United States: California Enacts A Raft Of New Employment Legislation

The latest legislative session has just ended, and, true to form, the California Legislature has added more than a dozen new laws affecting employers doing business in the nation's largest state. These statutes are in addition to the other six new laws that we reported on in September:

  • Signed legislation:
    • Sick Leave: Accrual And Limitations Language Clarified (AB 304)
    • Employers Prohibited From Using E-Verify For Purposes Not Specified Under Federal Law (AB 622)
    • Modifications To AB 359 Which Gives Preferential Treatment To Grocery Workers Affected By A Change In Control (AB 897)
    • Labor Commissioner's Enforcement Capabilities Expanded To Local Jurisdictions (AB 970)
    • PAGA Amended To Allow Employers To Cure Certain Wage Statement Violations (AB 1506)
    • No Retaliation Against Family Members of Employee Whistleblowers; New Exclusion From Joint Liability Rules (AB 1509)
    • Piece-Rate Compensation Becomes More Costly And Difficult To Administer (AB 1513)
    • Special Meal Period Waiver Rules For Health Care Employees Clarified (SB 327)
    • New Gender-Based "Fair Pay Act" Enacted (SB 358)
    • Wage Garnishment Restrictions Modified (SB 501)
    • School Activity Leave and Sick Leave Protections Expanded (SB 579)
    • Expanded Authority Granted To Labor Commissioner For Judgment Enforcement (SB 588)
    • New Protected Classes Added To Unruh Civil Rights Act (SB 600)
  • Vetoed Legislation:
    • Governor Vetoes AB 465, Saves Mandatory Arbitration Agreements
    • Governor Vetoes AB 676 (Employment Discrimination And A Person's Unemployment Status)
    • Governor Vetoes AB 1017 (Prohibition On Seeking Salary Information About An Applicant For Employment)
    • Governor Vetoes SB 406 (Expansion Of CFRA: 12 Weeks Of Unpaid Leave To Extend To Kin Care)

Signed Legislation

Sick Leave: Accrual And Limitations Language Clarified

Governor Brown signed AB 304 into law on July 13, 2015. AB 304, which is effective immediately, clarifies certain ambiguities relating to sick leave accrual and limitations in the California's Healthy Workplaces, Healthy Families Act of 2014 (AB 1522).

Employers Prohibited From Using E-Verify For Purposes Not Specified Under Federal Law

Governor Brown signed AB 622 into law on October 9, 2015. AB 622 expands the definition of an "unlawful employment practice" to prohibit an employer or any other person or entity from using the E-Verify system at a time or in a manner not required by a specified federal law or not authorized by a federal agency memorandum of understanding to check the employment authorization status of an existing employee or an applicant who has not received an offer of employment, except as required by federal law or as a condition of receiving federal funds. AB 622 also requires an employer that uses the E-Verify system to provide to the affected employee any notification issued by the Social Security Administration or the United States Department of Homeland Security containing information specific to the employee's E-Verify case or any tentative nonconfirmation notice.

Modifications To AB 359 Which Gives Preferential Treatment To Grocery Workers Affected By A Change In Control

As described in our earlier blog post, AB 359 provides that certain grocery workers must be given preferential treatment following a "change in control." Governor Brown, in his signing message approving AB 359, stated that the bill is not clear how the provisions apply if an incumbent grocery employer has ceased operations. Effective January 1, 2016, AB 897 amends AB 359 to provide that "grocery establishment" does not include an establishment that has ceased operations for six months or more.

Labor Commissioner's Enforcement Capabilities Expanded To Local Jurisdictions

Governor Brown signed AB 970 into law on October 11, 2015. AB 970 authorizes the Labor Commissioner to investigate and enforce local overtime and minimum wage laws and to issue citations and penalties for violations, except when the local entity has already cited the employer for the same violation. AB 970 also authorizes the Labor Commissioner to issue citations and penalties to employers who violate the expense reimbursement provisions of Labor Code Section 2802.

PAGA Amended To Allow Employers To Cure Certain Wage Statement Violations

Governor Brown signed AB 1506 into law on October 2, 2015. AB 1506, effective immediately, amends PAGA to provide an employer with the right to cure a violation of the requirement that an employer provide its employees with the inclusive dates of the pay period and the name and address of the employer before an employee may bring a civil action under PAGA. An employer can utilize this cure provision only once during each 12-month period.

