New California Employment Laws for 2014: What Your Business Needs to Know

by Holland & Knight LLP


>>    California employers and employers with business in California should be aware of a number of new employment laws in the state, many of which take effect January 1, 2014.
>>    California's new labor and employment laws include a higher minimum wage, more powerful whistleblower protections and new immigration status-related protections for employees.

The California Legislature enacted numerous employment laws in 2013 that affect California employers. The significant changes initiated by these statutes include a higher minimum wage, increased whistleblower protections and new protections based on immigration status. Below is a brief summary of some of the most important new laws. Unless otherwise specified, the legislation is effective January 1, 2014.

New Wage and Hour-Related Laws in California

Minimum Wage Increases on July 1, 2014 and January 1, 2016

AB 10 raises California's minimum wage of $8.00/hour to $9.00/hour on July 1, 2014, and to $10.00/hour on January 1, 2016.

Increased Penalties for Minimum Wage Violations

In addition to existing penalties, AB 442 amends Labor Code sections 1194.2 and 1197.1 to authorize the Labor Commissioner to seek payment of liquidated damages to employees for an employer's violation of minimum wage requirements.

Heat Illness Recovery Period Penalties

SB 435 prohibits employers from requiring an employee to work during any cooldown period required under Cal/OSHA's heat illness prevention standards, which is termed a "recovery period" in the new law codified at Labor Code section 226.7. The penalty for a violation is the same as for meal and rest period violations, i.e., one additional hour of pay at the employee's regular rate of pay for each day that a recovery period is not provided. Employers with outdoor places of employment should note they are subject to Cal/OSHA's heat illness prevention requirements.

Attorneys' Fees Limitation for Employers Prevailing in Wage Claims

SB 462 amends Labor Code 218.5 to provide that employers who prevail in lawsuits by employees seeking recovery of unpaid wages may recover attorneys' fees and costs from the employee only if the court finds that the employee brought the lawsuit in bad faith. This will dramatically curtail the award of attorneys' fees to prevailing employers, as the added showing of bad faith is now required. Note that this bill does not modify the rules applicable to shifting of attorneys' fees in lawsuits for overtime or minimum wage violations, which have long allowed only for one-way fee shifting in favor of prevailing employees, not prevailing employers.

Criminal Penalty for Failure to Remit Withholdings

SB 390 makes it a crime for an employer to fail to remit withholdings from an employee's wages that were made pursuant to state, local or federal law. SB 390 adds to existing law, which provides for criminal penalties where an employer fails to make agreed-upon payments to health and welfare funds, pension funds or various benefit plans.

Labor Commissioner Liens on Property

AB 1386 provides that a final Labor Commissioner award creates a lien that the Labor Commissioner may record on the employer's real property.

Prevailing Wages and Privately Financed Refinery Projects

Employers providing services or construction work for public entities or publicly funded projects must pay the prevailing wage set by the trade in the region where the project is located. These rates generally far exceed the minimum wage, and construction companies should be particularly careful to consult counsel about their prevailing wage projects. In 2013, five bills affected prevailing wage projects, including expanding prevailing wage coverage to privately financed refinery construction projects.

Domestic Employee Overtime

AB 241, the "Domestic Worker Bill of Rights," provides for overtime pay for domestic employees who are "personal attendants" as defined by the law. Employers of in-home help should also be aware that the federal Department of Labor has issued new rules affecting the "companionship" exemption, which will take effect on January 1, 2015.

Discrimination and Retaliation Protections in California

New Protected Category: Military and Veteran Status

AB 556 extends the protections of the California Fair Employment and Housing Act (FEHA) to "military and veteran status." The bill does, however, permit inquiries regarding military or veteran status for the purpose of awarding a veteran's preference as otherwise permitted by law. This is an exception to the general prohibition under the FEHA of inquiries into protected characteristics of job candidates.

Definition of "Sexual Harassment"

SB 292 amends the definition of harassment to now state that sexually harassing conduct need not be motivated by sexual desire. So long as the harassment was directed to someone because of his or her sex, the harassment is unlawful. This codifies into the statute what had been held by courts but not clearly spelled out in the FEHA.

Added Whistleblower Protections and Penalties

In addition to prohibiting "unfair immigration-related practices" (see below), AB 263 expands the anti-retaliation provisions of Labor Code sections 98.6 and 98.7. Previously, these provisions made it unlawful to "discharge an employee or in any manner discriminate against any employee or applicant" for engaging in certain activities protected under the Labor Code. AB 263 adds that it is also unlawful to "retaliate, or take any adverse action" against such an employee or applicant. The scope of these additional protections likely will be addressed in future litigation. This bill also expands Labor Code section 98.6 to specifically protect an employee's written or oral complaint that he or she is owed wages. Finally, the bill adds a civil penalty of up to $10,000 per employee for each violation of Labor Code section 98.6 and provides that administrative remedies or procedures need not be exhausted to enforce rights under Labor Code section 98.7.

Whistleblower Protections and Internal Disclosures

SB 496 greatly expands Labor Code section 1102.5 whistleblower protections so that they now include reports alleging a violation of a local rule or regulation. Additionally, while existing law by its terms protects employees who disclose alleged violations to a government or law enforcement agency, SB 496 extends protections to employees who disclose information regarding alleged violations "to a person with authority over the employee or another employee who has authority to investigate, discover or correct the violation." Finally, SB 496 extends the prohibition on retaliation from instances of actual disclosure by an employee to circumstances where the employer "believes the employee disclosed or may disclose information." Each of these elements of the new law significantly widens its scope.

