Written by Murtaugh Law

New Laws Affecting California Employers

For California employers, January 1, 2017 marked the beginning of a five (or six) year upwards climb towards the new $15.00 state minimum wage.1 But that’s not all it marked. Of the 900 some new bills adopted into law over the 2016 year, many of them affect California employers and also went into effect on January 1st.

Navigating these laws can be troublesome, and some of them undoubtedly require follow up, clarifying legislation. Nonetheless, at a minimum California employers should be updating their handbooks, reviewing their interviewing and application processes, and generally assessing their policies and practices in light of the new laws.

What follows is a summary of some of the key new laws affecting California employers, categorized for convenience, which – unless otherwise noted – took effect on January 1st.

Application & Hiring Process

Inquiry into an applicant’s juvenile convictions or use of any juvenile convictions as a factor in determining any condition of employment is prohibited.

This new law prohibits employers from inquiring into an applicant’s juvenile convictions or using such convictions as a factor in determining any condition of employment. This information should not be requested on employment applications, or as part of any post-offer background checks.

Unlawful immigration practices as part of I-9 verification process now unlawful under state law.

Employers are required by Federal law to verify an employee’s eligibility to work using the Form I-9 process. Under Federal law, it is unlawful for employers to ask for more or different documentation than is required by the Form I-9, refuse to accept documents that appear genuine on their face, or engage in other types of document abuse. This conduct is now unlawful under state law as well, and subjects violators to a $10,000 penalty per violation.

Also, keep in mind that as of January 22, 2017, employers must use the revised Form I-9. For more information on which form to use, visit the Department of Homeland Security I-9 Central website, https://www.uscis.gov/i-9-central.

The Fair Pay Act & (Anti) Discrimination

The Fair Pay Act now protects against wage disparity based on race or ethnicity, and makes clear an employee’s prior salary alone cannot justify a wage disparity.

The Fair Pay Act prohibits an employer from paying an employee of one gender less than an employee of the opposite gender for substantially similar work, in terms of skill, effort, and responsibility, when performed under similar working conditions. Under the Act, the employer has the burden of establishing that any wage differential is based on: (1) a seniority system; (2) a merit system, (3) a system that measures earnings by quantity or quality of production; or, (4) a bona fide factor other than sex, such as education, training or experience, but only if the factor other than sex is consistent with business necessity. To the extent the employer relies on one or more of these four factors, they must account for the entire wage differential.

This year, the Legislature modified the Fair Pay Act in two ways. First, the protections of the Act are now extended beyond gender to include preventing wage disparities among members of different races and ethnicities performing substantially similar jobs.

Second, it is now clear that an employee’s prior salary alone is not a bona fide factor justifying any disparity in compensation. This change is intended to “help ensure that both employers and workers are able to negotiate and set salaries based on the requirements, expectations, and qualifications of the person and the job in question, rather than on an individual’s prior earnings, which may reflect widespread, long-standing, gender-based wage disparities in the labor market.”

Individuals employed under a special license in a nonprofit sheltered workshop, day program, or rehabilitation facility now protected from prohibited harassment and discrimination under the Fair Employment and Housing Act.

The definition of “employee” under California’s Fair Employment and Housing Act is now revised to authorize an individual employed under a special license in a nonprofit sheltered workshop, day program, or rehabilitation facility to bring an action under the Act for any form of prohibited harassment or discrimination.

Employers must provide written notice of Domestic Violence Leave Rights to new employees (and to existing employees who request it).

Existing law prohibits an employer from discharging, discriminating, or retaliating against an employee that has been the victim of domestic violence, sexual assault, or stalking because the employee needs to take time off from work as a result of having been a victim, i.e. because the employee needs to seek medical treatment, services from a domestic violence shelter, or a legal restraining order. The law also provides that an employee who is discharged, disciplined, demoted, suspended, or discriminated or retaliated against in any way on these grounds is entitled to reinstatement and reimbursement for lost wages and benefits, including any other appropriate equitable relief.

The new law requires employers with 25 or more employees to inform employees of their domestic violence related rights by providing notice in writing to all new employees upon hire, and to all existing employees upon request. The law also requires the Labor Commissioner to develop a form by July 1, 2017, for use by employers to notify employees. Employers are not required to comply with these new notice requirements until the Labor Commissioner develops and posts the form.

Single User Restrooms must be “All-Gender” Facilities.

Beginning March 1, 2017, single-user toilet facilities in any business establishment must be identified specifically as all-gender toilet facilities (as opposed to designating certain single-user toilet restrooms for males or females, or simply labeling such facilities “restrooms”).

State Contracts of $100,000 (or more) require an Anti-Discrimination Certification.

