2016 Employment Law Update – Top Ten Changes

Sat, 01/09/16

Happy New Year!  Now that we are back from the holidays, it’s time to dust off the employee handbook, review our policies and procedures, and make sure they are compliant with the new employment laws taking effect in 2016.  This year, we have a combination of new laws, and existing laws that have been updated with additional protections.   

1.  Fair Pay Act:  Labor Code 1197.5 was amended to expand the protections for gender wage equality.  The revisions are in four main areas: 1) the terms “equal work” for “equal skill, effort and responsibility” were amended to “substantially similar work, when viewed as a composite of skill, effort and responsibility”;  2) the requirement that the pay difference be “within the same establishment” was eliminated, so employers with multiple locations have to maintain gender wage equality across locations; 3) if there is a wage differential, employers have the affirmative burden to demonstrate that the differential is not unlawful, but is instead based entirely and reasonably on one or more of the acceptable listed factors, which include seniority, merit systems, or other bona fide factors coupled with a showing of “business necessity,” as defined by the statute; and 4) employers cannot prohibit employees from asking about, discussing or disclosing their wages.  This new law also increases the record-keeping requirements for wage-related information from two years to three years. 

I encourage employers  to review their payroll, assess which jobs involve substantially similar work even if they have different titles, and analyze if men and women are being paid the same.  This includes employees in different locations.  One example cited is that a hotel maid can now compare her salary to that of the janitor who cleans the hotel’s business offices.  

2.  Piece Rate Work:  New Labor Code 226.2 applies to any employers who pay employees on a “piece rate” basis.  This affects manufacturing facilities, repair facilities, spas, and most agricultural employers.   Traditionally, when employers pay on a piece rate basis, any down time during the day (for example tailgate talks, rest periods, heat illness recovery periods, time spent waiting for the next job, etc.) has just been rolled into the piece rate without any separate compensation.  A number of recent court rulings held that this  “non-productive time” had to be compensated separately from the piece rate, and that rest periods have to be paid separately, at the average hourly rate, so that employees are not discouraged from taking rest breaks.  Over the past two years, these holdings spawned a great deal of class action and PAGA claims.  Since an employee can go back four years in filing a wage and hour claim, the potential exposure is enormous, especially because employees can also recover statutory penalties and attorneys’ fees.  

The Legislature enacted Labor Code 226.2 to clarify the law and to provide employers with a “safe harbor” for righting any historical errors.  The new statute does two things.  First, it provides that a piece rate employee must be paid for rest and recovery periods taken in a workweek at an hourly rate that is the higher of minimum wage or the average hourly rate, and that other non-productive time must be paid at no less than minimum wage.   

Second, it provides an employer with an affirmative defense against past wage claims dating back to July 1, 2012, so long as the employer either a) determines and pays the actual sums due, with 10% interest; or b) pays each employee an amount equal to 4% of the employee’s gross earning in pay periods in which any piece work was performed, less amounts already paid for nonproductive time, but in no event less than 3%; and notifies the DIR by 7/1/16 that it is electing to use one of these safe harbors.  

If your company has paid employees on a piece rate basis at any time from 2012 to present, it is important to take advantage of this “safe harbor.”  Organizations like the UFW are already posting notices to advise agricultural workers of their rights under this new law, and any employer who has not notified DIR that it has elected the safe harbor will likely become a target. 

3.  New Sick Leave Entitlement:  Hopefully all of you adopted a new sick leave policy as of July 1, 2015.  While the kinks in this new law are still being ironed out, it is clear that every California employer must provide every employee who works 30 or more days in a calendar year, including temporary, part-time and seasonal employees, with paid sick leave.  Employers can choose to front load three days every year, or allow employees to accrue at least one hour of sick time for every 30 hours worked.  Employees must be allowed to begin using the accrued sick leave on the 90th day of their employment, which is consistent with most introductory periods.  Employers can cap the accrual at six days per year, and limit use to three days per year, but must allow carry-over from year-to-year up to the six day maximum accrual.  Sick time does not have to be paid out upon termination unless the employer has a PTO policy that combines sick and vacation time.  The time available for use must be included as a line item on each paycheck, or in a separate writing.  In addition, employees must be allowed to use the time for sick family members as defined by the statute.  

4.  Kin Care Expanded:  Labor Code 233 was amended to conform to the definitions in the new sick leave law; which are broader than the former Kin Care law with regard to the reasons allowed for use of sick leave and the definition of “family member.”  

5.  School Activities Leave:  Labor Code 230.8 was amended to expand the type of school/child care activities that constitute protected time off.  Employers with 25 or more employees must allow employees to take time off to: 1) find a school or a licensed child care provider; 2) enroll or re-enroll a child; and 3) to address school or child care provider emergencies.  This would include situations where a babysitter calls out sick, or a child is sent home from school. 

6.   Private Attorney General Act:  The Private Attorney General Act (“PAGA”) allows an employee to file a lawsuit against an employer both personally, and on behalf of other current and/or former employees, to recover civil penalties for Labor Code violations.  PAGA was amended to allow employers a limited right to cure two types of technical wage statement violations before an employee can sue.  Specifically, before suing, an employee must give his/her employer notice and an opportunity to cure: 1) pay stubs/itemized wage statements that do not contain the name and address of the legal entity; and 2) pay stubs/itemized wage statements that do not contain the inclusive dates of the pay period.  While this provides some relief to employers, PAGA claims are still a significant problem, and we are hoping that future legislation will expand the list of opportunities to cure.  

7.  Labor Commissioner’s Role Expanded: The State Labor Commissioner’s role has been expanded in several different ways.  The Labor Commissioner can now: 1) issue levies and liens on employer property and issue “stop orders” to prevent employers from continuing to conduct business in California; 2) issue citations and penalties when employers fail to reimburse employees for employer-required expenses, such as cell phones and mileage; 3) enforce local overtime and minimum wage laws that are more generous than state law, such as those in San Francisco; and 4) hold owners, directors, officers and managing agents personally liable for willful failure to pay wages, provide a pay stub, pay minimum wage or overtime, or reimburse an employee for proper business expenses. 

 8.  Use of E-Verify:  Labor Code 2814 now makes it unlawful for an employer to use E-Verify to check the employment authorization status of an existing employee or an applicant who has not received an offer of employment.  The statute also requires an employer to provide the employee with any government notification that the information supplied by the employee does not match federal records.  

9.  Reasonable Accommodation & Retaliation:  The Fair Employment and Housing Act (Government Code 12940) was amended to clarify that when an employee requests reasonable accommodation for a disability or religious belief, they are engaging in a protected activity.  As such, employers are prohibited from retaliating or discriminating against the employee, regardless of whether the accommodation request was granted.    

10.  Minimum Wage Now $10/hr:  While not a new law, this year brings the next increase from the 2013 law that increased minimum wage over a period of years.  Remember that all hourly employees need to be paid at least $10/hr. beginning January 1st, and all salaried exempt employees need to be paid at least 2x minimum wage ($41,600/year for full time employees).  

Caution – Future Trends:  This year be aware of hourly employees who are checking emails after hours.  We have become a 24/7 world, and that means that employers are facing huge overtime claims from employees who allege they worked hundreds of hours of overtime checking and responding to emails and texts after hours.  These same employees are claiming significant cell phone reimbursement charges.  If it’s not essential, disconnect hourly employees from remote access and do not text them after hours.  If after-hours access is essential, be sure to have employees record their time and submit a reasonable portion of their cell phone costs for reimbursement. 

Have a great 2016! Please contact Dawn Ross for help with your labor and employment law needs – (707) 526-4200 or dross@cmprlaw.com