Each year, employers await the new changes that our legislators make in the area of employment law which impact the way we do business in California. This year, Governor Brown, while vetoing a number of bills that surprised many of us, did sign a raft of legislation brought on by the #Me Too movement. Of note, CA employers are no longer able to enter into Non-Disclosure Agreements involving claims of sexual assault, harassment, or discrimination; will be required to increase the Sexual Harassment Training efforts; and will be restricted from entering into certain Settlement Agreements related to harassment and discrimination. Additionally, we have new Lactation Accommodation rules, clarification about inquiries regarding Salary Expectations from candidates; and a ground-breaking new requirement for business to install Female Corporate Board Members.
New California Employment Laws – The following is a description of most of the more impactful (but not all) new employment laws that unless otherwise stated, went into effect on 1/1/19:
Minimum Wage and Exemptions – Although SB 3 passed in 2016, effective 1/1/19, we had our next scheduled minimum wage increase. For employers with 25 or fewer employees, the new minimum wage is $11.00 per hour. For employers with 26 or more employees, the new minimum wage is $12.00 per hour. As a reminder, in California, minimum wage has an impact on more than just the employees who earn at that level. In order to be exempt from overtime, an employee must have job responsibilities that meet certain legal requirements and must generally be paid a salary that is at least twice minimum wage for the equivalent of full time work. This now means that the minimum salary requirement for exempt employees depends upon employer size and is either $45,760 or $49,920 per year.
Additionally, minimum wage has an impact on determining if insides sales employees are exempt and when certain trade employees can be required to provide their own hand tools. Also keep in mind that close to 20 different cities and other municipalities in California have their own minimum wage ordinances.
Sexual Harassment Disclosures – AB 3109 makes any provision in a contract or settlement agreement void and unenforceable if it waives a person’s right to testify in an administrative, legislative, or judicial proceeding concerning criminal conduct or sexual harassment.
Sexual Harassment Offenders – AB 224 amends the California Civil Code to expand the types of relationships that can give rise to a claim of sexual harassment. Specifically, the new law now applies where one party holds him/herself out to another as being in a position of being able to help the person establish a business, service, or other professional relationship. As such, individuals such as doctors, therapists, attorneys, real estate agents, landlords, teachers, elected officials, lobbyists, directors, and producers (amongst others) may now be found liable for sexual harassment.
Settlement of Sexual Harassment Claims – SB 820 prohibits a settlement agreement entered into on or after 1/1/19 from containing language that would prevent the disclosure of factual information related to sexual harassment, sexual assault, or sex discrimination. It still allows for a provision that precludes disclosure of the amount of the settlement paid. It also allows for a provision, at the claimant’s request, that limits the disclosure of the person’s identity or other facts that could lead to the discovery of the person’s identity.
Fair Employment and Housing Act (FEHA) Amendments – SB 1300 amends the CA FEHA in a number of ways that will have a significant impact on how sexual harassment claims are litigated. 1. Employers are prohibited from requiring employees to sign a release of claim or any right under FEHA in exchange for a raise, a bonus, or continuing employment. Similarly, an employer cannot require employees to sign a non-disparagement agreement or non-disclosure agreement under the same conditions. However, bona fide settlement agreements appear to be excluded from these prohibitions. 2. Additional restrictions will now be placed upon employers’ rights to attorneys’ fees and costs even when they prevail in a FEHA action. 3. Employers may now be found liable for any kind of unlawful harassment by non-employees (not just for sexual harassment per existing law) when the employer either knew or should have known of the conduct and failed to take action. 4. Employers will now have a harder time prevailing in court on harassment claims due to “statements of legislative intent” in this bill such as saying that harassment cases are rarely appropriate for summary judgement and that single incidents of harassing conduct may be sufficient to give rise to a hostile work environment.
