Dear Clients, business owners and Colleagues,

I am writing to notify you about recently enacted legislation taking effect on January 1, 2017, as well as other important developments in labor and employment law. This list is not exhaustive, but I wanted to touch on a few key developments heading employers’ way in 2017.

  1. Minimum Wage rises from $10 to $10.50 for employers with 26 or more employees.

SB 3, passed in April 2016, raises the minimum wage from $10 to $15 via a schedule of incremental pay increases so that the California minimum wage reaches $15 an hour for all California employees by January 1, 2023.

Therefore, pursuant to the SB 3 schedule, beginning on January 1, 2017, employers with 26 or more employees must pay a minimum hourly wage of $10.50. Employers with 25 employees or less will be required to raise the hourly rate to $10.50 on January 1, 2018.

  1. Agricultural Employees are now Entitled to Meal Periods and Additional Benefits Under the Labor Code.

Under prior law, agricultural employees were exempt from certain provisions in the Labor Code. Agricultural employees were not entitled to double-time wages for hours exceeding twelve in a workday; they could be denied a 30-minute duty free meal period; and they earned overtime after working more regular hours than most other California workers.

AB 1066 removes the agricultural exemption as of January 1, 2017, and phases in changes to the overtime requirements to achieve parity with the overtime rights of other California workers. In addition, it also requires payment of double-time wages to agricultural workers by 2022. Employers that used to exempt their agricultural employees must provide timely meal periods and rest periods beginning January 1, 2017. Further, agricultural employers will need to pay more overtime starting January 1, 2018.

Agricultural employers wishing to have their employee benefits reviewed and/or amended may contact us.

  1. Employees Must Receive Written Notice of the Rights of Victims of Domestic Violence, Sexual Assault, or Stalking.

Existing law prohibits employers from discharging or retaliating against an employee because that employee took time off to receive medical attention, obtain services at a domestic violence shelter or program, or counseling as the result of sexual assault, domestic violence, or stalking.

AB 2337 requires employers to provide written notice to their employees as of January 1, 2017, to inform them of these rights. Notice must be provided on the date of hire or upon request.

  1. California Employers may No Longer Select an Out-of-State Forum for Dispute Resolution of Employment Agreements with Unrepresented Employees.

Under prior law, an employer was free to require an employee to litigate or arbitrate any dispute arising from an employment contract in any venue or jurisdiction in the United States and/or require the agreement to be governed by the laws of any state in the United States.

AB 1241 now prohibits an employer from either forcing a California employee and resident to adjudicate a dispute of a claim that arises in California in any out-of-state jurisdiction, or from depriving the employee of the substantive protection of California law with respect to a controversy arising in California. However, this new rule would not apply to any employee represented by legal counsel in the negotiation of the arbitration agreement.

Employers wishing to have their employment or arbitration agreements reviewed and/or amended to comply with this law may contact us.

  1. Employers Must Give Notice to Employees of their Eligibility for the California Earned Income Tax Credit.

Prior law required employers to provide written notice of the employee’s eligibility for the federal Earned Income Tax Credit within one week before or after the employer issues the employee an annual wage summary, W-2, and/or Form 1099.  Notice must either be hand delivered to employee or mailed to their last known address.

Now, pursuant to AB 1847, employers must also provide notice of the employee’s eligibility for the California Earned Income Tax Credit under the same conditions.

  1. California Supreme Court Rules that a Policy requiring “On Call” Rest Breaks Violates the Labor Code.

A recent decision by the California Supreme Court held that an employer’s policy requiring employees to remain “on call”, by keeping their cell phones and radios on and in their possession during their rest breaks violated the Labor Code.

In Augustus v. ABM Security Services, security guard plaintiffs alleged that the defendant employer failed to authorize rest breaks because plaintiffs were required to keep their cell phones and radios on them during working hours, including while they were on their rest breaks. The Supreme Court concluded that California labor regulations require “employers to relinquish any control over how employees spend their break time, and relieve their employees of all duties – including the obligation that an employee remain on call.” The Supreme Court reached this conclusion in spite of evidence showing the security guards, in reality, were never prevented from taking a rest period and were permitted to take another full ten minute break if an earlier break had been interrupted.

Employers should amend their handbook and/or rest break policies to comply with this law. Please contact us for more information on modifying your handbook.

