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Labor & Employment Legal Alert
January 22, 2016              

New California Employment Laws of Particular Interest to the Hospitality Industry

SB 588: Expanded Individual Liability For Owner, Director, Officer or Managing Agent

Senate Bill No. 588, the "California Fair Day's Pay Act," amends or adds 13 statutory sections to California's Labor Code or Code of Civil Procedure. The Legislature's stated purpose for amending or adding those various statutory provisions is to address the "wage theft" issue. Thus, Senate Bill No. 588, effective January 1, 2016, now gives the Labor Commissioner additional rights and remedies typically available to judgment creditors (such as property liens and bank levies) to enforce awards issued by the Labor Commissioner against employers.

More importantly, Senate Bill No. 588 creates additional potential liabilities to successor employers and to any person acting on behalf of an employer. First, any employer which is similar in operation and ownership to a prior employer which has been deemed liable for wage and hour violations may be held liable for those violations of the prior employer. Second, under Senate Bill No. 588, current or former employees now may seek to impose liability for wage and hour violations of an employer on any person acting on behalf of "the employer." This means that an owner, director, officer or managing agent could be personally liable for their employer's failure to comply with any of the numerous requirements set forth in California's Labor Code or Industrial Welfare Commission Wage Orders.

Senate Bill No. 588 is further reason to make sure that businesses are fully compliant with all wage and hour obligations (such as minimum wage, overtime, meal period and rest break, business reimbursement, etc.) under California law.

AB 1506: Employers Given Time to Fix Wage Errors

Assembly Bill No. 1506, signed as an urgency law earlier this year, immediately amended the California Private Attorneys General Act of 2004 ("PAGA") to allow employers to cure certain technical violations of the wage statement requirements of California Labor Code Section 226. 

The new law specifically addresses only the wage statement requirements of listing the inclusive dates of the pay period and the name and address of the legal entity that is the employer. Upon receiving written notice from an aggrieved employee alleging that a wage statement did not comply with these specific requirements, an employer now has the ability to cure the alleged defects within a 33-day period. If the employer does so, no civil PAGA action can commence. The Legislature intended this new law to avoid frivolous litigation over technical violations, and the curing provisions can be a major tool for employers to avoid civil litigation over such technical defects of a wage statement.

If an employer receives a notice from the Labor Commissioner or from an aggrieved employee of such violations, it should contact employment counsel immediately to determine strategically: (1) whether to cure an alleged defect; (2) if so, how to cure the defect (consistent with the requirements for curing under PAGA); and (3) how to take into account other considerations (such as protecting employee privacy and confidential information).

AB 304: California Clarifies Its Sick Leave Law

While employers throughout the state have struggled with the new requirements set out by the Paid Sick Leave Law that took effect July 1, 2015, new amendments to the law attempt to provide some clarification. 

On July 13, 2015, Governor Brown signed into law AB 304, which clarifies the permissible accrual methods an employer may use in calculating sick leave pay. The new amendments were effective immediately. Read more about the noteworthy changes

Given the recent changes and this emerging area of law, employers should review their sick leave policies for compliance with this new law if they have not done so already.

AB 987: Retaliation for Requesting Reasonable Accommodation Prohibited

California has amended its Fair Employment and Housing Act ("FEHA") to prohibit retaliation against an employee for requesting accommodation of his or her disability or religious beliefs. Assembly Bill 987 overturns Rope v. Auto-Chlor System, 220 Cal.App.4th 635 (2013), in which a California appellate court ruled that requests for accommodation, without more, did not constitute a protected activity under FEHA. The amendment, effective January 1, 2016, allows employees to claim retaliation because they requested an accommodation of their disability or religious reliefs, regardless of whether the accommodation request was actually granted. Accordingly, employers assessing risks relating to potential adverse employment actions should continue to be mindful regarding circumstances in which an employee has requested accommodation of disability or religious beliefs (even if the request was denied). 

SB 358: California Fair Pay Act

Effective January 1, 2016, the new "California Fair Pay Act" will provide California employees with greater protection against gender wage inequality. Under existing law (Section 1197.5 of the Labor Code), California's "Equal Pay" Act generally prohibits employers from paying any employee at wage rates less than the rates paid to employees of the opposite sex in the same establishment for equal work on jobs the performance of which requires equal skill, effort and responsibility.

The new "Fair Pay" Act changes the comparative analysis from "equal work" to "substantially similar work" and eliminates the "same establishment" requirement. Substantially similar work is viewed as a composite of skill, effort and responsibility when performed under similar working conditions.

The Fair Pay Act requires that an employer affirmatively demonstrate that wage differentials are based on lawful, nondiscriminatory factors such as: (i) a seniority system; (ii) a merit system; (iii) a system that measures earnings by quantity or quality of production; or (iv) a bona fide factor other than sex. The new law also includes an anti-retaliation provision which prohibits employers from taking adverse action against any employee who invokes or assists in the enforcement of the Fair Pay Act.

In light of these revised statutory requirements, prudent employers will review their existing compensation systems, as well as job descriptions, to assess the potential for any gender wage inequality claims. Human resources and organizational development personnel should also take steps to train and educate managers and supervisors on compensation policies and structures.

AB 1513: Piece Rate Compensation

Assembly Bill No. 1513, effective January 1, 2016, introduces certain requirements regarding piece-rate compensation and repeals obsolete provisions requiring certain workers' compensation studies. Specifically, this new law adds Labor Code Section 226.2, which states that employees shall be compensated for rest and recovery periods as well as "other nonproductive time" separate from any piece-rate compensation. Section 226.2 also requires that, in addition to the wage statement requirements of Labor Code Section 226, employers must provide employees compensated on a piece-rate basis with itemized statements separately stating:

  • the total hours and rate of compensation for compensable rest and recovery periods;
  • the gross wages paid for those rest and recovery periods during the pay period; 
  • the total hours and rate of compensation for other non-productive time; and
  • the gross wages paid for that non-productive time during the pay period. 

Section 226.2 defines "other non-productive time" as time under the employer's control, aside from rest and recovery periods, that is not directly related to the activity compensated on a piece-rate basis. 

Section 226.2 also requires employers to compensate employees for rest and recovery periods at a rate no less than the greater of: (i) the average hourly rate determined by dividing the total compensation for the workweek, exclusive of compensation for rest and recovery periods and any premium compensation for overtime, by the total hours worked during the workweek, exclusive of rest and recovery periods; or (ii) the applicable minimum wage. Other non-productive time shall be compensated at a rate at least equal to the applicable minimum wage. 

Section 226.2 provides an employer with an affirmative defense to any claim based solely on an employer's failure to compensate the employee for rest and recovery periods and other non-productive time for periods up through December 31, 2015. To take advantage of this affirmative defense, there are various statutory requirements that need to be met no later than December 15, 2016.  

Grady Patrick J Patrick J. Grady
Labor & Employment
Orange County
(949) 851-5431
(949) 553-8354 (fax)
Email Patrick


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