United States: California Employers – New Year, New Rules In 2017

The new year will bring along a variety of new obligations for California employers.  Although some of the new laws clarify existing law and provide helpful guidance, several impose additional requirements.  This update highlights key provisions of some of the more notable changes taking effect in 2017.  Links to the statutes and/or prior updates regarding the same are provided where applicable.

A.B. 1732: Single-User Restrooms

Assembly Bill 1732 requires all single-user toilet facilities in any business establishment, place of public accommodation, or state or local government agency to be identified as all-gender toilet facilities by signage which must comply with Title 24 of the California Code of Regulations as of March 1, 2017.  The single-user toilet facilities must be designated for use for only one occupant at a time, or for family or assisted use.  The statute defines a "single-user toilet facility" as a toilet facility with no more than one water closet and one urinal with a locking mechanism controlled by the user.  The statute is aimed at providing equal access to everyone, regardless of their gender. The new law will be enforced by inspectors, building officials, and other local officials.

A.B. 2535: Itemized Wage Statements

Effective January 1, 2017, Assembly Bill 2535 revises Labor Code Section 226 to clarify that employers are not required to report the total hours worked on the itemized wage statements of employees who are exempt from payment of minimum wage and overtime under specified statutes of any applicable order of the Industrial Welfare Commission.  Prior to this amendment, Labor Code Section 226 required employers to include the employees' total hours worked on their pay stubs unless the employee was paid solely by salary and exempt from payment of overtime.  For more information on A.B. 2535, please see our prior article here.

A.B. 1843: Juvenile Criminal History

Existing law prohibits employers from asking applicants to disclose, or taking into consideration, information regarding an arrest or detention that did not result in a conviction, or a conviction that was judicially dismissed or sealed.  Effective January 1, 2017, Assembly Bill 1843 amends Section 432.7 of the Labor Code and expands restrictions by prohibiting employers from taking into consideration, and/or asking applicants to disclose, certain information regarding juvenile records.  Specifically, employers are prohibited from seeking information pertaining to an arrest, detention, processing, diversion, supervision, adjudication, or court disposition that occurred while the person was subject to the process and jurisdiction of a juvenile court.

A.B. 2337: Protections for Victims of Domestic Violence

Assembly Bill 2337 adds subsection (h) to Labor Code Section 230.1 and will require employers with 25 or more employees to provide written notice to new employees upon hire, and to current employees upon request, of the rights and duties of employers and employees as set forth in Labor Code section 230 and 230.1.  Under the law, victims of domestic violence, sexual assault, or stalking, have the right to take time off from work, participate in safety planning, obtain psychological counseling, and seek medical attention for injuries caused by domestic violence, sexual assault, or stalking.  The amendment requires the Labor Commissioner to develop a form for employers to use to comply with the notice requirements.  The Labor Commissioner will post the form on or before July 1, 2017.  Employers are not required to comply with the notice requirement until the Labor Commissioner makes the form available.

S.B. 1001: Unfair Immigration Related Practices

Effective January 1, 2017, Senate Bill 1001 adds Section 1019.1 to the Labor Code prohibiting employers from: (1) requesting more or different documents than are required under federal law; (2) refusing to honor documents tendered that on their face reasonably appear to be genuine; (3) refusing to honor documents or work authorization based upon the specific status or term of status that accompanies the authorization to work; or (4) attempting to reinvestigate or re-verify an incumbent employee's authorization to work using an unfair immigration-related practice.  Job applicants and employees who suffer an "unfair immigration-related practice" can file a complaint with the Department of Labor Standards and Enforcement.  In addition to equitable relief, the statute imposes a penalty of not more than $10,000 per violation.

Significantly, the U.S. Citizenship and Immigration Services issued a revised Form I-9, which employers must begin using no later than January 22, 2017.  Employers may continue to use the current Form I-9 with a revision date of March 8, 2013 through January 21, 2017.  For more information on the revised I-9, please see our prior article here.

