New Employment Laws Affecting California Employers Effective January 1, 2019

There are fifteen (15) significant developments in California employment law which require your attention:

1 – Minimum Wage & Minimum Salary Threshold Increased. In 2016, California enacted a new law which (a) gradually the state minimum wage, (b) then provided for annual increases linked to the Consumer Price Index, and (c) created a Minimum Salary Threshold, the minimum compensation a salaried employee must be paid to be exempt from California’s overtime laws.

Effective January 1, 2019, California’s state minimum wage increased from $10.50 to $11 per hour for employers twenty-five (25) or fewer employees, and from $11 to $12 per hour for employers with twenty-six (26) or more employees.

The Minimum Salary Threshold increased to $45,760 per year ($22 per hour based on a 40-hour workweek and 2080 hours worked per year) for employers with twenty-five (25) or fewer employees, and to $49,920 per year ($24 per hour) for employers with twenty-six (26) or more employees.

Both the state minimum wage and Minimum Salary Threshold will continue to increase annually until 2023:

Starting in January 2024, further increases will be made using a formula linked to the US Bureau of Labor Statistics non-seasonally adjusted Consumer Price Index.

Note: Any scheduled annual increase can be rejected by the California state legislature.

Local Minimum Wage Increased: Some California cities have higher city-wide minimum wages. These include Berkeley, Campbell, Cupertino, Gilroy, El Cerrito, Emeryville, Los Altos, Los Altos Hills, Los Gatos, Los Angeles (city and county), Long Beach, Malibu, Milpitas, Monte Sereno, Morgan Hill, Mountain View, Oakland, Palo Alto, Pasadena, Richmond, Sacramento, San Francisco, San Jose, San Leandro, Santa Clara, San Mateo, Santa Monica, Saratoga, and Sunnyvale. A few of the major population centers law are listed:

Berkeley’s minimum wage increased to $15.00 per hour on October 1, 2018 and will continue to increase in an amount corresponding to the local Consumer Price Index.

Los Angeles’ (city and county) minimum wage increased to $10.50 per hour for employers with twenty-five (25) or fewer employees, and $12.00 per hour for employers with twenty-six (26) or more employees. It will increase annually thru 2021, based upon employer size:

Sacramento’s minimum wage will increase on July 1, 2019 to $11.75 per hour and again on July 1, 2020 to $12.40 per hour. Thereafter, the local minimum wage will be linked with increases to the Consumer Price Index.

San Diego’s minimum wage on January 1, 2019 the minimum wage increased from $11.50 per hour to $12.00 per hour and will continue to increase annually with increases to the local Consumer Price Index.

San Francisco’s minimum wage increased to $15.00 per hour on July 1, 2018 and will continue to increase annually in an amount linked to the Consumer Price Index.

San Jose’s minimum wage increased to $15.00 per hour on January 1, 2019 and will continue to increase annually in an amount linked to the Consumer Price Index.

Immediate Action Required: Review your job descriptions, employee locations, and payroll to ensure compliance with applicable local and state wage laws.

2 – IRS Standard Mileage Reimbursement Rates Increased. Effective January 1, 2019, the IRS Optional Business Standard Mileage Rate (“OBSMR”) will increase to $0.58 per mile. The OBSMR is used by the IRS to calculate the deductible costs of operating an automobile for business use in lieu of tracking actual costs. Many businesses use the OBSMR as their “go to” rate of reimbursement for its employees who drive their own car or truck for business purposes.

California employers should however be aware that in 2007, the California Supreme Court found that the OBSMR will not automatically be considered “full compensation” for mileage as the OBSMR does not take into account the actual costs incurred by the employee to operate their vehicle. Full compensation is a matter for negotiation between the employee & employer, and must take into account the costs of gas, vehicle maintenance, depreciation and insurance. See Gatusso v. HartHanks Shopper, Inc.

Immediate Action Required: (1) Review your existing policies and forms to confirm that your business engages in a dialogue with each employee to calculate the correct mileage reimbursement rate for each employee. (2) Confirm that personnel and payroll files fully document each employee agreement that either the OBSMR fully compensates him / her for the actual costs of operating his / her vehicle or each employees’ actual costs to operate their vehicle. (3) Ensure that payroll reimbursement records fully document (i) miles driven and date mileage incurred, (ii) per mile reimbursement rate, (iii) date and amount each employee was reimbursed

3 – Mandatory Sexual Harassment Training Expanded. Since 2005, employers with fifty (50) or more employees have been required to provide supervisors with two hours of Sexual Harassment and Discrimination training within six (6) months of hire and every other year thereafter. Effective January 1, 2015, this training had to include abusive conduct prevention training.

