New California Labor and Employment Laws for 2018

HIGHLIGHTS:

• The California Legislature passed numerous labor and employment bills that Gov. Jerry Brown signed into law in 2017.
• Many of the new laws relate to wages and hours, leaves and benefits, hiring practices, health and safety, and other workplace protections. A number of these laws become effective on Jan. 1, 2018.
• Employers will need to ensure they are in compliance with these new laws.

As in prior years, in 2017 the California Legislature passed and Gov. Jerry Brown signed into law numerous labor and employment bills. Unless otherwise noted, each bill is effective on Jan. 1, 2018. This alert highlights the following selected and significant new laws:

• SB 3 – California's Minimum Wage Increase in 2018
• AB 1701 – Direct Contractors Are Liable for Subcontractors' Debt Owed to Wage Claimants
• SB 63 – The New Parent Leave Act for Small Employers
• AB 1008 – "Ban the Box" – Restrictions on Requesting and Considering Criminal History When Making Employment Decisions
• AB 168 – Prospective Employers Cannot Rely on or Seek an Applicant's Salary History in Determining Whether to Offer Employment
• SB 306 – The Labor Commissioner May Investigate an Employer Suspected of Retaliation or Discrimination Without a Complaint
• AB 46 – Clarification That Public Entities Are Included as "Employers" Under California's Equal Pay Law
• AB 1710 – Expanding Discrimination Protection for Service Members
• AB 450 – Restrictions on Employer Cooperation with Federal Immigration Enforcement Authorities and I-9 Eligibility Checks
• SB 396 – Additional Supervisor Training for Gender-Based Harassment
• SB 295 – New Sexual Harassment Training Requirements for Farm Labor Contractors
• SB 179 – The Gender Recognition Act
• AB 260 – Additional Businesses Must Comply with Human Trafficking Notice Requirements
• SB 225 – New Human Trafficking Notice Requirements
• AB 1687 – Online Entertainment Employment Services Are Restricted from Posting Subscribers' Ages

WAGE AND HOUR

SB 3 – California's Minimum Wage Increase in 2018

Beginning Jan. 1, 2018, the minimum wage will increase from $10.50 per hour to $11 per hour for California employees of employers with 26 employees or more. Thus, for employers with 26 employees or more, the minimum annual salary for exempt employees under California law will increase from $43,680 to $45,760.

For California employees of employers with 25 employees or less, the minimum wage will increase from $10 per hour to $10.50 per hour. Thus, for employers with 25 employees or less, the minimum annual salary for exempt employees under California law will increase from $41,600 to $43,680.

SB 3 sets forth a schedule for minimum wage increases through 2023, which are subject to temporary suspension by the governor, based on certain determinations.

AB 1701 – Direct Contractors Are Liable for Subcontractors' Debt Owed to Wage Claimants

Under Labor Code Section 218.7, direct contractors are liable for the debts of subcontractors at any tier owed to wage claimants. Liability extends to "any unpaid wage, fringe or other benefit payment or contribution, including interest owed but shall not extend to penalties or liquidated damages." The Labor Commissioner may enforce liability for unpaid wages and interest on those wages. Third parties owed fringe benefits or other benefits on the claimant's behalf may bring a private action to enforce this liability and the court shall award a prevailing plaintiff in such actions reasonable attorney's fees and costs, including expert witness fees. Joint labor-management cooperation committees established pursuant to relevant federal law may also file suit against the direct contractor. No other parties may maintain actions under this section.

AB 1701 is not retroactive and applies only to contracts entered into after Jan. 1, 2018. Furthermore, there is a one-year statute of limitations to bring an action under this new section, for which the statute of limitations begins running upon the earliest of the 1) recording of the notice of completion of the direct contract; 2) recording of a notice of cessation of the work specified in the direct contract; or 3) actual completion of the work specified in the direct contract. The statute does not apply to work performed by employees of the state, a special district, a city, a county, a city and county, or any political subdivision of the state.

LEAVE AND BENEFITS

SB 63 – The New Parent Leave Act for Small Employers

The California Family Rights Act (CFRA) currently makes it an unlawful employment practice for employers of 50 or more employees to deny an eligible employee up to 12 work weeks of protected bonding leave for a child born to, adopted by or placed for foster care with the employee. California employees are eligible for CFRA leave if they 1) have completed at least 12 months of employment with the company; 2) have worked for the company for at least 1,250 hours in the past 12 months; and 3) are employed at a worksite that has 50 or more employees within 75 miles of that worksite.

SB 63 extends protected bonding leave (12 work weeks) to eligible employees of smaller California employers with 20 to 49 employees. Employees are eligible for bonding leave under SB 63 if they 1) have completed at least 12 months of employment with the company; 2) have worked for the company for at least 1,250 hours in the past 12 months; and 3) are employed at a worksite that has 20 or more employees within 75 miles of that worksite.

Employees may request parental leave to bond with a new child within one year of the child's birth, adoption or foster care placement.

