United States: California's Employment Law Class Of 2017 (Part I): The Laws, Their Effects And Some Recommendations For Compliance

Co-authored by Ariana Goodell* (Not yet admitted to practice, on 26 October 2016)

Amend, extend and clarify: the 2016 legislative session was not so much about creating new rights and responsibilities under California employment law, but more about expanding and addressing lingering questions that stem from existing workplace mandates. However, don't be fooled by the lack of "new" regulations. By amending many of California's complex existing laws, the legislature certainly placed HR departments and employment counsel in a difficult position to prepare for compliance by the looming January 2017 implementation date (for most of these laws). With a full plate of issues, such as workplace health and safety, pay equity, hiring, leave laws, harassment and discrimination, and, of course, wage and hour updates (no big surprise there), the class of 2017 will make an impact that will last for years and spur on dramatic change.

In this first portion of our two-part review of the employment law class of 2017, we will focus on developments in discrimination, anti-Retaliation and discharge, hiring and background checks, and workplace health and safety. In part II we will focus on developments in wage and hour law, leave laws, industry-specific regulations, and California's recent legislation affecting choice-of-law in employment contracts.


Pay Equity Based On Race And Ethnicity (SB 1063)

Last year's gender-based Fair Pay Act, which amended Labor Code section 1197.5, is now being extended to make it unlawful to pay employees less than employees of another race or ethnicity for "substantially similar work." The law also prohibits employers from preventing employees from disclosing their own wages, disclosing or asking about the wages of others; provides significant penalties for discrimination, termination and retaliation based on employees exercising their rights to wage transparency; and requires employers to maintain past records of employee wages and job classifications for three years.

Effect: (Effective January 1, 2017) SB 1063 requires employers to be prepared to demonstrate that reasonably applied factors such as a merit system, a seniority system, or some other combination of objective criteria accounts for the entire pay differential between similarly situated employees of different races or ethnicities.

Reed Smith RECOMMENDS:  With the Fair Pay Act now giving a right of action to employees, based on pay gaps between persons of different races and ethnicities performing "substantially similar work" for the same employer, it has become even more important for employers to take action and audit employee pay.  An effective audit will allow employers to identify employees doing similar job duties and responsibilities, and allow employers to take note of whether pay discrepancies exist between employees of different genders, races or ethnicities.  Regardless of an audit's outcome, employers should review all compensation-related policies and procedures to ensure that the criteria for base compensation, bonuses, and raises are as objective as possible.  Additionally, this new legislation should serve as a reminder to all employers to review their confidentiality policies related to discussion of wages to ensure their policies comply with the wage transparency aspects of California's equal pay law.

Salary History As Justification For Pay Discrepancy (AB 1676)

In a second bill modifying the 2016 California Fair Pay Act, AB 1676 will expand the law to further specify that an employer cannot use an individual's prior salary, by itself, to justify a wage differential.

Effect: (Effective January 1, 2017) This legislation states that the bill is meant to clarify that prior salary, by itself, does not amount to a bona fide factor justifying a pay discrepancy between similarly situated employees.  The original bill prohibited employers from asking job applicants about their compensation history.  However, that provision was vetoed, and replaced with "[p]rior salary shall not, by itself, justify any disparity in compensation."  Thus, an employer cannot rely on the fact that an employee was paid less by past employers in order to continue paying that person less.

Reed Smith RECOMMENDS:  When determining starting pay for a new employee, employers should not look to what the employee made at a previous job, but should evaluate and record reasons why the employee was paid the amount at his/her previous job.  Employers should establish guidelines for employee pay based on relevant experience, education, and expertise.  Such factors are clear justifications for why certain employees are paid more or less.  Employers should be careful not to let subjectivity and bias affect their application of the factors, but should establish ongoing procedures for comparisons and review of both employee pay and the factors to ensure objective treatment of all.  Employers should be sure to document those factors so as to support their salary decisions, rather than the amount itself as the sole basis for an employee's starting pay.

