LEGISLATIVE SUMMARY

With the June 5^th deadline for bills to pass their house of origin fast approaching, the California legislative session is heating up, with a clearer picture emerging of the bills likely to continue advancing.  Indeed, a number of significant employment bills have already passed initial key committee votes, including bills that would:

• Increase California’s minimum wage beyond the already contemplated 2016 increase, and to $13.00 per hour by 2017 (SB 3);
• Amend the Paid Sick Leave bill passed in 2014, including to allow employees to use paid sick leave for “childcare or school emergencies” (AB 304 and SB 579);
• Require employers provide double pay on Thanksgiving and Christmas (AB 67);
• Require food and retail establishments provide two weeks’ notice of schedules or pay additional compensation (AB 357);
• Target gender-based wage differentials, including by preventing employers from obtaining or releasing salary history information (AB 1017 and SB 358);
• Expand the California Family Rights Act to apply to employers with more than five employees (instead of 50) and expand the class of family members for whom leave may be taken because of a serious health condition (SB 406);
• Prohibit advertisements discouraging the unemployed or public employees from applying (AB 676 and AB 883);
• Allow employers to provide a preference to veterans during hiring decisions (AB 1383);
• Amend the Fair Employment and Housing Act (FEHA) to treat accommodation requests as protected legal activities for retaliation purposes (AB 987);
• Amend the FEHA to prohibit employers from engaging in work eligibility-related violations and to limit when employers may use
  E-Verify (AB 1065 and AB 622); and
• Preclude employers from requiring employees agree to arbitration as a condition of employment (AB 465).

Of these, several have already passed their original legislative chamber, while most others are pending in the Appropriations Committee’s suspense file to resolve any fiscal concerns.  Given the overwhelming single party rule in Sacramento, most bills that emerge from the Appropriations Committee will pass their house of origin and have a significant likelihood of making it to Governor Jerry Brown’s desk.

There were also several significant employment bills that failed passage, including bills that would have allowed individual employees to elect an alternative workweek schedule (AB 1038), or would have created an overtime exemption for certain highly-compensated employees (AB 1480) or would have created a “tip credit” against an employer’s minimum wage obligation (AB 669).

Listed below, and largely by subject matter, are the key employment bills of potential general application that remain pending, followed by a brief discussion of the employment bills that failed passage but may be reconsidered in 2016.

PENDING BILLS

Additional Minimum Wage Increase (SB 3)

Even though California’s minimum wage is already scheduled to increase to $10.00 per hour on January 1, 2016, SB 3 proposes several additional increases.  Specifically, California’s minimum wage would increase to $11.00 per hour on January 1, 2016, and to $13.00 per hour on July 1, 2017.  After January 1, 2019, the minimum wage would also be annually adjusted based on the California Consumer Price Index (CPI) and rounded to the nearest five cents.  This bill also provides that it would not preclude the Industrial Welfare Commission (IWC) from increasing the minimum wage beyond that required by the CPI formula, but would preclude the IWC from adjusting it downwards even if the CPI was negative for the preceding year.

While California overwhelmingly approved a two-step minimum wage increase in 2013 (AB 10), that increase had specifically omitted annual CPI-based increases, and a very similar bill to SB 3 (SB 935) stalled in committee last year.

Status:  SB 3 passed the Senate’s Labor and Industrial Relations Committee and is pending in the Senate’s Appropriations Committee where it has been referred to the suspense file to further analyze its potential costs to California and the economy.  (As a reminder, San Francisco’s minimum wage increased to $12.25 per hour on May 1, 2015, and will increase to $15.00 per hour by 2018, while Los Angeles is presently considering increasing its minimum wage to $15.00 per hour by 2020, and the minimum wage for hotel industry employees in Los Angeles will soon increase to $15.37 per hour.)

Double Pay on Certain Holidays (AB 67)

Entitled the Double Pay on the Holiday Act of 2015, this bill would require employers to pay employees at least twice the employee’s regular rate of pay for any work on any “family holiday.”  New Labor Code section 511.5 would define “family holiday” as December 25^th (Christmas Day) or the fourth Thursday of November of each year (Thanksgiving).  While “employer” is broadly defined to include any person employing another under any arrangement or contract of hire, including public entities, it would exclude employees covered by a collective bargaining agreement containing specifically-enumerated provisions, including a minimum wage 30 percent higher than the state minimum wage.

