California Employment Law Update: What’s New for 2018

by Davis Wright Tremaine LLP
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Davis Wright Tremaine LLP

2017 has been a busy year for the California legislature, with the result that a number of new and significant employment laws have been added to the books and will take effect on January 1, 2018. Employers should take note of the following key developments and adjust their policies and practices accordingly:

Ban on Seeking Job Applicant’s Compensation History (AB 168)

AB 168 created Labor Code Section 432.3, which applies to all employers, including all public employers, regardless of size. Under Section 432.3, employers will be prohibited from relying on an applicant’s compensation history as a factor in determining whether to make a job offer or what compensation to offer an applicant. For purposes of the statute, “compensation” includes not only salary, but benefits as well. Employers may not ask applicants about their compensation history, nor otherwise seek it from a third party, such as a recruiter. However, if an applicant voluntarily and without prompting discloses his or her compensation history, the employer may consider that information in determining its compensation offer, subject to Section 432.3(i), which explicitly states that prior compensation alone cannot be used to justify a disparity in compensation. The new law also requires employers to provide the “pay scale” for a position upon an applicant’s reasonable request. While the term “pay scale” is not defined by the statute, the provision of a “salary range” for the position would appear to satisfy the new law’s requirement. The new statute can be found here.

In light of this new restriction, employers should remove questions about prior compensation from their applications and any applicant interview guidelines, advise Human Resources staff, hiring managers, and recruiters that they are not to seek compensation history information, and prepare to provide a pay scale for each open position. While the law does not require that a pay scale be provided to an applicant in writing, doing so may be the better practice as documentation will avoid any possible confusion or ambiguity in terms of what information was provided and when.

Please see our earlier Advisories on this significant new statute, which can be found here and here.

Ban the Box – Job Applicants’ Conviction History (AB 1008)

Labor Code Section 432.7 has long prohibited an employer, whether a private individual, corporation or public agency, from asking a job applicant to disclose, or from utilizing as a factor in determining any condition of employment, information concerning an arrest or detention that did not result in a conviction, or information concerning a referral or participation in any pre-trial or post-trial diversion program.

AB 1008, which adds new Government Code Section 12952 to the Fair Employment and Housing Act (“FEHA”), expands existing protections by prohibiting covered employers with five or more employees from (1) including on an employment application any question seeking disclosure of an applicant’s conviction history, (2) inquiring into or considering an applicant’s conviction history until after a conditional employment offer has been made, and (3) considering, distributing, or disseminating information developed as a result of a background check that is related to (a) certain arrests not followed by a conviction, (b) referral to or participation in a pre-trial or post-trial diversion program, and (c) convictions that have been sealed, dismissed, expunged, or statutorily eradicated. The new statute can be found here.

When an employer intends to deny an applicant a job offer either solely or in part because of the applicant’s conviction history, AB 1008 requires the employer to make an individualized assessment and comply with certain notice procedures before employment may be denied.

Please see our earlier Advisories on this new statute and related regulations promulgated by the Fair Employment and Housing Council here and here

Requirement to Cover Gender Identity as Part of Supervisor Trainings on Prevention of Sexual Harassment (SB 295)

Employers with 50 or more employees must incorporate information on harassment based upon gender identity, gender expression, and sexual orientation into the two-hour sexual harassment prevention training already required for all supervisory employees. In addition, employers with five or more employees must prominently post a new poster issued by the DFEH (available here) that incorporates information from the FEHC regulations on gender identity and expression that were adopted in July 2017. (These regulations were covered in a previous Advisory).

Expansion of 12-Week Parental Leave to Employers with 20 or More Employees (SB 63)

Under the existing California Family Rights Act (“CFRA”), eligible employees who work for employers with 50 or more employees may take up to 12 weeks of leave in any 12-month period for the birth, adoption, or foster care placement of a child. The New Parent Leave Act extends these parental-leave provisions of CFRA to employees working for employers with 20 or more employees. The new law can be found here.

Employers should note that this change in the law applies only to leave taken for the birth, adoption, or foster care placement of a child; the New Parent Leave Act does not extend to employees of smaller employers the right to leave under CFRA for an employee’s or a family member’s serious health condition. Also, all other threshold requirements of CFRA still must be met to qualify for the leave. As with “baby bonding” leave under CFRA, leave under the New Parent Leave Act is in addition to the up to four months Pregnancy Disability Leave (“PDL”) available to employees who are disabled by pregnancy, childbirth, or related medical conditions.

Immigrant Worker Protection Act (AB 450)

AB 450, known as the Immigrant Worker Protection Act, prohibits employers from allowing immigration enforcement agents to (1) access non-public areas of a workplace without a warrant and/or (2) access, review, or obtain employee records without a subpoena or court order, subject to the exception regarding I-9 forms discussed below. AB 450 adds Sections 7285.1, 7285.2, and 7285.3 to the Government Code and Sections 90.2 and 1019.2 to the Labor Code, and can be found here.

