A New Year = New Laws for California Employers

It’s that time again  a new year means new laws and regulations for California employers.  Below we summarize new legislation that will affect employers doing business in California.  Unless otherwise indicated, the new laws below went into effect starting January 1, 2016.

Wage and Hour Laws, Penalties, and Awards

Amendment to the California Private Attorneys General Act (PAGA) to Cure Certain Wage Statement Violations
(AB 1506 Hernández)

AB 1506 amends PAGA to provide employers 33 days to cure technical violations of Labor Code sections 226(a)(6) & (8) (relating to wage statements) before an employee may bring a civil action under PAGA. Section 226(a)(6) requires employers to specify the inclusive dates of the period for which the employee is paid. Section 226(a)(8) mandates that each wage statement shall include “the name and address of the legal entity that is the employer.” Employers have a cure period which runs from the postmarked date of an employee’s written notice of the alleged violation to the Labor and Workforce Development Agency (“LWDA”).  A violation is cured “upon a showing that the employer has provided a fully compliant, itemized wage statement to each aggrieved employee for each pay period for the three-year period prior to the date of the written notice.”  Employers may only cure such violations once within a 12-month period.

AB 1506 was signed on October 2, 2015 and became effective immediately.

Expansion of the California Labor Commissioner’s Powers to Enforce Local Laws
(AB 970 Nazarian)

The California Labor Commissioner has the authority to enforce certain state wage and hour laws including, but not limited to, laws regarding the payment of a minimum wage and overtime.  Some municipalities, like the cities of San Francisco, Santa Monica, and San Diego have passed local laws dictating a higher minimum wage or a prevailing wage.

AB 970 grants authority to the twenty Labor Commissioner offices across the state to enforce, at the request of a local entity, local laws regarding overtime and minimum wage provisions and to issue citations and penalties for violations of these local laws.  Under existing law, the Commissioner may issue a $100 citation for an initial violation where an employee is intentionally underpaid.  Subsequent violations for the same specific offense are $250 per underpaid employee for each pay period.  In addition, the Labor Commissioner is authorized under the new law to recover liquidated damages and any applicable waiting time penalties, or penalties associated with an employer’s failure to pay all wages owed at the time of termination for violation of these local laws.  AB 970 provides that the Labor Commissioner cannot act if the local entity has already cited the employer for the same violation.

Under AB 970, the Labor Commissioner may also issue citations and penalties to employers who fail to reimburse an employee for his reasonable expenses or losses incurred in the course and scope of employment.

California Labor Commissioner Can Now Enforce Judgments for Employees 
(SB 588 De León)

SB 588 allows the California Labor Commissioner to enforce judgments against employers who have been found liable for failure to pay wages to an employee.  This new law permits the Labor Commissioner to use any of the existing remedies available to a judgment creditor under California law and act as a levying officer when enforcing a judgment against an employer.  The Labor Commission may now file a lien or levy on an employer’s property to assist an employee in collecting unpaid wages and other compensation, penalties, and interest owed to the employee based on a final judgment against the employer.

Hospital Meal Periods 
(SB 327 Hernandez)

SB 327 amends Labor Code section 516 and confirms that non-exempt health care employees may waive one of their two meal periods when working a shift of over twelve hours in a workday. The bill is retroactive, making such health care employee meal period waiver provisions valid and enforceable on and after October 1, 2000.

The law clarifies confusion caused by the appellate court case Gerard v. Orange Coast Memorial Medical Center, 234 Cal.App.4th 285 (2015), a decision now on appeal to the California Supreme Court.

In the Gerard case, health care workers claimed their hospital employer’s policy of allowing them to waive their second meal period, via written waiver, when they worked a shift of more than twelve hours was unlawful.

Labor Code section 512 requires employers to provide employees with the opportunity to take two meal periods when they work more than ten hours in a day. Employees are allowed to waive their second meal period provided their shift does not exceed twelve hours and they have received their first meal period.

