A new year often means new laws and changes to existing labor laws, making it an important time of year for California business owners and employers. 2017 is no different, with many of these changes going into effect as of January 1, 2017. These new requirements can impact whether or not your business remains in compliance with California state law.
This 2017 Employment Law Update outlines the new and amended labor laws that will affect California businesses this year and what changes you should start preparing for in coming years, including how legalization of marijuana affects the workplace, changes to the I-9 form, new federal regulations affecting exemptions from overtime and more.
Unless otherwise specified, the following legislative changes went into effect January 1, 2017.
LEGALIZATION OF MARIJUANA UNDER STATE LAW AFFECTS THE WORKPLACE (PROPOSITION 64)
California voters passed Proposition 64, known as the Adult Use of Marijuana Act, which permits the recreational use of marijuana for adults 21 years old and over. Effective November 9, 2016, state law allows adults to smoke or ingest marijuana in a private home, to possess small amounts of non-medical marijuana, and to grow small amounts at home for personal use. Effective January 1, 2018, state law will also allow for the purchase and consumption of marijuana at a licensed business. Proposition 64 continues to prohibit smoking while driving a vehicle, in all public places, and anywhere that smoking tobacco is prohibited. Possession of marijuana on the grounds of a school, day care, or youth center while children are present is illegal.
Marijuana, however, remains illegal under federal law, including for medical use, and the new administration could decide to undertake enforcement efforts not currently utilized. Proposition 64 also makes clear that employers remain free to test workers for marijuana use before hiring them, or at any point during their employment if there is a reasonable suspicion of impairment. If employees test positive, Proposition 64 allows businesses to terminate their employment even if there is no indication that they were actually impaired on the job. These employer-friendly provisions codify case law that emerged after the legalization of medical marijuana.
NEW OSHA RULES ADDRESS POST-ACCIDENT DRUG TESTING, RETALIATION CLAIMS AND ELECTRONIC INJURY/ILLNESS REPORTING
On May 12, 2016, the Occupational Safety and Health Administration published new final rules on discrimination and injury and illness reporting. First, a new anti-discrimination and anti-retaliation rule came into force on August 10, 2016 for all employers. OSHA interprets this rule broadly to prohibit mandatory post-accident drug testing, concluding that such tests discriminate against employees on the basis of injury and illness reporting. OSHA further explains that incentive programs are retaliatory if they offer benefits to employees or workforces who do not report injuries and illnesses. The regulations further require employers to post workplace recordable injury and illness information electronically. OSHA will release this employer injury and illness information publically on its website believing that its disclosure will “shame” employers into improving workplace safety and health. The electronic data submission requirement will also ease OSHA’s data analysis, presumably to ramp up citations against employers based on the frequency of certain types of injuries (such as OSHA’s renewed focus on “ergonomics” injuries) or injuries caused by exposures to certain chemicals or toxic materials. The remaining provisions of the final rule, including the electronic reporting provisions, took effect on January 1, 2017.) Employers are encouraged to review their current drug testing policies in light of OSHA’s new guidelines.
OSHA’s Preamble to the Final Rule interprets the regulation broadly to prohibit any “adverse action that could well dissuade a reasonable employee from reporting a work-related injury or illness.” OSHA applies the prohibition to any “blanket post-injury drug testing policies deter proper reporting,” concluding that drug-testing alone constitutes an “adverse employment action.” OSHA instructs employers to “limit post-incident testing to situations in which employee drug use is likely to have contributed to the incident, and for which the drug test can accurately identify impairment caused by drug use.”
