2018 Employment Law Updates for California


Last updated: January 2018

Every year, California passes a number of new employment-related laws that while aimed at protecting employees, often complicate the lives of employers. While there were perhaps less bills passed in 2017 than in other years, the new laws California employers are faced with for 2018 are significant and far- reaching. To name a few, we now have a bifurcated increase in Minimum Wage, a New Parent Leave Act, prohibitions against asking applicants for Criminal Background Information, and employers now are prohibited from asking applicants about Salary History.

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 1/1/18:

Minimum Wage and Exemptions – Although SB 3 passed in 2016, effective 1/1/18, we had our next scheduled minimum wage increase. For employers with 25 or fewer employees, the new minimum wage is $10.50 per hour. For employers with 26 or more employees, the new minimum wage is $11.00 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 $43,680 or $45,750 per year.

Additionally, minimum wage has an impact on determining if insides sales employees are exempt and in determining 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.

Note that in 2017 a California appellate court decision (Vaquero v. Stoneledge Furniture) held that commissioned sales employees must be paid separately (at no less than minimum wage) for all mandatory rest breaks. The court further held that the employer cannot comply with this requirement by paying employees a recoverable draw, even if the draw is large enough to cover minimum wage for all hours worked.

For more information on exemptions, see Vantaggio’s Info Bulletins Exempt vs. Non-Exempt and Special Exemptions.

New Parent Leave ActSB 63 requires employers with between 20 and 49 employees to provide up to 12 weeks of unpaid parental leave, in a 12-month period, to bond with a new child within one year of the child’s birth, adoption, or foster care placement. Prior to the enactment of this law, only employees who worked at a location with 50 or more employees in a-75 mile radius were required to provide baby bonding leave under both the Federal Family Medical Leave Act (FMLA) and California Family Rights Act (CFRA). This law provides new benefits to employees at companies already subject to FMLA and CFRA who work at location with less than 50 employees in a 75-mile radius as well as to employees at smaller companies who are not subject to FMLA and CFRA. (For more details, see Vantaggio’s article California’s New Parent Leave Act.) Note that the California Fair Employment and Housing Council has published some proposed NPLA regulations – so we will be learning more in the coming months once those are finalized.

Sexual Harassment TrainingSB 396 expands the required content that must be included as part of currently mandated sexual harassment prevention training that employers with 50 or more employees must provide to their supervisors and managers every 2 years. The curriculum must now include instruction on harassment based on gender identity, gender expression, and sexual orientation including practical examples. The law also requires that trainers have specific knowledge and expertise in these newly added areas. In addition, employers with 5 or more employees must immediately display a new Transgender Rights in the Workplace poster and begin distributing updated Sexual Harassment Info Sheets (updated December 2017) to all employees. (For more details, see Vantaggio’s article Sexual Harassment Training Expanded in CA.)

Note that all farm labor contractors, regardless of company size, as a condition for receiving or renewing a farm labor contractor’s license, are currently required to provide 2 hours of sexual harassment prevention training to all employees (supervisory and non-supervisory) annually. SB 295 adds the requirement that the training be in the language understood by each agricultural employee.

Criminal Background Information – AB 1008 makes 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. Employers are further prohibited from making adverse employment decisions based on the results of a background check unless they can demonstrate that the applicant’s conviction history has a direct and adverse relationship with the specific duties of the job. Employers are required to consider – the nature and gravity of the offence, the time that has passed since the offense or the completion of the sentence, and the nature of the job. If an employer is considering rescinding the job offer, the employer must notify the applicant of their preliminary decision to disqualify the applicant and provide the applicant with 5 business days to respond to the notice and submit evidence. If within those 5 days the applicant notifies the employer that he/she disputes the accuracy of the information, the applicant will be afforded 5 additional business days to respond. After considering the information supplied by the applicant, if the employer makes the final decision to rescind the offer, the employer must notify the applicant of this decision in writing and must include a number of detailed pieces of information including how to challenge the decision and/or file a complaint. There are several exemptions from these new requirements for certain types of jobs where background checks are required by law. All of this is a dramatic change for most California employers, making it all the more important to enlist the services of a qualified and experienced third-party background check company who can help ensure compliance. Please contact us at Vantaggio for a recommendation.

Salary History Information – AB 168 prohibits employers from relying on an applicant’s salary history as a factor in determining whether or not to offer employment and in determining the salary to be offered. Additionally, employers may not, either personally or through an agent (such as a recruiter) seek history salary information, including benefits and compensation, from an applicant either orally or in writing. Applicants would not be prohibited from voluntarily disclosing, without prompting, salary information, and if they do so, employers may use this information in determining salary for that applicant. Upon reasonable request, an employer must provide the pay scale for a position to the applicant.

Paid Family Leave (aka Family Temporary Disability Insurance)AB 908 increases the amount of weekly benefits payable to employees who apply for wage replacement while taking time off to care for family members. The bill also removes the 7-day waiting period before benefits are payable.

