New Bill Alert 2016

Reminder: the California minimum wage will increase to $10 per hour on January 1, 2016, so companies must ensure all nonexempt employees are being paid at least that amount.  This change also indirectly affects some overtime-exempt employees, whose monthly salary must be no less than two times the minimum wage.  Those exempt employees whose salaries are less than $41,600 annually will need a salary increase to continue to qualify for the overtime exemption.

Also of note, the federal Department of Labor has proposed increasing its minimum salary requirement for exempt employees under the federal Fair Labor Standards Act to $50,440 annually, however, the final regulations have not yet been published, so the change is not in effect, and that figure could change.

All laws listed below take effect January 1, 2016 unless otherwise noted.

Discrimination

SB 358 – The Fair Pay Act, targeting gender pay gaps.

The Fair Pay Act prohibits employers from having sex-based wage differentials amongst all job sites operated by the employer for “substantially similar work” (not necessarily the same job) when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions. The move from “equal work” to “substantially similar work” will greatly expand the number of employees who might be considered “comparators” to establish claims under this law.

Furthermore, the new law will prohibit employers from restricting in any way the ability of their employees to disclose their own wages, to discuss or ask about the wages of others, or to aid or encourage other employees to do the same.  However, the bill stops short of requiring employers to divulge the wage rates of other employees, even if the request comes from a female employee trying to determine whether pay discrimination exists.

The new law will also continue to permit exceptions for pay disparities based on a system of seniority, merit, quantity or quality of production, or any other bona fide factor that is not based on sex, provided these are affirmatively established by the employer. The “bona fide factor” exception is significantly limited, however, as employers must now demonstrate that the factor or factors used are related to the specific job and justified by a legitimate business necessity, and that there are no other alternatives that would serve the same business necessity without resulting in a wage gap. See our more comprehensive article on the Fair Pay Act here.

AB 987 – Retaliation for requests for disability or religious accommodations.

This bill makes explicit that employers must not retaliate or discriminate against employees who request disability or religious accommodations, whether or not the request was granted.

AB 1509 – Retaliation against family members of employees who exercise certain rights.

This new law prohibits employers from retaliating against employees who are family members of employees who engage in certain protected activities, including political activities, whistleblowing, filing a complaint with the Labor Commissioner, testifying in a Labor Commissioner hearing, making complaints that he or she is owed wages, or filing a claim or lawsuit under the “Private Attorneys General Act.”

Wage and hour

SB 588 – Expanded Labor Commissioner enforcement and owner/corporate officer liability for nonpayment of wages.

This bill expands liability for payment of minimum wages, payment of overtime wages, violations of the Industrial Wage Orders, unreimbursed business expenses, and other related penalties under the Labor Code, to owners, directors, officers, or managing agents of the employer, which is a significant change in law that puts business owners at risk.  The bill also allows companies that purchase or otherwise take control of predecessor companies to be held liable for the former employer’s nonpayment of wages, after receiving written notice, if the successor company is sufficiently similar to the former employer, based on factors listed in the law.

Under this bill, the Labor Commissioner is given new ways to collect final Labor Commissioner judgments.  The Labor Commissioner will be able to seek levies against employers, impose liens against the employer’s property, and require bonds from delinquent employers as a condition of continuing to do business in the state.  Employers in the long-term care industry may be denied licenses if they have unpaid final judgments.  Individuals or businesses that contract for services with companies in the property services or long-term care industries can be held jointly liable for the unpaid wages caused by the company, after notice to the contracting party, to the extent the unpaid wages are for services performed under the contract.  “Property services” includes janitorial, security guard, valet parking, landscaping, and gardening services.

AB 970 – Expanded Labor Commissioner enforcement.

The Labor Commissioner is now empowered, under this bill, to enforce, via investigations, citations, and penalty assessments, local overtime and minimum wage laws.  This bill also empowers the state Labor Commissioner to enforce Labor Code 2802, which requires employers to reimburse employees for all necessary expenses incurred in carrying out their duties.

Because of SB 588 and AB 970, now would be a good time to check again and ensure you are complying with local laws and state laws regarding wages.  It remains to be seen if the Labor Commissioner actually has resources to step up its enforcement activity, but these bills give it significant new tools to do so.

AB 1513 – Piece rate wages; pay for down time, wage statement information.

Employers who pay piece rate wages now have more to worry about.  This bill requires piece rate workers be paid a separate hourly wage, in addition to their piece rate wages, for time spent taking legally mandated paid rest periods (and “recovery” periods) and for other “nonproductive time,” which means work time “that is not directly related to the activity being compensated on a piece-rate basis.”  The law mandates that rest and recovery periods be paid at an hourly rate that is the higher of (1) an average hourly rate determined by dividing the total compensation for the workweek (less overtime premiums) by the total hours worked during the week (less time for rest and recovery periods) or (2) the highest federal, state, or local minimum wage applicable to the employer.  Nonproductive time is paid at the applicable federal, state or local minimum wage, but need not be paid if the company already pays minimum wage (or above) for all hours worked in addition to piece rate wages.

The law requires the total time, rates, and total wages for rest and recovery period pay and nonproductive time pay to be separately listed on employees’ wage statements.  The law also creates a safe harbor protecting employers from lawsuits for past unpaid piece rate wages if they pay the owed wages and follow the process explained in the statute.  See our more comprehensive article on the new piece rate law here.

