California Legislation Update

California’s state legislature is nearing the end of its term, and employers are beginning to glimpse some of the laws that could apply in 2018.  There are multiple proposed bills that prohibits employers’ ability to rely upon or seek information about applicant’s previous wages to set the employee’s pay.  This Friday’s Five reviews the current law – California’s Fair Pay Act, the proposed bills on disclosure of wages, and San Francisco’s local ordinance that recently passed.

1. Current law – California’s Fair Pay Act (Labor Code section 1197.5)

Existing law generally prohibits an employer from paying an employee at wage rates less than the rates paid to employees of the opposite sex in the same establishment for equal work for work performance that requires equal skill, effort, and responsibility that are performed under similar working conditions.  Effective as of January 1, 2017, AB 1676 amended California’s Fair Pay Act, found in Labor Code section 1197.5, prohibiting employers from relying on an employee’s prior salary, by itself, to justify any disparity in compensation.  It is important to note the bill was modified to take out language that would have prohibited employers from obtaining an applicant’s prior salary.

2. Proposed State Bill – AB 1209 – Gender Pay Gap Transparency Act

This bill has been sent to the Governor’s desk during the week of September 11, 2017 to be signed into law or vetoed.  The bill, if signed by the Governor, would require employers with at least 500 employees to calculate the difference between the wages of male and female exempt employees in California by each job classification or title.  The employer would also have to do the same for all board members who are located in California.  The employer would need to report the difference in pay, which would be published on the Internet by the Secretary of State.  Governor Brown has until October 15, 2017 to sign or veto the bill.

3. Proposed State Bill – AB 168 – Salary Information

This bill prohibits employers from replying upon or seeking salary history from applicants.  In addition, employers would be required to provide the pay scale for a position to an applicant.

4. San Francisco local ordinance: Parity in Pay Ordinance

San Francisco passed a local law that prohibits employers from asking job applicants to disclose their salary history.  It also prohibits employers from considering an applicant’s pay history as a factor in determining the level of pay to offer.  The law is effective July 1, 2018, so San Francisco employers have some time to review hiring practices to comply.

5. Proposed State Bill – AB 46 – Wage Discrimination

This bill amends the California Fair Pay Act to make clear that the law applies to both public and private employers.

With the end of summer quickly approaching, this Friday’s Five (and next week’s post as well) covers broad topics employers should review periodically.  Today’s post covers five questions a company operating in California should be asking on a routine basis:

1. Has the company reviewed and updated the employee handbook and related policies?

As discussed in last weeks Friday’s Five about the new court decision on vacation pay in Minnick v. Automotive Creations, an employer’s policies are critical in defending claims.  Vague or out dated policies can create huge amounts of liability for employers. California’s requirements change throughout the year, and it is important that employers have a good relationship with employment counsel so that they are routinely communicating and reviewing the need to update policies based on new case law and legislation.

2. Does your company train supervisors and employees on its handbook and other policies, and does the company standby what it tells employees in these policies?

Legally drafted policies only get your company half of the way there.  Companies need to train managers and supervisors about what the policies mean and how they need to be implemented day-to-day.  Furthermore, the company needs to follow-through with what it tells supervisors, managers, and employees.  For examples, if the company maintains an open door policy, but none of the employees are utilizing the open door policy there could be a problem.  One solution is for the company to start pro-actively having open door sessions with employees to discuss their experience at the company (my post next week will discuss what should be asked during these open door sessions).

3. Has the company conducted a review of a local county and city laws that apply?

State, county and city laws regulating minimum wage and paid sick leave are numerous and California employers need to ensure they have closely reviewed they are complying with these requirements.  As Carl’s Jr. is finding out, noncompliance can have steep penalties.

4. When was the last time the company conducted an internal wage and hour audit internally? When was the last time an external lawyer or other professional reviewed wage and hour practices?

Many companies establish policies or simply continuing using policies from the past that have never been reviewed internally or externally by a lawyer or other professional.  I’ve published an HR audit list that covers a few of the essential areas that must be reviewed to lower a company’s legal exposure in California.

5. Is there an open line of communication with the employer’s payroll company and have specific wage and hour compliance issues been discussed?

