Summary of New Laws Affecting California Employers
The past year has been a busy one for passing employment-related legislation. Numerous new laws have gone into effect that impact how California employers manage and interact with their current, prospective, and former employees. In case you missed them, what follows is a brief summary of what we consider to be the most important developments.
- Family parental leave requirements now apply to smaller employers. The California Family Rights Act (“CFRA”) previously applied to only employers with 50 or more employees within a 75-mile radius. Senate Bill 63, which went into effect on January 1, 2018, expanded the definition of “employer” in the CFRA to include employers with 20 or more employees within a 75-mile radius. These employers must grant a qualified employee’s request to take up to 12 weeks of unpaid parental leave to bond with a new child within one year of the child’s birth, adoption or foster care placement. In addition, employers must provide continuance of group health coverage during the leave period on the same basis as would have been provided had the employee continued to work.
- Employers can no longer ask applicants about their salary history. Effective January 1, 2018, Assembly Bill 168, codified as Labor Code § 432.3, prevents employers from relying upon salary history as a factor in determining whether to offer employment to an applicant, or the salary the employer will offer an applicant. The new law also requires employers to provide the pay scale for a position upon an applicant’s request.
- Effective January 1, 2018, Assembly Bill 1008 added Government Code § 12952, as part of a national “ban the box” trend, to prohibit employers with five or more employees from inquiring about or considering criminal history before making a conditional offer of employment. If the employer, after making a conditional offer of employment, determines the criminal history disqualifies the applicant, the employer must provide the applicant with written notice of its preliminary decision and the opportunity to respond. If, after considering the employee’s response, the employer still decides against hire, the employer must provide additional written notice to the applicant along with information regarding the applicant’s right to challenge the decision and to file a complaint with the Department of Fair Employment and Housing.
- The California Fair Employment and Housing Council (FEHC) imposed new regulations, effective July 1, 2017, that are also consistent with the “ban the box” trend. The FEHC regulations prohibit employers from considering criminal history in making employment decisions if doing so would result in an adverse impact on individuals within a protected class, such as race, sex, or national origin. An applicant or employee has the burden of proving adverse impact, but if proven, the burden shifts to the employer to establish that the policy or practice is job-related and consistent with business necessity. Even if an employer can show that its consideration of conviction history is job-related and consistent with business necessity, adversely impacted employees or applicants in a protected group can still claim this practice or policy is discriminatory if they can show there is a less discriminatory policy or practice that still meets the employer’s goals.
- Beginning on July 1, 2017, the Fair Employment and Housing Act (FEHA), which applies to employers with five or more employees, expanded its protections against discrimination to include discrimination on the basis of gender identity and expression in the workplace. The new FEHA regulations apply to individuals who identify as transgender, including those who are transitioning, have transitioned, or are perceived to be transitioning. Under the new FEHA regulations, employers must, among numerous other requirements, permit employees to use the restroom facilities that correspond to the employee’s gender identity or gender expression, refer to employees by their chosen name and preferred gender pronouns, allow employees to dress in a manner consistent with their gender expression or identity, and abstain from asking about or requiring proof of an employee’s sex, gender, or gender identity or expression as a condition of employment.
- The Transgender Work Opportunity Act, Senate Bill 396, requires employers with 50 or more employees or independent contractors to include gender identity, gender expression, or sexual orientation as topics in sexual harassment trainings, and to display a Department of Fair Employment and Housing (DFEH) poster on transgender rights in the workplace.
- The DFEH recently issued an updated sexual harassment brochure (DFEH-185) and a new poster (DFEH-185P), either of which will satisfy employers’ obligations to provide employees with an information sheet regarding sexual harassment under state law. The DFEH also issued a new guide on workplace harassment which provides recommended practices for preventing and addressing workplace harassment. Among other things, the guide suggests that the employer’s policies regarding harassment should be discussed with employees at regular meetings, such as at a meeting held every six months.
- Assembly Bill 1710 expanded state law to include protection against discrimination in “terms, conditions, or privileges” of employment for all military service personnel. The law became effective on January 1, 2018.
- Effective July 1, 2017, Senate Bill 96 increased penalties for repeated Cal/OSHA violations and the civil penalty maximum for each non-serious violation and each violation of posting, recordkeeping or notice requirements. The bill also permits maximum penalty amounts to increase on January 1, 2018, and each January 1st thereafter based on the Consumer Price Index.
