New Year, New Employment Laws for California Employers

The California Legislature, local city councils, and other lawmakers have been busy over the last several months passing a number of laws that will impact the employment landscape.  Below is an overview of some of the key changes to be aware of as we head into 2017:

1.  New I-9 Form:  By January 21, 2017, employers must start using a new I-9 form prepared by the U.S. Citizenship and Immigration Service with respect to all new hires and reverifications.  The purpose of the form is to verify each individual’s legal authorization to work in the United States.  Note that other laws prohibit employers from requesting more or different verifying information than that set out in the I-9 form or engaging in other unfair immigration-related practices so employers should not do more than what the I-9 requires when it comes to verifying an individual’s authorization to work in the US.

2.  New City of LA Law Prohibits Many Employers From Inquiring into a Job Applicant’s Criminal History Until After a Conditional Offer of Employment Has Been Made:  The City of LA recently passed the “Fair Chance Initiative for Hiring” or “Ban the Box” ordinance that restricts many employers within the City of LA that employ 10 or more employees who regularly work in the City from asking job applicants about their criminal conviction history until after a conditional offer of employment has been made.  The law further requires such employers to state in all job ads that the employer will consider qualified applicants with criminal histories.  Employers are exempt from this law only if (a) they are required by law to obtain information regarding criminal convictions of applicants, (b) the applicant would be required to possess or use a firearm in the course of employment, (c) an individual who has been convicted of a crime is prohibited by law from holding the position sought by the applicant, or (d) the employer is prohibited by law from hiring an applicant who has been convicted of a crime.

The new law prohibits covered employers from taking any adverse action, such as withdrawing an offer of employment, based upon an applicant’s criminal history unless the employer prepares a written assessment that links the specific aspects of the applicant’s criminal history with the risks inherent in the duties of the position sought by the applicant.  In preparing this assessment, the ordinance requires employers to, at a minimum, consider the factors set forth by the Equal Employment Opportunity Commission (EEOC) with respect to criminal history information, which include: (1) the nature of the offense; (2) the individual’s age at the time of the offense; (3) circumstances surrounding the offense; (4) the number of offenses for which the individual has been convicted; (5) employment history before and after the conviction; (6) evidence of rehabilitation; (7) time that has passed since the offense, and other mitigating factors. If the employer decides to take an adverse action, the employer must provide the applicant with a “Fair Chance Process,” which affords the applicant an opportunity to rebut the evidence relied upon in the written assessment.

Violations of this law carry fines and penalties ranging from $500-$2000, which will begin being assessed as of July 1, 2017.  The full text of the ordinance is available here.  Covered employers should be sure to update their job applications and related paperwork to be in compliance with this law.

3.  Employers Are Prohibited from Asking About or Utilizing Information Related to Juvenile Criminal History in Making Employment-Related Decisions.  The California Legislature passed a new law prohibiting employers from inquiring into an applicant’s or employee’s juvenile criminal history for the purpose of making hiring, firing, compensation, promotion, or other decisions related to the terms and conditions of an individual’s employment.  As with the “Ban the Box” ordinance, employers should review their job applications and other paperwork to be sure they are in compliance with these new restrictions.

4.  Employers May Not Require California Employees to Bring Employment Disputes In Another State or Pursuant to Another State’s Laws.  Because California has some of the most employee-protective laws in the United States, some employers seek to get around this by requiring employees to sign contracts stating that if a dispute ever arises with respect to their employment, the dispute must be adjudicated in some other state or pursuant to another state’s laws.  As of January 1, 2017, a new law, codified as Labor Code Section 925, will largely prohibit this practice.  That law provides that employers “shall not require an employee who primarily resides and works in California, as a condition of employment, to agree to a provision that would do either of the following:  (1) require the employee to adjudicate (i.e., litigate or arbitrate) outside of California a claim arising in California; or (2) deprive the employee of the substantive protection of California law with respect to a controversy arising in California.

The law provides that if an employer does include such a provision in an employment contract, the contract will be voidable at the employee’s option, and if it is rendered void, the dispute will be heard in California and pursuant to California law.  The law further allows an employee enforcing his or her rights under this statute to obtain an award of attorney’s fees.

The law does not apply to a contract entered into with an employee who was individually represented by legal counsel in negotiating the terms of an agreement to designate either the venue or the substantive law that would govern in the event of an employment dispute.

The law applies to contracts entered into, modified, or extended on or after January 1, 2017.

