A GUIDE FOR THE BUSINESS OWNER:

New Employment Laws for 2016

Time to review the new employment laws for 2016. As usual, several new employment laws will affect California employers’ operations and practices in 2016. Some of the new laws make important changes to existing state law. Other new laws make small changes to different parts of existing law or may only affect employers in specified industries.

Also don’t forget that the minimum wage increases on January 1, 2016, to $10 per hour — this is not a new law (it was signed in 2013), but this is the last mandatory increase from that law.

Unless specified, all new legislation goes into effect on January 1, 2016.
Leaves of Absence And Benefits

Several new laws will make changes to leaves of absence in California for 2016.

Mandatory Paid Sick Leave Amendments

Last year, the Healthy Workplaces, Healthy Families Act was signed into law and required employers to begin providing the mandatory paid sick leave (PSL) benefit beginning July 1, 2015. But after the law was already in effect, the Legislature passed AB 304 which made several substantial amendments to the law. The amendments became effective on July 13, 2015.

Among other things, the amendments:

• Clarify who is a covered worker;
• Provide alternative accrual methods other than one hour for every 30 hours worked;
• Clarify protections for employers that already provided PSL or paid time off before January 1, 2015 (a grandfather clause); and
• Provide alternative methods for paying employees who use PSL.

School Activities Leave

SB 579 expands Labor Code section 230.8 which requires an employer who employs 25 or more employees to provide an employee up to 40 hours each year and no more than eight hours in a calendar month for the purpose of participating in school activities, including activities at child care facilities.

The revised law:

• Expands the reasons for which an employee can take time off beyond school activities to allow 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.
• Expands the time off protections to cover employees who are stepparents, foster parents, or stand in loco parentis to a child. Existing law already covers grandparents, but the revision eliminates the requirement that grandparents have custody.
• Broadly refers to "licensed child care providers," instead of child care facilities.

Kin Care

SB 579 also makes technical amendments to California's "kin care" law (Labor Code section 233) to conform to the mandatory PSL law. SB 579 allows employees to use kin care for the same purposes specified by the PSL law and defines "family member" under the kin care law the same as under PSL.

National Guard Leave and Protections

Existing law provides protections and return rights for members of the National Guard ordered into active state service for emergency purposes and for reservists called to active duty.

AB 583 extends these protections to apply to California employees who are members of the National Guard in another state and are called into service by the other state or by the president, causing them to leave a private job in California.

Unemployment Insurance and Electronic Reporting

AB 1245 requires an employer with 10 or more employees to file all unemployment insurance reports and returns electronically and remit all contributions for unemployment insurance premiums by electronic funds transfer beginning on January 1, 2017. These requirements will apply to all employers beginning January 1, 2018. A waiver from these requirements can be granted under specified conditions.

The new law includes a penalty of $50 for employers who fail to file a quarterly return electronically without good cause.

State Disability Insurance Eligibility: Waiting Periods

SB 667 waives the seven-day waiting period when someone who already served the waiting period for his/her initial disability benefits claim files a second disability benefits claim for the same or related condition within 60 days after the first.

Also, under existing law if an individual receives two consecutive periods of disability benefits due to the same or a related cause or condition that are separated by not more than 14 days, the two periods are treated as one disability benefit period.

SB 667 extends the time between the claims from 14 days to 60 days to be considered one disability benefit period.

This law is effective July 1, 2016.

Unemployment Insurance: Training Benefits

AB 1514 makes changes related to eligibility for unemployment insurance benefits during a period when the individual is taking specified training or retraining.

Discrimination, Harassment and Retaliation Protections

Several new laws expand employee protections for 2016.

Gender Wage Equality

SB 358 (Fair Pay Act) revises Labor Code section 1197.5, which deals with gender pay inequality or disparity. Under existing California law, employers cannot pay an employee less than the rate paid to an opposite-sex employee in the same establishment for equal work on jobs that require equal skill, effort and responsibility.

The Fair Pay Act revises and expands this prohibition. It eliminates the requirement that the pay difference be "within the same establishment" and eliminates use of the terms "equal work" for "equal skill, effort, and responsibility."

Instead, SB 358 prohibits an employer from paying any of its employees less than employees of the opposite sex for "substantially similar work, when viewed as a composite of skill, effort and responsibility." In addition, the legislation places specific requirements on employers to affirmatively show that any wage differential is not unlawful but is instead based entirely and reasonably upon one or more acceptable listed factors, including seniority and merit systems or other bona fide factors coupled with a showing of "business necessity," as defined.

The Fair Pay Act prohibits employers from terminating, discriminating or retaliating against an employee who exercises his/her rights under the Act or assists others in exercising their rights. Employers also can't prohibit employees from disclosing their wages, discussing the wages of others or asking about another employee's wages. The Act does not create an obligation on anyone to disclose wages when asked.

