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New Year, New Laws: California Employment Legislation Update

October 31, 2016

As the end of 2016 nears, employers must begin the task of understanding and planning for new employment laws that will impact them in 2017. The California Legislative session closed on September 30, 2016 and Governor Jerry Brown signed into law many employment-related bills. Below is a summary of several of the newly signed bills, few others signed earlier in the year and San Francisco’s Paid Parental Leave Ordinance. Contact Shivani Sutaria Law Offices for any questions on these new employment laws.

Pay Equity

Race/Ethnicity Pay Equity:

Governor Brown signed into law SB 1063, which expands last year’s gender pay equity law (Cal. Lab. Code § 1197.5) to prohibit employers from paying employees less than employees of a different race or ethnicity for substantially similar work. The effective date is January 1, 2017.

Prior Salary Reliance:

Governor Brown also signed into law Assembly Bill 1676 which prohibits employers from relying on prior salary as the sole justification for any disparity in compensation between male and female employees who perform substantially similar work. The original version of Assembly Bill 1676 would have prohibited employers from even seeking an applicant’s salary history. The effective date is also January 1, 2017.

Leave of Absences

Increase in Paid Family Leave Benefits:

California’s Paid Family Leave (PFL) program, enacted in 2002, provides partial wage replacement benefits for employees who take time off to bond with a new child or to care for a family member with a serious health condition. Currently, employees receive 55% of their regular wages, up to approximately $1,129 a week, for a maximum of six weeks.

Under a new law passed in April 2016, the PFL benefit rate will increase beginning on January 1, 2018 to 60%. Employees earning below $20,000/year will be entitled to up to 70% of their usual pay. Further, the new law also removes the one-week waiting period for receiving PFL benefits. The 6-week period for PFL benefits did not change under the new law.

San Francisco’s Paid Parental Leave Ordinance:

Beginning on January 1, 2017, San Francisco’s new Paid Parental Leave (“PPL”) Ordinance will begin its gradual rollout. This new law is in conjunction with California's Paid Family Leave program (discussed above) and specifically related to leave for the purpose of bonding with a minor child during the first year after birth or placement through foster care or adoption.

As discussed above, covered employees can currently receive up to 55% of their wages based on an annual maximum salary of $106,740 through the state’s PFL program; the new local law will mandate employers pay eligible employees the 45% difference (called “supplemental compensation”) so that employees are being paid 100% of their normal wages for those six weeks of leave:

  • CA PFL (55%): $1,129 per week

  • SF PPL (45%): $924 per week

  • Total (100%): $2,053 per week

With the increase in maximum weekly benefits to 60% or 70% under California PFL law beginning on or after January 1, 2018, San Francisco employers’ supplemental compensation will decrease to either 40% or 30%, respectively. San Francisco employers can require employees to use up to two weeks of accrued, unused vacation leave to help meet the supplemental compensation obligations.

While the PPL goes into effect on January 1, 2017, employers’ obligations to provide supplemental compensation depends on the following scheduled based on an employer’s size (defined as the total number of employees regardless of location): January 1, 2017, for employers with 50 or more employees; July 1, 2017, for employers with 35 or more employees; and January 1, 2018, for employers with 20 or more employees. Employers with 19 or less employees are exempt.

Eligible employees, which can include part-time, full-time and temporary employees, must have 1) worked for the covered employer at least 180 days prior to the start of the leave period; 2) performed at least eight hours of work per week for the employer in San Francisco; 3) worked at least 40% of the total weekly hours for the employer in San Francisco; and 4) eligibility to receive benefits under the California Paid Family Leave law for the purpose of bonding with a new child.

Harassment and Discrimination

Employment Rights of Domestic Violence Victims:

Assembly Bill 2337 requires employers with 25 or more employees to provide their employees with notice - at the time or hire and upon request - of California’s leave laws for victims of domestic violence, sexual assault, and/or stalking. The Labor Commissioner will prepare a notice that employers can use to satisfy the requirements of this new law by July 1, 2017.

Transgender Rights:

Assembly Bill 1732 is being touted as the most inclusive restroom access law in the country. It goes into effect March 1, 2017, and requires all single-user restrooms in any business establishment, place of public accommodation, or government agency to be identified by signage as “all gender” and be universally accessible. A “single-user” bathroom is defined as a toilet facility with no more than one water closet and one urinal, and with a locking mechanism controlled by the user.

Wage and Hour

Minimum Wage Increases:

California’s minimum wage will increase to $15.00 per hour by 2022. The law goes into effect on January 1, 2017 and will incrementally increase based on the following schedule:

  • January 1, 2017 – $10.50 per hour

  • January 1, 2018 – $11.00 per hour

  • January 1, 2019 – $12.00 per hour

  • January 1, 2020 – $13.00 per hour

  • January 1, 2021 – $14.00 per hour

  • January 1, 2022 – $15.00 per hour

On January 1, 2017, several local Bay Area cities will see an increase, such as San Mateo ($12.00 per hour) and Palo Alto ($11.10 per hour).

Overtime for Agricultural Workers:

Assembly Bill 1066, the “Phase-In Overtime for Agricultural Workers Act of 2016,” requires employers to begin paying agricultural workers overtime. Beginning January 1, 2019, employers are required to pay overtime for any hours worked over 9.5 hours/day or 55 hours/week. Each year the hours worked triggering overtime pay will reduce. By January 1, 2022, agricultural workers will receive overtime for working more than the standard 8 hours/day or 40 hours/week.

Itemized Wage Statements:

Signed by Governor Brown in July 2016, Assembly Bill 2535 amends California’s paycheck stub law (Cal. Lab. Code §226). Effective January 1, 2017, employers no longer need to report total hours worked on a paycheck stub for exempt employees.

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