Status:  This bill has passed the Assembly’s Labor and Employment Committee and is pending in the Assembly’s Appropriations Committee, where it has been referred to the suspense file to assess its financial impact to the state of California (primarily for increased wages to in-home support services employees).

Scheduling Predictability for Food and General Retail Establishments (AB 357)

Entitled the Fair Scheduling Act of 2015, this bill would require that “food and general retails establishments” provide employees with at least two weeks’ notice of their schedules, and would entitle employees who do not receive such advance notice to additional pay.  Under proposed new Labor Code section 518, “food and general retail establishments” would be defined as a retail sales establishment with a physical location with in-person sales that has 500 or more employees in California, 10 or more retail sales establishments located in the United States and two or more of the following: (1) a standardized array of merchandise; (2) a standardized façade; (3) a standardized décor and color scheme; (4) uniform apparel; (5) standardized signage; and (6) a trademark or a service mark.  Such food and general retail establishments would include food retail stores, grocery stores, general merchandise stores, department stores, and a health or personal care store, but would not include on-line retailers without a physical location in California, or a franchise that does not meet the specified criteria.

Covered establishments would also be required to provide an employee with additional compensation per shift for each previously scheduled shift that is moved to another date or time or is cancelled, and for each previously unscheduled shift the employer requires an employee to work.  The amount of additional compensation owed will depend upon the amount of notice provided and the number of hours worked as follows:

• One hour of pay at the employee’s regular hourly rate if less than seven days’ notice but at least 24 hours’ notice is given to the employee;
• Two hours of pay at the employee’s regular hourly rate for each shift of four hours or less if less than 24 hours’ notice is given to the employee; and
• Four hours of pay at the employee’s regular hourly rate for each shift of more than four hours if less than 24 hours’ notice is given to the employee.

Recent amendments state this additional compensation requirement would not apply to shifts for which the employee is compensated with reporting time pay as required by any Industrial Welfare Commission wage order.  Employers would also not be required to provide additional compensation for changes in the scheduling of rest periods, recovery periods or meal periods.

Food and retail establishments would also be required to provide compensation for each “on-call shift” the employee is required to be available but is not called in to work as follows:

• Two hours of pay at the employee’s regular hourly rate for each on-call shift of four hours or less; and
• Four hours of pay at the employee’s regular hourly rate for each on-call shift of more than four hours.

Recent amendments further clarify that no additional “on-call” compensation is required if such on-call time is already required to be compensated as hours worked and the employee is in fact compensated under existing law.

Employers would not be required to pay additional compensation nor will the employer have violated this new law, under certain specified circumstances, including where: (1) the change results from an unexpected absence (i.e., less than seven days’ notice) of an employee previously scheduled to work; (2) where an employee scheduled to work has not reported on time, or is terminated or sent home from work for disciplinary reasons; (3) an employee trades shifts with another employee or requests a change in his or her work schedule; or (4) where the employer requires the employee to work overtime, such as mandatory overtime.  Additional compensation would also not be required where operations cannot begin or continue due to: (1) threats to employees or property, or when civil authorities recommend work not begin or continue; (2) a failure of public utilities or sewer system; or (3) acts of God or other emergencies (e.g., earthquakes) beyond the employer’s control.

This bill would also require the Labor Commissioner to promulgate regulations and rules necessary to carry out its provisions.  It also specifies that it would not prohibit employers from providing greater advance knowledge of an employee’s work schedule or changes in that schedule than required by this bill.

New Labor Code section 519 would also require “food and general retail establishments” to allow employees to take unpaid time off up to eight hours twice per year to attend required appointments at the county human resources agency related to public benefits.  Employees would be required to provide reasonable advance notice to take time off, unless unfeasible to do so.  Employers would also be prohibited from taking any actions against employees due to unscheduled absences because of a required appointment if the employee provides documentation of the required meeting within a reasonable period.

Status:  This bill narrowly passed the Assembly’s Labor and Employment Committee, and is pending in the Assembly’s Appropriations Committee where it has been referred to the suspense file.  As a reminder, San Francisco’s Retail Worker Bill of Rights, upon which AB 357 is modeled, is scheduled to take effect on July 3, 2015.

