United States: California Labor & Employment Law Update: Key Changes In 2017 And What's Slated For 2018

California has enacted a number of new regulations related to labor and employment that go into effect when 2018 begins. Hotels owners and developers with properties in California need to be aware of how these rules apply to their workforce so they can meet their legal obligations and remain in compliance with the law. A round-up of upcoming changes, written by the JMBM Labor & Employment group, is below.

The legal landscape for California employers continues to evolve at the state and local level – ranging from prohibitions on inquiries into an applicant's salary and conviction history, additional sexual harassment training requirements, to new immigration obligations.  The following is a high-level summary of the most significant changes in state and local labor and employment laws, which go into effect on January 1, 2018, unless otherwise noted.

EXPANDING POWERS OF THE DLSE

Retaliation Actions (SB 306) – DLSE can commence investigations; petition for injunctive relief; issue citations

The state's Division of Labor Standards Enforcement ("DLSE") has new powers starting January 1, 2018.  With SB 306, the DLSE will now be authorized to commence an investigation of an employer, with or without a complaint being filed, when specified retaliation or discrimination is suspected during the course of a wage claim or other specified investigation being conducted by the DLSE. The new law also authorizes the DLSE, upon finding reasonable cause to believe that any person has engaged in or is engaging in a violation, to petition a superior court for injunctive relief.  The bill requires a court, if an employee has been discharged or faced adverse action for raising a claim of retaliation for asserting rights under any law under the jurisdiction of the commissioner, to order appropriate injunctive relief on a showing that reasonable cause exists to believe a violation has occurred.  This temporary injunctive relief does not prohibit an employer from disciplining or terminating an employee for conduct that is unrelated to the claim of the retaliation.

The new law also authorizes the DLSE to issue citations directing specific relief to persons determined to be responsible for violations.  The law establishes review procedures, including procedures for requesting a hearing before a hearing officer, and for a petition for a writ of mandate.  The law subjects an employer who willfully refuses to comply with a final order to civil penalties payable to the affected employee.  The law also allows employees to seek injunctive relief in court.

Labor-Related Liabilities (AB 1701) – Contractors can be liable for wage claims against subcontractors

For contracts entered into on or after January 1, 2018, this new law requires a direct contractor, as defined, making or taking a contract in the state for "the erection, construction, alteration, or repair of a building, structure, or other work," to assume, and be liable for, specified debt owed to a wage claimant that is incurred by a subcontractor, at any tier.  The DLSE is authorized to bring an action to enforce this liability.   A third party owed fringe or other benefits, or a joint labor-management cooperation committee, as defined, is authorized to bring a civil action to enforce the liability against a direct contractor.  The new law does not apply to any work being done by an employee of the state or any political subdivision of the state.  It requires a subcontractor, upon request from the direct contractor, to provide specified information regarding the subcontractor's and third party's work on the project and provides that the direct contractor can withhold disputed sums upon the subcontractor's failure to provide the requested information.

NOTICE REQUIREMENTS

Human Trafficking (AB 260) – Notice requirements extended to hotels, motels and bed & breakfast inns

Two new laws which take effect on January 1, 2018 address human trafficking.  AB 260 adds hotels, motels, and bed and breakfast inns, not including personal residences, to the list of specified businesses and other establishments required to post a notice with information related to slavery and human trafficking, including information related to specified nonprofit organizations that provide services in support of the elimination of slavery and human trafficking.  SB 225 adds to the notice a specified number which a person may text for services and support, and revises the names of the nonprofit organizations listed in the notice.  While not specifically addressed to employee issues, the required notice must be posted "in a conspicuous place near the public entrance of the establishment or in another conspicuous location in clear view of the public and employees where similar notices."

Informing Employees of the Rights of Victims of Domestic Violence, Sexual Assault, or Stalking (AB 2337) – Written notice required

Existing law (Labor Code section 230.1) prohibits employers from discharging, discriminating, or retaliating against an employee who is a victim of domestic violence, sexual assault, or stalking for taking time off from work to: seek medical attention for resulting injuries; obtain services from a domestic violence shelter or rape crisis center; undergo counseling, or participate in safety planning.  Last year, California passed AB 2337, which requires employers to provide written notice to employees about the rights of victims of domestic violence, sexual assault, or stalking.  However, employers did not have to comply with this requirements until the Labor Commissioner developed a model notice.  In June 2017, the Labor Commissioner posted the model notice .  Employers may use the Labor Commissioner's notice, or create their own as long as it is substantially similar in content and clarity.  The notice must include the following content:

