California: Legislative Forecast for 2014

News Updates
A number of bills that, if enacted, will affect private-sector employers are pending in the California legislature, including proposals to increase the minimum wage and require paid sick leave. Several of these bills are discussed below.
Additional Minimum Wage Increases Proposed (SB 935)
In 2013, the legislature passed, and Gov. Jerry Brown approved Assembly Bill (AB) 10, increasing California’s hourly minimum wage to $9 on July 1, 2014, and to $10 on Jan. 1, 2016. Perhaps in response to President Obama’s proposal to increase the federal minimum wage to $10.10 and to minimum wage increases in over a dozen states, Senate Bill (SB 935) would again increase California’s minimum wage in three separate increments over the next three years. Specifically, it would increase California’s hourly minimum wage to $11 by Jan. 1, 2015, to $12 by Jan. 1, 2016, and to $13 by Jan. 1, 2017. After Jan. 1, 2018, the minimum wage would also be annually adjusted based on the California Consumer Price Index (CPI). Notably, while the rate could be adjusted upwards, it could not be adjusted downwards, even if the CPI was negative for the preceding year.
A recent amendment clarifies that these minimum wage increases would apply to all industries, including private and public employment.
Paid Sick Leave Bill (AB 1522)
Known as the “Healthy Workplaces, Healthy Families Act of 2014,” this bill would implement a number of new Labor Code provisions requiring employers to provide paid sick leave for their employees. This bill would apply to all employers regardless of size, including public employers, the state, and municipalities.
Employees who work in California for seven or more days in a calendar year would accrue paid sick leave at a rate of no less than one hour for every 30 hours worked. Exempt employees would be deemed to work 40 hours per week for accrual purposes, unless their normal workweek schedule is less than 40 hours, in which case they would accrue paid sick leave based upon that normal workweek. Employees would be entitled to use accrued paid sick days beginning on the 90th calendar day of employment, after which they may use paid sick days as they are accrued. Employers would also have the discretion to lend paid sick days to an employee in advance of accrual.
While accrued paid sick days shall carry over to the following calendar year, employers may limit an employee’s use of paid sick leave to 24 hours, or three days, in each calendar year. Employers would not be required to compensate employees for unused sick days upon employment ending, but they would be required to reinstate the previously unused balance if they rehired the employee within one year.
Employees would be entitled to use paid sick time for preventive care for themselves or a family member, as well as for the diagnosis, care, or treatment of their or their family member’s existing health condition. For purposes of this bill, “family member” means (1) a child (as defined), (2) parent (as defined), (3) spouse, (4) registered domestic partner, (5) grandparent, (6) grandchild, or (7) sibling. The employer shall also provide paid sick days for an employee who is a victim of domestic violence, sexual assault, or stalking, as discussed in Labor Code sections 230 and 230.1. 
The bill states it is not intended to preclude employers from implementing more generous policies. Also, an employer shall not be required to provide additional sick pay under this bill if the employer already has a paid leave or paid time off policy that permits accrual at at least the same rate, and the accrued time is to be used for the same purposes and under the same conditions as in this bill.
Like many other recent Labor Code amendments, this bill also contains carve-outs for employees covered by collective bargaining agreements (CBAs) with certain provisions. Specifically, this bill would not apply to employees covered by CBAs that expressly provide for the wages, hours of work, and working conditions of employees, as well as for paid sick days (with final and binding arbitration for any disputes regarding paid sick days), premium wage rates for all overtime, and a regular hourly rate of not less than 30 percent more than the state minimum wage.
Similarly, construction industry employees covered by a CBA with these provisions would also not be covered by this bill if the CBA was entered into before Jan. 1, 2015, or it expressly waives the requirements of “this article” in clear and unambiguous terms.
This bill would also prohibit discrimination or retaliation against employees for using sick days, or for filing a complaint regarding any sick day policy violation. However, similar to last year’s protections against “immigration-related practices” (AB 263), this bill would create a rebuttable presumption of unlawful retaliation if an employer takes an adverse employment action (including denying the right to use sick days) within 90 days of an employee engaging in a protected legal activity (as defined).
Under Labor Code section 248.5, the Labor Commissioner would be entitled to enforce this article by awarding reinstatement, back pay, and payment of sick days unlawfully withheld, plus the payment of an additional (currently unspecified) sum in the form of an administrative penalty to an employee whose rights were violated. Where paid sick leave was unlawfully withheld, the employee shall recover the greater of $250 or the dollar value of the paid sick days withheld, multiplied by three. To encourage such reporting, the Labor Commissioner would be permitted to keep the reporting employee’s identifying information confidential.
The Labor Commissioner, the Attorney General, or an employee would be able to file a civil action in court against the employer or any person violating this article. A prevailing employee would be entitled to appropriate legal and equitable relief, including reinstatement, back pay, the payment of sick days improperly withheld, and liquidated damages of $50 to each employee for each violation each day, plus reasonable attorneys’ fees and costs.  