Notwithstanding section 512, Industrial Welfare Commission (IWC) Wage Orders 4 and 5 contain specific meal period waiver provisions for health care industry employees. The Wage Orders permit employees in the health care industry to waive their second meal period, even when their shift exceeded twelve hours.  Specifically, Section 11(D) of Wage Order No. 5-2001 explicitly allows employees in the health care industry who work shifts of more than eight hours in a day to waive one of their two meal periods by written agreement signed by both the employee and the employer. Orange Coast Memorial Medical Center’s policy was consistent with Section 11(D).

The Gerard court held that Section 11(D) of Wage Order No. 5-2001 was invalid, and that health care workers could not waive a second meal period for shifts exceeding eight hours. In reaching that conclusion, the court found that the IWC had no authority to adopt a regulation that conflicted with Labor Code section 512.

In response to the Gerard decision, Governor Brown signed SB 327 into law on October 5, 2015 as an emergency measure and taking immediate effect. SB 327 basically makes issues regarding waivers in Gerard moot, amending Labor Code section 516 to expressly validate section 11(D) of Wage Orders No. 4 and 5, and to confirm that the voluntary meal period waivers allowed by those Wage Orders have always been, and continue to be, valid and enforceable.

Professional Sports Team Cheerleaders as Employees 
(AB 202 Gonzalez) 

AB 202 requires California-based professional sports teams (including minor or major league baseball, basketball, football, ice hockey, and soccer) to classify their cheerleaders as employees, entitled to minimum wage, overtime, and paid sick leave.

Previously, the cheerleaders could be classified as independent contractors, making them exempt from the state’s wage and hour laws.

Lawsuits brought by cheerleaders of several NFL teams, including the Oakland Raiders, the New York Jets, the Buffalo Bills, the Tampa Bay Buccaneers, and the Cincinnati Bengals claiming they received minimal to no compensation for work performed (including appearances at games, rehearsals and required public appearances) helped bring nationwide attention to the issue.

In a sign that such lawsuits are not exclusive to the NFL, a former cheerleader for the NBA’s Milwaukee Bucks recently filed suit against the team for alleged wage and hour violations.

AB 202 was introduced by Rep. Lorena Gonzales (a former Stanford University cheerleader).

New Piece-Rate Pay for Rest and Recovery Periods
(AB 1513 Williams)

AB 1513 adds section 226.2 to the Labor Code relating to piece-rate compensation.  This new section significantly changes the requirements governing the payment of piece-rate compensation and codifies rulings in some recent California court cases, including Gonzalez v. Downtown LA Motors, 215 Cal.App.4th 36 (2013), and Bluford v. Safeway Stores, Inc., 216 Cal.App.4th 864 (2013).  First, AB 1513 requires the payment of a separate hourly wage for rest and recovery periods and for “other nonproductive time” worked by piece-rate employees, at the rates set forth by the statute.  “Other nonproductive time” is defined as “time under the employer’s control, exclusive of rest and recovery periods, that is not directly related to the activity being compensated on a piece-rate basis.”  In addition, employers must separately itemize on employees’ paystubs the hours and rates that relate to “nonproductive time” and rest and recovery periods.

AB 1513 also provides employers with a safe harbor to make back payments for undercompensated rest and recovery period and other nonproductive time.  For employers to participate, back payments are required for the time period of July 1, 2012 through December 31, 2015, employers must notify the Department of Industrial Relations by July 1, 2016 of their election, employers must provide employees with detailed statements regarding the payments, and payments must be made no later than December 15, 2016.

The Department of Industrial Relations has recently issued further guidance on compliance with the new laws, as well as the safe harbor provisions.

See http://www.dir.ca.gov/pieceratebackpayelection/piecerate.html.

Hiring

Retention of Grocery Workers Following Change of Ownership 
(AB 359 and AB 897 Gonzalez)

AB 359 protects grocery workers from being fired because of a change in store ownership. California is the first state in the nation to pass a statewide grocery worker retention law.