Cheerleaders to be Considered Employees of Professional Sports Teams (AB 202)

Recently, there have been several high-profile wage and hour class actions filed by cheerleaders or dance teams of professional sports franchises.  This bill would add new Labor Code section 2754 to provide that for purposes of state law governing employment, including the Labor Code, the Unemployment Insurance Code, and the FEHA, a cheerleader utilized by a California-based professional sports team, directly or through a labor contractor, will be deemed an employee.  The professional sports team will also be required to ensure the cheerleader is classified and treated as an employee.

Cheerleader will be defined as “an individual who performs acrobatics, dance, or gymnastic exercises on a recurring basis, but will not include individuals utilized no more than one time in a calendar year.  “Professional sports teams” will be defined as teams at either a minor or major league level for baseball, basketball, football, ice hockey or soccer.

Status:  This bill passed the Assembly along a largely party-line vote and is pending in the Senate but has not yet been referred to a committee.

Arbitration Agreements Targeted (AB 465)

This bill would create a new Labor Code section (section 925) to provide that any waiver of rights, penalties, remedies, forums and procedures established by the Labor Code, including the right to file a claim with the Labor Commissioner or a civil action in court, may not be required as a condition of employment.  It would also require that any such waiver be knowing and voluntary and in writing, and expressly not made as a condition of employment, and require the party seeking to enforce the waiver to prove that it was made voluntarily and knowingly and not as a condition of employment.  Otherwise, any such waiver will be deemed involuntary, unconscionable, against public policy and unenforceable.

It would further prohibit employers from threatening, retaliating or discriminating against any person who refuses to waive such rights, and, in addition to any other legal remedy, would impose a civil penalty of up to $10,000 per each individual for each violation of this section, plus reasonable attorney’s fees.

This bill would apply to any such waivers, including private arbitration agreements, entered into, altered, modified, renewed or extended on or after January 1, 2016.

Status:  This bill passed the Assembly on a fairly narrow basis, and is presently pending in the Senate and will soon be assigned to a committee.

Expanded Labor Commissioner Enforcement Powers (AB 970)

This bill would amend several Labor Code provisions to expand the citation authority of the Labor Commissioner.  For instance, while Labor Code section 558 presently authorizes the Labor Commissioner to investigate Labor Code or Industrial Welfare Commission (IWC) orders regarding wages, this bill would also authorize the Labor Commissioner to issue a citation for violations of applicable “local” overtime laws.  Similarly, it would amend Labor Code sections 1197 and 1197.1, which presently authorize the Labor Commissioner to investigate violations of the minimum wage set by the IWC, and to issue a citation for violations of any state or local minimum wage laws.

This bill would also amend Labor Code section 2802 to authorize the Labor Commissioner to issue citations and penalties against employers who fail to properly indemnify employees for expenses incurred in employment.

Status:  This bill passed the Assembly, and is pending in the Senate and will soon be assigned to a committee.

Paid Sick Leave Amendments (AB 304)

This bill amends several provisions of last year’s paid sick leave bill (AB 1522), which takes effect July 1, 2015.

For instance, section 246(e) exempts employers who have “paid time off” (PTO) policies from providing additional paid sick leave if they either:  (a) satisfy the accrual, carry over and use requirements of this section; or (b) provide no less than 24 hours or three days of paid sick leave or paid time off for each year of employment.  As presently worded, this second option is not clear as to whether employers must provide this PTO at the beginning of each year, or simply at any point during the year.  This bill resolves this ambiguity by amending this second option to require the PTO be provided “at the beginning” of each year of employment, calendar year or 12-month period.

Labor Code section 246(h) requires employers to provide written notice to employees of available paid sick leave balances, either through the itemized wage statements required under Labor Code section 226 or a separate writing provided on the designated pay date.  Responding to employer concerns about how to track balances and provide these notices if the employer provides “unlimited” paid sick time, this bill would specify that an employer may satisfy this notice obligation by indicating “unlimited” on the notice or wage statement.  Notably, this bill also delays this notice requirement until January 21, 2016 for employers covered by Wage Orders 11 and 12 (e.g., motion picture and broadcasting employers).

