United States: New Year, New Rules For Employers Doing Business In California

This year the California Legislature added over a dozen new employment laws, many of which take effect on January 1, 2016. Some of these laws impose new prohibitions on employers, while others provide positive benefits such as safe harbors, cure provisions, and employer incentives for reclassification of certain independent contractors. This update highlights key provisions in some of the new laws taking effect January 1, 2016. Links to the statutes are provided.

California Fair Pay Act – S.B. 358

Senate Bill (S.B.) 358 amends Labor Code section 1197.5, which prohibits gender-based wage inequality. Significant amendments include: (1) lowering the comparison standard from employees performing "equal work" to employees performing "substantially similar work," (2) restricting employers from prohibiting an employee from disclosing the employee's own wages, discussing the wages of others, inquiring about another employee's wages, or aiding or encouraging any other employee to exercise his or her rights under this section, and (3) the creation of a new private cause of action whereby an employee may bring a civil action seeking reinstatement and reimbursement for discrimination or retaliation for invoking or assisting in the enforcement of this section.

Employers are encouraged to audit their salary structure and recordkeeping practices and policies to ensure compliance with the law before it takes effect. For more information on S.B. 358, please see the article, previously published on Sheppard Mullin's Labor & Employment Blog on October 26, 2015: California's Equal Pay Law To Become More Stringent Effective January 1, 2016.

Changes to California's Piece-Rate Compensation Requirements – A.B. 1513

Assembly Bill (A.B.) 1513 adds section 226.2 to the Labor Code and requires employers to pay piece-rate employees a separate hourly wage for "nonproductive" time worked as well as separate payment for rest and recovery periods. Employers must also separately itemize the hours and pay rates relating to "nonproductive" time and rest and recovery periods on the employees' paystubs. Employers subject to A.B. 1513 are strongly encouraged to consult counsel before year's end regarding the new obligations, potential liability, and the affirmative defense created by this highly complicated statute. For more information on A.B. 1513, please see the article, published on Sheppard Mullin's Labor & Employment Blog on December 1, 2016: Changes to California's Piece-Rate Compensation Requirements Take Effect January 1, 2016.

Requesting Reasonable Accommodations is a Protected Activity – A.B. 987

A.B. 987 amends the California Fair Employment Housing Act to expand the protections afforded to employees who request reasonable accommodations for disabilities or religious beliefs, regardless of whether the accommodation request is granted. The amendment overrules the holding in Rope v. Auto-Chlor Sys. of Washington, Inc., 220 Cal. App. 4th 635 (2013), that a mere request for an accommodation does not, without more, constitute a basis for a FEHA retaliation claim. The Rope court found that FEHA only prohibits retaliation for certain expressly stated protected activities and an employee's request for a disability accommodation was not delineated. This amendment makes clear that a request for reasonable accommodation on the basis of religion or disability is a protected activity and that it is unlawful to retaliate against employees who request reasonable accommodations regardless of whether the request is granted.

Prohibitions Against Retaliation Extended to Whistleblowers' Family Members – A.B. 1509

A.B. 1509 amends Labor Code sections 98.6 (regarding complaints made to the Labor Commissioner), 1102.5 (regarding internal and external complaints made about legal violations), and 6310 (regarding complaints made about unsafe working conditions). The amendment expands prohibitions on retaliating against an applicant or employee who has, or is perceived to have, engaged in any protected conduct delineated in the respective statutes to the employee's or applicant's family members. Liability is also extended to any "business entity . . . that obtains or is provided workers," even if a third party staffing agency is the direct employer.

Expansion of Protections Under the Family School Partnership Act – S.B. 579

S.B. 579 amends Labor Code section 230.8 to prohibit an employer from discharging or otherwise discriminating against an employee who is a "parent" of one or more children of the age to attend kindergarten or grades 1 to 12, inclusive, or a licensed child care provider, for taking off up to 40 hours each year, to engage in any of the following child-related activities:

Find, enroll, or re-enroll his or her child in a school or with a licensed child care provider (limited to eight hours in one month) if the employee gives reasonable notice to the employer of the planned absence of the employee.

To address a "child care provider or school emergency," if the employee gives notice to the employer. "Child care provider or school emergency" means that an employee's child cannot remain in a school or with a child care provider due to one of the following:

The school or child care provider had requested that the child be picked up or has an attendance policy (excluding holidays) that prohibits the child from attending or requires that the child be picked up;

Behavior or discipline problems;

Closure or unexpected unavailability of the school or child care provider; or

A natural disaster, such as a fire, earthquake, or flood.

