United States: 2016 California Labor And Employment Legislation Update: The End (of Session) Is Near…

Seyfarth Synopsis: The California Legislature sent a number of employment bills to the Governor, including bills that would expand the Fair Pay Act to race and ethnicity and prohibit salary history inquiries; require overtime pay for agricultural workers, extend family leave protections to employees of small businesses, and much more! We will update you on what received the Governor's approval after his for September 30 deadline.

The California Legislature adjourned in the wee hours yesterday, Wednesday, August 31st, having reviewed over 100 bills in the single day, bringing the second half of the 2015-2016 Legislative Session to a close. Several employment-related bills have been sent to Governor Jerry Brown for his consideration by the September 30th deadline to either veto or sign the bills. Below is a summary of what made the Legislative cut, bills the Governor has already signed, and those that did not make it to his desk. Of particular interest, bills that would have doubled pay for large grocery and retail employees on Thanksgiving did not pass the legislature, while bills allowing overtime pay for agricultural employees and expanded parental leave are in the Governor's hands. Which bills will further complicate our already peculiar California laws? Stay tuned...

PENDING BILLS

Fair Pay Act: Prior Salary. AB 1676 would prohibit employers from considering prior salary to justify any disparity in compensation. Before the amendments, the bill would have prohibited employers from seeking an applicant's salary history information just as its predecessor, AB 1017, attempted to do last year. In vetoing AB 1017, Governor Brown stated that we should wait and see whether last year's momentous Fair Pay Act, SB 358, addressed the pay equity issue before making further changes. Has one year been enough time for the Governor to believe the Fair Pay Act has or has not been effective? Will he think it is time to keep up with other governments that have recently pursued similar legislation? On August 2, 2016, Massachusetts passed a law prohibiting Massachusetts employers from requesting the compensation history of a prospective employee prior to making an offer, unless the prospective employee has "voluntarily" disclosed such information; and on August 16, the New York City Council followed suit, introducing a bill that would prohibit employers from inquiring about a prospective employee's salary history on a job application, or at any other stage in the employment process.

Fair Pay Act: Race/Ethnicity. SB 1063 seeks to expand the provisions of last year's Fair Pay Act — at the time the strictest gender pay equity law in the country — to race and ethnicity, and responds to critics of the Fair Pay Act that the pay equity issue is not limited to gender. Specifically, it would prohibit employers from paying employees a wage less than the wage paid to employees of a different race or ethnicity for substantially similar work. This bill would also make the prior salary prohibition change proposed in AB 1676 if both bills are signed by the Governor and this bill is signed last. If AB 1676 is not signed into law, this bill would not incorporate the prior salary prohibition.

Parental Leave. SB 654 would, beginning January 1, 2018, significantly expand California's parental leave laws by requiring employers with 20 to 49 employees to provide up to six weeks of job-protected parental leave to bond with a new child within one year of the child's birth, adoption, or foster care placement. Existing law, the California Family Rights Act (Gov. C. § 12945.2), applies only to employers with 50 and greater employees, and provides for at least 12 weeks of job-protected parental leave. This bill — dubbed the "New Parent Leave Act"— would impose many of the same requirements as CFRA: to be eligible, an employee must have worked 1250 hours in the preceding 12-month period; the employer must guarantee reinstatement of the employee to the same or comparable employment at the conclusion of the leave; the employee is entitled to use accrued paid time off during the time off; and the employer must maintain and pay for coverage under a group health plan for employees while taking this leave. This bill applies to private and state and local government employers except for school districts, county offices of education, and community college districts. SB 654 was given new life as a mellower gut and amend version of SB 1166, which failed to pass in committee in June.

