2018 Legislative Update for California Employers

By: Andrew J. Sommer and Daniel C. Deacon

california-flagCalifornia has had yet another banner year closing the 2017 legislative session with a spate of new employment laws imposing additional compliance obligations on employers.  Bucking the anti-regulatory tide in Washington, DC, California has passed dozens of new laws impacting both private and public sector employers.  Overall, Governor Jerry Brown has vetoed just over 12% of the bills passed by the California legislature this year.

Conn Maciel Carey LLP provides this summary of key new employment bills, regulations and local ordinances impacting California private sector employers.  Unless otherwise indicated, these new employment laws take effect January 1, 2018.

 Statewide “Ban the Box” Law

Continuing a national trend at the state and municipal level, California has passed Assembly Bill (AB) 1008, a statewide “ban the box” law limiting any inquiry into an applicant’s criminal history.  AB 1008 applies to employers with five or more employees, and is markedly different from San Francisco’s “ban the box” ordinance.

The statewide law makes it unlawful for an employer to inquire into or consider an applicant’s criminal history, including seeking such information on any job application, before the employer has made a conditional offer of employment.  In addition, an employer that intends to deny an applicant a position solely, or in part, because of the applicant’s conviction history ascertained after the conditional job offer has been extended must make an individualized assessment of whether the applicant’s conviction history has a “direct and adverse relationship” with the specific duties of the applied for position.  In making this assessment, the employer must consider:  (1) the nature and gravity of the offense or conduct; (2) the time that has passed since the offense or conduct and/or completion of the sentence; and (3) the nature of the job held or sought.

AB 1008 requires the employer to provide the applicant written notice of the preliminary decision that the applicant’s conviction history disqualifies him or her from employment.  The applicant is allowed at least five business days to respond to the employer’s notice.  If the applicant responds, the employer must then consider the information submitted by the applicant before making a final decision.  A final decision to deny an application solely, or in part, because of the applicant’s conviction history must be in writing and disclose the decision, the employer’s existing procedures for challenging the decision or requesting reconsideration, and the applicant’s right to file a complaint with the California Department of Fair Employment and Housing.

Consideration of Job Applicants’ Salary History

Another bill that has garnered significant public interest is AB 168, which seeks to close the gender wage gap by barring employers from, orally or in writing, seeking salary history information from a job applicant.  AB 168 also prohibits employers from relying on an applicant’s salary history as a factor in determining whether to offer employment to an applicant or what salary to offer.  Although employers are prohibited from requesting salary information on an application, an applicant may, voluntarily and without prompting, disclose salary history information to a prospective employer.  The employer may consider or rely upon that voluntarily disclosed salary history information in determining the applicant’s salary.

In addition to these requirements, employers must now provide an applicant “upon reasonable request” the pay scale for the position at issue.

California Regulations Expand Protections for Transgender Workers

As we discussed in a prior post, the California Office of Administrative Law has approved new regulations, effective July 1, 2017, expanding protections for transgender workers under California’s Fair Employment and Housing Act (FEHA).  The FEHA prohibits workplace discrimination and harassment on the basis of gender identity or gender expression, among other protected classifications.  These regulations specifically address protections for transgender employees, including access to bathroom facilities, grooming and dress standards and recording the gender and name of employees.

Recognition of Transition Discrimination

While the FEHA addresses discrimination because of the gender identity or gender expression of an employee or applicant for employment, these new regulations make it unlawful to discriminate against an individual “who is transitioning or has transitioned or is perceived to be transitioning.”  “Transitioning” is defined as “a process some transgender people go through to begin living as the gender with which they identify” including changes in name and pronoun usage, facility usage, participation in employer-sponsored activities, or undergoing hormone therapy, surgeries or other medical procedures.

Recording of Gender and Name

The regulations require employers to abide by an employee’s request to be identified with a preferred gender, name, or pronoun.  An employer is permitted, however, to use an employee’s gender or legal name as indicated in a government-issued identification document, even if inconsistent with the employee’s preferred gender or name, as necessary to meet a legally-mandated obligation.

Employers are also prohibited from requiring an applicant or employee to disclose whether the individual is transgender generally and specifically on job applications.  Yet, the regulations make clear that an employer may communicate with an employee about the employee’s gender, gender identity or gender expression once the employee “initiates communication with the employer regarding the employee’s working conditions.”