Sexual Harassment Prevention Training (AB 1661)

Under AB 1661, local government agency officials are required to receive two hours of training and education on sexual harassment prevention within the first six months of taking office or commencing employment. Thereafter, agency officials, legislators, electeds of cities, counties, and special districts, must receive this training once every two years. AB 1661, which was passed in reaction to several sexual harassment cases against elected officials, is similar to 2004's AB 1825, which required the same basic requirements for private employers.

Effect: (Effective January 1, 2017) Existing law does not explicitly state that city elected officials are required to take a sexual harassment prevention training and education course, which has allowed each city to interpret the law differently.  Newly passed AB 1661 clarifies that local agency officials must complete sexual harassment training, just like any other public employee.

AB 1661 aims to create uniformity, to improve health and safety, and to establish clear rules regarding appropriate conduct in the workplace. The drafters of the bill also hope it will minimize loss in revenue to local agencies associated with settlement claims for sexual harassment.

Reed Smith RECOMMENDS:  All employers, including local agencies, should ensure that they organize the appropriate trainings at least every six months for new people joining their ranks, and carefully record attendance from those trainings to have clear records supporting that all applicable employees are in compliance with this regulation regarding sexual harassment prevention training.

Employment Discrimination In Sheltered Workshops (AB 488) – Non-Profit Sheltered Workshop Or Rehabilitation Facility Operators

Certain licensed individuals working in nonprofit sheltered workshop and rehabilitation facilities may bring an action under the Fair Employment and Housing Act (FEHA) for prohibited harassment or discrimination. This bill also extends FEHA's protections to workers with disabilities. This bill expands AB 1443, enacted in 2014, which extended FEHA's protections to unpaid interns and volunteers.

Effect: (Effective January 1, 2017) This law strengthens the rights and protections for sheltered workshop employees who work in highly restrictive environments and currently are not afforded the same protections against discrimination as other employees, including interns.

Reed Smith RECOMMENDS:  Employers who operate nonprofit sheltered workshops or rehabilitation facilities should be sure to update all employment policies and procedures to be FEHA compliant.


Background Checks By "Transportation Network Companies" (AB 1289)

Transportation network companies, such as Uber or Lyft, which use online platforms to match passengers with drivers that use their personal vehicles, are now required to have local and national criminal background checks done on each driver. The check can be performed by a third-party vendor or the company itself.  If a driver is currently or within the last seven years has been registered on the U.S. Department of Justice's National Sex Offender Public Website, convicted of terrorism-related or violent felonies, or has been convicted of misdemeanor assault or battery, domestic violence, or driving under the influence within the previous 7 years, the companies would be barred from contracting and using that driver.

Effect: (Effective January 1, 2017) This new law requires both local and national background checks to be completed by transportation network companies. Failure to do so can subject the company to fines up to $5,000 per offense.  The new requirements should ease any concerns ride-sharing customers may have about driver safety.

Reed Smith RECOMMENDS:  While the focus of this law is on "transportation network companies," it may indicate the beginning of increased regulation of all companies actively engaged in the sharing economy.  Such employers should keep abreast of legislation in this next year that may place restrictions on how they hire and manage employees and independent contractors.  Further, companies should be sure to comply with all laws giving notice to those for whom background checks are performed, so as to allow permission, response and individualized consideration of any issue.

Juvenile Criminal History (AB 1843)

Labor Code section 432.7 prohibits employers from asking an applicant to disclose juvenile convictions. AB 1843 expands the prohibition to prevent requests and disclosure demands related to: 1) disclosing information about a juvenile court related arrest, detention, processing, diversion, supervision, adjudication, or court disposition; 2) seeking out and using any sources that provide information concerning or related to an arrest, detention, processing, diversion, supervision, adjudication, or court while the applicant was a juvenile; or 3) using such information as a factor to determine any condition of employment. Health facilities are exempted to the extent an inquiry into an applicant's juvenile background is to determine if the applicant had committed a felony or misdemeanor relating to certain sex or controlled substances crimes within five years preceding the employment application.  But inquiries regarding sealed juvenile criminal records are prohibited.  An employer at a health facility must disclose any juvenile offense to the applicant, if disclosure is sought.

