Once again, our Legislature and courts were active in 2015. Here are some of the important new changes.
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, to any employee who worked in California for 30 days at an accrual rate of no less than one hour for every 30 hours worked. Employers are allowed to limit an employee’s use of paid sick leave to 24 hours or three days in each year of employment and may put a maximum cap on total accrual of 48 hours or six days. The law applies to all employers, regardless of size.
After the law was already in effect, the Legislature passed AB 304 which made several substantial amendments to the law. They included: allowing sick leave accrual at a different rate than specified in the Act so long as the employee will have at least 24 hours of accrued sick leave available by the 120th calendar day of employment; limiting PSL usage to 24 hours or 3 days in either a calendar year or 12 month period; allowing employers to have an “unlimited” sick leave policy provided that notice of that policy is on the employee’s wage statement; clarifying that independent contractors are not employees under the Act; and other technical changes. The amendments became effective on July 13, 2015.
Unlawful Use of E-Verify
AB 622 expands the definition of an “unlawful employment practice” to prohibit an employer or any other person or entity from using the E-Verify system to check the employment authorization status of an existing employee or an applicant who has not received an offer of employment, except as required by federal law or as a condition of receiving federal funds. Employers can use the system to check the employment authorization status of a person who has been offered employment. AB 622 also requires employers to comply with specific employee notification requirements when they receive notice from a federal agency that employee E-Verify information does not match federal records. There is a $10,000 penalty for each violation.
Gender Wage Equality
SB 358 (Fair Pay Act) expands the law concerning 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, and could face a lawsuit for such disparity. 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.”
Under this Act, the employer must look to “substantially similar work, when viewed as a composite of skill, effort and responsibility” when establishing pay rates. The term “substantially similar” is not limited to the employer’s establishment. Employers must also show that any wage differential based entirely and reasonably upon one or more of the 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 contains various other restrictions/requirements. It prohibits employers from terminating, discriminating or retaliation against an employee who exercises his/her rights under the Act or assists others in exercising their rights. Employers may not prohibit employees from disclosing their wages, discussing their wages, discussing the wages of others or asking about another employee’s wages. Employers must also retain records relative to wages, wage rates, job classifications and other terms and conditions for 3 years instead of 2 years.
Whistleblower and Anti-Retaliation Protections
AB 1509 prohibits employers from retaliating against an employee when his/her family member engages in whistleblowing or other described protected activity, such as complaining of wage theft or unsafe working conditions.
Reasonable Accommodation and Retaliation
AB 987 clarifies that an employer can not 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.
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-protective time at specified minimum hourly rates, separate from the piece-rate compensation.
Additionally, specific information, such as the total hours of compensable rest and recovery periods, must now be included on a piece-rate employee’s itemized wage statement. Plus, meal or rest and recovery periods must also be shown.
AB 1513 also 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. Employers who want to take advantage of the safe harbor provision will need to meet the statutory requirements by December 15, 2016.
School Activities Leave
SB 579 expands the ability of employees to take time off from work for school or child care related activities. This includes 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. The categories of employees eligible to take time off for a child is expanded to include stepparents, foster parents and stand in loco parentis to a child. This law applies to employers with 25 or more employees.
Unemployment Insurance and Electronic Reporting
AB 1245 requires electronic reporting for unemployment insurance reports submitted to the Employment Development Department. It also requires employers to remit contributions for unemployment insurance premiums by electronic funds transfer. The requirements will apply to employers with 10 or more employees beginning January 1, 2017, and to all employers beginning January 1, 2018.
Labor Commissioner Enforcement of Local Laws
AB 970 allows the Labor Commissioner to investigate and enforce local overtime and minimum wage laws, such as the local minimum wage ordinances enacted by many cities. AB 970 also gives the Labor Commissioner new authority to issue citations and penalties when employers fail to reimburse employees for employer-required expenses.
Under SB 588, the Labor Commissioner now has the power to enforce judgments for nonpayment of wages. This includes the ability to issue “stop orders” preventing the employer from continuing to conduct business in California. The bill also provides for individual liability for individuals acting on behalf of the employer for violations of certain Labor Code sections.
SB 501 reduces the amount of weekly disposable earnings that may be garnished pursuant to a withholding order to the lesser of 1) 25% of the employee’s weekly earning or 2) 50% of the amount by which employee’s earnings for the week exceed 40 times the minimum wage. This amendment is effective July 1, 2016.