It's important to remember that the ability of employees to discuss wages is already protected by other existing state and federal laws, even though the Fair Pay Act also includes this same protection.
This law creates a private right of action for retaliation and discrimination.

Whistleblower and Anti-Retaliation Protections

Several state laws prohibit retaliation against employees who complain about unlawful conduct or oppose practices which the employees reasonably believe are unlawful, such as wage-and-hour practices or workplace safety procedures (Labor Code sections 98.6, 1102.5, 6310).

AB 1509 expands these protections to prohibit employers from retaliating against an employee when a family member of the employee engages in whistleblowing or other described protected activity.
AB 1509 also expands joint employer liability by changing the definition of employer under these anti-retaliation laws to include “client employers” — a specific definition related to companies who contract for labor (Labor Code section 2810.3).

Under AB 1509, the "client employer" can be held legally responsible when a labor contractor, such as a staffing agency, retaliates against a worker for engaging in protected conduct such as whistleblowing.

Reasonable Accommodation and Retaliation

AB 987 clarifies that an employer can’t retaliate or discriminate against an employee for requesting a reasonable accommodation for a disability or religion, regardless of whether the request was granted. The law clarifies that the mere act of making the request is protected conduct under the Fair Employment and Housing Act.

The legislation overturns an interpretation from a California appellate court in Rope v. Auto-Chlor System of Washington that an accommodation request alone is not protected activity.

Immigration-Related Protections

Currently, all state law protections, rights and remedies are available to all individuals in California who have applied for employment or are employed, regardless of their immigration status. This includes California labor, employment, civil rights and housing laws.

AB 560 adds an additional protection for child workers to clarify that their immigration status is not relevant to the issue of whether their employer violated the law or to what remedies are available to the worker.

State Contracts

Existing law prohibits the state from entering into contracts for goods or services of $100,000 or more with a contractor that discriminates between spouses and domestic partners or between same-sex and different-sex couples when providing benefits.

SB 703 amends the law to also prohibit the state from entering into such contracts with a contractor that discriminates between employees on the basis of gender identity, such as being transgender, when providing benefits.

Wage and Hour

Several new laws will affect employers' wage-and-hour obligations in 2016.

Many of the new wage-and-hour laws deal with how the laws will be enforced, instead of imposing significant new obligations on employers.

Private Attorneys General Act

The Private Attorneys General Act (PAGA) allows employees to sue an employer for violations of the Labor Code on behalf of themselves or a class of other employees. PAGA also subjects employers to statutory penalties and allows employees who successfully sue to recover attorneys' fees.

AB 1506 gives employers the right to correct (or "cure") two types of violations relating to itemized wage statements before an employee may bring a civil action under PAGA, subject to specified limitations.

An employer will now be allowed 33 days to correct violations involving:

• A failure to provide employees with an itemized wage statement that contains the inclusive dates of the pay period; or
• A failure to provide employees with an itemized wage statement that contains the name and address of the legal entity.

This law is "urgency legislation" and became effective immediately when the Governor signed it on October 2, 2015

Piece Rate Workers

AB 1513 sets forth new rules for employers with piece-rate employees. The law requires employers to pay piece rate workers for rest and recovery periods and other non-productive time at specified minimum hourly rates. This compensation must be separate from the piece rate compensation. The law includes a definition of "other non-productive time."

AB 1513 also mandates that specific information must now be included on a piece rate employee’s itemized wage statement (pay stub). For instance, the total hours of compensable rest and recovery periods must now be included on the pay stub.

The new law contains a "safe harbor" provision for employers who, in the past, may not have properly paid piece rate workers for rest and recovery periods or non-productive time and face liability. An employer will be required to fully compensate employees for any amounts not properly paid and meet other requirements by December 15, 2016, to take advantage of the safe harbor provision and avoid liability.

Meal Periods Health Care Industry

SB 327 reaffirms that the Wage Orders which allow for a specific meal period waiver in the health care industry are still in effect. Employers in the health care industry can continue to allow employees to voluntarily waive one of their two meal periods, even when an employee's shift exceeds 12 hours.

The legislation was passed to deal with uncertainty caused by a California Court of Appeal decision in Gerard v. Orange Coast Memorial that questioned whether employees could agree to waive the second meal period if their shift exceeds 12 hours — a common practice in the health care industry.

This law was also "urgency legislation" and became effective immediately when signed on October 5, 2015.

