LEGISLATIVE SUMMARY
The California Legislature is presently considering a number of significant employment-related bills under consideration, including bills that would:
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 will be heard in the Senate’s Labor and Industrial Relations Committee on April 6, 2016.
Paid Time Off for School-Related Activities (AB 2405)
California’s Family School Partnership Act, codified at Labor Code section 230.8, presently requires employers with more than 25 employees at the same location to allow parents (as defined) to take up to 40 hours each year to participate in school related activities, enroll children in child care, or attend to child-care or school-related emergencies. It also presently authorizes employers to require employees to use accrued vacation or paid time off when taking time off under this section and otherwise authorizes the use of unpaid time off.
This bill would amend section 230.8 to require employers to provide an employee at least 24 hours of paid time off for planned absences under this section, unless otherwise provided in a collective bargaining agreement entered into before January 1, 2017. It would also allow an employee to use vacation or paid time off when taking time off under section 230.8 if they elect, rather than allow an employer to require such usage.
While section 230.8, subsection (d), presently authorizes employees who have been retaliated against for invoking these rights to pursue a civil remedy to seek reinstatement and recover lost wages, this bill would expand this subsection to allow employees who have simply been denied time off to pursue “appropriate equitable relief”(presumably an order requiring time off). It would also add new subsection (e) to allow employees who have been discriminated or retaliated against for taking time off to file a complaint with the Labor Commissioner.
Lastly, new subsection (f) would require employers to display a poster, which the Labor Commissioner would develop, advising employees of their right to accrue, request and use 24 hours of paid time off for their child’s school-related activities and identifying the employee’s remedies for any discrimination or retaliation.
Status: This bill will be heard in the Assembly’s Labor and Employment Committee on April 20, 2016.
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 to new employees upon hire and to other employees upon request.
Status: This bill will be heard in the Assembly’s Labor and Employment Committee on April 6, 2016.
Scheduling Predictability Bill Re-Introduced (SB 878)
Entitled the Reliable Scheduling Act of 2016, this bill would require grocery stores, restaurants and retail stores to provide employees advance notice of their schedules, and would require employers to provide “modification pay” for failure to provide sufficient advance notice or if any changes are made. Specifically, new Labor Code section 510.5 would require employers to provide employees at least seven days’ notice of the first day on the work schedule, with the work schedule required to identify all scheduled shifts for at least 21 consecutive days.
Employers would also be required to provide “modification pay” per shift, for each previously scheduled shift that the employer cancels or moves to another date or time or for any previously unscheduled shift that the employer requires an employee to work. Specifically, the employer would be required to provide one hour of pay at the employee’s regular rate of pay if the employer provides less than seven days but more than 24 hours’ notice of any change. If less than 24 hours’ notice is provided, the employer shall provide “modification pay” equal to or greater than half of that shift’s schedule hours at the employee’s regular rate, but not less than two hours or more than four hours. For each on-call shift that the employee is required to be available but is not called in, the employer would be required to provide modification pay equal to or greater than half of that shift’s scheduled hours.
Notably, proposed subsection (c)(5)(B) defines “modification pay” as an employee’s hourly wage, but then for employees who had different hourly rates in the preceding 90 days, uses the same complicated formula initially contained in the Paid Sick Leave law (AB 1522) that was subsequently amended in 2015 (AB 304).
However, an employer would not be deemed to have violated these notice provisions if the changes occur because: (1) operations cannot begin or continue due to threats or civil agency order; (2) operations cannot begin or continue due to disruption in water or electrical supply; (3) operations cannot begin or continue due to acts of God or natural disaster; (4) another previously scheduled employee failed to show up or became ill; (5) another previously scheduled employee was disciplined/terminated; (6) two employees have mutually agreed to trade shifts; or (7) the employer requires the employee to work overtime.
Employers would also be required to post a poster containing specified information, including information about these deadlines and an employee’s modification pay rights, and require the Labor Commissioner to develop this poster. Employers would also be required to retain for three years records documenting the hours worked and modification pay awarded, and allow the Labor Commissioner or an employee to inspect these records.
It would also preclude an employer from retaliating or discriminating against any employee for filing a complaint or alleging a violation of these requirements, and would create a rebuttable presumption of retaliation if any adverse employment action occurred within 30 days of an employee’s complaint, opposition or cooperation in an investigation.
This bill would also authorize the Labor Commissioner to enforce these requirements, including to investigate, mitigate, and order relief for violations. It would also authorize the Labor Commissioner to impose statutorily-enumerated administrative fines, and would authorize the Labor Commissioner or any aggrieved employee to recover specified civil penalties, as well as attorneys’ fees, costs and interest.