NEW FEDERAL REGULATIONS MAY AFFECT EXEMPT CLASSIFICATION OF CALIFORNIA WORKERS
For months, employers anticipated that effective December 1, 2016, the federal threshold regarding exempt and non-exempt employees would increase. However, on November 22, 2016, a federal judge in Texas issued a nationwide injunction prohibiting the new regulations from going into effect. Should the injunction be lifted and the new DOL regulations become effective, they will affect employers with California employees because both federal and state wage and hour laws apply to them. California is widely known for wage and hour laws more stringent than their federal counterparts. Up until the adoption of the new DOL regulations, however, California employers could take comfort in the notion that compliance with California exemption requirements generally would mean compliance with the FLSA (but not vice versa). The new DOL regulations would require California employers to revisit the exemption requirements under the FLSA. The DOL regulation significantly increases the compensation required to meet the minimum salary standard to qualify for exempt status under the FLSA. Specifically, it requires a minimum salary threshold based on the 40th percentile of earnings of full-time salaried employees in the lowest-wage Census Region. Currently, this means that the minimum salary for a white collar exemption is $913 per week or $47,476 per year. The DOL regulation also permits the salary threshold to update every three years, beginning on January 1, 2020, to maintain the 40th percentile level noted above. Before the DOL regulation, the Salary Basis Test under the FLSA required a minimum salary of $455 per week or $23,660 per year. To help meet the new salary requirements, the DOL regulation now permits employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new salary requirements (i.e., up to $4,747.60). Notably, the use of such bonuses and commissions, however, can be risky because the bonus and commission amounts can fluctuate. Moreover, employers cannot use any such bonuses and commissions toward meeting the Salary Basis Test under California wage and hour laws. The new DOL regulations also increase the total annual compensation requirement for highly compensated employees from $100,000 to the annual equivalent of the 90th percentile of full-time salaried workers nationally, which on December 1, 2016, will be $134,004. The DOL regulations permit this minimum threshold to update every three years, beginning on January 1, 2020, to maintain the 90th percentile statistic. The increase in salary for the high-compensated employee exemption, however, generally does not have much affect for California employers because the high-compensated employee exemption has no counterpart under California state wage and hour laws. Thus, California employers cannot solely rely on this federal exemption and still must meet one or more of California’s state law exemptions. The highly-compensated exemption, however, would be relevant for employers in California on federal enclaves or in areas where only federal law applies.
EXPANSION OF SMOKING BAN IN THE WORKPLACE (AB X2-7)
Labor Code Section 6404.5 now expands its smoke-free workplace protections by eliminating most of the previous exemptions that allowed for smoking in certain work environments. For example, prior to Assembly Bill No. X2-7 becoming effective on June 9, 2016, hotel lobbies, bars, taverns, gaming clubs and warehouse facilities were not considered “places of employment,” and thus smoking was permitted. These exemptions, among others, have been removed, and now only seven narrow exemptions remain. Further, the new law eliminated the ability of employers to have designated smoking break rooms for employees. AB X2-7 also eliminated the exception for small businesses with a total of five or fewer employees and expanded the workplace smoking ban to include owner-operated businesses in which the owner is the only worker. Finally, the smoking ban includes the use of e-cigarettes and vaping devices that contain nicotine.
FEHA ANTI-DISCRIMINATION LAWS EXPANDED TO PROTECT CERTAIN LICENSED INDIVIDUALS WITH DISABILITIES (AB 488)
The California Fair Employment and Housing Act (FEHA) protects the right to seek, obtain, and hold employment without discrimination because of race, religion, sex, age, disability, or sexual orientation, among other characteristics. Under the FEHA, the current definition of “employee” in Section 12926 of the Government Code excludes individuals with disabilities that were granted special licenses to work at nonprofit sheltered workshops, day programs, or rehabilitation facilities at less than the minimum wage. Thus, these individuals currently have no recourse for employment discrimination under the FEHA. Assembly Bill No. 488, effective January 1, 2017, extends FEHA protections to these individuals.
Specifically, AB 488 adds Section 12926.05 to the Government Code, which allows a disabled individual employed under these special licenses to bring a complaint against their employer for any form of discrimination prohibited by the FEHA. The Bill further clarifies that the definition of “employee” in Section 12926 is not intended to permit discrimination against these disabled individuals. Section 12926.05 also contains an affirmative defense for employers against any claims brought by individuals employed under a special license. To establish this defense an employer must prove, by a preponderance of the evidence that the challenged action was permitted by statute or regulation and was necessary to serve employees with disabilities under a special license.
STATE DISABILITY AND PAID FAMILY LEAVE BENEFITS INCREASE (AB 908)
Assembly Bill No. 908 increases paid family leave payments with the goal of making them more meaningful to low-wage workers. California’s State Disability Insurance (SDI) and Paid Family Leave (PFL) programs currently provide only 55% of wage levels for six weeks to allow workers to bond with a child or provide caregiving for a sick relative. This bill would revise the formula for determining benefits available for both SDI and PFL and would raise the weekly benefit amount for periods of disability commencing on January 1, 2018, to either 60% or 70% depending on income.