Agricultural Workers. AB 1066. AB 2757 failed to pass the house of origin in June. Undeterred, author Assembly Member Lorena Gonzales resurrected it with that handy legislative "gut and amend" trick, putting its contents into a bill formerly relating to educational employees. On August 30, the much-publicized AB 1066 was sent to Governor Brown's desk, where it currently awaits his action. The bill would delete an exemption for agricultural workers from the entire chapter of the Labor Code relating to working hours, and enact the "Phase-In Overtime for Agricultural Workers Act of 2016", which would require employers to pay agricultural workers overtime over a four-year phase-in process. Beginning January 1, 2019, employers would be required to pay overtime for any hours worked above 9.5 hours per day or 55 hours per workweek. Each year the hours worked triggering overtime pay will reduce, until reaching 8 hours per day, 40 hours per week beginning January 1, 2022. Also beginning on January 1, 2022, any employee who works over 12 hours per day must be paid at a rate no less than double his or her regular rate of pay. The Governor may temporarily suspend the scheduled overtime requirement but only if the minimum wage increases are suspended as well. Employers that employ 25 or fewer employees are given an extra three years to comply with the phase-in and must begin paying overtime by January 1, 2022.

Property Service Workers. AB 1978 would create the Property Services Workers Protection Act by establishing various requirements for the janitorial industry, including registering annually with the DLSE, to protect janitorial employees from wage theft and sexual harassment. The provisions of this bill would apply to employers that employ at least one or more "covered workers" that enter into a contract, subcontract, or franchise agreement to provide janitorial services. This bill would also require the DLSE to maintain a database of property service employers and to develop a biennial sexual harassment and violence prevention training. This bill would also prohibit an employer from registering or renewing its registration if it has not fully satisfied any final judgment for unpaid wages or made appropriate tax contributions. "Successor employers" would also liable for any wages and penalties owed to the predecessor's employees.

Minimum Wage Violation Challenges. AB 2899 would require that any employer, prior to filing an appeal of a decision by the Labor Commissioner relating to a violation of wage laws, file a bond with the Labor Commissioner that covers the total amount of any minimum wages, liquidated damages, and overtime compensation owed. The bill would require that the bond be issued in favor of the unpaid employees. The bill would also provide that the total amount of the bond would be forfeited to the employee if the employer fails to pay the amounts owed within 10 days from the conclusion of the proceedings.

Criminal History. AB 1843 would prohibit employers from asking an applicant for employment to disclose any information regarding juvenile convictions. The bill would also prohibit employers from seeking or utilizing any information related to juvenile arrests, detentions, or court dispositions as a factor in their employment determination. The bill does specify that an employer at a health facility can inquire into an applicant's juvenile criminal background if a juvenile court made a final ruling or adjudication, that the applicant had committed a felony or misdemeanor relating to sex crimes or certain controlled substances crimes within five years prior to applying for employment. Still, these employers cannot inquire into an applicant's sealed juvenile criminal records. Read more about existing California law on background checks here.

Transportation Network Companies, Background Checks: AB 1289 would require a transportation network company ("TNC"; i.e., Uber) to conduct, or have a third party conduct, criminal background checks on each participating driver. This bill follows a 2014 lawsuit that accused TNC's of misleading customers by suggesting their background checks were the toughest in the industry. The bill would also prohibit an TNC from contracting with a driver who is currently registered on the DOJ's National Sex Offender Public Website; has been convicted of specified felonies within the past seven years; and/or has been convicted, within the past seven years, of misdemeanor assault or battery, domestic violence, or driving under the influence of drugs or alcohol.

DLSE Enforcement. AB 2261 would provide the Department of Labor Standards Enforcement (DLSE) with new independent authority to, with or without an employee complaint, bring an action against an employer who it suspects may have terminated or otherwise discriminated against an employee in violation of any law under the jurisdiction of the Labor Commissioner. The authors of this bill argue that despite laws providing employees protection and encouragement to report abuse, the reality is that many workers do not report out of fear of losing their jobs. AB 2261 builds upon AB 970, which the Governor signed into law last year, and which we wrote about here.

Unfair Immigration-Related Practices. SB 1001 is a redux of 2015's AB 1065, which was held in committee (and which we reported here). SB 1001, like AB 1065, would make it an unlawful employment practice to request more or different documents than required under federal law to verify that an individual is not an unauthorized immigrant, or to refuse to honor documents tendered that on their face reasonably appear to be genuine, refuse to honor documents or work authorization based on specific status or term that accompanies the authorization to work, or to attempt to reinvestigate or re-verify an incumbent employee's authorization to work using an unfair immigration-related practice. Assembly amendments have removed this year's bill provision that would have allowed a private right of action for job applicants and employees who suffer an "unfair immigration-related practice." Instead, those job applications and employees can file a complaint with the DLSE for enforcement. The bill provides that a violation of these provisions could result in a penalty of up to $10,000.

