Earlier this week Governor Brown signed the last bills for the year. This newsletter provides brief summaries of the new employment laws most likely to affect the clients of Holden Law Group. We also outline significant bills that were vetoed as they provide a glimpse of employment law changes we can expect in the future. The new laws described will be effective January 1, 2018, unless otherwise noted. Full copies of the laws can be viewed by clicking on the links provided. Please contact us if you would like further explanation on how a particular bill may apply to your organization.
ASSEMBLY BILLS (AB)
- The bill clarifies that the prohibitions in Labor Code section 1197.5 apply to public employers. While the bill adds nothing new for private employers, we include it as a reminder to our clients about this Labor Code section.
- Section 1197.5 prohibits an employer from paying any of its employees at wage rates less than the rates paid to employees of the opposite sex for substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions, unless the employer demonstrates that the wage differential is based upon specific factors such as seniority. It also prohibits an employer from paying any of its employees at wage rates less than the rates paid to employees of another race or ethnicity for substantially similar work.
- Employers have the burden of proving that any wage differential is lawful.
Salary Inquiries Prohibited
- The bill prohibits all employers from seeking out the salary history information of an applicant for employment. It further prohibits employers from relying upon an applicant’s salary history as a factor in determining whether to offer employment or what salary to offer. The bill contains an exemption for salary history information available to the public under state and federal public disclosure laws. The bill also requires employers to provide the pay scale for a position to a requesting applicant.
- As long as a candidate is not prompted, the bill would not prohibit an applicant from voluntarily disclosing salary history information and would not prohibit an employer from considering or relying on that voluntarily disclosed salary history information in determining salary.
Public Works: Private Residential Projects
- The bill expands the application of prevailing wage law by narrowing the exemption for private residential projects built on private property. Private residential projects will be subject to prevailing wage laws if the project is built pursuant to an agreement with a successor agency to a redevelopment agency.
Immigration Worksite Enforcement Actions
- This bill highlights the current tension between California and the federal government related to immigration enforcement.
- The bill prohibits an employer, and any person acting on behalf of the employer, from voluntarily providing access to an immigration enforcement agent to any non-public areas of the employer’s facility if the agent does not have a warrant unless the access is otherwise required by federal law. An immigration enforcement agent may be taken to a non-public location for the purpose of determining if the agent has a warrant so long as no employees are present and the agent is not permitted to search the area.
- The bill prohibits an employer, and any person acting on behalf of the employer, from voluntarily consenting to provide an immigration enforcement agent with access to, review of, or copies of employee records without a warrant. An exception is made for providing access, review, and copying of I-9 forms and other documents for which a Notice of Inspection has been provided to the employer.
- The bill requires employers to post a notice to employees informing them when an employer receives a notice of inspection from an immigration enforcement agency. The notice to the employees must provide the name of the immigration agency conducting the inspection, the date the employer received the notice, the nature of the inspection (to the extent known) and a copy of the Notice of Inspection served by the immigration agency. The notice to the employees must be posted within 72 hours of being served with the Notice of Inspection. The employer must also provide a copy of the Notice of Inspection to any employee who requests it. Upon the completion of any investigation by the immigration agency, the employer must provide each affected employee, and their union representative, with copies of specific documents containing the results of the investigation and notification to each employee with specific information, including the employer’s obligations and the employee’s obligations.
- The bill also creates a new Labor Code section specifically prohibiting employers from re-verifying the employment eligibility of a current employee at a time or in a manner not required under federal law.
- The bill creates penalties of up to $10,000 per violation, but specifies that a “violation” means each incident where the law was violated without reference to the number of employees or immigration officers involved or the number of employee records accessed.
Employment Discrimination: Criminal History Information
- The bill aligns more closely the requirements for both public and private sector employers and prohibits employers with 5 or more employees to include on any employment application any question that seeks the disclosure of an applicant’s conviction history. It also prohibits employers from inquiring into or considering the conviction history of an applicant until that applicant has received a conditional offer of employment. When conducting a conviction history background check, employers may not consider, distribute, or disseminate information related to an applicant’s specified prior arrests, diversions, and convictions.