AB 1506 provides a cure period to an employer who has not received notice of such a wage statement violation. The question remains as to how AB1506 impacts pending PAGA wage statement violation cases.

No Retaliation Against Family Members of Employee Whistleblowers; New Exclusion From Joint Liability Rules

Governor Brown signed AB 1509, effective January 1, 2016, into law on October 11, 2015. AB 1509 prohibits employers from retaliating against an employee who is a family member of an employee who has or is perceived to have engaged in protected conduct or made a protected complaint (such as whistleblowing). Additionally, AB 1509 excludes certain entities, such as certain household goods carriers, from the imposition of joint liability on client employers for all workers supplied by a labor contractor.

Piece-Rate Compensation Becomes More Costly And Difficult To Administer

Governor Brown signed AB 1513 into law on October 10, 2015. AB 1513 requires employers to pay piece-rate employees for rest and recovery periods and "other nonproductive time" at or above specified minimum hourly rates, separately from any piece-rate compensation. AB 1513 defines "other nonproductive time" as time under the employer's control, exclusive of rest and recovery periods, that is not directly related to the activity being compensated on a piece-rate basis.

Additionally, employers must specify the following on a piece-rate employee's itemized wage statement: the total hours of compensable rest and recovery periods, the rate of compensation paid for those periods, and the gross wages paid for those periods during the pay period.

AB 1513 makes it virtually impossible to employ piece-rate employees without being vulnerable to wage and hour class action litigation. Employers may wish to devise new business models to address this issue.

Special Meal Period Waiver Rules For Health Care Employees Clarified

Governor Brown signed SB 327 into law on October 5, 2015. SB 327 clarifies that special meal period waiver rules for employees in the health care industry remain in force, despite the uncertainty caused by the court of appeal decision in Gerard v. Orange Coast Mem. Med. Ctr. (2015).

New Gender-Based "Fair Pay Act" Enacted

Governor Brown signed SB 358, the California Fair Pay Act, into law on October 6, 2015. SB 358 seeks to eliminate the gender wage gap by amending Section 1197.5 of the Labor Code ("Section 1197.5"), relating to private employment. Such amendments will become effective on January 1, 2016. Employers should be aware that, as representative actions under PAGA do not require the plaintiffs to obtain class certification, violations of Section 1197.5, as amended, may also result in PAGA penalties. The material amendments to Section 1197.5 are summarized below:

Broader Prohibition on Gender Wage Differentials

Currently, Section 1197.5 prohibits an employer from paying an employee at wage rates less than the rates paid to employees of the opposite sex in the same establishment for equal work. SB 358 revises this prohibition, instead prohibiting an employer from paying an employee at wage rates less than the rates paid to employees of the opposite sex for "substantially similar work." "Substantially similar work" is determined by analyzing a composite of skill, effort, and responsibility, while considering whether the work is being performed under similar working conditions. SB 358 does not require such "substantially similar work" to be "in the same establishment" of the employer as previously required by Section 1197.5. This is bound to be the cause of much litigation.

Employer Required to Demonstrate Exceptions

Section 1197.5 automatically exempted certain gender wage differentials related to payments based on a seniority system, a merit system, quantity or quality of production, or any bona fide factor other than sex. SB 358 amends Section 1197.5 to require that an employer must affirmatively demonstrate that: (i) a wage differential is based on a seniority system, a merit system, quantity or quality of production, or any bona fide factor other than sex; (ii) each factor relied upon is applied reasonably; and (iii) these factors account for the entire wage differential.

Anti-Retaliation Protections Introduced

SB 358 added a provision to Section 1197.5 that prohibits an employer from discharging, discriminating or retaliating against an employee by reason of any action taken by the employee to invoke or assist in any manner the enforcement of this legislation. This new provision authorizes an employee to disclose the employee's own wages, discuss the wages of others, inquire about another employee's wages, or aid or encourage other employees to exercise their rights under this legislation.

If an employee is discharged, discriminated or retaliated against in the terms and conditions of his or her employment because the employee engaged in any such protected conduct, such employee may recover, in a civil action, reinstatement and reimbursement for lost wages and work benefits caused by the acts of the employer, including interest thereon, as well as appropriate equitable relief.

Increased Recordkeeping Duration

SB 358 also increases the duration of recordkeeping requirements of wages, wage rates, job classifications, and other terms and conditions of employment from 2 years to 3 years.