Significantly, the term "parent" has been expanded to include guardians, stepparents, foster parents, or grandparents of, or persons who stand in loco parentis to, a child. Also, while the employer may request documentation proving that the employee was engaged in protected child-related activities on a specific date and at a particular time, the term "documentation" is defined as "whatever written verification of parental participation the school or licensed child care provider deems appropriate and reasonable."

Expansion of Kin Care Leave – S.B. 579

S.B. 579 also amends what is known as California's kin care law, set forth in Labor Code section 233, to require that employers permit an employee's use of up to half of his or her annual accrued and available sick leave for the any of the following reasons: (1) the diagnosis, care, or treatment of an existing health condition of, or preventive care for, an employee; (2) the diagnosis, care, or treatment of an existing health condition of, or preventive care for, an employee's family member; and (3) an employee who is a victim of domestic violence, sexual assault, or stalking. The term "family member" is defined in the Healthy Workplaces, Healthy Families Act of 2014 and includes: a child (whether biological, adopted, foster, stepchild, legal ward, or a child to whom the employee stands in loco parentis), a parent (whether biological, adoptive, foster, stepparent, legal guardian of employee or his/her spouse/registered domestic partner, or person who stood in loco parentis when employee was a child), a spouse, a registered domestic partner, a grandparent, a grandchild, or a sibling. "Sick leave" is defined as paid time taken for any of the purposes that are contained in Section 246.5(a) of the Healthy Workplaces, Healthy Families Act of 2014, which includes paid sick time for the illness of family members (like under the old statute), as well as the employee's own illness.

Significantly, S.B. 579 strikes the provision of the kin care law that expressly allowed employers to place conditions and restrictions on the use of employee of sick leave (e.g., the ability to request doctor's notes or similar certification from the employee using sick leave for the stated purposes). The amendment also adds that an employer shall not deny an employee the right to use sick leave or to discharge, threaten to discharge, demote, suspend, or in any other manner discriminate against an employee for using, or attempting to exercise the right to use, sick leave to attend to an illness or the preventive care of a family member, or for any other reason specified in section 246.5(a). (Italics emphasize the change in the statutory language). Given these changes, employers are strongly encouraged to review their policies and practices, with particular attention to the interactions between sick leave and absence control policies.

For more information on the Healthy Workplaces, Healthy Families Act of 2014, please refer to our prior posts: California Enacts New Law Mandating Paid Sick Leave for Employees and California Paid Sick Leave Law Amended, Effective Immediately. Reference can also be made to California's Sick Pay Obligations – The Healthy Workplaces, Healthy Families Act of 2014, a publication authored by Attorney Richard J. Simmons of Sheppard, Mullin, Richter & Hampton LLP, and published by Castle Publications, Ltd.

Right to Cure Certain Errors in Itemized Wages – A.B. 1506

A.B. 1506 amends the Private Attorney General Act of 2004 (PAGA) codified in Labor Code sections 2698, et seq., to require that a current or former employee give an employer notice and opportunity to cure itemized wage statements (a.k.a. pay stubs) that do not include: (1) the inclusive dates of the period for which the employee is paid; and/or (2) the correct name and address of the legal entity that is the employer. If within a 12-month period of the employee's notice to the employer, the employer provides a compliant, itemized wage statement to each aggrieved employee, it is deemed to have cured the violations. If the employer cures the violations within the 12-month time period, PAGA penalties will not be imposed for those particular violations. In order to cure the violation(s), the employer must provide fully compliant wage statements to each aggrieved employee for each pay period up to three years prior to the date of the employee's notice to the employer.

Prohibition of Discrimination Based on Immigration Status – S.B. 600

California's Unruh Civil Rights Act, provides that all persons within California are entitled to full and equal accommodations in all business establishments regardless of their sex, race, color, religion, ancestry, national origin, disability, medical condition, genetic information, marital status, or sexual orientation. S.B. 600 extends the protected categories to include citizenship, primary language, and immigration status. The amendment expressly provides that: (1) verification of immigration status and any discrimination based upon verified immigration status, where required by federal law, shall not constitute a violation of the Act and (2) nothing in the Act shall be construed to require the provision of services or documents in a language other than English, beyond that which is otherwise required by other provisions of federal, state, or local law. The legislation stems from complaints regarding the denial of services and/or access by business establishments based on, for example, the use of foreign language while in a business establishment or use of foreign identification to show proof of age.