5.  Laws Prohibiting Pay-Based Discrimination Expanded.  California’s Fair Pay Act, which went into effect January 1, 2016 and which set out new rules aimed at combating gender-based pay discrimination, has now been expanded in two important ways.  First, the law has been extended to prohibit not only gender-based pay discrimination but also race- and ethnicity-based pay discrimination.  The Act prohibits an employer from paying any of its employees wages that are less than what the employer pays employees of the opposite sex or different race or ethnicity for substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions.  The Act provides for exceptions allowing for pay disparities when the wage differential is based upon one or more of the following factors: (a) a seniority system; (b) a merit system; (c) a system that measures earnings by quantity or quality of production; (d) a bona fide factor other than sex, race, or ethnicity, such as education, training, or experience.

Second, the law has been amended to provide that “prior salary shall not, by itself, justify any disparity in compensation.”

These new provisions stem from the legislative findings that substantial wage disparities persist between men and women and particularly among women of color.  According to the findings, women are paid less than men in 99.6 percent of occupations.  Moreover, relying on prior salary history to set pay rates contributes to the wage gap by perpetuating wage inequality, causing women to continue earning less than their male counterparts.

6.  Ban on Smoking in Enclosed Workplaces.  The Legislature has expanded Labor Code Section 6404.5 to prohibit the smoking of tobacco products in all enclosed places of employment, even in owner-operated businesses with no employees, as long as those businesses allow clients or other non-employees access to the workplace.  The phrase “place of employment” is defined to exclude: (1) 20% of the guestroom accommodations in a hotel, motel, or similar transient lodging establishment; (2) retail or wholesale tobacco shops and private smokers’ lounges; (3) cabs of motortrucks; (4) theatrical production sites, if smoking is an integral part of the story in the theatrical production; (5) medical research or treatment sites, if smoking is integral to the research and treatment being conducted; (6) private residences, except for licensed family day care homes; and             (7) patient smoking areas in long-term health care facilities.

7.  Minimum Wage Increases and New Posting Requirements:  As we previously blogged about here, the California Legislature and many city councils have passed laws increasing the minimum wage.  As of the start of the new year, California’s statewide minimum wage will be $10.50 per hour with respect to employers with 26 or more employees (smaller employers must be at $10.50 per hour by January 1, 2018).  But a variety of cities, including Los Angeles, have passed their own laws setting the minimum wage even higher: Employers in the City of LA with 26 or more employees should have been paying at least $10.50 per hour as of July 1, 2016, which will go up for these employers to $12 per hour as of July 1, 2017.  As with the CA state law, smaller employers in the City of LA have a one-year grace period to match these minimum amounts.  Increases to the minimum wage also impact whether or not an employee qualifies as “exempt” from the overtime and meal and rest break requirements of California law so employers are well-advised to familiarize themselves with the nuances of these laws to avoid costly wage and hour violations.  All employers should also be posting a new minimum wage poster, available here, and employers in the City of LA should be posting the minimum wage and sick leave poster prepared by the City available here.

8.  New Paid Sick Leave Requirements:  Several cities within CA have implemented paid sick leave laws that exceed the minimum requirements of CA’s paid sick leave law, discussed in greater detail here, which entitles California employees to 3 days or 24 hours (whichever is greater) of paid sick leave each year.  For example, employers in the City of LA with 26 or more employees should have begun making available to their non-exempt employees working inside the City no less than 48 hours of paid sick leave each year.  On July 1, 2017, employers in the City of LA with less than 26 employees will also be required to meet this requirement.  Similarly, businesses in Santa Monica with 26 or more employees working in the city must offer non-exempt employees working inside the city at least 40 hours of sick leave per year, which will increase to 72 hours as of January 1, 2018.  Smaller employers in Santa Monica need to offer no less than 32 hours of paid sick leave as of January 1, 2017 and 40 hours of leave as of January 1, 2018.

More information about the City of LA’s sick leave law is available here, and more information about Santa Monica’s sick leave law is available here.  Other CA cities, including San Diego, San Francisco, Oakland, Emeryville, and Berkeley have also adopted their own sick leave ordinances providing for greater paid sick leave benefits than those required under CA state law.

In light of these changes, employers should review their employee handbooks and other employment-related paperwork to ensure compliance with these new laws.  Please feel free to call Polina Bernstein or Diana Friedland at (818) 817-7570 for help with these or any other employment-related matters.

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The above summary has been prepared for general informational purposes only and is not intended as legal advice.  

Bernstein & Friedland, P.C. is a boutique employment law firm in Los Angeles specializing in wrongful termination, discrimination, harassment, retaliation, and unpaid wage and overtime matters.  Please visit our website at www.laemploymentcounsel.com to learn more about us.

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