- In a trend to hold contractors responsible for the actions of those with whom they contract, Assembly Bill 1701 provides that a “direct contractor” is liable for its subcontractors’ non-payment of wages. AB 1701 does not, however, provide wage claimants the right to bring an action against the direct contractor. Instead, the Labor Commissioner and the Joint Labor-Management Cooperation Committee may bring a civil action against the direct contractor for unpaid wages on behalf of wage claimants, and a third party such as a labor union owed benefit payments or contributions on a wage claimant’s behalf can also bring a civil action against the direct contractor. The law applies to all private construction contracts entered into on or after January 1, 2018.
- Starting January 1, 2018, Assembly Bill 908 increased benefits for employees using paid family leave and state disability insurance by: (1) raising the wage replacement amount from 55% to 60-70% depending on the employee’s income level; (2) removing the seven-day waiting period for eligibility for benefits; and (3) imposing the limitation that payments cannot exceed the maximum amount for workers’ compensation temporary disability indemnity weekly benefits established by the Department of Industrial Relations.
- Beginning March 1, 2018, Assembly Bill 2886 amended the Unemployment Insurance Code to extend the period that an individual may appeal a determination regarding eligibility to receive State Disability Insurance (SDI) benefits, a computation made regarding benefits, or a notice of overpayment of benefits, from within 20 days from mailing or personal service of the determination to within 30 days of such date.
- Under California’s Healthy Workplaces, Healthy Families Act of 2014, in-home supportive services (IHSS) workers were specifically excluded from eligibility to receive paid sick leave. However, beginning July 1, 2018, Senate Bill 3, enacted in 2016, will end the exclusion and extend paid sick leave to IHSS workers. IHSS workers will initially not be entitled to reach the three days or 24 hours of paid sick leave other eligible California workers may receive. Rather, SB 3 provides that IHSS workers may earn a “full amount” of paid sick leave in which will be increased as the state minimum wage increases to $15 per hour.
- The federal Tax Cuts and Jobs Act, signed into law on December 22, 2017, includes section 162(q) of the Internal Revenue Code, which may have a significant impact on employers' ability to settle lawsuits based on sexual harassment or sexual abuse. Referred to as the "Harvey Weinstein Tax" (even though it is not a tax), section 162(q) provides: “No deduction shall be allowed … for (1) any settlement or payment related to sexual harassment or sexual abuse if such settlement or payment is subject to a nondisclosure agreement, or (2) attorney's fees related to such a settlement or payment.” The provision applies to all amounts paid or incurred after December 22, 2017. The result of section 162(q) is that taxpayers may need to choose between deducting the settlement payment (and related attorney's fees) on their tax returns and keeping the settlement confidential.
- On January 1, 2018, California’s new Immigrant Worker Protection Act, Assembly Bill 450, became effective. This hotly debated law, which is now the subject of litigation between the federal government and the state of California, prohibits both public and private employers from providing voluntary consent to workplace raids by immigration enforcement agents. Specifically, AB 450 prohibits employers from sharing employee records with immigration agents without a subpoena or judicial warrant, with the exception of I-9 Employment Eligibility Verification forms and “and other documents for which a Notice of Inspection has been provided to the employer.” AB 450 further prohibits employers from allowing immigration agents to enter any nonpublic areas of a workplace without a judicial warrant and establishes certain notice requirements for employers to alert employees to inspections.
- On January 1, 2018 , the state minimum wage increased to $11.00 per hour for employers with at least 26 employees, and $10.50 per hour for smaller employers. The state minimum wage governs the exempt employee threshold salary, which has increased accordingly. The new minimum salary for employees exempt from overtime is $45,760 annually for employers with at least 26 employees, and $43,680 annually for employers with fewer than 26 employees. Further, a number of California municipalities will raise their minimum wage rates on July 1, 2018. Employers should take care to note these changes because the pace of minimum wage increases in these locations will outstrip increases in the California state minimum wage in the race to reach $15.00 per hour.
- Assembly Bill 2337 amends Labor Code section 230.1 to require that employers provide written notice of employee rights pertaining to domestic violence, sexual assault, or stalking to all new hires and, upon request, to current employees. The Labor Commissioner has developed a form that an employer can elect to use to comply with this requirement, which is posted online.
- On July 17, 2017, the U.S. Department of Homeland Security issued a revised version of Form I-9, Employment Eligibility Verification. Employers were required to use the new form by September 18, 2017, for all new hires, reverifications and rehires. The new version of Form I-9 is very similar to the prior version. The changes include the addition of a new document, the Consular Report of Birth Abroad (Form FS-240) that may be used to show an individual’s identity and employment authorization.
The information contained in this article is intended solely for use solely as a cursory reminder of the most recent changes in employer obligations. For more detailed information about these laws, please refer to the language of the statutes, our more thorough articles on these topics, and, as always, seek the advice of legal counsel.
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