United States: New California Labor And Employment Laws For 2016

Linda Auerbach Allderdice and James Michalski are Partners and John Haney an Associate in Holland & Knight's Los Angeles office


  • The California Legislature and Gov. Jerry Brown signed numerous labor and employment bills into law in 2015.
  • Many significant new laws related to Wage and Hour, Leave and Benefits, Discrimination/Unlawful Employment Practices, and Employee/Independent Contractor Classification become effective on Jan. 1, 2016.
  • Employers should take note of these new laws so that they may ensure compliance.

As in recent years, the California Legislature passed and Gov. Jerry Brown signed numerous labor and employment bills into law in 2015. Each become effective on Jan. 1, 2016, unless otherwise stated. This Alert highlights the following select, significant new laws in further detail below:

  • MW-2014 – IWC Minimum Wage Order – Raises minimum wage to $10 per hour
  • AB 1506 – Labor Code Private Attorneys General Act of 2004 – Permits employers to cure itemized wage statement violations
  • SB 588 – California Labor Commissioner – Judgment enforcement
  • AB 970 – California Labor Commissioner – Enforcement of employee claims
  • SB 358 – California Labor Code section 1197.5 amended to address gender pay inequality
  • AB 1513 – Modification of workers' compensation and piece rate compensation rules
  • SB 501 – New wage garnishment restrictions
  • AB 304 – Amendments to the Health Workplaces, Healthy Families Act of 2014
  • SB 579 – New protections for employees taking time off for child care and kin care
  • SB 667 – Changes to disability insurance eligibility and waiting time periods
  • AB 622 – Employer restrictions for use of federal E-Verify system
  • AB 987 – California FEHA amendment – Expands protections to employees requesting an accommodation
  • AB 1509 – Discrimination/retaliation protections extended to an employee who is a family member of employee engaging in protected activity
  • AB 359 and AB 897 – New protections for grocery employees
  • AB 202 – Cheerleaders of California's professional sports teams deemed employees, not independent contractors
  • AB 621 – Amnesty program regarding motor carrier's classification of truck drivers as independent contractors


IWC Minimum Wage Order, MW-2014 – California's Minimum Wage Increases to $10.00 Per Hour

Effective Jan. 1, 2016, California's minimum wage will increase from $9.00 per hour to $10.00 per hour, which in turn will increase the minimum salary that must be paid to exempt employees. Starting Jan. 1, 2016, the minimum annual salary for exempt status under California's wage and hour laws is $41,600.

AB 1506 – Employers Can Now Cure Itemized Wage Statement Violations Under the Labor Code Private Attorneys General Act of 2004

The Labor Code Private Attorneys General Act of 2004 (PAGA) authorizes an aggrieved employee to bring a civil action to recover specified civil penalties on behalf of the employee and other current or former employees for the violation of certain provisions affecting employees. Before the PAGA, these penalties were assessed and collected only by the California Labor and Workforce Development Agency.

PAGA provides employers with the right to "cure" certain Labor Code violations before the employee may bring a civil action, as specified in the statute. California law requires an employer to provide its employees with wage statements with enumerated types of information regarding their wages, such as the dates of the pay period and name and address of the employer.

This new law, which was enacted as an urgency statute effective Oct. 2, 2015, provides 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 PAGA action.

Under the new law, a cure is shown only if the employer has provided a fully compliant, itemized wage statement to each aggrieved employee. An employer may take advantage of the new law's notice and cure provisions no more than one time in a 12-month period for the same violation or violations set forth in the Labor & Workforce Development Agency(LWDA) notice, despite the location of the worksite.

SB 588 – California Labor Commissioner – Judgment Enforcement

The Enforcement of Judgments Law (EJL) provides for the enforcement of money judgments and other civil judgments. Under the EJL, a judgment creditor may levy upon the property of a judgment debtor, and a levying officer holds the property until the final determination of any exemptions the debtor claims. This new law allows enforcement of judgments against an employer arising from the employer's nonpayment of wages, and specifically authorizes the Labor Commissioner to use any remedies that are available to a judgment creditor, and to act as a levying officer when enforcing a judgment pursuant to a writ of execution. The new law also authorizes the Labor Commissioner to issue a notice of levy on assets owed to the judgment debtor by an account debtor.

