United States: A New Wave Of California Employment Legislation For 2018

Businesses with employees in California, get ready. In addition to the salary history ban recently signed into law in California, several other new employment laws will be taking effect in the Golden State on January 1, 2018. The new obligations concern criminal background inquiries, employee leaves of absence, immigration compliance, sexual harassment training, general contractor liability, and administrative complaints and investigations.

Governor Brown Officially Bans the Box

On October 14, 2017, Governor Jerry Brown signed Assembly Bill No. 1008 to officially "ban the box" in California, becoming the latest state to restrict criminal history inquiries by private employers during the hiring process. California joins Connecticut, Hawaii, Illinois, Massachusetts, Minnesota, New Jersey, New York City, Oregon, Philadelphia, Rhode Island, Vermont and San Francisco in restricting discussions about an applicant's criminal past.

The new law takes effect on January 1, 2018, and will restrict the ability of employers to ask about an applicant's conviction history until the applicant has received a conditional offer of employment. Employers are also restricted in how they may make hiring decisions if an applicant's conviction history is lawfully disclosed.

Hiring Restrictions

The new law applies throughout California to all employers, public or private, with five or more employees, with only limited exceptions. Because roughly 7 million Californians (nearly one in three adults) have an arrest or conviction record, the legislation applies to a significant segment of the workforce. Employment applications, hiring decisions and background checks are all impacted:

  • Employment Applications. Employers may not include on any application for employment any question that seeks the disclosure of an applicant's conviction history.
  • Hiring Decisions. Employers may not inquire or consider the conviction history of an applicant unless and until that applicant has received a conditional offer of employment.
  • Background Check and Arrest Limitations. While conducting a lawful conviction history background check, employers may not consider or distribute information about (1) an arrest not followed by a conviction (with limited exceptions for certain positions), (2) referral to or participation in a pre- or post-trial diversion program, or (3) convictions that have been sealed, dismissed, expunged or eradicated under the law.

Individualized Assessment and Notice Requirements

The new law requires that employers conduct an individualized assessment of each candidate before denying employment solely or in part because of the applicant's conviction history. The assessment must include whether the applicant's conviction history has a direct and adverse relationship with the job requirements. If an employer makes a preliminary decision to deny employment based on the assessment, it must then provide the applicant written notification of the decision and allow the applicant to respond before the employer may make a final decision. If an employer preliminarily decides not to hire the candidate because of a conviction, the employee must be provided specific notices, addressing potential challenges and the right to file an administrative complaint with the California Department of Fair Employment and Housing.

The new law does not supersede other state and local laws relating to background checks and criminal history inquiries and employers should be mindful of their duty to separately comply with each applicable rule and regulation.

Job-Protected Parental Leave Expanded for Small Businesses

Governor Brown also signed Senate Bill No. 63, which imposes new employee leave requirements on small businesses, significantly expanding portions of the California Family Rights Act. Beginning January 1, 2018, employers with as few as 20 employees within a 75-mile radius must provide 12 weeks of job-protected unpaid parental leave to eligible employees to bond with a new child. To be eligible for this leave, employees must have worked for the employer at least 1,250 hours during the last 12 months, and leave must be taken within one year of the child's birth, adoption or foster care placement. If both parents work for a single employer and are equally eligible for leave, the employer may limit the amount of leave taken to 12 weeks between both employees.

Adverse actions immediately before, during or after job-protected leaves must be carefully considered due the liability risk such actions create. The new law requires employers continue to pay health insurance premiums during leave and prohibits firing, suspension or discrimination for taking such leave, and addresses reinstatement upon return from leave.

Joint Liability for Wages for General Contractors

Under Assembly Bill No. 1701, contracts entered into, on or after January 1, 2018, will require direct contractors to assume and be liable for a subcontractor's wage obligations to its workers for the labor provided on construction projects. Only the labor commissioner may enforce this law, with limited exceptions. To provide assurances to direct contractors, the new law allows direct contractors to request and obtain the payroll information for employees of subcontractors so that they can audit the subcontractor's payroll records as necessary.

Expanded Sexual Harassment Training Requirements in California

California employers with 50 or more employees are familiar with their mandatory biennial sexual harassment training requirements for their supervisory employees. Effective January 1, 2018, Senate Bill No. 396 requires that the training program now include topics of gender identity, gender expression and sexual orientation. The law requires that classroom or other effective interactive training be conducted by qualified trainers with expertise in these areas and that the program includes practical examples aimed at preventing harassment, discrimination and retaliation on any of these grounds. Covered employers must also post required notices of transgender rights.