- If an employer intends to deny an applicant a position based solely or in part because of the applicant’s conviction history, the employer is required to make an individualized evaluation of whether the applicant’s conviction history has a direct and adverse relationship with the specific duties of the job, and to consider certain factors, including the nature and gravity of the offense or conduct, how long ago the conviction occurred, the completion of a sentence, and the nature of the job held or applied for. If the employer determines that denial of employment is appropriate based upon the required evaluation, the employer must then provide the applicant written notification of the decision. This written notification must include, among other things, identification of the disqualifying conviction and a copy of the conviction report, if any, as well as an explanation of an applicant’s right to dispute the accuracy of the conviction report and/or provide supporting documentation to validate their dispute. The bill provides for specific timeframes in which a candidate is allowed to respond to a preliminary denial of employment.
- The bill would require an employer who has made a final decision to deny employment to the applicant to provide written notice to the applicant that contains the decision, any internal review procedure available to the applicant, and notice of the right to file a complaint with the Department of Fair Employment and Housing.
- The bill contains a number of exemptions specific to those positions that are otherwise legally required to undergo criminal background checks.
Expansion of Prevailing Wage Law
- The bill expands the term “public works” for purposes of requirements regarding the payment of prevailing wages to include specific types of tree removal work done in execution of a project done under contract and paid for in whole or in part out of public funds.
Gender Neutral Pronouns
- This bill amends several sections of the Government Code by deleting gender-specific personal pronouns and by making other conforming changes.
- It appears that the bill was not intended to have any substantive effect on the law. Unfortunately, unintended consequences happen. We found one section where the attempt to neutralize the gender may have actually changed the law. The amendment to Government Code section 12926 (q) changes the definition of what qualifies as religious dress and grooming practices when determining if an accommodation must be made by an employer. Existing law requires an employer to accommodate an individual observing his or her religious creed. The new law reads that an employer is required to accommodate an individual observing a religious creed, not necessarily his or her own religious creed. If a court were to give the new law its plain meaning, it would be a significant expansion of employee rights.
Labor-related Liabilities: Original Contractors
- The bill provides that a direct contractor who makes or takes a contract in the state for the erection, construction, alteration, or repair of a building, structure, or other work, is liable for any unpaid wages and fringe benefits of the employees of subcontractors performing work on the contract. The contractor’s liability is limited to unpaid wages, fringe benefits, and interest, but does not extend to penalties or liquidated damages. In certain instances the direct contractor may also be liable for the plaintiff’s reasonable attorney’s fees and costs.
- The statute allows for enforcement through an administrative or civil action and allows the following parties to bring a claim: (1) the Labor Commissioner; (2) a third party owed fringe or other benefit payments or contributions on a wage claimant’s behalf; or (3) a joint labor-management cooperation committee, provided the committee provides the direct contractor and subcontractor that employed the wage claimant with at least 30 days’ notice by first-class mail of the general nature of the claim.
- The bill also allows a direct contractor to obtain from any subcontractor payroll records that contain, at a minimum, the information required to be on pay stubs and records showing the daily hours of work and any piece-rate units earned. The records must contain information sufficient to apprise the direct contractor of the subcontractor’s payment status in making fringe or other benefit payments or contributions to a third party on the employees’ behalf. The direct contractor is also entitled to receive from any subcontractor specific details about the subcontractor’s anticipated work, including the estimated number of journeyman and apprentice hours. Failure of a subcontractor to provide the requested information allows a direct contractor to withhold disputed sums, but does not relieve a direct contractor from any of the obligations or liability under the bill.
- The bill applies to all contracts entered into on or after January 1, 2018. The bill specifically excludes work performed by an employee of the state, a special district, a city, a county, a city and county, or any political subdivision of the state. The bill also requires an action be brought within one year of the earliest: (1) recordation of the notice of completion of the direct contract; (2) recordation of a notice of cessation of the work covered by the direct contract; or (3) actual completion of the work covered by the direct contract.
Discrimination against Military Service Members
- This bill expands employment protections for members of the military service. Section 394 of the Military and Veterans Code protects military service members from a variety of specific forms of discrimination, including forms of employment discrimination. The section now prohibits an employer prejudicing or harming a military service member in relation to the service member’s terms, conditions or privileges of employment.
