EMPLOYMENT LAW: Looking Ahead to 2018 – New Laws Affecting California Employers

‘Tis the season . . .for human resources professionals to fret and business owners to lose sleep over the bevy of new laws ready to take effect. The California Legislature has once again set the bar very high for businesses to meet the latest compliance and “best practice” threshold when it comes to dealing with employees. Adding to the ordinary stressors, businesses are also dealing with a number of new judicial decisions that have changed the employment law landscape and the entire “#metoo” movement, which is changing the way that harassment in the workplace will be viewed going forward. The following are a few of the highlights from a very busy 2017:

Minimum Wage Laws

As has now become an annual tradition for California, January 1, 2018 will ring in a new threshold for minimum wages for employees throughout the state. For all businesses with 26 or more employees, the statewide minimum wage will increase to $11.00/hour, while smaller companies (≤25) will increase to $10.50/hour until January 2019. Complicating matters, though, are the state's largest cities/counties which are also scheduled to increase minimum wages during the 2018 calendar year, on their way to a $15.00/hour minimum wage by 2020. A table explaining the different minimum wage rates throughout L.A. County can be found here.

While the lowest wage earners will certainly be affected by these minimum wage increases, it is also important to note that these increases have a "trickle up" effect, influencing the minimum salary of even salaried, exempt employees. Most of the statewide "white collar" exemptions set forth in the California Industrial Wage Commission Wage Orders, require an employee to earn no less than double the state minimum wage in order to qualify as exempt (e.g. no obligation for an employer to pay overtime). This would equate to a pay raise for tens of thousands of “exempt” employees, to a minimum salary of $45,760 (26+ employee companies) in order to maintain their exempt status.

The Importance of Rest

2017 also saw a number of judicial decisions weighing the importance of rest periods and days of rest for non-exempt personnel. The California Supreme Court ruled that an employer is no longer permitted to keep employees “on call,” or on the physical premises of the business, during the employee’s 10-minute rest periods. In practical effect, the employer must take steps to ensure that each employee is receiving a truly “duty free” rest period, otherwise significant penalties will be assessed upon the employer. Augustus v. ABM Security Services, Inc.

Further complicating the rest period laws, a California appellate court ruled that workers who are regularly paid on a commission basis must be separately compensated for legally required rest periods, as those are qualified as non-productive time, but still compensable under the Wage Orders. Vaquero v. Stoneledge Furniture LLC.

One piece of good news coming from the California Supreme Court came in the Mendoza v. Nordstrom, Inc. case when we finally confirmed that the seventh-consecutive workday overtime rule is based upon the employer’s defined workweek, rather than a “rolling” basis that ensures that an employee does not work more than six (6) consecutive days without a day off.

Mandatory Baby Bonding for Small(er) Employers

In October, Governor Brown signed SB 63, which was deemed the Unlawful Employment Practice: Parental Leave Act. This expansion of the existing California Family Rights Act (CFRA) provides 12 weeks of job protected, but unpaid time off, for baby bonding leave in addition to other parental leave already imposed under California law. While the law used to apply only to those employers with 50+ employees, this expansion now includes employers with 20 or more employees. In order to qualify for this protected leave, the employee must have: worked 12 or more months for the employer; and completed at least 1,250 hours of service during prior 12-months period; and, work at jobsite with at least 20 employees within a 75-mile radius. The new law also prohibits employers from refusing to pay for group health insurance while an employee is on this leave, and mandates that a failure to provide baby bonding leave to a qualified employee is an “unlawful employment practice.”

New Restrictions on Pre-Employment Screenings

The statewide “Ban the Box” effort came to fruition with AB 1008, which precludes employers with five or more employees from requesting criminal arrest or conviction history on a pre-employment application or interview process, until after a conditional offer of employment has been extended. The employer also cannot “consider, distribute, or disseminate information” related to arrests or conviction when conducting the post-offer background check. If, after a conditional offer is extended, the employer runs a background check and discovers information in an applicant’s criminal past, the employer must then: (1) assess whether the conviction has a direct adverse relationship to the position; (2) provide written notice to the applicant of the potential decision not to hire; (3) provide the applicant with five (5) business days to respond to the information provided. If, after exhausting these steps, an employer still decides not to offer a position to the applicant, the employer must provide written notice of its final decision not to hire, and all of the bases under which employment was being denied. Watch for this new law to create a whole new area of litigation in 2018 and beyond!