Effective January 1, 2018, AB 908 also removes the seven-day waiting period for these benefits. Existing law deems an individual to be eligible for disability benefits if, among other things, the individual is unable to perform his or her regular or customary work for a seven-day waiting period during each disability benefit period and prohibits payments for benefits during this waiting period.
WEEKLY PAY REQUIRED FOR SECURITY GUARDS EMPLOYMENT BY PRIVATE PATROL OFFICERS (AB 1311)
To reverse a 2015 California court decision which found that certain Labor Code pay timing requirements did not apply to security guards (Huff v. Securitas Security Services), the Legislature passed Assembly Bill No. 1311. The law expands California’s weekly pay requirement in California Labor Code Section 201.3 to security guards employed by a private patrol operator that is a temporary services employer (which does not include a bona fide nonprofit organization) that provides temporary employees to clients, a farm labor contractor (as defined by statute) and a garment manufacturing employer. It generally requires temporary services employers to pay registered security officer employees at least once a week, regardless of when the assignment changes. Furthermore, covered security guards must be paid their wages for the workweek no later than the regular payday of the following workweek. The bill was enacted as an urgency statute, so took effect immediately on July 22, 2016.
ELIMINATION OF WAGE DISPARITIES (AB 1676 and SB 1063)
Existing California law prohibits employers from paying employees at rates less than the rates paid to employees of the opposite sex for substantially similar work when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions. This prohibition is codified at Labor Code Section 1197.5, which also provides exceptions based upon various factors, including a seniority system, a merit system, or any other “bona fide factor” other than sex, such as education, training, or experience.
- Assembly Bill No. 1676, however, provides that an individual’s prior salary cannot, by itself, justify any disparity in compensation. Part of the rationale for this new legislation is an attempt to remove one more barrier to wage equality. The California Legislature found that the gender wage gap has not narrowed significantly in recent years and that in 2015 the gender wage gap in California was 16%. Wage inequality is even greater among women of color. Accordingly, the reliance by an employer upon an individual’s prior salary to establish wage rates could perpetuate historical wage inequality.
- Senate Bill No. 1063 also amends Labor Code Section 1197.5 to expand the Fair Pay Act to prohibit employers from paying lesser wages to employees of another race or ethnicity for substantially similar work. SB 1063 requires that an employer affirmatively demonstrate that wage differentials are based on lawful, nondiscriminatory factors such as: (1) a seniority system; (2) a merit system; (3) a system that measures earnings by quantity or quality of production; or (4) a bona fide factor other than race or ethnicity.
AB 1676 and SB 1063 re-emphasize the importance of using objective, non-discriminatory factors in establishing initial wage rates, compensation, advancement, bonuses, and other forms of remuneration.
BAN THE BOX EXPANDS (AB 1843)
California Labor Code Section 432.7 prohibits most employers from asking an applicant to disclose any arrest or detention that did not result in a conviction, or from using such information as a factor in connection with employment. Assembly Bill No. 1843 expands this prohibition to include any information concerning or relating to an arrest, detention, processing, diversion, supervision, adjudication, or court disposition that occurred while the person was subject to the process and jurisdiction of juvenile court law. This legislation is one more limitation on an employer’s ability to inquire into criminal background information. More than 100 jurisdictions around the country, including San Francisco, have adopted “ban the box” legislation placing significant restrictions on when and how an employer may inquire into applicants’ criminal background records. On December 1, 2016, the City of Los Angeles granted preliminary approval of such a measure, which could be signed by Mayor Eric Garcetti before the end of the year.