  1. Employers are No Longer Required to Provide Total Hours Worked on Wage Statements Provided to Certain Non-Salaried Exempt Employees.

Existing law requires an employer to provide its employees with an accurate itemized wage statement that shows the total hours worked, unless the employee’s compensation is based on a salary and the employee is exempt from overtime by statute or by an applicable order of the Industrial Welfare Commission. For instance, an employee paid commissions only may be exempt from overtime under the Labor Code, but since that employee is not paid by salary, the employer must still provide a wage statement showing the total hours worked.

AB 2535 clarifies that employees who do not require a wage statement showing total hours worked include those who are not paid a salary, but are nonetheless exempt from overtime. The following are now not entitled to a wage statement showing total hours worked: “Outside sales” employees, certain salaried computer professionals, certain family members of the employer, certain substance abuse rehabilitation center employees, commercial passenger fishing boat crew members, and participants in certain national service programs.

Please consult with us about the information required on wage statements for your employees.

  1. Employers May Not Demand More Documents than Required by Federal Agencies in Assessing an Applicant’s Legal Status or Authority to Work in the U.S.

Existing law prohibits retaliatory document abuse as an unfair immigration-related practice. “Document abuse” is where an employer requests more or different documents from an employee than are required under federal law, or refuses to honor documents presented by an employee that, on their face, appear to be genuine.

SB 1001 expands the prohibitions of document abuse to job applicants. In addition, “document abuse” now includes the refusal to honor documents or work authorization based upon the specific status or term of status that accompanies the authorization to work. “Document abuse” also includes the employer’s re-investigating or re-verifying an incumbent employee’s authorization to work. The new law also permits employees to file “document abuse” complaints with the Division of Labor Standards Enforcement, and employers found to have violated the prohibition against document abuse may be subject to a $10,000 penalty.

To develop a process in compliance with these new laws, contact our office.

  1. Apprentices Must Be Paid Prevailing Wages for Pre-Employment Activities.

Current law requires apprentices to be paid the prevailing rate of per diem (prevailing) wages for work in the craft or trade in which they are registered.

AB 1926 now requires apprentices that have been requested by a contractor on a prevailing wage project to be compensated at the prevailing rate for the time spent on any required pre-employment activity, including travel time to and from the activity.

  1. Employers may not rely on Salary Alone to justify Pay Disparity Between Men and Women Doing the Same Work under Similar Conditions.

The Equal Pay Act prohibits an employer from paying a worker at lower wage rates than the rates paid to workers of the opposite sex for work performed under similar conditions and requiring equal skill and training. However, an employer may avoid liability as long as there is a bona fide factor other than sex to justify the pay disparity.

Beginning January 1, 2016, AB 1676 and SB 1063 specifies that an employee’s prior salary cannot, by itself, qualify as a bona fide factor to justify any pay disparities.

Please contact our office if you have concerns about how this change to the Equal Pay Act may impact your business practices.

  1. Overtime Rules for Domestic Employees Working as Personal Attendants have been made Permanent.

In 2013, AB 241 went into effect and required payment of overtime rates for domestic employees working as personal attendants. Overtime pay has been due to personal attendants who worked more than nine hours in a workday or more than 45 hours in a workweek. AB 241 included a “sunset” provision and was to be repealed on January 1, 2017.

In February 2016, SB 2015 made the overtime rights for domestic employees who are personal attendants permanent, eliminating the expiration date for AB 241.

If you employ domestic workers as personal attendants and have questions about overtime, please feel free to contact us.

  1. New Workplace Smoking Regulations Expand the Definition of Tobacco Products and Remove Most Exceptions to the General Prohibition of Smoking at a Place of Employment.

Prior law prohibited smoking tobacco products inside an enclosed space at a place of employment, except for certain work environments like hotel lobbies, bars and taverns, banquet rooms, warehouse facilities and employee breakrooms.

AB 7X-2 removes the exceptions to the general prohibition against workplace smoking and also expands the prohibition to include any owner-operated business in California. Further, SB 5X-2 changes the definition of “tobacco products” to include electronic devices, such as electronic cigarettes and vaporizers. In other words, all of those tobacco products are prohibited from all indoor workplaces for all owner-operated California businesses.

Employers should amend their handbook and/or smoking policies to comply with these laws. Please contact us for more information on modifying and updating your handbook.

Sincerely,

Karen J. Sloat, Esq. and Alex Reed, Law Clerk