  • Inform employees that they have the right to take time off to obtain a restraining order/court order, seek medical attention, seek services from a domestic violence shelter, program, or rape crises center, seek counseling, or safety planning.
  • Inform employees that they can use available vacation, personal leave, accrued paid sick leave, or compensatory time off for such purposes, unless they are covered by a collective bargaining agreement which provides different leave uses.
  • Inform employees that they have a right to take time off for these purposes even if they do not have paid leave.
  • Advise employees that they should give advance notice before taking leave. But, if they cannot give advance notice, they will not be disciplined if they provide proof for the absence within a reasonable time. Proof can be a police report, court order, or a doctor's/counselor's note.
  • Inform employees that they can request as a reasonable accommodation that the employer make changes in the workplace to ensure the employees' safety. Advise employees that their accommodation request will be kept confidential.
  • Inform employees that they have a right to be free from retaliation and discrimination and that they cannot be discharged because they are a victim of domestic violence, sexual assault, or stalking; because they asked for leave to get help; or because they asked the employer for an accommodation so they can feel safe at work.
  • Advise employees that they can file a complaint with the Labor Commissioner's Office if they believe their rights have been violated.

Employers must update their new hire/orientation materials to include either the Labor Commissioner's model notice or their own notice that satisfies the statutory requirements.  Note, while employers must provide new hires with a notice of their rights under Section 230.1 (and other employees upon request), employers should consider providing a standard notice to all employees, not just new hires.

PROHIBITED INQUIRIES OF JOB APPLICANTS

State Salary Information Law – Employers cannot seek or use job applicants' salary histories

Add this to the growing list of questions to avoid asking during a job interview: How much do you make in your current job?  AB 168 prohibits an employer from seeking salary history information from a job applicant or using salary history as a factor in determining whether to offer a job.  An employer also is not allowed, orally or in writing, personally or through an agent, to seek a job applicant's salary history information.  Also, the law requires an employer "upon reasonable request" to provide the pay scale for a position to a job applicant.  It does not apply to salary history information disclosable to the public under federal or state law.

San Francisco Parity Pay Ordinance – More prohibitions on salary history information

San Francisco's Parity in Pay Ordinance is similar to AB 168, discussed above.  Under the ordinance, an employer may not do any of the following:

  • Ask about current or past compensation in the applicant's current position, or in any prior position (whether with the current employer or a prior employer).
  • Consider an applicant's salary history as a factor in determining what salary to offer an applicant—even if the applicant voluntarily discloses his or her pay without prompting.
  • Refuse to hire, disfavor or retaliate against an applicant for not disclosing pay history.
  • Release the salary history of any current or former employee to an employer or prospective employer without written authorization.

The Ordinance allows an employer to ask about the applicant's expectations with respect to salary.  For example, it is permissible to ask about unvested equity or deferred compensation or a bonus that an applicant would forfeit or have cancelled if he or she quit a current job.  This may be a way for employers to obtain salary information without asking directly for it.  The Ordinance becomes operative on July 1, 2018, with penalties of up to $500 beginning on January 1, 2019.

Statewide Ban the Box Legislation (AB 1008) – Limitations on an employers' ability to inquire about an applicant's criminal history

AB 1008 adds Government Code section 12952, which creates a new protected class under the Fair Employment and Housing Act (FEHA).  Employers with five or more employees are prohibited from:

  • Inquiring about an applicant's criminal history on a job application or at any time (i.e. during the interview process) before extending a conditional offer of employment.
  • If employers run a conviction background check in connection with an application for employment, it is prohibited from considering, distributing, or disseminating information about (a) an arrest not resulting in a conviction, except as permitted in Labor Code section 432.7, (b) referral to or participation in a pretrial or post-trial diversion program, and (c) convictions that are sealed, dismissed, expunged, or statutorily eradicated.

An employer who intends to deny an applicant a position of employment solely or in part because of the applicant's conviction history must first perform an individualized assessment.  The assessment requires analysis of various enumerated  factors, including whether the applicant's conviction history has a direct and adverse relationship with the specific duties of the job.  If the employer decides to deny employment, it must provide the applicant written notification of its decision.  The applicant then has the opportunity to respond by providing evidence challenging the accuracy of the conviction history report and/or evidence of rehabilitation or other mitigating circumstances.  The employer must consider any information the applicant submits before making a final decision.  If the employer's final decision is to deny employment, the employer must provide written notification to the applicant, including information on any additional appeal process and the applicant's right to file a complaint with the Department of Fair Employment and Housing (DFEH).  AB 1008 does not apply to situations where employers (public and private) are required by law to conduct criminal background checks or to restrict employment based on criminal history.