REMOVING THE WAGE/HOUR EXEMPTION FOR AGRICULTURAL EMPLOYEES (AB 1066)
This law phases in additional daily and weekly overtime requirements for agricultural workers (as defined in Wage Order 14-2001) over the course of four years, beginning in 2019 (but with a three-year delay for employers with less than 25 employees). Under new Labor Code section 862, employers with more than 25 employees must pay daily and weekly overtime under the following schedule: (1) beginning January 1, 2019, agricultural workers are entitled to one-and-a-half times their regular rate for hours worked over nine and one-half hours daily or 55 hours weekly; (2) beginning January 1, 2020, agricultural workers are entitled to one-and-a-half times their regular rate for hours worked over nine hours daily and 50 hours weekly; (3) beginning January 1, 2021, agricultural workers are entitled to one-and-a-half times their regular rate of pay for hours worked over eight and one-half hours daily and 45 hours weekly; and (4) beginning January 1, 2022, agricultural workers are entitled to one-and-a-half times their regular rate for hours worked over eight hours daily and 40 hours weekly. Beginning January 1, 2022, agricultural workers are entitled to double their regular rate of pay for hours worked beyond twelve hours daily. As mentioned, employers with fewer than 25 employees have a three-year grace period, meaning these phase-in requirements do not commence until January 1, 2022, and the requirement to pay double-time commences January 1, 2025. Beginning January 1, 2017, and except as otherwise expressly specified, all other existing California provisions regarding overtime compensation shall apply to agricultural workers.
BOND REQUIREMENTS FOR MINIMUM WAGE VIOLATIONS (AB 2899)
Labor Code section 1194 prohibits employers from paying employees a wage less than the minimum wage, and allows aggrieved employees to recover lost wages, civil penalties, and liquidated damages for violations. Labor Code section 1197.1 allows a party to contest a citation issued by the Labor Commissioner through the superior court. This law amends section 1197.1 to require a person seeking a writ of mandate contesting the Labor Commissioner’s ruling to post with the Labor Commissioner a bond equal to the unpaid wages, excluding penalties, in favor of the aggrieved employee. It also specifies the procedures for an appellant to pay any judgment as result of that hearing or the withdrawal of the writ. It provides that if the employer fails to pay the amounts owed within 10 days after the proceedings are concluded, the portion of the bond needed to cover the amount owed will be forfeited by the employer to the employee.
EMPLOYERS MUST NOTIFY EMPLOYEES OF RIGHTS UNDER LAWS PROTECTING VICTIMS OF DOMESTIC VIOLENCE, SEXUAL ASSAULT, OR STALKING (AB 2337)
Existing law prohibits an employer from discharging or in any manner discriminating or retaliating against an employee who is a victim of domestic violence, sexual assault, or stalking for taking time off from work for specified purposes related to addressing the domestic violence, sexual assault, or stalking. Currently, any employee who is discharged, threatened with discharge, demoted, suspended, or in any manner discriminated or retaliated against in the terms and conditions of employment by his or her employer because the employee has taken time off for those purposes is entitled to reinstatement and reimbursement for lost wages and work benefits caused by the acts of the employer, as well as appropriate equitable relief.
Assembly Bill No. 2337 requires employers to inform each employee of his or her rights established under those laws by providing specific information in writing to new employees upon hire and to other employees upon request. The bill also requires the Labor Commissioner, on or before July 1, 2017, to develop a form that an employer may elect to use to comply with these provisions. Employers are not required to comply with the notice of rights requirement until the Labor Commissioner posts the form.
EXPANSION OF ITEMIZED WAGE STATEMENT EXCEPTION TO TOTAL HOURS REQUIREMENT (AB 2535)
Labor Code Section 226 currently requires employers to state the total number of hours worked by the employee on his or her itemized wage statements. Assembly Bill No. 2535 was a reaction to a federal court decision, Garnett v. ADT LLC, which ruled that Section 226(a) required the reporting of total number of hours worked even for exempt outside sales employees. Previously, the only exception to this requirement applied to employees paid solely by salary and exempt from overtime pay under Labor Code Section 515(a) or applicable Industrial Welfare Commission (IWC) Wage Orders.
AB 2535 expands this exception to cover other employees who are exempt from minimum wage and overtime. The additional exceptions include:
- Exempt executive, administrative, or professional employees consistent with the applicable IWC Wage Order;
- Outside salespersons as provided in the applicable IWC Wage Order;
- Exempt, salaried computer software professionals;
- Parents, spouses, children, or legally adopted children of employers;
- Participants, directors, and staff of a live-in alternative to incarceration rehabilitation programs with special focus on substance abusers;
- Crew members employed on certain commercial passenger fishing boats; and
- Employees participating in national service programs as provided in any applicable IWC Wage Order.
