2016 California Employment Law Update


A new year sometimes means a new start and a blank slate. Not so for California employers who tend to review their policies and practices to ensure compliance with the ever growing list of laws governing the employer-employee relationship. The following list is a summary of new changes. Employers may want to consult with legal counsel to ensure compliance with both state and federal laws. These laws go into effect January 1, 2016 unless otherwise noted. Construction companies, in particular, are likely to be affected by the new piece-rate worker law.

Hiring and Retention

Federal E-Verify Requirements Affirmed Under State Law. AB 622 makes it unlawful employment practice to prohibit an employer or any other person or entity from using the E-Verify system at a time or in a manner not required by a specified federal law or not authorized by a federal agency memorandum of understanding to check the employment authorization status of an existing employee or an applicant, except as required by federal law or as a condition of receiving federal funds. Under AB 622 and E-Verfy, California employers must comply with the employee notification requirement when an employee receives a nonconfirmation from Social Security Administration or the United States Department of Homeland Security containing information specific to the employee’s E-Verify case or any tentative nonconfirmation notice. AB 622, though, would provide for a civil penalty of $10,000 for each violation of these provisions.

Wage and Hour

Minimum Wage Increase. California’s minimum wage increases to $10 per hour, effective January 1, 2016. Many cities also have local minimum wage ordinances that exceed the state minimum and some have a posting notice requirement: Berkeley ($11.00), Emeryville ($13.00 or $14.82 depending on employer size on 7/1/2016), Mountain View ($11.00), Oakland ($12.55), Palo Alto ($11.00), Richmond ($11.52), San Francisco ($13.00 on 7/1/2016), San Jose ($10.30), Santa Clara ($11.00), and Sunnyvale ($10.30).

Opportunity to Cure in 2016 under the Private Attorneys General Act (PAGA). The law requires employers to provide employees with certain information in their wage statements. AB 1506 amends PAGA to allow employers a limited right to cure wage statement violations such as 1) pay period dates and 2) the name and address of the legal entity before individuals can bring civil suits for such alleged violations. Employers are able to cure such alleged violations once in a 12-month period. Employers have 33 calendar days of the postmark date of the notice of violations to cure any defects. An employer can prove it “cured” the violation by presenting a “fully compliant, itemized wage statement to each aggrieved employee for each pay period for the three-year period prior to the date of the written notice.” This law became effective October 2, 2015.

New Compensation Rules for Piece Rate Workers. AB 1513 requires that an itemized statement provided to employees compensated on a piece-rate basis to also separately state the total hours of compensable rest and recovery periods, the rate of compensation, and the gross wages paid for those periods during the pay period. For rest and recovery periods and “other nonproduction time”, employees must now receive at or above the minimum hourly rate which is separate compensation from any piece-rate pay. Under AB 1513, “other nonproductive time” means time under the employer’s control, exclusive of rest and recovery periods, that is not directly related to the activity being compensated on a piece-rate basis. There is a safe harbor provision for employers who make necessary changes to comply with this new law by December 15, 2016.

Reaffirmation of Meal Periods in the Healthcare Industry. SB 327 reaffirms the meal waiver provisions under Industrial Welfare Commission Wage Orders 4 and 5 where employees in the healthcare industry can waive one of their two meal periods on shifts exceeding 12 hours. This new law went into effect on October 5, 2015.

Additional Enforcement Powers for Labor Commissioner. Under SB 588, if a final judgment against an employer remains unsatisfied after a period of 30 days after the time to appeal the judgment has expired, the employer cannot continue to conduct business unless the employer has obtained a bond of up to $150,000 and filed a copy of the bond with the Labor Commissioner. The bond shall be effective and maintained until satisfaction of all judgments for nonpayment of wages. Failure to comply with the bond requirements allows the Labor Commissioner to create a lien on any real or personal property of a California employer or successor employer for the full amount of any wages, interest, and penalties claimed by the employee.

Under AB 970, the Labor Commissioner has the authority to investigate, and upon request from the local governing entity, to enforce local law regarding overtime hours or minimum wage provisions and to issue citations and penalties for violations, except when the local governing entity has already issued a citation for the same violation and vice versa. AB 970 gives the Labor Commissioner new authority to issue citations and penalties for the employer’s failure to properly reimburse employees for costs incurred as part of the employee’s duties or as a result of obeying the employer’s directions.

Wage Garnishment Reduction. Starting on July 1, 2016, SB 501 reduces the prohibited amount of an individual judgment debtor’s weekly disposable earnings subject to levy under an earnings withholding order from exceeding the lesser of 25% of the individual’s weekly disposable earnings or 50% of the amount by which the individual’s disposable earnings for the week exceed 40 times the state minimum hourly wage, or applicable local minimum wage, if higher.

Motor Carrier Employer Misclassification Amnesty Program. Under AB 621, employers performing drayage services may escape liability for statutory or civil penalties associated with misclassification of commercial drivers as independent drivers if the motor employer enters into a settlement agreement with the Labor Commissioner prior to January 1, 2017. Some of the terms of the settlement agreement require the employer to convert all of its commercial drivers to employees and pay all wages, benefits, and taxes owed, if any.

Prevailing Wage. Employers who provide services or construction work on public works projects for the government or public-sector entities may pay a prevailing wage, which is usually higher than the minimum wage. For more information, see https://calconstructionlawblog.com/2015/12/07/2016-california-construction-law-upate/.