Grooming and Dress Standards

The new regulations clarify that it is unlawful for an employer to impose upon an applicant or employee any physical appearance, grooming or dress standard that is “inconsistent with an individual’s gender identity or gender expression,” unless the employer can establish a business necessity defense.

Access to Bathrooms and Other Facilities

Employers must now permit an employee to use bathrooms and other facilities that correspond to the employee’s “gender identity or gender expression, regardless of the employee’s assigned sex at birth.”  An employer may not require an employee to use a particular facility.  Employers are required to provide “feasible alternatives” to protect transgender employees’ privacy such as locking toilet stalls, staggered schedules for showering and shower curtains.

While these regulations recognize that an employer may make a “reasonable and confidential inquiry” for the sole purpose of ensuring access to comparable, safe and adequate multi-user facilities, the employer may not require employees to provide proof of any medical treatment or procedure, or provide any identity document, to use facilities designated for use by a particular gender.

In addition to multiple-user facilities, the regulations address the required signage for single-user toilet facilities, which must be identified as all-gender toilet facilities under a new law (AB1732) that was effective March 1, 2017.  The regulations provide that employers must use gender-neutral signage for these facilities with terms such as “Restroom,” “Unisex,” “Gender Neutral,” or “All Gender Restroom.”

It is important to note that federal agencies during the Obama administration have adopted similar positions concerning transgender employees’ access to bathroom facilities.  Specifically, in 2015 the United States Equal Employment Opportunity Commission (EEOC) found that the Department of the Army discriminated against a transgender female employee under Title VII when it barred her from using the restroom consistent with her female transgender identity.  Tamara Lusardi v. John M. McHugh, Secretary of the Army, EEOC DOC 120133395 (April 1, 2015).  In addition, the Occupational Safety and Health Administration (Fed/OSHA) has published guidance for employers regarding restroom access for transgender workers.  The publication states that employees should have access to restrooms that correspond to their gender identity and should not be asked to provide any medical or legal documentation of their gender identity.

Supervisor Training on Gender Identity and Sexual Orientation Harassment

Just a few months after the amendments to the FEHA regulations went into effect on July 1, 2017, which centralize, clarify, and expand protections for transgender individuals against discrimination, Governor Jerry Brown signed into law Senate Bill (SB) 396.  SB 396 goes even further in facilitating a workplace free of harassment by requiring employers to include gender identity/expression and sexual orientation as subject matters for mandatory harassment training for supervisory employees.

Existing law requires that employers with 50 or more employees provide all supervisors two hours of training regarding sexual harassment within six months of becoming a supervisor, and at least once every two years thereafter.  SB 396 additionally requires employers to include as a component of this training a discussion of harassment based on gender identity, gender expression and sexual orientation.  The training must be performed by an individual with knowledge and expertise in these areas, and must include practical examples.

As of January 1, 2018, employers also are required to affix a poster developed by the California Department of Fair Employment and Housing (DFEH) regarding transgender rights in a prominent and accessible location in the workplace.  For a more in depth review of this law, you can reference this previous post.

 Immigration Worksite Enforcement

Several years ago, California enacted a law prohibiting employers from engaging in or directing another person or entity to engage in “unfair immigration-related practices” against a person for exercising specific rights, including retaliating against employees suspected of being undocumented.  The law makes clear, however, that “unfair immigration-related practices” do not include conduct undertaken by the employer at the express and specific direction of the immigration authorities.

California has now passed AB 450 taking the further step of precluding employers from voluntarily cooperating with an immigration agency in worksite enforcement actions.  Specifically, the law prohibits an employer or other person acting on the employer’s behalf from providing voluntary consent to an immigration enforcement agent entering nonpublic areas of a place of labor unless the agent provides a judicial warrant.  The law also prohibits an employer, or other person acting on the employer’s behalf, from providing voluntary consent to an immigration enforcement agent to access, review, or obtain the employer’s employee records without a subpoena or court order.  The California Labor Commissioner and the Attorney General have exclusive authority to enforce these provisions, and may recover penalties of $2,000 to $5,000 for a first violation and $5,000 to $10,000 for each subsequent violation.

AB 450 also requires that employers post notice in the workplace of any inspections of I-9 Employment Eligibility Verification forms or other employment records conducted by an immigration agency within 72 hours of receiving notice of the inspection.  By July 1, 2018, the California Labor Commissioner is required to create a template posting that employers may use for this purpose.  In addition to this posting, the employer is required to provide affected employees or their authorized representatives a copy of the immigration agency’s notice regarding the results of the inspection of I-9 forms or other employment records within 72 hours of receipt of the notice.