CERTAIN BUSINESSES NOW HAVE A SAFE HARBOR PERIOD AND A LIMITED EXEMPTION IN CONSTRUCTION-RELATED ACCESSIBILITY CLAIMS (SB 269)
Effective earlier this year, on May 10, 2016, Senate Bill No. 269 created a rebuttable presumption that certain technical violations do not cause an individual to experience “difficulty, discomfort or embarrassment,” which would otherwise entitle him or her to statutory damages in a construction-related accessibility claim. This rebuttable presumption is available only to businesses that employ 25 or fewer employees on average over the past three years and have average annual gross receipts of less than $3.5 million. The presumption arises when: (1) the defendant has, within 15 days of service of a summons and complaint asserting a construction-related accessibility claim or receipt of a written notice, whichever is earlier corrected, all of the technical violations that are the basis of the claim; and (2) the claim is based on one or more of the technical violations listed in Cal. Civil Code Section 55.56(e)(1)(A)-(G). SB 269 also exempts businesses that employ 50 or fewer employees from liability for statutory damages if the structure or area of the alleged violation was inspected by a Certified Access Specialist or “CASp” before a claim was filed and all required corrections were completed within 120 days of the inspection.
LAWS TOUGHEN ON UNFAIR IMMIGRATION-RELATED PRACTICES (SB 1001)
Senate Bill No. 1001 amends existing law regarding unfair immigration-related practices by an employer. Under existing law, an employer is prohibited from engaging in or directing another person to engage in an unfair immigration-related practice against a person for the purpose of or intent to retaliate against any person for exercising a protected right. Unfair immigration-related practices are defined as requesting more or different documents than are required under federal law, or refusing to honor documents tendered that on their face reasonably appear to be genuine.
SB 1001 amends the existing law to make it unlawful for an employer to: (1) request more or different documents than required under Section 1324a(b) of Title 8 of the United States Code to verify that an individual is not an unauthorized immigrant; (2) refuse to honor documents tendered that on their face reasonably appear to be genuine; (3) refuse to honor documents or work authorizations based on specific status or term that accompanies the authorization to work; or (4) attempt to reinvestigate or re-verify an incumbent employee’s authorization to work using an unfair immigration-related practice. An employee who suffers an unfair immigration-related practice can file a complaint with the Division of Labor Standards Enforcement. The bill also provides that a violation of these provisions can result in a penalty of up to $10,000.
INDOOR HEAT ILLNESS REGULATIONS COMING TO CALIFORNIA SOON (SB 1167)
Senate Bill No. 1167, which will be codified as California Labor Code Section 6720, requires the Division of Occupational Safety and Health (the “Division”) to propose heat illness and injury prevention regulations regarding employees who work indoors. By January 1, 2019, the Division must propose these regulations to the Occupational Safety and Health Standards Board for review and adoption. The law permits the Division to limit certain high heat provisions to certain industries.
CA GOVERNOR SIGNS BILL ALLOWING ACTORS TO DELETE THEIR AGE FROM ONLINE PROFILES (AB 1687)
On September 24, 2016, California Gov. Jerry Brown signed A.B. 1687 – a measure aimed at preventing age discrimination against film, television, and other professionals in the entertainment industry whose ages could be viewed by casting directors and other potential employers. As a result of this bill, industry professionals whose profiles are listed on commercial online entertainment employment service providers (IMDb.comPro and similar sites) can request to have their dates of birth and ages removed from the public’s purview. Upon request, such service providers must remove subscribers’ dates of birth and ages from their online profiles within five days, and also ensure that companion websites under the service provider’s control do the same. These new requirements only apply to service providers who have contractual relationships with subscribers who pay fees. The bill will be codified as Civil Code section 1798.83.5, and currently contains no provision outlining any penalties for those in violation of the statute or recourse for those allegedly harmed. Nonetheless, California-based commercial online entertainment employment service providers, as well as out-of-state providers who have California-based subscribers, should be prepared to promptly remove date of birth and age information from subscriber profiles upon request and to require other providers under their control to do the same.
