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Notable Changes in California Employment Law for 2016

On Behalf of | Jun 29, 2022 | in Announcements, Class Actions, Employment Updates, Family Leave, Minimum Wage, Overtime

It is that time of year again for California employees to hear about the latest and greatest out of Sacramento and for California employers to revisit their policies and handbooks to assess compliance with the slew of new California employment laws that take effect on January 1, 2016, or shortly thereafter. This year there is something for everyone. A few of these employment law updates place new prohibitions on employers, while others provide positive benefits such as safe harbors, cure provisions, and employer incentives for reclassification of certain independent contractors.  The California state minimum wage increased from $9.00 to $10.00. The minimum wage increase will also increase the required salary threshold for exempt employees under California’s Wage Orders to $3,466 a month.

All the new laws discussed below are effective on January 1, 2016, unless otherwise indicated.

California’s Fair Pay Act

Senate Bill (“SB”) 358 amends Labor Code section 1197.5 which prohibits gender based inequality. Existing law states that men and women working at the same location receive equal pay for equal work. The new law requires that men and women receive equal pay for substantially similar work even if they are working in different locations. Other significant amendments that will help eliminate the gender wage gap in California is by ensuring that if there is a disparity, the employer justifies the disparity of such non-sex factors as education, experience and training and that they are applied reasonably to account for the entire pay differential. In addition, discouraging pay secrecy by prohibiting retaliation or discrimination against employees who disclose, discuss, or inquire about their own or co-workers’ wages for the purpose of enforcing their rights under the California EPA.  The EEOC is actually working to collect data to ascertain if large companies are in compliance with the federal Lilly Ledbetter Fair Pay Act.

Employers are encouraged to audit their salary structure and recordkeeping practices and policies to ensure compliance with the law.

Piece-Rate Compensation

Assembly Bill (“AB”) 1513 adds Labor Code section 226.2 to the which will significantly change the requirements governing the payment of piece rate compensation. The bill requires employers to pay piece rate workers for rest and recovery periods and other nonproductive or non-working time at specified minimum hourly rates, separate from the piece rate comp. This information must be included on piece-rate employees’ itemized wage statements, which as governed by Labor Code section 226 in general. The law will provide a limited “safe harbor” for employees that haven’t been sued for wages, damages, or statutory and civil penalties based solely on employer’s failure to account and compensate for rest periods and nonproductive time. If you currently pay your employees on a piece-rate system, Labor Code section 226.2 requires that you change your pay practices immediately.

Employers are required to compensate their employees for rest periods at an average hourly rate by dividing the total compensation for the workweek by the total hours worked during the week by the employee, exclusive of rest periods, or by compensating employees with the applicable minimum wage [which is now $10 an hour if you forgot], whichever one is higher. In addition, employers must compensate for the “other nonproductive time” at the minimum wage and must include in their updated paystubs the total hours of rest periods and nonproductive time and the rate and gross wages for said periods.

Requesting Reasonable Accommodations is a Protected Activity

AB 987 expands the protections afforded to employees under the California Fair Employment Housing Act (“FEHA”) by prohibiting employers from discriminating or retaliating against employees who request an accommodation for a disability or religion, regardless of whether the request was granted. The law clarifies that the act of making the request is protected conduct and is actionable separate and apart from the protected-class status of the employee due to a decision out of the Second District Court of Appeal.

AB 987 amends the Fair Employment and Housing Act under the religious accommodation and disability accommodation provisions (California Government Code, § 12940, subds, (I) and (m), respectively) to clarify that an employer cannot retaliate or otherwise discriminate against a person for requesting a reasonable accommodation.

This bill abrogates part of the Second District Court of Appeal decision, Rope v. Auto-Chlor System of Washington, Inc. (2013) 220 Cal. App. 4th 635, which held that a request for reasonable accommodation is not protected activity under the Fair Employment and Housing Act (FEHA). With the exception of its holding on this issue, Rope remains good law.