The new law requires individuals or businesses bidding or proposing to enter into or renew a contract with a state agency for any contract in an amount of $100,000 or more to certify, under penalty of perjury, that they are in compliance with both the Unruh Civil Rights Act and the Fair Employment and Housing Act (FEHA). Further, they must certify that any policy the individual or entity has about any nation or people is not used to discriminate in violation of either of these sets of laws.

Employment Contracts

Limitations on Employer ability to include Non-California Choice of Law & Forum Selection provisions in Employment contracts.

For labor and employment contracts entered into, modified or extended on or after January 1, 2017, this new law prohibits an employer from requiring an employee who primarily resides and works in California, as a condition of employment, to agree to a provision that would either: (1) require the employee to adjudicate (litigate or arbitrate) outside of California a claim arising in California; or, (2) deprive the employee of the substantive protection of California law with respect to a controversy arising in California.

The law makes any provision of a contract that violates either of these prohibitions voidable, upon request of the employee, and requires that once deemed void the matter is adjudicated in California under California law. The law authorizes injunctive relief and the recovery of reasonable attorney’s fees by the employee.

Wages & Wage Statements

Wage Statements No Longer Need Contain “Total Hours Worked” for Employees Exempt from Payment of Minimum Wages & Overtime Wage Statements.

This new law makes clear that the itemized wages statements required to accompany an employee’s wage payment under Labor Code §226(a), no longer needs to record the “total hours worked” for employees that are exempt from payment of minimum wages and overtime. The amendment sets forth the specific categories of employees to whom this applies, so employers should take caution to make sure any employee appropriately falls within one of these categories before making any changes to the information reported on that employee’s itemized wage statement.

Public Works Contractors Now Required to Pay Apprentices for Pre-Employment Activities.

Unless otherwise provided by a collective bargaining agreement (CBA), contractors requesting the dispatch of an apprentice to perform work on a public works project are required to pay the apprentice for the time spent on required pre-employment activities, including travel time to and from the required activity (if any), at the prevailing rate of per diem wages for apprentices in the trade to which he or she is registered. Pre-employment activities include filling out an application, undergoing testing, training, an examination, or other pre-employment processes as a condition of employment.

If the apprentice is required to take a pre-employment drug or alcohol test and fails to pass that test, the contractor is not required to compensate the apprentice for the time spent on pre-employment activities, unless otherwise provided by the operative CBA.

Workplace Safety Issues

Ban on Smoking in Employment Areas Expanded.

Existing law prohibits smoking in enclosed employment areas for many employers. The new law, effective June 9, 2016, significantly expands the smoking ban to include all enclosed employment areas for all employers (regardless of size). Additionally, an enclosed space in which all smoking is prohibited includes locations like parking garages, lounges, restrooms, stairwells and waiting areas. Limited exceptions apply in certain areas, including for example, wholesale tobacco shops, private smokers lounges, private residences, patient smoking areas in long-term care facilities, a small percentage of hotel, motel or other lodging accommodations, and cabs of motor trucks.

Drivers can now use their hands to (de)activate their device while still complying with hand’s free requirement – provided it’s only a single swipe or tap.

Existing law prohibits an individual from operating a motor vehicle while using an electronic wireless device, unless using hands-free operation. The new law amends the Vehicle Code and clarifies that an individual may use his/her hand to activate or deactivate the device with the motion of a single swipe or tap of the driver’s finger, and provided the device is appropriately mounted.

So what does all this mean for California employers? While the long term effects of these new laws will need time to play out, and the Legislature (or Courts) will need to provide clarification as to some – i.e., the full extent and coverage of the new choice of law and venue restrictions in employment contracts – employers should be proactive in striving to achieve compliance. At a minimum, employers should consider:

Reviewing their Handbook and related policies/procedures as amendments may be needed;

Reviewing their application and interview process (and any related background checks) to eliminate any potentially offending questions related to juvenile convictions or an individual’s prior salary;

Reviewing any employment contracts with California based employees entered into, modified, or extended on/after January 1, 2017, to assess any potentially voidable choice of law or choice of venue provisions.

The above is only a sample of the many new laws – employment related and otherwise – that went into effect on January 1, 2017, in California. For more information on the content of this article or other new laws, please contact your regular Murtaugh Meyer Nelson & Treglia LLP attorney or Jessica A. Thompson at (949) 794-4000.

Jessica A. Thompson
Murtaugh Treglia Stern & Deily LLP
2603 Main Street, Penthouse, Irvine, CA 92614
Telephone: (949) 794-4000 Fax: (949) 794-4099

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or any of its or their respective affiliates. This article is for advertisement and general information purposes and is not intended to be and should not be taken as legal advice.

1 For an article specifically on California’s Minimum Wage Increase, see MMNT’s “Court Blocks New Federal Overtime Rules. What Does That Mean For California Employers.”