of Race or Ethnicity (SB 1063)
Following up on last year’s amendments to the 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 also 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 1163 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 incorporate its protections for employees to disclose, inquire or discuss wages.
Status: SB 1063 is pending in the Senate but has not yet been referred to a committee.
Equal Pay Certifications for Certain State Contractors (AB 1890)
Entitled the Equal Pay for Equal Work Act of 2016, AB 1354 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 more than 100 employees in the state and a contract with the state of 30 days or more to submit periodic reports, no more than annual on a schedule to be determined by the department, of its compliance with this program. Employers with less than 100 employees in the state or a contract less than 30 days may also be required to submit a nondiscrimination program and, if so required, to comply with the same requirements applicable to employers with more than 100 employees in the state.
A nondiscrimination program would need to include policies and procedures designed to ensure equal employment opportunities for applicants and employees, an analysis of employment selection procedures, and a workforce analysis. This workforce analysis would need to include the total number of workers with a specified job category identified by race, ethnicity and sex, 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 the total hours worked on an annual basis for all workers in a specific job category identified by race, ethnicity, and sex. Exempt employees shall be presumed to work 40 hours a week for purposes of this reporting requirement.
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.
Status: This bill is pending in the Assembly but has not yet been referred to a committee. Governor Brown vetoed a very similar bill (AB 1354) in 2015.
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 or participation 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 slightly expand this provision to also prohibit employers from inquiring about or using information related to specific juvenile court actions or custodial detentions.
Prohibitions on Salary History Questions during Hiring (AB 1676)
Citing a concern that salary history potentially institutionalizes prior discriminatory pay practices, this bill would add Labor Code section 432.3 to prohibit any employer from seeking salary history information about an applicant for employment. This prohibition would extend to any oral or written inquiries and to inquiries by the employer or through an agent. It would also require private employers, but not state or local employers, to respond to a reasonable request by providing the pay scale for a position to the applicant. The bill also specifies that Labor Code section 433, which makes any violations of this particular Labor Code article a misdemeanor, would not apply to this new section.
Status: This bill is pending in the Assembly’s Labor and Employment Committee. Governor Jerry Brown vetoed a similar bill (AB 1017) in 2015.
Increased Paid Family Leave Benefits (AB 908)
Under California’s family temporary disability insurance program, employees may receive up to 6 weeks of wage replacement benefits when taking time off work to care for specified persons (e.g., child, spouse, parent, etc.) or to bond with a minor child within one year of the birth or placement of the child in connection with foster care or adoption. Citing a concern that the relatively low wage replacement rate dissuaded employees from using this benefit, this bill would amend Insurance Code section 3301 to increase the wage replacement benefits. Specifically, it would modify the formula for calculating these benefits to ensure a minimum weekly benefit of $50, and to increase the wage replacement rate from the current 55% to 70% for most low-wage workers, and to 60% for higher wage earners. These increases in the level and duration of benefits would be funded by adjusting the worker contribution rate from 1.0 % to 1.3% (and potentially higher but capped at 1.5%) of worker income depending on utilization levels.
Beginning January 1, 2017, this bill would also remove the 7-day waiting period for these family leave benefits.
Status: This bill has previously passed both legislative chambers, and the Senate is expected shortly to concur in several amendments and then forward the bill to Governor Brown.
Paid Family Leave Benefits (AB 2197)
Presently, an employee only becomes eligible to receive so-called “paid family leave” after being unable to work for a 7-day waiting period, and an employer may require an employee to take up to two weeks of earned but unused vacation before receiving these PFL benefits. Unemployment Insurance Code section 3303.1 further requires that if an employer requires the employee to take vacation leave, that portion of vacation leave that does not exceed one week shall be applied to this 7-day waiting period.
This bill would amend Unemployment Insurance Code section 3301 to eliminate the requirement that vacation be applied to this 7-day waiting period.
Status: This bill is pending in the Assembly where a similar bill (AB 688) stalled in 2015.
Scheduling Predictability Bill Expected (AB 1643)
Last year, the Legislature considered but failed to pass AB 357 (the Fair Scheduling Act of 2015), which would have required certain employers to provide a minimum amount of specified notice, and additional pay for failure to meet these deadlines or for scheduling changes made after the schedules were posted. The bill’s authors recently signaled their intent to introduce a similar bill and it appears AB 1643, which currently proposes only non-substantive changes to Labor Code section 2810, is a “spot bill” (i.e., a bill that will be substantively amended after the initial deadline) for this scheduling-related bill.
