December 21, 2017

Employment Alert: Protect Your business in 2018 — Prepare for Changes in California Employment Law

California State Capital with State Flag

Sacramento California outside the capital building

It’s the shortest day of the year, but, as usual, there is no shortage of laws impacting California employers scheduled to go into effect in the New Year.  As anticipated, new laws and updates to existing laws will expand protections to employees in 2018.  We summarize below eight laws effective January 1, 2018, unless otherwise noted.  These laws will govern the way California employers operate their day-to-day businesses going forward.  Please do not hesitate to contact one of our employment lawyers should you need further guidance on any of these changes.

  1. Salary History Questions Prohibited.  AB 168 amends the California Labor Code to prohibit employers and their agents from inquiring about a job applicant’s prior salary, compensation and benefits.  Further, employers may not use salary history information as a factor in the hiring process.  Employers may consider salary history information that the applicant “voluntarily and without prompting” discloses in determining the applicant’s salary.  However, recall that the California Fair Pay Act (Labor Code § 1197.5) prohibits employers from using salary history alone to justify a pay disparity.  Employers will need to review and revise their job application forms and interview policies accordingly.  In addition, the new law will require employers to provide an applicant, upon reasonable request, with the pay scale for the particular position.
  2. Minimum Wage Increases.  Pursuant to the passage of SB 3 in 2016, California’s minimum wage on January 18, 2018 increases from $10 to $10.50 per hour for employers with 25 or fewer employees, and from $10.50 to $11 per hour for employers with 26 or more employees.  This increase not only affects the compensation paid to minimum-wage earning employees, but also impacts the salary test for certain overtime exemptions, notice requirements, overtime rates, meal and lodging policies and other benefits tied to an employee’s compensation.  Please note that many cities in California have higher minimum wage requirements.  Employers in those cities must comply with the higher rates.
  3. Conviction History Questions Limited.  AB 1008 amends the Fair Employment and Housing Act to prohibit employers with five or more employees from inquiring about or considering a job applicant’s criminal conviction history before extending a conditional offer of employment.  “Conviction history” includes “convictions” as defined under Labor Code section 432.7, as well as certain arrests.  If an employer intends to deny the applicant a position based on his or her conviction history, the employer must conduct an individualized assessment of whether the conviction history has a “direct and adverse relationship” with the specific duties of the position.  Upon determining that the individualized assessment disqualifies the applicant from the position, an employer must provide the applicant with written notice of the preliminary decision and allow the applicant five days to respond.  California employers should review and update job application forms, interview policies and background check procedures accordingly.
  4. Gender Identity Protection Expanded.  Two bills extend protections to employees against gender identity discrimination.  With the passage of the Gender Recognition Act (SB 179), California now recognizes three gender options – female, male or nonbinary – on state-issued identification cards, birth certificates and driver’s licenses.  The Act also makes it easier for individuals to change their gender on legal documents.  For changes to birth certificates and legal documents, the law is effective on September 1, 2018.  For changes to driver’s licenses, SB 179 is effective January 1, 2019.  Effective January 1, 2018, SB 396 requires California employers with 50 or more employees to include additional content in their currently-mandated sexual harassment prevention training (under Government Code section 12950.1).  The new content includes harassment prevention based on “gender identity, gender expression and sexual orientation.”  The law also requires employers to display a new poster in a prominent and accessible location.  The poster, developed by the Department of Fair Employment and Housing, addresses “Transgender Rights in the Workplace.”
  5. Immigration Enforcement Agents Access to Worksites Limited.  The Immigrant Worker Protection Act (AB 450) prohibits employers from granting federal immigration enforcement agents voluntary consent to: (1) enter nonpublic areas of a business; or (2) access, review, or obtain employee records, with the exception of I-9 Employment Eligibility Verification forms and documents where a Notice of Inspection is provided to the employer.  With regard to exempted documents, employers must: (1) provide posted notice to employees of an immigration agency’s inspection within 72 hours of receiving the Notice of Inspection; and (2) provide a copy of the notice and inspection results to affected employees.  The law also prohibits employers from re-verifying the employment eligibility of a current employee at a time or in a manner not required by the Immigration Reform and Control Act of 1986 (8 U.S.C. § 1324a(b)).  Fines for an employer’s violation of AB 450 range from $2,000 to $5,000 for a first violation, and can be up to $10,000 for each subsequent violation.
  6. Anti-Discrimination Protections for Military Service Members Expanded.  California law currently prohibits discrimination against an employee because of his or her membership or service in the military or naval forces of California or the United States.  AB 1710 extends the prohibition against discrimination to all “terms, conditions, or privileges” of employment.
    Paid Family Leave Benefits Increase.  AB 908 increases the amount of Paid Family Leave (PFL) and State Disability Insurance (SDI) benefits an employee can receive from 55% to 60-70% of earnings, depending on income.  Employees earning less than one-third of California’s average quarterly wage annually are paid 70% of their salary during their leave, while those earning one-third or more of the state’s average quarterly wage annually will receive 60%.  The law also removes the current seven-day waiting period before an employee is eligible to receive PFL benefits (the SDI waiting period is not removed).  Employers will not be substantively affected by this new law as SDI and PFL benefits are administered by the California Employment Development Department.
  7. Parental Leave Benefits Required for Small Employers.  The New Parent Leave Act (SB 63) requires employers with 20 or more employees to provide eligible employees up to 12 weeks of unpaid job-protected leave to bond with a new child within one year of the child’s birth, adoption, or foster care placement.  To be eligible, an employee must: (1) have worked for the employer more than 12 months; (2) have worked at least 1,250 hours during the previous 12-month period; and (3) work at a worksite where there are at least 20 employees within a 75-mile radius.  If an employee takes this leave, the employer must: (1) provide a guarantee of employment in the same or comparable position; (2) maintain and pay for coverage under a group health plan; and (3) not take any adverse employment action against the employee for taking the leave.  This new law will have the greatest impact on employers with 20 to 49 employees because, currently, the federal Family and Medical Leave Act and the California Family Rights Act do not require these employers to provide “baby bonding” leave.

 

Keesal, Young & Logan Employment Group

This information has been prepared by Keesal, Young & Logan for informational purposes only and is not legal advice. Transmission of the information is not intended to create, and receipt does not constitute, an attorney-client relationship between you and Keesal, Young & Logan. You should not act upon this information without seeking professional counsel.

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