Effective January 1, 2019, the mandatory supervisor training must be provided by all employers with five (5) or more employees. Non-supervisory employees are required to received one (1) hours training. Training must be completed by 2020, be provided every once every two (2) years thereafter. The Department of Fair Employment and Housing is required to develop and post-training materials for employer to use for these purposes.

Action Required. Consult with an HR consultant trainer or employment attorney to provide or review the training provided and ensure proper documentation and compliance with the applicable California law.

4 – Statute of Limitations Increased for Civil Actions for Sexual Assault. Effective January 1, 2019, the statute of limitations for any civil action for recovery of damages suffered as a result of sexual assault which occurred on or after a plaintiff’s eighteenth (18^th) birthday, will be extended from three (3) years to ten (10) years after the alleged assault, or three (3) years after the plaintiff discovered or reasonably discovered injury as a result of the assault, which is later.

Action Required. An individual’s personal exposure for civil damages for sexual assault should be made part of the mandatory sexual harassment training and provided to all employees. Consult with an employment attorney, as required.

5 – Sexual Harassment Expanded. Effective January 1, 2019, individuals who hold himself or herself out as being able to help someone establish a business or professional relationship directly or with a third party (and expressing adding lobbyists, elected officials, directors, producers, and investors) can be sued for sexual harassment. Sexual harassment is defined as making sexual advances, solicitations, sexual requests, demands for sexual compliant by the plaintiff, or engaged in other verbal, visual, or physical conduct of a sexual nature, or of a hostile nature based on gender, that was unwelcome and pervasive or severe.

Physicians, psychotherapists, dentists, attorneys, Master of Social Work, real estate agents, real estate appraisers, investors, accountants, bankers, trust officers, financial planners, loan officers, collection services, building contractor, escrow loan officers, executors, trustee, administrators, landlords, property managers, and teachers were previously covered.

Action Required. An individual’s personal exposure for civil damages for sexual assault should be made part of the mandatory sexual harassment training and provided to employees by all employers. Consult with an employment attorney, as required.

6 – Sexual Harassment Settlements No Longer Confidential. Effective January 1, 2019, Civil Code § 1670.11 makes any portion of a settlement agreement or contract which prevents a party to such an agreement from testifying about criminal conduct or sexual harassment in an administrative, legislative, or judicial proceeding pursuant to court order, subpoena or written request from an administrator agency or legislature void and unenforceable.

Effective January 1, 2019, Code of Civil Procedure § 1001 prohibits and makes void any provision of a settlement agreement which prevents a party to that agreement from disclosing factual information of claims of sexual assault, sexual harassment, workplace harassment or discrimination, gender discrimination or related retaliation claims when those claims are part of a civil or administrative action. Settlement Agreements may, however, include provisions to shield the identity of the claimant and all facts that could lead to the discovery of the claimant’s identity, including in the pleadings filed in court upon the request of the claimant, except when a government agency or public official is a party to the settlement agreement.

Action Required. Seek and obtain the advice and counsel of an employment attorney prior to entering into any such agreement.

7 – Employee Right to Inspect Payroll Records Clarified. Labor Code § 226 provides that employees, upon written request to their employer, have the right to inspect their payroll records within twenty-one (21) days of the employer’s receipt of the request. Effective January 1, 2018, Labor Code § 226 has been clarified and now requires that employers provide a copy of the records (if requested) and not just make the records available to be copied.

Immediate Action Required. Consult with your payroll company to ensure compliance with the new law. Consult with an employment attorney, as needed.

8 – Mandatory Use Of Pay Scale And Salary History Clarified And Expanded. As from January 1, 2017, California’s Equal Pay Act was amended to prohibits employers from using prior pay history, “within itself from justifying any disparity in compensation.”

As of January 1, 2018, California employers have been prohibited from inquiring about applicant’s prior pay history, and upon the request of an applicant, provide an applicant with the pay scale for the position for which s/he has applied. Violation is a misdemeanor.

Applicants may voluntarily and without prompting disclosing their salary history, and employers may rely on voluntarily disclosed wage history in determining the wages offered to an individual applicant. Employers are also permitted to ask applicants about his or her salary expectation for the position being sought by the applicant.

Effective January 1, 2019, employer’s upon “reasonable request” are required to provide applicants the “pay scale” for the position. “Pay scale” means salary or hourly wage range. “Reasonable request” means a request made after an applicant has complete an initial interview with the employer.