The bill establishes clear findings and declarations to support the argument that the clarifying statutory language should apply to all existing claims. As the California Supreme Court has explained, “A statute that merely clarifies, rather than changes, existing law” may be “applied to transactions predating its enactment” See W. Sec. Bank v. Superior Court (1997) 15 Cal. 4th 232, at p.250.

Discrimination, Retaliation & Whistleblower Protections for Family Members

AB 1509 amends Labor Code sections 98.6, 1102.5, 2810.3, and 6310, expanding and anti-retaliation protections to an employee who is a family member of a person engaged in protected conduct or who makes a complaint protected by the Labor Code. The law also expands joint employer liability, expanding the definition of employer to include “client employers” (i.e. companies who contract for labor).

Expansion of Protections Under the Family School Partnership Act

SB 579 amends Labor Code section 230.8 to prohibit an employer from discharging or otherwise discriminating against an employee who is considered a “parent” of one or more children that attends school grades 1 through 12. In addition, expands child-related leaves, allowing employees time off to find a school or a licensed child care provider and to enroll or re-enroll a child, and time off to address child care provider or school emergencies. It also expands the categories of employees who are eligible to take time off to care for a child. Employers with 25 or more employees are covered under this law.

The term “parent” now includes guardians, stepparents, foster parents, or grandparents of, or persons who stand in loco parentis to a child. The term “family member” is defined in the Healthy Workplaces, Healthy Families Act of 2014 and includes:  a child (whether biological, adopted, foster, stepchild, legal ward, or a child to whom the employee stands in loco parentis), a parent (whether biological, adoptive, foster, stepparent, legal guardian of employee or his/her spouse/registered domestic partner, or person who stood in loco parentis when employee was a child), a spouse, a registered domestic partner, a grandparent, a grandchild, or a sibling.  “Sick leave” is defined as paid time taken for any of the purposes that are contained in Section 246.5(a) of the Healthy Workplaces, Healthy Families Act of 2014, which includes paid sick time for the illness of family members (like under the old statute), as well as the employee’s own illness.

The employer may request documentation proving that the employee was taking care of the child in protected child-related activities on a specific date and time. The term “documentation” is defined as “whatever written verification of parental participation the school or licensed child care provider deems appropriate and reasonable.”

The amendment also adds that an employer shall not deny an employee the right to use sick leave or to discharge, threaten to discharge, demote, suspend, or in any other manner discriminate against an employee for using, or attempting to exercise the right to use, sick leave to attend to an illness or the preventive care of a family member, or for any other reason specified in section 246.5(a).  (Italics emphasize the change in the statutory language).  Given these changes, employers are strongly encouraged to review their policies and practices, with particular attention to the interactions between sick leave and absence control policies.

PAGA Amendment – Right to Cure Certain Errors in Itemized Wage Statements

AB 1506 amends Labor Code 2699, 2699.3 and 2699.5. Existing law requires the employer to provide its employees with information in regards to their wages, including the inclusive dates of the period for which the employee is paid and the name and address of the employer. PAGA allows private employees to sue to recover penalties that the state labor commissioner could have collected on.  However, the new law does not prevent employees from seeking statutory penalties, and employers are only permitted to cure such violations once within a 12 month period.

Now an employer would have an opportunity to cure a PAGA violation based on failure to include specific beginning and end dates of the pay period and the employer’s name and address.  If within a 12-month period of the employee’s notice to the employer, the employer provides a compliant, itemized wage statement to each aggrieved employee, it is deemed to have cured the violations.  If the employer cures the violations within the 12-month time period, PAGA penalties will not be imposed for those particular violations.  In order to cure the violation(s), the employer must provide fully compliant wage statements to each aggrieved employee for each pay period up to three years prior to the date of the employee’s notice to the employer.