Status: This bill is pending in the Senate’s Labor and Industrial Relations Committee. A similar bill (AB 357) stalled in committee last year. This bill appears loosely modeled on San Francisco’s Retail Workers’ Bill of Rights, which took effect in 2015 but only applies to much larger employers (e.g., those with at least 500 employees and 10 locations in California).
Governor Brown Announces Deal to Increase California’s Minimum Wage to $15.00 by 2022 (Bill No. T.B.D.)
Although California’s state-wide minimum wage increased to $10.00 on January 1, 2016, and even though many municipalities have increased or considering increasing their local minimum wage to levels higher than the state minimum wage, Governor Brown and certain lawmakers recently announced a tentative deal to increase the minimum wage to $15.00 an hour by 2021. Although the actual bill has not yet been submitted, it appears this deal contemplates the minimum wage increasing to $10.50 on January 1, 2017, and increasing to $11.00 on January 1, 2018, with subsequent $1 increases annually, reaching $15.00 on January 1, 2022. The bill also contemplates annual increases thereafter tied to consumer inflation. It appears this schedule would apply to employers with more than 25 employees, with smaller employers being subject to a slightly slower pace and the full $15.00 minimum wage not taking effect until January 1, 2023.
These increases to the hourly minimum wage would also impact the salary level needed for exempt employee purposes, with the salary level ultimately increasing to $60,000 when the $15.00 level is reached in 2022.
Status: Although the bill has not yet officially been introduced, Governor Brown, most of the Democratic caucus and union leaders have already signaled support for this bill suggesting some version of it will likely pass very shortly despite likely fierce opposition, and even though Governor Brown had previously signaled concerns about automatic inflation-based increases. If enacted, this will would likely lead to the unions withdrawing the state-wide ballot initiatives they had introduced to raise the minimum wage to $15.00, which had been scheduled for vote in November 2016.
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 establishments” would be defined as those having a physical store within the state that sells primarily 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 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 will be heard in the Senate’s Judiciary Committee on April 5, 2016.
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 it would incorporate its protections for employees to disclose, inquire or discuss wages.
Status: SB 1063 is pending in the Senate’s Labor and Industrial Relations Committee.
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 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 annually 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 will be heard in the Assembly’s Labor and Employment Committee on April 6, 2016. 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 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 slightly expand this provision to also prohibit employers from inquiring about or using information related to specific juvenile court actions or custodial detentions.
Status: This bill will be heard in the Assembly’s Labor and Employment Committee on April 6, 2016.
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 will be heard in the Assembly’s Labor and Employment Committee on April 6, 2016. 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.
Beginning January 1, 2017, this bill would also remove the 7-day waiting period for these family leave benefits.
Status: This bill passed both legislative chambers and had initially been sent to Governor Brown, but the Assembly subsequently requested it be returned, presumably to make some final additional changes.
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’s Insurance Committee where a similar bill (AB 688) stalled in 2015.
No Permanent Disability Apportionment for Gender-Related Conditions (AB 1643)
California’s Workers’ Compensation system requires employers to maintain coverage to compensate employees for injuries sustained in the course and scope of employment. For permanent disability purposes, a treating physician must prepare a report assessing causation, including making an apportionment determination as to what percentage of the permanent disability is work-related and non-work-related.
This bill would, for physical injuries occurring on or after January 1, 2017, modify Labor Code section 4663 to prevent apportionment based on certain specific conditions (e.g., pregnancy, menopause, osteoporosis or carpal tunnel syndrome) if the condition is contemporaneous with the claimed physical injury. It would also prohibit apportionment of permanent disability in cases of psychiatric injury occurring after January 1, 2017 from being based on psychiatric disability or impairment caused by any of these conditions.
It would also add new Labor Code section 4660.2 to state that for injuries occurring on or after January 1, 2017, the impairment ratings for breast cancer and its aftereffects (i.e., sequelae) shall also not be less than comparable ratings for prostate cancer and its aftereffects.
Status: This bill is pending in the Assembly’s Insurance Committee. Governor Brown vetoed a very similar bill (AB 305) in 2015.
No Duty to Track “Hours Worked” on Itemized Wage Statements for Exempt Employees (AB 2535)
While Labor Code section 226 presently requires employers to provide written wage statements containing specifically enumerated information, including identifying the total hours worked, it contains an exception from the reporting the total hours worked for employees who are paid solely on salary and are exempt from overtime. Responding to concerns that there are many employees who are exempt from overtime, in which case employers may not track hours worked, but whose compensation is not “solely based on a salary” (e.g., salespersons paid on commission, high-ranking executives partially compensated with stock options, etc.), this bill would amend section 226 to expand this exception. Specifically, it would provide that employers need not list on the itemized wage statement the total hours worked for an employee “exempt from payment of minimum wage and overtime and the employee’s compensation is not based in whole or in part on hours worked” or if the employee’s compensation is solely based on salary and the employee is exempt from overtime.
Status: This bill will be heard in t
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