Employment Law

• Jurisdiction: California,United States
• Author: By Andrew H. Friedman
• Citation: Vol. 2016
• Publication year: 2016

Employment Law

By Andrew H. Friedman

In sharp contrast to 2015, when California state and federal courts seemed to be issuing important decisions in labor and employment law cases on a near daily basis, 2016 saw significantly fewer decisions. However, the California Legislature enacted a slew of new employment laws that extend additional protections for employees. This article "cherry-picks" and briefly summarizes not only the most significant laws, cases and regulations from 2016 but also those that are most useful to the employment practitioner, whether defense, plaintiff or neutral.

California Legislative and Regulatory Update

Continuing their annual tradition, the California Legislature passed, and Governor Brown signed, numerous labor and employment bills that will affect the workplace in many significant ways. In addition, the California Department of Fair Employment and Housing issued new regulations. Unless noted otherwise, the new legislation became effective January 1, 2017.

Expansion of California's Fair Pay Act to Encompass Race and Ethnicity

In 2015, California enacted SB 358, the California Fair Pay Act. SB 358, the most aggressive equal pay law in the country, amended Labor Code section 1197.5 to prohibit employers from paying an employee a wage rate less than that paid to any employees of the opposite sex for doing substantially similar work—when viewed as a composite of skill, effort, and responsibility. This year, California enacted SB 1063, dubbed the "Wage Equality Act of 2016," which amended Labor Code section 1197.5 to include employee race and ethnicity, in addition to gender, as a protected basis for equal pay.

Prior Salary Alone Does Not Justify Wage Differentials

AB 1676 expanded the California Fair Pay Act (Labor Code section 1197.5) even further by emphasizing that an individual's "[p]rior salary shall not, by itself, justify any disparity in compensation." As originally proposed, AB 1676 would have prohibited employer inquiries into an applicant's prior salary. However, concerns that Governor Brown would veto the bill, as he did AB 1017 in 2015, which also would have banned inquiries into salary history, led the Legislature to remove this prohibition from AB 1676.

Protections for Victims of Domestic Violence, Sexual Assault, or Stalking

Labor Code section 230.1 provides that employers with 25 or more employees shall not retaliate against an employee who is a victim of domestic violence, sexual assault, or stalking because he or she took time off from work for certain specified activities, such as seeking medical attention, obtaining psychological counseling, or obtaining services from a domestic violence shelter or rape crisis center. Effective July 1, 2017, section 230.1 (amended by AB 2337) will require covered employers to give certain written information to new employees upon hire (and to other employees upon request) regarding their rights to take leave under that statute.

AB 2337 also amended section 230.1 to provide that, on or before July 1, 2017, the Labor Commissioner must develop, and post on the Labor Commissioner's website, a form notice that employers may use to comply with the foregoing provision. Employers are not required to comply with the new notice provisions until the Labor Commissioner posts the form.

Clarification Regarding Itemized Wage Statements

AB 2535 amended Labor Code section 226 to clarify that an itemized wage statement for certain exempt employees does not have to show the employee's "total hours worked." The new provision applies to employees who meet the requirements of the executive, managerial, professional or outside sales exemptions pursuant to any IWC Wage Order or the overtime exemption for computer software professionals under Labor Code section 515.5. Of course, employers must continue to include the total hours worked by non-exempt employees on the itemized wage statements for each pay period.

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Employers Restricted from Considering Certain Juvenile Criminal Records

AB 1843 expanded Labor Code section 432.7's restrictions on what inquiries employers may make regarding the criminal history of applicants for employment. Employers are now prohibited from asking applicants about, or considering information relating to, "an arrest, detention, process, diversion, supervision, adjudication, or court disposition that occurred while the person was subject to the process and jurisdiction of juvenile court law." Likewise, employers may not use "self-help" to find out about an applicant's juvenile criminal history—i.e., an employer may not "seek from any source whatsoever, or utilize, as a factor in determining any condition of employment including hiring, promotion, termination, or any apprenticeship training program or any other training program leading to employment, any record concerning or related to an arrest, detention, processing, diversion, supervision, adjudication, or court disposition that occurred while a person was subject to the process and jurisdiction of juvenile court law."

