Legislative Updates Employers Should Know About to Avoid Wringing in the New Year

The California legislature played an active role in 2015 by enacting new rules and amendments in many employment areas.  The following covers some of the key highlights, some of which became effective on January 1, 2016.

 Equal Wages for Substantially Similar Work (SB 358).  Known as the “Fair Pay Act,” SB 358 will amend Labor Code Section 1197.5 with the aim of improving gender wage equality.  We blogged about the bill’s controversial provisions when it was first introduced in March of this year.  To summarize, Section 1197.5 currently prohibits an employer “from paying an employee wages less than the rates paid to the opposite sex within the same establishment for equal work.”  But under the new language, an employer will now be prohibited from paying any of its employees lesser wages than the amounts paid to employees of the opposite sex for “substantially similar work.”  Whether employees perform “substantially similar work” is determined by analyzing a composite of skill, effort, and responsibility.  Notably, SB 358 does not confine the “substantially similar work” analysis to “the same establishment” of the employer.  The bill also increases the burden of defense by requiring an employer to demonstrate that any wage differential is not based on or derived from a sex-based differential in compensation, is related to the job at issue, and is consistent with business necessity.  This new law became effective on January 1, 2016.

Increased Minimum Wage.  As we pointed out last week, on January 1, 2016 the minimum wage increases to $10.00 an hour. This also bumps the annual salary minimum for exempt employees to $41,600.

Separate Pay for Rest and Recovery Under Piece-Rate Plans (AB 1513).  This bill adds Section 226.2 to the Labor Code, which provides that piece-rate workers must be “compensated for rest and recovery periods and other nonproductive time” at an hourly rate that is separate from any other piece-rate compensation.  The statute further defines “other nonproductive time” as “time under the employer’s control, exclusive of rest and recovery periods, that is not directly related to the activity being compensated on a piece-rate basis.”

In conjunction with this new requirement, AB 1513 also amends Labor Code Section 226(a) to impose additional administrative obligations upon employers of piece-rate workers.  Those workers’ wage statements must now also reflect the total hours worked for compensable rest and recovery periods and other nonproductive time, as well as the rates of compensation and gross wages paid for those periods of time.  This new law became effective on January 1, 2016.

Opportunity to Cure Noncompliant Wage Statements After Receiving a PAGA Notice (AB 1506).  By way of background, the California Private Attorneys General Act of 2004 (“PAGA,” codified at Labor Code Section 2699, et seq.) authorizes allegedly aggrieved employees to sue employers to recover civil penalties for Labor Code violations.  Following PAGA’s enactment, however, were actions that sought significant monetary penalties for technical violations of wage statement requirements that undisputedly caused no actual injury.  AB 1506, immediately effective on October 2, 2015, was designed to reduce the frequency of these wage statement claims.  The new law amended PAGA to provide employers with 33 days from the postmarked date of notice to cure wage statements that omit the inclusive dates of the period for which the employee was paid or the name and address of the legal entity that is the employer.  According to the amended terms, a violation is “cured” once an employer has provided a fully compliant, itemized wage statement to each aggrieved employee for each pay period for the three-year period prior to the date of the written notice.  Aside from the short timeframe to cure, it is also important to note that an employer may use this cure provision only once for the same violation of the statute during each 12-month period.  This change became effective on October 2, 2015.

Complying with California’s Sick Leave Requirements (AB 304).  Don’t forget about California’s new paid sick leave law, which went into effect in July 2015. Read our prior blog posts on the original law and the subsequent amendments.

Requests for Accommodation Constitutes “Protected Activity” (AB 987).  California’s Fair Employment and Housing Act (“FEHA,” codified at Government Code Section 12940, et seq.) requires employers to provide reasonable accommodations for known disabilities and prohibits retaliation against an employee who “oppose[s] any practices forbidden” by the statute.  However, in 2013, the Court of Appeal in Rope v. Auto-Chlor System of Washington Inc., 220 Cal. App. 4th 635, held that a request for accommodation, without more, is not a protected legal activity and does not support a claim of retaliation under FEHA.

