In 2015, the California Legislature enacted numerous employment-related laws. California employers should take note of these new laws to ensure that their policies and procedures are in compliance. Below is a summary of the most significant new laws affecting the workplace.
All laws are effective January 1, 2016, unless otherwise noted. Our office is available to assist employers with the implementation of these new laws.
Wage and Hour
PAGA Claims
AB 1506, amending California's Private Attorneys General Act
(PAGA), provides employers the right to cure certain technical
violations of the California Wage Statement Law before an employer
can be sued. The bill aims to ensure employees are provided
accurate wage statements while also safeguarding employers against
PAGA lawsuits involving minor wage statement violations. The bill
gives employers 33 days to fix these errors and sets forth specific
steps that must be taken before a technical violation can be cured.
An employer can take advantage of this provision only once for the
same violation of the statute during each 12-month period. This
bill was signed on October 2, 2015, and became effective
immediately.
Prevailing Wages for Public Works
AB 852 expands the definition of "public works" for
purposes of provisions relating to the prevailing rate of per diem
wages. Under AB 852, for purposes of the prevailing rate of per
diem wages, "public works" includes any construction,
alteration, demolition, installation, or repair work done under
private contract on a project for a general acute care hospital
when the project is paid for with the proceeds of conduit revenue
bonds issued on or after January 1, 2016.
Wage Garnishment Restrictions
SB 501 provides some relief to low income judgment debtors, as it
changes the formula for calculating the percentage of disposable
income subject to a wage garnishment. Current law requires
employers to withhold 25% of an employee's disposable income
but the bill provides that an earnings withholding order cannot
exceed the lesser of 25% of the individual's weekly disposable
earnings or 50% of the amount by which the individual's
disposable earnings for the week exceed 40 times the state minimum
hourly wage (or applicable minimum wage if higher) in effect at the
time the earnings are payable.
Piece-Rate Employees
AB 1513 requires employers to pay piece-rate employees rest and
recovery periods and nonproductive time separately from their
piece-rate compensation. Employers must pay a piece-rate employee
for rest and recovery periods at an average hourly rate, which is
determined by dividing the employee's total compensation for
the workweek (excluding compensation for rest, recovery periods,
and overtime) by the total hours worked during the workweek
(excluding rest and recovery periods). Employers must pay
piece-rate employees for other nonproductive time at an hourly rate
no less than minimum wage. If an employer pays an hourly rate for
all hours worked in addition to piece-rate wages, it does not need
to pay any additional hourly rate for nonproductive time. Finally,
employers must specify additional categories of information on a
piece-rate employee's itemized wage statement.
Labor Commissioner: Judgment Enforcement
SB 588 makes changes to the Labor Code pertaining to the Labor
Commissioner's enforcement authority. More specifically, it
authorizes the Labor Commissioner to file a lien on an
employer's California property for unpaid wages, other
compensation, penalties, and/or interest owed to an employee.
Expansion of Labor Commissioner Enforcement
Authority
AB 970 amends Labor Code sections 558, 1197, and 1197.1 to
authorize the Labor Commissioner to enforce local laws regarding
overtime and minimum wage provisions. The bill also authorizes the
Labor Commissioner to issue citations and penalties for violations
if the local entity has not already cited the employer for the same
violation. The bill also authorizes the Labor Commissioner to issue
citations and penalties to employers who violate the expense
reimbursement provisions of Labor Code section 2802.
Public Works: Concrete Delivery
AB 219 includes several provisions which apply to public work
contracts awarded on or after January 1, 2016. The bill expands the
definition of "public works" in employment contracts
involving any state agency to include the hauling and delivery of
ready-mixed concrete. The bill requires the entity hauling or
delivering the concrete to enter into a written subcontract with
the worker and provide the employee with payroll and time records.
The employee's wage rate must be the rate for the geographic
area in which the concrete factory is located.
