LEGISLATIVE RECAP
As expected, there was a flurry of activity as the May 30th deadline for bills to pass their house of origin approached. And also as expected, a number of employment-related bills passed either the Assembly or the Senate and have now proceeded to the second legislative chamber. Some of the more significant employment bills that have passed this first legislative hurdle include:
- AB 1522 which would require all employers provide up to three days of paid sick leave annually;
- AB 1443 which would amend FEHA to prohibit discrimination or harassment against unpaid interns or volunteers;
- AB 2053 which would require employers discuss “abusive conduct” in sexual harassment training currently required under AB 1825;
- SB 1407 and AB 2617 which would impose new requirements for FEHA-related settlement agreements and essentially prohibit arbitration agreements for employment claims, respectively;
- SB 935 which would raise California’s minimum wage beyond the just-enacted raises in AB 10, to $13.00 hourly by 2017;
- AB 2416 which would allow employees to file liens against an employer’s real or personal property in wage disputes; and
- AB 2271 which would preclude employers from advertising in a manner suggesting that unemployed applicants need not apply; and
Looking ahead, the Legislature will soon begin holding initial Committee hearings on these bills before taking its summer recess, with a second flurry of activity anticipated before the August 31, 2014 deadline for bills to pass both legislative chambers.
Listed below, largely by subject matter, are the bills that may affect private sector employers we are currently tracking.
BILLS THAT PASSED THE FIRST LEGISLATIVE CHAMBER
Amended Paid Sick Leave Bill Moves Forward (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 seven 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.
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 at least the same rate, 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 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. (A provision that would have authorized employees to file civil actions was deleted by recent amendment). 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.
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 (which the Labor Commissioner will create) in a conspicuous place notifying employees of these paid sick leave rights. 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 is presently pending in the Senate and will likely be assigned to the Labor and Industrial Relations Committee.
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.
Status: This bill unanimously passed the Assembly and is pending in the Senate’s Labor and Industrial Relations Committee where passage seems likely.
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.
Status: This bill passed the Assembly largely along a party-line vote and is pending in the Senate but has not yet been assigned to a committee.
FEHA Protections for Unpaid Interns and Volunteers (AB 1443)
This bill 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 any other program to provide unpaid experience for that person in the workplace or industry. It would also amend subjection (j) to prohibit harassment against unpaid interns or volunteers because of a legally protected classification. This bill is in response to several court rulings in other jurisdictions suggesting interns or volunteers are not employees for purposes of harassment and discrimination laws.
Status: This bill unanimously passed the Assembly and is pending in the Senate’s Judiciary Committee where passage seems likely.
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 or employee in the workplace, with malice, that a reasonable person would find hostile, offensive, and unrelated to an employer’s legitimate business interests.” It further specifies that such abusive conduct “may include repeated infliction of verbal abuse, such as the use of derogatory remarks, insults, and epithets, verbal or physical conduct that a reasonable person would find threatening, intimidating, or humiliating, or the gratuitous sabotage or undermining of a person’s work performance.” The bill specifies that “a single act shall not constitute abusive conduct, unless especially severe and egregious.”
Notably, this bill only would require such “abusive conduct” prevention training within the already required AB 1825 harassment training, and it does not otherwise amend the Fair Employment and Housing Act to prohibit “abusive conduct” unrelated to an already protected criterion.
Status: This bill passed the Assembly, and is scheduled for a hearing in the Senate’s Labor and Industrial Relations Committee on June 11, 2014.
FEHA Settlement Agreements Must be Knowing and Voluntary (SB 1407)
Citing a concern that employers are routinely forcing employees to waive the Fair Employment and Housing Act’s (FEHA) protections by signing “inconspicuous” releases or as a condition of receiving compensation already owed, this bill would add Government Code section 12964.5 to invalidate any release of FEHA claims unless the release is knowing and voluntary. However, while earlier versions of this bill enumerated various requirements to ensure releases were knowing and voluntary, including requiring employees have 21 days to review the agreement and seven days to revoke an executed agreement, these requirements were deleted by amendment. Thus, in its current form, this bill simply states releases of FEHA claims must be “knowing and voluntary” without any further specific written requirements for a release.
Status: This bill passed the Senate and is pending in the Assembly’s Judiciary Committee but no hearing has yet been scheduled.
Arbitration Agreements Targeted (AB 2617)
Employers often utilize arbitration agreements regarding employment disputes for various reasons, including to more expeditiously resolve such disputes, to lower the costs of such disputes, and to avoid the potential for runaway jury verdicts. This bill would amend Civil Code sections 51.7, 52, and 52.1 to prohibit businesses from requiring an individual to agree to arbitrate future disputes regarding violations of the Ralph Civil Rights Act or the Bane Civil Rights Act rather than litigating them. This bill would apply to any contracts entered into, modified, or extended after January 1, 2015.
Similar bills have previously stalled during the legislative process, and since this bill singles out arbitration agreements in contravention of the Federal Arbitration Act, it will likely be judicially challenged even if enacted.
Status: This bill passed the Assembly along a party-line vote, and is pending in the Senate but has not yet been assigned to a committee.
Retaliation Protections for Employees Enrolled in Public Assistance Programs
(AB 1792)
Citing the impact poorly-paid employees have on the state budget, this bill would require the Employment Development Department to collaborate with other specified state agencies to compile and publish a list of employers with employees that are enrolled in public assistance programs. This bill would define “employer” to mean an organization “that employ[s] 25 or more beneficiaries in this state.” This bill would also add Government Code section 13084 prohibiting employers from: (1) discharging, discriminating, or retaliating against an employee who enrolls in a public assistance program, (2) refusing to hire a beneficiary of a public assistance program; or (3) disclosing to a non-governmental entity that an employee receives or is applying for public benefits.
