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October 15, 2015

California Legislative Season Closes with a Flurry of Vetoes and New Employment Laws For 2016

he 2015 California legislative session closed October 11, 2015, with Governor Jerry Brown waiting until the last two days of the session to sign or veto several bills affecting employers. Among the more significant measures Governor Brown signed into law are bills intending to close the gender wage gap; expanding the powers of the Labor Commissioner to prosecute wage and hour violations and collect upon judgments; expanding anti-discrimination laws; amending California’s Private Attorneys General Act; and imposing new obligations with respect to employees paid on a piece-rate basis.

Below is a summary of the employment-related bills that were signed into law by Governor Brown. Unless otherwise noted, changes to the law are effective January 1, 2016.

AB 219 (Public Works: Concrete Delivery):
This bill expands the definition of "public works" to include the hauling and delivery of ready-mixed concrete to carry out a public works contract. This bill requires the applicable prevailing wage rate to be the rate for the geographic area in which the concrete factory or batching plant is located, and requires the entity hauling or delivering ready-mixed concrete to provide employee payroll and time records to the party that engaged that entity.

Employer Action: Employers must compensate employees who haul and deliver ready-mixed concrete to carry out a public works contract at the applicable prevailing wage rate, and must provide employee payroll and time records to the party which engaged the employer.

AB 359 and AB 897 (Grocery Workers):
AB 359 requires a successor grocery employer, upon a change in control of a grocery establishment, to hire from a list of specified eligible grocery workers and retain eligible workers for a 90-day period. This bill prohibits a successor grocery employer from discharging those workers without cause during the 90-day period, and, upon close of that 90-day period, requires the successor grocery employer to consider offering continued employment to those workers. AB 897 provides that the definition of "grocery establishment" does not include a retail store that has ceased operations for 6 months or more.

Employer Action: Employers in the grocery industry should be aware of the protections afforded employees in connection with the change in control of a grocery establishment, and should ensure personnel decisions relating to worker retention comply with these bills.

AB 621 (Drayage Truck Operators: Motor Carrier Employer Amnesty Program):
This bill establishes the "Motor Carrier Employer Amnesty Program," pursuant to which a motor carrier performing drayage services may be relieved of liability for statutory or civil penalties associated with misclassification of commercial drivers as independent contractors if: (1) the motor carrier enters into a settlement agreement with the Labor Commissioner with the cooperation and consent of the Employment Development Department; (2) the motor carrier agrees to convert all of its commercial drivers to employees; (3) the motor carrier agrees to pay the misclassified drivers all wages, benefits, and taxes owed; (4) the motor carrier agrees to pay the costs the Labor Commissioner and the EDD incur reviewing, approving, and monitoring compliance with the settlement agreement; and (5) the motor carrier fulfills additional obligations.

Employer Action: Motor carriers performing drayage services should assess the benefits and drawbacks of participating in the Motor Carrier Employer Amnesty Program. Although the Program’s cost of compliance may be significant, the penalties for worker misclassification are also significant. An employer availing itself of the Program could avoid assessment of substantial monetary penalties for each misclassified worker.

AB 622 (E-Verify System: Unlawful Business Practices):
This bill adds a provision to the Labor Code prohibiting an employer from using the E-Verify system at a time or in a manner not required by federal law, or not authorized by a federal agency memorandum of understanding, in order to check the employment authorization status of an existing employee or an applicant who has not received an offer of employment.

Employer Action: The actions now prohibited under California law already violate federal law and the memorandum of understanding employers agree to when enrolling in E-Verify. The California Legislature must have perceived a lack of enforcement as it saw fit to make such actions violations of State law. Employers who use E-Verify can expect scrutiny of their use of E-Verify as a result.

AB 970 (Labor Commissioner: Enforcement of Employee Claims):
This bill authorizes the Labor Commissioner to issue citations for violations of local laws regarding overtime hours or minimum wage provisions; and authorizes the Labor Commissioner to issue citations for an employer’s failure to reimburse an employee for expenses incurred in connection with the discharge of the employee’s duties.