The Legislature passed AB 987 in direct response to the Rope decision.  The law amends FEHA to make clear that a request for reasonable accommodation on the basis of religion or disability constitutes a “protected activity”; and that an employee who makes such a request for accommodation is protected from retaliation, regardless of whether the request was granted.  This new law became effective on January 1, 2016.

Prohibition on Adverse Action Against Family Members of Employee Engaged in Protected Activity (AB 1509).  AB 1509 expands certain protections against retaliation and adverse action.  The Labor Code currently prohibits an employer from discriminating, retaliating, or taking any adverse action against an employee or applicant for engaging in specified protected conduct. As a result of AB 1509, an employer, or a person acting on behalf of the employer, will also be prohibited from retaliating against an employee who is a family member of a person who engaged in, or is perceived to have engaged in protected conduct.  This new law became effective on January 1, 2016.

Expanded Rights to Take Time Off for Health and Childcare (SB 579).  California’s current “Kin Care” law (Labor Code Section 230.8) generally prohibits covered employers from discharging or discriminating against an employee who is a parent, guardian, or grandparent with custody of a child in a licensed child day care facility, kindergarten, or grades 1 to 12, for taking off up to 40 hours each year to participate in school activities.  SB 579 will expand those rights of leave to include time off work to find, enroll, or re-enroll a child in school or with a childcare provider; or to address childcare provider or school emergencies.  The bill also redefines “parent” to further include a stepparent, foster parent, or a person who stands in loco parentis to a child, thereby extending leave to individuals who hold such status..

In addition, SB 579 will also amend the paid sick leave law (codified at Labor Code Section 233) to, among other things, permit employees to use sick leave for the purposes set forth in the Healthy Workplaces, Healthy Families Act of 2014.  As a result, employees will be able to take paid time off to address a greater range of health needs or to provide care for a broader group of “family members.” This new law became effective on January 1, 2016.

Military Leave for National Guard Members of Other States (AB 583).  California provides military leave protections to members of the National Guard who are called into active duty by the Governor of California or the President.  With some exception, returning National Guard members are generally entitled to be restored to their former positions, or ones with comparable pay, status, and seniority.  AB 583 expands these protections to members of the National Guard of other states who are ordered to serve by the Governor of their respective states or the President, and who have left a position in private employment in California.  These rights became effective on January 1, 2016.

Prohibitions Against the Unlawful Use of E-Verify (AB 622).  Federal law permits companies to employ only individuals who are authorized to work in the United States.  E-Verify is an electronic system administered by various federal agencies that allows employers to determine the work eligibility of their employees.  The E-Verify program, however, has come under fire over the years amid reports of it being misused for unlawful, discriminatory purposes.  AB 622 adds Section 2814 to the Labor Code, generally prohibiting 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, or in a manner not required under federal law or authorized under any federal agency memorandum of understanding.  The new law does not otherwise restrict an employer’s right to use E-Verify in accordance with federal law.  Further, if an employer receives notice of a tentative non-confirmation issued by the Social Security Administration or the Department of Homeland Security , the employer will be required to provide the notification to the affected person, as soon as practicable.  This new law became effective on January 1, 2016.

Procedures for the Labor Commissioner to Enforce Judgments (SB 588).  SB 588 adds several new sections and an entirely new chapter to the Labor Code.  These new rules do not necessarily create any additional requirements for employers, but rather establish new procedures that the Labor Commissioner can use to enforce judgments or awards arising from unpaid wages.  In general, these rules enable the Labor Commissioner to use any remedies available to a judgment creditor, and to act as a levying officer when enforcing a judgment pursuant to a writ of execution.  The Labor Commissioner, for example, will be permitted to issue liens on credits, money, or property belonging to an employer.  Should a final judgment for unpaid wages remain unsatisfied for 30 days after the time to appeal the judgment has expired, and there is no appeal pending, the employer must obtain a surety bond that covers the value of the judgment or otherwise must cease business operations in California.  SB 588 also amends Labor Code Section 558.1, extending individual liability to owners, directors, officers, and managing agents of the employer for any willful failure to pay wages, failure to issue pay stubs, failure to provide cooldown, rest, or meal periods, or failure indemnify business expenses.  These laws became operative on January 1, 2016.

Don’t delay—make sure your company’s policies and practices comply with these new laws so you and your employees can have a Happy New Year!