Lastly, it clarifies that for purposes of the Paid Sick Leave law, the term “health care provider” has the same meaning as defined in California’s Family Rights Act (Government Code section 12945.2(c)(6).)

Status: This bill passed the Assembly’s Labor and Employment Committee and is pending in the Assembly’s Appropriations Committee.  As a reminder, the Division of Labor Standards Enforcement has published the poster and updated Wage Theft Prevention Act Notices (including in multiple languages) employers may use, plus several sets of “Frequently Asked Questions.”  These items and other resources related to AB 1522 are available at www.dir.ca.gov/dlse/ab1522.htm.

Paid Sick Leave Usage for Childcare or School Emergencies (SB 579)

This bill would expand the bases for which the not-yet-effective Paid Sick Leave law could be used, as well as expand the discrimination/retaliation protections originally enacted under the Family School Partnership Act.

For instance, this bill would amend Labor Code section 245.5 and authorize employees to utilize the paid sick leave mandated under the Healthy Workplace and Healthy Families Act of 2014 for a “childcare or school emergency.”  A childcare or school emergency would be defined as meaning a child cannot remain in a school or childcare facility due to:  (a) the illness of, or injury to, the child; (b) behavioral or discipline problems; (c) closure of the facility; or (d) a disaster or extreme weather conditions, including, but not limited to, fire, earthquake or flood.

It would also modify California’s Kin Care law (Labor Code section 233) to align it more closely with the Paid Sick Leave law by authorizing employees to use sick leave to attend to any “preventative care” needs (as well as the illness) of a worker’s child, parent, spouse or domestic partner.

Presently, the Family School Partnership Act (Labor Code section 230.8) requires employers with 25 or more employees to allow employees to use up to 40 hours of unpaid time (limited to eight hours in any calendar month) to participate in school or childcare related activities.  Accordingly, this bill would expand this provision to also allow employees to take job-protected time off to find, enroll or reenroll their children in a school or licensed day care facility.

Status:  This bill passed the Senate’s Labor and Industrial Relations Committee and is pending in the Senate’s Appropriations Committee.

Paid Sick Leave to Include In-Home Support Service Workers (AB 11)

In a last-minute amendment to avoid a potential veto by Governor Brown, “in-home support services” (IHSS) employees were specifically excluded from the definition of employee from last year’s Paid Sick Leave bill (AB 1522).  While this amendment avoided imposing certain costs upon the State of California and helped AB 1522 become enacted, several lawmakers were upset that in-home support services employees were not entitled to paid sick leave under this new law.  Accordingly, this bill would revise the definition of employee in Labor Code section 245.5, as of July 1, 2016, to include providers of in-home support services employees, as defined in the Welfare and Institutions Code.

Status:  This bill has passed the Assembly’s Labor and Employment Committee and is pending in the Assembly’s Appropriations Committee.  The bill is presently on the suspense file because of the potential costs of expanding Paid Sick Leave to IHSS employees.

Expansions to the California Family Rights Act (SB 406)

This bill proposes to materially expand the number of employers subject to California’s Family Rights Act (CFRA, Gov. Code section 12945.2 et seq.), and to expand the bases for employee leave, thus potentially creating further differences between CFRA and the federal Family Medical Leave Act (FMLA).  For instance, while CFRA presently defines “employer” as a person employing 50 or more employees, this bill would redefine employer to include any person employing five or more persons.  Similarly, while CFRA presently authorizes even covered employers (i.e., 50 or more employees) to deny a qualifying leave if the employer has less than 50 employees within 75 miles of the employee’s worksite, this bill would restrict this small employer exemption to employers that employ fewer than 25 employees within 75 miles of the employee’s worksite.

This bill would also alter the definitions regarding the circumstances for which CFRA leave may be taken.  For example, it would expand the definition of “child” to include children of a domestic partner or for persons to whom the employee stands in loco parentis, and would remove the current age (i.e., under 18 years old) and dependent status restrictions.  If adopted, CFRA leave would be permitted for the serious health condition of a “child,” as defined, regardless of age and, for adult children regardless of whether that child is dependent upon the employee.  It would also expand the definition of “parent” to include “parents-in-law.”

While CFRA presently authorizes employees to take leave for the serious health condition of a child, parent or spouse, this bill would expand this entitlement to include leaves for the serious health condition of a grandparent, grandchild, sibling or domestic partner.

