The California Workplace in 2017

Each year brings challenges when you’re working with the ever-changing landscape of the California workplace. As expected, 2017 will be no different, with California cities not to be outdone: there is legislation for San Francisco, Los Angeles, and San Jose especially that will bring employment law and human resources practitioners to the drawing board. The main topics are familiar: ban-the-box restrictions, paid leave ordinances, and revisions to pay practice requirements.

Ban-the-Box Restrictions

California has a new limitation on requests and consideration of criminal history information. At its basis, the law disallows you from considering any information related to juvenile indiscretions. If you’re asking about criminal history, and are in a locality where you are permitted to do so, consider adding this to your questionnaire: “Do not disclose any information related to any arrest, detention, process, diversion, supervision, adjudication, or court disposition that occurred while the person was subject to the process and jurisdiction of juvenile court law.”

Los Angeles was active in 2016 and also passed its own expansive ban-the-box legislation. It has two primary components for your consideration: (a) ban-the-box limitations, and (b) the Fair Chance Process.

The limitation are straight-forward and not too different from what is in place elsewhere: do not ask about criminal history until a conditional job offer has been made. There are four exceptions: (1) when you are required by law to run a background check; (2) when the position involves the use or possession of a firearm; (3) when a person convicted of a crime is prohibited by law from the position; or (4) when the employer is prohibited by law from hiring an applicant who has been convicted.

The more expansive part of the L.A. legislation is the “Fair Chance Process.” It requires that, if planning to act on the basis of criminal history, an employer take the following steps in addition to what is already required under the Fair Credit Reporting Act:

  • Conduct a written assessment linking the conviction-related risks to the position. Explicitly consider Equal Employment Opportunity Commission guidance and any guidance issued by the Los Angeles Designated Administrative agency (presumably forthcoming).
  • Provide a copy of the assessment and any information (e.g. documentation) relied upon in authoring the assessment or coming to the conclusions contained therein, to the applicant.
  • Wait at least five (5) business days before taking any adverse action.
  • If the applicant provides any other information related to the criminal history item of concern, conduct a written reassessment explicitly discussing such additional information.

Only after following the “Fair Chance Process” is an employer permitted to take adverse action on the basis of information contained in a criminal background.

Paid Leave Ordinances

Santa Monica added a paid sick leave law, the provisions of which are a medley of what is present in other such ordinances. The accrual minimum is familiar (i.e. 1 hour per 30 hours worked). Employers are divided into two groups: those with 25 or fewer employees, and those with more than 25. For the first group, you may limit paid sick leave accrual to 40 hours per year, whereas the latter group may establish a cap at 72 hours during the same timeframe. Use cannot be capped, and up to the maximum amount may be carried over from year-to-year, without loss. Accrual can be limited or stopped until the employee falls below the limit of paid sick leave hours. This applies to everyone who works at least 2 hours in a “particular workweek” in Santa Monica, and all hotel workers, with exceptions for managerial, supervisory, or confidential employees.

Expecting parents in San Francisco will look forward to the new Paid Parental Leave Ordinance, which provides a “make-whole” supplement to parents who use paid family leave benefits for bonding with a new child. To take advantage of these benefits, the expecting parents must work for an employer with 50 or more employees (nation-wide), and must also perform eight (8) hours of work in any particular workweek in San Francisco, and perform at least 40% of their work in any particular workweek in San Francisco as well.

Also in San Francisco for 2017: the “front-loading,” “up-front,” or “lump-sum” accrual prohibition for paid sick leave has been limited. If you’re interested in allowing front-loading, as under the California model, speak to a qualified California law practitioner.

Pay and Pay Practices

California has a new state-wide minimum wage level: $10.50 (or $10.00 for small employers with 25 or fewer employees). But there are also 21 locales with their own minimum wage levels, ranging as high as $15.20 for large employers (56 or more employees) in Emeryville.  Along with the state-wide rise in minimum wage was an accompanying rise in the minimum salary threshold required for most minimum wage and overtime exemptions, to $43,680 per year. Last, note that these increases also accompanied step-wise increases in the credit an employer may take for meals and lodging.

Be especially mindful of meal and rest breaks. The California Supreme Court previously held that meal periods must be given “free of duties” to comply with California state law. See Brinker Restaurant Corp. v. Superior Court, 273 P.3d 513 (2012). This rationale was recently extended to rest periods by the California Supreme Court. See Augustus v. ABM Security Services, Inc., 2016 WL 7407 (Cal. S. Ct. 2016), wherein security guards who wore radios and pagers during their breaks were, in the estimation of California’s highest court, not sufficiently relieved of duties. In light of this decision, ensure that your supervisors and managers are aware that employees must receive duty-free breaks.

Another California decision elevated the degree of risk an employer assumes when failing to do so. In Lubin v. The Wackenhut Corp., 5 Cal. App. 5th 926 (2016), another group of security guards successfully asserted their right to file many types of meal and break period violations as class action lawsuits.

For a limited number of employers, there may be exceptions when some of your employees (a) perform duties that do not lend themselves to breaks and (b) signed an agreement explicitly allowing for on-duty breaks (but it appears clear that both factors must be satisfied). Such was the case in Driscoll v. Graniterock Co., 2016 WL 6994923 (Cal. Ct. App. 2016), where concrete mixer drivers signed on-duty break agreements and performed duties which required them to monitor and mix concrete at regular intervals throughout the workday.