SENATE BILLS (SB)
Expanded Parental Leave
- This bill expands the number of employers required to provide employees with parental leave to bond with a new child. Previously only employers with 50 or more employees were required to provide “baby bonding” leave to eligible employees. Now employers with 20 or more employees will be required to provide up to 12 weeks of leave to eligible employees.
- To be eligible for the leave, an employee must have more than 12 months of service with the employer, have at least 1,250 hours of service with the employer during the previous 12-month period, and work at a worksite in which the employer employs at least 20 employees within 75 miles. The rules and requirements of the leave should be identical to those existing for larger employers. One key requirement: Employers must maintain coverage under a group health plan through the duration of the leave and make the same employer contributions as if the employee were working.
- The detailed regulations governing the parental leave for larger employers under the California Family Rights Act (CFRA) will also govern the leave now applicable to smaller employers unless the Department of Fair Employment and Housing determines that modifications to the regulations are necessary.
- This expansion of parental leave does not apply to employees who are already covered under both state and federal family medical leaves (FMLA/CFRA).
- The bill would also prohibit any adverse action against an applicant for employment or an employee who exercises their right to parental leave, or for giving information or testimony as to his or her own parental leave, or another person’s parental leave, in an investigation or proceeding related to the parental leave law requirements.
- The bill also creates a special mediation program within the Department of Fair Employment and Housing to address violations of the new law. Assuming the program is funded by the Legislature, it will remain in effect until 2020.
Budget and Fiscal Review Changes
This appropriations bill contains numerous changes, many of which are not related to employment law or not substantive. We highlight only some of the changes that we think may be of interest and most significance. The provisions of the bill took effect on June 27, 2017.
Defense Evidence Exclusion
- The bill specifies that employers, or any person who may be individually liable for wage and hour violations, will be precluded from introducing into evidence any books, documents or records when such books, documents and records are not provided to the Labor Commissioner upon a request with at least 15 days’ notice. The evidence cannot be used in defending administrative claims or in seeking a writ from a court. The bill contains an exception for inadvertent errors, and also permits the Labor Commissioner to grant extensions of time to comply with its requests for documents.
Division of Labor Enforcement Procedural Changes
- The bill significantly increases the amount a time the Division of Labor Standards Enforcement (DLSE) can investigate a violation without affecting the statute of limitations for the claim. The bill adds a tolling period of 12 months after an investigation by the field enforcement unit is opened. After expiration of the 12–month period, the time under the applicable statute of limitations will resume running.
- The bill provides the DLSE with discretion to close an investigation into allegations of retaliation or discrimination if the employee files an action in court against employer based upon the same or similar facts as the complaint made to the DLSE.
- The bill extends the period of time an employer has to comply with remedies required by the DLSE for violations from 10 days up to 30 days. If after 30 days the employer does not comply and the DLSE is the prevailing party in an action to enforce the remedy, the employer shall be responsible for attorney’s fees incurred by the Labor Commissioner. If an employer still refuses to comply after an order of the court, in addition to other penalties, employer shall be assessed a fine of $100 per day up to a maximum of $20,000 for non-compliance which shall be paid to the affected employee.
Public Works Project Changes
- The bill increases registration fees for a contractor or subcontractor, to be eligible to bid on, be listed on a bid proposal for, or perform work on any qualified public works project. The fee is increased to $400 annually but allows a contractor to register or renew for up to 3 years at a time, beginning June 01, 2019.
- The bill establishes new and significant civil penalties when an unregistered contractor performs work on a qualified project. The penalties are based upon the number of days an unregistered contractor performs work and can run up to $10,000. The penalties can be assessed against both the unregistered contractor and the high tiered contractors on the project. The higher tiered contractors cannot be indemnified by the lower tiered contractors. The bill also requires the Labor Commissioner to issue a stop order prohibiting the use of an unregistered contractor or unregistered subcontractor, as specified. The bill would make the violation of the stop order a misdemeanor.
- The bill provides that the registration requirement and penalties do not apply on construction, alteration, demolition, installation or repair work projects of $25,000 or less, or maintenance work projects of $15,000 or less.
