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(323) 652-9451 - LALast fall, the California Legislature broadened the obligations of employers to provide sexual harassment and abusive conduct prevention training to their workforce. This Bulletin briefly explains these changes.
Expanded Scope for Sexual Harassment Prevention Training
For many years, only California employers with 50 or more employees were required to provide supervisors with sexual harassment and abusive conduct prevention training every 2 years. However, Senate Bill (SB) 1343, signed into law in 2018, changed this requirement in two important ways.
First, SB 1343 now requires employers with just five (5) or more employeesto provide sexual harassment and abusive conduct prevention training every two years.
Second, the law previously required only that supervisorsreceive sexual harassment prevention training. SB 1343 expands this requirement, as well, so that all employees, including seasonal and temporary workers, must receive sexual harassment and abusive conduct prevention training every two years.
What if You Provided Training to Supervisors in 2018?
Many employers reading this may have complied with the then-existing law and provided sexual harassment prevention training to their supervisors in 2018. Common sense would dictate that, at least as to these supervisors, these employers have met their obligation until 2020, right?
WRONG! In its FAQs, the California Department of Fair Employment and Housing (DFEH) states that, “[e]mployees who were trained in 2018 or before will need to be retrained.” “Employees” in this context applies to supervisors trained in 2018.
Additional Rules Regarding Sexual Harassment Prevention Training
What Should Employers Do
Employers should take steps to ensure allemployees, including part-time, temporary and seasonal workers, receive the required sexual harassment and abusive conduct prevention training sometime this year. Employers with questions about these changes or needing help finding a sexual harassment and abusive conduct training provider should contact their qualified employment law counsel.
On September 30, 2018, Gov. Jerry Brown signed into law several bills that greatly expand the rights of employees to pursue sexual harassment lawsuits in California. The majority of these laws require immediate attention as they become effective January 1, 2019. This discusses these laws and provides recommendations for how employers can act to avoid liability.
SB 1300 makes numerous changes to existing law with regard to liability for alleged sexual harassment. In serial form, beginning on January 1, 2019, employers will:
• Be prohibited from requiring a release of Fair Employment and Housing Act (FEHA) claims in exchange for a bonus, raise, employment or continued employment;
• Be prohibited from recovering fees and enhanced costs through use of statutory (Cal. Code of Civil Procedure §998) offers to compromise, except where the employer can show (1) the lawsuit was frivolous, unreasonable and/or without merit; or (2) the employee continued to litigate a claim after becoming aware his/her case had no merit;
• Be potentially liable for any kind of unlawful harassment by nonemployees;
• Be potentially liable even where the harassment was a single instance or “stray remark” by a non-decision-maker;
• Be less likely to prevail on a sexual harassment case through a motion for summary judgment.
The statute of limitations refers to the “window” of time following an event within which an alleged victim can bring a civil action. Claims of sexual harassment can include a claim of sexual assault, in which the victim claims he/she was sexually touched without consent, or coerced or forced to engage in a sexual act. AB 1619 expands the limitations period for sexual assault claims to 10 years after the act, or 3 years after the alleged victim discovers the injury, whichever is later.
SB 224 expands the list of professional relationships which can form the basis of a claim for sexual harassment. To the previous list, which included physician, psychotherapist, dentist and real estate agent, the bill adds individuals who present themselves as able to assist one in establishing a business, service or professional relationship. The law specifically identifies lobbyists, elected officials, directors, producers and investors.
Settlements of sexual harassment claims have historically included nondisclosure clauses, preventing the alleged victim from disclosing details about the claim and settlement. SB 820 prohibits provisions that prevent the disclosure of factual information relating to certain claims of sexual assault, sexual harassment, or discrimination based on sex, that are filed in a civil or administrative action.
The bill makes such provisions in a settlement agreement on or after January 1, 2019, void as a matter of law and against public policy. The bill creates a limited exception for a provision that shields the identity of the claimant and facts that could lead to the discovery of his or her identity, if that provision is included in the agreement at the claimant’s request.