Good news when showing the hours worked for your exempt employees, however. In a recent and controversial decision, Garnett v. ADT LLC, 139 F.Supp.3d 1121 (E.D. Cal. 2015), the United States District Court for the Eastern District of California held that the provision of the California Labor Code requiring paystub identification of actual hours worked must be strictly construed and thus, the hours worked requirement must also be met for many exempt employees, such as outside sales staff. The California legislature responded to this decision by making it clear that employees who are exempt from minimum wage and overtime do not need to have their “actual hours worked” reflected on wage statements.

Equally important with respect to pay are amendments to the Fair Pay Act (via the Equal Wage Act of 2016) which add “race” and “ethnicity” alongside “gender” with respect to the “equal pay for substantially similar work” requirements. California employers may still inquire into and consider salary history when determining compensation, albeit they may not rely solely on salary history to justify current levels. This nuanced law may nevertheless carry liabilities for the unwary via disparate impact claims, e.g. anti-discrimination claims that allege that an employer, regardless of intent, engaged in unlawful discrimination by implementing a policy or practice that in fact discriminates based on protected classes, here gender, race, and national origin. The best practice for determining whether such a bias, albeit unintentional, exists, is to have a qualified practitioner perform a disparate impact analysis. In addition, review your hiring and salary negotiation practices.

Opportunity to Work in San Jose

If you conduct business in San Jose, you may have heard of Measure E, or the “Opportunity to Work” law. Effective March 8, 2017, it applies to employers who have 36 or more employees, situated anywhere. It addresses the question every employer ultimately faces in deciding whether to give new work hours to existing employees or to bring in new or temporary employees. The measure effectively makes the decision for employers: you must offer these newly available hours to existing or current employees, rather than hiring new or temporary workers. It provides for exceptions. First, the additional hours need not be offered to anyone for whom they would create a premium rate (such as overtime) payment obligation. Second, the measure’s benefits can be waived by a collective bargaining agreement. And last, the hours do not have to be offered to anyone who does not possess the qualifications, skillset, or experience to perform the work. As usual, notices and posters will be required. Take note: if any employee complains about a violation of Measure E, and is subjected to adverse action within 90 days, that adversely acted upon employee will operate under a presumption that retaliation has occurred.

Other Workplace Items, Briefly

Immigration: Ensure that you are strictly following the terms of the I-9 immigration document, including sticking to the list documents. Requesting or considering additional documentation not listed or required by the I-9 is now unlawful and may carry a penalty of up to $10,000.

Smoking: Use of e-cigarettes, vaporizers, and similar devices is now included in the smoking ban along with cigarettes. Ensure that you update your non-smoking policies accordingly.

Driving while Phoning: The traffic code generally has created a penalty for operation of cellular and smartphones while operating a motor vehicle. Hands-free operation is allowed, however, and there is a limited exception for the use of hands when activating the hands-free option while driving. If you employ anyone in a driving capacity, you will wish to update your policies with respect to cell- and smartphone use.

Employment Agreements: You may continue using “choice of law” and “choice of venue (or forum)” provisions in your employment agreements, but it is unlikely that you will be able to enforce them to your benefit. In California, such provisions are now voidable by the employee (but not by the employer) for employment situations and claims arising out of California. Thus, if you have California-based employees but seek to enforce their employment agreements under the laws of the state of, say, Florida, it is unlikely that this practice will be allowed to continue unless the employee also desires to litigate in Florida.

Handbooks: Though required for 2016, be sure that your equal employment opportunity policies reflect required changes, including to listings of protected classes, sexual harassment complaint procedures, abusive language, and more.

Bathrooms: Starting March 1, 2017, ensure that your “single-user bathrooms” are designated as “All Gender Access” bathrooms.

Sexual Assault and Domestic Violence Protections: The Labor Commissioner will require you to issue notices to your employees regarding these protections. A form should be available near mid-year, on or around July 1, 2017.

Amendment 64, Adult Use of Marijuana: Employers may continue to prohibit and test for marijuana use along with the previously existing restrictions on substance abuse testing.

Property Service (i.e. Facilities and Janitorial Staff): For three (3) years, keep records pertaining to name and address, age (if under 18), wages and pay, daily hours worked (including start and end times), and records pertaining to terms and conditions of employment. In essence, keep identifying information, wage documentation, time records, and all records with respect to pay practices and other policies then-existing (e.g. a then-current employee handbook).

Things for Which to Watch

As the new legislation explained above is implemented, local enforcement agencies and California courts will undoubtedly weigh in on the grey areas. For instance, how is “equitable and non-discriminatory” distribution of work hours effected in under San Jose’s “Opportunity to Work” law? And what will be the requirements for a complaint “written assessment” as required by Los Angeles’ Ban-the-Box legislation?

In addition, the impact of federal decision-making may bring employers back to their pay practices. For instance, if the Department of Labor’s now-stalled overtime rule were to be implemented, employers will be required to abide by a federal minimum salary level for exemptions (i.e. $47,476/year) that is higher than the new California level ($43,680/year). Developments with respect to the pending appeal to the injunction that placed this rule in abeyance will need to be followed closely by employers who employ exempt workers falling between the California and proposed federal levels.

On the horizon for 2018 are changes for home-care workers (requiring paid sick leave), heat injury and illness prevention regulations (due to Cal-OSHA in 2018), and the possible implementation of the California Secure Choice Retirement Savings program (at earliest, in 2018).

For now, assess your regional requirements and determine whether changes are feasible on the local level or require broader introspection into national or California-wide policies.