California Employer Compliance 2017
by: Lewitt Hackman’s Employment Practice Group
There have been significant changes to state and federal laws in 2016 affecting employers of all sizes and in many industries. We’d like to help our clients stay apprised of some of the more critical changes by reminding all of the important dates below. Except where otherwise indicated, new laws and regulations go into effect as of January 1, 2017.
Federal Minimum Salary Threshold
A federal court blocked the Department of Labor’s Final Rule with an injunction in late November. As a result, the minimum salary threshold required for overtime exemptions that was to be met December 1, 2016 no longer applies. This may be a temporary reprieve for employers, as the DOL recently filed a Notice of Appeal.
In the meantime, employers should ensure they meet all state and local overtime exemption requirements.
Affordable Care Act
Under the Affordable Care Act, employers must provide employees forms 1094-B (Health Coverage) and 1094-C (Employer-provided Health Insurance Offer and Coverage to Employees) by March 2, 2017.
Information reporting via Forms 1094 and 1095 with the IRS is February 28, 2017 (hard copies) or March 31, 2017 (electronic filing).
New I-9 and Immigration Protections
A new I-9 Form (Employment Eligibility Verification) was released in November. Employers must begin using the new form for new hires by January 22, 2017.
Federal law prohibits employers from asking for additional documents other than those required by the I-9. A new California law (Senate Bill 1001) prohibits this practice as well — violations may incur penalties of up to $10,000.
California Fair Pay Act
The Fair Pay Act prohibits employers from paying employees of opposite sex different wages for substantially similar work. Any pay differentials must be based on seniority, merit system, quantity or quality of production, or other bona fide factors such as education or experience. Additionally:
Senate Bill 1063 amends and expands the different rates of pay prohibitions to employees of another race or ethnicity.
Assembly Bill 1676 clarifies that prior salary history cannot justify compensation disparities.
Criminal Background Checks
California: Employers are prohibited from asking about arrests or detentions that did not result in a conviction, or about those incidents that have been judicially sealed or dismissed. Assembly Bill 1843 expands protections to protect job applicants with juvenile criminal histories as well.
Los Angeles: Ban the Box, or the Second Chance Initiative, prohibits employers with ten or more employees from including questions about criminal history on job applications. Employers may ask about criminal history AFTER a conditional offer of employment is made to the applicant. There is a process involved regarding the consideration of such information, written notices, maintaining records; and notifications that must be included on all job posts. Read our Ban the Box blog for more information.
Payroll, Wage Statements & Notices
Currently, employers cannot discriminate or retaliate against employees who are victims of domestic violence, sex assault or stalking – and cannot prohibit employees from taking time off to seek treatment or legal actions for these crimes. Assembly Bill 2337 now requires employers to provide written notice of their employment rights should they become victims of these crimes to all new hires and to other employees as requested. Employers are required to comply with the notice requirements when the Labor Commissioner develops a form notice, on or before July 1, 2017.
Employers who must notify employees of eligibility for federal Earned Income Tax Credits (EITCs) must also notify employees of California EITCs per Assembly Bill 1847.
Employers are not required to track hours worked for exempt employees on itemized wage statements. The clarification comes under Assembly Bill 2535.
Employees of Temporary Staffing Agencies must be paid weekly. Assembly Bill 1311 makes this law applicable to security personnel employed by private patrol operators who are also temp service employers, as of July 2016.
Single User Restroom Facilities
As of March 1, 2017, single-occupant toilet facilities in any business or public building must be identified as “all gender” facilities with signage compliant with Title 24 of the California Code of Regulations. Single-occupant bathrooms have no more than one stall and one urinal. See Assembly Bill 1732.
Minimum Wage Hikes
California: Businesses with 26 or more employees must pay a minimum wage of $10.50 per hour as of January 1, 2017. Employers with 25 or fewer employers must raise minimum wages to this rate on January 1, 2018.
Local Ordinances: In unincorporated Los Angeles County, Los Angeles City, Pasadena and Santa Monica, employers with 25 or fewer employees must begin paying minimums of $10.50 per hour as of July 1, 2017. Employers with 26 or more employees were required to start paying a rate of $10.50 per hour as of July 1, 2016; and will be required to pay $12.00 per hour as of July 1, 2017. (Click: Cty and County Wage Rates for more specific information.)
California: As of 2015, employers in California must provide 24 hours of paid leave per year for employees who work at least 30 days per year.
Local Ordinances: In Los Angeles County, employers must provide 48 hours of paid sick leave annually. The time can be front-loaded every 12 months or accrued at the rate of one hour paid sick time for every 30 hours worked. This requirement is part of the Los Angeles Minimum Wage Ordinance, and went into effect last July for employers with 26 or more employees. For employers with 25 or fewer employees, the requirements must be implemented as of July 1, 2017.
Senate Bill 1241 prohibits employers from requiring employees, as a prerequisite of employment, to arbitrate employment disputes under the laws of another state or in another state. This protection applies to all employees who primarily live and work in California.
An exception to the new law applies to employees represented by an attorney when negotiating terms of an employment contract, including those containing forum selection and choice of law provisions.
New California Employment Laws: Industry Specific Legislation
Per Assembly Bill 1978, employers of property service workers (janitorial) must keep records of all employees to include: employee names and addresses; start/stop times and all hours worked; wage rates for each pay period; ages of any minor employees; and conditions of employment – for three years. The law applies to janitorial employees, independent contractors and franchisees.
Employers in this industry must register with the Labor Commissioner each year as of July 1, 2018. Cost of registration is $500.00.
The new legislation also requires janitorial staff and supervisors to undergo sexual violence and harassment prevention training every two years as of January 1, 2019.
Assembly Bill 1066 eliminates the one day of rest per seven days worked exemption for California’s agricultural industry. Employers cannot require agricultural employees to work more than six days per week.
As of January 1, 2019, agricultural employers must provide overtime wages for more than 9.5 hours worked (or more than 8 hours starting January 2022); meal breaks; and meet other wage and working condition requirements.
Employers with 25 or fewer employees have an additional three years to comply with the criteria above.
Assembly Bill 2230 requires a new minimum earnings test for private school teachers to be exempt from overtime: salaries for these employees must be comparable to those offered to public schools in the same district or county. The new test is effective as of July 1, 2017.
Businesses licensed by the Board of Barbering and Cosmetology (BBC) are required to post notices regarding wage and hour laws and workplace rights as of July 1, 2017, under Assembly Bill 2437.
Another new law (Assembly Bill 2025) will require BBC schools to provide basic labor law education to license applicants.