2017 New Bill Alert, November 2016
Article by: Brian E. Ewing, Esq.
This year, it appears that the California Legislature focused less on passing bills that restrict an employer’s ability to manage its workforce compared to previous years. Nonetheless, there are a few bills passed this year that are worth noting. The following new laws take effect January 1, 2017 unless otherwise noted:
California employers have to remember the following minimum wage and exemption “salary test” increases:
- State minimum wage for employers with more than 25 employees effective January 1, 2017 – $10.50 (Senate Bill 3).
- State minimum wage for employers with 25 or less employees effective January 1, 2017 – still $10.00 (Senate Bill 3).
- Minimum salary for employees to be exempt from overtime under state law, as of January 1, 2017 – $43,680.00 (because of Senate Bill 3).
- Minimum salary for exempt employees working for employers subject to the federal Fair Labor Standards Act, as of December 1, 2016 – $47,476.00, or $913 per week (Department of Labor Final Overtime Regulations).
- This federal regulation applies to many, but not all, California employers, and many employers in other states. Under the federal regulation only (not the California salary test), 10% of the salary can consist of certain non-discretionary bonuses. If you believe that your business is not subject to the FLSA, we strongly recommend that you have legal counsel review your situation to ensure that this is the case.
The cities listed below have set their own higher minimum wages, which must be paid to employees who work a specified amount of time within each city’s borders for hours worked within each city’s borders. Some laws have limited exceptions or delayed enforcement for small employers or some industries, for instance, nonprofit organizations or in-home care workers. Please review with your legal counsel if you have any questions about whether or not your business fits into one of these exceptions.
- Berkeley: $12.53 per hour on October 1, 2016; $13.75 per hour on October 1, 2017.
- El Cerrito: $12.25 per hour as of January 1, 2017.
- Emeryville: On July 1, 2017, $15.20 per hour (estimated) for employers with more than 55 employees within the City, $14.00 per hour for employers with 55 or less employees within the City.
- Los Altos: $12.00 per hour as of January 1, 2017.
- City of Los Angeles: On July 1, 2017, $12.00 per hour for employers with more than 25 employees within the City, $10.50 per hour for employers with 25 or less employees within the City.
- Los Angeles County: Same schedule as Los Angeles City, applies to employees working in unincorporated areas of Los Angeles County (Marina del Rey, some parts of Calabasas, Universal City, etc.)
- Malibu: Same schedule as Los Angeles City.
- Mountain View: $13.00 per hour as of January 1, 2017.
- Oakland: CPI-based minimum wage increase for January 1, 2017 not published yet.
- Pasadena: On July 1, 2017, $12.00 per hour for employers with more than 25 employees within the City, $10.50 per hour for employers with 25 or less employees within the City.
- Palo Alto: $12.00 per hour as of January 1, 2017.
- Richmond: $12.30 per hour as of January 1, 2017, except for some small businesses.
- San Diego: $11.50 per hour as of January 1, 2017.
- San Francisco: $14.00 per hour as of July 1, 2017.
- San Jose: $10.40 per hour as of January 1, 2017.
- San Leandro: $12.00 per hour as of July 1, 2017.
- San Mateo: $12.00 per hour as of January 1, 2017.
- Santa Clara: $11.10 per hour as of January 1, 2017.
- Santa Monica: On July 1, 2017, $12.00 per hour for employers with more than 25 employees within the City, $10.50 per hour for employers with 25 or less employees within the City.
- Sunnyvale: $13.00 per hour as of January 1, 2017.
This list might not be exhaustive.
These laws typically also have posting and recordkeeping requirements that can be found on the City’s website. Many localities have also passed their own paid sick leave laws that require employers to grant employees more paid sick hours than required by state law (currently three days or 24 hours per year). Local paid sick leave ordinances are often included in the minimum wage ordinances noted above.
Wage and hour
SB 1063 – Amendment to the Fair Pay Act (concerning wage gaps).
