January 18, 2017

New Employment Laws for 2017

On January 1, 2017, a number of new employment laws will take effect in California. These laws will have a significant impact on California employers and companies with operations in the state.  Prompt action will need to be taken to ensure compliance, including revising employment policies and practices such as hiring and compensation practices, employee handbooks, and notices. Below is a summary of many of the laws that affect agricultural employers. All are effective January 1, 2017, unless otherwise noted.


New Minimum Wage and Salary for White Collar Exemptions

Governor Brown signed into law SB 3, setting a $15 minimum wage in California by 2022 for businesses with more than 25 employees and by 2023 for smaller companies. The first phase-in sets the minimum wage at $10.50 an hour, up from $10 an hour, as of January 1, 2017. 

The increased minimum wage also increases the minimum salary that must be paid to meet the so called “white collar” exemptions (i.e., executive, administrative, and professional). For employers with 26 or more employees, the minimum salary under California law is $43,680 per year as of January 1, 2017. This is less than the $47,476 per year that the U.S. Department of Labor set in its Final Rule, but a Texas judge issued a nationwide preliminary injunction halting the increase, and the rule is not expected to be resuscitated by the Trump administration.

In addition, a number of cities and counties have set their own minimum wages higher than the state’s minimum, including San Diego, Los Angeles, San Francisco, and San Jose, among others.  Some municipalities including San Diego and Emeryville have even enacted their own paid sick leave ordinances that exceed state law requirements. Make sure to check whether or not the cities or counties where your employees work have such ordinances.


Ag Overtime

AB 1066 will gradually lower the daily and weekly hours of work thresholds for paying overtime to agricultural employees starting in 2019 for ag employers with more than 25 employees and by 2022 for smaller operations. Currently, agricultural employees are entitled to be paid overtime when working more than 10 hours in a workday or more than six days in a workweek. On the seventh day of work, the first eight hours worked must be paid at 1½ times the employee’s regular rate of pay, and any hours over eight must be paid at twice the employee’s regular rate of pay. Because AB 1066 was poorly drafted and not well-understood by legislators, there are questions concerning the legislation’s impact upon the existing statutory day of rest exception and the existing overtime exemptions (irrigators, truck drivers, etc..) that are provided for in Industrial Wage Commission Wage Order 14, which governs agriculture.  Many ag employment law practitioners believe that these Order 14 exemptions remain in place until 2019 at the earliest, when the overtime changes begin to phase-in.  However, ag’s exemption from the requirement to provide employees with one day’s rest in seven likely was eliminated by AB 1066 on Jan. 1, 2017.  Western Growers, in conjunction with other industry organizations, is seeking clarification by state regulators and cleanup legislation, if necessary.


Fair Pay

SB 1063 and AB 1676 significantly expand California’s toughest-in-the-nation equal pay law, the Fair Pay Act (SB 358) which was enacted last year. The Fair Pay Act’s requirement of equal pay for substantially similar work is expanded beyond gender to include race and ethnicity. In addition, AB 1676 amended the Labor Code to state that “prior salary shall not, by itself, justify any disparity in compensation” between workers of the opposite sex, race, or ethnicity.  Thus, the new law eliminates considering prior pay history, by itself, as a permissible explanation of pay differential. While the new law does not prohibit asking job seekers for salary history, obtaining that information may prove problematic in a pay equity lawsuit.


Arbitration Agreements

Two new laws, SB 1007 and SB 1241, proscribe certain common provisions in arbitration agreements governing workplace disputes. SB 1007 gives any party to arbitration proceedings the right to have a court reporter transcribe any proceeding as the official record in the dispute. SB 1241 prohibits employers from requiring California employees to adjudicate their claims in other states or adjudicate claims using the law of another state, as a condition of employment. This applies specifically to arbitration agreements, and other agreements entered into on or after January 1, 2017.


Unlawful Employment Verification

SB 1001 prohibits an employer, in the course of verifying authorization to work, from: (1) requesting more or different documents than are required under federal law; (2) refusing to honor documents that on their face appear reasonably genuine; (3) refusing to honor documents or work authorization based upon the specific status or term of status that accompanies the authorization; and (4) attempting to re-investigate or re-verify an employee’s authorization using an unfair immigration-related practice. Such practices are already illegal under federal law. However, SB 1001 creates a new penalty recoverable by the applicant or employee, or by the Labor Commissioner, for a violation of the statute of up to $10,000 per violation.


Employee Retirement Savings

Passed in 2012, SB 1234 goes into effect on January 1, 2017. The bill requires employers to either maintain a private, qualified retirement savings plan, or enable employees to make automatic contributions from their paycheck to a California Secure Choice Retirement Savings Trust savings account. Employers that don’t offer a retirement plan must offer a payroll deposit retirement savings arrangement for eligible employees to contribute 3 percent of annual salary to retirement. Open enrollment is every two years and employees may opt out of the program. Employers may also be required to provide information about the program to employees.


Juvenile Criminal History

AB 1843 prohibits employers from asking about or considering information relating to arrests, convictions, or other proceedings that occurred while an applicant or employee “was subject to the process and jurisdiction of juvenile court law.”


Domestic Violence Prevention

AB 2337 requires employers with 25 or more employees to notify employees at time of hire of their rights to take protected leave when victimized by domestic violence, sexual assault, or stalking. Employers do not have to provide the notice until the California Labor Commissioner develops a notification form, which has not yet been published as of this writing. (Early January 2017)


Pay Stubs for Exempt Employees

AB 2535 relieves employers from having to track hours worked by employees that are exempt from minimum wage and overtime regulations. The new law identifies seven circumstances where exempt employee hours do not need to be tracked and hours logged on an itemized wage statement.


All-Gender Restrooms

Effective March 1, 2017, AB 1732 requires all single-user restroom facilities in any business establishment, place of public accommodation, or government agency to be identified as “all gender” rather than being labeled as male or female only. AB 1731 defines “single-user toilet facility” as “a toilet facility with no more than one water closet and one urinal with a locking mechanism controlled by the user.” It is unclear whether the law applies to single-user toilets in the field, but it is probably advisable to include at least one PortaSan with an “all gender” sign.   However, note that state regulations require agricultural employers to maintain separate field toilets for “men” and “women.”  Employers are advised to allow employees to utilize the restroom of the gender with whom they identify.


Workplace Smoking Prohibitions

Existing law prohibits smoking of tobacco products inside an enclosed space, as defined, at a place of employment. Labor Code section 6404.5 extends the definitions of smoking to include “vaping” and a companion statute expands the definition of tobacco product to include electronic cigarettes (e-cigarettes).