Additionally, AB 3109 renders void and unenforceable any clause that prevents a party to a settlement agreement from testifying about alleged criminal conduct or sexual harassment in an administrative, legislative or judicial proceeding.
California law currently requires employers with 50+ employees to provide their supervisors with sexual harassment prevention training every 2 years. Effective January 1, 2020, SB 1343 requires any employer who employs 5 or more employees, including temporary or seasonal employees, to provide at least 2 hours of sexual harassment prevention training to all supervisory employees, and at least 1 hour of such training to all nonsupervisory employees, once every 2 years. The bill also requires the Department of Fair Employment and Housing (DFEH) to develop or obtain 1-hour and 2-hour online training courses on the prevention of sexual harassment in the workplace.
Many of these new laws will impact how employment lawyers do their job, and will likely make it more difficult to resolve sexual harassment claims and lawsuits without a trial. However, employers remain primarily responsible and should examine their practices to ensure they maintain a harassment-free workplace.
Consideration should be given to getting a head start on sexual harassment prevention training, including for non-supervisory personnel. Employers with questions about how to reduce their chances of being targeted by a sexual harassment claim should contact their qualified employment law counsel.
On April 30, 2018, the California Supreme Court, in Dynamex Operations West, Inc. v. Superior Court, clarified the proper test for California companies to apply before treating any worker as an independent contractor. This post discusses this important new holding.
Background on “Employee” vs. “Independent Contractor”
For some businesses and their workers, the question whether the worker is properly classified as an “employee” or an “independent contractor” is both important and challenging. For employees, the hiring business pays federal Social Security and payroll taxes, unemployment insurance taxes and state employment taxes, provides worker’s compensation insurance and must comply with numerous state and federal statutes and regulations governing the wages, hours, and working conditions of employees. The worker obtains the protection of the applicable labor laws and regulations, including protections against unlawful discrimination, harassment and retaliation.
If, on the other hand, a worker should properly be classified as an independent contractor, the business avoids those costs and responsibilities, the worker obtains none of the numerous labor law benefits, and the public may be required in some circumstances to assume additional financial burdens with respect to such workers and their families.
The proper classification analysis is, in the first instance, up to the hiring business. The decision is often made without the assistance of counsel and, where the classification lands on independent contractor, is frequently wrong. The consequences may not become known for months or even years. However, disgruntled employees misclassified as independent contractors often ultimately bring claims or suits under wage-hour laws. Worse, the California Employment Development Department (EDD), which administers unemployment insurance claims, can audit a business suspected of widespread misclassification and, in extreme instances, impound funds without notice to the business. Therefore, it is critical before a business classifies any worker as an independent contractor that it ensures the classification is accurate.
The DynamexCase and the ABC Test
Since 1989, California courts were historically guided in deciding the independent contractor question by “the seminal California decision on the subject,” S.G. Borello & Sons, Inc. v. Dept. of Industrial Relations. This case provided employers, their lawyers, the state and the courts with several non-exclusive factors to consider in the employee/independent contractor analysis.
In the Dynamexlawsuit, two delivery drivers sued the company on behalf of themselves and similarly situated workers claiming that the company misclassified its drivers as independent contractors rather than employees. The California Supreme Court expressed the view that the multi-factor test previously announced in the S.G. Borellocase “makes it difficult for both hiring businesses and workers to determine in advance how a particular category of workers will be classified.” Therefore, the Supreme Court adopted a test previously adopted by some other courts known as the “ABC Test.”
Under the ABC Test, a worker is presumed to be an employee, unless the worker:
What Should Employers Do
If anything, the stakes get higher all the time for companies that misclassify workers as independent contractors. Claims brought before the Division of Labor Standards Enforcement (DLSE), as well as civil lawsuits, including class action and private attorney general (PAGA) lawsuits are on the rise.
Before classifying one or a class of workers as independent contractors, companies should be sure they meet the applicable criteria. Additionally, the role of workers currently classified as independent contractors should be evaluated under the ABC Test. Given the complexity of this area of employment law, employers should consider working with their employment counsel to make sure they are in compliance.