Leaves of Absence
Paid Sick Leave
AB 304, effective July 13, 2015, amends provisions of the Healthy
Workplaces, Healthy Families Act of 2014 codified in Labor Code
sections 245.5, 246, and 247.5. Previously, the law required
employees to accrue paid sick leave at the rate of 1 hour for every
30 hours worked. The new amendment allows employers to use a
different accrual method as long as accrual is on a regular basis
so that employees have at least 24 hours of accrued sick time or
other paid time off by the 120th day of employment each calendar
year or other 12 month basis.
Additionally, under the amendment, the employee must work for the same employer for at least 30 days within the previous 12 months to be eligible to accrue paid sick leave with the employer. The amendment also uses a new way to calculate an hourly rate for paid sick leave for employees with a fluctuating pay rate. Finally, the amendment no longer provides the employer with an obligation to inquire into or record the purposes for which an employee uses sick leave or paid time off.
Kin Care
SB 579 expands California's Kin Care law to allow employees to
use accrued sick leave to provide care for a family member's
illness. The bill protects parents from being discriminated against
for addressing a child care provider emergency, which is broadly
defined by the bill and includes the finding, enrolling, or
reenrolling of a child in a school or with a child care provider.
The bill also extends protections to an employee who is a
step-parent or foster parent who stands in loco parentis to a
child.
Sick Leave for Veterans with Service-Related
Disabilities
Existing law allows full-time state officers or employees to accrue
paid sick leave at a rate of 1 day for each calendar month of
service. SB 221 provides state officers or employees hired on or
after January 1, 2016 with additional paid sick time if they are
military veterans with a disability rated at 30% or more by the US
Department of Veterans Affairs. Additionally, the entire credit is
available to such officers or employees on the first day of their
employment and is available for the following twelve months of
employment. It does not, however, carry over after twelve
months.
Insurance and Benefits
Insurance Committee
AB 1514 makes minor technical changes to the California Training
Benefits (CTB) program and updates the reporting requirements of
the Employment Development Department (EDD). More specifically, the
bill requires the EDD to automatically qualify individuals
participating in an employer sponsored training program for
benefits through the CTB Program.
Workers' Compensation Benefits
Existing law generally requires an employer to compensate an
employee for an injury sustained on the job or during the course of
employment, regardless of the employee's negligence. If an
employer fails to pay this required compensation, an employee may
apply to receive the funds he is entitled to from the Uninsured
Employers Fund or the Subsequent Injuries Benefits Trust Fund. SB
623 provides that a person will not be excluded from receiving
benefits under either of these funds based on his citizenship or
immigration status.
Unemployment Insurance: Electronic Reporting and Funds
Transfers
AB 1245 requires an employer with 10 or more employees to file all
reports (i.e. reports of contribution and reports of wages paid)
and returns (i.e. quarterly returns and annual reconciliation
returns) electronically and make all unemployment insurance
premiums payments by fund transfer starting January 1, 2017. This
requirement will extend to all employers beginning on January 1,
2018. The bill authorizes the granting of waivers from these
requirements for certain employers but also imposes a penalty of
$50 on those employers who fail to comply without good cause.
Disability Insurance: Waiting Period for
Eligibility
SB 667 amends the Unemployment Insurance Code and provides that the
7-day waiting period for receiving benefits does not apply to
subsequent applications for benefits if the applicant met the 7-day
waiting period on the initial application for benefits.
Additionally, whereas existing law provides that 2 consecutive
periods of disability benefits are considered 1 disability benefit
period if they are separated by no more than 14 days, this bill
expands that separation period to 60 days.
Health Care Coverage: Rate Review
SB 546 requires additional data collection and review of health
care rates in the large-group market. More specifically, the bill
requires large-group health care service plans and health insurers
to file with the respective department prior to implementing any
rate increase, all required rate information for any product with a
rate increase if certain conditions apply. The bill also provides
procedures and time frames for department action on such increase
requests. The bill additionally requires the plan or insurer to
file additional aggregate rate information with the respective
department.