New Labor Code section 247 would also require the employer to provide employees written notice of these paid sick leave rights in English, Spanish, Chinese, Tagalog, Vietnamese, and Korean, as well as any other language spoken by at least 5 percent of its employees. An employer will also be required to display a poster (which the Labor Commissioner will create) in a conspicuous place notifying employees of these paid sick leave rights. Employers who willfully violate the notice and posting requirements will be subject to a civil penalty of not more than one hundred dollars per offense.
New Labor Code section 247.5 would also require employers to retain, for at least five years, records documenting the hours worked, paid sick days accrued, and paid sick days used by each employee. These records may be inspected by the Labor Commissioner or by an employee, and if an employer fails to maintain adequate records, it shall be presumed that the employee is entitled to the maximum number of hours accruable under this new article, unless the employer proves otherwise by clear and convincing evidence.
Lastly, this bill would amend Labor Code section 226 to require employers to include on the itemized wage statements accompanying paychecks, the “paid sick leave accrued and used” during each pay period.  
This bill is very similar to bills that have repeatedly been introduced but stalled, although it is less far-reaching in that it only requires three days of sick leave per year as compared to up to nine days of annual sick leave.
Paid Time Off Proposed for School or Day Care Visits (AB 2030)
Labor Code section 230.8 presently requires employers with more than 25 employees at the same location to provide up to 40 hours annually (and up to eight hours in a single month) for specified employees (i.e., parent, guardian, or grandparents with custody) to participate in the child’s school or day care activities. Section 230.8 also presently requires an employee to utilize existing vacation, personal leave, or compensatory time off for purposes of such a planned absence, and also authorizes an employee to utilize time off without pay for this purpose, to the extent the employer makes such time off available.
Seemingly, this bill would materially amend this section by requiring employers to provide such time off without loss of pay. In this regard, it would prohibit employers from requiring employees to use existing vacation, personal leave, or compensatory time off for these purposes, unless otherwise provided by a collective bargaining agreement entered into before Jan. 1, 2015, or from being required to use time off without pay for those purposes. This bill would also delete a current restriction prohibiting employees who are accorded vacation during the same period of time in the calendar year as all other permanent, full-time employees from using that accrued vacation benefit at any other time for school or day care activities.
Individual Alternative Workweek Schedules Proposed Again (AB 2448)
While California authorizes so-called “alternative workweek schedules,” whereby non-exempt employees can work up to ten hours daily without receiving overtime, as a practical matter, it is often difficult to obtain the requisite two-thirds work unit approval for such schedules. Known as the Workplace Flexibility Act of 2014, this bill would enact Labor Code section 511.5 to permit an individual nonexempt employee to request an “employee-selected flexible work schedule,” providing for workdays up to 10 hours within the 40-hour workweek, and to allow the employer to implement this schedule without the obligation to pay overtime compensation for the ninth and tenth hours in a workday.
In short, this bill would allow individual employees to request such schedules without requiring the employers to follow the complicated “work unit approval” under section 510. In this regard, the bill would essentially utilize a procedure similar to that used in two other states requiring daily overtime (Alaska and Nevada).
Employers would still be required to pay overtime at the rate of one-and-a-half times the regular rate for daily hours worked in excess of ten hours, and weekly hours in excess of forty work hours. Employers would also still be required to pay double-time for work performed in excess of twelve hours per workday, and in excess of eight hours on a fifth, sixth, or seventh day in the workweek.
Either the employee or employer would be able to discontinue this “employee-selected flexible work schedule” at any time by giving written notice to the other party. Such a request would be effective the first day of the next pay period, or the fifth day after the notice is given if there are fewer than five days before the start of the next pay period, unless otherwise agreed to by the employer and the employee.
This bill also contains some safeguards to ensure employers do not force employees into working more than eight hours a day. For instance, new section 511.5 would require that any such schedule be requested by the employee in writing. It also specifies that while employers could inform employees they are willing to consider such employee requests, employers cannot induce a request by promising an employment benefit or threatening an employment detriment.
This bill would not apply to any employee covered by a collective bargaining agreement or employed by the state, a county, or any political subdivision, since those entities already have the ability to contract for such flexible work schedules.
This bill also would require the Division of Labor Standards Enforcement to enforce this provision and adopt regulations.
This bill is similar to AB 907 and SB 607, which stalled in committee last year, but it appears to be gaining support.
Employee Liens Against Employer Property (AB 2416)
California law presently permits specified classes of laborers who contribute labor, skill, or services to a work of improvement the right to record a mechanic’s lien upon the property improved by their efforts. California law also generally authorizes employees to file claims against their employers through the Division of Labor Standards Enforcement for unpaid wages, although it does not authorize such employees to obtain a lien (akin to a mechanic’s lien) for such wages owed.
Known as the California Wage Theft Prevention Act, this bill would enact a new Chapter in the Labor Code authorizing an employee to record and enforce a wage lien upon real and personal property of an employer or a property owner, as specified, for wages, other compensation, and related penalties owed the employee. This bill would also prescribe requirements relating to the recording and enforcement of the wage lien and for its cancellation and removal.