On March 5, 2018, the California Supreme Court, in Alvarado v. Dart Container Corp., announced a new formula to determine an employee’s “regular rate” for overtime purposes when the worker received a flat bonus during the pay period. This post discusses this important new holding.
Background on Overtime Compensation and the “Regular Rate”
Most employers understand that, in California, employees are entitled to be paid overtime after working eight hours in any workday, 40 hours in any workweek, and on the seventh consecutive day of work in any workweek. The overtime rate is calculated at 1.5 times the employee’s “regular rate” after 8 hours and 2 times the “regular rate” after 12 hours on any workday or after the eighth hour on the seventh consecutive day in any workweek.
But many employers do not have a strong grasp of the formula involved in determining an employee’s “regular rate” used to calculate her overtime premium pay. Many improperly assume it is simply the worker’s base hourly rate. However, when calculating the “regular rate,” employers must also consider “remuneration” for work performed, with specific payments excluded—such as reimbursed expenses, reporting-time premiums, vacation or holiday pay, or discretionary bonuses—divided in any pay period by the total number of hours actually worked.
The following example, drawn from a guide provided by the Society for Human Resources Management (SHRM) is instructive:
For example, if an employee works 32 hours at $12.00 per hour and 10 hours during the same workweek at $10.50 per hour, the weighted average (and thus the regular rate for that workweek) is $11.64. This amount is calculated by adding the employee’s $489 straight-time pay for the workweek ((32 hours x $12.00/hour) + (10 hours x $10.50/hour) = $489) and dividing it by the 42 hours the employee worked ($489 / 42 hours =$11.64 per hour regular rate). The overtime premium of $5.82 (half the regular rate) is added to the employee’s wages for each one and a half overtime hour worked, and an additional overtime premium of $11.64 is added to hourly wages for each hour of double time earned.
Against this background, we discuss the California Supreme Court’s holding in Alvarado v. Dart Container Corp.regarding how to calculate an employee’s “regular rate” when she has received a flat rate bonus during the pay period.
The AlvaradoCase and the Flat Rate Bonus
The plaintiff, Hector Alvarado, worked in the warehouse of Dart Container Corporation. To incentivize employees to work on weekends, Dart offered a $15 attendance bonus when any employee worked a full shift on a weekend day. The $15 “flat rate” bonus was paid regardless whether the employee worked any overtime hours. Alvarado sued Dart, claiming it had used an improper formula to calculate his “regular rate” for overtime in those pay periods in which he received at least one $15 attendance bonus.
Dart moved for summary judgment, which was granted and affirmed on appeal. However, after considering the formula Dart applied, as well as the formula set forth in the Division of Labor Standards Enforcement (DLSE) Manual, the California Supreme Court reversed, and embraced the following calculation methodology:
This formula differs from the method used by Dart solely in that Dart divided the bonus amount by the total hours worked—both overtime and non-overtime. While this difference appears trivial, a failure to apply the proper formula will support a claim or lawsuit for unpaid wages. To make matters worse, the Supreme Court, acknowledging the “liberal construction” of California’s labor laws, held the new formula would be applied retroactively, as well as going forward.
What Should Employers Do
Employers who provide any type of nondiscretionary “flat rate” bonus, should immediately review and ensure their overtime “regular rate” calculation methodology is consistent with the new formula announced by the Alvarado v. Dart Container Corp. court. Given the complexity of this area of employment law, employers should consider working with their employment counsel in revising policies and methodology.
Employers often find it difficult to justify, practically or emotionally, paying severance to an employee being terminated for cause. After all, employers ask, why compensate and reward a worker who broke the rules? It may be easier when the separation is a layoff, yet even under these circumstances, the company’s financial condition may constrain its ability to offer money to a separating employee, getting nothing but goodwill in return.
This Employment Law Bulletin briefly discusses severance and its primary justification: obtaining a release of any future employment law-based claims. We explain why best practices dictate employers set emotions aside in order to secure the protection provided by a release in exchange for a severance payment. We also discuss important issues related to the drafting and implementation of an enforceable severance agreement.
