United States: Are You Compliant? A New Year Brings New Laws Impacting California Employers

In 2017, the California Legislature and Governor Jerry Brown were busy passing new laws that will impact employers across California this year. Although some took effect in 2017, most of the new laws impacting California employers went into effect on January 1. Below is a summary of those key laws, and some recommendations on how you and your business can bring your enterprise into compliance in the New Year. 

  • New Parent Leave Act: Prior to January 1, 2018, only those employers with 50 or more employees were required to provide employees with child bonding leave under the California Family Rights Act (CFRA). Effective January 1, 2018, those protections have been expanded to smaller employers who employee 20 to 49 employees within a 75 mile radius. Under the new law, employees who work at least 1,250 hours of service during the previous 12-month period with the employer will be permitted to take up to 12 weeks of unpaid, job-protected leave under CFRA in order to bond with a new child within one year of the child's birth, adoption or foster-care placement. Employers will need to provide the requesting employee with a guarantee that he or she will return to the same or comparable position after the leave has expired, and must maintain and pay for coverage under a group health plan at the same level and conditions that coverage would have been provided had the employee continued working. This leave is separate and distinct from paid sick leave under the California Healthy Family Act, which was enacted in 2015.
  • New LGBTQ protections: Prior to January 1, 2018, California law required employers with 50 or more employees to provide supervisors with an annual two-hour training on sexual harassment. Effective January 1, 2018, that training must also address harassment based on gender identity, gender expression and sexual orientation. Covered employers are also now required to post a Department of Fair Employment and Housing (DFEH) "Transgender Rights in the Workplace" poster in a prominent and accessible workplace location. Earlier in 2017, the DFEH issued a set of regulations that prohibit California employers from discriminating against job applicants or employees because that individual is transitioning, or is perceived to be transitioning, to a gender other than that assigned at birth. Those regulations also require covered employers to allow employees to use restroom facilities that correspond to their gender identity or gender expression, and prohibit employers from imposing dress standards upon job applicants and/or employees if those dress standards discriminate against the employee on the basis of gender identity or gender expression.
  • Salary history information: Effective January 1, 2018, all California employers, regardless of size, are prohibited from directly or indirectly inquiring about a job applicant's salary history, or relying on salary history "as a factor in determining whether to offer employment . . . or what salary to offer an applicant." Salary history includes an individual's rate of compensation and other benefits. Employers must also, upon reasonable request, provide an applicant with the pay scale assigned to the position sought. Notwithstanding these new protections, employers are still permitted to consider salary history information that is disclosable to the public pursuant to federal or state law (e.g., the California Public Records Act or the federal Freedom of Information Act). And an applicant may disclose salary history to a prospective employer if it is voluntary and without prompting. 
  • "Ban-the-box" expansion: "Ban-the-box" measures have gained popularity recently, including in Los Angeles. Effective January 1, 2018, those protections expanded statewide under a new law that prohibits employers with five or more employees from asking job applicants about their criminal history information before making a conditional offer of employment. Under the new law, after a conditional offer of employment is made, the employer is permitted to inquire into conviction history and conduct a background check. But if that background check reveals a criminal conviction, and the employer intends to deny the applicant the position at least in part because of the conviction, the employer must engage in an individualized assessment of whether the applicant's conviction would have a direct and adverse relationship with the duties of the job, provide notice to the applicant of such decision and allow the applicant to dispute the accuracy of the conviction. If the final decision is to deny employment, the employer must notify the applicant in writing and explain any procedure the employee has to challenge the decision, including that the employee has a right to file a complaint with the DFEH.
  • Immigrant Worker Protection Act: Effective January 1, 2018, all California employers are prohibited from allowing immigration enforcement agents to enter nonpublic areas of a workplace without a judicial warrant. Employers are also prohibited from allowing an immigration enforcement agent to access, review or obtain most employee records without subpoena or judicial warrant, or from unnecessarily re-verifying the employment eligibility of an employee. The new law also requires employers to provide notice to current employees of an immigration agency's inspection of I-9 Employment Eligibility Verification forms or other employment records within 72 hours of receiving the federal notice of inspection. And upon reasonable request, individuals who may lack work authorizations or whose documents have deficiencies may request—and employers must provide—a copy of the inspection notice. Employers in violation of this new law face penalties in an amount between US$2,000 and US$5,000 for a first violation and between US$5,000 and US$10,000 for each subsequent violation.
  • Domestic violence, sexual assault, stalking notice: Effective July 1, 2017, employers must inform employees of their rights to take time off for domestic violence, sexual assault and stalking-related leave by providing specific information in writing to new employees upon hire and to other employees upon request. This leave can be unpaid, and is covered under Labor Code Section 230. 
  • State minimum wage increase: Effective January 1, 2018, the state minimum wage increased from US$10.50 to US$11 an hour for employers with 26 or more employees, and from US$10 to US$10.50 an hour for employers with fewer than 26 employees. Exempt employees must therefore be paid a weekly salary of no less than US$800 per week, and US$45,760 annually (US$840 per week, and US$43,680 annually, for employers with fewer than 26 employees).
  • Rest break clarification: In 2016, the California Supreme Court made clear in Augustus v. ABM Security Services, Inc. that employers cannot control how an employee spends his or her work breaks. In 2017, the California Labor Commissioner updated its fact sheet and clarified that an employer cannot require employees to stay on the work premises during their rest breaks, which had become common practice for employers. According to the Labor Commissioner, "during rest periods employers must relieve employees of all duties and relinquish control over how employees spend their time." As a practical matter, however, if an employee is provided a 10-minute rest period, the employee can only travel five minutes from a work post before heading back to return in time.
  • Increased DLSE enforcement: Effective January 1, 2018, the California Labor Commissioner's Division of Labor Standards Enforcement (DLSE) has increased authority to investigate employers even without a complaint being filed for discrimination or retaliation. Prior to January 1, 2018, the DLSE was only permitted to investigate an employer once an employee filed a complaint with the Labor Commissioner. Under the new law, the DLSE will have authority to investigate on its own and seek injunctive relief, or request that the offending employer cease its unlawful activities if the DLSE has reasonable cause to believe a violation of law has occurred.  

Employer takeaways

January is a great time to revisit your employee handbook, workplace policies and day-to-day procedures. Here are some concrete steps you can take to help bring you and your enterprise into compliance in California:

  • Audit your application forms and hiring practices to steer clear from asking applicants about their salary history, gender identity, gender expression or sexual orientation, or asking prematurely about their criminal history.
  • Audit your current policies and procedures to ensure equal access to restrooms and dress codes for all employees regardless of gender identity or sexual orientation.
  • Consider adopting an employee-transitioning policy that will provide transitioning employees with support.
  • Update your policies and procedures to adequately address the New Parent Leave Act rights, and incorporate within the annual harassment training the issues of gender identity and sexual orientation.
  • Make sure you have adequate notice ready for new hires concerning domestic violence and stalking.
  • Review your current immigration-related policies to come into compliance with the new enforcement laws.
  • Although not a direct employment-related issue, based on fast-evolving case law and regulations, all companies that operate public-facing websites should also consider reviewing and updating the accessibility of their websites for individuals with visual impairments, which includes adding an accessibility statement and ensuring that their website is compliant with Web Content Accessibility Guidelines (WCAG) 2.0 standards.

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