Additionally, the California Fair Employment and Housing Council ("FEHC") has proposed regulations related to the use of criminal history information in employment decisions.¹ The proposed regulations would prohibit criminal history consideration in a manner that would adversely impact individuals on a basis protected by FEHA. These regulations could impose restrictions greater than those set forth in Labor Code section 432.7 on the use of criminal history information by employers.

Single-user Restrooms must be Labeled "All Gender"

Effective March 1, 2017, Health and Safety Code section 118600 (added by AB 1732) provides that all single-user toilet facilities in any business establishment must be identified with signage as "all-gender" facilities rather than designated as male or female. In addition, the signage must comply with Title 24 of the California Code of Regulations and be designated for use by no more than one occupant at a time or for family or assisted use. For the purposes of section 118600, "'single-user toilet facility' means a toilet facil-ity with no more than one water closet and one urinal with a locking mechanism controlled by the user."

Expanded Immigration Related Unfair Employment Practices

SB 1001 created new Labor Code section 1019.1, which provides that it will be an "unfair immigration-related practice" for employers to take any of the following actions when verifying an employee's authorization to work in the United States: (1) request more or different documents than required under federal law; (2) refuse to honor documents tendered that, on their face, reasonably appear to be genuine; (3) refuse to honor documents or work authorization based on the specific status or term that accompanies the authorization to work; or (4) attempt to reinvestigate or re-verify an incumbent employee's authorization to work. Any person who violates the law will be subject to a penalty imposed by the Labor Commissioner of up to $10,000.

Employers Restricted from Imposing Choice-of-Law and Forum Provisions in Employment Contracts

Increasingly, employers doing business in California have been including choice-of-law and forum selection provisions in employment agreements for their California based employees in an effort to seek resolution of disputes in employer-friendly forums. To counter this trend, SB 1241 amended the Labor Code to add section 925. Under section 925, for contracts entered into, modified, or extended on or after January 1, 2017, an employer may not require an employee who primarily resides and works in California, as a condition of employment, to agree to a provision requiring the employee to adjudicate claims arising in California outside of California, or deprive the employee of the substantive protection of California law with respect to a controversy arising in California. Any provision of a contract that violates these prohibitions is voidable and any dispute over a voided provision must be adjudicated in California under California law. The new law specifies that injunctive relief is available and authorizes a court to award reasonable attorneys' fees. A contract with an employee who was represented by legal counsel is excepted from the foregoing provisions.

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Increase in Minimum Wage

Effective January 1, 2017, the minimum wage for California employers with 26 or more employees is $10.50 per hour. The minimum wage for California employers with 25 or fewer employees will remain $10.00 per hour and will not increase to $10.50 per hour until January 1, 2018. Many cities and counties (e.g., Los Angeles, Oakland, Palo Alto, Mountain View, Richmond, San Diego, San Francisco, San Jose, San Leandro, San Mateo) have their own minimum wage ordinances that provide a higher minimum wage than the state. Prudent counsel will review the county and city ordinances to ensure compliance with those local regulations.

Bond Posting Requirement for Employers Appealing from Minimum Wage and Overtime Citations Issued by the Labor Commissioner

AB 2899 amended Labor Code section 1197.1 to require that, before an employer can appeal from a citation by the Labor Commissioner for minimum wage and overtime violations, employers post a bond in favor of the employee with the Labor Commissioner in an amount equal to the unpaid wages and liquidated damages assessed under the citation. The bond is to be forfeited to the employee if the employer fails to pay the amounts owed within 10 days from the conclusion of the proceedings.

Expanded Transgender Protections

Counsel should be aware of and monitor the status of proposed regulations issued by the FEHC related to transgender identity and expression. If promulgated, the proposed regulations will clarify issues relating to transgender protections in the workplace.²

California Code of Regulations Updates Cover Entire Range of FEHA Issues

After approval by the California Office of Administrative Law and filing with the...