Why Offer Severance
There are sundry reasons an employer may want to offer severance to a separating employee: to reward a worker for years of loyalty; to cushion the blow of an unexpected layoff; to maintain goodwill in the community; or to preserve standing as a competitive, quality employer in the industry.
These are all sound reasons. They explain why employers might consider offering severance in many instances. But the single best reason why employers should offer severance to every terminated employee (i.e., one who is not leaving by her own volition) is the protection that a severance payment, combined with a well-drafted severance agreement, provides against a future claim or lawsuit.
Let’s begin by defining “severance.” In order to support a binding agreement in which the employee waives any claims, the severance must be compensation to which the employee wasn’t already entitled by virtue of her employment. Many employers we work with are surprised to learn that severance does not need to equal several months’ or even several weeks’ pay. This can be a particularly helpful point when considering offering severance to an employee terminated for lying or theft. The investment can be minimal. The peace purchased for merely a few hundred dollars (or less!) is always well worth the investment.
What Severance Buys You
Provided the agreement is properly drafted, signed and otherwise enforceable, the severance payment purchases a promise by the separating employee that she will not bring any claim or lawsuit, in a court or with a government agency, arising out of the employment relationship. Our typical California severance agreement expressly protects against seventeen (17) separate common law causes of action, as well as claims that could potentially be brought under eighteen (18) separate state and federal statutory schemes and regulations.
In fact, the only employment-related claim that cannot be expressly released by way of a severance agreement is one for unpaid wages, which can include reimbursement of expenses, overtime and waiting time penalties. Perhaps most importantly, most reasonably competent lawyers will abandon a claim, regardless of its apparent merits, where a potential client has signed an enforceable severance agreement with the former employer. In this way, for an investment of as little as a few hundred dollars, an employer can avoid incurring attorney’s fees and costs fighting a spurious claim.
The Elements of an Enforceable Severance Agreement
We cannot overstate the importance of having a knowledgeable employment law attorney draft your severance agreement. A severance agreement is a contract. In addition to pitfalls common to every type of contract, there are crucial drafting considerations unique to a severance agreement. This is particularly true if the separating employee is over 40-years-old. An agreement waiving any claims under the Older Workers’ Benefit Protection Act (“OWBPA”) must meet eight (8) statutory requirements, including providing the separating worker a 21-45 day period within which to consider the Agreement before signing it. Even then, the employee has seven (7) days to revoke the agreement. If the employer pays the severance before the expiration of the 7-day period, and the employee revokes the agreement, she may keep the payment and the employer is without recourse to recoup the funds!
In addition to an explicit waiver of any claims that could be brought under federal, state, common law, county, city or local ordinances, a severance agreement can and should provide other protections. Among these, we recommend clauses requiring confidentiality of the severance and prohibiting future disparagement of the employer and its management. It is generally a good idea also to include a clause in which the employee agrees not to apply for employment at any future time; this protects against future claims of discrimination in hiring.
The employee should never be pressured to sign the severance agreement, or to sign it “right away,” as this can provide a duress defense which may undermine the effectiveness of the agreement. It is also a good idea to include a severability clause so that, if an issue arises, a court can later “sever” out any portions of the agreement that are unlawful, rather than rendering the entire agreement unenforceable. A merger clause is also advisable, to prevent a terminated employee from claiming additional terms that are not included on the agreement itself.
Conclusion
California employers should always consider offering a severance when terminating an employee, provided the employee signs a well-drafted severance agreement waiving any claims arising out of the employment relationship. The severance payment need not be sizeable. However, it is crucial that the agreement be drafted properly. Employers with lingering questions should not hesitate to contact their experienced employment law counsel.
Employers must begin using a new version of the Form I-9 issued by the U.S. Citizens and Immigration Services (USCIS) no later than September 18, 2017 or face potentially large fines. The Form I-9 is the document employers must use to verify the identity of new hires to ensure they are authorized to work in the United States.
What’s Different?
The changes to the Form are subtle. There are changes to the instructions and the list of documents approved to verify eligibility. A Consular Report of Birth Abroad (Form FS-240) was added as a List C document, and all the certifications of report of birth issued by the State Department (Form FS-545, Form DS-1350, and Form FS-240) have been combined.