Effect: (Effective January 1, 2017) The stated purpose behind AB 1843 was to give young people the same protections as adults and reduce the chances of young people falling back into the justice system, as studies show criminal history can prevent candidates from getting hired or called back after an interview. This bill slightly expands California law to also prohibit employers from inquiring about or using information related to specific juvenile court actions or custodial detentions.

Reed Smith RECOMMENDS:  Employers should review the information requested on their job applications and update interviewers that they may not inquire into an applicant's involvement with the juvenile justice system.

Work Experience Education Programs (AB 2063) 

This bill allows for greater opportunity for students to participate in work experience education programs for credit, if the student is at least 14 years old, amending the law from the former requirement that students be at least 16 years old to participate.  The bill enhances students' ability to now participate in a job shadowing experience for up to 40 hours rather than 25 hours, if the school principal certifies that it is necessary for the pupil's participation in a career technical education program.

Effect: (Effective January 1, 2017) AB 2063 expands access to Career Technical Education (CTE) and will make it easier for high school students to participate in CTE. Work-experience-education programs teach valuable life skills like financial literacy, business operations, and time management.  Additionally, this type of "linked learning" can reduce drop-out rates by showing students the relevancy of what they are learning in the classroom.

Reed Smith RECOMMENDS:  Thanks to this new law, employers may have the opportunity to give back to their community, while at the same time training future employees, but it will be extremely important that employers ensure that all the appropriate paperwork is in order before engaging these young individuals.  Furthermore, with the potential of greater student participation in these programs, employers should be sure to communicate to their workforce about the appropriate way to interact with the students participating in this program.

Unfair Immigration-Related Practices (SB 1001)

SB 1001 establishes the new Labor Code Section 1019.1, creating an "unfair immigration-related practice" to verify authorization to work by: 1) requesting more or different documents than required under federal law, I-9 process to verify authorization to work); 2) refusing to honor documents tendered that on their face reasonably appear to be genuine; 3) refusing to honor documents or work authorization based on the specific status or term that accompanies the authorization to work; or 4) attempting to reinvestigate or re-verify an incumbent employee's work authorization using an unfair immigration-related practice.  Individuals who suffer an unfair immigration-related practice can file a complaint with the DLSE for enforcement, and violations carry a penalty of up to $10,000.  

Effect: (Effective January 1, 2017) This is yet another law demonstrating how California has made immigration-related abuses a legislative priority (see also AB 622 imposing a $10,000 penalty for E-Verify violations, AB 1660 amending FEHA by prohibiting discrimination against drivers licenses issued to undocumented workers, and AB 263 and SB 666, both of which prohibit retaliation for "immigration-related practices).  SB 1001 is meant to address the issue of document abuse in California.  It prohibits an employer from requiring additional or other documents that are already required under the I-9 process—a practice known as document abuse. SB 1001 creates a state remedy for this unfair labor practice that targets immigrant workers.

Reed Smith RECOMMENDS:  Employers should take this new legislation as a directive to review their hiring processes, especially as related to work-eligibility verification.  Employers need to ensure that they have a legally valid practice that can be consistently applied, and allows prospective workers to use any legally acceptable form of proof of eligibility to work in California.


Single-User Restrooms Must Be "All Gender" (AB 1732)

Just as signs identify which gender a restroom is designated for, AB 1732 requires that single-occupancy restroom facilities in any business establishment must also have signage that identifies the facility as "all gender," rather than designated as male or female. A single-user restroom is defined as one which has only one urinal and one water closet, with a lock that is controlled by the person using the facility.  Although the text of the bill says nothing about gender equality, transgender rights, or other motivations based on civil rights, it is clearly a step toward embracing the call of such 21st century demands on lawmaking.  It is important to note that the bill currently does not require businesses to remodel existing gender-specific restrooms or to add single-gender restrooms.

Effect: (Effective March 1, 2017) This is arguably the nation's most inclusive restroom access law. It is a relatively simple measure to comply with, and will enable all Californians to use restrooms in a way that is more safe, fair, and convenient.