This bill extends California’s Fair Pay Act to race and ethnicity, as well as gender, which was the law’s original intent. With respect to analyzing wage gaps based on race and ethnicity, the Act’s requirements will be the same as they are for gender pay differentials. Employers are now prohibited from paying different wages to people of different races, ethnicities and genders for “substantially similar work” (not necessarily the same job). “Substantially similar work” is viewed as a composite of skill, effort, and responsibility, which is performed under similar working conditions. Employers can justify pay disparities only if they are based on a system of seniority, merit, quantity or quality of production, or another genuine factor that is not sex, race or ethnicity-based. To take advantage of this exception, the burden is on the employer and must also demonstrate that the factor or factors it used to justify the wage gap are related to the specific job and are justified by a legitimate business necessity. There must be no other alternatives that would satisfy the same business necessity without resulting in a wage gap. Employers are also prohibited from retaliating against employees who report, complain about, or discuss race, ethnicity and gender-based wage differentials.
Recommended steps to take: Businesses should perform a pay analysis to ensure that employees in similar positions (not just the same jobs) are receiving the same wages, regardless of gender, race, or ethnicity. If wage differentials between people of different races, ethnicities, or gender are discovered and cannot be justified by the factors listed above, adjustments to those employee’s wages should be made in order to keep them equal and in line with the Act’s mandates.
AB 1676 – Another amendment to the Fair Pay Act.
This new law also amends the Fair Pay Act. The bill prohibits an employee’s own salary history, standing alone, from being used to justify gender wage differentials. It only applies to gender wage differentials, not ones based on race or ethnicity. It appears this restriction also forbids consideration of salary history from an employee’s former jobs.
AB 1066 – the “Phase-In Overtime for Agricultural Workers Act of 2016.”
This bill gradually repeals overtime exemptions for agricultural workers subject to Industrial Wage Order 14. The state will amend that Wage Order to reflect the new law. Currently, agricultural employees need to be paid overtime wages of one and a half times their regular rate of pay after ten hours of work in a day and for the first eight hours of work performed on the seventh day of the workweek. Agricultural employees also need to be paid double time wages after eight hours of work on the seventh day of the workweek. The new bill applies California’s standard overtime wage requirements to agricultural workers in steps, as follows:
|Agricultural employees must be paid one and a half times the regular rate of pay for hours worked over:||For companies with over 25 employees, as of:||For companies with 25 employees or fewer, as of:|
|9 ½ per day and 55 per week||January 1, 2019||January 1, 2022|
|9 per day and 50 per week||January 1, 2020||January 1, 2023|
|8 ½ per day and 45 per week||January 1, 2021||January 1, 2024|
|8 per day and 40 per week||January 1, 2022||January 1, 2025|
|Agricultural employees must be paid two times the regular rate of pay for hours worked over:||For companies with over 25 employees, as of:||For companies with 25 employees or fewer, as of:|
|12 per day||January 1, 2022||January 1, 2025|
The Governor can temporarily suspend these increases, based on economic conditions in the State, if the Governor has also suspended minimum wage increases in a given year.
Steps to take: For agricultural employers with employees subject to Wage Order 14, start planning to revise your overtime practices by 2019 to comply with scheduled changes above.
SB 1015 – Overtime pay for personal attendants.
This bill makes permanent the previously enacted temporary changes that require overtime wages be paid to most personal attendants after nine hours of work per day, or 45 hours of work per week.
AB 2535 – Exempt employee’s hours on wage statements.
This bill makes a small technical change to the overbearing wage statement law. Employers will no longer have to print exempt employees’ hours on wage statements, whether they are paid by salary alone, or by salary and commissions, salary and bonuses, etc. Formerly, this exception to the requirement to list hours worked applied only to exempt employees paid solely by salary.
AB 1843 – Juvenile arrest and conviction records.
This bill prohibits most employers from asking applicants about juvenile arrest, detention, or conviction records. Certain health care providers may continue to request limited information from applicants about juvenile convictions within the last five years for specified crimes, unless the records are sealed. The health care facility must provide an applicant with a list of the crimes for which it will seek juvenile records.
Steps to take: Revise your applications and hiring practices to omit these types of questions. Health care facilities should consult counsel to determine how to comply with the new law.