The List C documents have been renumbered, except for the Social Security Card. All changes are described in detail in the newly revised Handbook for Employers: Guidance for Completing Form I-9 (M-274).
Storage and Retention Rules
Employers must be able to present the Forms to government officials for inspection within 3 business days of a request. Employers who choose to keep paper copies of the documents their employees present may store them with the employee’s Form I-9 or with the employees’ records. However, the USCIS recommends that employers keep Form I-9 separate from personnel records to facilitate an inspection request.
Employers are required to retain an employee’s Form I-9 until the later of (1) the date the employee began work for pay + 3 years, or (2) the date employment was terminated + 1 year.
Potential Penalties for Failure to Follow Form I-9 Rules
In 2016, Immigration and Customs Enforcement (ICE) announced increases for Form I-9 violations. For example, the minimum and maximum fines for simple Form I-9 violations increased to $216 and $2,156, respectively. Additionally, minimum and maximum fines for first offenses of Unlawful Employment of Unauthorized Workers has increased to $539 and $4,313 per worker, respectively.
Employers with lingering questions about the new Form I-9 should contact their employment counsel.
Employers may be already aware of the significant movement afoot to eliminate the consideration of an applicant’s criminal history, both from job applications and the interview, until a conditional offer of employment has been made. Variously termed “Ban the Box” or “fair chance” laws, the goal is to “ensure a fairer decision-making process” because, it is believed, anything that makes it harder for ex-offenders to find a job makes it more likely they will re-offend.
In California, the state of the law in this area is very much in flux. The purpose of this Bulletin is to discuss the current state of the law, including a new set of regulations issued in January, and provide a preview of pending legislation that is reasonably likely to be signed into law.
The Current Law
Under the current California laws and regulations, it is unlawful for an employer to consider the following from an applicant’s background record when hiring:
Before an employer can refuse to hire based on an applicant’s criminal history, it must provide the applicant notice of the disqualifying conviction and an opportunity to show that it is factually inaccurate. If shown to be inaccurate, the conviction cannot be relied upon.
There are exceptions to these prohibitions for certain classes of employers, including health care facilities, that are required by law to screen prospective employees or prohibit hiring of individuals with criminal records.
Additionally, the cities of San Francisco and Los Angeles have enacted their own “Ban the Box”-type ordinances with more stringent requirements/limitations than those described above.
Pending Legislation
Assembly Bill 1008, introduced on February 16, 2017, proposes to add a section to California’s Fair Employment and Housing Act (FEHA), which would create new statewide restrictions on employers’ ability to make pre-hire decisions based on an applicant’s criminal history.
Under the proposed new law, employers:
If the employer decides, following this individualized assessment, to deny employment it must provide written notice that:
The applicant may then offer information that challenges the accuracy of the conviction or provide mitigation/rehabilitation evidence. In its current form, the bill requires the employer to consider any mitigation/rehabilitation evidence the applicant offers.
If the applicant does not respond to the first written notice, or upon receipt of the applicant’s response the employer still decides against hiring the applicant, it must provide a second written notice that:
What Should Employers Do?
California employers should ensure that their hiring practices fully comply with existing California laws, which must include consideration whether they are also governed by the separate ordinances for the cities of San Francisco and Los Angeles. Additionally, employers should monitor the progress and outcome of Assembly Bill 1008, and appropriately adjust their practices if it passes. Employers with lingering questions should not hesitate to contact their experienced employment law counsel.
The California Supreme Court recently issued an important opinion clarifying employers’ obligations to provide employee rest periods. Specifically, in Augustus v. ABM Security Services, Inc., 2 Cal.5th 257, the Court reinstated a trial court order awarding approximately $90 million to a class of employee plaintiffs and held that employers (1) must relieve their employees of all duties during rest periods, and (2) must relinquish any control over how employees spend their break time. This Bulletin discusses the background and additional considerations addressed by the Augustus Court in this critical decision.
