United States: California Legislative Update: Proposals Include PAGA Reform, Salary History Limitations, And Equal Pay Expansion

Last Updated: March 2 2016
Article by Christopher E. Cobey

The pace of employment legislative activity in Sacramento picked up as February drew to a close. The following highlights some of the more notable issues under consideration in the Golden State.

PAGA Reform?

As part of Governor Jerry Brown's annual budget message, his administration included a 22-page "Budget Change Proposal" that would increase staffing to provide enhanced Department of Industrial Relations oversight over what has become as many as 643 notices a month of potential Private Attorneys General Act (PAGA) claims.  Included in that portion of the proposal is a suggested nine-page bill to amend PAGA. The proposal would accomplish the following:

  • Require more detail in the PAGA claim notices filed with the Labor & Workforce Development Agency (LWDA) and require that claims for 10 or more employees be verified and accompanied by a copy of the proposed complaint.
  • Extend the LWDA's time to review PAGA notices from 30 to 60 days, and specify that employers may submit a request for the LWDA to Investigate a PAGA claim.
  • Require PAGA notices and employer responses to be submitted online and accompanied by a filing fee.
  • Extend the time for the LWDA to investigate an accepted claim from 120 to 180 days.
  • Require the Director of Industrial Relations (DIR) to be served with a copy of the complaint when a PAGA case is filed.
  • Require court approval of all PAGA case settlements, and require that the Director of DIR be provided with notice and an opportunity to object before the court determines whether to approve a settlement.
  • Create a separate procedure through which interested parties may ask the Director of DIR to establish a temporary amnesty and safe harbor program to provide expedited back wage payments to employees and penalty relief to employers following the invalidation of a widespread industry practice (similar to Assembly Bill 1513, Chapter 754, Statutes of 2015).

The significance of these proposed changes spurred an employment plaintiffs' bar association to call for the administration to assess the practical effects of the most recent PAGA reforms implemented last month before considering new PAGA reforms.

Other Early Major Proposals

  • AB 908 would expand of the scope of California's paid sick leave law to increase, from 55% of their salary, to 70%, the benefits paid to those working near the minimum wage.  The measure, sponsored by the chair of the Assembly Appropriations Committee, may be fast-tracked for early passage.
  • AB 2879 would expand existing employment discrimination protections for military service veterans by including within the law's prohibitions any attempt by an employer to impose mandatory arbitration as a condition of hiring or continued employment.  The provision is similar to the near-universal mandatory arbitration prohibition contained in AB 465.  That bill was passed by the Legislature last year, but vetoed by Governor Brown, who added an unusually detailed message explaining the rationale for his veto.
  • SB 1063 would further expand the scope of the recently expanded equal pay statute (Labor Code § 1197.5) to include prohibitions against pay on the basis of race or ethnicity.
  • AB 1727, currently a spot bill,1 will be amended to create the 1099 Employees Self-Organizing Act, allowing workers who are not employees to organize and bargain collectively with the entities that use their services.

The Democratic members of the California Women's Legislative Caucus announced a package of bills they would be backing in 2016.  The topics related to private sector employment law include:

  • SB 1166, which would expand current parental leave for employees of smaller employers by ensuring that new parents working for an employer with five or more employee have a right to up to three months of job-protected leave while caring for a new child.
  • AB 1676 would prohibit an employer, including state and local government employers, from seeking salary history information about an applicant for employment, except as otherwise provided. The bill would require private sector employers, upon a job applicant's reasonable request, to provide the pay scale for a position.
  • SB 878, another spot bill, would create "The Reliable Scheduling Act," which would, according to sponsor Senator Connie Leyva, "create certainty for workers and employers by giving employees adequate advance notice of their schedule so they may better plan their lives. This proposal would make California one of the first states in the nation to recognize the importance of reliable schedules for workers while also meeting the day-to-day needs of businesses."  The bill's content is expected to be substantially similar to AB 357 ("Fair Scheduling Act of 2015").

Employment Bills to Watch

  • AB 67 would enact the Double Pay on the Holiday Act of 2016, which would require an employer to pay at least two times the regular rate of pay to an employee at retail and grocery establishments, except employees in specified categories, for work on a family holiday.
  • AB 1233 would provide that a public subsidy is de minimis for the purpose of exempting from the definition of "public works" an otherwise private development project if the state or political subdivision provides, directly or indirectly, a public subsidy to the private development project that is de minimis in the context of the project, if it is both less than $250,000 and less than 2% of the total project cost. The bill would specify that those provisions do not apply to a project that was advertised for bid, or a contract that was awarded, before July 1, 2017.
  • AB 1669 would add employees of solid waste collection and transportation contractors and subcontractors to "displaced employees" provisions that require subsequent contractors to retain, for a minimum specified period of time, employees of a predecessor contractor or subcontractor.

An Early (But Anticipated) Casualty

  • SB 368 would have enacted the California Workplace Flexibility Act of 2016. The bill would have permitted an individual, nonexempt employee to request an employee-selected flexible work schedule providing for workdays up to 10 hours per day within a 40-hour workweek, and would have allowed the employer to implement this schedule without the obligation to pay overtime compensation for those additional hours in a workday. The bill would have prescribed a method for calculating the payment of overtime for hours worked in excess of the permitted amounts, and would establish requirements for termination of these agreements. The bill would have excepted from its provisions employees covered by collective bargaining agreements and public employees. The bill would have required the Division of Labor Standards Enforcement to enforce this provision and adopt regulations. The bill has been proposed by Republicans more than a dozen times in the past decade, has been strongly opposed by labor as a threat to the eight-hour workday, and has always been voted down by the Democratic majority, usually in committee.  The Senate Labor and Industrial Relations Committee failed to pass this measure out of committee.

Direct Legislation

The November 8, 2016, general election ballot shows promise of having more initiatives on it than at any time in the last 20 years.  So far, four initiatives and one referendum have qualified for the ballot, 64 initiatives and referenda have been cleared for circulation, 10 proposed ballot measures are in circulation to obtain the required number of signatures to be placed on the ballot, and 9 more proposals are being vetted by the Attorney General's office for circulation.  At least 20 proposals relate to marijuana.

On employment issues, there will probably be at least two proposals on the ballot to raise the minimum wage, and one requiring participants in adult films to wear condoms.

There will also be a referendum on a previously-passed statute that banned single-use plastic bags.

The 2016 legislative calendar

February 19 was the last official day for bills to be introduced in the California Legislature this term.  However, it is not uncommon to see what are essentially new bills appear within the weeks prior to adjournment, based upon waivers of procedural rules by at least the majority. The 2016 legislative schedule includes recesses from March 19 through 27 and July 1 through 31.

This year's legislative session must adjourn by August 31, 2016.  The Governor will have until September 30 to sign or veto bills passed at the end of the session.


1. "A bill that amends a code section in a nonsubstantive way. A spot bill may be introduced to ensure that a germane vehicle will be available at a later date...." (http://www.legislature.ca.gov/quicklinks/glossary.html) 

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Christopher E. Cobey
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