The information that must be listed on employee’s pay stub is detailed, but easy to comply with.  A model pay stub published by the State Division of Labor Standards Enforcement can be found here (but note this only lists the state requirements – any other local county or city requirement will also apply).  The model pay stubs does not list paid sick leave, which employers must also remember to list on the employee’s pay stub or other writing provided to employees when they are paid.

Many payroll companies do not review the accuracy of the information listed on the pay stubs they generate, and this burden falls on the employer.  In addition to the California Labor Code requirements of the information that must be listed on pay stubs, the local requirements for reporting the amount of paid sick time available to employees must also be provided.  Employers need to proactively review and discuss these requirements with their payroll companies.

In this Friday’s Five I discuss:

  • new case decision on vacation pay and policies (Minnick v. Automotive Creations)
  • PAGA decision allowing contact information for other employees (Williams v. Superior Court),
  • new Form I-9 released and employers must start using by September 17, 2017 (download here)
  • new Notice of Rights for Victims of Domestic Violence/sexual assault/stalking required to be provided to California employees effective July 1, 2017 (download here), and
  • new law signed by Governor Brown prohibiting inquiries into litigant’s immigration status.

The City of Los Angeles recently assessed Carl’s Jr. Restaurants $1.45 million in fines for violation of the City’s minimum wage law ordinance.  The City sought these penalties against Carl’s Jr. for allegedly failing to pay 37 employees the applicable Los Angeles minimum wage rate of $10.50 per hour from July 1, 2016 to December 31, 2016.  The city also claimed that the company failed to post the required notices required by the ordinance and did not allow investigators access to two locations.  This astronomical fine imposed by the city seems out of proportion for the size of the number of employees affected, but it is a stark reminder for employers about how serious any violations of the local ordinances could be.  Here are five lessons for Southern California employers from this incident:

1. Enforcement of local ordinances is taking place.

The cities that have passed local ordinances are enforcing the laws strenuously.  The City of Los Angeles has especially been active in investigating potential violations.  First hand I have had a number of clients who have been contact by the city seeking information about compliance with the ordinance.  The investigators have appeared at workplaces in person and also contacted the employers over the phone. As discussed in item number five below, it is important for employers to train staff about how to appropriately respond to questions with people entering the workplace asking for information about the employer’s employment practices.

2. Review pay rates to ensure compliance with local ordinances.

Employers need to remember that even if their business is not located in a city or county that does not have a minimum wage or paid sick leave requirement, this does not mean your company can ignore the new laws.  Most of the ordinances require compliance with their local laws if any employee works two hours within the city or county even if the employer is not based within that city or county.  For example:

  • Santa Monica:  Law applies to any employee working a minimum of two hours within Santa Monica in a given week (even if employer is located outside of Santa Monica).
  • City of Los Angeles: Ordinance applies to “[a]n employee … who performs at least two hours of work in a particular week within the City of Los Angeles….”
  • County of Los Angeles: Ordinance applies to “[a]nyone who works at least two hours in a one-week period within the unincorporated areas of Los Angeles County is entitled to the County minimum wage for the hours worked in the unincorporated area of the County.”
  • Pasadena: Applies to employees who perform at least two hours of work in Pasadena.
  • Malibu: “This ordinance applies to employees who perform at least two hours of work in a particular week within the Malibu city limits.”

3. Penalties for non-compliance are substantial.

An employer who violates the City of Los Angeles’ minimum wage requirements is liable to the employee for payment of back wages and an additional penalty of $100 for each day that the violation occurred or continued.  Where retaliation has occurred, the employee is entitled to reinstatement and a trebling of all back wages and penalties.

