New California Employment Laws for 2017

Each year presents new challenges for employers regarding compliance with California employment laws. Below is an overview of some of the key provisions taking effect on January 1, 2017.

Minimum Wage

Under existing law, California’s minimum wage for all industries is $10.00 per hour. Beginning January 1, 2017, the minimum wage will be $10.50 an hour for employers with 26 or more employees. There is no increase in minimum wage for employers with 25 or fewer employees until January 2018, at which time those employees must also be paid $10.50. Each year thereafter, the minimum wage will increase until January 1, 2022, at which time minimum wage for all employees will be $15.00 per hour. Note that the increase in 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 26 or more employees, that amount will now be $43,680 per year. For employees with 25 or fewer employees, the base amount will remain at $41,600 in 2017.

All Gender Restrooms

Effective March 1, 2017, all single-user restrooms in any business establishment, place of public accommodation, or government agency must be identified as “all gender” facilities as opposed to male- or female-only. The law authorizes public inspectors or building officials to inspect for compliance with the new law.

Employers May No Longer Consider Juvenile Criminal Convictions

Until this year, California law prohibited employers from inquiring about arrests or detentions that did not result in a conviction, but the law did not impose any restrictions on what types of convictions an employer could ask about or consider. AB 1843 prohibits an employer from asking a job applicant to disclose information (or from seeking such information from any other source) regarding a juvenile conviction. The new law also prohibits an employer from considering an adjudication or court disposition by a juvenile court as a factor in determining any condition of employment.

Employers should immediately review their employment applications and other

employment-related documents to determine whether they should be revised in light of this new law.

Employees’ Rights to Have Their Claims Heard in California

Currently, some employers doing business in California require their employees to agree to bring any employment-related lawsuit or arbitration in—or under the law of—another state. After January 1, 2017, this practice will be illegal unless the employee was represented by legal counsel who assisted in negotiating the out-of-state venue, forum or choice of law terms.

SB 1241 regulates where and under what law a California employee may sue or arbitrate. For claims arising in California brought by employees who primarily reside and work in the state, employers are prohibited from requiring adjudication of claims in venues or forums outside of California—including both litigation and arbitration—or from depriving employees of the substantive protections of California law. Any contract provision to the contrary is voidable by the employee, who may seek injunctive relief and other available remedies (including attorney’s fees) in California under California law. The bill will be codified as Labor Code section 925 and will apply to any contract entered into, modified, or extended on and after January 1, 2017. Employers should immediately review any employment and arbitration agreements, handbooks, and other employment-related documents to determine whether they should be revised in light of this new law.

Wage Discrimination

Existing law generally prohibits an employer from paying an employee at wage rates less than the rates paid to employees of the opposite sex in the same establishment for work that requires equal skill, effort, and responsibility and that is performed under similar working conditions. AB 1676 now establishes that an employee’s prior salary cannot, by itself, justify any disparity in compensation. However, the bill does not prohibit employers from obtaining an applicant’s prior salary (as the bill originally proposed).

Wage Differential—Fair Pay Act Expanded to Protect Race and Ethnicity

Current law prohibits an employer from paying any of its employees at wage rates less than the rates paid to employees of the opposite sex for substantially similar work. SB 1063 expands the Fair Pay Act to prohibit a wage differential based on an employee’s race or ethnicity for substantially similar work.

Paid Family Leave

Paid Family Leave (PFL) benefits, which are wholly funded by employee contributions, provide up to six weeks of wage-replacement benefits for bonding with a new child or to care for an ill family member. Under current law, PFL and State Disability Insurance wage-replacement benefits are 55 percent of a participant’s wages. Effective January 1, 2018, state PFL and State Disability Insurance wage-replacement benefits will increase to 60 to 70 percent of a participant’s wages, depending on income level and up to the statutory cap (currently $1,129). In addition, the current seven-day waiting period for PFL benefits will be eliminated.

Immigration Documents

Existing law prohibits an employer or any other person from engaging in, or directing another person to engage in, an unfair immigration-related practice against a person for the purpose of or intent to retaliate against any person for exercising a protected right, as specified. Existing law defines requesting more or different documents than are required under federal law, or refusing to honor documents tendered that on their face reasonably appear to be genuine, as an unfair immigration-related practice. SB 1001 will expand prohibited acts to also include refusing to honor documents or work authorization based upon the specific status or term of status that accompanies the authorization to work, or attempting to reinvestigate or re-verify an incumbent employee’s authorization to work using an unfair immigration-related practice. For any violations, workers may file a complaint with the Department of Labor Standards Enforcement and can recover penalties up to $10,000.

Notice of Domestic Violence Leave and Accommodation Rights

Under existing law, employers are prohibited from discharging or in any manner discriminating or retaliating against an employee who is a victim of domestic violence, sexual assault, or stalking for taking time off from work for specified purposes related to addressing the domestic violence, sexual assault, or stalking. AB 2337 will require employers to provide written notice to new employees, and to current employees upon request, of the time off and accommodation rights under Labor Code sections 230 and 230.1. The Labor Commissioner, no later than July 1, 2017, must develop a model notice for employer use, and employers will not be required to comply until this sample is available.

Itemized Wage Statements

Existing law requires employers to provide their employees an accurate itemized statement in writing containing specified information, either semimonthly or at the time the employer pays the employee his or her wages. That specified information includes total hours worked by the employee, unless the employee’s compensation is solely based on a salary and the employee is exempt from payment of overtime under a specified statute or any applicable order of the Industrial Welfare Commission. AB 2535 additionally exempts from Labor Code section 226 the requirement to list total hours for an employee exempt from payment of minimum wage and overtime under the specified statues or any applicable order of the Industrial Welfare Commission.

Agricultural Workers

Existing law sets wage, hour, meal break requirements, and other working conditions for employees and requires an employer to pay overtime wages as specified to an employee who works in excess of a workday or workweek, and imposes criminal penalties for the violation of these requirements. Existing law exempts agricultural employees from these requirements.

AB 1066 removes the exemption for agricultural workers from the entire chapter of the Labor Code relating to working hours, and enacts the “Phase-in Overtime for Agricultural Workers Act of 2016”, which requires employers to pay agricultural workers overtime over a four-year phase-in process. Beginning January 1, 2019, employers are required to pay overtime for any hours worked above 9.5 hours per day or 55 hours per workweek. Each year the hours worked triggering overtime pay will reduce, until reaching 8 hours per day, 40 hours per week beginning January 1, 2022. Also, beginning on January 1, 2022, any employee who works over 12 hours per day must be paid at a rate no less than double his or her regular rate of pay. Employers that employ 25 or fewer employees are given an extra three years to comply with the phase-in and must begin paying overtime by January 1, 2022. The bill authorizes the Governor to delay the implementation of these overtime pay provisions if the Governor also suspends the implementation of a scheduled state minimum wage increase.

Heat Regulations for Indoor Workers

The Division of Occupational Safety and Health (Cal/OSHA) investigates complaints that a workplace is not safe and may issue orders necessary to ensure employee safety. The Division has adopted regulations establishing a heat illness prevention standard for outdoor workers. Under existing law, certain violations are a crime. SB 1167 requires that, by January 1, 2019, Cal/OSHA craft similar standards for indoor workers. The new law specifies that this requirement does not prohibit the Division from proposing, or the Standards Board from adopting, a standard that limits the application of high heat provisions to certain industry sectors.