Employer Action: With California municipalities increasingly implementing ordinances raising the minimum wage, employers can expect the Labor Commissioner to pay special attention to such laws in enforcement actions. Employers will want to stay apprised of new laws in each locality in which they operate.

AB 987 (Discrimination: Requests for Accommodation):
This bill prohibits an employer from retaliating or discriminating against a person for requesting accommodation of a disability or religious belief, regardless of whether the accommodation request was granted.

Employer Action: Employers should consider modifying their anti-discrimination policies to encompass employees who request an accommodation of a disability or religious belief. Employers should also be aware of the potential for discrimination claims predicated upon requests for such accommodations.

AB 1506 (Private Attorneys General Act):
This bill extends employers a right to cure certain itemized wage statement violations claimed pursuant to the Private Attorneys General Act ("PAGA"). With respect to certain provisions of the Labor Code, PAGA provides that before a civil suit may be commenced by an aggrieved employee, the employer may cure the alleged violation within 33 calendar days of notice. PAGA has not, until now, included violations of Labor Code Section 226(a) within those provisions for which an employer is provided the right to cure. AB 1506, however, extends the employer’s right to cure with respect to wage statement violations for the inclusive dates of the period for which the employee is paid and the name and address of the legal entity that is the employer. (Labor Code Section 226(a), paragraphs (6) and (8).) A violation of paragraph (6) or (8) of Labor Code Section 226(a) will be considered cured upon a showing that the employer has provided a fully compliant, itemized wage statement to each aggrieved employee for each pay period for the three-year period prior to the date of the written notice of violation. Because this bill was enacted as an urgency measure, it became effective upon enactment (October 2, 2015).

Employer Action: Employers served with a PAGA notice should assess whether the claims asserted are based on wage statement violations involving the inclusive dates of employment and the name/address of the employer. If so, employers may be able to reduce their exposure on a PAGA lawsuit, or altogether prevent such a suit from going forward, by taking steps to promptly cure the violations. For more information concerning AB 1506, please see our Alert: Governor Brown Signs Urgency Legislation Amending PAGA to Permit Employers to Cure Certain Alleged Wage Statement Violations.

AB 1509 (Discrimination: Family Member Status):
This bill prohibits an employer from discriminating against an employee who is a family member of a person who engaged in, or was perceived to engage in, any proceeding under or relating to his or her rights that are under the jurisdiction of the Labor Commissioner.

Employer Action: Family members often serve as referral sources for plaintiffs’ lawyers and Labor Commissioner claims. Employers must not use the fact that an employee’s family member pursued his or her rights in a Labor Commissioner proceeding to discriminate against the employee.

AB 1513 (Piece-Rate Compensation):
This bill requires employees to be compensated for rest and recovery periods and other nonproductive time at or above specified minimum hourly rates, separately from any piece-rate compensation. This bill defines "other nonproductive time" to mean time under the employer’s control, exclusive of rest and recovery periods, that is not directly related to the activity being compensated on a piece-rate basis. This bill requires wage statements provided to employees compensated on a piece-rate basis to also separately state: (1) the total hours of compensable rest and recovery periods, (2) the rate of compensation for rest and recovery periods, (3) the gross wages paid for rest and recovery periods during the pay period, (4) the total hours of other nonproductive time, (5) the rate of compensation for nonproductive time, (6) and the gross wages paid for all nonproductive time during the pay period.

Employer Action: This bill codifies recent Court of Appeal decisions holding that employees paid on a piece-rate basis must be compensated separately for rest periods and nonproductive time, and imposes new wage statement obligations upon employers who compensate their employees on a piece-rate basis. Employers should take prompt action to ensure their wage payment practices are in compliance and to add the requisite new information to employee wage statements. For more information concerning AB 1513, please see our Alert: California’s Piece-Rate System Gets an Overhaul: Governor Brown Signs Legislation Establishing New Requirements for Paying Workers on a Piece-Rate Basis.