WAGE LAW ENFORCEMENT SHARED BETWEEN STATE AND LOCAL AGENCIES (SB 1342)
Senate Bill No. 1342, which will be codified as California Government Code Section 53060.4, permits cities and counties to work with the California Division of Labor Standards Enforcement to enforce wage payment laws. The stated intent of the new measure is to give local wage enforcement programs the necessary tools to conduct successful wage claim investigations to recover unpaid back wages. It permits a city or county to delegate its administrative subpoena authority to city or county officials in order to investigate and enforce local laws or ordinances, including local wage laws.
EEOC ISSUES NEW GUIDELINES ON NATIONAL ORIGIN DISCRIMINATION AND HARASSMENT
On November 21, 2016, the Equal Employment Opportunity Commission (EEOC) issued new guidelines on “national origin” discrimination and harassment. The new guidelines will be helpful to employers confronted with various hiring, firing, and discipline issues related to language abilities, citizenship, and origin-related harassment in order to avoid violations of Title VII of the Civil Rights Act of 1964. Many of the guidelines track California case law on similar topics, such as:
- The place of origin can be a country, former country, or geographic region closely associated with a particular national origin group.
- National origin discrimination includes discrimination based on:
- Ethnicity: A person can be discriminated against because he or she either belongs, or doesn’t belong, to a particular ethnic group.
- Physical, linguistic, or cultural traits: Subjecting a person to adverse employment action due to his or her accent, style of dress, or other traits associated with a certain origin may constitute discrimination.
- Perception: Regardless of a person’s actual origin, if he or she is discriminated against due to the belief that he or she is of that origin.
- Association: A person’s association with someone of a particular national origin (for example, his or her spouse or child)
- The EEOC warns against hiring practices that may result in perpetuation of the historical makeup of a workforce. For example, “word of mouth” recruiting can lead persons of one national origin to recruit, promote or hire similar persons of the same national origin. Similarly, an apprenticeship program that only admits candidates who are sponsored by existing employees could lead to few minority hires if the industry or workplace is not diverse.
- Employers must ensure they have legitimate business reasons for making language-based employment decisions.
- Accents: A decision cannot be based on accent unless (1) the ability to communicate in spoken English is required to perform job duties effectively; and (2) the individual’s accent materially interferes with job performance.
- Fluency: Fluency may be required if it is necessary for the effective performance of the position.
- “English-only” policies: Language-restrictive policies are unlawful unless they are required to promote safe and efficient job performance or business operations, and are only enforced for those purposes.
- Employers cannot use United States citizenship requirements as a pretext for discrimination in hiring. The Immigration Reform and Citizenship Act of 1986 makes it illegal for an employer to discriminate based upon an individual’s citizenship or immigration status. Unless the law requires an employer to do so based on the specific industry, an employer cannot limit its employees to U.S. citizens or lawful permanent residents, and should not consider immigration status in hiring.
- Employers do not have to accommodate national origin traditions or practices. However, national origin often overlaps other protected classes, such as religion, in which accommodations may be required.
EXPANDED PROTECTIONS FOR JANITORIAL SERVICE WORKERS (AB 1978)
Known as the Property Service Workers Protection Act, this law enacts numerous measures to protect janitorial industry employees from sexual assault and other Labor Code violations. Amongst other things, it requires the Department of Industrial Relations to develop by July 1, 2018 training materials for both supervisors and workers regarding sexual harassment and sexual violence, and to establish requirements for such training. It also directs Cal-OSHA to require janitorial industry employers to include this training as part of its injury and illness prevention plans. It also establishes a system of janitorial contractor registration to encourage labor standards compliance and to establish prompt and effective sanctions for violating this part.
EMPLOYERS TO PROVIDE NEW HIRES WITH WRITTEN INFORMATION ABOUT TIME-OFF RELATED TO SEXUAL ASSUALT, 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 law adds new subsection (h) to require employers to provide written information regarding these rights under section 230.1 and rights under Labor Code section 230, subsections (c), (e) and (f) prohibiting retaliation and requiring employers to reasonably accommodate victims of domestic violence, sexual assault or stalking. Employers will be required to provide this written information to new employees upon hire and to other employees upon request. By July 1, 2017, the Labor Commissioner must post on its website a form employers can use, and employers need not comply with these notice requirements until the Labor Commissioner posts the form. Alternatively, employers may develop and use their own notice provided it is “substantially similar in content and clarity” to the Labor Commissioner’s form.