Reed Smith RECOMMENDS:  While this law is rather simple to comply with, it is important that all employees are educated on the law and understand its implications on how employees should direct customers with regard to restroom usage.  Furthermore, employers with multiple locations should carefully inspect all locations to identify the applicable bathrooms and ensure the appropriate signage is in place by March 1, 2017.

Employment Heat Safety (SB 1167)

The Division of Occupational Safety and Health, under SB 1167, shall propose to the OSHA Standards Board, a standard that minimizes heat-related illness and injury among workers working in indoor places of employment by January 1, 2019. This bill is in response to a 2012 OSHA decision, which affirmed fines against a staffing company and warehouse operator because they caused illness to an employee who was working inside a metal freight, with temperatures over100 degrees.

Effect: (Effective January 1, 2019) SB 1167 creates more heat illness prevention regulations by directing Cal/OSHA to adopt a regulation for indoor workers to prevent heat illness.  This law will mostly affect larger companies with inland warehouses, factories, and distribution centers, such as Amazon.

Reed Smith RECOMMENDS:  While this legislation doesn't place immediate regulations on employers, employers should proactively review the heat-control procedures they have in place at existing locations, and carefully evaluate if any updates will be necessary to ensure they are operating safe, compliant workplace facilities.

Smoking in the Workplace (AB 7)

ABX2-7 expands California's prohibition on smoking of tobacco products in all enclosed places of employment to all employers of any size. Additionally, the bill eliminates some of the previous exempted smoking areas.  Specifically, smoking will now be prohibited in all covered parking lots, breakrooms designated by employers, warehouse facilities, and gaming clubs.

Effect: (Effective June 9, 2016) California law has prohibited smoking of tobacco products inside all enclosed places of employment for several years now; however, this bill expands the prohibition to employers of all sizes, including places of employment where the owner-operator is the only employee.

Reed Smith RECOMMENDS:  Employers of all sizes, particularly in industries where there are certain exceptions, such as theatrical production sites and the trucking industry, should ensure that they update company postings and policies about where, if anywhere, smoking is allowed.

"Safe Harbor" Period For Construction-Related Accessibility Violations Under California Law (SB 269)

SB 269 addresses the "safe harbor" period of time that small businesses (25 employees or fewer) are provided to correct construction-related accessibility violations under the Unruh Act.  The new and amended statutes establish a rebuttable presumption that certain technical violations of the Unruh Act do not cause a plaintiff to experience difficulty, discomfort, or embarrassment, if specified conditions are met. The "safe harbor" is only applied where: 1) the claim is based on specific violations listed in the statutes; and 2) the small business corrects all of the technical violations included in the claim within 15 days of receiving written notice, or the service of a summons and complaint regarding the accessibility claim, whichever is earlier.  The bill also provides employers of 50 or fewer employees with a "safe harbor" from liability for accessibility claims raised in the 120-day period following an inspection by a California certified access specialist (CASp).

Effect: (Effective May 10, 2016 as urgency measure) This bill provides small businesses a short time period to implement immediate changes to update their facilities based on technical violations (such as the location and condition of required signage) without needing to pay the legal fees and statutory damages that would otherwise be required.  This bill also incentivizes employers to take advantage of CASp inspections to learn about what alterations need to be made to make their facilities fully compliant.

Reed Smith RECOMMENDS:  Employers should take immediate action when receiving notice of accessibility violations, as a quick response greatly reduces the costs imposed by any technical violation.  Furthermore, employers should take advantage of  the "safe harbor" period following CASp inspections by scheduling CASp inspections to determine what updates and alterations are necessary to bring a facility into full compliance.  Finally, employers should note that while California has passed several urgency measures in an attempt to slow the onslaught of frivolous accessibility lawsuits against California businesses, plaintiffs' attorneys can often avoid the implications of these California measures by including associated ADA-accessibility claims in their complaint and filing these claims in federal court.  Therefore, it is a best practice to schedule CASp inspections as soon as possible upon opening up a facility and on a regular basis thereafter to ensure accessibility compliance, and diminish the chances of having to deal with one of these frivolous lawsuits.

This article is presented for informational purposes only and is not intended to constitute legal advice.

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