Case Background
ABM Security Services employs several thousand security guards throughout California. A large class of the guards sued, claiming ABM failed to provide proper rest periods in compliance with California law. More specifically, the guards claimed ABM required them to keep their pagers and radios on during rest periods and to “remain vigilant” and responsive to calls when needs arose, including escorting tenants to parking lots, notifying building managers of mechanical problems and responding to emergency situations.
The Los Angeles Superior Court granted a motion for summary judgment brought by the employees and awarded them approximately $90 million in damages. The Court of Appeal reversed this order, finding that simply being “on call” did not constitute “performing work” and therefore did not violate California’s rest period laws.
The Applicable Law
California law, set forth in Cal. Labor Code Sections 226.7, 512 and Industrial Welfare Commission (“IWC”) Wage Order No. 4-2001, requires that employers provide a paid 10-minute rest period every four (4) hours of work (or fraction thereof) to any employee who works more than three-and-one-one-half hours per day. The law stipulates that employees should not be required “to work” during this break.
The California Supreme Court Opinion
The Supreme Court disagreed with the reasoning of the Court of Appeal and reversed, reinstating the $90 million damages award. It did so by adhering to the plain language of the Wage Order, which simply requires employees be relieved of all work-related duties and employer control during 10-minute break periods. The Court also found support for its position in what it termed the “practical realities” of rest periods. While a policy requiring employees to remain on an employer’s premises during rest periods does not establish employer control, requiring employees to carry devices or otherwise remain reachable during a break suggests impermissible employer control.
The Court recognized that employers do have options if an exigency arises and the employee is needed during his or her break. First, it said, “Nothing in our holding circumscribes an employer’s ability to reschedule a rest period when the need arises.” Additionally, the employer may provide employees with another rest period to replace one that was interrupted or pay the employee the premium pay required under the applicable IWC Wage Order and Labor Code Section 226.7. This premium equates to one additional hour of pay at the employee’s regular rate of pay for each day that a rest period is not provided.
What Should Employers Do in Light of the Augustus Opinion?
California employers have collectively paid hundreds of millions of dollars in verdicts, settlements and administrative claims as a result of failing to strictly adhere to the rest period requirements. The Augustus opinion should serve as a wake-up call to any employer who does not already comply with this law. At a minimum, employers should not only review their policies to ensure that employees receive 10-minute rest periods free from duties and employer control, but also take steps to ensure that managers are properly trained to implement this policy.
Conclusion
Employers with lingering questions concerning their rest period policies should not hesitate to contact their experienced employment law counsel.
Among the major issues decided by California voters this past November was Proposition 64, the Adult Use of Marijuana Act, which legalized recreational use of marijuana by adults. While our state has permitted limited marijuana possession and use for medical reasons for roughly 20 years, expanding legalization to recreational use could further compound what may already seem a murky area for California employers. This post aims to help employers understand the new law and offers guidance as to how to deal with challenges employers may face.
Understanding Proposition 64
Proposition 64 legalizes possession and recreational use of up to 28.5 grams of marijuana and up to 8 grams of concentrated marijuana for adults 21 years old and over. Adults are also permitted to grow up to six marijuana plants at home in a locked area that is not visible from a public place. The law also imposes a 15% excise tax on marijuana sales and establishes a regulatory framework for the sale of marijuana.
However, marijuana remains an illegal Schedule I substance under the federal Controlled Substances Act. Even under California law, smoking or ingesting marijuana in public will remain unlawful, as will smoking or ingesting marijuana in places where smoking tobacco also is prohibited. Similarly, driving under the influence of marijuana remains illegal.
Does Proposition 64 Limit an Employer’s Power to Prohibit Marijuana?
No. The new law expressly says that nothing in the statute should be construed to affect the “rights and obligations of public and private employers to maintain a drug and alcohol free workplace or require an employer to permit or accommodate the use, consumption, possession, transfer, display, transportation, sale, or growth of marijuana in the workplace, or affect the ability of employers to have policies prohibiting the use of marijuana by employees and prospective employees…”
Therefore, even with the passage of Proposition 64, employers may continue to prohibit use, possession and impairment at work. In fact, certain employers are required to maintain a “drug-free” workplace, and the new law does nothing to change this. These include employers contracting with the government or who engage in commercial transportation.