In addition, employers are subject to administrative fines as set forth below:

Failure to post notice of the Los Angeles Minimum Wage rate

$500 per day per employee
Failure to allow access to payroll records $500 per day per employee
Failure to maintain payroll records or to retain payroll records for your years $500 per day per employee
Failure to allow access for inspection of books and records or to interview employees $500 per day per employee
Retaliation for exercising rights under the ordinance $1,000 per day per employee
Failure to provide employer’s name, address, and telephone in writing $500 per day per employee
Failure to cooperate with the Division’s investigation $500 per day per employee
Failure to post Notice of Determination to employee $500 per day per employee

4. Ensure all poster and notice requirements are complied with.

The cities and counties that have local minimum wage and paid sick leave ordinances are making the notices relatively easy to obtain from their websites.  For example, here are a few links published by various cities in the Los Angeles area:

Santa Monica notices:  https://cityofsantamonica.app.box.com/s/nuccal4on935m43p0nhmuzgy65f5mbwl

City of Los Angeles notice: http://wagesla.lacity.org/#information

County of Los Angeles notice: http://file.lacounty.gov/dca/cms1_245570.pdf

Pasadena notice:  http://www.cityofpasadena.net/minimumwage/

Malibu: http://www.malibucity.org/minimumwage

5. Implement policy and train staff and managers about how to respond to investigators.

All staff should receive training about how to respond if contacted by anyone who indicates that they are from a government office and are seeking information about the workplace.  It is important for the employer to be able to identify and confirm that the investigators are who they are reporting to be and that they are actually working for the federal, state or local government.  Once their identify has been confirmed, employers need to designate who from the company will gather and communicate the relevant information to the investigators in a timely manner.  The person designated by the employer should have experience in dealing with investigations, an understanding of the company’s policies and the local legal requirements.  Finally, the employer should address whether they need the assistance of legal counsel to assist in the investigation.

In speaking to a few groups of California employers this week, a common question kept coming up about what are the essential Booksemployment policies California employers must have?  While there are more than five, this week’s Friday’s Five starts with what I consider to be critical policies that every California must have in place.

1. At-will policy

Under California law, it is presumed that all employment is terminable at-will. California Labor Code section 2922 provides: “An employment, having no specified term, may be terminated at the will of either party on notice to the other.” The at-will doctrine means that the employment relationship can be terminated by either party at any time, with or without cause, and with or without advanced notice. There are some major exceptions to this rule, but generally California law recognizes that employers and employees may, at any time, and for any legal reason, terminate the employment relationship.

2. Anti-harassment, discrimination and retaliation policy

California’s Fair Employment and Housing Council published new regulations pertaining to anti-discrimination and anti-harassment requirements effective April 1, 2016.  Employers need to review and potentially update their policies in order to meet the new requirements.  The full text of the regulations can be obtained here.

3. Timekeeping policy

California law requires employers to track start and stop times for hourly, non-exempt employees. The law also requires employer to track the start and stop times for the employee’s thirty minute meal periods. The time system needs to be accurate, and the employer needs to be involved in the installation and setup of the system. Do not simply use the default settings for the hardware and software. Understand what the system is tracking and how it is recording the data. Since the statute of limitations for California wage and hour violations can extent back four years, it is recommended that employers take steps to keep these records at least four years.  Employers should also have a complaint procedure in place and regularly communicate the policy to employees in order to establish an effective way to remedy any issues.

4. Meal and rest break policy

As I’ve written about many times previously, employers must have a compliant meal and rest break policy.  Indeed, given the California Supreme Court’s ruling in Augustus v. ABM Security Services in December 2016, employers should review their rest beak policy to ensure it complies with this ruling.

5. Paid sick leave policy

Many local governments in Southern California have passed laws increasing the minimum wage and amount of paid sick leave that must be provided to employees.  Employers must ensure they are complying with the law that provides the most benefits to employees.  Here is a brief summary of some of the local laws in Southern California:

State/City Minimum Wage Paid Sick Leave
1) California $10/hr January 1, 2016; $10.50 January 1, 2017; $11/hr January 1, 2018; $12/hr January 1, 2019; $13/hr January 1, 2020; $14/hr January 1, 2021; $15/hr January 2022* Current: 3 days or 24 hours
2) Los Angeles – City (click here for more information about Los Angeles City’s minimum wage and paid sick leave laws) July 1, 2016: $10.50/hr; July 1, 2017 $12; July 1, 2018 $13.25; July 1, 2019 $14.25; July 1, 2020 $15.00 * (click here for more information about Los Angeles’s minimum wage ordinance) July 1, 2016: 48 hours*
3) Los Angeles – County (applies to unincorporated cities in LA County) Same as LA City (see above) No specific requirement – state law applies
4) San Diego City July 2016: $10.50 (date not set yet – likely effective in first half of July 2016); January 1, 2017 $11.50; January 1, 2019 $11.82; January 1, 2020 $12.15; January 1, 2021 $12.49; January 1, 2022 $12.84 5 paid sick days
5) Santa Monica (click here for Santa Monica’s website for details of the law) $10.50 July 1, 2016; July 1, 2017 $12.00; July 1, 2018 $13.25; July 1, 2019 $14.25; July 1, 2020 $15.00* January 1, 2017: 32 hours for small businesses, 40 hours for large businesses; January 1, 2018: 40 hours for small business, 72 hours for large businesses*
*Employers with 25 or fewer employees the implementation is delayed one year.

Happy Memorial day weekend!

This Friday’s Five comes on Cinco de Mayo – how appropriate.  The U.S. House of Representatives passed the Working Family Flexibility Act, now it is being consideredfamily - school by the Senate.  President Trump has indicated that he would sign the bill if it makes it to his desk.  Five issues California employers need to understand surrounding comp time:

1. What does the Working Family Flexibility Act provide?

The law passed by the U.S. House of Representatives adds sections to the Fair Labor Standards Act (FLSA) by allowing employers to offer employees compensatory time instead of paying them for overtime worked.  The bill provides for the following:

  • Comp time is accrued at the rate of not less than one and one-half hours for each hour of overtime pay is required under the FLSA;
  • Private employers that are not unionized are required to enter into a written agreement with the employee about the comp time, and the agreement must be voluntarily entered into by the employee; and
  • The employee must have worked for the employer for at least 1,000 hours for the employer for a continuous period in the 12-month period before being eligible for comp time.

2. The Federal legislation will unlikely effect California employers

California law generally prohibits most employers from offering comp time in lieu of paid overtime.  California law requires employers to pay overtime on a more stringent basis than the FLSA (below is a description of California’s daily overtime requirements).  California’s Labor Code specifically prohibits any employee from waiving their rights to overtime under the Labor Code.  See Section 1194.  Therefore, because California law is more stringent and provides employees more protection than the FLSA (and the proposed Working Family Flexibility Act), California employers would still need to comply with California law even if the Working Family Flexibly Act is passed into federal law.

3. California’s unwaivable daily overtime requirements

Under California’s Labor Code, time and a half overtime is due for (1) time over eight hours in one day or (2) over 40 hours in one week or (3) the first eight hours worked on the seventh consecutive day worked in a single workweek; and double time is due for (1) time over 12 hours in one day and (2) hours worked beyond eight on the seventh consecutive day in a single workweek. The DLSE provides a good summary here.

4. California employers can offer makeup time to employees, but there are strict requirements that must be meet

California employers are not without any options however, as it is easy to forget the one form of flexibility provided to California employers: makeup time. This provision allows employers to avoid paying overtime when employees want to take off an equivalent amount of time during the same work week. There are, however, a few requirements that must be met to ensure that the employer is not required to pay overtime for the makeup time.  For instance:

  • An employee may work no more than 11 hours on another workday, and not more than 40 hours in the workweek to make up for the time off;
  • The time missed must be made up within the same workweek;
  • The employee needs to provide a signed written request to the employer for each occasion that they want to makeup time (and if employers permit makeup time, they should have a carefully drafted policy on makeup time and a system to document employee requests); and
  • Employers cannot solicit or encourage employees to request makeup time, but employers may inform employees of this option.

5. Will the federal legislation influence California to provide similar flexibility to workers?

If the Working Family Flexibility Act becomes federal law, it is unlikely to influence California’s legislators to draft a similar state law.  The Democrats in the U.S. House all voted against the bill, and the left is vehemently opposed to the bill, even though it provides for the payment of all comp time accrued but not used when the employee leaves employment.  Such opposition from the Democrats make it unlikely to be considered in the California legislature.