VENUE AND CHOICE OF LAW PROVISIONS IN EMPLOYMENT AGREEMENTS (SB 1241)
Effective January 1, 2017, Senate Bill 1241 adds Section 925 to the Labor Code and prohibits an employer from requiring a California-based employee, as a condition of employment, to agree to a provision that would either require the employee to litigate or arbitrate California-based claims outside of California or under the laws of another state.
The law seeks to protect employees, who primarily work and reside in California, from being required to agree to venue and choice of law provisions that deprive the employee of the substantive protection of California law with respect to a controversy arising in California. Currently, many employers, particularly those based out of state, include choice of law provisions in their agreements that apply the company’s home-state laws to all employees, including those in California. A court faced with a dispute would then apply a balancing test to determine whether to apply the chosen law, or California law instead. Senate Bill 1241 essentially strips employers of this ability, and requires companies, regardless of where they may be headquartered, to come to California to litigate or arbitrate employment claims under California law. However, the bill provides an exception for contracts with an employee who is in fact “individually represented by legal counsel in negotiating the terms of an agreement to designate either the venue or forum in which a controversy arising from the employment contract may be adjudicated or the choice of law to be applied.”
The new law applies to any employment contract entered into, modified, or extended on or after January 1, 2017. Any contract that violates the provisions of the new law is voidable by the employee, and if a provision is rendered void at the request of the employee, the matter shall be adjudicated in California and California law shall govern the dispute. Furthermore, a court may award reasonable attorneys’ fees, among other remedies, to an employee enforcing his or her rights under the law.
CALIFORNIA MINIMUM WAGE INCREASE
On April 4, 2016, Governor Jerry Brown signed SB 3 to increase the California minimum wage to $15.00 per hour by January 1, 2022. The wage increase was initiated by the Service Employee International Union (SEIU) which sponsored the “Fair Wage Act of 2016.” The wage increase would make the California minimum wage the highest in the United States. Although California’s minimum wage would be the highest, it would not happen overnight. Under the proposed agreement, the minimum wage would increase to $10.50 an hour January 1, 2017, and to $11.00 an hour January 1, 2018. From 2019 going forward, the minimum wage would increase $1.00 each year until 2022 until minimum wage reaches $15.00. After 2022, the minimum wage would increase commensurate with the rate of inflation of the previous year.
BEGINNING JANUARY 22, 2017, EMPLOYERS MUST BEGIN USING REVISED I-9 FORM
The U.S. Citizenship and Immigration Services (USCIS) has published a revised version of Form I-9, Employment Eligibility Verification. By January 22, 2017, all employers must begin using the new I-9 Form for verification of employment. Under the Immigration Reform and Control Act (IRCA), employers are prohibited from hiring employees in the United States without verifying their identity and employment authorization on Form I-9. Technical changes were made to the form, which are designed to reduce errors and enhance form completion.
SEXUAL HARASSMENT TRAINING FOR GOVERNMENT OFFICIALS (AB 1661)
AB 1661 requires local agency officials to receive sexual harassment prevention training and education if the local agency (including any city, county, city and county, charter city, charter county, charter city and county, or special district) provides any type of compensation, salary, or stipend to those officials. “Local agency officials” are any member of a local agency legislative body and any elected agency official. Additionally, local agencies will be allowed to require employees to receive sexual harassment prevention training or information. (See Government Code section 53237, et seq.)
EEOC RESOURCE- DEPRESSION, PTSD, AND OTHER MENTAL HEALTH CONDITIONS IN THE WORKPLACE
On December 12, 2016, the Equal Employment Opportunity Commission (EEOC) published a resource document titled, “Depression, PTSD, & Other Mental Health Conditions in the Workplace: Your Legal Rights,” which summarizes the rights of individuals with mental health conditions under the Americans with Disabilities Act of 1990 (ADA). The resource document, drafted in a basic Q&A format, addresses workers’ rights to protection against discrimination and harassment because of mental health conditions, privacy regarding mental health information, and reasonable accommodation in the performance of job functions. The resource document provides guidance regarding an employer’s obligation not to discriminate against an individual on the basis of their mental health condition, and the employer’s right to not hire or retain an employee if the employee cannot perform the essential functions of the job or if the employee poses a “direct threat” to safety (i.e., a “significant risk of substantial harm to self or others”). Importantly, the EEOC warns against the reliance on “myths or stereotypes” about mental health conditions when making employment decisions and advises employers to collect objective evidence of an employee’s inability to perform essential job functions or any direct threat to safety before making an employment decision. The resource document also provides details regarding the EEOC’s position with regard to an employee’s right to keep their mental health condition(s) private.