Labor Commissioner Expanded Enforcement Powers

SB 588 expands the Labor Commissioner’s ability to enforce laws and makes several changes to the Labor Code:

• Allows the Labor Commissioner to issue levies and liens on employer property to enforce a judgment against an employer for nonpayment of wages (includes successor employers).
• Allows the Labor Commissioner to issue a "stop order" — preventing the employer from continuing to conduct business in the state — when an employer fails to satisfy a final judgment for unpaid wages. The employer can continue to conduct business if a bond is posted.
• Specifies that an individual acting on behalf of the employer can be personally liable for violating certain provisions of the Labor Code, including the failure to: pay minimum wage and overtime; pay wages in a timely manner; issue correct wage statements; comply with meal and rest break laws; or properly reimburse employees for employer-required expenses.
• Provides for joint and several liability for unpaid wages in the property-services and long-term care industries when judgments are not satisfied. The property-services industry includes janitorial, security guard, valet parking, landscaping and gardening businesses.
• The new law also adds a provision that the Labor Commissioner can deny a license to an employer in the long-term care industry, as defined, for failing to pay a judgment for unpaid wages.

Labor Commissioner Enforcement of Local Laws

AB 970 expands the Labor Commissioner’s enforcement authority. The Labor Commissioner may now investigate and enforce local overtime and minimum wage laws, such as the local minimum wage ordinances that many cities now have. The Labor Commissioner is also authorized to issue citations, except when a local government entity already cited the employer for the violation.

AB 970 also gives the Labor Commissioner new authority to issue citations and penalties when employers fail to reimburse employees for employer-required expenses.

Wage Garnishment

SB 501 reduces the prohibited amount of weekly disposable earnings that may be garnished.

Under existing law, a withholding order cannot exceed the lesser of: (1) 25 percent of an individual's weekly disposable earnings; or (2) the amount by which the disposable earnings for the week exceed 40 times the state minimum hourly wage in effect.

Under the amendment, a withholding order now cannot exceed the lesser of: (1) 25 percent of an individual's weekly disposable earnings; or (2) 50 percent of the amount by which the disposable earnings for the week exceed 40 times the state minimum hourly wage in effect.

This amendment is effective July 1, 2016.

Public Works and Prevailing Wages

A number of bills signed this year relate to public works and prevailing wages. Employers who provide services or construction work on public works projects for the government or public sector-entities must pay the prevailing wage, which is usually significantly higher than the minimum wage.

The bills include:

• AB 219: Expands the definition of "public works" to include the hauling and delivery of ready-mixed concrete to carry out a public works contract. Applies to public works contracts awarded on or after July 1, 2016.
• AB 327: Extends the law that exempts volunteers from public works requirements until January 1, 2024.
• AB 852: Expands the definition of "public works" for purposes of paying prevailing wages to include any construction, alteration, demolition, installation or repair work done under private contract on a project for a general acute care hospital when the project is paid for with conduit revenue bonds issued on or after January 1, 2016. A limited exception applies to specified rural general acute care hospitals.

Hiring

Unlawful Use of E-Verify

AB 622 makes it unlawful for an employer to use the federal E-Verify system at a time or in a manner not required by federal law to check the employment authorization status of an existing employee or of an applicant who has not received an offer of employment.

Employers can still use E-Verify, in accordance with federal law, to check the employment authorization status of a person who has been offered employment.

The law is intended to prevent discrimination against applicants or employees, not to sanction the potential hiring of unauthorized individuals. Federal law already prohibits employers from pre-screening job applicants or submitting existing employees' data to E-Verify.

AB 622 also requires employers who use E-Verify to comply with specific notification requirements when receiving a tentative nonconfirmation letter from the Social Security Administration or Homeland Security indicating that the E-Verify information did not match federal records.

AB 622 creates a penalty of $10,000 for each violation.

Workers’ Compensation

Several bills relating to workers’ compensation were signed into law in 2015:

• AB 1124: Requires the Division of Workers’ Compensation to establish a formulary for prescription medications in the workers’ compensation system by July 1, 2017. Ensures that clinically appropriate medications are provided to injured workers, reduces treatment disputes and begins to combat the overutilization of dangerous and habit forming drugs, such as opioids.
• SB 623: Ensures that all injured workers receive benefits by clarifying that workers cannot be denied benefits based on citizenship or immigration status.
• AB 438: Requires specified workers’ compensation forms, notices and fact sheets to be made available in additional languages by January 1, 2018.
• SB 542: Makes clarifications to medical provider network laws, including requirements about the information a medical provider network must post on its website.
• SB 560: Allows the Contractors State License Board to investigate and enforce the obligation of licensees to secure valid and current workers' compensation insurance.

The Division of Workers' Compensation also recently finalized regulations revising certain benefit notices for January 1, 2016. Revisions were made to:

• The Claim Form and Notice of Potential Eligibility.
• The workers' compensation Notice to Employees — a required posting for California.