Each year, California enacts a number of new employment-related laws that never seem to fail in making employers’ lives more difficult. 2016 is no different. In addition to an increase in Minimum Wage, California has new laws which impact Paid Sick Days, Piece Rate Pay, School Activities Leave, Kin Care, Retaliation, Reasonable Accommodation, E-Verify, and others. Additionally, the new CA Fair Pay Act, which mirrors proposed federal legislation, has both legal and practical implications for employers. The CA Fair Day’s Pay Act expands the labor commissioner’s authority and creates increased personal liability for an employer’s owners, directors, officers, and managing agents. And on both the federal and state level, classifying workers as Independent Contractors continues to get increasingly difficult. Now, more than ever, employers need to educate themselves on the changing legal landscape and ensure that their operations are compliant.
New California Employment Laws – The following is a brief description of a number (but not all) of new employment laws that unless otherwise stated, went into effect on 1/1/16:
Minimum Wage – AB 10, passed in 2013, provided for an increase in California’s minimum wage to $10.00 per hour effective January 1, 2016. As a reminder, in addition to having job responsibilities that are considered exempt duties under the law, exempt employees need to be paid at least twice minimum wage for the equivalent of full time work, or at least $41,600 annually in order to remain exempt from overtime. Note that sometime early in 2016, we expect the federal Department of Labor to also increase the minimum salary requirement for exempt employees which may well end up being higher than the current threshold in California.
Paid Sick Days – Only 13 days after California’s Healthy Workplaces, Healthy Families Act of 2014 went into effect, Governor Brown signed AB 304 into law on 7/13/15. This urgency piece of legislation was enacted to clear up confusion over the initial Paid Sick Days legislation. For more information, please see Vantaggio’s detailed article California’s Paid Sick Days Law Effective 7/1/15 Amended on 7/13/15!
Piece Rate – Historically, employers who paid employees a flat fee per item produced or service performed (common in the manufacturing and automotive industries) could use the total amount paid to the employee each week divided by the total hours worked in order to ensure that the employee was paid at least minimum wage and for calculating overtime. In 2013, two California court cases ruled that employers could not use this averaging method to ensure that employees were adequately compensated for paid breaks, recovery periods, and other non-productive time. Instead, employees need to be paid at least minimum wage for those periods on top of the piece-rate pay received. AB 1513 imposes significant record-keeping requirements for employers who utilize this method of compensation. Notably, employees’ pay stubs must show the total hours worked for paid rest and recovery periods and other non-productive time, the corresponding rates of pay, and the gross wages earned for these periods. Additionally, employers are required to pay employees for these periods at the greater of current minimum wage or the average hourly rate based on total hours worked exclusive of these periods.
School Activities/ Child Care Leave – Current law provides that employers with 25 or more employees must allow an employee who is a parent, guardian, or grandparent of a child in licensed child day care, kindergarten, or grades K to 12 to take up to 8 hours per month to a maximum of 40 hours per year for the purpose of participating in school activities and cannot discharge or discriminate against an employee for engaging in such activities. Employers are allowed to require documentation and can make the employee use available paid time off before taking additional unpaid time off. SB 579 expanded these rights to stepparents, foster parents, or persons who stand in loco parentis to a child. And instead of referencing a child day care facility, the law now refers to a child care provider. Further, activities allowed for such leave now also include addressing a child care provider or school emergency, and finding, enrolling, or re-enrolling a child in school or with a child care provider.
Kin Care – California’s existing Kin Care law requires employers who provide paid sick time off to their employees to allow at least ½ of any such accrued time off to be used to care for a family member who is sick. After passage of California’s new Paid Sick Days law in 2015, Kin Care and Paid Sick Leave laws differed in their definitions of who is a family member and the allowable reasons for using paid sick time. SB 579 amended the Kin Care law so that it now mirrors Paid Sick Days in these two areas. For more information, please see Vantaggio’s detailed article on Paid Sick Days.
Retaliation against Family Members – Existing law prohibits an employer from discharging or discriminating, retaliating, or taking any adverse action against an employee or applicant who has engaged in protected conduct or who has made a protected complaint (such as whistleblowing). AB 1509 expands this protection to an employee who is a family member of a person who has engaged in or who is perceived to have engaged in these protected activities.
Retaliation based on Reasonable Accommodation – Existing law protects employees from retaliation and discrimination based on their being in a protected category, and requires employers to provide reasonable accommodation of, among other things, a person’s disability and religious beliefs. It also prohibits discrimination against a person who has opposed such prohibited practices or because the person has filed a complaint. AB 987 makes the mere act of requesting accommodation based on religion or disability a protected activity and protects the person from retaliation – regardless of whether the requested accommodation was granted or not. This law further expands the definition of “employer” to include “client employers” and “controlling employers” (i.e. staffing agencies, PEOs, etc.) even if the retaliation is not coming from the direct employer.
California’s Fair Pay Act – Currently, employers must pay employees at the same rate of pay as employees of the opposite sex who perform equal work at the same establishment. AB 358 makes a number of significant legal changes to existing law, notably removing the requirement that the employees in question have to be at the same establishment, and now instead of “equal work,” the pay must be the same for “substantially similar” work. “Substantially similar work” means a composite of skill, effort, and responsibility that is performed under similar working conditions and does not have to be the exact same job title or function. Additionally, existing law provided for an automatic exemption when a gender wage differential was related to a seniority system, a merit system, quantity or quality of production, or any bona fide factor other than sex. AB 358 provides that an employer must now affirmatively demonstrate that one of these factors applies, that the factor has been applied reasonably, and that the factor accounts for the entire wage differential. In summary, AB 358 makes it easier for employees to bring unfair pay claims against employers.