Wage Garnishment Restrictions Modified

Governor Brown signed SB 501, effective July 1, 2016, into law on October 11, 2015. SB 501 reduces the prohibited amount of an employee's weekly earnings subject to levy under an earnings withholding order from exceeding the lesser of (i) 25% of the employee's weekly earnings or (ii) 50% of the amount by which the employee's earnings for the week exceed 40 times the minimum wage.

School Activity Leave and Sick Leave Protections Expanded

Governor Brown signed SB 579 into law on October 11, 2015. SB 579 provides for additional circumstances under which employees may take school activities leave. Because of SB 579, California school activities leave now includes the addressing of a child care provider emergency, a school emergency, finding, enrolling, and reenrolling a child in a school or with a child care provider. The pool of eligible employees is expanded by SB 579 to include employees who are stepparents, foster parents or stand in loco parentis to a child.

SB 579 also requires employers to permit employees to use sick leave for the purposes specified in the Healthy Workplaces, Healthy Families Act of 2014 and prohibits an employer from denying or retaliating against such employee for using sick leave for such purposes.

Expanded Authority Granted To Labor Commissioner For Judgment Enforcement

Governor Brown signed SB 588 into law on October 11, 2015. SB 588 expands the Labor Commissioner's authority with regard to the enforcement of judgments. For example, SB 588 authorizes the Labor Commissioner to issue a lien on an employer's property for amounts owed to an employee, such as unpaid wages, and other compensation, penalties, and interest.

New Protected Classes Added To Unruh Civil Rights Act

Governor Brown signed SB 600 into law on September 8, 2015. SB 600 expands the protections of the Unruh Civil Rights Act by prohibiting discrimination by business establishments based on citizenship, primary language, or immigration status. Other than what is currently required by law, the bill does not extend so far as to require services or documents to be provided in a language other than English.

Vetoed Legislation

Governor Vetoes AB 465, Saves Mandatory Arbitration Agreements

On October 11, 2015, Governor Brown vetoed AB 465, the "Increased Unnecessary Litigation Costs" bill referenced previously in this blog. AB 465 would have precluded mandatory pre-dispute employment arbitration agreements, currently used by many California employers.

In his veto message, Governor Brown referred to AB 465 as "far-reaching," noting that if arbitration abuses exist, "they should be specified and solved by targeted legislation, not a blanket prohibition." Furthermore, Governor Brown added that such a blanket ban has been construed in other states as violating the Federal Arbitration Act. Because the Supreme Court is considering two California cases pertaining to FAA preemption of state arbitration policies, Governor Brown noted that he would prefer to see the outcome of those cases prior to enacting a law as broad as AB 465.

Many employers view a "best practice" as encouraging (but not mandating) new employees to sign arbitration agreements and also encouraging (but not mandating) current employees to sign arbitration agreements when rolling out a new arbitration program. This is so because, even though this bill was vetoed, many state court judges view "mandatory" arbitration agreements as contracts of adhesion and unconscionable, despite appellate law to the contrary.

Governor Vetoes AB 676 (Employment Discrimination And A Person's Unemployment Status)

On October 10, 2015, Governor Brown vetoed AB 676, a bill which would have prohibited an employer from discriminating against job applicants based on the applicant's status as unemployed. Governor Brown noted in his veto message that AB 676, like the bill he vetoed last year, does not "provide a proper or even effective path to get unemployed people back to work."

Governor Vetoes AB 1017 (Prohibition On Seeking Salary Information About An Applicant For Employment)

On October 11, 2015, Governor Brown vetoed AB 1017, a bill which would have prohibited an employer from seeking salary information from an applicant for employment. Governor Brown stated in his veto message that unlike SB 358, AB 1017 would "prohibit employers from obtaining relevant information with little evidence that this would assure equitable wages."

Governor Vetoes SB 406 (Expansion Of CFRA: 12 Weeks Of Unpaid Leave To Extend To Kin Care)

On October 11, 2015, Governor Brown vetoed SB 406, a bill would have allowed a qualified employee to take up to 12 weeks of unpaid leave under the California Family Rights Act ("CFRA") to care for a seriously ill family member. Governor Brown, in his veto message, noted that SB 406 creates a disparity between CFRA and the Federal Medical Leave Act which could require an employer to provide up to 24 weeks of family leave in a 12 month period. Governor Brown would be open to legislation that does not provide such a loophole.

California Enacts A Raft Of New Employment Legislation

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