Meal, Rest and Recovery Period Caps (AB 1948)
Labor Code section 226.7 prohibits employers from requiring employees to work during a meal or rest or recovery period, and requires employers to pay a penalty of one additional hour at the employee’s regular rate for each type of violation per day of this provision. Concerned that employees and/or plaintiff’s attorneys were using a violation of this provision as a basis to recover penalties under other Labor Code provisions (e.g., section 203 regarding waiting time penalties), this bill would amend section 226.7 to specify that the one hour of regular rate of pay shall be the entire penalty awarded for a violation of this section. It would also specify that if a penalty is imposed under this section, no civil or criminal penalty shall be imposed under Labor Code sections 203 (waiting time penalties), section 225 (unlawful withholding of wages), section 558 (working hours penalties), section 2699 (Private Attorneys General Act) or Business and Professions Code section 17200 (unlawful competition).
It would also add new subsection (f) to specify that payments under section 226.7 shall be considered a penalty for all purposes, including the statute of limitations. This would effectively establish a one-year statute of limitations for such penalties and nullify the California Supreme Court’s decision in Murphy v. Kenneth Cole Productions (2007) 40 Cal.4th 1094, that held these penalties were wages subject to a three (and potentially four) year statute of limitations.
Status: This bill is pending in the Assembly’s Labor and Employment Committee.
Expanded Labor Commissioner Powers (AB 2261)
Labor Code section 98.7 authorizes the Labor Commissioner, in response to a complaint involving a violation of any law within the Labor Commissioner’s jurisdiction, to investigate this complaint. This bill would add new Labor Code section 98.74 to allow the Labor Commissioner to commence an investigation, issue citations or bring an action against an employer for such violations regardless of whether an employee files a complaint.
Status: This bill is pending in the Assembly, but has not yet been referred to a committee.
Increased Local Enforcement to Combat Wage Theft (SB 1342)
Citing concerns about the continued prevalence of wage theft, especially for lower income workers, this bill would add new Labor Code section 1176.5 to authorize county-level boards to issue subpoenas to enforce local wage laws. If the subpoenaed individuals failed to appear or refused to answer questions, the designated local investigators shall report that fact to the local superior court judge to compel compliance.
Status: This bill is pending in the Senate but has not yet been referred to a committee.
Health Care Wage Order Regarding “Hours Worked” Deemed Lawful (AB 2370)
This bill would amend Labor Code section 516 to clarify that the definition of “hours worked” within the health care industry as defined in IWC Wage Order 5 was valid and enforceable since October 2000 and continues to be valid and enforceable. This bill also states it is declaratory of existing law and presumably would apply retroactively if passed.
Status: This bill is pending in the Assembly and appears unlikely to be meaningfully opposed.
Multiple PAGA Amendments Proposed (AB 2461- AB 2465)
The Labor Code Private Attorneys General Act (PAGA, Labor Code section 2699 et seq.) authorizes an aggrieved employee to bring a civil action to recover specified civil penalties that would otherwise be assessed and collected by the Labor and Workforce Development Agency (LWDA) on behalf of the employee and other current or former employees. Responding to concerns the PAGA is too broad or has led to litigation abuse, a series of reforms have been proposed.
For instance, AB 2461 would eliminate Labor Code section 2699.5, which allows civil actions for hundreds of enumerated Labor Code provisions, and limit civil actions to those based on violations of Labor Code section 226 (wage statements), section 226.7 (meal/rest/recovery period penalties), section 510 (hours worked) and 512 (meal periods)
Alternatively, AB 2462 would amend Labor Code section 2699.3, which presently allows an employer an opportunity to cure a subset of potential violations before a civil suit ensues, to allow the employer to cure any Labor Code violation covered by PAGA.
While PAGA presently enumerates various potential civil penalties employees may recover, AB 2463 would establish a cap on that penalty of $1,000 for each aggrieved employee.
Responding to concerns some PAGA actions involve hyper-technical violations devoid of actual harm, AB 2464 would authorize the court to dismiss an action as to an aggrieved employee seeking recovery of a civil penalty if the court finds that the aggrieved employee suffered no appreciable harm.
Lastly, while the PAGA presently authorizes private lawsuits if the LWDA declines to investigate, AB 2465 would require the LWDA to investigate the alleged violation and determine if there is a reasonable basis for a civil action. An aggrieved employee would still be permitted to commence an action but only upon receiving notice the agency concluded a reasonable basis exists for a civil action or if the LWDA failed to provide timely notice of its investigation within the proscribed 120-day investigation period.
Overtime Provisions for Domestic Worker Employees (SB 1015 and SB 1344)
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.