Contractors Liable for Subcontractors’ WagesAB 1701 imposes liability onto the general contractor on private construction contracts for unpaid wages and fringe benefit contributions or payments that a subcontractor (at any tier) owes a laborer who performs work on contracts entered into after January 1, 2018. Subcontractors are required, upon request from the direct contractor, to provide payroll records and other information to confirm that all wages, benefits, and other contributions have been made. The law does not prohibit contractors from establishing or enforcing lawful remedies against any of its subcontractors. Note that in 2017, for the very first time, the CA Labor Commissioner fined a general contractor $249,879 for unpaid overtime, minimum wage, final pay, and rest break violations for one of its drywall and framing subcontractors!

With the current trend, we strongly recommend that general contractors use well drafted written contracts that include indemnity and hold harmless provisions to protect against unpaid wage or benefits claims by subcontractors’ employees. Additional language should be added requiring strict compliance with all applicable wage and hour regulations. General contractors should consult immediately with counsel experienced in this area of the law to take the necessary precautions. Please call us if you would like a referral.

Wage Discrimination – Prior to the implementation of California’s Fair Pay Act (AB 358, 2015), California law required employers to pay employees at the same rate of pay as employees of the opposite sex or another ethnicity who perform equal work at the same establishment. This law made a number of significant legal changes, notably removing the requirement that the employees in question have to be at the same establishment, and instead of “equal work,” the pay must be the same for “substantially similar” work. Despite how it was generally perceived, the Fair Pay Act was not the piece of legislation that made unequal pay illegal, it made it easier for employees to bring unfair pay claims against private employers. This year, AB 46 extends the Fair Pay Act to also cover public employers. However, public employers are not subject to the provision that makes a willful violation of the law a misdemeanor.

Worksite Immigration Enforcement  AB 450 includes a number of provisions to protect employees from immigration enforcement activities while at work and imposes fines between $2,000 and $10,000 per violation on employers who fail to comply. Employers are prohibited from allowing federal immigration officials to access non-public areas of the worksite without a warrant and from providing agents access to employee records without a subpoena or warrant. However, the latter provision does not apply to I-9 forms or other documents for which a Notice of Inspection was provided to the employer.

Regarding I-9 audits, employers must post a notice to inform employees of the impending inspection within 72 hours of receiving a Notice of Inspection. The notice must include specific information about the inspection and must be provided in the language that is normally used to communicate about employment issues. While employers must begin meeting this notice requirement on January 1, 2018, the Labor Commissioner has until July 1, 2018 to develop a model notice.

Employers must provide a copy of the Notice of Inspection to an affected employee (those who are identified to be lacking work authorization or whose documents have deficiencies) upon reasonable request. Affected employees and their collective bargaining representatives must be given a copy of the inspection results and the employer’s ensuing obligations within 72 hours of receiving this information.

Federal law already prohibits employers from reverifying the employment eligibility of current employees in a manner not required by law. AB 450 now makes doing so also a violation of state law that can subject an employer to civil penalties of up to $10,000.

Labor Commissioner’s Increased Authority –  SB 306 expands the California Labor Commissioner’s authority by allowing an employer to now be investigated even without  an employee complaint in situations where the Labor Commissioner suspects retaliation or discrimination against an employee during a wage claim or other investigation. The Labor Commissioner could then “with reasonable cause” obtain a court order for injunctive relieve to prohibit the employer from terminating or taking adverse action against the employee even before the investigation is complete. The employer would still be permitted to discipline or terminate the employee for reasons unrelated to the retaliation claim. Fines of $100 per day (up to a maximum of $20,000) can be assessed against the employer for willful refusal to comply with an order to reinstate an employee or former employee and/or for refusal to post a notice regarding the alleged conduct.

Gender Identification – SB 179 allows CA residents to choose any one of 3 options on state ID cards including birth certificates and drivers’ licenses – female, male, and “nonbinary,” The bill further simplifies the process for individuals to change their gender on legal documents. AB 1556 revises the Fair Employment and Housing Act (FEHA) by replacing gender specific pronouns in California’s anti-discrimination, anti-harassment, Pregnancy Disability Leave, and Family Medical leave laws – utilizing terms such as “the person” or “the employee” instead of “he” or “she.” And earlier in 2017, new FEHA guidelines were issued requiring employers to honor an employee’s request to be referred to by a preferred gender, name, or pronoun including gender neutral pronouns.

Human Trafficking Poster – Current law requires certain service organizations (businesses with liquor licenses, adult or sexually-oriented businesses, ER and urgent care, airports, passenger, light rail and bus stations, truck stops, etc.) to post a notice regarding slavery and human trafficking. AB 260 expands this posting requirement to hotels, motels, and bed and breakfast inns effective January 1, 2018. In addition to requiring the posters to now include a text number along with phone numbers where individuals can reach out for help, AB 260 makes other changes to the model notice which will be updated by the CA Dept. of Justice on or begore January 1, 2019.

Cleaning Products in the Workplace – Existing law requires that employers make available to employees Material Data Safety Sheets (MDSS) on hazardous chemicals in the workplace. SB 258 impacts employers that have certain designated products in the workplace that are used primarily for janitorial, industrial, or domestic cleaning purposes and include general cleaning products, air care products, automotive care products, and polish or floor maintenance products. Employers must now make MDSS available on these products. For more information on MDSS compliance, see Cal OSHA’s Publication, “Guide to the California Hazard Communication Regulation.”