Immigrant Worker Protection Act

In a bill that pits state law against federal immigration objectives, Governor Brown signed Assembly Bill No. 450, entitled the Immigrant Worker Protection Act. Effective January 1, 2018, the new law applies to federal immigration inspections and information requests, as well as E-Verify compliance and will restrict the ability of employers to voluntarily comply with the federal government. The new law prohibits employers from voluntarily providing federal agents access to employee information or non-public areas without a subpoena, court order or judicial warrant.

Warrant and Subpoena Required

The new law prohibits employers from allowing federal immigration agents to access non-public areas of their worksites without a judicial warrant. It also prohibits employers from providing immigration agents access to employee records without a subpoena or court order, unless otherwise required to do so by applicable law.

The statute requires that employers notify current employees of a federal immigration agency's inspection of I-9 forms or other employment records within 72 hours of receiving notice of the inspection. The notice must include the name of the agency conducting the inspection, the date the employer received notice of the inspection, the nature of the inspection and a copy of the notice of inspection provided.

Employers are also restricted from reverifying the employment eligibility of current employees at a time or in a manner not allowed by law.

Penalties and Compliance

Failure to comply with the law will expose companies to penalties up to $10,000 per violation. Compliance may frustrate efforts of federal immigration agencies and therefore employers are advised to assess their current employment, staffing and hiring practices to avoid potential state and federal civil and criminal penalties.

Labor Commissioner's Authority Expanded for Retaliation Claims

California employment law prohibits employers from retaliating against employees for engaging in protected activities. Governor Brown's signing of Senate Bill No. 306 enhances the ability of the labor commissioner and Department of Labor Standards Enforcement (DLSE) to enforce compliance with anti-retaliation laws. Notably, the new laws expand the DLSE's authority to investigate and penalize employers for what it perceives to be violations of statutory anti-retaliation restrictions:

  • The DLSE may investigate an employer without any retaliation complaint if it "suspects" that retaliation is occurring in the course of its adjudication or inspection of a wage claim or related matter.
  • The DLSE may petition the California Superior Court for injunctive relief when it determines there is "reasonable cause" to believe that an employer has engaged or is engaging in unlawful retaliation.
  • The DLSE is relieved of the burden to affirmatively initiate civil actions against an employer and is now authorized to issue a citation for the employer to take corrective actions, which the employer may seek review through an administrative hearing before the labor commissioner within 30 days of the citation. The labor commissioner's decision is reviewable only through a writ of mandate to the Superior Court.
  • The DLSE can impose penalties up to $20,000 for "willful" failures to comply with a court order, take corrective action or post a required notice to employees.

The new law further provides that employees may now initiate a lawsuit for retaliation and seek injunctive relief in Superior Court.

What This Means for Employers

Because these new laws affect a wide range of employment policies and practices, employers are advised to develop compliance strategies before the end of the year.

Review Forms and Practices

Audit your hiring practices. Job applications, offer letters and rejection decisions take on increasing importance in light of the new criminal history prohibitions. Proceed cautiously in asking about criminal history and in taking action due to an applicant's criminal past. Make offers conditional. Provide necessary and timely notifications. Above all, start the process early.

Know your employee-leave obligations. Employers of all sizes should consider using standardized forms to address leaves of absence. Smaller employers, traditionally exempted from leave laws, should understand their new obligations. Anticipate how to respond to frequently asked questions and what to expect when an employee requests time off.

Update your policies and employee handbooks. Ensure that your organization's retaliation, discrimination and harassment policies and complaint procedures are up to date.

Evaluate key contracts. While all employers should regularly undertake a legal review of standardized agreements, construction contractors should consider a review of their agreements with general or subcontractors before year's end in light of the new joint liability laws taking effect soon. Execute agreements this year, if prudent. Consider defense, indemnity and other clauses for better potential protection.

Provide Appropriate Training and Update Postings

Knowledge should be shared. Decrease your legal risks by making sure those who should know these new laws learn about them. Train your hiring managers and those involved in the interview process as to what they can and cannot say to job applicants. Make sure your managers know how to respond to a request for a leave of absence and how their actions may be construed as retaliatory. Use certified trainers to conduct anti-harassment trainings and be sure the trainings are fully compliant with all rules and regulations. Make sure your postings are up-to-date and distributed appropriately.

For Further Information

If you have any questions about this Alert, please contact any of the attorneys in our Employment, Labor, Benefits and Immigration Practice Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.

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