2017 Labor & Employment Legislative Update: House of Origin Deadline

by Seyfarth Shaw LLP
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Seyfarth Synopsis: Pay equity and Ban The Box bills lead the list of bills approved to continue their quest (moving to the other house of the California Legislature) to become California law.

Friday, June 2, marked the last day for bills in the California Legislature to pass out of their house of origin—the Senate or Assembly—and continue the legislative process for a shot at becoming a new California Peculiarity. Pay equity and Ban The Box bills lead the list of bills approved to continue moving through the process. Meanwhile, some other feared bills, including the Opportunity to Work Act and retail holiday overtime, did not make the cut. But the substance of these bills, like zombies, may refuse to die and re-emerge through amendment to bills that are still alive. We’ll keep watching, and keep you updated, through the September 15 deadline for bills to pass from the Legislature to the Governor’s desk.

Still Alive:

Pay Equity: Salary Inquiry Ban. AB 168 would prohibit employers, including state and local governments (even the Legislature) from asking applicants about their salary history information, including compensation and benefits. The bill would also require private employers to provide the applicant with the position’s pay scale upon a reasonable request. Will the third time be the charm for this legislation? AB 168 is scheduled for hearing June 14 in the Senate Committee on Labor and Industrial Relations.

Pay Equity: Gender Pay Gap Transparency Act. Attempting a California version of the revised EEO-1 report, AB 1209, effective July 1, 2020, would require employers with 250 or more employees to collect specified data on gender pay differentials, to publish the data on their websites, and to submit the data annually in reporting to the Secretary of State. The required data would include the difference between the mean salary and median salary of male exempt employees and female exempt employees, by job classification or title, and the difference between the mean compensation and median compensation of male board members and female board members. Committee analyses note that this bill was modeled after the recent measure passed in the United Kingdom that requires employers with 250 or more employees to publish their gender pay figures by April 2018.

Applicants: Prior Criminal History. On the heels of Los Angeles’s adoption of “Ban-the-Box,” this year’s attempt at even stronger, state-wide “Ban the Box” legislation marches on. AB 1008 would make it unlawful under California’s Fair Employment and Housing Act (“FEHA”) for an employer to include on any employment application any question seeking disclosure of an applicant’s criminal history, to inquire into or consider the conviction history of an applicant before extending a conditional offer of employment, or to consider or distribute specified criminal history information in conducting a conviction history background check. The bill would require an employer that intends to deny a position solely or in part because of the applicant’s prior conviction to assess whether the applicant’s conviction history has a direct and adverse relationship with the specific job duties. Then, the employer must notify the applicant of the reasons for the decision, provide the applicant time to respond, and consider the response before making a final written employment decision. Exempted from the bill’s scope are criminal justice agencies, farm labor contractors, and positions for which the law requires a state or local agency to conduct a background check or precludes employment based on criminal history.

Voluntary Veterans’ Preference Employment Policy Act. AB 353 would allow private employers to establish a veterans’ preference policy and uniformly grant a hiring preference to veteran applicants, regardless of when the veteran served. This preference would not violate the FEHA or any other local or state equal opportunity employment law or regulation (provided that the policy is not applied for the purpose of discrimination on the basis of any protected classification).

Credit and Debit Card Gratuities. AB 1099 would require entities that allow debit or credit card payment for services to also accept gratuities or tips via debit or credit card, and to pay those gratuities to the worker no later than the next regular payday. Prior to amendments, the bill would have applied to specified employers (lodging establishments, car washes, barber shops and beauty salons, massage parlors, restaurants, and on-demand service providers such as transportation network companies). As amended, rather than specifying the industries to which it applies, AB 1099 defines “entity” as “an organization that uses an online-enabled application or platform to connect workers with customers … including, but not limited to, a transportation network company.” The author’s stated reason for the bill is to make it easier and more reliable for workers in the gig economy to receive tips. The Assembly Appropriations Committee estimates the bill would cost approximately $300,000 in annual enforcement by the Department of Labor Standards Enforcement (“DLSE”), an estimate that could earn this bill the Governor’s veto.