SB 327 – Meal period waivers in the health care industry.

The legislature has clarified that certain employers in the health care industry can still have certain employees forego their second meal period on shifts longer than 12 hours if they sign a written, voluntary waiver.  This specific regulation is in some Wage Orders, but was called into question in a recent appellate court decision, so this bill eliminates the confusion.  The law goes into effect immediately and applies retroactively.

AB 202 – Cheerleaders.

AB 202 declares that cheerleaders employed by California based professional sports teams at exhibitions, events, or games, shall be deemed to be employees for all purposes (Labor Code, Unemployment Insurance Code, FEHA, etc.), and not independent contractors.

Prevailing Wage

AB 219 expands prevailing wage laws to include the hauling and delivery of ready-mixed concrete, as defined.

AB 327 extends until January 1, 2024, the law that excludes from prevailing wage laws certain work performed by volunteers or members of the California Conservation Corps or a community conservation corps.

AB 852 expands prevailing wage laws to private contracts for most general acute care hospitals paid for by conduit revenue bonds issued after January 1, 2016.

Sick leave/Leaves of absence

SB 579 – Kin Care and time off for children’s school activities.

This bill amends two laws regarding specific leaves of absence.  It changes Labor Code 230.8, which grants time off to parents (as defined in the law) to attend children’s school or day care activities, with reasonable advance notice.  The law still only applies to employers of 25 or more employees, and the amount of time that can be taken is still 40 hours per year.  However, the reasons employees may take time off are expanded to include not just school activities, but also enrolling children in a school or with a licensed child care provider, picking up children when the school requests it or when school policies prohibit the child from attending (except for holidays), handling behavioral or discipline problems, or when natural disasters strike.  “Parent” is expanded to explicitly include stepparents and foster parents, not just parents, grandparents, or guardians.

The Kin Care Law, Labor Code 233, is amended by SB 579 to more closely align with the Healthy Workplaces, Healthy Families Act of 2014. Employers have to allow employees to use up to half of their accrued paid sick leave per year for all the purposes listed in the Healthy Workplaces, Healthy Families Act of 2014.  Note that, under the new paid sick leave law itself, employers still have to provide a minimum of three days per year for these uses.  Presumably the amended Kin Care Law would be implicated for employees who accrue higher amounts of paid sick leave per year.

AB 304 – Amendments to the “Healthy Workplaces, Healthy Families Act of 2014.”

This bill amended the new law regarding paid sick leave, and was effective July 13, 2015.  The amendments allow employers to continue to use existing paid sick leave policies that were in effect on January 1, 2015, regardless of the accrual rate of paid sick leave, as long as the policies provide at least one day or eight hours of paid sick leave in each 3 month period of employment, and at least 3 days or 24 hours within the first nine months of each 12 month period.  The amendments allow employers to use paid sick leave policies that provide 3 days or 24 hours of paid sick leave by the 120th day of employment in a calendar year or other 12-month period, under certain conditions.  The amendments clarify that no accrual or carry over of paid sick leave is required if 3 days or 24 hours of paid sick leave are provided at the beginning of each calendar year, employment year, or 12 month period. See our more comprehensive article on the amendments here.

Immigration

AB 622 – Use of e-verify and disclosures to employees.

This bill prohibits employers from using the federal e-verify system to check the employment authorization status of a current employee or an applicant who has not received an offer of employment, except as otherwise required by federal law or by a federal agency or as a condition of receiving federal funds.  The bill does not affect an employer’s ability to use e-verify in accordance with federal law to check the employment authorization status of a person who is offered employment.  Employers who use e-verify and discover the information provided by the employee does not match the system records must provide the affected employee with any notices issued by the Social Security Administration or Department of Homeland Security.

Unemployment Insurance

AB 1245 – Electronic reporting and payment.

Employers will soon be required to use electronic reporting and electronic payment systems for unemployment insurance.  The requirement is imposed on employers of 10 or more employees as of January 1, 2017, and all employers as of January 1, 2018.  Please consult your payroll company regarding the changes.

Grocery stores: employee retention when there is a change of control.

AB 359 will require operators of grocery stores to retain certain employees when there is a change of control of the grocery store, as defined.  The successor company must, from the time of the transfer until 90 days after the grocery store is operational under the successor, hire from a preferential list of “eligible grocery workers,” meaning non-managerial and non-supervisory workers employed for longer than 6 months by the prior employer.  The new employer must retain each of those employees for a period of 90 days after the employee’s start date with the new employer; however, employees can be discharged for cause.  Also, if the new employer determines that it needs fewer employees than were employed by the prior employer, employees shall be retained based on seniority within comparable job classifications.  After 90 days of employment, the new employer must “consider” offering continued employment to each of the workers.  Stores located in federally designated “food deserts” are exempt from the new law under certain conditions.  A different bill, AB 897, amends this bill so that it does not apply to grocery stores that ceased operations for six months or more.

Arbitration

It is important to note that a bill banning all use of mandatory arbitration agreements in employment was vetoed by Governor Brown.  The Governor’s veto statement indicated he was not confident the bill would be upheld by federal courts in light of recent U.S. Supreme Court rulings.

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