Amnesty Program for Reclassification of Drayage Truck Drivers from Independent Contractors to Employees – A.B. 621

A.B. 621 adds section 2750.8 to the Labor Code and affects transportation companies handling drayage work – the movement of cargo from ports to warehouses and distribution centers. Section 2750.8 creates a "Motor Carrier Employer Amnesty Program," intended to encourage transportation companies handling drayage work to reclassify owner-operator truck drivers currently classified as independent contractors as employees.

Eligible transportation companies may apply to the labor commissioner for participation in the program. Companies accepted into the program will be relieved of any liability for statutory or civil penalties (e.g., PAGA penalties), associated with the alleged misclassification of truck drivers as independent contractors, if they execute a settlement agreement with the labor commissioner. If the company is denied participation in the program, the fact and contents of the company's application are not admissible to be used against the company in any legal action alleging misclassification.

Employment Protections for Grocery Workers Upon Change in Control – A.B. 359

A.B. 359 creates Labor Code sections 2500, et seq. which provides for a transitional retention period for grocery retail workers upon the change of ownership, control, or operation of a grocery establishment. The statute defines "grocery establishment" as a retail store that is over 15,000 square feet in size and that sells primarily household foodstuffs for offsite consumption, including the sale of fresh produce, meats, poultry, fish, deli products, dairy products, canned foods, dry foods, beverages, baked foods, or prepared foods. When a triggering event occurs, the statute requires that the former employer post public notice of the change in control at the location of the affected grocery establishment and create a list of all employees who have been employed by the former employer for at least six months and who are not managerial, supervisory, or confidential employees. The successor employer must: (1) hire and retain employees from the list upon the execution of the transfer document, (2) retain the employees for 90 days after the grocery establishment is fully operational and open to the public under the successor employer, (3) prepare written offers of employment that include the name, address, date of hire, and employment occupation classification of each eligible grocery worker, and (4) retain the written offers of employment for at least three years. Eligible employees cannot be terminated during the 90-day period without cause. At the end of the 90-day period, the new employer must prepare a written performance review for each employee on the list and retain the same for three years. If an employee rates satisfactory or better, the new employer must consider offering continued employment to that employee.

Employers subject to the statute may, by collective bargaining agreement, provide that the agreement supersedes the requirements of the statute.

Professional Sports Cheerleaders – A.B. 202

A.B. 202 creates Labor Code section 2754 and provides that any "cheerleader" used by a California-based professional sports team is deemed to be an employee and must be classified as an employee, no matter whether hired directly or indirectly, for all purposes concerning California law governing employment, including the Labor Code, Unemployment Insurance Code, and FEHA. "Cheerleader" is defined as someone who performs acrobatics, dance, or tumbling moves on a recurring basis. A "California-based professional sports team" is any baseball, basketball, football, ice hockey, or soccer team, at either a minor or major league level in the sport, that plays a majority of its home games in California.

Restrictions on Use of E-Verify – A.B. 622

A.B. 622 creates Labor Code section 2814 and provides that, except as required by federal law or as a condition of receiving federal funds, it shall be unlawful for an employer, or any other person or entity, to use E-Verify to check the employment authorization status of an existing employee or an applicant who has not been offered employment at a time or in a manner not required under subsection (b) of Section 1324a of Title 8 of the United States Code or not authorized under any federal agency memorandum of understanding governing the use of E-Verify. The statute expressly states that it does not prohibit an employer from utilizing E-Verify, in accordance with federal law, to check the employment authorization status of a person who has been offered employment. In addition to other remedies, the statute creates a civil penalty of $10,000 for each violation of its provisions.

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.1 Employers should consult experienced legal counsel with questions and concerns before making or implementing personnel-related decisions.


1 Further information about the laws discussed herein can also be found in the Wage And Hour Manual For California Employers, the California's Sick Pay Obligations – The Healthy Workplaces, Healthy Families Act of 2014, and the Employee Handbook And Personnel Policies Manual, authored by Attorney Richard J. Simmons of Sheppard, Mullin, Richter & Hampton LLP, and published by Castle Publications, Ltd.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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