Upon a change in control of a grocery establishment (a retail store that is over 15,000 square feet and that sells primarily household foodstuffs for offsite consumption), AB 359 requires an incumbent grocery employer to prepare a list of specified eligible grocery store workers for a successor grocery store employer. The successor grocery employer must hire from this list during a 90-day transition period.

The successor grocery employer must retain eligible grocery workers for a 90-day period, and is prohibited from discharging those workers without cause during that period. Following the 90-day transition period, the successor employer shall consider offering continued employment to eligible grocery workers after a written performance evaluation.

AB 359 provides that a collective bargaining agreement may supersede the law’s requirements and that its provisions do not preempt any local ordinances that provide equal or greater protections to eligible grocery workers.

San Francisco, Santa Monica, Alameda, Gardena and Los Angeles have adopted local ordinances containing similar protections to retain workers.

Governor Brown also signed into law AB 897, which amends provisions put in place by AB 359 to exclude from the definition of “grocery establishment” a retail store that has ceased operations for six months or more. This clarifies the ambiguity in how AB 359 applies if an incumbent grocery employer has ceased operations.

Limitations On Use Of E-Verify 
(AB 622 Hernández)

AB 622 adds Labor Code section 2814 to strengthen current California prohibitions on an employer’s use of E-Verify and other electronic employment eligibility verification systems.  E-Verify is an electronic database system administered by the federal government that enables employers to verify eligibility of employees they hire to work in the United States.  Labor Code section 2811 (enacted in 2011)  already prohibits the state, or a city and county, or other special district from requiring a private employer to use E-Verify or another electronic employment eligibility verification system, except when otherwise required by federal law or as a condition of receiving federal funds.  The amended Labor Code section 2814, aimed at further addressing potential employer abuse of E-Verify, prohibits employers from using E-Verify to check the employment status of current employees, or job applicants who have not yet been offered employment, unless the employer is otherwise obligated to do so under federal law.  The amended law also requires employers who use E-Verify and receive a tentative nonconfirmation (TNC) notice or other notification from the Social Security Administration or the Department of Homeland Security containing information specific to the employee, to provide the employee with a copy of the TNC notice or other notice “as soon as practicable.”  Employers will also now be liable for civil penalties of up to $10,000 for each violation of section 2814.  Section 2814 states that it is intended to prevent employment discrimination rather than to sanction the potential hiring and employment of persons who are not authorized for employment under federal law.

Discrimination, Harassment and Retaliation

Accommodation Request as Protected Activity
(AB 987 Levine)

AB 987 amended the Fair Employment and Housing Act (FEHA) to expressly prohibit employers from retaliating or otherwise discriminating against a person for requesting accommodation of a disability or religious belief, regardless of whether the accommodation requested is granted.  This amendment brings FEHA into conformity with federal law, and overturns a contrary interpretation of FEHA set forth by a California Court of Appeal in 2013.

Gender Wage Equality
(SB 358 Jackson)

SB 358 broadens protections available under California’s current equal pay law and shifts the burden onto employers to affirmatively demonstrate that a wage differential between employees is not sex-based.  Read more about the amended law’s most significant changes here.

Family Members Protected From Retaliation; Narrow Limitation on Contractor Joint Liability 
(AB 1509 Hernández)

Under  Labor Code section 98.6, employers are prohibited from discharging an employee, or discriminating, retaliating or taking any adverse action against an employee for engaging in, or being perceived as engaging in, “protected conduct.”  Protected conduct is defined in statutory and case law, and includes complaining about working conditions or pay, and whistleblowing.  Current law provides that for any employee who makes a bona fide complaint, and is consequently discharged or otherwise suffers an adverse employment action, the employee is entitled to reinstatement and recovery of lost wages.  In addition, an employer may be guilty of a misdemeanor if it willfully refuses to reinstate or restore an employee who is determined by a trier of fact to be eligible for reinstatement.  Civil penalties can amount to $10,000 per violation.