Employers should review their job applications, postings, and recruitment procedures to ensure they comply with AB 1008.  Employers should also keep written records which demonstrate that  they performed the required individual assessments and considered any applicant responses before making final employment decisions.  Furthermore, employers need to comply with any related local ordinances, such as the San Francisco and the Los Angeles Fair Chance Ordinance.  To the extent a local ordinance provides applicants greater protection, employers must comply with that standard.

Los Angeles Fair Chance Ordinance – More prohibitions on criminal history inquires

Individuals with criminal records may have a better chance of finding a job in Los Angeles under the city's new Fair Chance Initiative for Hiring.  Under the Ordinance, a prospective employer is not permitted to ask an applicant questions about criminal history before making a conditional offer of employment – meaning an offer that is conditioned on an assessment of the applicant's criminal history and how it relates to the duties of the job being offered. The meaning of "employment" here is broader than normal, because the law also applies to the retention of independent contractors and unpaid interns.  The Ordinance became effective on January 22, 2017.  The Ordinance applies to all employers located or doing business in the City of Los Angeles and that employ 10 or more employees.

INCREASED EMPLOYEE PROTECTIONS

Immigration Worksite Enforcement Actions (AB 450) – Warrants required before employers can comply with certain requests

A new law limits how much California employers may accommodate some requests from federal immigration officials.  Beginning January 1, 2018, California employers "shall not provide voluntary consent to an immigration enforcement agent to enter any nonpublic areas of a place of labor," unless the immigration enforcement agent provides a judicial warrant.  Similarly, employers will not be allowed to "provide voluntary consent to an immigration enforcement agent to access, review, or obtain the employer's employee records" without a warrant, except for I-9 employment eligibility and verification forms and other documents for which a Notice of Inspection has been provided to the employer.  Employers must post a notice of any inspections of I-9 Employment Eligibility Verification forms or other employment records conducted by an immigration agency within seventy-two hours of receiving notice of the inspection.  Upon reasonable request, the employer must provide a copy of the Notice of Inspection to an affected employee.  AB 450 also provides that an employer "shall not reverify the employment eligibility of a current employee at a time or in a manner" not required by federal law.  The Labor Commissioner has enforcement authority, and penalties for violations can be up to $10,000.

Parental Leave Rights (SB 63) – Smaller employers (20+ employees) now required to provide unpaid leave

Small employers will need to be ready to give time off to new parents starting January 1, 2018.  SB 63 will require California employers with at least twenty employees within a 75-mile radius to provide up to twelve weeks of job-protected unpaid leave to new parents for the purpose of bonding with a newborn child, adopted child, or foster-placed child.  SB 63 is similar to the California Family Rights Act (CFRA), which requires employers with fifty or more employees within a 75-mile radius to offer these parental leave protections to new parents.  Employers may not "interfere with, restrain, or deny the exercise of, or the attempt to exercise, any right" provided by the new law.  Employees may use accrued vacation pay, paid sick time, other accrued paid time off,  or other paid or unpaid time off negotiated with the employer, during the parental leave.

Public Sector Employers Cannot Discourage Union Membership (SB 285)

Under Government Code section 16645.6, public employers who receive state funds are prohibited from using those funds to deter union organization.  SB 285 goes a step further – prohibiting public employers from discouraging or deterring public employees from becoming or remaining members of an employee organization.  Notably, this statute applies to all public employers regardless of the source of funds, including employers subject to the MMBA, Dills Act, EERA, HEERA, Trial Court Act, Court Interpreter Act, TEERA, and Section 12302.25 of the Welfare and Institutions Code.  The Public Employment Relations Board has jurisdiction over any violations.  Since the statute does not define what constitutes to "discourage" or to "deter," public employers must be cautious in their interactions with union members and the information they transmit about union membership.  Significantly, SB 285 likely attempts to protect labor unions if the Supreme Court holds that agency fees cannot be imposed on public sector employees in Janus v. AFSCME.

Service Member Anti-discrimination Protection (AB 1710 and SB 266) – Existing law expanded; violations carry significant penalties

AB 1710 and SB 266 amends section 394 of the Military Veterans Code. Existing law prohibits discrimination against service members.  These bills expand the scope of the protection for military personnel by prohibiting discrimination in terms, conditions, or privileges of employment.  The law covers discrimination by individuals and public and private sector employers.  Violations of the law result in criminal and civil penalties, including actual damages and reasonable attorney's fees.  Given these remedies, employers need to ensure that their recruiters and supervisors are trained on service member anti-discrimination laws.