Discrimination, Retaliation, and Harassment Protections
Unlawful Employment Practices:
Discrimination
The California Fair Employment and Housing Act requires an employer
to provide reasonable accommodation of a person's disability
and religious beliefs and prohibits discrimination against any
person on these grounds. AB 987 expands this protection and
clarifies that a request for reasonable accommodation based on
religion or disability constitutes protected activity. This change
to Government Code section 12940 overturns the California Court of
Appeal's interpretation in Rope v. Auto-Chlor Sys. of
Washington, Inc., 220 Cal. App. 4th 635 (2013), that an
accommodation request is not a protected activity.
Persons with Disabilities: Examination for Service under
LEAP
Existing law requires the Department of Human Resource to
administer the Limited Examination and Appointment Program (LEAP)
to provide an alternative to the traditional civil service
examination and appointment process to facilitate the hiring of
people with disabilities. SB 644 permits a person with
developmental disabilities to either complete a written
examination, readiness evaluation, or an internship to qualify for
service under LEAP. The bill requires on-the-job support and
financing of the internship or a position under LEAP with specified
funding.
Civil Action for Gender Violence
AB 830 allows a person who has been subject to sexual orientation
violence to bring a civil action for damages against any
responsible party. The Unruh Civil Rights Act prohibits
discrimination based on a person's sex, race, religion, or
sexual orientation and specifies that sex includes gender, which
includes a person's gender identity and gender expression.
Gender Wage Differential
SB 358 strengthens existing law that prohibits paying women less
than men for performing the same job. While existing law required
equal pay for equal work, SB 358 requires equal pay for
"substantially similar work, when viewed as a composite of
skill, effort and responsibility." The bill allows differences
in pay based on certain enumerated factors (i.e. based on a system
of seniority or merit) but requires that it be consistent with
business necessity. The bill prohibits retaliation against
employees for invoking this law and requires employers to maintain
records for 3 years instead of 2.
Employer Liability: Employee Family Member Protected
Complaints & Labor Contractor Joint Liability
California law prohibits retaliation against employees who engage
in legally protected activities. AB 1509 extends this protection by
prohibiting employers from retaliating against employees for being
a family member of an employee who has, or is perceived to have,
engaged in activities protected under the Labor Code (i.e., making
complaints about working conditions or pay, or whistleblowing). The
bill also amends Labor Code section 2810.3 to impose joint
liability on client employers for employees supplied by a labor
contractor to exclude law client employers that use Public
Utilities Commission-permitted third-party household goods
carriers, as specified.
Removal of the Term Alien from the Labor
Code
SB 432 removes the term "alien" to describe foreign-born
workers from the California Labor Code. The bill also repeals Labor
Code provisions which prefers US citizens over individuals who are
not born in this country.
Lawsuits, Liens, and Other Encumbrances
AB 1267 prohibits a person from filing or recording, or directing
another person to file or record, a lawsuit, lien, or other
encumbrance against any person or entity, knowing it is false, with
the intent to harass the person or entity. It similarly prohibits a
person from influencing or hindering a public officer or employee
in his or her discharging of official duties. AB 1267 imposes a
civil penalty for violations, not to exceed $5,000.
Transportation
Drayage Truck Operators
AB 621 establishes the Motor Carrier Employer Amnesty Program
pursuant to which a motor carrier performing drayage services may
be relieved of liability for statutory or civil penalties
associated with the misclassification of commercial drivers as
independent contractors if the motor carrier enters into a
settlement agreement with the Labor Commissioner prior to January
1, 2017, whereby the motor carrier agrees to convert all of its
commercial drivers to employees and the settlement agreement
contains prescribed components including, but not limited to, an
agreement by the motor carrier to pay all wage benefits and taxes
owed, if any.
Transportation Network Companies
AB 1422 requires Transportation Network Companies such as Uber and
Lyft to participate in the Department of Motor Vehicles'
Employer Pull Notice Program to regularly check the drivers'
records, regardless of whether the driver is an employee or
independent contractor.
Business
Limited Liability Companies
Existing law, the California Revised Uniform Limited Liability
Company Act, governs the formation of a limited liability company,
the disassociation of a member from an LLC, and the effects of
disassociation. AB 506 specifies that a person's right to vote
as a member of the LLC terminates upon dissolution. If a member
dies, his executor, administrator, guardian, conservator,
attorney-in-fact, or legal representative may exercise all of the
member's rights for the purpose of settling the member's
estate or administering the member's property.