Workers Compensation – Like most years, 2018 included a number of new laws regarding California Workers’ Compensation Insurance:

  • AB 44 – Requires employers to provide a nurse case manager to employees who suffer workplace injuries in an act of domestic terrorism during a declared state of emergency. The Division of Workers’ Compensation is charged with developing regulations to implement this law.
  • SB 189 – This law goes into effect on July 1, 2018 and provides clarity about when business owners, officers, board members, and LLC members may be excluded from workers’ compensation coverage.
  • AB 1422 – Clarifies provisions of AB 2883 from 2016 regarding automatic stays on liens filed by medical providers charged with criminal fraud.
  • SB 489 – Extends the billing deadline for providers of emergency workers’ compensation medical services from 30 to 180 days and was aimed to avoid a situation where a severely injured worker is unable to communicate about the injury in question until after the billing period had passed.

Other New CA Laws:

  • AB 1221 – Mandatory Training for Alcohol Servers
  • AB 219 – LGBT Rights for Long-Term Care Facility Residents
  • AB 1102 – Whistleblower Protections for Employees in Health Facilities
  • SB 490 – Wages and Licenses in the Barbering and Cosmetology Industry
  • AB 1170 – Expands Anti-Discrimination Protection for Veterans

Other California Developments:

Waiting Periods on Vacation Plans –A recent California case (Minnick v. Automotive Creations, Inc.) ruled that an employee who worked for less than one full year was not entitled to vacation pay at the time of termination since the employer had a clear and unambiguous policy stating that employees do not earn or accrue vacation until after the first year of employment. While not inconsistent with the California Labor Commissioner’s previous positions on vacation waiting periods, this case does open up some additional, albeit a bit murky, possibilities for the design of a compliant vacation policy.

One Day of Rest in Seven – The California labor code stipulates that employees are entitled to at least one day off in a seven-day workweek and that the employer cannot cause an employee to lose a day of rest. An employee is allowed to accumulate rest days when the nature of the work requires the person to work more than 7 consecutive days, provided that the worker received the equivalent of one day of rest in seven during each calendar month. Additionally, the requirement does not apply to emergency situation or to work performed to protect life of the loss or destruction of property. That being said, these requirements have long been the subject of conflicting interpretation. In 2017, the California Supreme Court (Mendoza v. Nordstorm, Inc.) answered several questions. The court ruled that the day of rest is only guaranteed for each workweek, not any 7-day rolling period. As such, employees can work 6 consecutive days that cross two workweeks without a violation. The court also expounded upon what it means for an employer to “cause” an employee to lose a day of rest and opined that the employer is not forbidden from allowing or permitting an employee to independently decide not to take a day of rest. Additionally, the court ruled that the day of rest rules do not apply for employees who work less than 30 hours in any workweek or 6 hours in any one day.

Rest Breaks – As a reminder, in 2016, the California Supreme Court (Augustus v. ABM Security Services Inc.) ruled that employers cannot require employees to remain “on call” during rest periods even if they perform no work. As such, employers are discouraged from rest break policies that require employees to remain on-site during their rest breaks.

Computer Professionals Exemption – In order to be exempt from overtime, computer professionals in CA must have duties that meet the strict requirements under the law AND must be paid no less than rates established by the DIR each year. For 2018, computer professionals must be paid no less than $43.58 per hour or a monthly salary of $7,352.62, or an annual salary of $90,790.07.

Private School Employees – As a reminder, effective July 1, 2017 (AB 2230 from 2016) requires that in order to be exempt from overtime, private school teachers must be paid a salary that is comparable to those offered in public schools in the same district or county.

Posters – If you need to order new 2018 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 2018 for use of an employee’s automobile – it’s now 54.5 cents per mile.

I-9 Forms – As a reminder a New I-9 Form was published and the Handbook For Employers was updated in mid 2017.

What should employers do?

  • Review and update your employee handbooks to include a policy on New Parent Leave.
  • Review and revise your Sexual Harassment Prevention training curriculum to ensure it covers all of the newly required elements. Ensure your trainer is well versed in these areas.
  • Schedule your bi-annual Sexual Harassment Prevention training for all supervisors and managers and training for any new supervisors/managers.
  • Consider Sexual Harassment Prevention training for your entire staff.
  • Obtain and post your new employment posters.
  • Update employee handbooks immediately due to the New Parent Leave Act and also to consider changing employee references throughout the document to be gender neutral.
  • Update job applications to remove all language regarding criminal history and salary information.
  • Amend hiring and background check practices to ensure appropriate timing and notifications regarding criminal background information.
  • Review your scheduling practices to ensure meeting the 1 Day of Rest in 7 requirements.
  • 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.
  • Ensure that your Commission Plans are in writing and that your pay practices for commissioned employees comply with the requirements to pay separately for rest breaks.
  • Inspect your workplace for hazardous and MDSS covered chemicals and cleaning products.

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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