Doing Business In California? Be Sure You Comply With These New Employment Rules

Every year, the California legislature churns out new laws regulating employment in the Golden State and 2017 was no different. As Trump appointees at the Department of Labor, National Labor Relations Board and other agencies have begun to be confirmed, the pendulum of federal law and regulation has started to move in favor of employers.

Effective January 1, 2018, there are a series of new statutes that will go into effect and present new requirements for California employers that all human resource professionals should make note.

New Restrictions and Requirements in the Hiring Process

“Ban the Box” — Joining several other states and municipalities that already have “ban the box” laws, with this legislation California employers with five or more employees will be prohibited from inquiring about an applicant’s criminal history on a job application, in an interview, or at any other time prior to making a conditional offer of employment.

Under this legislation, after a conditional offer is made, the employer may inquire about most criminal convictions. However, employers cannot institute a blanket ban on the hiring of all applicants with a conviction record. Instead, California employers must conduct an individualized assessment of whether the conviction has a direct and adverse relationship with the specific duties of the job sought, considering nature and gravity of the offense, amount of time that has passed, and nature and duties of the position before the employer can use the conviction to withdraw the conditional offer.

In addition, if there is a preliminary decision to deny employment, the employer must provide written notice to the applicant identifying the disqualifying conviction and informing the applicant that he or she may provide a response with evidence disputing the accuracy of the conviction information and/or demonstrating rehabilitation or other mitigating circumstances. The applicant must be given at least five business days to provide this response, which can be extended by the applicant in certain circumstances. If a timely response is made, the new law requires the employer to consider the information submitted before making any final decision. Any decision to withdraw a conditional offer must be made in writing and is required to contain certain information including providing the applicant with information about his or her right to file a complaint with the California Department of Fair Employment and Housing.

Prohibition on salary history inquiries – Effective on January1, a section in the California Labor Code will be added that prohibits California employers from inquiring about or considering information concerning an applicant’s prior compensation in determining either:

  1. Whether to make an offer of employment
  2. The amount of compensation to provide to the applicant with the job offer.

It should be noted that the legislation does not prohibit the employer from asking what the applicant’s salary or compensation expectations are, as long as there is no inquiry about the compensation history. The exception is if the applicant voluntarily, without any prompting from the employer, discloses his or her prior compensation history.

This legislation also requires California employers to provide the “pay scale” for the position to any applicant applying for the position, upon request by the applicant. Unfortunately, the law does not provide a definition for “pay scale.”

Expansion of Parental Leave For Small Business

Like the federal FMLA, California has a similar statute, the Family Care Rights Act (FCRA), that provides family leave for employees working for employers with 50 or more employees located within a 75 mile radius. California added a section to its government code for employers with 20 or employees within a 75 mile radius for employees to receive 12 weeks of family leave for bonding with a new child within one year of birth, adoption or foster care placement. The leave, like CFRA and FMLA, is unpaid although eligible employees will be able to seek compensation from the California EDD through its paid family leave program, with the funding coming from EDD contributions by the employer. The eligibility requirements for this leave or the same as CFRA and FMLA: the employee must have at least 12 months of service and have worked for at least 1,250 hours in the year prior to the commencement of the leave to be eligible. In addition, the employer is required to maintain the employee’s group health coverage during the leave as if the employee were still working.

Immigration Enforcement Legislation

California has put its employers right in the crosshairs of the immigration debate and the differing views on the subject between the state and federal government. Starting in 2018, California employers will be prohibited from complying with requests of federal immigration enforcement officials to enter non-public areas of the workplace or to inspect an employer’s records (other than I-9 records in certain instances), unless a valid warrant or subpoena is provided. The legislation further provides that if an employer cooperates and there is no subpoena or warrant, the employer can be penalized by the California Labor Commissioner for amounts up to $10,000.

Harassment Training Expanded

California employers of 50 or more are currently required to provide at least two hours of interactive sexual harassment and bullying training to all supervisory employees within six months of becoming a supervisor, and again every two years thereafter. Effective January 1 those same employers (50 or more) will be required to include training regarding harassment based on gender identity, gender expression and sexual orientation as part of that training.

In addition to this training, California regulations now prohibit employers from inquiring about an applicant’s or employee’s gender or gender identity, unless required to do so as part of an affirmative action program or EEO-1 recordkeeping, and in those cases can only do so on a voluntary basis, consistent with applicable law.

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Minimum Wage Increase

On January 1, the California minimum wage increased to $11 per hour for employees working for large employers (26 or more employees) and $10.50 per hour for small employers (25 or fewer employees). In addition, the minimum salary for the primary white-collar overtime exemptions (administrative, professional, executive) will increase with the minimum wage. California law requires that to be exempt from overtime, employees must earn a salary equivalent no less than two times the state minimum wage for full-time employment. At $11 per hour, the minimum monthly salary level for large employers moves to $45,760 annually.

California also has a separate provision for computer software engineers. To be exempt from overtime, they must be paid $43.58 per hour ($90,790.07 annually) beginning January 1.

Next Steps for Employers

Here are a few recommendations for California employers to ensure compliance with these new requirements:

  • Review employment applications and delete criminal history inquiries, prior salary inquiries and inquiries about gender or gender identity.
  • Make sure all individuals involved in the hiring process are trained about the new restrictions on hiring inquiries about gender, salary history and criminal history. The hiring process should be modified to allow for conditional offers where a criminal background check may be implemented and employers should consider standard questions inquiring about salary/compensation expectations (without making any express or implied inquiry concerning salary or compensation history).
  • For California employers with 50 or more employees — Revamp training programs so they include training based on harassment because of gender identity, gender expression and sexual orientation. If training is purchased from an outside source, applicable employers should make sure that the training they are purchasing is in compliance. In addition, all California employers should consider training supervisors about transgender rights.
  • For California employers with 20-49 employees — Prepare policies and procedures that comply with the new parental leave law.
  • Review wages and salaries to make sure employees are being paid consistent with the new minimum wage requirements and new salary tests for exempt workers. In addition, for employees being paid just above the new minimum wage, employers should consider whether changes are necessary to continue to recruit adequately.

It’s important for employers to understand these new laws and have a system in place not only to meet compliance guidelines but also to be an employer of choice.

Mark S. Spring

Mark S. Spring, partner at Carothers DiSante & Freudenberger LLP, has over 25 years of experience handling labor and employment law matters throughout Northern California. Mark’s practice is focused on representation of management in union-management relations and handling litigation triggered by all types of employment related disputes.

He is a member of the American Employment Law Council (AELC), a national invitation-only group of senior, management-side employment attorneys, and is the Northern California representative for the Wage & Hour Defense Institute (WHDI), a group comprised of rigidly selected top wage and hour litigators from across the country.

Mark can be reached at mspring@cdflaborlaw.com.