SB 327 (Wage Order: Meal Periods):
This bill amends the Labor Code to provide that the health care employee meal period waiver provisions in Section 11(D) of Industrial Welfare Commission Wage Orders 4 and 5 were valid and enforceable on and after October 1, 2000, and continue to be valid and enforceable. This bill – enacted in response to the recent Court of Appeal decision in Gerard v. Orange Coast Memorial Medical Center – is declarative of, and clarifies, existing law.

Employer Action: Health care employees covered by Industrial Welfare Commission Wage Orders 4 and 5 may again waive their right to a second meal period when their shifts exceed 12 hours. Employers in the health care industry who are currently defending against litigation based on alleged unlawful employee waivers of second meal periods may have a renewed defense to such claims.

SB 358 (Gender Wage Differential):
Existing law generally prohibits an employer from paying an employee at wage rates less than the rates paid to employees of the opposite sex within the same establishment for equal work. This bill expands what constitutes an unlawful wage payment practice by eliminating the prohibition that wage differentials among employees of the opposite sex be within the same "establishment." This bill amends existing law to place the burden on the employer to demonstrate that wage differentials are based on a seniority system, a merit system, a system that measures earnings by quantity or quality of production, or a bona fide factor other than sex (such as education, training or experience).

Employer Action: Employers should audit their pay practices to determine whether a pay differential exists. Although pay disparities are allowed under the new law if they are based on certain factors that are unrelated to gender, such as education, training, or experience, employers must be prepared to affirmatively demonstrate that these factors account for the entire pay differential, if such a pay differential exists. In an effort to meet this burden, employers should carefully document all decisions related to pay, performance and promotion, and provide timely and effective performance evaluations.

SB 579 (Expansion of Family School Partnership Act and Kin Care Law):
This bill expands on the currently authorized reasons for which an employee can take job-protected time off from work to: (1) find, enroll, or re-enroll his or her child in a school or with a licensed child care provider; and (2) to address a child care provider or school emergency. This bill revises various provisions of the "kin care" law to make those provisions consistent with the Healthy Workplaces, Healthy Families Act of 2014 with respect to the definition of "family member."

Employer Action: Employers should update their leave policies to ensure they are consistent with the protections provided by this bill, and should provide leave consistent with the expanded reasons for which leave is authorized.

SB 588 (Labor Commissioner: Enforcement of Judgments):
This bill enacts special provisions for the enforcement of judgments against an employer arising from the nonpayment of wages. This bill authorizes the Labor Commissioner to use any of the existing remedies available to a judgment creditor and to act as a levying officer when enforcing a judgment pursuant to a writ of execution.

Employer Action: Employers should be aware of the Labor Commissioner’s expanded authority to utilize previously unavailable collection remedies and its expanded power to enforce judgments.

Governor Brown vetoed several bills that would have had substantial impact on employers, including:

AB 465 (Restrictions on Arbitration Agreements):
This bill would have prohibited arbitration agreements as a condition of employment.

AB 676 (Discrimination Against Unemployed Applicants):
This bill would have prohibited an employer from publishing an advertisement or announcement for a job stating that an unemployed person is not eligible for the job, and would have prohibited an employer from asking an applicant to disclose the applicant’s employment status until the employer had determined that the applicant met the minimum employment qualifications for the position.

AB-1017 (Salary History Information):
This bill would have prohibited an employer from seeking salary history information about an applicant for employment.

AB 1354 (Equal Pay: State Contracting):
This bill would have required an employer with 100 or more employees in-State, and a contract of 30 days or more, to submit a nondiscrimination program to the Department of Fair Employment and Housing prior to becoming a contractor with the State.

SB 406 (Expansion of California Family Rights Act):
This bill would have expanded the definition of "child" and would have expanded use of CFRA to care for grandparents, grandchildren, siblings, and parents-in-law.

AALRR will discuss these bills and their impact on employers in more detail in the December breakfast briefings. In the meantime, if you have any questions regarding the application of any of the bills, please contact one of the authors or other AALRR labor and employment attorneys.

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