- The bill expands the protections against discrimination for employees related to safety. The bill prohibits a person from discharging or in any manner discriminating against an employee because the employee reports a work-related fatality, injury, or illness. It also prohibits discrimination based upon an employee’s request to have access to the employer’s safety records or based upon any rights the employee exercises under federal health and safety law.
- The bill increases the penalty for a violation of an occupational safety or health standard, order, or prohibition when the violation is specifically determined to be non-serious. The penalty can now run up to $12,471 per violation (over $5,000 increase). The same increase applies to violations of posting or record-keeping requirements. The penalty is increased up to $124,709, but not less than $8,908, for each willful or repeated violation of any of the occupational safety or health standards or orders. The bill also sets a formula for automatic annual increases to the maximum penalties beginning on January 1, 2018, and each January 1 thereafter based on the percentage in the Consumer Price Index for All Consumers (CPI-U).
Cleaning Product Right to Know Act of 2017
- The bill creates the Cleaning Product Right to Know Act. It establishes very detailed labeling and information disclosure requirements for manufactures of air care products, automotive products, general cleaning products and floor maintenance products as those terms are specifically defined in the statute.
- The bill requires employers who have or use any such products in their operations to obtain the specific information manufacturers must make available on ingredients and material safety, and make that information readily available to employees.
Farm Labor Contractors: Sexual Harassment Prevention
- This bill expands the requirements on farm labor contractors to obtain a license. Existing law prohibits the issuance of a farm labor contractor license to an applicant unless the applicant attests in writing that certain employees have undergone sexual harassment prevention and reporting training that meet specific requirements relating to the substance and presentation of the material and the record keeping of the training once conducted.
- This bill expands the requirements to specify that the training must be conducted in the language understood by the employee. The bill would require a licensee, upon application for a license renewal, to provide the commissioner with a complete list of all materials or resources used in the presentation of the sexual harassment prevention training to employees in the calendar year prior to the month the renewal application is submitted. Employer must also submit to the commissioner the total number of agricultural employees trained in sexual harassment prevention in the calendar year prior to the month the renewal application is submitted. The commissioner will collect the data provided by all licenses and publish the number of agricultural employees trained in the previous year.
- The bill authorizes the Labor Commissioner to issue citations and assess civil penalties of $100 for each violation.
Retaliation Complaints & Administrative Review
- The bill expands the authority of the Labor Commissioner in taking enforcement action against employers to retaliate against employees who complain about wage and hour violations or who participate in wage claims.
- The bill authorizes the Labor Commissioner to commence an investigation of an employer, with or without a complaint being filed, when retaliation or discrimination is suspected during the course of a wage claim or other specified investigation being conducted by the Labor Commissioner. The bill grants the Labor Commissioner authority to seek an immediate and temporary injunction when workers face retaliation for reporting violations of the law on a showing that reasonable cause exists to believe a violation has occurred. In addition to the potential harm to the worker, the court is allowed to consider the chilling effect on other employees asserting their rights under those laws to determine if temporary injunctive relief is just and proper. The temporary injunctive relief shall remain in effect until the Labor Commissioner issues a determination or citation, or until the completion of review, whichever period is longer. Afterwards, the court may issue a preliminary or permanent injunction if it is shown to be just and proper. However, the law provides that temporary injunctive relief shall not prohibit an employer from disciplining or terminating an employee for conduct that is unrelated to the claim of retaliation.
- The bill also authorizes the Labor Commissioner to issue citations, instead of determinations in accordance with the section, directing specific relief to persons determined to be responsible for violations. If the Labor Commissioner issues a determination and the employer does not comply with the order within thirty days, the Labor Commissioner must bring an action in the appropriate court against the employer. The bill provides that the Labor Commissioner is entitled to recover reasonable attorney’s fees and costs from the employer if the Labor Commissioner is the prevailing party.
Public Contracts: Skilled and Trained Workforce
- The bill changes the definition of a “skilled and trained workforce” as that phrase is used under the Public Contract Code. The bill makes it easier to meet the requirement of maintaining a skilled and trained workforce by excluding certain crafts from the progressively increasing apprentice graduation percentages. The apprentice graduation percentage requirements shall not apply to the following trades: acoustical installer, bricklayer, carpenter, cement mason, drywall installer or lather, marble mason, finisher, or setter, modular furniture or systems installer, operating engineer, pile driver, plasterer, roofer or water-proofer, stone mason, surveyor, teamster, terrazzo worker or finisher, and tile layer, setter, or finisher.