California employers may continue to conduct pre-employment drug testing of all applicants before hire and deny employment if the drug test comes back positive, even if the applicant was legally using marijuana under the state’s Compassionate Use Act.
What Should Employers Do in Light of Proposition 64?
California employers should review and update workplace policies to ensure they clearly state the company’s drug-free workplace policy. With the new law, this should include a specific prohibition of possession or use of marijuana, in any form, in the workplace. Employees should also be reminded that impairment on the job will not be tolerated, even if the impairment resulted from use of an otherwise legal substance (alcohol, marijuana) off site.
If an employer’s policies include pre-employment drug testing, applicants should be informed that they will also be tested for marijuana use.
We recommend the drug-free workplace policy be followed evenly. Making exceptions for one employee tends to undermine the effectiveness of a zero-tolerance policy and may also provide support for disparate treatment claims.
Conclusion
Employers with lingering questions concerning their policies with Proposition 64 should not hesitate to contact their experienced employment law counsel.
Governor Brown has signed a number of new laws affecting California employers. This post briefly discusses a few of them.
Increased Statewide Minimum Wage
Senate Bill (SB) 3 provides for six stepped annual statewide increases in the minimum wage, currently $10 an hour, for employers with 26 or more employees. The minimum wage will increase, beginning on January 1, 2017, as follows:
Employers with 25 or fewer employers have an extra year to comply with each new wage rate. Bear in mind that individual municipalities may set minimum wage rates that exceed this schedule.
Employers Cannot Choose Venue or Law in Employment Contracts
Some employers have historically included choice of venue or law clauses in employment contracts. Such clauses dictate where an employee can bring a civil lawsuit or what state (or federal) law would apply in deciding disputes. New California Labor Code Section 925 prohibits employers from including contract provisions as a condition of employment that require application of another state’s law or dictate that suits must be filed in another state court. This law will apply to employment contracts signed, modified or extended on or after January 1, 2017.
Notification of Certain Leave Rights
Assembly Bill (AB) 2337, effective January 1, 2017, will require employers to inform each worker of his or her employment leave rights as a possible victim of domestic violence, sexual assault, or stalking, by providing that information in writing to newly hired employees. Existing employees are entitled to such information upon request.
Restriction on Use of Applicant’s Juvenile Records in Employment Decisions
AB 1843, also effective January 1, 2017, will prohibit employers from inquiring about and considering information concerning “an arrest, detention, process, diversion, supervision, adjudication, or court disposition” that occurred while an applicant or employee was under the jurisdiction of the juvenile court.
Legislative Approval of California Secure Choice Retirement Savings Program
Under SB 1234, employers with five or more employees that do not already offer an employer-sponsored retirement plan will be required either to offer an employer-sponsored retirement plan or to automatically enroll their employees in Secure Choice by creating a payroll contribution to the employee’s personal California Secure Choice Retirement Savings account. The legislation was intended to saddle employers with only minimal administrative burdens. They will be required to: (1) enable employees to make an automatic contribution from their paycheck into their Secure Choice Account; (2) transmit the payroll contribution to a third-party administrator to be determined by the Board; and (3) potentially provide state-developed informational materials about the program to employees.
Extension of Equal Pay Protections to Race and Ethnicity
Readers of this Bulletin will recall that, last year, the California Equal Pay Act was amended to require employers to pay the same wage as between a male and female employees who perform substantially similar work. On September 30, 2016, Governor Brown signed the Wage and Equality Act of 2016, SB 1063. Effective January 1, 2017, this will extend the protections provided by the Equal Pay Act to employees of different races or ethnicities. Thus, employees who perform substantially similar work must be paid equally, regardless of differences in gender, race or ethnicity.
As with the Equal Pay Act, pay differential between workers of different races or ethnicities may be allowed if it is based on a reasonably applied factor such as a seniority system, merit system, system that measures earning by quantity or quality of production, or some bona fide factor other than race or ethnicity.
Conclusion
Employers with questions concerning any of these new or amended California employment laws should not hesitate to contact their experienced employment law counsel.