Overtime Compensation: Executive, Administrative, or Professional Employees. AB 1565 would exempt from overtime compensation an executive, administrative, or professional employee who earns a monthly salary of either $3,956 or no less than twice the state minimum wage for full-time employment, whichever amount is higher. The bill states the Legislature does not intend to change the “duties test” of the overtime exemptions established in orders of the Industrial Welfare Commission for executive, administrative, or professional employees;  those provisions would continue to apply. The bill’s proponents argue that it would create “important protection for middle class workers who fall into the gap between the state’s overtime pay protections and what would have been higher overtime protections afforded” by federal Fair Labor Standards Act regulations adopted by President Obama’s US Department of Labor but enjoined through a court challenge. Opponents argue the bill unnecessarily accelerates salary increases for California exempt employees and applies to all employers regardless of size.

Immigration: Worksite Enforcement Actions. AB 450, the proposed “Immigrant Worker Protection Act,” would prohibit an employer from allowing federal immigration agency worksite enforcement authorities warrantless access to nonpublic areas of a place of labor and from releasing employee records to those federal authorities without a subpoena. This bill would also require an employer to notify the Labor Commissioner and employee representative of an Immigration and Customs Enforcement I-9 Employment Eligibility Verification audit within 24 hours of receiving the inspection notice and provide a copy of the notice. The bill would prescribe penalties, recoverable by the Labor Commissioner against employers for failing to satisfy the bill’s requirements and prohibitions, of not less than $2,000-$5,000 for the first violation and $5,000-$10,000 for each subsequent violation.

Good Faith Defense: Employment Violations. SB 524 would permit an employer to raise an affirmative defense that, at the time of an alleged violation of statute or regulation, the employer was acting in good faith when the employer relied upon a valid published DLSE opinion letter or enforcement policy. Even though SB 524 failed to pass the Senate Committee on Labor and Industrial Relations, reconsideration was granted and this bill is heading to the Assembly.

Retaliation: Expanding The Labor Commissioner’s Authority.  A former placeholder bill, as amended, SB 306 would authorize the Labor Commissioner, upon finding reasonable cause to believe an employer discharged or discriminated against an employee in violation of Labor Code section 98.7—before issuing a final determination—to seek temporary and permanent injunctive relief. This bill also would allow the Labor Commissioner to recover attorney’s fees and costs on a successful enforcement action, would authorize the Labor Commissioner to cite and penalize a person it determines violated Section 98.7, and would create procedural requirements for these processes.

Reproductive Health. AB 569 would add a provision to the Labor Code that would prohibit employers from taking any adverse employment action against an employee based on the employee’s or an employee dependent’s reproductive health decisions, methods, or use of a particular drug, device, or medical service (e.g., in vitro fertilization), including the timing of such. This bill would also prohibit employers from requiring employees to sign a code of conduct or similar document denying an employee the right to make such decisions. This bill would also require employers to include a notice of the employee rights and remedies in its handbook.  This bill is aimed at religiously affiliated institutions, noting (in language that would not be codified)  the Legislature’s agreement with Justice Alito in Hosanna-Tabor Evangelical Lutheran Church and School v. EEOC (2012) 565 U.S. 171, 199, that “the ministerial exception should apply only to an ‘employee who leads a religious organization, conducts worship services or important religious ceremonies or rituals, or serves as a messenger or teacher of its faith.’”

New Parent Leave Act. SB 63, as its predecessor (the vetoed SB 654 of 2016) attempted, would prohibit larger employers (having at least 20 employees within 75 miles) from refusing to allow an employee to take up to 12 weeks of parental leave to bond with a new child within one year of the child’s birth, adoption, or foster care placement as long as the employee has at least 1,250 hours of service with the employer during the previous 12-month period. This bill would also require the employer to maintain and pay for the employee’s coverage under a group health plan during this leave and allow—although not require—an employer to grant simultaneous leave to two employees entitled to leave for the same birth, adoption, or foster care placement.

Employee Request: Injury and Illness Prevention Program. AB 978 would require an employer to provide an employee or the employee’s representative a copy of the employer’s injury prevention program, free of charge, within 10 business days after the employer receives a written request. Under this bill, a recognized collective bargaining agent would automatically be treated as an authorized employee representative. The employer would be able to assert an impossibility of performance affirmative defense.