AB 358 also makes it illegal for an employer to prohibit an employee from disclosing his/her own wages, discussing the wages of others, inquiring about another employee’s wages. Employers are; however, not required to disclose wages.
Personal Liability for Wage Claims – SB 588, oddly named “The Fair Day’s Pay Act,” expands the Labor Commissioner’s authority to enforce judgments for a number of wage and hour violations including unpaid wages, other compensation, penalties, and interest. The Labor Commissioner can place a lien on an employer’s property, levy a business’s bank accounts and/or accounts receivable, and impose a “stop order” on the company. Further it can prohibit an employer from closing down and re-opening its operations under a new business name in an attempt to avoid liability. Of particular note is that this law provides for individual liability for many wage and hour violations for business owners, directors, officers, and managing agents of a company!
E-Verify – AB 622 prohibits an employer for using the federal E-Verify system at any time or in any manner not required by federal law. Employers may not use E-Verify to check the employment authorization status of an existing employee or an applicant who has not yet received an offer of employment – unless otherwise required by federal law.
Private Attorneys General Act (PAGA) Claims – Under PAGA, an employee acting on his/her own behalf or on behalf of other current and former employees, can bring a civil action to enforce provision of the California Labor Code if the government has not done so. AB 1506 amends PAGA to allow employers a limited opportunity to cure two different types of violations relating to wage statements. Employees will be required to give notice to the employer, providing the opportunity to fix wage statements that failed to include the correct dates of the pay period and /or do not show the correct name or address of the employer. The corrected wage statement will be deemed to have fully cured the violation. However, an employer can only utilize this cure provision once in any 12-month period.
Other California Developments:
Posters – In addition to needing to post the new state minimum wage, California has two new/updated postings: Note to Employees – Injuries Caused by Work and California Whistleblower’s Protection. If you need to order new 2016 combined federal and state poster sets, please contact us at Info@VantaggioHR.com or call 1-877-VHR-relx (1-877-847-7359.
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 2016, computer professionals must be paid no less than $41.85 per hour or a monthly salary of $7265.43, or an annual salary of $87,185.14.
California Family Rights Act – On July 1, 2015, the California’s Fair Employment and Housing Council’s updates to the California Family Rights Act (CFRA) went into effect. The intent was to clarify the existing regulations and bring them more in line with the federal Family Medical Leave Act (FMLA). While both sets of laws generally provide up to 12 weeks of unpaid leave to eligible employees and have many similar provisions, historically, the two laws also have had significant divergences. The new CFRA regulations incorporated many elements of the 2013 FMLA regulations, but intentionally elected to retain important differences and even created new ones. California employers with 50 or more employees must comply with both sets of rules. For more information, please see our detailed article, California’s Family Rights Act Amended on July 1, 2015.
And on the Federal Level:
Independent Contractors – The federal DOL continues to take a hard line approach to employers who want to classify workers as independent contractors. On July 15, 2015 they issued this Administrator’s Interpretation expressing their belief that “most workers [classified as independent contractors] are employees under the FLSA’s broad definitions.” As far back as 2012, California took dramatic measures to try to decrease the number of workers that were misclassified as independent contractors. For more information, see Vantaggio’s detailed article Independent Contractor Misclassification Penalties Now Severe.
ACA Reporting – With finally some good news for employers, the IRS extended its deadlines for employers to provide employees with Forms 1095-B and 1095-C to March 31, 2016 (initially February 1, 2016). The deadline for employers to file Forms 1094-B, 1095-B, 1094-C, and 1095-D has been extended to March 31, 2016 (initially February 29, 2016) if not filing electronically and June 30, 2016 (initially March 31, 2016) if filing electronically. More information can be found on the IRS’s website: Affordable Care Act Tax Provisions for Large Employers
IRS Mileage – The IRS updated the standard mileage rate for 2016 for use of an employee’s automobile – 54 cents per mile.
What should employers do?
- Review current sick leave, vacation, or PTO policies to ensure compliance with new mandated Sick Leave laws.
- Review CFRA/FMLA policy, procedure, administration process for compliance with updated regs.
- Review and update policy on school activities leave.
- Review policies on conflict of interest and family members working together.
- Update employee handbooks immediately due to new protected categories and expanded protections against retaliation.
- Audit for equal pay practices.
- Audit Independent Contractors.
- Audit Joint Employment relationships – PEOs and staffing agencies – due to increased legislation extending employment-related liability to all involved employers.
- Update all employment posters as of 1/1/16.
- 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.
- Review all payroll rates and practices to avoid potential wage/hour claims and penalties that now carry PERSONAL LIABILITY.
- Plan your bi-annual Sexual Harassment Prevention training for supervisors and ensure that the training contains the new information about abusive conduct in the workplace.
As always, but is changing and employers’ liability is increasing. 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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The information presented in this article is intended to be accurate and authoritative information on the subject matter at the time submitted for publication. It is distributed with the understanding that Vantaggio HR is not rendering legal advice and assumes no liability whatsoever in connection with its use.
Copyright © Vantaggio HR, ltd., 2016
Lauraine Bifulco is President and Principal Consultant of Vantaggio HR, a human resource outsourcing and consulting firm that works with companies of all sizes across all industries, offering services on a fully outsourced or project basis:
On-Site HR * Payroll Admin * Workplace Complaints & Terminations * Multi-State Audits & Handbooks