Additionally, SB 63 prohibits employers from refusing to maintain and pay for group health plan coverage for an employee on parental leave. The bill also includes a strong anti-retaliation provision, which makes it illegal for an employer to refuse to hire, discharge, fine, suspend, expel or discriminate against an employee for taking parental leave.

HIRING PRACTICES

AB 1008 – "Ban the Box" – Restrictions on Requesting and Considering Criminal History When Making Employment Decisions

Current California law bans employers from making a decision regarding the conditions of employment based on arrests or detentions that did not result in a conviction and participation in or referral to a pre- or post-trial diversionary program. AB 1008 repeals these provisions in favor of stronger anti-discrimination measures. Upon taking effect, it is an unlawful employment practice for employers with five or more employees to: 1) include on an employment application any question seeking the disclosure of an applicant's conviction history; 2) inquire or consider conviction history until a conditional offer has been made to the applicant; and 3) "consider, distribute, or disseminate information related to specified prior arrests, diversions, and convictions."

AB 1008 also lengthens the process for denial of employment based "solely or in part" on the applicant's conviction history. Employers who intend to deny an applicant on these grounds must first make an "individualized assessment" of whether the applicant's conviction history has a "direct and adverse" relationship to the duties of the job. If the employer determines that there is a direct and adverse relationship to the duties of the job, the employer must notify the applicant in writing of that decision. The applicant then has five business days to respond to the notice before the employer makes a final decision, and if the applicant disputes the accuracy of the conviction history, he or she has an additional five business days to obtain supporting evidence and respond to the notice of individualized assessment.

Various job positions are exempted from the new "ban the box" requirements. These include: 1) positions with a state or local agency where the agency is required to perform a conviction history background check; 2) positions with criminal justice agencies; 3) positions as a farm laborer contractor; and 4) positions where the employer is required by local, state or federal law to conduct criminal background checks or restrict employment based on criminal history.

AB 168 – Prospective Employers Cannot Rely on or Seek an Applicant's Salary History in Determining Whether to Offer Employment

AB 168 creates a new section of the Labor Code — Section 432.3 — that prevents prospective employers from seeking, either personally or through an agent, an applicant for employment's salary history information. Employers additionally cannot rely on salary history information to determine whether to offer employment or to determine what salary to offer.

Should an applicant voluntarily "and without prompting" reveal salary history to a prospective employer, the employer may consider salary history in determining what salary to offer the applicant. The prospective employer still may not use salary history in deciding whether to offer employment. Salary history "disclosable to the public pursuant to federal or state law" — by way, for example, of a California Public Records Act request or a federal Freedom of Information Act request — can be used by an employer to determine whether to offer employment and to determine what salary to offer. Using such means to obtain salary information, however, is a cumbersome process and not likely to be helpful in an immediate hiring situation.

Finally, potential employers must provide an applicant with the pay scale for the position sought upon reasonable request. Section 432.3 applies to all employers, including state and local governments.

DISCRIMINATION AND RETALIATION

SB 306 – The Labor Commissioner May Investigate an Employer Suspected of Retaliation or Discrimination Without a Complaint

Under current California law, the Labor Commissioner is empowered to investigate and report complaints of retaliation or discrimination that arise from the Commissioner's other investigations into a specific employer. The former law, which is revised by SB 306, granted the Labor Commissioner this power to investigate retaliation or discrimination only if an employee or other person made a complaint. Going forward, the Labor Commissioner will not need a complaint to investigate retaliation or discrimination relating to an existing investigation.

Should the Labor Commissioner or the Division of Labor Standards Enforcement (DLSE) suspect that an employer has retaliated or discriminated against employees because of an ongoing DLSE investigation into the employer, the Commissioner may initiate an investigation without a complaint. Upon finding "reasonable cause" to believe that a violation has occurred, the Commissioner may petition the respective superior court for injunctive relief.

SB 306 also authorizes the Commissioner to issue citations to individuals determined to be responsible for violations and establishes processes for hearings and writs of mandate. Finally, the bill grants employees the ability to seek injunctive relief in a private action. Any injunctive relief granted in a private action is not stayed pending appeal.

Given its track record of initiating vigorous enforcement actions across a wide variety of industry sectors, the Labor Commissioner's office is expected to use this new law to expand its oversight of the California workplace.

AB 46 – Clarification That Public Entities Are Included as "Employers" Under California's Equal Pay Law

Current Labor Code Section 1197.5 prohibits employers from paying any of its employees a different wage than the wage paid to members of the opposite sex for substantially similar work, subject to certain exceptions. The current law did not specify whether "employer" included both private and public employers. As amended by AB 46, both entities are considered "employers" for purposes of Section 1197.5. Under AB 46, public employers are not subject to the "misdemeanor violation provision" of Labor Code Section 1199.5. AB 46 took effect on Oct. 14, 2017.