Bills Stuck in the House of Origin:

Opportunity to Work Act. More expansive than the City of San Jose’s voter-approved Opportunity to Work Ordinance, the much-publicized and employer-feared AB 5 would have required employers with 10 or more employees in California to offer additional hours of work to existing nonexempt employees in California before the employer could hire additional employees or temporary employees. AB 5’s hearing in Assembly Appropriations was postponed by the committee on May 3. Read more on what AB 5 would have implemented here, here, and watch here.

Rest Breaks. AB 817 would have carved out an exception to Labor Code section 226.7’s off-duty “rest period” requirement for employers providing emergency medical services to the public. The bill would authorize those EMS employers to require employees to monitor and respond to calls for emergency response purposes during rest or recovery periods without penalty, as long as the rest break is rescheduled. AB 817 stalled in the Assembly Committee on Labor and Employment as the bill’s author, Assembly Member Flora, canceled the hearing.

Retail Employees: Holiday Overtime. AB 1173 would have established an overtime exemption that would have allowed an employee to work up to 10 hours per workday with no overtime pay. Hours worked between 10 and 12 in a workday, or over 40 hours in a workweek would be paid at one and one-half the regular rate of pay. All hours over 12 in a workday and over eight on a fifth, sixth, or seventh day in a workweek would have been paid at double time. This bill never even received a definition to fill in its “retail industry” blank, and was sent to but never heard in the Assembly Committee on Labor and Employment.

Voluntary Veterans’ Preference Employment Policy Act. Feeling déjà vu? AB 1477, almost identical to AB 353, detailed above, would have allowed private employers to establish a veterans’ preference policy  and uniformly grant a hiring preference to veteran applicants, regardless of when the veteran served. This bill remained stagnant in the Assembly Committee on Veterans Affairs and Labor and Employment.

Health Professional Interns: Minimum Wage. AB 387 would have expanded the definition of “employer” to include a person who employs any person engaged in supervised work experience (i.e., clinical hours) to satisfy the requirements for licensure, registration, or certification as an allied health professional. AB 387 was amended to only include work experience longer than 100 hours before Assembly Member Thurmond ordered it to the inactive file on June 1.

Resident Apartment Manager Wages. AB 543 would have authorized an employer that doesn’t charge a resident apartment manager monthly rent, to apply up to one-half of the fair market rental value, instead of the two-thirds provided by existing law, of the apartment to meet minimum wage obligations to the apartment manager, pursuant to a voluntary agreement. This bill’s hearing in the Assembly Committee of Labor and Employment was canceled at the author’s request.

Labor Organizations: Compulsory Fee Payments. AB 1174 would have prohibited a person from requiring employees, as a condition of employment, to pay union dues or contribute financially to any charity sponsored by or at the behest of a labor organization. This bill failed to pass the Assembly Committee on Labor and Employment.

Employer Liability: Small Business and Microbusiness. AB 442 would have prohibited Cal OSHA from bringing an enforcement action for any “nonserious violation” against any employers with small businesses or microbusinesses without first giving the employer written notice of the violation and providing 30 days to cure. The bill would have authorized Cal OSHA to assess a reasonable fee, up to $50, to cover its costs for enforcement. The bill’s hearing in the Assembly Committee on Labor and Employment was canceled at the request of the author.

PAGA: Three Valiant, But Failed, Efforts. 

AB 281 attempted to reform PAGA by (1) requiring an actual injury for an aggrieved employee to be awarded civil penalties, (2) excluding health and safety violations from the employer right to cure provisions, and (3) increasing employers’ cure period to 65 calendar days, up from 33.

AB 1429 would have limited the violations an aggrieved employee can bring, required the employee to follow specific procedural prerequisites to filing suit, limited civil penalties recoverable to $10,000 per claimant and excluded the recovery of filing fees, and required the superior court to review any penalties sought as part of a settlement agreement.

AB 1430 would have required the Labor and Workforce Development Agency (“LWDA”) to investigate alleged Labor Code violations and issue a citation or determination regarding a reasonable basis for a claim within 120 calendar days; and allow an employee private action only after the LWDA’s reasonable basis notification or the expiration of the 120 day period. Read our further analysis of the proposed PAGA amendments here.

All three PAGA reform attempts stalled in the Assembly Committee on Labor and Employment.

Workplace Solutions

We will keep you apprised of these continuing Peculiarities, as well as any other significant legislative developments that occur as the end of the 2017 Legislative Session draws near.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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