Prohibition of Discrimination Based on Immigration Status

Under California’s Unruh Civil Rights Act, all persons within California are entitled to full and equal accommodations in all business establishments regardless of their sex, race, color, religion, ancestry, national origin, disability, medical condition, genetic information, marital status, or sexual orientation. This new law extends these protected classes to include citizenship, primary language, and immigration status.  The amendment also provides that verification of immigration status and any discrimination based upon verified immigration status, where required by federal law, shall not constitute a violation of the Act. In addition, the bill specifies that the protections do not require the provision of services of documents in a language other than English, or otherwise required by law.  The legislation stems from complaints regarding the denial of services and/or access by business establishments based on, for example, the use of foreign language while in a business establishment or use of foreign identification to show proof of age.

Amnesty Program for Reclassification of Drayage Truck Drivers from Independent Contractors to Employees

AB 621 adds Labor Code section 2750.8 and affects transportation companies handling drayage work, that is, the movement of cargo from ports to warehouses and distribution centers.  The law creates a “Motor Carrier Employer Amnesty Program,” intended to encourage transportation companies handling drayage work to reclassify owner-operator truck drivers currently classified as independent contractors as employees.

Eligible companies may apply to the DLSE for participation in the program.  Companies accepted into the program will be relieved of any liability for statutory or civil, associated with the alleged misclassification of truck drivers as independent contractors, if they execute a settlement agreement with the labor commissioner, prior to January 1, 2017.  If the company is denied participation in the program, the fact and contents of the company’s application are not admissible to be used against the company in any legal action alleging misclassification.

Employment Protections for Grocery Workers Upon Change in Control

AB 359 creates Labor Code sections 2500, et seq. which provides for a transitional retention period for grocery retail workers upon the change of ownership, control, or operation of a grocery establishment. This bill protects grocery store employees working in stores of at least 15,000 square feet being fired during a 90-day transition period if the grocery store is changing ownerships. The law seems to conflict with existing bankruptcy law as well as overlap in some sense with the federal and state WARN Acts.  When a triggering event occurs, the statute requires that the former employer post public notice of the change in control at the location of the affected grocery establishment and create a list of all employees who have been employed by the former employer for at least six months and who are not managerial, supervisory, or confidential employees.  The successor employer must hire and retain employees from the list upon the execution of the transfer document, retain the employees for 90 days after the grocery establishment is fully operational and open to the public under the successor employer, prepare written offers of employment that include the name, address, date of hire, and employment occupation classification of each eligible grocery worker, and retain the written offers of employment for at least three years.  Eligible employees cannot be terminated during the 90-day period without cause.  After the 90 day period, the new employer must provide a written performance review and consider an offer to continue employment if it were to be a satisfactory review. Employers would have the right to terminate an employee for cause at any time during and following the transition period.

This is the first statewide law in the United States to require grocery stores to retain its employees after a change in ownership. This law will surely generate litigation for both the employees as well as the grocery store chains.

Professional Sports Cheerleaders

AB 202 creates Labor Code section 2754 and provides that any California-based sports team that utilizes the services of cheerleaders is to provide those cheerleaders with specified rights and benefits afforded to its employees under existing employment laws, regardless of terms and conditions under which the cheerleader performs. Cheerleaders employed by California sports teams are deemed to be an employee and must be classified as an employee, no matter whether hired directly or indirectly, for all purposes concerning California law governing employment, including the Labor Code, Unemployment Insurance Code, and the FEHA.  “Cheerleader” is defined as someone who performs acrobatics, dance, or tumbling moves on a recurring basis.  A “California-based professional sports team” is any baseball, basketball, football, ice hockey, or soccer team, at either a minor or major league level in the sport that plays a majority of its home games in California.

Restrictions on Use of E-Verify

AB 622 creates Labor Code section 2814 and provides that, except as required by federal law or as a condition of receiving federal funds, it shall be unlawful for an employer, or any other person or entity, to use E-Verify to check the employment authorization status of an existing employee or an applicant who has not been offered employment at a time or in a manner not required under subsection (b) of Section 1324a of Title 8 of the United States Code or not authorized under any federal agency memorandum of understanding governing the use of E-Verify.  Labor Code section 2814 prohibits employers from using the E-Verify system to check the employment authorization status of existing employees or applicants who have not received an offer of employment, except as required by federal law. Employers should still be able to utilize E-Verify in accordance with federal law to check the employment authorization status of a person who has been offered employment. Under the new law, employers who receive any notification from the Social Security Administration or Department of Homeland Security containing information regarding any discrepancies in an employee’s E-Verify case must provide notification to the employee as soon as possible. Finally, there are penalties for up to $10,000 for employers who violate the E-Verify laws.