While we’re discussing pre-employment “dos” and “do nots,” it’s important to note that the legislature has also extended a ban on an employer’s ability to seek an applicant’s prior salary/wage history prior to making an offer of employment. In other words, it is now a violation of California law if your employment application or interview process includes any inquiry into the candidate’s current or past salary history. Moreover, the employer must provide any applicant with a written pay scale for the position s/he is seeking, upon demand. Violations of this new provision (AB 168) will result in Private Attorney General Act (PAGA) penalties which can reach six- or even seven-figures in liability!

Sexual Harassment Prevention (Re)Training

Harvey Weinstein, Matt Lauer, Al Franken … the list goes on, but the theme at the end of 2017 was that harassment is a pervasive problem in many industries. That means that we expect to see a steady increase in the number of harassment-based claims as we venture into 2018. As a reminder, the Fair Employment and Housing Commission (FEHC) issued a set of regulations in 2016 that required employers to re-visit their written policies regarding harassment prevention in the workplace, setting forth eight affirmative statements that must be included in every effective policy. If your business has not reviewed and updated its employee handbook, or written policies in the last two years, it is highly likely that your procedures are out of date, and therefore out of compliance.

Additionally, while 2017 was a mandatory re-training year for many California employers, it is important to remember that California law requires every employer with 50 or more employees to train (or re-train) all management-level employees every two years on the prevention of sexual harassment in the workplace (known as AB 1825 training). If your business did not retrain in 2017, or if you are planning a 2018 presentation, Poole & Shaffery, LLP offers a live, two-hour, interactive harassment prevention training program for a flat fee. The presentation is designed to be engaging, informative and entertaining for all levels of management, making the training far more effective than an online training program. Please feel free to call our office to discuss pricing – 661-290-2991.

When it comes to preventing harassment in the workplace, an ounce of prevention is worth far more than a pound of cure, when a business is facing significant liability!

As always, this information is intended to be a brief overview of some of the most important changes to California employment law that came about in the last year. It is not intended to be a complete review, nor does it supplant the advice of competent legal counsel – which we strongly encourage for all California employers. Reviewing your company policies, procedures and protocols is an essential step in keeping your business compliant and out of the courtroom!

‘Tis the season . . .for human resources professionals to fret and business owners to lose sleep over the bevy of new laws ready to take effect. The California Legislature has once again set the bar very high for businesses to meet the latest compliance and “best practice” threshold when it comes to dealing with employees. Adding to the ordinary stressors, businesses are also dealing with a number of new judicial decisions that have changed the employment law landscape and the entire “#metoo” movement, which is changing the way that harassment in the workplace will be viewed going forward. The following are a few of the highlights from a very busy 2017:

Minimum Wage Laws

As has now become an annual tradition for California, January 1, 2018 will ring in a new threshold for minimum wages for employees throughout the state. For all businesses with 26 or more employees, the statewide minimum wage will increase to $11.00/hour, while smaller companies (≤25) will increase to $10.50/hour until January 2019. Complicating matters, though, are the state's largest cities/counties which are also scheduled to increase minimum wages during the 2018 calendar year, on their way to a $15.00/hour minimum wage by 2020. A table explaining the different minimum wage rates throughout L.A. County can be found here.

While the lowest wage earners will certainly be affected by these minimum wage increases, it is also important to note that these increases have a "trickle up" effect, influencing the minimum salary of even salaried, exempt employees. Most of the statewide "white collar" exemptions set forth in the California Industrial Wage Commission Wage Orders, require an employee to earn no less than double the state minimum wage in order to qualify as exempt (e.g. no obligation for an employer to pay overtime). This would equate to a pay raise for tens of thousands of “exempt” employees, to a minimum salary of $45,760 (26+ employee companies) in order to maintain their exempt status.

The Importance of Rest

2017 also saw a number of judicial decisions weighing the importance of rest periods and days of rest for non-exempt personnel. The California Supreme Court ruled that an employer is no longer permitted to keep employees “on call,” or on the physical premises of the business, during the employee’s 10-minute rest periods. In practical effect, the employer must take steps to ensure that each employee is receiving a truly “duty free” rest period, otherwise significant penalties will be assessed upon the employer. Augustus v. ABM Security Services, Inc.