 

Many cities and counties across California are set to increase their minimum wages in July 2017, and employers need to start preparing now.  For example, Los Angeles City and County are increasing the minimum wage for employers with 26 or more employees to $12 per hour on July 1, 2017 (currently at $10.50 per hour). This Friday’s Five video covers five issues that employers should start to review in order to comply with these increases in the minimum wage.

For more information about the local minimum wages in place throughout California:

San Diego: http://www.californiaemploymentlawrep…

Los Angeles: http://www.californiaemploymentlawrep… and http://www.californiaemploymentlawrep…

Southern California overview of various minimum wage requirements: http://www.californiaemploymentlawrep…

Sample model pay stub: https://www.dir.ca.gov/dlse/PayStub.pdf

 

Assemblymember David Chiu (D-San Francisco) introduced a bill – AB 450 – that would put employers between the federal government and the state of California in the immigration debate.  Basically, the bill imposes penalties on employers who cooperate or do not notify the state of federal immigration actions taking place at their locations.  As set out in a statement issued by Assemblymember Chiu, the bill does the following:

  • Protecting workers from being wrongfully detained in their workplace by requiring employers to ask for a judicial warrant before granting ICE access to a worksite.
  • Preventing employers from sharing confidential employee information, such as a social security number, without a subpoena.
  • Requiring employers to notify the Labor Commissioner and employee representative of a worksite raid. Employers must also notify the Labor Commissioner, employees, and employee representatives of an I-9 audit.
  • Preventing employers from retaliating against employees who report labor claims by enabling workers crucial to a labor claim investigation to receive certification from the Labor Commissioner. This certification would both protect the worker and aid in successfully adjudicating labor violations.

The current version of the bill creates the following obligations for employers:

  • prohibit an employer from providing a federal immigration enforcement agent access to a place of labor without a properly executed warrant and would prohibit an employer, or a person acting on behalf of the employer, from providing voluntary access to a federal government immigration enforcement agent to the employer’s employee records without a subpoena
  • require an employer to provide an employee, and the employee’s representative, a written notice containing specified information, in the language the employer normally uses to communicate employment information, of an immigration worksite enforcement action to be conducted by a federal immigration agency at the employer’s worksite, unless prohibited by federal law
  • require an employer to provide to an affected employee, and to the employee’s representative, a copy of the written federal immigration agency notice describing the results of an immigration worksite enforcement audit or inspection and written notice of the obligations of the employer and the affected employee arising from the action
  • require an employer to notify the Labor Commissioner of a federal government immigration agency immigration worksite enforcement action within 24 hours of receiving notice of the action and, if the employer does not receive advance notice, to immediately notify the Labor Commission upon learning of the action, unless prohibited by federal law
  • require an employer to notify the Labor Commissioner before conducting a self-audit or inspection of specified employment eligibility verification forms, and before checking the employee work authorization documents of a current employee, unless prohibited by federal law

Failure to meet any of the obligations would create liability for employers of not less than $10,000 and not more than $25,000 for each violation.  This creates a potential legal conundrum for employers who have a responsibility to comply with federal immigration laws.  Under this proposed bill employers could face fines under state law for not following these requirements, but on the other hand employers face penalties for not complying with federal immigration laws.  The bill makes employers responsible for these difficult legal determinations in interpreting state and federal obligations, in addition to requiring them to become legal experts in determining if the federal government has a “properly executed search warrant” for example.

I hope everyone is having a great Thanksgiving weekend.  This Friday’s Five is about five common questions I’m receiving from California employers at the close of 2016.

1. Does the legalization of recreational use of marijuana in California with the passage of proposition 64 change employer’s rights to prohibit it in the workplace?

No.  Proposition 64 expressly provides that employers may prohibit marijuana in the workplace, and will not be required to accommodate an employee’s use of marijuana.  This is also consistent with the California Supreme Court’s holding in Ross v. Ragingwire Telecommunications, Inc.  In that case the court examined the conflict between California’s Compassionate Use Act, (which gives a person who uses marijuana for medical purposes on a physician’s recommendation a defense to certain state criminal charges and permission to possess the drug) and Federal law (which prohibits the drug’s possession, even by medical users).  The court held that the Compassionate Use Act did not intend to address the rights and obligation of employers and employees, and further noted that the possession and use of marijuana could not be a protected activity because it is still illegal under federal law.

