United States: California Divide: What California Employers Can Expect In 2017

As California goes, so goes the nation. When it comes to employment law, the Golden State is continuing down a path of increased regulation. With 2017 right around the corner, here are some new laws California employers must prepare for – all effective Jan. 1, 2017 unless otherwise stated:

Pay Equity

As our sister blog the Equal Pay Pulse reported, California created one of the strongest equal pay protections in the nation with passage of the California Fair Pay Act ("FPA") in 2016. Now the Golden State is doubling down on its equal pay initiatives with two new amendments. First, AB 1676 will mandate that an employee's prior salary cannot be the sole justification for a compensation disparity (the bill was modified from its original version to remove language that would have prohibited employers entirely from obtaining an applicant's prior salary.) Second, SB 1063 expands the FPA to prohibit wage differentials based on an employee's race or ethnicity in addition to gender.

Paid Family Leave and State Disability Insurance Increases

AB 908 will increase the benefits provided to individuals in the Paid Family Leave and State Disability Insurance programs for periods of disability commencing on or after January 1, 2018. Specifically, the new law increases the level of benefits from the current level of 55 percent to either 60 or 70 percent, depending on the applicant's income. Also beginning on January 1, 2018, the seven-day period individuals must wait for to become eligible for family temporary disability benefits no longer will apply.

Background Checks by Transportation Network Companies

AB 1289 will require transportation network companies, defined as companies "operating in California that provide[ ] prearranged transportation services for compensation using an online-enabled platform to connect passengers with drivers using their personal vehicles" (i.e., Lyft and Uber) to conduct or have a third party vendor conduct local and national criminal background checks on each participating driver. Similarly, a transportation network company will be barred from contracting with or retaining a driver who is: (1) currently registered on the U.S. Department of Justice's National Sex Offender Public Website; (2) has been convicted of certain terrorism-related or violent felonies; or (3) within the past seven years, has been convicted of misdemeanor assault or battery, domestic violence, or driving under the influence.

"All Gender" Restrooms

AB 1732 will require all employers with single-user restrooms to identify the facilities as "all gender" facilities, rather than as male or female facilities. The new law defines a "single-user restroom" as "a toilet facility with no more than one water closet and one urinal with a locking mechanism that is controlled by the user," and will become effective March 1, 2017.

Juvenile Criminal Backgrounds

AB 1843 will prohibit employers from asking about, or taking into consideration, applicants' juvenile arrests and criminal convictions. Specifically, the law states, "employers [are prohibited] from asking an applicant for employment to disclose, or from utilizing as a factor in determining any condition of employment, information concerning or related to an arrest, detention, processing, diversion, supervision, adjudication, or court disposition that occurred while the person was subject to the process and jurisdiction of juvenile court law."

Increased DLSE Enforcement Authority

AB 2261 will broaden the authority of the Division of Labor Standards Enforcement ("DLSE") by allowing the DLSE to bring an action against an employer who terminates or discriminates against an employee in violation of any law under the Labor Commissioner's jurisdiction. Most notably, the DLSE will be able to bring action with or without an employee complaint.

Domestic Violence Protection Notice

AB 2337 will require employers with 25 or more employees to post written notice of their employees' rights under California's domestic violence protections laws. Employers do not have to post the information, however, until the California Labor Commissioner develops the notice, which it must do by July 1, 2017.

Itemized Wage Statements

AB 2535 will clarify the employees for whom an employer must track and record hours worked on wage statements. The bill was passed to assuage employer confusion after a federal court in Garnett v. ADT, LLC held that employers must still include total hours worked on pay stubs for outside sales employees and executives, even though they were paid solely by commission because they also received bonuses and stock options. The new law explains that employers are not required to provide itemized wage statements to employees if the "employee's compensation is solely based on salary and the employee is exempt from payment of overtime," or the "employee is exempt from the payment of minimum wage and overtime under ...any applicable order of the Industrial Welfare Commission" and specified statutes.

Immigration Documents

SB 1001 will prohibit employers from: (1) requesting more or different documents than only those required under federal law; (2) refusing to honor documents that reasonably appear to be genuine on their face; (3) refusing to honor documents or work authorization based upon the specific status or term of status that accompanies the authorization to work; and (4) attempting to reinvestigate or re-verify an incumbent employee's authorization to work using an unfair immigration-related practice. This law also provides that an applicant for employment or an employee who is subject to an act that is prohibited by this law, or his or her representative, to file a complaint with the DLSE. The law further provides that a violation of these provisions shall subject an employer to a civil penalty of up to $10,000 per violation.

Forum Selection Clauses in Contracts

As we previously mentioned, SB 1241 will prohibit employers from requiring employees who "primarily work and reside in California" to agree to non-California choice-of-law or venue provisions for claims arising in California, either in litigation or arbitration, as a condition of employment. Such provisions will be voidable by the employee, and the matter will be adjudicated in California and under California law. These restrictions do not apply, however, to employees who were represented by legal counsel in negotiating an agreement designating a non-California venue or choice-of-law provision. The new law will be codified as California Labor Code section 925, and will apply only to new contracts entered into, modified, or extended on or after January 1, 2017.

With the New Year quickly approaching, it is never too early for California employers to start on compliance efforts, including but not limited to a review of relevant employment agreements, policies, or HR procedures.

For a more detailed discussion of these California employment law developments, please join us at one of our two upcoming programs in San Francisco on December 13, or in Silicon Valley on January 18. For more information and to RSVP, click here.

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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