Sexual Harassment Prevention Training – SB 1343 expands the requirements for mandated sexual harassment training for California employers. Existing law requires employers with 50 or more employees (total headcount includes temporary and seasonal staff and all employees anywhere in the U.S.) to provide 2 hours of specified curriculum to their California supervisors and managers every 2 years. Employers with 5 or more employees will now be required to train all California employees at least bi-annually. Prior to 1/1/20, supervisors and managers will still be required to attend 2 hours of training and non-supervisory staff 1 hour. Seasonal, temporary, or any other worker hired to work for less than 6 months must be trained within 30 calendar days of beginning work or within 100 hours worked, whichever occurs first. While the required curriculum has not changed, SB 1300 introduces the concept of “bystander intervention training” and encourages employers to address the tendency for people to remain silent and refrain from providing assistance or coming forward when they witness harassment of others.
Salary History Information – On 1/1/18, California legislation (AB 168) made it illegal for an employer to rely on an applicant’s salary history when determining whether or not to offer employment and in determining the salary to be offered. Additionally, employers were prohibited from seeking salary history either orally or in writing from an applicant. The law left a number of unanswered questions. This year, AB 2282 specified that asking for salary expectations is not a violation of current law. It further clarified that an employer is authorized to make compensation decisions based on an employee’s current salary, should the employee reveal that information voluntarily, so long as any resulting wage differential is justified by factors such an existing seniority or merit system.
Criminal Background Information – On 1/1/18, California legislation (AB 1008) made it an unlawful employment practices for employers with 5 or more employees to include questions on a job application that require disclosure of an applicant’s conviction history and to perform a background check into an applicant’s criminal history until such time as the applicant has received a conditional offer of employment. An exception was made for employers who are required by federal or state law to perform a criminal background check on applicants. SB 1412 amends existing law in order to tighten this exception to only apply in situations where the employer is not permitted to hire someone with a “particular conviction.” As such, for those employers required to do a pre-employment criminal history check, they may only consider these “particular convictions” when making a hiring decision.
Female Members of Boards of Directors – SB 826 provides for the mandatory inclusion of women on corporate boards of directors. No later than the end of 2019, publicly held domestic or foreign corporations with principal corporate offices in California, must have a minimum of 1 female on its board of directors. By the end of 2021, the number of required females will increase to 2 if the corporation has a total of 5 directors, and 3 if the corporation has 6 or more directors.
Lactation Accommodation – AB 1976 makes changes to existing law which requires employers to provide a location other than a toilet stall to employees who need to express breastmilk during the workday. The new law now requires that the location be something other than a bathroom, should be close to the employee’s work area, and should generally be a permanent location only used for such purposes. The use of a temporary location will only be allowed if the employer: 1. is unable to provide a permanent location due to operational, financial, or space limitations; 2. the temporary location is private and free from intrusion while the employee is using it; and 3. the temporary location is only used for lactation purposes while the employee is expressing milk. Agricultural employers will be permitted to use a private, enclosed, shaded space such as an air- conditioned cab or a truck or tractor. If an employer can prove that complying with these new requirements represents an undue hardship for their company, the employer may still be able to provide a location that is something other than a toilet stall (such as a bathroom).
Paid Family Leave – SB 1123 expands the scope of the current California family disability insurance program which provides wage replacement benefits to employees who need to take time off from work to care for family members. Effective 1/1/21, employees who take time off as a result of a qualifying exigency related to the covered active duty in the U.S. armed forces of a spouse, domestic partner, child, or parent will become eligible for paid family leave benefits.
Copy of Payroll Records – Existing law allows current and former employees the right to inspect and copy information in their personnel files within 21 days of a request. SB 1252 clarifies that if requested, the employer must provide copies of the documents to the employee (as opposed to requiring the employee to make the copies him/herself) but may charge the employee for the cost of doing so.
Human Trafficking – SB 2034 requires businesses that operate intercity rail, light rail, or bus stations to provide 20 minutes of training by 1/1/21 to new and existing employees who may come into contact with victims of human trafficking. SB 970 amends the California Fair Employment and Housing Act (FEHA) to require hotels and motels (not bed and breakfasts) effective 1/1/20 to provide 20 minutes of training to employees who may come into contact with victims of human trafficking including receptionists, housekeepers, bell desk staff, drivers, and others who interface with customers. The training must be completed within 6 months of hire and every 2 years thereafter.