Prior salary may not justify any disparity in compensation, and employers may make compensation decisions based on a current employee’s existing salary, so long as any wage differential resulting from that compensation decision is justified by one or more of the following an existing (a) seniority system; (b) merit system; (c) system that measures earning by quantity or quality of production; (c) a bona fide factor other than race or ethnicity, such as education, training, or experience.

Immediate Action Required: Job applications, and other hiring documents, should be reviewed to ensure compliance with the new law. Employers should train personnel to ask prospective hires what they would like to earn and be prepared to advise the prospective hire of the pay scale which the position pays. Consult with an employment attorney, as required.

9 – Pre-Hiring Inquiries of Prior Criminal Convictions (aka the “Ban the Box” Law) Revised. Since January 1, 2014, it has been unlawful for employers to ask about, seek, or utilize as a condition of employment information about criminal convictions that have been expunged, or about arrests or detentions that did not result in a conviction, or to ask about an applicant’s referral to or participation in a pretrial or post-trial diversion program. Employers violating the law face civil penalties and even misdemeanor criminal charges if the inquiry was intentional. Effective January 1, 2017, these prohibitions were expanded to include juvenile arrests, criminal records and criminal convictions.

Effective January 1, 2018, employers with five (5) or more employees, may no longer:

• include on any application for employment any question that seeks the disclosure of an applicant’s conviction history;
• inquire into or consider the conviction history of an applicant until that applicant has received a conditional offer.

Post-Offer background checks are permitted. However, employers may not disseminate information related to an applicant’s arrests, diversions, and convictions.

When a decision not to hire based on an applicant’s history of convictions, the decision must be supported by a direct and adverse relationship between the applicant’s criminal conviction history with the specific duties of the job. For example, prior convictions for theft would be a basis to deny an offer of employment as a cashier.

However, the new law also requires that the employer provide the applicant with a written notice of its decision not to hire, which includes specific reasons why the prior conviction makes the applicant ineligible for the job. The notice must include a copy of the criminal history background check.

Applicants must then be given five (5) business days to respond to the employer’s notification before the employer makes its final not to hire decision. If the applicant notifies the employer in writing that s/he disputes the accuracy of the conviction history, the applicant will have an additional five (5) days to obtain evidence to support that assertion.

Employers must consider any information submitted by the applicant before making a final not to hire decision. Employers who deny employment must then notify the applicant in writing of its final decision to deny employment, providing specific reasons.

Effective January 1, 2019, a limited exception to these restrictions against criminal background checks are permitted by employers who are required by state or federal law to inquire into an applicant’s criminal history and who are prohibited from employing individuals who have been convicted of specific criminal misconduct. Examples of such job categories can include teachers, bankers, financial advisors, people required to carry firearms and other fiduciaries.

Immediate Action Required. Review current employment applications, and other pre-hire forms to ensure compliance with the new law. Provide training to all personnel performing pre-hire interviews and hiring to educate them on the new law. Offers of employment should be made conditional on successfully passing a background check. Do not perform background checks prior to an offer of employment and give yourself time to obtain and review the results prior to the employee starting work. Consult with an employment attorney to ensure compliance when denying an applicant based upon prior criminal history.

10 – New Qualified Privilege Shields Victims & Employers from Defamation Lawsuits. Effective January 1, 2019, the definition of “privileged publication or broadcast” in Civil Code § 47 has been expanded to include (1) complaints of sexual harassment by an employee made without malice to an employer provided it is based upon credible evidence; and (2) communications between an employee an interested person made without malice regarding complaints of sexual harassment. The qualified privilege includes current and former employers’ communications regarding whether the employer would rehire the alleged harasser based upon a determination that s/he engaged in sexual harassment.

Recommended Action: Review and revise all applicable policies and practices, including policies for providing references. Consult with an employment attorney, as required.

11 – Lactation Accommodation Revised. Since 2002, employers have been required to make reasonable efforts to provide lactating employees with a location, other than a toilet stall, to express milk in private which is close to the employee’s work area. Since 2013, an appropriate private location must be equipped with an electrical outlet and comfortable seating to facilitate lactation, and access must be provided to a refrigerator where breast milk can be temporarily stored.

Effective January 1, 2019, the legislature has clarified what is considered adequate temporary accommodation for lactating employees. A temporary lactation location shall be in compliance with California’s requirements provided: (1) the employer is unable to provide a permanent lactation location because of operational, financial, or space limitations; (2) the temporary lactation location is private and free from intrusion while an employee expresses milk; (3) the temporary lactation location is used only for lactation purposes while an employee expresses milk; and (4) the temporary lactation location meets all other requirement provided for by state law concerning lactation accommodation. Agricultural employers may provide a private shaded space to express milk, which may include an air-conditioned cab of a truck or tractor.

