With the end of 2016 also came the end of yet another legislative term, providing a multitude of new laws, which took effect January 1, 2017 (unless otherwise specified). This article provides a survey of the new laws by category, including health and safety, public works, discrimination, leaves, contingent workforce, wage and hour, and employment contracts, and how these new laws may affect employers in the New Year and beyond. We recommend all employers review the new laws and make any necessary changes to bring their businesses into compliance.
Health and Safety:
A.B. 7: Smoking in the Workplace
Effective January 1, 2017, A.B.-7 expanded the workplace smoking prohibition to include owner-operated businesses where the owner-operator is the only worker and has no employees, independent contractors, or volunteers. This bill also expanded the definition of “enclosed space” where smoking is prohibited and eliminated exemptions for hotel or motel lobbies; meeting and banquet rooms in a hotel or motel; warehouse facilities; gaming clubs; bars and taverns; employee break rooms; and businesses with five or fewer employees. Employers who allow smoking in the workplace should assure that they were not relying on any of the eliminated exemptions in allowing smoking in the workplace. If any of the now eliminated exemptions were relied upon, employers must change their policies accordingly.
S.B. 1167: Heat Regulations for Indoor Workers
This bill requires the division of Occupational Safety and Health to propose a heat illness and injury prevention standard applicable to indoor workers to the Occupational Safety and Health Standards Board. This standard is to be reviewed and adopted by January 1, 2019. This bill has very little impact on employers until the new standard is adopted. However, employers should watch for any proposed rules so policies may be brought into compliance, prior to the regulations taking effect.
A.B. 2687: Driving Under the Influence with a Passenger for Hire in Vehicle.
Effective January 1, 2018, this bill makes it unlawful for a person to drive a motor vehicle with a blood alcohol content of 0.04 or higher when a passenger for hire is in the vehicle or to cause injury to a passenger for hire while driving a motor vehicle with the specified blood alcohol content. A “passenger for hire” is defined as someone for whom consideration is contributed or expected as a condition of carriage in the vehicle, meaning someone who pays or is expected to pay money for a ride. This bill would most significantly affect drivers of ride services such as Uber and Lyft. Additionally any employer who employs these drivers should be aware of the potential vicarious liability for an offense. Employers in this industry may wish to audit their drug and alcohol policy and assure that their employees are aware of this change.
Public Works:
S.B. 954: Per Diem Wages for Employers Subject to Collective Bargaining Agreements
This bill qualifies which employer payments and benefits may be included as per diem wages for the purposes of an employer's obligation to pay prevailing wages on public works projects where an employer is obligated to make certain payments pursuant to a collective bargaining agreement (CBA). If an employer is obligated under a CBA, he or she may include industry advancement and any administrative fees relating to a CBA in per diem wages. The purpose of this bill is to prevent employers from passing these costs to employees without the input or consent of the employees or their labor representatives. This means employers who are not subject to a CBA may not credit industry advancement payments towards the prevailing wage rate.
A.B. 1926: Prevailing Wages for Apprentices’ Pre-Employment Activities
This bill expanded the requirement that apprentices who perform work on a public works project be paid the prevailing wage rate. Under the new law, apprentices must also be paid prevailing wages for any pre-employment activities required by the contractor. Pre-employment activity includes filling out an application; testing, training, or examination; or other pre-employment process that is a condition of employment. Additionally the apprentice shall be paid for the travel time to and from the required activity. Starting January 1, 2017, employers who wish to use apprentices for public works projects should make sure to pay them the appropriate wage for these pre-employment activities.
A.B. 326: Timing of the Return of Wage and Penalty Assessments Held by Labor Commissioner
This bill shortens the amount of time the Department of Industrial Relations has to release any civil wage and penalty assessments held by the Labor Commissioner for violation of the laws regulating public works contracts, during a review or appeal of the penalty. The Department must release the money to the person or entity entitled to it within 30 days of either: (1) the conclusion of all administrative and judicial review; or (2) the department’s receipt of written notice from the Labor Commissioner of a settlement or other final disposition of an assessment. Employers should be aware that starting January 1, 2017, upon a successful judgment by the Labor Commissioner, they no longer have to wait 60 days for their bond to be returned.
Discrimination:
A.B. 1676: Wage Discrimination Based on Gender
Effective January 1, 2017, this bill amended the equal pay act so that prior salary, by itself, is not enough to justify a disparity in compensation under the bona fide factor exception, which allows for a disparity based on any bona fide factor other than sex, such as education, training, or experience. This means that pay differentials based on prior salary, even if applied neutrally, will not be tolerated where it leads to a wage gap among similarly situated men and women. Employers using prior salary as a basis for current salary may want to consider removing that factor from consideration or, at the very least, implement an auditing system to ensure that it does not result in a discrepancy in current salary among genders.