Additionally, AB 506 requires that profits and losses of an LLC be allocated among members according to the operating agreement, or if the operating agreement does not so provide, then in proportion to members' contributions. The amendment eliminates the requirement that consent be obtained from all members of an LLC to approve a merger or conversion or to amend the operating agreement. Under the amendment, an LLC that has filed a certificate of cancellation continues to exist for purposes of winding up its affairs and prosecuting and defending actions by or against it. AB 506 also covers an LLC's duty to indemnify an agent who successfully defends a claim on the merits. AB 506 limits the applicability of existing law to acts or transactions by an LLC occurring on or after January 1, 2014.
Unlawful Business Practices
SB 386 adds to the list of unlawful practices prohibited under the
California Legal Remedies Act. The bill includes advertising,
offering for sale, or selling a financial product or service that
is illegal, including a cash payment for the assignment to a third
party of the consumer's right to receive future pension or
veteran's benefits. The bill also adds an additional
prohibition against advertising, offering, or entering into an
agreement with a pension beneficiary that would involve an
assignment of pension benefits.
State Programs
Grant Program for Supervised Population Workforce
Training
AB 1093 revises the criteria for the Supervised Population
Workforce Training Grant Program (which aims to provide workforce
training to formerly incarcerated individuals) and allows grant
applicants to address the education and training needs of those who
have some postsecondary education or individuals who require basic
education. This bill also helps local jurisdictions reduce
recidivism rates and aims to create safer communities and bolster
local economies. This bill took effect on May 7, 2015.
California Workforce Innovation and Opportunity
Act
AB 1270 was enacted to transform the state's existing set of
workforce and education programs to conform with the new Federal
Workforce Innovation and Opportunity Act. The bill requires the
board to assist the Governor in the development of a State Plan.
The bill also changes membership requirements and the duties of
state and local boards. It also transitions youth councils
established under WIOA to standing committees of local boards.
Apprenticeship Programs
AB 1308 strengthens the state's apprenticeship system by
establishing basic procedures for the approval of new
apprenticeship programs. The bill clarifies that existing programs
cannot be found to lack the capacity or willingness to dispatch
apprentices unless contractors actually request apprentices.
California Workforce Investment Board:
Responsibilities
Existing law requires the California Workforce Investment Board to
assist the Governor in targeting resources to specified industry
sectors and providing guidance to ensure that services reflect such
needs. SB 342 additionally requires the board to assist the
Governor with implementing policies that encourage the attainment
of marketable skills relevant to current labor market trends for
purposes of helping individuals with barriers to employment achieve
economic security and upward mobility.
Miscellaneous
Cheerleader Employee Status
AB 202 requires California-based professional sports teams to
classify and treat cheerleaders who perform during their
exhibitions, events, or games, as employees instead of independent
contractors. This bill applies to cheerleaders who are either
directly or indirectly employed (i.e., through a labor
contractor).
90-Day Retention of Grocery Workers Following Change of
Ownership
AB 359 adds Labor Code sections 2500-2522 and requires a successor
grocery store employer to retain current grocery workers for 90
days upon the "change in control" of a grocery store. The
new law also prohibits the successor grocery employer from
discharging those workers without cause during the 90-day period
and requires the successor grocery employer to consider offering
continued employment to those workers upon the end of the 90-day
period. Governor Brown noted in his signing message an ambiguity in
how the law applies if an incumbent grocery employer has ceased
operations and noted the author and sponsor have committed to
clarify that the law would not apply to a grocery store that has
ceased operations for 6 months or more.
The Legislature responded with AB 897, which excludes from the definition of "grocery establishment" a retail store that has ceased operations for 6 months or more.
E-Verify System
AB 622 adds section 2814 to the Labor Code and prohibits an
employer from using E-Verify to check the employment authorization
status of an employee or job applicant, except as required by
federal law or as a condition of receiving federal funds. The bills
imposes a $10,000 fine per violation to each employer that uses
E-Verify in violation of this amendment.
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