Fair Day’s Pay Act and New DLSE Enforcement

SB 588, otherwise known as the Fair Day’s Pay Act empowers The Labor Commissioner to take action in order to assist employees in collecting unpaid wages. The new law is a huge boost to employees pursuing delinquent employers who violates provisions involving wage theft or other liabilities. A bond of up to $150,000 may be required of an employer who does not promptly pay a judgment for unpaid wages. The law adds sections 690.020-690.050 to the Code of Civil Procedure; amends section 98 of the Labor Code, and adds sections 96.8, 238, 238.1, 238.2, 238.3, 238.4, 238.5, and 558.1.

Additionally, the Labor Commissioner and DLSE now have the expanded authority under AB 970 to issue a citation to enforce local minimum wage and overtime laws, including against an employer or person acting on behalf of an employer for violations of existing law related to reimbursements for expenses. These expansions support California’s claim to being one of the most employee-friendly states as well allow the DLSE to enforce local employment laws.  This law amends Labor Code sections 558, 1197, 1197.1, and 2802.

Public Works

AB 219, creating Labor Code section 1720.9 and 1720.7, expanded the definition of “public works” to include the hauling and delivery of ready-mixed concrete and AB 852 expanded “public works” to include any construction, alteration, demolition, installation, or repair work done under private contract on a general acute care hospital. This will mean higher pay (and costs) for public works projects.

Miscellaneous Changes – Disability Benefits, Aliens, eFiling Unemployment

There have been some other amendments to various terms under the Labor Code. Under SB 667, the duration of the “disability benefit period” is extended from 14 days to 60 days. SB 432 deletes two statutory provisions containing the term “alien,” used to describe any person who is not born in or a fully naturalized citizen of the United States, from the Labor Code. The law amends, repeals, and adds sections 2608 and 2627 of the Unemployment Insurance Code. SB 432 specifically repeals the definition of “alien” through Labor Code sections1725 and 2015.

Beginning on January 1, 2017, AB 1245 will require an employer with 10 or more employees to file all reports and returns electronically, and remit all contributions for unemployment insurance premiums by electronic funds transfer, except as provided in the law. Beginning on January 1, 2018, these electronic filing and fund transfer requirements will be extended to all employers.

The bill would authorize the granting of a waiver from these requirements. Additionally, the new law would impose a penalty of $50 on those employers who fail to file a quarterly return electronically without good cause. This amends sections 1088, 1110, 1112, 1114, 13002, and 13021 of the Unemployment Insurance Code, and adds section 1112.1.  Please make sure you have good processes in place to get your filings and payments in on time.

Misclassification of Uber and Lyft Drivers

As reported in earlier posts on this blog, many Uber cases were filed over the distinction between an employee and an independent contractor in the scope of the shared-economy world. First, in June 2015 the Labor Commission ruled that an Uber driver is considered an employee-not an independent contractor-and thus ordered Uber to provide work-related expenses. Similarly, in August 2015 the California Employment Development Department determined that a former Uber driver was an employee and thus was entitled to unemployment benefits. In September 2015, the United States District Court, Northern District, granted certification to a class of Uber drivers regarding lost tips. Keep tuned to this blog for updates on these cases and how they could affect your employment and business.

What You Should Do Now

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.

If you are reading this and you have more than one (1) employee, employers are strongly urged to review and update their handbooks, policies, and procedures in anticipation of the new laws. Quintilone & Associates can assist you with protecting your rights as an employee or remaining complaint if you are a business.

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