2015 Labor & Employment Law Update for California Employers

The California Legislature enacted a number of new bills that become effective in 2015. Among the most significant are the following:

AB 1522: Mandated Paid Sick Leave For California Employees

AB 1522, the "Healthy Workplaces, Healthy Families Act of 2014," requires California employers to provide paid sick leave benefits to their employees, including all full-time, part-time, temporary, migrant and seasonal employees. Employers must provide paid sick leave to these employees if they work 30 or more days within a year from the commencement of employment. Under the new law, employees are entitled to accrue paid sick days at a rate of no less than one hour for every 30 hours worked. Employers may limit the employee's annual use of paid sick leave benefits to 24 hours or 3 days per year, and cap the accrual of paid sick leave to 48 hours or 6 days per year.

The rate of pay for paid sick leave is the employee's regular hourly wage (which includes commission or piece rate pay), and employers must pay sick leave to employees no later than the payday for the next payroll period after the sick leave was taken. Employers are also required to provide written notice on the designated pay dates that sets forth the amount of paid sick leave benefits available to the employee. This notice may be given to the employee on either the itemized wage statement or a separate written document.

Unlike many other California laws, AB 1522 does not exclude small employers with a limited number of employees. Employers are defined expansively to include "any person employing another." The law also contains various exclusions, and has specific provisions that apply where an employer already provides paid time off. Although the new law applies to employees who, on or after July 1, 2015, work for more than 30 days a year, employers in California should immediately begin carefully reviewing any sick leave or paid time off policies, as well as payroll and wage statement practices regarding such time off. The law also requires changes to the employer's new-hire employee notice, a different workplace poster, and recordkeeping obligations.

AB 2288: The Child Labor Protection Act Provides Additional Damages for Victims

Enforcement of child labor laws has always been a priority for federal and state agencies. The Child Labor Protection Act of 2014 ("CLPA"), which becomes effective on January 1, 2015, broadens the potential penalties against violators of these laws. The CLPA authorizes treble damages to an individual who was "discharged, threatened with discharge, demoted, suspended, retaliated against, subjected to an adverse action, or in any other manner discriminated against in the terms or conditions of his or her employment" because the individual filed a claim or civil action alleging a violation of employment laws that arose while the individual was a minor. Treble damages are available whether a claim or civil action was filed before or after the individual reached the age of 18. Under the CLPA, the statute of limitations is tolled until the individual allegedly aggrieved by an unlawful employment practice reaches the age of 18. As child labor law rules vary upon the particular age of the minor and the particular job involved, employers should always double-check the applicable restrictions when hiring any individual younger than 18 years of age.

AB 1443: Volunteers and Interns Receive "Employee" Anti-Discrimination Protections

AB 1443 amends the California Fair Employment and Housing Act ("FEHA") and extends its prohibitions against discrimination and harassment to volunteers and unpaid interns. Previously, these prohibitions (e.g., on account of race, religious creed, national origin, disability, sex, sexual orientation -- and many others) expressly applied to "apprentice programs" and "training programs" that specifically "led to employment," but they did not apply expressly to unpaid intern or volunteer programs that were not designed to lead to actual employment. In addition, the FEHA now prohibits discrimination and harassment not just in the "selection" or "termination" of apprentices, unpaid interns and volunteers, but also discrimination and harassment in the "training" or "other terms or treatment" of such persons. As a result, virtually any discriminatory act is prohibited throughout the duration of the unpaid intern or volunteer's involvement with an employer. The proponents of AB 1443 expressed a concern that the economic recession has resulted in many individuals having to rely on unpaid positions and internships in an effort to enhance their employability. The new law extends basic workplace protections to those who do so in order to gain work experience. Similar legislation exists in other states, including Oregon.

AB 1897: More Costly For Employers To Use Independent Contractors At Their Workplaces

Normally, when it comes to paying wages and obtaining workers' compensation insurance, an employer is only responsible for its own employees. AB 1897, however, changes this normal rule and creates additional responsibility for California employers. Under AB 1897, when a California employer uses an independent contractor at the employer's jobsite to perform any part of the employer's "usual course of business," and the independent contractor has a total crew of six or more non-exempt workers at the jobsite, the employer will also be jointly responsible for the "wages" of the independent contractor's workers and for their workers' compensation insurance. This additional employer responsibility appears in Section 2810.3 of the California Labor Code, and is effective January 1, 2015.

Because AB 1897 creates a major shift in responsibility for wages and workers' compensation insurance, employers who utilize independent contractors at their worksites need to pay careful attention to its requirements. AB 1897 is only triggered when the employer "obtains or is provided workers to perform labor within its usual course of business from a labor contractor." An employer's "usual course of business" means its "regular and customary work" which is "performed within or upon" its premises or worksites. Accordingly, AB 1897 does not apply, for example, to an employer who manufactures clothing and who engages an independent contractor to wash the windows of the employer's facility once a month. Because window washing is not part of the regular and customary work of the clothing manufacturer, AB 1897 is inapplicable. AB 1897 also does not apply to certain employers, including small employers whose combined workforce has 25 or fewer workers (when counting both its own employees, and the workers of the labor contractor it utilizes). An employer that is planning on using an independent contractor to perform any part of the regular and customary work of the employer's business on or after January 1, 2015, should plan accordingly.

AB 2053: Employers Must Provide Supervisorial Training on "Abusive Conduct"

Effective January 1, 2015, employers that are already required to provide sexual harassment training to supervisors must additionally provide training on "abusive conduct." Since 2006, employers with 50 or more employees have been required to provide at least two hours of sexual harassment prevention training to all supervisors. The training must be provided within six months of the time the employee becomes a supervisor, and every two years thereafter. AB 2053 now imposes the additional requirement on these employers to "include prevention of abusive conduct as a component" of the required sexual harassment training.