AB 1509 expands the above current law to prohibit an employer from retaliating against a family member of an employee who has, or is viewed as having, engaged in the same types of protected conduct.

In addition, AB 1509 amends Labor Code section 2810.3 to limit existing liability for joint employers.  Under Section 2810.3, which was added to the Labor Code on January 1, 2015, a “client employer” must share civil liability with its “labor contractors” (e.g., payroll, temporary staffing, or employee leasing agencies) for items such as the payment of wages of the contract employees and the failure to obtain worker’s compensation coverage.  Section 2810.3 also stated that client employers cannot make the labor contractors exclusively responsible for worksite occupational health and safety.  AB 1509 now excludes certain household good carriers as permitted by the Public Utilities Commission from the joint liability created by section 2810.3.

Prohibition of Discrimination by Business Establishments on the Basis of Immigration Status
(SB 600 Pan)

SB 600 expands the characteristics expressly protected by California’s Unruh Civil Rights Act to include citizenship, primary language, and immigration status.  The Unruh Civil Rights Act already expressly prohibits business establishments from denying equal accommodations and services on the basis of race, color, ancestry, national origin, religion, sex, sexual orientation, marital status, disability, medical condition, or genetic information.  The new law also contains a federal law carve-out, by providing that verification of immigration status and any discrimination based on verification of immigration status where required by federal law does not violate the Unruh Act.  Additionally, the new law provides that business establishments are not required to provide services or documents in languages other than English

Leave Laws

Protections for Child-Care Activities & Kin Care
(SB 579 Jackson)

SB 579 amends California’s Family-School Partnership Act (FSPA), which allows employees who have custody of a child as a parent, grandparent, or guardian to take time off from work to participate in school or child-care activities. The bill expands employee protections by (1) widening the definition of parent to one who is a stepparent, foster parent, or person who stands in loco parentis to a child; and (2) providing that time off may be used to find or enroll a child in school or with a child care provider, or to address a school or child care provider emergency.

The bill also amends the kin care law to align with the recently enacted paid sick leave law.  Employees now must be permitted to take leave to care for grandparents, grandchildren, and siblings.  In addition, the bill clarifies that kin care leave may be taken for any reason provided under the paid sick leave law, including for preventative care; the diagnosis, care, or treatment of an existing health condition; or if a family member is the victim of domestic violence, sexual assault, or stalking.

Paid Sick Leave Law Amendments 
(AB 304 Gonzalez)

AB 304 was designed to clarify and address drafting issues with the Healthy Workplaces, Healthy Families Act of 2014 (paid sick leave law), which requires employers to provide paid sick leave.  The amended law went into effect immediately upon Governor Brown’s execution of Assembly Bill 304 in July 2015.  Among other changes, it provides two alternative methods by which employees’ accrued paid sick leave may be calculated, in addition to the standard method of one-hour for every thirty-hours worked.  The amended law also provides that employers who provide unlimited sick leave or paid time off can satisfy the law’s notice requirement by indicating “unlimited” on employees’ paychecks or accompanying documents. Read more about the most significant changes to the Healthy Workplaces, Healthy Families Act of 2014 here.

Workers’ Compensation

Workers’ Compensation Benefits Regardless of Immigration Status 
(SB 623 Lara)

Current California regulations prohibit undocumented workers from receiving workers’ compensation benefits from the Uninsured Employers Benefits Trust Fund or the Subsequent Injuries Benefits Trust Fund. The regulations, while remaining on the books, are contrary to current California law and have never been enforced. Based on Labor Code section 1171.5, enacted in 2002 (granting protections of labor and employment laws to undocumented employees), undocumented employees have been receiving benefits from the Trust Funds irrespective of the regulations. SB 623 provides that a person shall not be excluded from receiving benefits from these Trust Funds due to their citizenship or immigration status and expressly supersedes the outdated regulations.

- Sarah K. Hamilton

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