S.B. 1063 and A.B. 1676: Amendments to California's Equal Pay Act

Codified under Labor Code Section 1197.5, the Equal Pay Act prohibits employers from paying employees of the opposite sex different rates for "substantially similar work" when viewed as "a composite of skill, effort, and responsibility, and performed under similar working conditions."  An employer does not violate the Act if it can prove any wage differential is based upon a seniority system, a merit system, a system which measures earnings by quantity or quality of production, or a bona fide factor other than sex, such as education, training, or experience.

Senate Bill 1063 amends Labor Code Section 1975.5(b) to expand California's equal pay protections to cover race and ethnicity and mirrors the language in Labor Code Section 1197.5(a).

Assembly Bill 1676 also amends the Equal Pay Act by adding the following language: "[p]rior salary shall not, by itself, justify any disparity in compensation" to subsections (a)(3) and (b)(3) of Section 1197.5.  Significantly, these amendments do not prohibit an employer from inquiring about an applicant's prior salary.  However, an employer may not rely solely on an individual's prior salary history to justify a disparity in compensation for "substantially similar work."

Both amendments are effective January 1, 2017.  For an in-depth analysis of California's Equal Pay Act and suggested steps to ensure compliance with the Equal Pay Act, and recent amendments, please click here.

S.B. 1241: Venue and Choice of Law Provisions in Employment Agreements

Effective January 1, 2017, Senate Bill 1241 adds Section 925 to the Labor Code and prohibits an employer from requiring a California-based employee, as a condition of employment, to agree to a provision that would either require the employee to litigate or arbitrate California-based claims outside of California or under the laws of another state.

The law seeks to protect employees, who primarily work and reside in California, from being required to agree to venue and choice of law provisions that deprive the employee of the substantive protection of California law with respect to a controversy arising in California. Currently, many employers, particularly those based out of state, include choice of law provisions in their agreements that apply the company's home-state laws to all employees, including those in California.  A court faced with a dispute would then apply a balancing test to determine whether to apply the chosen law, or California law instead.  Senate Bill 1241 essentially strips employers of this ability, and requires companies, regardless of where they may be headquartered, to come to California to litigate or arbitrate employment claims under California law.  However, the bill provides an exception for contracts with an employee who is in fact "individually represented by legal counsel in negotiating the terms of an agreement to designate either the venue or forum in which a controversy arising from the employment contract may be adjudicated or the choice of law to be applied."

The new law applies to any employment contract entered into, modified, or extended on or after January 1, 2017.  Any contract that violates the provisions of the new law is voidable by the employee, and if a provision is rendered void at the request of the employee, the matter shall be adjudicated in California and California law shall govern the dispute.  Furthermore, a court may award reasonable attorneys' fees, among other remedies, to an employee enforcing his or her rights under the law.

California State Minimum Wage Increase

Senate Bill 3 amends Sections 245.5, 246, and 1182.12 of the Labor Code and schedules six increases to the state minimum wage over the next six years.  Significantly, on January 1, 2017, all California employers with 26 or more employees will be required to increase the minimum wage paid to workers to $10.50.  For information on future increases please see our prior post here.

Los Angeles and San Diego Minimum Wage and Paid Sick Leave Ordinances

Earlier this year, Los Angeles and San Diego approved ordinances for increased minimum wage and paid sick leave requirements.  For more information on the Los Angeles and San Diego ordinances, please see our prior article posted here.

By way of reminder, the San Diego ordinance will increase the minimum wage to $11.50 per hour, effective January 1, 2017.

The Los Angeles ordinance will increase the minimum wage to $12.00 per hour for employers with 26 or more employees, effective July 1, 2017.  The minimum wage for employers with 25 or fewer employees will increase to $10.50 per hour, effective July 1, 2017.

In light of these new statutes and amendments to existing law, employers are encouraged to educate themselves on the new obligations and review their policies and practices prior to the end of the year.  Employers should consult experienced legal counsel with questions and concerns before making or implementing personnel-related decisions.

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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