Under the new law, "abusive conduct" is defined as conduct that a "reasonable person would find hostile, offensive, and unrelated to an employer's legitimate business interests." While "[a]busive conduct may include repeated infliction of verbal abuse, such as the use of derogatory remarks, insults, and epithets, verbal or physical conduct that a reasonable person would find threatening, intimidating, or humiliating, or the gratuitous sabotage or undermining of a person's work performance," the law provides that "[a] single act shall not constitute abusive conduct, unless especially severe and egregious."

AB 2053 does not detail what is to be included in the training component on "prevention of abusive conduct." Nor does it quantify how much of the two-hour training should be dedicated to the "prevention of abusive conduct." Employers should consult with their "approved trainers" to incorporate this material into their sexual harassment training programs. Under the law, approved trainers include attorneys who have been in practice for at least two years and have practiced employment law, certain human resource professionals, and certain professors and instructors.

If an employer violates the new training requirements, it may be subject to a court order or an order from the California Department of Fair Employment and Housing requiring compliance. Employers can also expect compliance, or the alleged lack of compliance, to come up in various types of employment litigation.

AB 2617: No Mandatory Arbitration of Hate Crimes

Under AB 2617, a company may not require that, as a condition of providing goods and services, any person and/or business sign a mandatory arbitration agreement that waives its right to sue under the Ralph Civil Rights Act or the Tom Bane Civil Rights Act. The Ralph Civil Rights Act prohibits violence or threats of violence based on an individual's race, color, religion, ancestry, age, disability, sex, sexual orientation, political affiliation, or position in a labor dispute (California Civil Code section 51.7). The Tom Bane Civil Rights Act forbids anyone from "interfering by force or by threat of violence" with another's federal or state constitutional or statutory rights. (California Civil Code section 52.1.) AB 2617 amends the California Civil Code, but it does not override the enforceability of employment arbitration agreements under the Federal Arbitration Act. Nevertheless, employers should monitor judicial developments as this new law is implemented.

AB 1723: Citations for Minimum Wage Violations May Include Waiting Time Penalties

Under existing law, the California Labor Code provides three avenues to address minimum wage disputes (administrative wage claims before the Labor Commissioner under Labor Code section 98, civil actions in court under Labor Code section 1194, and Labor Commissioner citations under Labor Code section 1197.1). Effective January 1, 2015, AB 1723 will expand the Labor Commissioner's authority with respect to citations. Pursuant to Labor Code section 1197.1, the Labor Commissioner can, after an investigation, issue a citation to the person who has paid the employee (or caused the employee to be paid) less than the state minimum wage. Prior to AB 1723, the Labor Commissioner was authorized to enforce the citation and recover civil penalties ($100 for initial violation/$250 for subsequent violations), restitution of wages, and liquidated damages. In addition to those penalties, AB 1723 now authorizes the Labor Commissioner to assess waiting time penalties pursuant to Labor Code section 203 in connection with the citation. (Section 203 provides a waiting time penalty for an employer's willful failure to timely pay any wages of an employee who is discharged or who quits, by continuing the employee's wages for up to 30 days.) The person cited has the right to a hearing by timely contesting the citation, proposed assessments, and/or penalties.

AB 2751: Retaliation Victims Entitled to Civil Penalty

Current law prohibits an employer from discharging or retaliating against an employee who has filed a claim with the California Division of Labor Standards Enforcement ("DLSE"). This includes a possible civil penalty of up to $10,000 for each violation, but the Labor Code does not specify where the funds go. AB 2751 amends Labor Code section 98.6(b)(3) to clarify that the civil penalty is to be paid to the employee who was the victim of retaliation.

AB 2751 also modifies Labor Code section 1024.6 to prohibit employers from taking adverse action against an employee for updating personal information "based on a lawful change of name, social security number, or federal employment authorization document."

Finally, AB 2751 broadens the definition of an unfair immigration-related practice under Labor Code section 1019 to include "threatening to file or the filing of a false police report, or a false report or complaint with any state or federal agency." The bill further modifies Section 1019 by authorizing victims of unfair immigration-related practices to bring civil actions for damages, penalties, or equitable relief.

Employers Should Monitor Local Minimum Wage Ordinances

The current federal and state minimum wage rates are $7.25 and $9.00 per hour, respectively, with California's set to increase to $10.00 per hour in another year, on January 1, 2016. Importantly, however, employers need to monitor local minimum wage ordinances, as there is increasing activity in this area.

For example, San Francisco voters approved yet another minimum wage increase. Currently, its minimum wage is the highest in the state at $10.74 per hour and will increase to $11.05 on January 1, 2015. Under the new law ("Proposition J"), the minimum wage will increase to $12.25 per hour in May of 2015, and then will increase every July thereafter, until it reaches $15.00 per hour in July of 2018.

Oakland voters also approved a ballot measure ("Measure FF") designed to match San Francisco's current wage ordinance. That is, starting in March of 2015, employers in Oakland will be required to provide paid sick leave of 5 or 9 days, depending on the size of the business, and will be subject to a minimum wage of $12.25 per hour. The rate will be adjusted every year thereafter for increases in the cost of living.

Berkeley implemented a recent minimum wage ordinance that bypassed the November elections. In Berkeley, the minimum wage is currently set at $10.00 per hour and will increase to $11.00 per hour in 2015 and to $12.53 per hour in 2016.