AB 1710 – Expanding Discrimination Protection for Service Members

Current California law prohibits discrimination against service members because of their membership or service with respect to employment, position or status. AB 1710 expands this protection, making it illegal to discriminate against service members with respect to the terms, conditions or privileges of employment in addition to current protections.

IMMIGRATION

AB 450 – Restrictions on Employer Cooperation with Federal Immigration Enforcement Authorities and I-9 Eligibility Checks

AB 450 creates four new provisions, two in the Government Code and two in the Labor Code. The new law bars employers from giving consent to immigration enforcement officers without a warrant to enter any non-public areas of the workplace, except as required by federal law. Only the Labor Commissioner or the California Attorney General may enforce this provision.

Further, employers may not voluntarily consent to immigration enforcement officials' warrantless or non-subpoenaed requests to access, view or obtain the employer's employee records, except as authorized by federal law. This prohibition does not apply to I-9 Employment Eligibility Verification forms or other forms for which a Notice of Inspection has been provided. Within 72 hours of receiving a Notice of Inspection, an employer must provide each current employee notice of the inspection.

Employers must also provide notices to each "current affected employee" — defined as those who are "identified by the immigration agency inspection results to be an employee who may lack work authorization, or an employee whose work authorization documents have been identified by the immigration agency inspection to have deficiencies." This notice must be provided to the affected employee by hand within 72 hours of the employer's receipt of a written immigration agency notice containing the results of any I-9 or employment record inspection. Additionally, employers may not re-verify the employment eligibility of a current employee at a time or in a manner not required by federal law.

These new provisions carry with them fines and civil penalties ranging from $2,000 to $5,000 for the first violation and $5,000 to $10,000 for subsequent violations.

HARASSMENT PREVENTION TRAINING

SB 396 – Additional Supervisor Training for Gender-Based Harassment

California law currently requires employers with 50 or more employees to provide at least two hours of training regarding sexual harassment to supervisory employees once every two years, and the training must also be provided within six months of an employee taking a supervisory position.

Under SB 396, employers with 50 or more employees must, as part of the required training and education for supervisors, also include training for harassment based on gender identity, gender expression and sexual orientation. Additionally, each employer must place a poster developed by the Department of Fair Employment and Housing (DFEH) on transgender rights in the workplace. Finally, SB 396 expands the definition of "individuals with employment barriers" to include transgendered and gender nonconforming individuals.

SB 295 – New Sexual Harassment Training Requirements for Farm Labor Contractors

California law currently provides that farm labor contractors must attest that employees have received sexual harassment prevention and reporting training. SB 295 adds to this requirement, mandating that the training for each agricultural employee be in the language understood by that employee. Farm labor contractors must also, as part of their application for a license renewal, provide the Labor Commissioner with 1) a complete list of materials and resources utilized to provide the training, and 2) the total number of agricultural employees trained. These materials must be provided at least one month prior to submitting the application for renewal. SB 925 also authorizes the Commissioner to issue citations and assess civil penalties of $100 for each violation.

OTHER PROTECTIONS

SB 179 – The Gender Recognition Act

California law presently allows for persons who have undergone clinically appropriate treatment for gender transition to obtain a new birth certificate from the State Registrar and to petition a court for a judgment recognizing the change of gender. Starting on Sept. 1, 2018, persons seeking a court judgment to recognize a change of gender or persons seeking a new birth certificate do not need to have undergone any treatment. The bill authorizes a court to change a person's gender upon petition to either female, male or nonbinary. On Jan. 1, 2019, applicants for either a new or renewed driver's license may choose from the gender categories of female, male and nonbinary.

AB 260 – Additional Businesses Must Comply with Human Trafficking Notice Requirements

Under existing California law, certain businesses and other establishments must post specified notices containing information regarding slavery and human trafficking. AB 260 expands the covered businesses that must post slavery and human trafficking notices to "[h]otels, motels, and bed and breakfast inns, as defined in subdivision (b) of Section 24045.12 of the Business and Professions Code, not including personal residences."

SB 225 – New Human Trafficking Notice Requirements

SB 225 is a companion bill to AB 260, discussed above. This bill requires that human trafficking notices posted in the workplace must specify a number that employees can text for services and support. Further, the California Department of Justice is tasked with creating a revised and updated model human trafficking notice by Jan. 1, 2019. Covered businesses and establishments will not be required to post the Department of Justice's model posting until on and after Jan. 1, 2019.

AB 1687 – Online Entertainment Employment Services Are Restricted from Posting Subscribers' Ages

AB 1687 targets a specific industry with the aim of curbing "employment or age discrimination." Under the bill, which creates the new Civil Code Section 1798.83.5, an online entertainment employment service that individuals pay to subscribe to shall not publish or make public a subscriber's date of birth or age in an online profile. Simply, the bill bans online entertainment job posting or recruiting websites from circulating its paying members' age information. Covered websites must also remove such information within five days of a subscriber's request.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.