State and Local Agency Applicant Background Checks (Criminal Convictions)

Subject to certain exceptions, AB 218 prohibits a state or local agency from asking an applicant to disclose information regarding criminal convictions until the agency has determined the applicant meets the minimum employment qualifications for the position. This legislation is not effective until July 1, 2014. Employers should note that existing law continues to prohibit both public and private employers from asking an applicant to disclose any information concerning an arrest or detention that did not result in a conviction.

Protections in California Based on Immigration Status

Prohibited Retaliation

An additional aspect of AB 263 (discussed above) is its prohibition of "unfair immigration-related practices" when an employee asserts any rights protected by the California Labor Code or by any local ordinance applicable to employees. "Unfair immigration-related practices" include: (1) requesting more or different documentation than is sufficient under federal law governing employment verification, or refusing to honor such documents that on their face reasonably appear to be genuine, (2) misusing the E-Verify system, (3) threatening to file or the filing of a false police report, and (4) threatening to contact or contacting immigration authorities. Significantly, AB 263 creates a private right of action and provides for recovery of attorneys' fees by a prevailing employee or other person "who is the subject of an unfair immigration-document practice."

Business License Revocations for Threatening Employees Regarding Immigration Status; No Administrative Exhaustion Requirement

Going beyond AB 263, SB 666 permits the suspension or revocation of an employer's business license for reporting or threatening to report the citizenship or immigration status of any employee (former, current, or prospective) or employee’s family member (as defined) because the employee exercised rights under the Labor Code, the Government Code or the Civil Code. This law does not prohibit employers from requiring employees to verify their eligibility for employment with an I-9 Employment Eligibility Verification Form within three days of starting work. Additionally, SB 666 includes a broad statement that individuals are not required to exhaust administrative remedies or procedures in order to bring a civil action under any provision of the Labor Code, unless that section expressly requires exhaustion of an administrative remedy; this provision does not affect the requirements of Labor Code section 2699.3 relating to the Labor Code Private Attorneys General Act of 2004, or "PAGA."

Leaves and Other Benefits in California

Time Off for Stalking Victims; Protected Status and Reasonable Accommodation for Victims of Domestic Violence, Sexual Assault and Stalking

SB 400 extends to stalking victims the same protections provided to victims of domestic violence or sexual assault, including time off to appear at legal proceedings. For employers of 25 or more employees, the law also provides for time off to participate in safety planning or to seek medical services, psychological services or services from a domestic violence shelter, program or rape crisis center. Additionally, victims of domestic violence, sexual assault or stalking may not be retaliated against because of their status as victims and are entitled to reasonable accommodation, including the implementation of safety measures. Codified at Labor Code section 230, the new law provides a list of potential reasonable accommodations.

Time Off for Victims of Specified Crimes

SB 288 protects the right of victims of certain crimes to take time off of work "to appear in court to be heard at any proceeding, including any delinquency proceeding, involving a postarrest release decision, plea, sentencing, postconviction release decision, or any proceeding in which a right of the victim is at issue."

Leave for Emergency Service Training

AB 11 extends current law, which requires leave for volunteer firefighter training, to training as a reserve peace officer or as emergency rescue personnel. Such employees must be permitted to take an aggregate of 14 days of leave per calendar year to engage in training activities. These requirements apply to employers with 50 or more employees.

Family Temporary Disability Benefits

Effective July 1, 2014, SB 770 expands the scope of the family temporary disability insurance program to include wage replacement during time off to care for a seriously ill grandparent, grandchild, sibling or parent-in-law, as defined in the new law.

New Industry-Related Laws in California

Farm Labor Contractors

SB 168 makes successor farm labor contractors liable for wages and penalties owed to former employees of the predecessor if the successor meets one or more criteria specified in the law.

Garment Manufacturers

AB 1384 subjects registered garment manufacturers to civil penalties if they fail to display their name, address and garment manufacturing registration number on the front entrance of their businesses.

Car Washes

AB 1387 increases the bond requirement for car wash establishments from $15,000 to $150,000, with a specific exemption for employers with a collective bargaining agreement in place that provides for wages, hours of work, working conditions and "an expeditious process to resolve disputes concerning nonpayment of wages."

San Francisco Family-Friendly Workplace Ordinance

The San Francisco "Family-Friendly Workplace Ordinance" requires employers with 20 or more employees that have employees working in San Francisco to consider requests for "flexible or "predictable" working arrangements to assist with care-giving responsibilities. Under the ordinance, an employer denying a request must provide a written response that sets out a bona fide business reason for the denial and provides the employee with notice of the right to request reconsideration. Employees are also protected from adverse action for making such requests or otherwise due to their status as caregivers. A required posting informing employees of their rights has been developed by the San Francisco Office of Labor Standards Enforcement.

Workers' Compensation in California

Several bills relating to workers' compensation were passed in 2013. Notably, AB 1309 is likely to reduce significantly the filing of California workers' compensation claims by athletes employed by non-California sports teams. AB 1309 precludes professional athletes hired out of state from seeking workers' compensation benefits for cumulative injuries unless they have performed specified minimum periods of work within California or worked for a California-based team for specified minimum periods.

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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