SB 1344 would also amend section 1454 regarding live-in domestic workers who are required to be on-duty for 24 or more consecutive hours. It would authorize the domestic worker and the employer to agree, in writing, to exclude from hours worked a bona fide regularly scheduled sleeping period of not more than eight hours for uninterrupted sleep, if the employee has eight hours free of duty and available for continuous, uninterrupted sleep and the employer otherwise complies with this section. If the sleeping period is interrupted by an emergency, only time spent working during the emergency shall constitute hours worked. However, absent a written agreement, the hours available for sleep shall constitute hours worked.
Status: Both SB 1015 and 1344 are pending in the Senate and have not yet been referred to committee.
Removing the Wage/Hour Exemption for Agricultural Employees (AB 2757)
Presently, Labor Code section 554 exempts agricultural employees from Labor Code provisions regarding wage and hour, meal break requirements and other working conditions. Known as the Phase-In Overtime for Agricultural Workers Act of 2016, this bill would remove this exemption and would create a schedule that would phase-in overtime requirements for agricultural workers over the course of four years, beginning in 2017. Under proposed new Labor Code section 860, beginning January 1, 2017, agricultural workers would receive overtime for all work after nine and one-half hours daily or in excess of 55 hours in one workweek. The thresholds for daily and weekly overtime would be further reduced each subsequent year until January 2020, at which point agricultural employees would receive overtime for work beyond eight hours daily or 40 hours weekly.
Status: This bill is pending in the Assembly but has not yet been referred to a committee.
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 July 1, 2017, to propose for adoption a heat illness and injury prevention standard applicable to indoor workers that provides equal or greater protection than those for outdoor workers.
Status: This bill is pending in the Senate but has not yet been referred to a committee.
Workplace Smoking Prohibitions Expansion (ABx2 6, ABx2 7 and SBx2 6)
Labor Code section 6404.5 prohibits smoking of tobacco products inside an enclosed space at a place of employment and enumerates fines for violations of these protections. ABx2 6 would amend this section to use the new definition of “smoking” (contained in in amended Business and Professions section 22950.5) that includes “the use of an electronic smoking device that creates an aerosol or vaper, in any manner or in any form, or the use of any oral smoking device for the purpose of circumventing the prohibition of smoking.”
The nearly identical ABx2 7 and Sbx2 6 would expand these prohibitions to include so-called “owner-operated businesses (i.e., those with no employees and the owner-operator is the only employee). It would also eliminate most of the specified exemptions that permit smoking in certain work environments, such as hotel lobbies, bars and taverns, banquet rooms, warehouse facilities and employee break rooms.
Status: ABx2 6 has passed the Public Health Committee and is pending in the Assembly’s Finance Committee. SBx2 6 has passed the Senate and is pending in the Assembly, and ABx2 7 has passed several committee votes in the Assembly and a full floor vote is expected shortly.
Human Trafficking Regulations (AB 1595 and AB 1942)
Continuing the Legislature’s recent emphasis on targeting human trafficking, it is considering several employment-related bills on this subject. AB 1595 would enact new Labor Code section 2810.6 to require employers that provide “mass transportation services” to train its employees who are likely to interact or come into contact with victims of human trafficking, regarding the signs of such trafficking and how to contact the appropriate law enforcement agency. By January 1, 2018, this training obligation would be expanded to be incorporated into the initial training process for all new and existing employees, not simply those likely to interact or come into contact with trafficking.
“Mass transportation services” would include busses, trains and light rail, but not include taxi services of air travel.
Similarly, AB 1942 would enact new Labor Code section 2810.7 to require hotels and motels that provide lodging services in the state to train their employees who are likely to come into contact with human trafficking victims regarding the signs of trafficking and how to report such concerns.
Status: AB 1595 and AB 1942 are pending in the Assembly’s Labor and Employment Committee.
Recoupment of Overpayment to State Employees (AB 1753)
Government Code section 19838 authorizes the state to recoup overpayments to employees provided certain procedural requirements are met and the action is initiated within three years of the overpayment. This bill would require the state to provide written notice of an administrative action for overpayment, and require the action to be initiated within three years from either the date the employee separates from state service, or when the employee obtained the overpayment as a result of fraud, or the date the state discovers the fraud, whichever is later.
Status: This bill is pending in the Assembly but has not yet been referred to a committee.
Assembly Passes 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” of the conclusion of all administrative and judicial review.
Status: This bill unanimously passed the Assembly, and is pending in the Senate’s Labor and Industrial Relations Committee.
Whistleblower Protections for Legislative Employees (AB 1788)
Entitled the Legislative Employee Whistleblower Protection Act, this bill would prohibit interference with the right of legislative employees to make protected disclosures of ethics violations and would prohibit retaliation against employees who have made such protected disclosures. It would also establish a procedure for legislative employees to report violations of these prohibitions to the Legislature, and would impose civil and criminal liability on an individual vio