The guidance asserts that employers cannot ask medical questions, including ones about mental health conditions, unless one of following scenarios applies: 1) The employee requests a reasonable accommodation. 2) After the employee receives a job offer, but before employment begins (so long as this practice is used for all applicants in the same job category). 3) The employer is engaging in affirmative action for individuals with disabilities (in which case a response is optional). 4) There exists objective evidence that an employee may be unable to perform their essential job functions or may pose a safety risk to themselves or others. With regard to an employee’s right to seek a reasonable accommodation, the EEOC explains that employees may be entitled to a reasonable accommodation when their mental health condition, if left untreated, would “substantially limit” a “major life activity.” While the definition of “substantially limit” is not made entirely clear, the resource document indicates that the EEOC intends to adopt a very liberal interpretation of the phrase.
Additionally, the resource document provides various examples of accommodations the EEOC considers “reasonable.”
Furthermore, the EEOC published a companion document titled, “The Mental Health Provider’s Role in a Client’s Request for a Reasonable Accommodation at Work,” which provides mental health providers with information for understanding the documentation necessary for submitting reasonable accommodation requests to an employer.
As part of the 2016-2017 Fiscal Year Budget Change Proposal, the Governor passed several amendments to PAGA—purportedly intended to reduce litigation costs for employers and improve outcomes for employees. The LWDA states on its website that the following procedural changes to PAGA are in effect as of June 27, 2016. A $75 filing fee is required with new PAGA claim notices and any employer responses to an initial claim (including any employer cure). This fee is waivable for those qualified as in forma pauperis. PAGA claim notices must now be filed online to the LWDA, with written notice (certified mail) to the employer. Similarly, employer cure notices and/ or employer responses to a PAGA claim must also be filed online, with a copy sent to the aggrieved employee by certified mail.
The LWDA’s timeframe to review notices extends to 60 days. (Formerly 30 days.)
Alleged aggrieved employees filing in court must provide a file-stamped copy of their PAGA Complaint to the LWDA (for any case filed on or after July 1, 2016). Court approval is required for any settlement of a PAGA civil action, whether or not the settlement includes an award of PAGA penalties. Proposed PAGA settlements are to be submitted to the LWDA at the same time they are submitted to the court. A copy of any court judgment, and any other order that awards or denies PAGA penalties, must be provided to the LWDA. These are essentially procedural changes and less-impactful than some of the broader, more substantive changes contained in the original proposal. For example, the original proposed amendments included an amnesty program for invalidated “commonplace industry practices” and a provision allowing the LWDA to object-to or comment-on proposed PAGA settlements. Nonetheless, the actual amendments may be a precursor to more sweeping reform, and the legislative environment surrounding PAGA actions deserves close attention.
LOS ANGELES AND SAN DIEGO MINIMUM WAGE AND PAID SICK LEAVE ORDINANCES
Earlier this year, Los Angeles and San Diego approved ordinances for increased minimum wage and paid sick leave requirements. For more information on the Los Angeles and San Diego ordinances, please see our prior article posted here. By way of reminder, the San Diego ordinance will increase the minimum wage to $11.50 per hour, effective January 1, 2017. The Los Angeles ordinance will increase the minimum wage to $12.00 per hour for employers with 26 or more employees, effective July 1, 2017. The minimum wage for employers with 25 or fewer employees will increase to $10.50 per hour, effective July 1, 2017. In light of these new statutes and amendments to existing law, employers are encouraged to educate themselves on the new obligations and review their policies and practices prior to the end of the year. Employers should consult experienced legal counsel with questions and concerns before making or implementing personnel-related decisions.
It is important to note that every employment law situation is unique and this legislative update is not a replacement for legal counsel. If you have questions on how these changes can impact your business, contact the Employment Law Department at Young Wooldridge, LLP.
To learn more about the cases that shaped Employment Law legislation in 2016, read Part Two of our 2017 Employment Law Update >>>