SB 1001 – Unfair immigration practices protection expanded.
This bill expands state law regarding immigration checks yet again. The bill prohibits employers from requesting more or different documents than are required under federal immigration law (I-9 checks or e-verify), refusing to honor documents that on their face reasonably appear to be genuine, refusing to honor work authorization documents based upon terms within the authorization to work, or using “unfair immigration practices” to re-verify the immigration status of current employees. In the past, this law only protected people who filed complaints with their employer or exercised rights under the Labor Code. Now, the same prohibitions apply to all employees and applicants.
The third prohibition – “refusing to honor work authorization documents based upon terms within the authorization to work”, appears to target beneficiaries of President Obama’s DACA and DAPA programs (the so-called “dreamers.”) For the fourth prohibition, applicable to current employees, “unfair immigration practices” includes refusing to honor acceptable documents, or requiring different documents than what the law requires, when performing I-9 employment verification checks, using the e-verify system in a way not explicitly authorized by federal law to check a worker’s immigration status, threatening to file or filing a false police report, and threatening to contact immigration authorities.
Steps to take: Revise your immigration check practices to conform to the above restrictions. Follow the I-9 Form, and if the applicant presents documents authorized by the I-9 Form that appear valid, the inquiry is over. Do not deny people employment simply because of the type of work authorization they have, as long as the work authorization is valid under current federal or state law.
AB 2337 – New hire information about the rights of victims of domestic violence.
This bill requires employers with 25 or more employees to distribute to newly hired employees information about the already existing rights of victims of domestic violence, sexual assault, or stalking, to take time off from work for medical appointments, court dates, counseling, or other commitments resulting from the domestic violence, sexual assault, or stalking. The California Labor Commissioner will develop the form by July 1, 2017, and employers do not need to comply until the state issues the form.
Steps to take: Start distributing the form to new hires when the state publishes it.
SB 1241 – Certain provisions in employment contracts.
This bill prohibits employers from requiring employees who primarily reside and work in California to agree, as a condition of employment, to file any lawsuits or arbitration proceedings in another state, or to agree to be subject to a different state’s law. It applies to contracts signed, extended or modified after January 1, 2017. It does not apply if the employee was represented by an attorney while negotiating the employment contract.
Steps to take: Work with counsel to remove out-of-state “choice of law” and “forum selection” clauses from all new and revised employment contracts.
AB 488 – Discrimination against disabled employees hired pursuant to special licenses.
This bill expands protections against discrimination and harassment to disabled employees hired pursuant to special licenses allowing the payment of less than minimum wage. Because of how the anti-discrimination laws were drafted, these employees used to fall outside of them.
AB 1978 –Janitorial employees.
This bill requires employers of janitors who contract with others to provide janitorial services to register with the Division of Labor Standards Enforcement (“DLSE”) annually, starting July 1, 2018. These companies will also have to retain three years’ worth of records showing the following information (most of which are already required to be kept under current law): names and addresses of all employees engaged in rendering actual services; hours worked daily by each employee, including the times each employee begins and ends each work period; wage and wage rates paid each payroll period; the ages of all minor employees; and, “any other conditions of employment.” As of July 1, 2018, these employers are also mandated to distribute the State’s DFEH-185 “Sexual Harassment” pamphlet to all janitorial staff. As of January 1, 2020, these applicants will have to complete “sexual violence and harassment prevention training,” still to be developed by the DLSE.
The law authorizes monetary penalties to be assessed against janitorial companies that do not comply. Companies that contract with unregistered janitorial service companies (after July 1, 2018) can also be subject to penalties.
The law also creates liability for successor companies of janitorial service companies that owed wages to their employees, under certain conditions.
State-run Retirement Program
SB 1234, passed in 2012, was reaffirmed by the legislature this year and establishes a state-run retirement investment program to which certain employees in the state can voluntarily contribute. The state is developing a package for employers that will contain more information about implementing program. We are not yet aware of when that package will be published, but we presume the program will not become operative until it is available.
Our firm is ready to assist you with understanding and implementing any of these new laws.
Article by: Brian E. Ewing, Esq.