Employment Protections. AB 2337 this bill would expand the notice requirement employers must give their employees regarding domestic violence protections. Specifically, this bill provides that an employer must inform each new employee, and to other employees upon request, of the rights protecting employees affected by domestic violence in writing.

Employment Contracts—Choice of Law and Forum. SB 1241 would allow an employee to void a contract provision that requires the employee to adjudicate a claim outside of California, or require the employee to waive their protections under California law. Specifically, this bill prohibits an employer from requiring an employee, who resides and works in California, as a condition of employment, to agree to a provision that would either require the employee to adjudicate outside of California a claim arising in California or deprive the employee of the protection of California law with respect to a controversy arising in California. The bill also provides that any contract that violates these provisions is voidable by the employee. A court may award an employee reasonable attorney's fees, among other remedies, for enforcing his or her rights under the act. This bill would not apply to employee who are represented by legal counsel during the contractual negotiations.

Employment of Minors, Agricultural Packing Plants. SB 702 would extend a Lake County-specific exemption of child labor law that allows minors to work during the peak agricultural season when school is not in session.

BILLS SIGNED BY THE GOVERNOR

Paid Family Leave Expansion. AB 908, which the Governor signed on April 11, 2016, increases the amount of benefits paid to employees on paid family leave and state disability leave. Read our report on AB 908 here.

Talent Services. AB 2068 updates the Talent Service Act's existing communication and contractual protections to include new technologies, such as mobile applications. Specifically, AB 2068 updates the protections for an artist's information or image to include information posted on an online service, online application, mobile application, or website. AB 2068 also updates the communication and advertisement protections between talent agencies and artists by including communication through the use of a telecommunication device, in print, on the Internet, or through the use of a mobile or online application or other electronic communication. AB 2068 also adds "text message" and other "electronic communication" to the list of methods by which an artist may ask for photographs and other information about the artist be removed from a Web site, online service, online application, or mobile application owned or serviced by the talent service.

Work Experience Education. AB 2063 provides an additional option for a student, at least 14 years old, to participate in work experience education. The bill also increases the number of hours per week a student may participate in job shadowing from 25 to 40 hours per semester if the principal of the school where the student is enrolled certifies that it is necessary for the student's participation in a career technical education program.

Itemized Wage Statements. AB 2535 comes on the heels of the recently decided federal case, Garnett v. ADT, LLC, and clarifies Labor Code section 226. This bill specifies that employers are not required to list the number of hours worked on wage statements for any exempt employee whose compensation is solely based off of salary and the employee is exempt from overtime wages.

BILLS THAT DIDN'T MAKE THE CUT (i.e., "it coulda been worse")

Double Pay on the Holiday—2016 Edition. The Double Pay on Holiday Act of 2015 failed to make its way to the Governor for the second year in a row. AB 67 would have required retail and grocery store establishments, as well as restaurants located within them, to pay at least twice the regular rate of pay for employees who work on Thanksgiving.

Employee Time Off. AB 2405 would have required an employer to provide an employee at least eight hours annually of paid, job-protected, time off for an absence under the Family School Partnership Act. This bill came on the heels of SB 579, chaptered in 2015, which expanded the authorized reasons an employee can take job-protected time off under the Act and specified the definition of 'family member" under California's Kin Care. Read our report on SB 579 here.

Work Hours. SB 878 was similar to AB 357, the Fair Scheduling Act of 2015, which did not make it out of the Assembly. SB 878, the Reliable Scheduling Act of 2016, would have required that restaurant, grocery, and retail employers provide non-exempt employees with a 21-day work schedule in advance of their first shift on that work schedule. SB 878 would have required at least seven days advance notice. SB 878 would have required employers to pay "modification pay"—defined as compensation in addition to regular pay (the hourly rate calculated based upon 90 days prior)—if any scheduled shift is canceled, moved, or added, and for each shift for which an employee is required be on call but is not called into work.