Lastly, under Government Code section 12945.2(q), where both parents are employed by the same employer, the employer may presently limit their combined leave rights in connection with the birth, adoption or foster care placement of a child to 12 weeks.  This bill would delete this subsection in its entirety, suggesting both employees employed by the same employer would each be entitled to 12 weeks of leave, assuming they are otherwise eligible.  As a reminder, although completely deleting this aggregation ability would create a material difference between CFRA and FMLA (since FMLA would still permit aggregation), these two statutes already currently differ in that FMLA permits aggregation only if both the “husband and wife” work for the same employer, while CFRA permits aggregation where both parents (whether married or not) work for the same employer.

Status:  This bill passed the Senate’s Labor and Industrial Relations Committee, and is pending in the Senate’s Appropriations Committee where it has been placed on the suspense file.

Extension of California’s Paid Family Leave Benefit from 6 to 10 Weeks (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.  This bill would amend Insurance Code section 3301 to allow employees to receive up to ten weeks of wage replacement benefits, rather than six.  It would also modify the formula for calculating these benefits to ensure a minimum weekly benefit of $250, and to increase the wage replacement rate from the current 55% to either 65%, 75% or 80% depending on an individual’s wage level.

Status:  This bill passed the Assembly’s Insurance Committee, and is pending in the Assembly’s Appropriations Committee where it has been placed on the suspense file.

Gender Wage Differentials Targeted (SB 358)

Echoing the Paycheck Fairness Act (S. 84) pending at the federal level, this bill proposes to amend California’s Equal Pay Act to address perceived gender-based wage gaps.

For instance, Labor Code section 1197.5 presently prohibits employers from paying less to members of the opposite sex who perform equal work in the same establishment.  This bill would eliminate the “same establishment” requirement, and revise the “equal work” requirement to instead prohibit paying less for “substantially similar work, when viewed as a composite of skill, effort and responsibility” performed under similar working conditions.

It would also significantly amend the statutorily-enumerated exceptions in section 1197.5, which presently are a seniority system, a merit system, a system which measures earnings by quantity or quality of production, or a differential based on any bona fide factor other than sex.  Specifically, while it would retain the first three exceptions, it would significantly revise the “bona fide factor” to require the employer to prove that a wage-differential is not based on or derived from a sex-based differential and is consistent with a “business necessity,” such as a difference in education, training or experience that is job-related with the position in question.  It would also specify that “business necessity” means “an overriding legitimate business purpose such that the factor relied upon effectively fulfills the business purposes it is supposed to serve.”  However, this bill would also provide that this defense shall not apply if the employee demonstrates that an alternative employment practice exists that would serve the same business purpose without producing the wage differential.

In addition to demonstrating at least one of those factors, the employer must also satisfy two new criteria:  (a) that each factor relied upon is applied reasonably; and (b) the one or more factors relied upon accounts for the entire wage difference.

This bill would also amend section 1197.5(d) to expand from two years to three years an employer’s obligation to retain records of the wages and wage rates, job classifications and other terms and conditions of employment for employees.

This bill would also add new subsection (j) to prohibit employers from discharging, or in any way discriminating or retaliating against, any employee who takes action to invoke or assist in any manner the enforcement of California’s Equal Pay Act.  Under this new subsection, employers would also not be able to prohibit an employee from discussing the employee’s own wages, discussing the wages of others, or inquiring about another employee’s wages, or aiding or encouraging any other employee to exercise his or her rights under this section.

The bill would extend the existing enforcement mechanisms for wage discrimination to claims for retaliation and would provide a one-year statute of limitations for retaliation claims.  In addition to Labor Commissioner enforcement, this bill would also authorize an employee who has been discharged, discriminated or retaliated against to pursue a civil action for reinstatement and reimbursement of lost wages, and would require that such civil actions be commenced no later than one-year after the cause of action accrues.

Status:  This bill has passed the Senate’s Labor and Industrial Relations, Judiciary and Appropriations Committees.  A full Senate floor vote is expected shortly.

Limits on Salary-Related Discussion during Hiring Process (AB 1017)

Citing a concern that prior salary history information perpetuates gender-based inequality, this bill would impose new limits on an empl