July 30, 2017

On the Horizon: Laws Going Into Effect in Early 2017

The California Legislature continues to be very active in passing pro-employee legislation, creating additional compliance burdens and litigation risks for employers.  The following summary contains the key new laws employers should be aware of as we begin the new year.

New Form I-9 

Employers have long been required to verify the identity and legal work authorization of employees through the federal Form I-9.  The United States Citizenship and Immigration Services (USCIS) released a new I-9 form in November 2016.  Employers are required to use the new version of the form by January 22, 2017.  (The form is available online at https://www.uscis.gov/i-9). And a new provision of the California Labor Code makes violations of the I-9 documentation requirements illegal under California law, subjecting employers to a penalty of up to $10,000.

Minimum Wage (SB 3)

A number of minimum wage changes take effect in 2017. 

On the federal level, effective January 1, 2017, the minimum wage for all work on federal contracts is now $10.20 per hour.

Under the new California law, the minimum wage will increase incrementally through 2022, ultimately reaching $15.00 an hour.  Effective January 1, 2017, the minimum wage for employers with 26 or more employees has been increased to $10.50 an hour, an increase of 50 cents over the prior rate.  For employers with 25 or fewer employees, the minimum wage rate for 2017 remains at $10.00 an hour, but the rate will increase to $10.50 an hour effective January 1, 2018.

  • Los Angeles: $12.00 
  • Mountain View: $13.00
  • Oakland: $12.86
  • Palo Alto: $12.00
  • San Diego: $11.50
  • San Francisco: $14.00
  • San Jose: $10.50
  • Santa Clara $11.10

Expansion and Clarification of the California Fair Pay Act (SB 1063 and AB 1676)

The California Fair Pay Act has been expanded (under SB 1063) to reach beyond gender, and now also prohibits pay disparities on the basis of either race or ethnicity.

Once an employee establishes unequal pay for substantially similar work, the employer must show that the disparity is based on (1) a seniority system; (2) a merit system; (3) a system that measures earnings by quantity or quality of productions; or (4) a bona fide factor other than gender, race or ethnicity (including factors such as education, prior experience, or training).  In evaluating disparities, employees may be compared across different work locations, and even if they do not hold the same or substantially equal jobs.

The Legislature also mandated (in AB 1676) that an employee’s prior salary, by itself, is not sufficient to justify a pay disparity.  In other words, prior salary does not qualify as a bona fide factor other than sex, race or ethnicity under the Fair Pay Act.

All Gender Restrooms (AB 1732)

Effective March 1, 2017, all single-user toilet facilities in any business establishment in California must be identified specifically as all-gender toilet facilities (as opposed to designating certain single-user toilet restrooms for males or females, or simply labeling such facilities as restrooms).

Prohibition on Background Checks Regarding Juvenile Criminal History Information (AB 1843)

Effective January 1, 2017, employers may not ask applicants about juvenile convictions, and must not seek or use information about juvenile arrests, detentions, or court dispositions as a factor in determining whether to hire the applicant.  The law includes certain exceptions for health facility employers.  Employers should also be aware of local laws restricting use of criminal background checks, such as the City of Los Angeles “ban the box” ordinance.

Limitation on Choice of Law Provisions (SB 1241)

Employers are now prohibited from requiring an employee who primarily resides and works in California, as a condition of employment, to agree to a provision that would require the employee to adjudicate outside of California a claim arising in California, or deprive the employee of the substantive protection of California law with respect to any controversy arising within the state.  With limited exceptions, employers may not use such language in labor or employment contracts entered into after January 1, 2017.

Notice Requirements Regarding Protections for Victims of Domestic Violence, Sexual Assault and Stalking (AB 2337)

Under existing law, employers are prohibited from discriminating or retaliating against an employee who is a victim of domestic violence, sexual assault or stalking for taking time off to deal with having been a victim of such actions. Employees are entitled to reinstatement and reimbursement for lost wages and benefits in the event of a violation. 

New law now requires employers with 25 or more employees to inform all employees of these rights in writing upon hire, and to all existing employees upon request.  The notice requirement will take effect once the Labor Commissioner develops and publishes a notice form (which the law requires must happen no later than July 1, 2017).  Employers should keep an eye out for this notice to be posted.

Industry-Specific Laws

Janitorial Employers (AB 1978)

Effective January 1, 2017, janitorial employers are required to keep accurate records of specific information regarding their employees for three years.  The same bill includes requirements that will take effect in 2018 and 2019, including annual registration of janitorial employers, as well as sexual violence and harassment prevention training for employees.

Agricultural Workers (AB 1066)

As of January 1, 2017, agricultural employees are no longer exempt from state law provisions regarding meal and rest breaks, including the provision requiring weekly rest days.  Under the new law, agricultural employees will be entitled to receive overtime pay on a gradually increasing basis, beginning in 2019.

Private School Teachers (AB 2230)

Effective July 1, 2017, private school teachers will be exempt from overtime requirements only if the teacher earns no less than either (1) the lowest salary offered by any school district, or (2) the equivalent of 70% of the lowest schedule salary offered by the school district of county in which the private school is located, whichever is greater.

Salon Employers (AB2437)

Effective July 1, 2017, salon employers (barbers, cosmetologists, estheticians, manicurists, etc.) are required to post a notice in English, Spanish, Vietnamese and Korean regarding workplace rights and wage-and-hour laws.  Failure to post will be punishable with an administrative fine.  The notice will be developed and posted by the Labor Commissioner before this requirement takes effect.