Private Attorneys General Act
AB 1506 amends the Private Attorneys General Act (PAGA) to allow employers a limited right to correct (or “cure”) two types of itemized wage statement violations before an employee may bring a civil action under PAGA. An employer will now be allowed to correct violations involving: (1) a failure to provide employees with an itemized wage statement that contains the inclusive dates of the pay period; or (2) a failure to provide employees with an itemized wage statement that contains the name and address of the legal entity.
Minimum Wage Increase
Let’s not forget that the Minimum Wage in California rose to $10.00 per hour on January 1, 2016.
SB 600 expands the protections of the Unruh Civil Rights Act by prohibiting discrimination by business establishments serving the public based on citizenship, primary language, or immigration status. For example, a coffee shop cannot refuse to serve a customer because he/she cannot speak English.
Some Important Cases
Religious Accommodation. In EEOC v. Abercrombie & Fitch, the United States Supreme Court said that an employer cannot refuse to hire an applicant if the employer is motivated by avoiding the need to accommodate the applicant’s religion. In this case, the applicant wore a head scarf or hijab to her job interview. She was denied employment because she did not conform to the “look policy” prohibiting the wearing of “caps” at A & F even though that policy was never explained to her and she never said that she would need to wear the scarf at work. The Supreme Court said that A &F were on notice of her religion and that created the duty to reasonably accommodate her religious practices. This case has wide ramifications since an applicant may appear to have a disability or practice a certain religion and that appearance cannot be a motivating factor in an employment decision. I expect much litigation on this issue.
Arbitration Agreements. As we told you last year, in Iskanian v. CLS Transportation the California Supreme Court announced a landmark ruling that arbitration agreements with mandatory class waivers are generally enforceable (thereby limiting the availability of class actions for employees who sign arbitration agreements) while carving out one notable exception. That exception consists of representative claims brought under the Private Attorneys General Act (PAGA) which is unique to California. Iskanian held that an employee’s right to bring a representative action under the PAGA is unwaiveable, and that any attempt to do so is contrary to public policy. On January 20, 2015, the United States Supreme Court declined to review the case. However, numerous federal courts are ignoring Iskanian and are ordering PAGA claims to arbitration.
If you are an employer and you have not done so already, have your Arbitration Agreement reviewed. Nothing takes the wind out of the sails of a civil or class action case like an order to arbitrate!
Training Costs. Some employers have agreements with their employees that if they leave within a specified period, they must reimburse the employer for training or other costs. Those agreements appear to no longer be enforceable. In the case entitled In re Acknowledgement Cases, the City of Los Angeles required all newly hired police officers to attend and graduate from the Los Angeles Police Academy. After the city realized that many officers who graduated from the academy were leaving within a few years to join other law enforcement agencies, the city enacted Los Angeles Administrative Code § 4.1700, which required that any police officer hired by the LAPD to reimburse the city a prorated portion of the cost of training at the academy if he or she voluntarily leaves the LAPD to work for another law enforcement agency after serving fewer than 60 months with the LAPD. In this coordinated action involving 43 former LAPD officers, the Court of Appeal held that Section 4.1700 violates Labor Code §§ 2802 and 2804 (which require an employer to indemnify employees for all necessary expenditures or losses incurred in direct consequence of the discharge of their duties).
Independent Contractors. As we also reported last year, Labor Code section 226.8 imposes penalties on employers who willfully misclassify their employees as independent contractors. In Noe v. Superior Court, Anschutz Entertainment Group (AEG) contracted with Levy Premium Foods (Levy) to manage AEG venues in Southern California. Levy in turn contracted with Canvas Corporation (Canvas) to supply food and beverage vendors. The vendors were paid on a commission basis and called “independent contractors.” A group of vendors sued AEG, Levy and Canvas alleging that they were misclassified. AEG and Levy tried to get out of the case with the argument that they were not “engaged in” the willful misclassification. The evidence showed that Levy was aware of and even objected to Canvas’ practice. Court of Appeal held that the term “engaged in” can have a broad meaning and that Levy and AEG might have liability under Labor Code section 226.8.
In another independent contractor decision, the Labor Commission has determined that Uber drivers are employees, not independent contractors.
If you have any questions about these, or any other employment laws, please do not hesitate to contact us.