Recommended Action: Review and revise all lactation accommodation policies and practices. Have your HR Manager and supervisors meet with employees who are anticipated to need lactation accommodation to review your policies, practices, and the proposed location. Advise impacted co-workers and supervisors as to the employer accommodations prior to the employers return from leave. Consult with an employment attorney, as required.

12 – Joint Liability of General Contractors and Subcontractors for Unpaid Wages Revised. Since January 1, 2018, general and subcontractor have been jointly and severally liable for the unpaid wages of their subcontractor’s employees. Subcontractors, upon request from the contractor. have also been required to provide information concerning their employees and the work performed to the General Contractor, so that General Contractors can dispute any monies allegedly owed but not paid to the subcontractor’s workers. The Labor Commissioner is empowered to bring enforcement actions.

Effective September 1, 2018, the legislature clarified that a general contractor may withhold payments to a subcontractor for unpaid wages as a “disputed sum” if upon request the subcontractor (or any sub-sub-contractor) fails to provide payroll records containing a breakdown of withholdings as required by applicable California paystub law. As from January 1, 2019, contracts between general contractors as well as between subcontractors must expressly specify the documents and information required by the general contractor in order to withhold funds for unpaid wages as a “disputed sum.”

Immediate Recommended Action: Review and revise all general and subcontractor contracts to include the required documents and information needed to ensure that subcontractors and sub-sub-contractors pay all wages owed to their employees. Consult with an attorney familiar with these laws as needed.

13 – Fair Employment And Housing Act (“FEHA”) Expanded. Effective January 1, 2019, the Legislature clarified and expanded California’s sexual harassment and hostile work environment law:

(1)Making it unlawful for an employer to require that an employee sign a release of a claim or a right or execute a statement that s/he does not possess any claim or injury against the employer or other covered entity, including the right to file and pursue a civil action or complaint with, or otherwise notify a state agency, or public prosecutor, law enforcement agency, or any court or other governmental agency in exchange for a raise or bonus, or as a condition of employment or continued employment.

(2) Requiring an employee to sign a nondisparagement agreement or other document that purports to deny the employee the right to disclose information about unlawful acts in the workplace, including but not limited to sexual harassment.

(3) Make it harder for employers to prevail on harassment claims on summary judgment, and that a single incident of harassment may support a hostile work environment finding.

Significantly, negotiated settlement agreements which resolve a claim filed by an employee in court, before an administrative agency, alternative dispute resolution forum, or through an employer’s internal complaint process which are voluntary, deliberate, and informed, provides consideration of value to the employee, and where the employee is given notice and an opportunity to retain an attorney or is represented by an attorney are still permitted.

Immediate Recommended Action: Consult with an employment attorney to review all applicable policies and practices.

14 – Paid Family Leave (“PFL”) Expanded. Enacted in 2002 (and effective as of 2004), California’s Paid Family Leave law aka Family Temporary Disability Insurance (“FTDI”) provides up to six (6) weeks of wage replacement benefits to workers who take time off to care for a seriously ill child, spouse, parent, grandparent, grandchild, sibling, or domestic partners, or to bond with a minor child within one year of the birth or placement of the child in connection with foster care or adoption. As of January 1, 2021, PFL will be expanded to include active duty or call to active duty of the individual’s spouse, domestic partner, child, or parent in the Armed Forces of the United States.

Required Action. Provide training to Human Resources professionals and employees as required.

15 – Human Trafficking Laws Expanded. Effective January 1, 2020, the Fair Employment and Housing Act (“FEHA”) has been expanded to require that all hotel and motel employees who are likely to come into contact with human trafficking victims (including receptionists, housekeeping, bell hop, and other employees who regularly interact with customers) be provided with twenty (20) minutes of training on human trafficking awareness. Starting January 1, 2021, employers operating an intercity passenger rail station, light rail station, or business station will also be required to provide human trafficking awareness training to employees likely to come into contact with human trafficking victims.

Required Action. Provide training to Human Resources professionals and employees as required.

Written updates of these and other new laws will be part of my firm’s next employee handbook and employment forms update. Should you have questions about these or any other workplace law, please contact me at doug@dmwadelaw.com.

The materials contained herein are for informational purposes only and not for the purpose of providing

legal advice. For advice about a particular problem or situation, please contact an attorney.