A New Year is Coming! Which means. . . new laws for California employers! Here is a brief summary of the new rules for your business. Please do not hesitate to contact me with questions.
Compensation
Minimum Wage. Effective January 1, 2019, California employers with at least 26 employees must pay minimum wage at the rate of $12.00 per hour. For employers with 25 or fewer employees, minimum wage will increase to $11.00 per hour.
Employers are generally subject to federal, state and local minimum wage laws and must follow the stricter standard; that is, the one that is the most beneficial to the employee. Here is a not-exhaustive list of local minimum wages as of January 1, 2019: San Francisco, Sunnyvale, San Jose, Emeryville, Palo Alto, Milpitas, and Berkeley all require a minimum wage of $15.00 per hour as of January 1, 2019 (it may already be that for a particular location). Milpitas will join the $15.00 per hour list in July 2019.
Exempt employees. The minimum salary that must be paid to exempt employees in California corresponds to the state minimum wage. Exempt employees must earn at least twice the state’s minimum wage for full-time employment, e.g. $49,920 annually for employers with 26+ employees. This minimum salary increases as minimum wage increases. As always, the “duties” tests must be satisfied for any employee classified as exempt.
Independent Contractors. Every year, courts and government agencies give more and more warnings that employers must confirm that an independent contractor is really an independent contractor, or suffer the consequences. Generally, complying with the California Supreme Court’s 2018 Dynamex “A-B-C test” can help employers reduce liability. Under the test, a worker is an employee unless:
- she is free from the control and direction of the hirer in performance of the work; and
- she performs work that is outside the usual course of the hiring entity’s business; and
- she is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.
Fair Employment
Sexual Harassment. The biggest list of changes in California law is in the area of sexual harassment.
By January 2020, employers with five or more employees must provide harassment prevention training to all employees every two years. Supervisors must attend a two-hour training and non-supervisory employees must attend a one hour training.
The Fair Employment and Housing Act was amended to make it an unlawful practice for an employer to require an employee to release a FEHA claim in exchange for a bonus, raise, or continued employment. FEHA now also makes employers liable for any kind of unlawful harassment by non-employees (not just for sexual harassment as under existing law) where the employer knew or should have known of the harassment and failed to take appropriate remedial action. FEHA now also includes statements of legislative intent to make it harder for employers to prevail on harassment claims, such as a declaration that a single act of harassment may suffice to support a finding of a hostile work environment.
Any provision of a contract or settlement agreement that prevents a party to the contract from testifying about criminal conduct or harassment in an administrative, legislative or judicial procedure is void and unenforceable.
Also, settlement agreements entered into after January 1, 2019 cannot prevent disclosure of factual information about claims of sexual assault, sexual harassment, gender discrimination or related retaliation that have been filed in court or before an administrative agency (but does not apply to settlements reached before any filing). The parties may limit disclosure of the amount of a settlement. And the claimant can request that the agreement protect his or her identity (and facts that would lead to the discovery of his or her identity).
A Civil Code section defining privileged communications has been amended to state that a sexual harassment complaint cannot be the basis of a defamation claim. The rule now protects three new categories of communications: Sexual harassment complaints by an employee to an employer based on credible evidence and made without malice; Communications during a harassment investigation between an employer and interested persons (witnesses, etc.) regarding a sexual harassment complaint; Responses by an employer to a reference check as to whether the employer would rehire an employee and, if not, whether that decision is based on the employer’s determination that the former employee was involved in sexual harassment. The rule is not particularly clear as to what the former employer should disclose during a reference check, so it is our recommendation that you work with your employment law counsel to craft a thoughtful response in each situation. Of note, this rule is only about sexual harassment claims; it does not similarly protect from a defamation claim complaints for other forms of harassment (race, religion, national origin, age, etc.).
Pay Equity. Last year, California enacted rules to limit the ongoing effect of salary history on future salary in an effort to reduce the gender pay gap. Last year’s bill required California employers to provide “applicants” with the “pay scale” for a position upon “reasonable request.” These terms were undefined and thus open to interpretation. This past summer, the legislature clarified parts of this rule. The term “applicant” or “applicant for employment” means an external individual seeking a position with the employer. Current employees are excluded. The term “pay scale” means a salary or hourly wage range. It does not include bonus or equity ranges. And the term “reasonable request” is a request made only after an applicant has completed an initial interview with the employer. The new law also clarified that an employer may ask an applicant what they expect or want to be paid, but may not ask what they were paid at a previous job.
