2018 Employment Law Update
Below is an overview of some of the key changes to California employment laws taking effect on January 1, 2018.
Minimum Wage Increases:
Under existing law, California’s minimum wage rates are $10.00 per hour for employers with 25 or fewer employees, and $10.50 per hour for employers with 26 or more employees. Beginning January 1, 2018, the minimum wage will increase by $0.50 for all employers. This means for employers with 26 or more employees, the minimum wage will increase to $11.00 per hour. For those with 25 or fewer employees, the minimum wage will increase to $10.50 per hour.
The increase in the minimum wage will also result in an increase in the base amount an exempt employee must be paid to retain exempt status. For employers with 25 or fewer employees, that base amount will increase from $41,600.00 in 2017 to $43,680.00 in 2018. The exempt salary threshold for employers with 26 or more employees will increase from $43,680.00 in 2017 to $45,760.00 in 2018.
Note that California minimum wage will continue to increase incrementally until January 1, 2022, at which time minimum wage for all employees will be $15.00 per hour.
Employers May No Longer Ask an Applicant’s Salary History:
In an effort to narrow the gender wage gap, Assembly Bill 168 amends the California Labor Code to prohibit all California employers, both private and public, from inquiring about an applicant's salary history, or using this information as a factor in determining whether to offer employment or what salary to offer. This new law also requires an employer to disclose the position's pay scale to an applicant, upon reasonable request to do so.
Note, however, that this law does not prevent an employer from relying on salary history information that is disclosed by an applicant voluntarily and without prompting. In addition, this restriction does not apply to salary history information disclosable to the public pursuant to federal or state law, such as under the California Public Records Act. In these limited circumstances, an employer may rely on salary history information to set the salary for that applicant, but is prohibited from relying on it in determining whether or not to hire the individual. When relying on salary history information, employers should bear in mind that prior salary shall not, by itself, justify any disparity in compensation between employees of different races, sexes, or ethnicities performing substantially similar work.
To ensure compliance, employers should: (1) revise job applications to remove questions that seek salary history information; (2) revise hiring policies and procedures and interview/screening guidelines; (3) implement procedures to ensure delivery of pay scale information upon an applicant’s request; and (4) provide training to all personnel involved in the hiring process.
New Restrictions Pertaining to an Applicant’s Criminal Conviction History:
Assembly Bill 1008 creates new state-wide restrictions on the use of criminal history in hiring decisions under California’s Fair Employment and Housing Act (FEHA). With limited exceptions, all employers with five or more employees will be prohibited from including on any employment application any question that seeks the disclosure of an applicant’s conviction history, or otherwise inquiring into or considering the conviction history of an applicant until that applicant has received a conditional offer of employment. After the conditional offer of employment is made, the employer may inquire into the applicant’s criminal history and may rely on prior convictions to deny an applicant a position of employment, but only after satisfying specific procedural requirements, sometimes referred to as a “fair chance” process.
Before an employer may rely on criminal history to rescind the conditional offer of employment, the employer must engage in an individualized assessment of whether the applicant’s conviction history has a direct and adverse relationship to the specific duties of the job. In making the initial assessment, the employer must consider the nature and gravity of the criminal offense, the proximity of time since the offense and completion of the sentence, and the nature of the job sought. If this assessment leads to a preliminary decision that the conviction history is disqualifying, the employer must then follow specific notice requirements.
First, the employer must notify the applicant of its preliminary decision in writing. The written notice must identify the disqualifying conviction, include a copy of the conviction history report, if any, and explain the applicant’s right to respond to the notice with evidence challenging the accuracy of the conviction record, evidence of rehabilitation, and/or mitigating circumstances, within not less than five business days. An applicant may extend the response deadline by an additional five business days with timely written notice that the applicant disputes the accuracy of the conviction history report and is taking specific steps to gather evidence supporting that assertion. If any information is submitted by the applicant, the employer is required to consider this information before making a final decision. If the final decision is to deny employment, the employer must notify the applicant of this decision in writing, with an explanation of any existing procedure the employee has to challenge the decision or to request reconsideration, and advise the applicant of his or her right to file a complaint with the Department of Fair Employment and Housing.
Note that employers may not consider, distribute, or disseminate, at any time, information related to arrests which did not result in conviction, referrals to or participation in a diversion program, and/or convictions that were dismissed, expunged, sealed, or statutorily eradicated. Moreover, this bill does not apply to applicants for any position where the law requires criminal background checks, for a position with a criminal justice agency, or as a Farm Labor Contractor.
To ensure compliance, employers with five or more employees should: (1) revise job applications to remove questions that seek criminal history information; (2) revise hiring policies and procedures and interview/screening guidelines; (3) provide training to all personnel involved in the hiring process; and (4) implement procedures to ensure compliance with the individualized assessment and “fair chance” process requirements.
Baby Bonding Extended to Small Businesses (The New Parent Leave Act):
Currently, employers with 50 or more employees are required to provide qualified employees with twelve work-weeks of unpaid protected leave during any twelve-month period to bond with a new child. The employer must guarantee reinstatement of employment for the employee in the same or comparable position at the end of the leave, so long as the leave is taken within one year of the child’s birth, adoption, or foster care placement. Existing law also requires employers to maintain and pay for group health coverage during a parental leave at the level and under the conditions that coverage would have been provided had the employee continued working.
Senate Bill 63 expands the bonding leave provision of the California Family Rights Act (CFRA) to smaller employers. Beginning January 1, 2018, these protections for baby bonding will be extended to qualifying employees who work at a worksite in which the employer employs 20 to 49 employees within a 75-mile radius. A qualified employee is one who has at least 1,250 hours of service with the employer during the previous twelve‐month period.