Increased Penalty for Whistleblower Retaliation/Discrimination (AB 1102) – Specific to health facilities

Existing law (Labor Code section 1278.5) prohibits a health facility from discriminating or retaliating against a patient, employee, medical staff, or any health care worker because that person filed a grievance, complaint, report with the facility, or participated in an investigation or administrative proceeding related to the quality of care, services, or conditions at the facility. A violation of the statute results in a civil penalty of up to $25,000 dollars.  Under AB 1102, a person who willfully violates section 1278.5 is also guilty of a misdemeanor punishable by a fine of up to $75,000 .

Recognizing Non-binary as a Third Gender (SB 179)

Through SB 179, California now recognizes three genders – female, male, and nonbinary.  This  legislation allows individuals to update their gender on a birth certificate, a driver's license (beginning January 1, 2019), and obtain a court judgement (beginning September 1, 2018) without undergoing clinical treatment.  Instead,  the individual has to attest, under penalty of perjury, that the request for a change in gender is to confirm the person's legal gender to the person's gender identity and not for fraudulent purposes.  While the impact of this legislation is unclear – it may impose new requirements on employers and educational institutions to provide additional restroom and locker room facilities.

New Anti-Harassment Training Requirements for Supervisors (SB 396)

FEHA currently requires employers with fifty or more employees to provide at least two hours of sexual harassment and abusive conduct prevention training to all supervisory employees within six months of an individual's assumption of supervisory duties and once every two years thereafter.  SB 396 requires covered employers to include training on harassment based on gender identity, gender expression, and sexual orientation.  The training must include practical examples and the trainer must have pertinent knowledge and expertise.  SB 396 also requires employers to display DFEH's poster on transgender rights in the workplace.

Given that sexual harassment allegations have permeated every industry and have dominated the news cycle – employers must be vigilant in providing anti-harassment training, investigating complaints, and taking prompt corrective action.  Employers should review their anti-harassment/anti-discrimination trainings and policies to ensure compliance with SB 396.

Equal Pay (AB 46) – Now applies to both public and private sector employers

Existing law prohibits employers from paying workers of one sex/race more than the workers of the opposite sex/race for "substantially similar work," unless the employer can show that any pay gap is justified.  AB 46 amends Labor Code section 1197.5 by extending the definition of employer.  The Equal Pay Act will now apply to both public and private sector employers. That said, employees still cannot sue public sector employers for penalties under Labor Code section 1199.5.

Emeryville Fair Workweek Ordinance – New employer requirements before hiring more employees

Emeryville has enacted its Fair Workweek Ordinance which became effective on July 1, 2017.  Under the Ordinance, employers must offer additional work hours to current qualified part-time employees (those with fewer than thirty-five hours of work in a calendar week) in writing before hiring new employees or using contractors or staffing agencies.  In addition to being qualified to do the work, covered employees are those who perform at least 2 hours of work within the geographic boundaries of the city in a week; and qualify as an employee entitled to minimum wage under the Labor Code.  Also, employers must provide new employees with good-faith written estimates of their work hours and schedules.  Employers must provide employees with at least two weeks' notice of their actual schedules; notify employees of schedule changes and allow employees to decline schedule changes made without two weeks' notice; pay employees a premium for schedule changes made with less than two weeks' notice; ensure that employees have at least eleven hours off between shifts; and allow employees to request flexible work arrangements without retaliation.

San Jose Opportunity to Work Ordinance – New employer requirements before hiring more employees

San Jose has enacted its Opportunity to Work Ordinance which became effective on March 13, 2017.  Under the Ordinance, employers must offer additional hours of work to existing employees who (in the employer's good faith and reasonable judgment) have the skills and experience to perform the work before hiring additional employees, subcontractors, temporary services or staffing agencies, and use a transparent and nondiscriminatory process to distribute work hours among existing employees.  In addition to being qualified to do the work, covered employees are those who, in a calendar week, perform at least two hours of work for the employer; and who qualify as an employee entitled to the California minimum wage, or is a participant in a Welfare-to-Work Program.  A Welfare-to Work Program means the CalWORKS Program, County Adult Assistance Program (CAAP) which includes the Personal Assisted Employment Services (PAES) Program, General Assistance Program and any successor programs that are substantially similar.

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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