Contractor Liability – Last year, AB 1701 made certain general contractors liable for unpaid wages and fringe benefits by subcontractors. AB 1565 amended existing law and for contracts entered into after 1/1/19, a direct contractor would be required to include a specific provision in their contracts that lists the documents that the subcontractor would have to produce before disputed payments could be withheld such as payroll and timekeeping records.
Other California Developments:
Independent Contractors – In 2018, the California Supreme Court, in its ruling in the Dynamex case, created a new test by which the California Labor Commissioner will determine if a worker is an employee or an independent contractor. The new ABC test makes it even harder than it was before to treat people as independent contractors. For more information, please see Vantaggio’s article How California’s New ABC Test Impact Employers.
De Minimum Timekeeping – In another significant ruling last year, the California Supreme Court, in Troester v. Starbucks, rejected the long-standing “de minimus” timekeeping rule. Historically, federal courts have found it appropriate for employers to not pay wages for small amounts of time that are difficult to record – up to a total of 15 minutes per day. In this case, the court found the employer liable for paying an employee who worked “off the clock” for several (4 to 10) minutes per shift, commenting that the current use of timekeeping technologies puts California employers in a position to better track regular recurring small amounts of time. The court did note that in cases where the time is “minute” or “irregular,” the time may still be unpaid such as an employee reviewing paperwork that takes a minute or less or reading an email about a shift change during non-work hours. This is a significant change in California wage and hour law that will have significant implications for employers’ payroll practices.
Non-Solicitation and Trade Secret Agreements – A California Court of Appeal, in AMN Healthcare v. Aya Healthcare Services, ruled that a somewhat standard non-solicitation agreement was unenforceable. The employees in this case were recruiters who recruited travelling nurses to work for their employer who provides temporary healthcare professionals to their clients. Four of these recruiters left the company and went to work for a competitor firm where they then began recruiting some of the same travelling nurses. Given that the effected employees’ profession was being recruiters, the court found the non-solicitation agreement that they had previously signed to be a violation of section 16600 of the California Business and Professions code, as it prevented them from carrying out their chosen profession. The court also ruled that given the specifics of this case, the original employer’s list of the prospective travelling nurses was not a bona-fide trade secret. While this case certainly does not prohibit the use of all employee non-solicitation agreements or clauses, employers are cautioned to have these types of agreements as well as trade secret protection agreements drafted carefully by professionals with experience in this evolving and increasingly restrictive area of the law.
Posters – If you need to order new 2019 combined federal and state poster sets, please contact us at Info@VantaggioHR.com or call 1-877-VHR-relx (1-877-847-7359).
And on the Federal Level:
IRS Mileage – The IRS updated the standard mileage rate for 2019 for use of an employee’s automobile – it’s now 58.00 cents per mile (up from 54.5 cents).
What should employers do?
- Schedule all of your employees to attend Sexual Harassment Prevention Training prior to the end of the year deadline.
- Ensure that your written Job Applications no longer ask for salary history.
- Obtain and post your new Employment Posters.
- Update Employee Handbooks.
- Ensure that you have a location to provide the appropriate lactation accommodation now required by law.
- Review your hiring and background check processes for compliance. Ensuring all hiring managers are trained on the legality of their questions.
- Audit all Independent Contractors to ensure they meet the new, stringent ABC rule.
- Review your timekeeping and pay practices to ensure that de minimus time is being recorded and paid.
- Consult with experienced counsel regarding any settlement agreements containing language about sexual or other forms of harassment.
- Have your existing Non-Solicitation and Trade Secret Agreements reviewed by experienced counsel.
- Ensure all employees are being paid the current minimum wage and that all exempt employees are paid the new minimum salary requirements. It would also be a good time to do an exempt/non- exempt audit of your employees to ensure proper classification.
Vantaggio can assist with answering additional questions; updating your handbook; ensuring that you have the proper forms, notices, and posters in place; conducting training; or implementing solutions to any of the above referenced compliance needs. We can even provide a complete HR audit for your company. For more information, contact us at Info@VantaggioHR.com or call 1-877-VHR-relx (1-877- 847-7359)
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