The Labor Commissioner currently may investigate employee complaints and provide for a hearing in any action to recover wages, penalties and other demands for compensation. Civil and criminal penalties are available for violation of the general provisions governing working hours. This new law now authorizes the Labor Commissioner to provide for a hearing to recover civil penalties against any employer or other person acting on behalf of an employer for a violation of provisions regulating hours and days of work in any order of the Industrial Welfare Commission. This new law also provides that any employer or other person acting on behalf of an employer who violates, or causes to be violated, any provision regulating minimum wages or hours and days of work may be held liable as the employer.

The new law further allows, 20 days after a judgment is entered, the Labor Commissioner to collect any outstanding amount of the judgment by mailing a notice of levy upon all persons having in their possession any money or property belonging to the judgment debtor, or owed to the judgment debtor. The new law makes any person noticed with a levy who fails or refuses to surrender any credits, money or property, or refuses to pay any debts owed to the judgment debtor liable in his or her own person or estate to the Labor Commissioner in an amount equal to the levy.

Additionally, if a final judgment against an employer arising from the employer's nonpayment of wages remains unsatisfied after any appeal rights have expired, an employer may not continue to conduct business in California unless the employer has obtained a bond and has filed a copy of that bond with the Labor Commissioner. The new law also makes an employer conducting business without satisfying the bond requirement subject to a specified civil penalty. Subject to required prior notice, the new law authorizes the Labor Commissioner to create a lien on any real or personal property in California of an employer that is conducting business without satisfying the bond requirement for the full amount of any wages, interest and penalties claimed to be owed to an employee. Also, an employer in violation of the bond requirement may be subject to a stop order from the Labor Commissioner disallowing use of labor until compliance is obtained. The failure to comply with such a stop order is deemed a misdemeanor.

As an alternative to the bond requirement, the new law authorizes the employer to provide the Labor Commissioner with a notarized copy of an accord reached with an individual holding an unsatisfied final judgment.

Current law generally provides for the licensure and regulation of various types of long-term care facilities. If a final judgment against an employer arising from the employer's nonpayment of wages remains unsatisfied after the time to appeal has expired, an employer in the long-term care industry may be denied a new or renewed operating license if the employer fails to obtain a necessary bond. The new law also requires any individual or business entity that contracts for services in the property services or long-term care industries to be jointly and severally liable, to the extent of the contract amount, for any unpaid wages where the individual or business entity has been provided notice.

AB 970 – California Labor Commissioner – Enforcement of Employee Claims

Upon a request from the local entity, this new law authorizes the Labor Commissioner to investigate and enforce local laws regarding overtime hours or minimum wage provisions and to issue citations and penalties for violations in place of the local entity.

This new law also authorizes the Labor Commissioner to enforce Labor Code provisions requiring an employer to indemnify employees for all that the employee necessarily expends or loses in direct consequence of the discharge of the employee's duties. The Labor Commissioner may issue citations and penalties for violations of this requirement. Also, the new law provides aggrieved employees a private right of action against their employer for recovery of such expenses or losses.

SB 358 – California Labor Code Section 1197.5 Amended to Address Gender Pay Inequality

Prior law prohibited 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 on jobs the performance of which requires equal skill, effort and responsibility, and which are performed under similar working conditions. This new law revises that prohibition to eliminate the requirement that the wage differential be within the same establishment and, instead, prohibits an employer from paying any of its employees at wage rates less than those paid to employees of the opposite sex for substantially similar work, when viewed as a composite of skill, effort and responsibility, as specified by the new law.

Also, prior law established exceptions to the rule where the payment is made pursuant to a seniority system, a merit system, a system which measures earnings by quantity or quality of production or a differential based on any bona fide factor other than sex. The revised law now requires the employer to demonstrate affirmatively that a wage differential is based upon one or more specified factors, including a seniority system, a merit system, a system that measures earnings by quantity or quality of production or a bona fide factor other than sex, as specified. The law also requires the employer to demonstrate that each factor relied upon is applied reasonably, and that the one or more factors relied upon account for the entire differential.