2. Does Trump’s win change any laws facing employers in 2017?

While it is hard to predict the effect President-elect Trump will have on California employers, I previously wrote about potential impacts in immigration and E-verify issues, paid family leave, and the expansion of even more additional local laws.

3. When is the new Form I-9 required to be used by employers?

Employers must begin using the new Form I-9 by January 22, 2017.  It is important to note that employees already hired with the older version of the Form I-9 do not have to complete the new version.  More information about the revised Form I-9 can be read here.

4. What new laws in California do employers need to understand for 2017?

New laws that will impact many California employers include:

  • Prohibition on asking or taking into consideration juvenile convictions when hiring
  • Expansion of wage discrimination laws based on gender, race or ethnicity.
  • Employers with 25 or more employees are required to provide written notice to employees about rights provided to domestic violence victims under California law.
  • Employers are prohibited from requiring employees who primarily reside and work in California to agree to adjudicate claims outside of California or apply another state’s laws in arbitration agreements.

My prior post contains more information about the laws facing California employers in 2017.

5. When are you conducting your next webinar?

Join me on December 13, at 11:00 a.m. Pacific time for a webinar: “Employment law update: Essential issues facing California employers in 2017.” (I had to throw this self-promoting question in the line-up.)  You can register for the webinar here.

What a week – and here we are at Friday already.  This Friday’s Five focuses on how President Trump could change the employment landscape on the federal and California levels.

1.      Department of Labor’s overtime regulations effective December 1, 2016 are still on course to take effect, but could be changed in 2017.

As I’ve written about previously, the DOL has issued changes to the federal rules raising the salary required for employees to qualify as exempt employees.  The DOL raised the salary required to $47,476 annually for a full time worker, and this change is effective December 1, 2016.  Mr. Trump will obviously be unable to roll back this increase until he is inaugurated as president.  However, there have been discussions that congress and some legal actions could prevent this requirement from taking effect, but prudent employers should continue to proceed to comply with the new requirement on December 1, 2016.  It is likely that this regulation will be carefully reviewed by President Trump, but any changes he potentially could make would likely not be effective until mid or late 2017.

2.      Immigration and E-verify issues.

During the campaign, Trump stated that he would mandate employers use the E-verify program to check on applicants’ right to work within the United States.  The system is available for employers to use currently, but Federal law does not require employers to use the system, and some states require its use.  However, employers in California are not currently required to use E-verify.

3.      Minimum wage.

During the campaign, Mr. Trump supported the idea of raising the federal minimum wage from $7.25 per hour to $10 per hour.  In July of 2016, Mr. Trump made statements that he supported this increase, and also supported the idea that states could set a higher minimum wage.  Of course, given California’s current minimum wage is set at $10 per hour, an increase on the federal level will probably not impact California employers, as California’s minimum wage is increasing to $10.50 per hour on January 1, 2017, $11 per hour on January 1, 2018, and then $1 per year thereafter until it reaches $15 per hour in January 2022.  These increased are delayed by one year for employers with 25 or fewer employees.

4.      Paid maternity leave.

Mr. Trump’s website proposes that he would support a law providing 6 weeks of paid leave to new mothers before returning to work.  Currently, under the FMLA, employers with 50 or more employees are required to provide up to 12 workweeks of unpaid, job-protected leave for the birth of a child and care for a newborn.

5.      Implementation of more local laws expected. 

As we have seen here in California, local cities and counties have taken the minimum wage and paid sick leave issues into their own hands and require employers to comply with more restrictive laws than those passed on the state or federal level.  Just in Southern California for example, there are many different minimum wage and paid sick leave laws that employers need to be aware of and comply with.  This local legislation makes it hard for businesses that have more than one location, as the laws require different policies, notices, pay requirements, and tracking obligations for each location.

Interested in learning more about employment law updates facing California employers?  My firm is hosting a webinar on December 13, 2016, discussing the new laws employers must comply with in 2017 and an update on the litigation front.  Click here to register.