AB 450 requires employers to post, at the workplace, any notice of a federal immigration agency’s intent to inspect I-9 forms or other employment records within 72 hours of the employer’s receipt of such notice. The Labor Commissioner is required to provide a template for such notice by July 1, 2018, although the posting requirement is in effect as of January 1, 2018. In addition to posting a notice, employers must, upon reasonable request, provide any affected employees with a copy of the actual inspection notice. Employers must also provide to affected employees (and any authorized representative, such as a union) a copy of the immigration agency’s inspection results, as well as any obligations of the employer and any affected employees that result from the inspection.

Employers who provide access to immigration enforcement agents in violation of AB 450 and/or who fail to provide the required notices are subject to penalties of between $2,000 and $5,000 for a first violation, and between $5,000 and $10,000 for each subsequent violation. These penalties are recoverable by the Labor Commissioner.

AB 450 also prohibits employers from re-verifying an employee’s employment eligibility at a time or in a manner not required by federal law. Violations of this requirement subject employers to a penalty of up to $10,000, also recoverable by the
Labor Commissioner.

Other Noteworthy Developments

Reminder of Increase in Minimum Wage and Minimum Salary Basis

California’s minimum wage will increase on January 1, 2018 to $10.50 per hour for employers with 25 or fewer employees, and to $11.00 per hour for employers with 26 or more employees (additional information on how employees are counted for purposes of this rule is available here). As a result in this increase, the minimum salary an employee must earn to qualify for exempt status under California law will increase to $43,680 per year ($840 per week) for employers with 25 or fewer employees, and to $45,760 per year ($880 per week) for employers with 26 or more employees. These rates are scheduled to increase again on January 1, 2019.

Employers should also be aware of any local minimum wage ordinances that require a higher minimum wage than state law (although such local requirements will not affect the minimum salary required to qualify for exempt status). Note that the federal minimum salary requirement for determining exempt status announced by the U.S. Department of Labor last year is tied up in the courts and its ultimate outcome remains uncertain. 

Wage Claim Liability for Construction Contractors (AB 1701)

AB 1701 adds Section 218.7 to the Labor Code, and applies to contracts entered into on or after January 1, 2018. Under this new law, construction contractors will be jointly and severally liable with their subcontractors for any failure by a subcontractor to pay wages, benefits, or health and welfare pension fund contributions to its workers. Section 218.7 will also require subcontractors to provide payroll records upon request by a direct contractor.

Requirement to Provide Nurse Case Manager to Assist Employees Injured by Domestic Terrorism (AB 44)

AB 44 requires employers to provide employees who sustain industrial injuries as a result of domestic terrorism with the immediate support of a nurse case manager to assist with coordination of medical treatment.

Responsible Beverage Service Training Program Required by 2021 (AB 1221)

AB 1221 requires the Department of Alcoholic Beverage Control to develop and administer a training course on Responsible Beverage Service, which will be required for alcohol servers starting in 2021.

Expansion of DLSE Investigation Powers (SB 306)

SB 306 enables the California Labor Commissioner to investigate suspicions of retaliation that arise in the course of investigation of wage claims or other matters within the Labor Commissioner’s jurisdiction, even in the absence of a complaint by the affected employee. In addition, this new law expands the remedies that the DLSE may impose if retaliation is found. Our Advisory on these amendments can be found here.

Recognition of Nonbinary Gender on State Identification Documents (SB 179) 

SB 179 permits Californians to specify “nonbinary” as a third gender option (in addition to male and female) on birth certificates and drivers’ licenses. In addition, this law streamlines the procedures for changing gender on state identification documents, and eliminates the requirement that a person provide evidence of clinical treatment before applying for a change of gender. Although this law does not explicitly concern employment, employers in California should nevertheless be aware of this change, and be prepared, in those instances where employee identification is required, to accept identification that includes the nonbinary designation. See also the recent Gender Identity and Gender Expression Regulations (here) and our related advisory (here).

Expansion of Slavery and Human Trafficking Notice Requirements (AB 260 and SB 225)

Under existing law, certain business establishments are required to post a notice containing instructions for reporting forced labor and other human trafficking activity. AB 260 expands the types of business establishments subject to the posting requirement to include hotels, motels, and bed and breakfast inns.

SB 225 provides that, starting on January 1, 2019, the notice must include a phone number to which a person can send a text message to receive services and support relating to slavery and human trafficking. Employers should check the website of the California Attorney General for a new sample notice as that date approaches. 

VETOED BILLS OF NOTE

  • AB 569, which would have added a new provision to the Labor Code prohibiting discrimination against employees (and their dependents or family members) for “reproductive health decisions.” 
  • AB 1209, which would have required large California companies (500+ California employees) biennially to collect and report data on gender wage differentials relating to their workforces and board members.

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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