S.B. 1063: Wage Differential Based on Race or Ethnicity
Effective January 1, 2017, this bill extends the protection against unequal pay on the basis of gender to also prohibit discrimination on the basis of race or ethnicity. Employers should note this extension would also include protection against a wage differential on the basis of prior salary, as discussed in the previous bill.
A.B. 1843: Background Checks for Employment Applications
Effective January 1, 2017, an employer is prohibited from asking an applicant for employment to disclose information concerning or related to an arrest, detention, procession, diversion, supervision, adjudication, or court disposition that occurred while the person was subject to juvenile court. An employer may not utilize any such information as a factor in determining any condition of employment. This means employers may need to edit their employment applications to exclude any of the prohibited subject matter.
A.B. 488: Harassment/Discrimination of Employees Employed Under Special License
Effective January 1, 2017, this bill expands the definition of employee pursuant to FEHA, to include individuals employed under a special license in a nonprofit sheltered workshop, day program, or rehabilitation facility. This allows employees to bring an action under the Fair Employment and Housing Act (FEHA) for prohibited harassment or discrimination.
This bill provides a defense to employers where the challenged action was permitted by statute or regulation and was necessary to serve employees with disabilities under a special license. The bill also protects employers who hire or employ a qualified individual at a wage less than the minimum wage, in conformity with a special license. This means that, aside from the narrow exceptions outlined above, it is unlawful for employers to discriminate against employees working under a special license.
A.B. 2844: Discrimination Prevention in Public Contracts
This bill applies to any person who submits a bid or proposal, proposes to enter into a contract, or renew a contract with a state agency in the amount of $100,000. Any person who falls within this definition is required to certify either at the time the bid or proposal is submitted or at the time that the contract is renewed, that they are in compliance with both the Unruh Civil Rights Act and the California Fair Employment and Housing Act. Employers who contract with state agencies should review their policies to ensure compliance with these two laws so that they can continue to submit bids in 2017.
S.B. 269: Construction Violations That Deny Full and Equal Access to Disabled Persons
A violation of the Construction-Related Accessibility Standards Compliance Act may cause a denial of full and equal access to a disabled plaintiff where he or she experienced difficulty, discomfort, or embarrassment because of the violation. Effective May 10, 2016, this bill created a rebuttable presumption that certain technical violations do not cause a plaintiff to experience difficulty, discomfort, or embarrassment, if specified conditions are met. On January 1, 2017, this bill also exempts a defendant from liability for minimum statutory damages if they resolve any violations identified within 120 days from receipt of a certified access specialist (CASp) report. This means that in the event of a violation businesses may significantly reduce their damages by expediently fixing violations.
S.B. 1001: Unfair Practices Regarding Employment Authorization Documents
Effective January 1, 2017, this bill prohibits an employer from requesting more or different employment authorization documents than are required under federal law, refusing to honor documents tendered, refusing to honor documents or work authorization based upon the specific status or the term of status accompanying the authorization, or reinvestigating or re-verifying an incumbent employee’s authorization to work. Employers should audit their employment verification procedures to ensure none of their practices fall within the expanded prohibited categories because a violation of provisions could result in civil penalties of up to $10,000 dollars per violation.
Leaves:
A.B. 908: Paid Family Leave
Effective January 1, 2018, this bill revises the formula for determining benefits available for unemployment compensation disability law and for the family temporary disability insurance program to provide an increase in the wage replacement rate to specified percentages. This bill also eliminates the seven (7) day waiting period before an employee begins to receive benefits. This benefit is paid for through the Unemployment Compensation Disability Fund, and therefore has little impact on employers. However, we encourage employers to be knowledgeable regarding leave laws to comply with notice requirements and provide employees with accurate information regarding protected leaves.
A.B. 2337: Leave for Victims of Domestic Violence, Sexual Assault, or Stalking
This bill requires employers (with 25 or more employees) to notify employees of their right to leave if they are a victim of domestic violence, sexual assault, or stalking. Employers must also notify employees that they will not be subject to any adverse employment action against them for taking leave for this purpose, as well as complaint procedures should employee be subject to any unlawful discrimination or retaliation for taking protected leave. Employers are to notify new employees of these rights in writing, upon hire, and any current employee upon request. The bill requires the Labor Commissioner to develop a form employers may elect to use to comply with the notice requirement and to post it on the Labor Commissioner’s Website by July 1, 2017. Employers are not required to comply with the notice of rights requirement until the commissioner posts the form, however employers should not wait for the form to begin updating their notice policy. We recommend employers update their employment handbooks to comply with this requirement, as well as other laws that took effect in 2016.