Additionally, this law prohibits an employer from discharging, discriminating or retaliating against any employee for any action taken by the employee to invoke the protections of this law. The law authorizes an aggrieved employee who has been discharged, discriminated or retaliated against to sue for lost wages and work benefits and to obtain appropriate equitable relief.

The new law also prohibits an employer from disallowing employees 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 these provisions. Finally, the duration of employer record keeping requirements for information regarding wages and wage rates, job classifications, and other terms and conditions of employment of the persons employed by the employer is expanded from two years to three years.

AB 1513 – Modification of Workers' Compensation and Piece Rate Compensation Rules

Current law establishes a workers' compensation system, administered by the Administrative Director of the Division of Workers' Compensation, to compensate an employee for injuries sustained in the course of his or her employment. This law deletes certain obsolete workers' compensation study requirements that had been assigned to the Division.

Current law already prohibits an employer from requiring an employee to work during any meal or rest or recovery period mandated by an applicable statute or specified regulation, standard or wage order. Current law also establishes a premium pay requirement for an employer's failure to provide a mandated meal or rest or recovery period, and requires rest or recovery periods to be counted as hours worked. The new law requires that the itemized wage statement provided to employees compensated on a piece-rate basis must also separately state the total hours of compensable rest and recovery periods available under law, the rate of compensation, the gross wages paid for those periods during the pay period, and the total hours of other nonproductive time, the rate of compensation and the gross wages paid for such time during the pay period. The new law defines "other nonproductive time" to mean 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. The new law also requires employees to be compensated for rest and recovery periods and other nonproductive time at or above specified minimum hourly rates, separately from any piece-rate compensation.

The new law contains a safe-harbor provision, which provides that, until Jan. 1, 2021, employers can maintain an affirmative defense to any claim or cause of action arising from the employer's failure to timely pay employees for rest and recovery periods, and other nonproductive time for time periods prior to and including Dec. 31, 2015, if, by no later than Dec. 15, 2016, the employer complies with certain requirements set forth in the new law.

SB 501 – New Wage Garnishment Restrictions

The existing Wage Garnishment Law prescribes the procedure for withholding an employee's earnings for purposes of paying a debt. The law requires that a levy of execution upon the earnings of an employee be made by service of an earnings withholding order upon the employer.

Current law prohibits the amount of an individual judgment debtor's weekly disposable earnings subject to levy under an earnings withholding order from exceeding the lesser of the following:

  1. 25 percent of the individual's weekly disposable earnings
  2. the amount by which the individual's disposable earnings for the week exceeds 40 times the state minimum hourly wage in effect at the time the earnings are payable, as specified, unless an exception applies

Starting July 1, 2016, this new law reduces the prohibited amount of an individual judgment debtor's weekly disposable earnings subject to levy from exceeding the lesser of the following:

  1. 25 percent of the individual's weekly disposable earnings
  2. 50 percent of the amount by which the individual's disposable earnings for the week exceeds 40 times the (i) state minimum hourly wage or (ii) applicable local minimum hourly wage, if higher, in effect at the time the earnings are payable


AB 304 – Amendments to the Health Workplaces, Healthy Families Act of 2014

The Healthy Workplaces, Healthy Families Act of 2014 provides, among other things, that an employee who works in California for 30 or more days within a year from the commencement of employment is entitled to paid sick days for prescribed purposes, to be accrued at a rate of no less than one hour for every 30 hours worked. This new law requires that the employee work for the same employer for 30 or more days within the previous 12 months in order to qualify for accrued sick leave. This new law also makes a necessary adjustment for retired annuitants of a public entity. The new law further authorizes an employer to provide for employee sick leave accrual on a basis other than one hour for each 30 hours worked, provided that the accrual is on a regular basis and the employee will have 24 hours of accrued sick leave available by the 120th calendar day of employment.

