New Legislation Impacting Employers and Employees in 2016

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In the weeks leading up to his October 11 deadline to sign into law legislation passed during the 2015-2016 Legislative Session, Governor Brown approved significant changes to California’s employment laws that will interest employers and employees alike. While passage of the Fair Pay Act is undoubtedly the star of the show, the home stretch of this year’s legislative session witnessed other important developments, which we detail below.  Unless otherwise specified, each of these laws becomes effective on January 1, 2016.

Expansion of Labor Commissioner’s Enforcement Powers Regarding Local Wage Rates (AB 970):  AB 970 expands the Labor Commissioner’s investigative and enforcement powers by authorizing her to investigate and, if requested by a local entity, enforce local overtime and minimum wage provisions.  We can expect to see beefed-up enforcement of the multitude of local minimum wage rates recently adopted (or increased) by cities throughout California.  The bill also authorizes the Labor Commissioner to issue citations to, and impose penalties on, employers who violate existing law requiring indemnification of employee expenses.

Changes to Piece-Rate Compensation Requirements (AB 1513):  Employers paying employees on a piece-rate basis may want to reconsider that practice now that the legislature has codified two California Court of Appeal decisions requiring employers to compensate piece-rate employees for “rest and recovery periods and other nonproductive time.” Newly enacted Labor Code section 226.2 requires employers to pay piece-rate workers for rest and recovery time at an average hourly rate that is calculated by dividing the employees’ total compensation for the week (not including overtime or rest and recovery pay) by the total hours worked for the week (exclusive of rest and recovery periods). Employers must pay employees at least minimum wage for any other “nonproductive time.” Employers must also now include in employee paystubs basic information about the bases for these calculations. Importantly, the legislation provides a “safe harbor” affirmative defense in piece-rate litigation for employers who have not been sued for unpaid piece-rate wages prior to April 2014, comply with all the wage obligations before January 1, 2016, and pay damages (actual or liquidated) by the end of 2016.

Changes to When Employers Can Use E-Verify System (AB 622):  This bill, codified in Labor Code section 2814, makes it unlawful for employers to use the E-Verify system to check the employment eligibility of a current employee or applicant awaiting an offer of employment except in a time and manner authorized by Federal law.  Employers face a fine of $10,000 for each violation of the new rule.

Requests for Religious or Disability-Related Accommodations Protected Against Retaliation (AB 987): This bill expressly overturns a 2013 California Court of Appeal decision, Rope v. Auto-Chlor Sys. of Wash., Inc., which held that requests for accommodation alone could not constitute a protected activity sufficient to support a claim for retaliation under FEHA. AB 987 amends FEHA to make clear that Section 12940’s protections against discrimination apply regardless of whether the request for accommodation was granted.

Employer Right to Cure Certain Labor Code Violations to Avoid PAGA Liability (AB 1506): AB 1506 gives employers a right to cure certain paystub deficiencies before employees may bring a Private Attorney General Act (PAGA) claim against them.  Specifically, existing Labor Code sections 226(a)(6) and 226(a)(8) require employers to include, in each paystub, the dates covered by the pay period and the name and address of the employing entity.  This new legislation allows employers to cure any deficiencies regarding these items once in every 12-month period.  Because the bill was deemed urgent, it took effect immediately upon the Governor’s signature on October 2.  For other recent significant developments related to PAGA, see our blog here.

No Retaliation for Acts of Family Members (AB 1509):  The Labor Code prohibits employers from “taking any adverse action” against an employee or prospective employee because that employee has engaged in certain “protected conduct” defined in Labor Code sections 98.6, 1102.5 and 6310.  AB 1509 extends these protections to an employee whose “family member” has engaged in (or is perceived to have engaged in) protected action.  The act does not define “family member.”

Fair Pay Act (SB 358): SB 358, the “Fair Pay Act,” introduces significant changes to the 1949 Equal Pay Act that are designed to facilitate litigation and close California’s gender wage gap, which currently stands at 16 cents per dollar. Our detailed analysis of the important changes introduced by the Fair Pay Act can be found here.

Expansion of Time Off For Childcare and School Functions (SB 579): This bill expands existing protections for time off taken by employees to attend school functions and to respond to childcare emergencies. Existing Labor Code section 230.8 allows employees to take up to 40 hours off each year for the purpose of attending school functions. SB 579 adds protections for time taken off to address school and childcare emergencies, as well as time to locate and enroll in school or childcare. SB 579 also amends Labor Code section 233 to bring its sick leave coverage—in terms of both reasons for leave and family members covered—in line with the Healthy Workplace Healthy Family Act of 2014.

Labor Commissioner Now Has Judgment Creditor Rights Over Unpaid Wages (SB 588): SB 588 allows the Labor Commissioner to use any of the remedies available to a judgment creditor to recover unpaid wages and to act as a levying officer when enforcing a judgment. The bill allows the Labor Commissioner to issue a notice of levy for deposit, money, and other accounts possessed by or under the control of a bank or savings and loan administration. The bill also empowers the Labor Commissioner to issue a stop order prohibiting the use of employee labor if an employer fails to satisfy a final judgment for nonpayment of wages within 30 days (where no timely appeal is filed).

Paid Sick Leave Amendments (AB 304): These important amendments, which took effect in July, clarified provisions of the Healthy Workplace Healthy Family Act of 2014.  Please see our detailed analysis of the amendments here.

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