Wages: Barbering and Cosmetology Licensees
- The bill creates special wage payment rules applicable to persons licensed under the Barbering and Cosmetology Act. Due to the unique nature of the industry, and the difficulty in distinguishing whether non-exempt employees who are licensed under the Act are subject to piece rate or commission rules, a new and unique set of rules has been created to authorize the payment of commissions and account for the payment of rest periods.
Overtime Compensation: Private School Teacher
- The bill broadens the overtime for teachers employed by private elementary and secondary schools. The bill makes the exemption applicable to part-time employees when the minimum salary requirement applied to full-time employees equals the proportion of the full-time instructional schedule for which the part-time employee is employed. The bill also permits employers when setting salaries that comply with the exemption requirements to refer to school salary schedules of the applicable public school district or county office of education that are in effect for up to 12 months prior to the start of the school year.
SIGNIFICANT VETOED BILLS
Discrimination: Reproductive Health
- This bill would have created a new section to the Labor Code prohibiting an employer from taking any adverse action against an employee, or a dependent or family member, because of the person’s reproductive health decisions. It would have also required a specific notice of employee rights and remedies in the employer’s employee handbook.
- Governor Brown vetoed the bill stating, “The California Fair Employment and Housing Act has long banned such adverse actions, except for religious institutions. I believe these types of claims should remain within the jurisdiction of the Department of Fair Employment and Housing.”
Illness and Injury Prevention Programs
- This bill would have created a new obligation for employers to provide employees, or their authorized representatives, with paper or electronic copies of the employer’s Injury and Illness Prevention Program within 10 days of the request.
- Governor Brown vetoed the bill stating, “I support policies that promote access and transparency in order to prevent injuries and improve health and safety. This bill, however, is unnecessary and duplicative of an existing regulatory proposal that is already underway at the Occupational Safety and Health Standards Board. The Standards Board advisory committee process is better suited to determine how to properly implement requirements of this kind.”
Gender Pay Differentials
- This bill would have created a new requirement that larger employers (500 or more employees) report specific information on gender wage differentials to the Secretary of State on a biennial basis. This information would then be made public on the Secretary’s website.
- Governor Brown vetoed the bill stating, “I have strongly supported polices that ensure women are compensated equitably and will continue to do so. While transparency is often the first step to addressing an identified problem, it is unclear that the bill as written, given its ambiguous wording, will provide data that will meaningfully contribute to efforts to close the gender wage gap. Indeed, I am worried that this ambiguity could be exploited to encourage more litigation than pay equity. Since the Equal Pay Act was signed into law in 2015, the Pay Equity Task Force, which is comprised of members from this administration, business, academia, labor, the legislature and pay equity advocates, has been engaged in analysis of the new law, as well as workplace and compensation policies that can lead to successful compliance with the Act. Guidance and recommendations coming out of the Task Force will assist companies around the state with assessing their current wage practices.”
Employment Discrimination: Local Government Enforcement
- This bill would have required the Department of Fair Employment and Housing to study the feasibility of giving local government entities the power to enforce state anti-discrimination laws.
- Governor Brown vetoed the bill stating, “The Fair Employment and Housing Act (FEHA) has preempted local governments from enforcing the provisions of this law for decades. I agree with the author that it is time for the state to reassess whether the state should allow local authorities to enforce FEHA. Unfortunately, as currently drafted, the bill is too broad and it is not clear that the advisory group would focus solely on employment protections governed by FEHA. I am directing the Department of Fair Employment and Housing to create an advisory group to explore allowing the provisions of FEHA to be enforced by local authorities and prepare a report to my office and the Legislature with findings and recommendations by December 31, 2018.”
We will be analyzing some of the bills in greater detail in the coming months and may provide analysis in selected cases. In the meantime, if you have immediate questions or concerns about the new legislation, call us and we will be your resource and partner in navigating through the changes.
Holden Law Group