Further complicating the rest period laws, a California appellate court ruled that workers who are regularly paid on a commission basis must be separately compensated for legally required rest periods, as those are qualified as non-productive time, but still compensable under the Wage Orders. Vaquero v. Stoneledge Furniture LLC.

One piece of good news coming from the California Supreme Court came in the Mendoza v. Nordstrom, Inc. case when we finally confirmed that the seventh-consecutive workday overtime rule is based upon the employer’s defined workweek, rather than a “rolling” basis that ensures that an employee does not work more than six (6) consecutive days without a day off.

Mandatory Baby Bonding for Small(er) Employers

In October, Governor Brown signed SB 63, which was deemed the Unlawful Employment Practice: Parental Leave Act. This expansion of the existing California Family Rights Act (CFRA) provides 12 weeks of job protected, but unpaid time off, for baby bonding leave in addition to other parental leave already imposed under California law. While the law used to apply only to those employers with 50+ employees, this expansion now includes employers with 20 or more employees. In order to qualify for this protected leave, the employee must have: worked 12 or more months for the employer; and completed at least 1,250 hours of service during prior 12-months period; and, work at jobsite with at least 20 employees within a 75-mile radius. The new law also prohibits employers from refusing to pay for group health insurance while an employee is on this leave, and mandates that a failure to provide baby bonding leave to a qualified employee is an “unlawful employment practice.”

New Restrictions on Pre-Employment Screenings

The statewide “Ban the Box” effort came to fruition with AB 1008, which precludes employers with five or more employees from requesting criminal arrest or conviction history on a pre-employment application or interview process, until after a conditional offer of employment has been extended. The employer also cannot “consider, distribute, or disseminate information” related to arrests or conviction when conducting the post-offer background check. If, after a conditional offer is extended, the employer runs a background check and discovers information in an applicant’s criminal past, the employer must then: (1) assess whether the conviction has a direct adverse relationship to the position; (2) provide written notice to the applicant of the potential decision not to hire; (3) provide the applicant with five (5) business days to respond to the information provided. If, after exhausting these steps, an employer still decides not to offer a position to the applicant, the employer must provide written notice of its final decision not to hire, and all of the bases under which employment was being denied. Watch for this new law to create a whole new area of litigation in 2018 and beyond!

While we’re discussing pre-employment “dos” and “do nots,” it’s important to note that the legislature has also extended a ban on an employer’s ability to seek an applicant’s prior salary/wage history prior to making an offer of employment. In other words, it is now a violation of California law if your employment application or interview process includes any inquiry into the candidate’s current or past salary history. Moreover, the employer must provide any applicant with a written pay scale for the position s/he is seeking, upon demand. Violations of this new provision (AB 168) will result in Private Attorney General Act (PAGA) penalties which can reach six- or even seven-figures in liability!

Sexual Harassment Prevention (Re)Training

Harvey Weinstein, Matt Lauer, Al Franken … the list goes on, but the theme at the end of 2017 was that harassment is a pervasive problem in many industries. That means that we expect to see a steady increase in the number of harassment-based claims as we venture into 2018. As a reminder, the Fair Employment and Housing Commission (FEHC) issued a set of regulations in 2016 that required employers to re-visit their written policies regarding harassment prevention in the workplace, setting forth eight affirmative statements that must be included in every effective policy. If your business has not reviewed and updated its employee handbook, or written policies in the last two years, it is highly likely that your procedures are out of date, and therefore out of compliance.

Additionally, while 2017 was a mandatory re-training year for many California employers, it is important to remember that California law requires every employer with 50 or more employees to train (or re-train) all management-level employees every two years on the prevention of sexual harassment in the workplace (known as AB 1825 training). If your business did not retrain in 2017, or if you are planning a 2018 presentation, Poole & Shaffery, LLP offers a live, two-hour, interactive harassment prevention training program for a flat fee. The presentation is designed to be engaging, informative and entertaining for all levels of management, making the training far more effective than an online training program. Please feel free to call our office to discuss pricing – 661-290-2991.

When it comes to preventing harassment in the workplace, an ounce of prevention is worth far more than a pound of cure, when a business is facing significant liability!

As always, this information is intended to be a brief overview of some of the most important changes to California employment law that came about in the last year. It is not intended to be a complete review, nor does it supplant the advice of competent legal counsel – which we strongly encourage for all California employers. Reviewing your company policies, procedures and protocols is an essential step in keeping your business compliant and out of the courtroom!