California Workplace Flexibility Act. SB 985, SB 368's predecessor, would have allowed employees to submit a written request for a flexible work schedule of up to four 10-hour days per week without obligating the employer to pay overtime for the 9th and 10th hours worked per day. The employer would have still been obligated to pay overtime for any hours worked over 10 hours per workday or 40 hours per workweek.

Meal and Rest or Recovery Periods. AB 1948 would have provided a statutory remedy for an employer's failure to provide a meal or rest or recovery period. The bill would have specified that the entire "penalty amount" was an additional hour or pay for each day that a meal or rest or recovery period was not provided to the employee.

Employee Safety. AB 2895 would have required an employer to keep at each worksite with three or more employees a complete, updated copy of the currently required written injury prevention program and make it available for inspection by any employee or by the Division of Occupational Safety and Health upon request. This bill also required an employer to inform each employee of the availability, and employee's rights, to inspect and receive a copy of the written injury prevention program. Additionally, an employer that received a written request for a copy of the injury prevention program would have to comply within a specified timeframe. The bill would have also entitled the employee to injunctive relief if the employer did not timely respond to the request.

Employment Arbitration Agreements Discrimination. AB 2879, the "Service Member Employment Protection Act," brings back the language of 2015's AB 465, which the Governor vetoed (read our summary here), but would have limited the application to military service members, similar to USERRA. Specifically, the bill would have prohibited employers from requiring service members to waive any Labor Code protections, including the right to file and pursue a civil action or complaint, and would have prohibited employers from requiring service members to accept private arbitration, as a condition of employment, unless the waiver was voluntary.

Human Trafficking Training. AB 1595 would have required public and private mass transportation providers (bus, train, light rail, etc.) to provide human-trafficking training to their employees who are likely to interact with victims of human trafficking. AB 1942 would have required the same training but is specific to hotels and motels that provide lodging services.

Sexual Offenses Against Minors. AB 2199 would define a two-year sentence enhancement where a defendant who committed a sex crime against a minor held a position of authority over the minor. The bill specifically provided that a person in a "position of authority" included, but was not limited to, a stepparent, foster parent, partner of the parent, youth leader, recreational director, athletic manager, coach, teacher, counselor, therapist, religious leader, doctor, or employer, or employee of one of the aforementioned persons.

PAGA. AB 1317. This bill expanded on last year's bill, AB 1506, which was signed by the Governor, that gave employers a limited right to cure certain wage-statement violations before an aggrieved employee could sue under PAGA. This bill would have provided an employer a right to cure any violation of the Labor Code before an employee could sue and would have provided an appropriation to the Labor and Workforce Development Agency to establish new positions to review and investigate PAGA cases. This bill was stuck in the Senate committee on rules.

PAGA Reform. None of the bills in this year's five-bill Private Attorneys' General Act (PAGA) reform package made it out of the Assembly. Those bills were:

  • AB 2461 would have limited violations an aggrieved employee was authorized to bring and required specific procedures before bringing an action.
  • AB 2462 would have provided employers with a right to cure before an employee brought a civil action.
  • AB 2463 would have established a penalty cap of $1,000 for each aggrieved employee.
  • AB 2464 would have authorized a court to dismiss an action if the court found the aggrieved employee suffered no appreciable physical or economic harm.
  • AB 2465 would have required the Labor and Workforce Development Agency to investigate alleged violations and determine if there was a reasonable basis for a civil action.

Independent Contractors. AB 1727 would have established rights for independent contractors to organize and negotiate with "hosting platforms." This bill would have provided a right for independent contractors to engage in "group activities" in an effort to negotiate through activities such as withholding work and boycotting or critiquing. The bill would authorize an independent contractor or a representative of independent contractors claiming a violation under this bill to bring an action in superior court.

Workplace Solutions.

We will continue to monitor and report on these potential sources of annoyance, as well as any other significant legislative developments of interest. Let your favorite Seyfarth attorney know if you have any questions.

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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