Contingent Workforce:
A.B. 1066: Overtime Exemptions for Agricultural Workers
This bill removed an exemption in current law, which prevents the payment of overtime compensation to agricultural employees after eight hours of work in a day or 40 in a week. Prior to this bill, agricultural employees were entitled to overtime pay after ten hours of work in a day or more than six days in a workweek. This bill provides that beginning January 1, 2019 (January 1, 2022 for employers with fewer than 25 employees), agricultural employees are entitled to overtime pay for more than 9 ½ hours in any one workday or more than 55 hours in any one workweek. The changes to the overtime requirements will be completely phased in by January 1, 2022, or January 1, 2025 for employers with 25 employees or less. Please note, however, that all other provisions of existing law, such as meal and rest period protections, shall apply to agricultural workers beginning January 1, 2017. Because of the complicated phasing in of this law, agricultural employers may want to seek legal counsel to ensure that they are in compliance to avoid costly penalties and potential back pay for unpaid overtime.
A.B. 1311: Weekly Pay Requirement for Temporary Service Employees
This bill extended the weekly pay requirement for temporary service employees to security guards that are employed by a temporary services provider. Please note that this was an urgency bill, which means that it took effect immediately upon being enacted on July 22, 2016. Employers who have not already updated their payment policies for these security guard employees should do so immediately because a violation of this law carries criminal penalties punishable up to a misdemeanor.
A.B. 2763: Use of Private Vehicles in Transportation Network Companies
Existing law authorizes the California Public Utilities Commission (CPUC) to regulate Transportation Network Companies (TNCs). A TNC is an organization that provides prearranged transportation services for compensation using an online-enabled application or platform to connect passengers with drivers using a personal vehicle (e.g., Lyft and Uber). Effective January 1, 2017, this bill defined the term personal vehicle and clarified that personal vehicles may be driven by TNC drivers and must comply with the CPUC regulations.
S.B. 1015: Domestic Worker Bill of Rights
The Domestic Worker Bill of Rights (DWBR) regulates the working hours of domestic work employees who are personal attendants and provides an overtime compensation rate for those employees. Under prior law the DWBR was set to be repealed as of January 1, 2017. This bill nullified the repeal date and extended the DWBR indefinitely. This means there is no longer an end date for overtime compensation due to domestic work employees under California law. However, due to a recent amendment to the FLSA, this change has little impact on employers because overtime is now required under federal law. For more information regarding the amendment to the FLSA and the DWBR please see our article, Final Rule Impacts Domestic and Household Workers.
Wage and Hour
A.B. 2535: Itemized Wages Statements for Salaried Employees
Currently, an employee exempt from overtime under IWC wage order is exempt from the “total hours worked” requirement on an itemized wage statement. This bill expands the total hours worked exemption to employees exempt from the minimum wage requirement. The purpose of this bill was to close any gaps in the law exposing employers to liability for omitting the total hours worked from a wage statement of an employee paid on a salary basis. This means that employers may omit this section of an itemized wage statement for employees paid on a salary basis.
A.B. 2899: Bond Requirement to Appeal of Labor Commissioner Ruling
Effective January 1, 2017, this bill requires that, prior to filing an appeal of a decision by the Labor Commissioner, relating to a violation of wage laws, employers must post a bond which covers the unpaid wages and damages owed to employees.
S.B. 3: Sick Leave for In-Home Care Workers
Effective July 1, 2018, this bill amends the definition of “employee” under the Healthy Families Act of 2014 and extends sick leave to in-home care workers. This means that all in-home care workers need to be receiving at least three (3) days or 24 hours of sick leave per year. For more information regarding the sick leave law, please see our article, Assembly Bill 304 – Urgency Amendment to the Paid Sick Leave Law.
S.B. 1234: California Secure Choice Retirement Savings Program
This bill would require eligible employers who do not offer specified retirement plans or accounts to have a payroll deposit retirement savings arrangement allowing employees to participate in the California Secure Choice Retirement Savings Program. The effective date for compliance is on a rolling basis, based on the number of eligible employees that the employer has. This bill only affects employers, with at least five employees, who do not have their own retirement savings arrangement. If you are an eligible employer and you do not have a retirement savings plan, we recommend consulting counsel to aid with compliance because of the complexity of the program’s requirements.
Employment Contracts
S.B. 1241: Forum Selection and Choice of Law Clause
This bill applies to contracts entered into, modified, or extended on or after January 1, 2017. This bill prohibits an employer from requiring an employee who primarily resides and works in California, as a condition of employment, to either: (1) agree to adjudicate a claim outside of California when that claim arose in California; or (2) deprive the employee of the substantive protection of California law with respect to a controversy arising in California. Employers should carefully review their agreements before requiring an employee to sign. Any provision in violation is voidable by the employee, and any adjudication will automatically occur in California, pursuant to California law. This means violation renders choice of law and forum selection moot as the bill defaults forum and choice of law to California. Lastly, while there are no penalties assessed for a violation, an employer may be liable for attorney’s fees, which could add up quickly if the employer recycles a deficient agreement.