Discrimination and Retaliation

California Equal Pay Act. SB 358 seeks to remedy gender-based wage differentials, which in 2014 was 16 cents on the dollar. This new law is supposed to be one of the strictest in the country. Prior California law required that employees complaining of wage differentials point to comparator employees that perform the “same” job, with the “same” skill, effort and responsibility. The new standard requires employees to show others performing only “substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions.” Comparators no longer need to work in the “same establishment.” Employers now bear the burden of proof and must “affirmatively demonstrate” that a disparity is based entirely “upon one or more specified factors, including a seniority system, a merit system, a system that measures earnings by quantity or quality of production, or a bona fide factor other than sex.”

There is now a private right of action for retaliation or discharge in violation of the law with remedies including reinstatement, reimbursement for lost wages and benefits, and injunctive relief. Employees are able to disclose their own wages, discuss the wages of others, inquire about another co-worker’s wages, or aid and encourage any other employee to exercise his or her rights under SB 358. The recordkeeping requirement also increased from 2 to 3 years.

Minor Child Employee and Immigration. In California, the law states that immigration status is irrelevant for purposes of enforcing state labor, employment, civil rights and employee housing laws. Under AB 560, a minor child’s immigration status is also irrelevant to issues of liability, remedies and recovery, except for employment-related injunctive relief that would violate federal immigration law.

Reasonable Accommodation and Retaliation. AB 987 clarifies that employers cannot discriminate or retaliate against employees who request an accommodation for a disability or religious beliefs, regardless of whether the request was granted. The law clarifies that the mere act of making the request is protected conduct and is actionable separate and apart from the protected-class status of the employee.

Family Whistleblower Protection. AB 1509 amends Labor Code sections 98.6, 1102.5, 2810.3 and 6310, by expanding whistleblower and anti-retaliation protections to an employee who is a family member of a person engaged in, or perceived to engage in, protected conduct or who makes a complaint protected by the Labor Code. The law also expands joint employer liability, expanding the definition to include “client employers” which are businesses who obtain or is provided contract laborers.

Gender Identity and State Contracts. SB 703 prohibits a state agency from entering into contracts for the acquisition of goods or services of $100,000 or more with a contractor that discriminates between employees on the basis of gender identity in the provision of benefits.

Leave of Absence and Benefits

School Activities Leave. SB 579 amended the law that prohibits employers with 25 or more employees from discharging or discriminating against an employee for taking leave for school-related activities. SB 579 revises references from “child day care facility” to a more general term of “child care provider.” The definition of who is a “parent” now includes an employee who is a stepparent or foster parent or who stands in loco parentis to a child. SB 579 now allows employees to take leave to address a child care provider emergency or a school emergency, and find, enroll, or reenroll a child in a school or with a child care provider.

Kin Care. SB 579 also reconciles the definition of “family member” under Kin Care with the new Paid Sick Leave Law and makes the two laws more compatible.  SB 579 also amends Kin Care to provide employees with protected leave for reasons provided under the Paid Sick Leave law.

Military Leave Protections. AB 583 expands the list of employees eligible for California’s military leave protections by extending protections to members of the National Guard of other states who leave private employment in California as a result of being called to military service.

Unemployment and Disability Insurance. SB 667, effective July 1, 2016, changes the eligibility waiting periods where an individual files a second disability claim for the same or related condition within 60 days after the initial disability benefit period. It also extends the time between claims that will be considered one disability benefit period from 14 days to 60 days.

Unemployment Electronic Reporting. AB 1245 requires that all employers with 10 or more employees need to file all reports and returns electronically and remit all contributions for unemployment insurance premiums by electronic funds transfer beginning on January 1, 2017. All employers, regardless of size, must comply with this requirement by January 1, 2018.

Worker’s Compensation

Notice Requirements. AB 438 requires the Division of Worker’s Compensation specified forms, notices, and facts sheets to be available in Chinese, Tagalog, Korean, and Vietnamese. The Administrative Director also has the discretion to recommend the translation of other documents into languages other than English no later than January 1, 2018.

Licensing Board. SB 560 allows the Contractor’s State License Board to investigate and enforce the obligation of licensees to secure valid and current worker’s compensation insurance. SB 560 also requires the licensing board to submit personal information regarding licensees, described above, to the Employment Development Department.

Immigration Status. SB 623 provides that a person shall not be excluded from receiving benefits under the Uninsured Employers Fund or the Subsequent Injuries Benefits Trust Fund based on his or her citizenship or immigration status.

Prescription Medication. AB 1124 would require the administrative director to establish a drug formulary, on or before July 1, 2017, as part of the medical treatment utilization schedule, for medications prescribed in the workers’ compensation system. A medical treatment utilization schedule addresses the frequency, duration, intensity, and appropriateness of all common treatments performed in workers’ compensation cases.

5 Responses to “2016 California Employment Law Update”

  1. Barbara M.

    Wow! That’s a lot of new regulations that went into effect for California businesses. I wonder if how many California employers complied with every single rule here. I also wonder if there will be this many new regulations in 2017…

    • Evelin Y. Bailey

      Barbara, The California legislature is always busy expanding or clarifying employment laws.


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