Status: This bill passed the Assembly on a party-line vote and is pending in the Senate but has not yet been assigned to a committee.
Amendments to “Immigration-Related” Retaliation Protections (AB 2751)
This “clean up” bill makes relatively-minor changes to several recently-enacted measures. 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 would amend 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. This bill would clarify that the licenses to be affected would be “specific to the business location or locations where the unfair immigration-related practice occurred.”
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 bill would further amend AB 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.” This section would 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.”
Lastly, this bill would amend Labor Code section 98.6 to specify that the $10,000 penalty for violating this section shall be awarded to the “employee or employees who suffer the violation.”
Status: This bill passed the Assembly and is scheduled for a hearing on June 10, 2014 in the Senate’s Judiciary Committee.
Farm Labor Contractors to Undergo Sexual Harassment Training (SB 1087)
California presently has detailed laws regulating “farm labor contractors” (FLC) and the procedures for them to obtain the requisite licenses. (See Labor Code section 1682 et seq.) This wide-ranging bill would attempt to address several concerns in the agricultural industry.
First, this bill would attempt to reduce the reported prevalence of inappropriate sexual conduct towards agricultural employees. Thus, this law would prohibit the Labor Commissioner from issuing a FLC license to any person who, within the preceding three years, has been found by a court or an administrative agency to have committed sexual harassment of an employee. It would also prohibit an FLC license from being issued to any person who, within the preceding three years, employed any supervisory employee he or she knew or should have known had been found by a court or an administrative agency within the preceding three years of his or her employment with the applicant to have sexually harassed an employee.
In addition to denying an FLC license, the Labor Commissioner would also be entitled to revoke, suspend, or refuse to renew an FLC license if either of these criteria is met.
It would also require that the mandatory written examination part of the licensing process cover laws and regulations concerning workplace sexual harassment, and that the annual mandatory eight hours of educational classes be increased to ten hours and include at least two hours of sexual harassment training. An applicant for an FLC license would also be required to execute a written statement attesting that their supervisory employees have been trained in the prevention of sexual harassment.
Secondly, this bill seeks to increase the ability of the Division of Labor Standards Enforcement (DLSE) to enforce applicable laws. Accordingly, this bill proposes increased funding for FLC enforcement and verification, and aims to increase bonding requirements, increase wage and hour reporting, and increase penalties for violations.
Status: This bill passed the Senate but has not yet been assigned to an Assembly Committee.
Additional Minimum Wage Increases Proposed (SB 935)
In 2013, the Legislature passed and Governor Brown approved AB 10, increasing California’s hourly minimum wage to $9.00 on July 1, 2014, and to $10.00 on January 1, 2016. This bill would again increase California’s minimum wage in three separate increments over the next three years. Specifically, it would increase California’s hourly minimum wage to $11.00 by January 1, 2015, to $12.00 by January 1, 2016, and to $13.00 by January 1, 2017. After January 1, 2018, the minimum wage would also be annually adjusted based on the California Consumer Price Index (CPI). Notably, while the rate could be adjusted upwards, it could not be adjusted downwards, even if the CPI was negative for the preceding year.
These minimum wage increases would apply to all industries, including private and public employment.
Status: This bill passed the Senate on a party-line vote and is pending in the Assembly but has not yet been assigned to a committee.
Senate Passes Bill Clarifying that 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.) This bill would amend section 226.7 to specify that any rest or recovery period 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. This bill further provides that this amendment would be declarative of existing law, thus applying retroactively.
Status: This bill passed the Senate by a fairly wide margin, and is scheduled to be heard in the Assembly’s Labor and Employment Committee on June 11, 2014.
Waiting Time Penalties Proposed for Final Wage Violations under CBA (AB 2743)
While Labor Code section 201 sets forth the general rule regarding the payment of final wages, the Labor Code also enumerates alternative final pay rules for particular industries due to the unique nature of those industries. Labor Code section 203, which authorizes waiting time penalties for failure to comply with these final pay rules, generally cross-references both section 201 and these more specific final pay statutes. However, and likely due to a legislative drafting error, Labor Code section 203 does not presently cross-reference section 201.9, which governs final pay for employees at live theatrical and concert events that are subject to a collective bargaining agreement. This bill would amend section 203 to include section 201.9 as one of the specific final pay statutes to which waiting time penalties apply if final wages are not paid in accordance with the applicable Labor Code section.
Status: This bill passed the Assembly and is scheduled to be heard in the in the Senate’s Labor and Industrial Relations Committee on June 11, 2014.
Longer Statute of Limitations for Recovering Liquidated Damages for Unpaid Wages (AB 2074)
California law permits an employee to pursue a civil action to recover unpaid wages or compensation, and Labor Code section 1194.2 permits a successful employee to also recover liquidated damages equal to the unpaid wages plus interest in civil actions regarding minimum wage violations. Responding to recent cases suggesting that actions for recovery of penalties must be filed only within one year, whereas actions to recover unpaid wages have a three-year statute of limitations, this bill would amend section 1194.2 to specify that the statute of limitations to pursue liquidated damages is the same as in an action for wages from which the liquidated damages arise.
Status: This bill passed the Assembly and is scheduled to be heard in the Senate’s Labor and Industrial Relations Committee on June 11, 2014.
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