Existing law entitles an employee to use accrued paid sick days beginning on the 90th day of employment, permits an employer to limit an employee's use of paid sick days to 24 hours or three days in each year of employment and requires an employer to provide an employee with written notice of the amount of paid sick leave available, or paid time off leave an employer provides in lieu of sick leave, as specified. Existing law also provides that an employer is not required to provide additional paid sick days if the employer has a paid leave policy or paid time off policy, the employer makes available an amount of leave for specified uses, and the policy either satisfies specified accrual, carry over and use requirements or provides no less than 24 hours or three days of paid sick leave for each year of employment or calendar year or 12-month basis.

This new law allows an employer to limit an employee's use of paid sick days to 24 hours or three days in each year of employment, a calendar year or a 12-month period. The new law also permits an employer who provides unlimited sick leave to its employees to satisfy notice requirements by indicating "unlimited" on the employee's itemized wage statement. The new law provides that if the employee receives a different hourly rate when the accrued sick leave is taken, the rate of pay would be calculated in the same manner as the regular rate of pay for purposes of overtime. The new law also provides an employer is not required to reinstate accrued paid time off to an employee who is rehired within one year of separation from employment if that accrued time off was paid out already at the end of the employment. The law provides that an employer is not required to provide additional paid sick days if the employer has a paid leave policy or paid time off policy and the policy satisfies specified accrual, carry over and use requirements of existing law.

Current law requires an employer to keep records for three years documenting the hours worked and paid sick days accrued and used by an employee and to make those records available to the Labor Commissioner upon request. This new law provides that the employer has no obligation to inquire into or record the purposes for which an employee uses sick leave or paid time off.

SB 579 – New Protections for Employees Taking Time Off for Child Care and Kin Care

This new law creates new protections for employees taking time off work for child care and kin care. Previously, employers with 25 or more employees working in the same place were prohibited from discriminating against an employee parent, guardian or grandparent having custody of a child for taking off up to 40 hours per year for participating in school activities at a licensed child day care facility, kindergarten or grades one through 12. Specifically, the new law replaces references to "child day care facility" with "child care provider," a more expansive term. The new law allows employee to additionally take time off work to: (1) address a child care provider emergency, (2) address a school emergency, or (3) enroll or reenroll a child in a school or with a child care provider. Furthermore, the new law expands the definition of "parent" to include not just a parent, guardian or grandparent, but also a stepparent, foster parent or a person who stands in loco parentis to a child. Employers may still request employees to provide documentation regarding protected activities.

The new law also expands protections for employees tending to the illness of relatives. Existing law requires employers to allow employees to use accrued sick leave to attend to the illness of a child, parent, spouse or domestic partner, and forbids employers from discriminating against employees for using or attempting to use sick leave for these purposes. The new law expands uses for sick leave to conform to the uses specified in the Healthy Workplaces, Healthy Families Act of 2014. That law requires employers to provide paid sick leave for victims of domestic violence, the diagnosis, care or treatment of an existing health condition of, or preventative care for, the employee or the employee's "family member," as defined by the Healthy Workplaces, Healthy Families Act of 2014. Accordingly, "family member" means the employee's child (biological, adopted, stepchild, legal ward or child to whom the employee stands in loco parentis), biological parent, foster parent, stepparent, legal guardian, person who stood in loco parentis when the employee was a minor child, spouse, registered domestic partner, grandparent, grandchild and sibling.

SB 667 – Changes to Disability Insurance Eligibility and Waiting Time Periods

Under current law, an individual who is disabled may receive benefits equal to 1/7 of the individual's weekly benefit amount for each full day during which the individual is unemployed because of a disability if the Director of Employment Development makes findings such as that the individual has been unemployed and disabled for a consecutive seven-day waiting period during each disability benefit period. This new law waives the seven-day waiting period when an individual already served the seven-day waiting period for an initial disability benefits claim when the individual files a subsequent claim for disability benefits for the same or related condition within 60 days after the initial disability benefit period.

Furthermore, under current law, when an individual receives two disability benefits periods because of the same or related condition and separated by 14 days or fewer, this is considered "one" disability benefit period. The new law extend the 14-day period to 60 days, thereby making it easier for an individual to establish that two separate disability claims are considered "one" disability benefit period.