National Origin Discrimination. California’s Fair Employment and Housing Council enacted new regulations to help employers better understand the long-protected characteristic of national origin. National origin is defined to include, without limitation, the following actual or perceived characteristics of an individual or her ancestors, including physical, cultural, or linguistic characteristics associated with a national origin group; marriage to or association with persons of a national origin group; tribal affiliation; membership in or association with an organization identified with the interests of a national origin group; participation in schools, churches, temples, mosques, or other religious institutions generally used by persons of a national origin group; and a name that is associated with a national origin group. The section defines “national origin groups” to include “ethnic groups, geographic places of origin, and countries that are not presently in existence.”
Finally, the new rules address “English-only” policies. Before, the rules allowed such policies where “justified by business necessity.” Now, the rules specifically prohibit any policy that “limits” the use of any language in the workplace unless the employer can show the restriction is “narrowly tailored” and justified by business necessity, and making clear that customer or co-worker preferences do not suffice. Also, English-only rules are never lawful during an employee’s non-work time (e.g., meal and break periods, unpaid employer-sponsored events). In fact, such restrictions during nonworking hours could lead to wage and hour violations. Employers cannot discriminate based on an employee or applicant’s “accent” unless it “interferes materially” with job performance. The new rules also specifically state that it is unlawful retaliation to threaten to contact immigration authorities.
Lactation accommodation. Existing law requires employers to make reasonable efforts to provide a location other than a toilet stall to be used for lactation. Under the new law, the location should be something other than a bathroom. (This is a slight change and puts a higher obligation on the employer for the facility). In addition, the location should be a permanent one, but it can be a temporary location under certain conditions.
Military Discrimination. California expanded discrimination protections to members of the Federal Reserve components of the Armed Forces of the United States and members of the State Military Reserve. California law already protects members of the military or naval forces of the state or of the United States or a person ordered to military duty or training or by reason of being a member of the military or naval forces of the state or U.S. In addition, the law specifically provides that no business and other covered establishments may deny a member of the Armed Forces of the United States entrance when the member is dressed in uniform.
Sexual Orientation Discrimination. As a reminder, the U.S. Supreme Court’s decision in Masterpiece Cakeshop, Inc. v. Colorado Civil Rights Commission (the “wedding cake decision”) does not grant businesses the right to discriminate. In that case, the Court ruled that a baker’s Free Exercise Clause rights under the Constitution were not properly considered by the Colorado Civil Rights Commission when that agency held that the baker was legally required to bake and sell a wedding cake for a same-sex couple. This was actually a very narrow decision focused on the Commission’s impermissible hostility toward the baker’s religious beliefs. The ruling does not give businesses or employers the right to discriminate against customers, guests, or employees due to their sexual orientation or any other protected class status.
Hiring
Background Checks. With a few exceptions, most California employers cannot ask job applicants about their criminal histories until a conditional offer is made. Then, employers can ask job applicants about criminal convictions, including expunged records, for certain roles, particularly if such inquiries are mandated by federal or other state laws. SB 1412 requires employers to ensure that they are not receiving or considering information about convictions beyond the particular conviction that would disqualify the applicant for the role.
In addition, this past year saw several courts give expensive reminders to employers that they should always err on the side of giving written notice and acquiring written consent before doing background checks. And make sure you are the type of employer that can (or should) even do particular background checks. Be thoughtful (and talk with your employment law counsel) about what your goal is in getting background information.
Employee Post-Employment Non-Solicitation Restrictions. In early November, a California Appeals Court invalidated an employer’s contract that restrained former employees from soliciting current employees for a one-year period. These types of restrictions had been a gray area. California’s general rule against noncompetition agreements is that “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” In a ruling directed at medical industry recruiters, the Court held that provisions barring solicitation of employees also violate the non-compete rules. And, more importantly, the Court indicated that any employee non-solicitation provisions are void under the law.
Arbitration Agreements. Recently, Facebook and Google announced that they will no longer require employees to arbitrate sexual harassment cases. Please note, our current aim with such agreements is not to compel arbitration of harassment or discrimination cases, but to limit the crushing financial consequences to the employer of wage and hour collective actions.
Questions? Please do not hesitate to contact me!
jdebacker@mstpartners.com • 408.293.1900
California Employment Law Blog 