Labor Commissioner Investigations

SB 306 authorizes the Division of Labor Standards Enforcement (DLSE) of the California Labor Commissioner to commence an investigation into suspected retaliation with or without receiving a complaint.  Previously, the DLSE had jurisdiction only after receiving an employee complaint.  Upon finding reasonable cause to believe a violation occurred, the Labor Commissioner may petition the superior court for injunctive relief compelling an employer to hire, promote or otherwise restore an employee or former employee, and potentially recover monetary penalties and the agency’s reasonable attorney’s fees and costs.

Parental Leave for Small Employers

California has enacted a parental leave law for small employers.  The law, SB 63, applies to businesses that employ 20 or more persons and are not subject to the California Family Rights Act (CFRA) and the federal Family and Medical Leave Act (FMLA).  Under this law, a covered employer must provide, upon an eligible employee’s request, up to 12 weeks of unpaid parental leave to bond with a new child within one year of the child’s birth, adoption, or foster care placement.  To be eligible for this parental leave, the employee must (1) have 12 months of service with the employer; (2) have at least 1,250 hours of service with the employer during the previous 12-month period; and (3) work at a worksite in which the employer employs at least 20 employees within 75 miles.

The eligible employee may use any accrued vacation pay, paid sick time or other accrued paid time off during the parental leave.  In addition, the employer must maintain and pay the eligible employee’s health insurance during the parental leave, but may recover the premium payments if the employee fails to return to work after the leave expires, for a reason other than the continuation, recurrence or onset of a serious health condition or other circumstances beyond the employee’s control.

 Increased Civil Penalties for Retaliation Against Medical Staff Employees

AB 1102 increases the civil penalties assessed against health facilities for retaliating against employees for engaging in certain whistleblowing activity in violation of California Labor Code section 1278.5.  Section 1278.5 prohibits a health facility from retaliating against an individual who has presented a grievance or participated in an investigation or administrative proceeding related to the quality of care, services, or conditions at the facility.  Under AB 1102, a violation of the statute now results in a civil penalty of up to $25,000.  Additionally, the law increases the civil fine for willful violations of the statute from $25,000 to $75,000.

Direct Contractors Liable for Subcontractor Wage Violations

AB 1701 adds Section 218.7 to the Labor Code, holding contractors liable for wage claims against subcontractors.  For contracts entered into on or after January 1, 2018, AB 1701 requires a “direct contractor” making or taking a contract in the state for “the erection, construction, alteration, or repair of a building, structure, or other private work,” to assume, and be liable for, specified debt owed to a wage claimant that is incurred by a subcontractor (at any tier) who is acting under, by, or for the direct contractor.  A direct contractor’s liability under Section 218.7 is limited to any unpaid wage, fringe or other benefit payment or contribution, including interest owed, but it does not extend to penalties or liquidated damages.

Finally, the law also requires a subcontractor, upon request from the direct contractor, to provide information regarding the subcontractor’s work on the project and its employees’ payroll records.  A direct contractor can withhold disputed sums upon the subcontractor’s failure to provide the requested information.

The Division of Labor Standards Enforcement (DLSE) is authorized to bring an action to enforce this liability.  Additionally, a third party owed fringe or other benefits, or a joint labor-management cooperation committee, is authorized to bring a civil action against a direct contractor.  In cases brought by a third-party or a joint labor-management cooperation committee, the court may award reasonable attorney’s fees and costs to a prevailing plaintiff.

California Military and Veterans Code Updated

Section 394 of the California Military and Veterans Code previously prohibited various types of discrimination against an officer, warrant officer, or enlisted member of the military or naval forces of the state or the United States because of that membership, including with respect to employment.  However, AB 1710 amends section 394 to expand the protections afforded to service members by broadly prohibiting discrimination in the “terms, conditions, or privileges” of employment.  The primary intent of this bill was to conform state law to the Uniformed Services Employment and Reemployment Rights Act (USERRA), the federal law providing certain protections to service members in civilian jobs.  The law covers discrimination by individuals and public and private sector employers.  Violations of the law result in criminal and civil penalties, which include actual damages and reasonable attorney’s fees.

Sexual Harassment Training Requirements for Farm Labor Contractor License Applicants

SB 295 amends California Labor Code section 1684 to require farm labor contractor license applicants to provide the California Labor Commissioner with a complete list of all materials and resources used to provide sexual harassment prevention training to agricultural employees, and the total number of agricultural employees trained in sexual harassment prevention during the calendar year preceding an application.  SB 295 also requires applicants to provide sexual harassment training to each agricultural employee in “the language understood by that employee.”