AB 622 – Employer Restrictions for Use of Federal E-Verify System

Under current law, an employer may use the federal E-verify system to verify that hired employees are authorized to work in the United States. This new law would expand the current definition of an unlawful employment practice to prohibit an employer or other person or entity from using the E-verify system at a time or in a manner not required by federal law or by a federal agency memorandum of understanding to check employment authorization of an applicant who has not received an offer of employment, except as required by federal law or as a condition of receiving federal funds.

Furthermore, the new law requires employers that use the E-verify system to notify the affected employee of any notification from the Social Security Administration or the U.S. Department of Homeland Security with information about the applicant's E-verify case or any tentative non-confirmation notice. The new law provides for a civil penalty of $10,000 for each employer violation of the new law's provisions.

AB 987 – California FEHA Amendment to Expand Protections to Employees Requesting an Accommodation

This new law amends the California Fair Employment Housing Act (FEHA) to add a new protected activity. Specifically, the new law prohibits an employer or other covered entity from retaliating or otherwise discriminating against an employee requesting an accommodation of his or her disability or religious beliefs, despite whether the accommodation request was granted.

AB 1509 – Discrimination/Retaliation Protections Extended to an Employee Who Is a Family Member of Employee Engaging in Protected Activity

Current law prohibits employers from discriminating against employees or employment applicants for engaging in protected activities. This new law extends these protections to an employee who is a family member of a person who engaged in, or was perceived to engage in, protected conduct or made a complaint protected by specific whistleblowing provisions, including California Labor Code sections 98.6 (employee complaints with the California Labor Commissioner), 1102.5 (employee complaints made to the employer or government regarding violations of law), and 6310 (employee complaints made about unsafe working conditions). The civil penalty for an employer's violation of these provisions is $10,000 per violation.

AB 359 and AB 897 – New Protections for Grocery Store Employees

AB 359 requires an incumbent grocery employer that owns, controls or operates a "grocery establishment," upon a change in control of a grocery establishment, to prepare a list of eligible grocery workers for the successor grocery employer, and requires the successor grocery employer to hire from this list during a 90-day transition period. Eligible grocery workers include individuals whose primary place of employment is at the grocery establishment subject to a change in control, and who have worked for the incumbent grocery employer for at least six months prior to the execution of the transfer document. Managerial, supervisory or confidential employees are not eligible.

The new law requires the successor grocery employer to retain eligible grocery employees for a 90-day period, and prohibits the successor grocery employer from firing those employees without cause during the 90-day period, and at the end of the 90-day period, requires the successor grocery employer to consider offering continued employment to those eligible employees. The new law does not apply to grocery employers located in any specified "food deserts." The new law's requirements may be superseded by a collective bargaining agreement.

Under AB 359, "grocery establishment" means a retail store in California 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.

AB 897, a very limited law, added that the definition of a "grocery establishment" does not include a retail store that has ceased operations for six months or more.


AB 202 – Cheerleaders of California's Professional Sports Teams Must Be Deemed Employees, Not Independent Contractors

This new law mandates that California-based professional sports teams using cheerleaders during its exhibitions, events or games must classify such cheerleaders as "employees" rather than "independent contractors."

AB 621 – Amnesty Program Regarding Motor Carrier's Classification of Truck Drivers as Independent Contractors

This new law establishes the "Motor Carrier Employer Amnesty Program," by which a motor carrier performing drayage services may be relieved of statutory and civil penalties associated with misclassification of commercial drivers as "independent contractors" if the motor carrier enters into a settlement agreement with the California Labor Commissioner, with the consent of the California Employment Development Department, before Jan. 1, 2017. To take advantage of the program, the motor carrier must agree to convert all of its commercial drivers to "employees" and the settlement agreement must provide, among other things, that the motor carrier pay all wages, benefits and taxes owed, if any. The new law allows the Labor Commissioner and Employment Development Department to recover reasonable, actual costs for their review, approval and compliance monitoring of the settlement agreement. In order to be eligible for the amnesty program, the motor carrier must not (1) have any civil lawsuit, filed on or before Dec. 31, 2015, pending against it in a state or federal court that alleges or involves a misclassification of a commercial driver or (2) have had a final imposition of certain penalties against it.

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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