Under this bill, an employer will be required to provide an advance guarantee of employment in the same or a comparable position upon return to work. An employer will also be prohibited from refusing to hire or taking certain adverse employment actions against an individual for exercising the right to parental leave, and from interfering with the attempt to exercise the right to parental leave.
If the employer employs both parents who are entitled to leave for the same birth, adoption, or foster care placement, parental leave is capped at the twelve weeks that would be granted to one employee. The employer may, but will not be required to, grant simultaneous leave to the parents.
An employer will be able to recover the costs of maintaining the health plan for employees who do not return to work after their leave is exhausted if the failure to return is due to a reason other than a serious health condition or other circumstances beyond the employee’s control.
The new law does not apply to employees who are already subject to the FMLA and CFRA.
To ensure compliance, qualifying employers should: (1) revise employee handbooks, policies and procedures, and leave request forms and notices; and (2) provide training to all supervisors and human resource employees about the new leave rights and obligations.
Anti-Harassment Training to Cover Gender Identity and Expression, and Sexual Orientation:
Employers with 50 or more employees are already required to provide sexual harassment training to all supervisory employees. Beginning January 1, 2018, Senate Bill 396 will require those employers to expand this training to include education on harassment based on gender identity, gender expression, and sexual orientation. Employers also must post a poster developed by the Department of Fair Employment and Housing regarding transgender rights.
To ensure compliance, qualifying employers should update their training to include information regarding gender identity, gender expression, and sexual orientation and obtain and post the new poster in a prominent location within the workplace.
The Immigrant Worker Protection Act:
Subject to certain exceptions, Assembly Bill 450 will prohibit both public and private employers from allowing immigration enforcement agents to (1) enter any nonpublic areas of a work place without a judicial warrant, or (2) access, review, or obtain employee records, without a subpoena or court order.
Although this law will not apply to the inspection of I-9 records or other employment documents for which the employer has received a Notice of Inspection, this law will add several notification requirements on employers who receive a Notice of Inspection.
Within 72 hours of receiving a Notice of Inspection by an immigration agency, the employer will be required to post a written notice to reach each current employee, and their authorized representatives, if any, of the agency conducting the inspections, the date the employer received notice of the inspection, and the nature of the inspection, and the employer shall include a copy of the Notice of Inspection. Also under this law, the employer will be required to deliver to each current affected employee and their authorized representatives, preferably by hand, written notice of the results of the inspection pertaining to that particular employee as well as the resulting obligations of the employer and employee within 72 hours of receiving them. This notice must include a description of the deficiencies related to the affected employee, the time for correcting the identified deficiencies, and notice of the employee’s right to representation during any meeting scheduled with the employer.
Lastly, employers will be prohibited from re-verifying employment eligibility of a current employee at a time or in a manner not required by federal law. Employer violations of this law may result in civil penalties of up to $10,000.00.
To ensure compliance, employers should: (1) provide training to all management employees about the new prohibitions; (2) update policies and procedures to comply with the new prohibitions; and (3) implement procedures to ensure compliance with the notice requirements.
Retaliation and Whistleblower Claims:
Senate Bill 306 expands the scope of retaliation and whistleblower claims by authorizing the Labor Commissioner to initiate an investigation on its own when it suspects retaliation has occurred in any of the following circumstances: (1) during the course of adjudicating a wage claim; (2) during a field inspection concerning labor standards; or (3) in instances of suspected immigration-related threats. Existing law authorizes an investigation by the Labor Commissioner only after receiving a complaint.
SB 306 also lowers the burden of proof for injunctive relief. The existing standard of proof for injunctive relief requires a showing of irreparable harm if the relief is not granted, likelihood of success on the merits of the claim, and that the foregoing interests outweigh the harm the defendant will suffer from granting injunctive relief. Under this new bill however, the Labor Commissioner will be authorized to petition a superior court for injunctive relief prior to completing its investigation or concluding that retaliation has in fact occurred, so long as there is reasonable cause to believe that an employee has been discharged or subjected to adverse action for raising a claim of retaliation or asserting rights under any law under the jurisdiction of the Labor Commissioner. This change means that employers could be forced to reinstate an employee pending the result of the investigation.
This new bill authorizes the issuance of citations directing employers to cease and remedy alleged violations, including paying lost wages and penalties to the affected employee. Persons to whom citations are issued will be afforded an opportunity to request a hearing with a hearing officer for the Labor Commissioner, after which the hearing officer will issue a written decision. If the employer to whom a citation is issued disagrees with that decision, it may obtain review of the decision, using an abuse of discretion standard, via petition for a writ of mandate to the appropriate superior court after posting a bond with the Labor Commissioner equal to the amount of wages allegedly owed to the affected employee.
An employer who willfully refuses to comply with the commissioner’s orders will be subject to civil penalties of $100.00 per day of non-compliance, to be paid to the affected employee.
General Construction Contractors May Be Liable for Wage Claims against Subcontractors:
Assembly Bill 1701 will apply to all contracts entered into on or after January 1, 2018, by a general contractor for the erection, construction, alteration, or repair of a building or structure. Under this bill, the general contractor will be liable for any debt owed to a wage claimant incurred by a subcontractor acting for the general contractor. The general contractor’s liability will be for wages owed to the claimant for his or her performance of labor included in the subject of the contract between the general contractor and the owner. The general contractor’s liability will not extend to penalties or liquidated damages.
This law authorizes general contractors to establish contractual remedies for liabilities incurred on behalf of subcontractors. It will also require subcontractors to provide payroll records to general contractors upon request.
The Labor Commissioner will be authorized to bring an action against a general contractor to enforce this liability.
Looking ahead: General contractors should take steps to learn the wage and benefit practices of their subcontractors, and ensure all agreements with subcontractors include appropriate indemnification provisions.
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