In furtherance of the sexual harassment training rules, SB 295 adds Section 1697.5 to the Labor Code to authorize the Labor Commissioner to levy civil penalties, which may be assessed at a rate of $100 per violation, against any farm labor contractor licensee who fails to:

  • Provide sexual harassment training to an agricultural employee at the time of hire;
  • Provide sexual harassment training in a language understood by an agricultural employee;
  • Provide an agricultural employee with sexual harassment training satisfying specific requirements;
  • Provide an agricultural employee with a record of his or her training or a copy of the Department of Fair Employment and Housing sexual harassment pamphlet; or
  • Keep a record of training for each agricultural employee who has received sexual harassment training.

The Labor Commissioner will aggregate the data provided by farm labor contractor licensees and publish information on the Labor Commissioner’s Office website the total number of agricultural employees trained in sexual harassment prevention in the previous calendar year.

 New Municipal Employment Ordinances

In addition to these new statewide laws, California cities have passed employment ordinances, some of which overlap with existing state laws.  For example, San Francisco has enacted an ordinance, effective July 1, 2018, prohibiting employers from inquiring into or considering current or past salary of a job applicant in determining whether to hire the applicant or what salary to offer.  San Francisco has also adopted a Lactation in the Workplace ordinance that largely mirrors existing state law requiring employers to provide breaks and a location for employees to express milk but with some notable exceptions.  It is also worth noting that, effective January 1, 2018, the San Francisco Paid Parental Leave ordinance will apply to all employers with 20 or more employees.

The City of Los Angeles’ paid sick leave ordinance has applied to employers with 25 or fewer employees since July 1, 2017.  The City of Los Angeles has also passed a “ban the box” ordinance which has been enforced by the city since July 1, 2017.

Minimum Wage Ordinances

As of January 1, 2018, the state’s minimum wage will be $10.50 per hour for employers with 25 or fewer employees and $11 per hour for employers with 26 or more employees.  The following municipalities have enacted minimum wage ordinances that exceed the state minimum:

City Standard Minimum Wage
Effective 1/1/18
Berkeley $13.75
Cupertino $13.50
El Cerrito $13.60
Emeryville $14.00 (55 or fewer employees)

$15.20 (56 or more)

Los Altos $13.50
Los Angeles $10.50 (25 or fewer employees)

$12.00 (26 or more employees)

Malibu $12.00
Milpitas $12.00
Mountain View $15.00
Oakland $13.23
Palo Alto $13.50
Pasadena $10.50 (25 or fewer employees)

$12.00 (26 or more employees)

Richmond $13.41
San Diego $11.50
San Francisco $14.00
San Jose $13.50
San Leandro $12.00
San Mateo $13.50
Santa Clara $13.00
Santa Monica $10.50 (25 or fewer employees)

$12.00 (26 or more employees)

Sunnyvale $15.00

Takeaways for Employers

As a result of these developments, we recommend that California employers take the following steps:

  • Modify job application forms to remove any inquiry into the applicant’s criminal history, or salary history.  Likewise, defer any inquiry into criminal history, or any request for a criminal background check verifying criminal history, until after a conditional job offer has been made.
  • Update employee handbooks to incorporate an equal employment opportunity policy stating a broad prohibition against transition discrimination (in addition to protections for gender identity and expression), as well as identify procedures for transgender employees to request access to facilities corresponding to their gender identity and any other change in working conditions necessitated by their gender identity or expression.  Also incorporate policies on parental leave for small employers not subject to the FMLA/CFRA, military leave and as otherwise necessitated by new municipal ordinances.
  • Train managers and supervisors on proper hiring procedures including refraining from inquiring into job applicants’ past salary and criminal history (at least pre-conditional offer).  Also consider conducting refresher training on permissible interview questions under the FEHA.  Additionally, train supervisors on gender identity concerns including that supervisors should refer to transgender employees by their preferred name, gender and pronoun, and consider requests for changes in working conditions, ideally by referring such matters to Human Resources.
  • Develop internal procedures for handling investigations or inspections by the immigration authorities or the California Labor Commissioner including proper protocols should this occur.
  • Update the sexual harassment training for supervisors to include a component on harassment based on gender identity and expression, and sexual orientation.

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