This bill is similar to prior versions that have stalled in the legislative process.
Partial Affirmative Defense Proposed for Relying Upon DLSE Guidance (AB 2688)
The Division of Labor Standards Enforcement (DLSE) of the Department of Industrial Relations (DIR) is generally charged with enforcing employment statutes and regulations in either administrative actions or through litigation. An employer who violates employment statutes or regulations may face administrative sanctions, civil fines, civil penalties, and criminal penalties. Some common employer laments are that many of California’s Labor Code provisions are not clearly drafted, and the controlling interpretation of these regulations may change from administration to administration.
This bill responds to several of these concerns by proposing new Labor Code section 98.73, which would, until 2019, provide a partial affirmative defense to employers who in good faith relied upon the DLSE’s guidance.
Under this section, employers who relied upon a published opinion letter or enforcement policy of the DLSE would not be liable for costs or subject to punishment for a violation of an employment statute or regulation if they demonstrate they were acting in good faith when the violation occurred. To establish this good faith defense, the employer would need to prove that it: (1) previously sought an opinion letter or enforcement policy from the DLSE; (2) relied upon and conformed to the applicable opinion letter or enforcement policy published by the DLSE; and (3) provided true and correct information to the DLSE in seeking the opinion letter or enforcement policy. This partial affirmative defense would apply even if after the alleged violation or omission occurred, the opinion letter or enforcement policy relied upon had been modified, rescinded, or deemed invalid, but this defense would not apply to violations occurring after such a nullification.
An employer satisfying these elements would be immune from certain civil and criminal penalties and costs, but would still be required to make restitution for lost wages. An employer asserting such a defense would also be required to post an undertaking with the reviewing court or administrative body in an amount equal to the reasonable estimate of alleged unpaid wages resulting from the employer’s reliance upon the DLSE’s advice.
If enacted, this defense would apply to all actions and proceedings that commence on or after January 1, 2015, and the bill would expire by its own terms on January 1, 2019.
Protections for Unpaid Interns (AB 1443)
This bill would amend Government Code section 12940(c), which presently prohibits discrimination against apprentice training programs, to also preclude discriminating against an unpaid intern on the basis of any legally protected classification (e.g., race, religion, disability, etc.). It would also amend subjection (j) to prohibit harassment against an unpaid intern because of a legally protected classification. This bill is in response to several court rulings in other jurisdictions suggesting interns are not employees for purposes of harassment and discrimination laws.
Prohibition Against Discrimination Based on Employment Status (AB 2271)
This bill would limit an employer’s ability to screen applicants based on “employment status,” which is defined as an individual’s “present unemployment regardless of the length of time that the individual has been unemployed. Specifically, this bill would prohibit an employer, unless based upon a bona fide occupational qualification, from (a) publishing advertisements suggesting an individual’s current employment is a job requirement; or (b) affirmatively asking an applicant to disclose orally or in writing his or her current employment status until the employer has determined that the applicant meets the minimum employment qualifications for the position, as stated in the published notice for the job. The law would impose fairly similar prohibitions upon employment agencies or persons who operate Internet websites for posting positions in California.
The proposed bill would not prohibit employers or employment agencies from publishing job advertisements setting forth the lawful qualifications for the job, including but not limited to the holding of a current and valid professional or occupational license. It would also not prohibit advertisements for job vacancies stating that only applicants who are currently employed by that employer will be considered (so-called “internal” hiring).
It would also not prohibit employers, employment agencies, or website operators from obtaining information regarding an individual’s employment, including recent relevant experience, or from having knowledge of a person’s “employment status,” or from inquiring about the reasons for an individual’s unemployment, or from refusing to offer employment to a person because of the reasons underlying an individual’s employment status. In other words, this bill seems to allow employers to consider the reasons for an individual’s unemployment, but prohibit them from screening out applicants simply because they are unemployed.
This bill would authorize civil penalties of $1,000 for the first violation, $5,000 for the second violation, and $10,000 for each subsequent violation, enforceable by the Labor Commissioner.
This bill appears very similar to AB 1450, which Governor Brown vetoed in 2012.
AB 1825 Training to Include Prevention of “Abusive Conduct” (AB 2053)
In 2004, California enacted AB 1825, which requires employers with more than 50 employees to provide at least two hours of sexual harassment training for supervisors located in California. Under Government Code section 12950.1, employers must provide this training within six months of an employee’s assumption of a supervisory position, and once every two years thereafter.
This bill would amend section 12950.1 to require that this training include the prevention of “abusive conduct.” Newly proposed subsection (g)(2) would define abusive conduct as “conduct of an employer or employee in the workplace, with malice, that a reasonable person would find hostile, offensive, and unrelated to an employer’s legitimate business interests.” It further specifies that such abusive conduct “may include repeated infliction of verbal abuse, such as the use of derogatory remarks, insults, and epithets, verbal or physical conduct that a reasonable person would find threatening, intimidating, or humiliating, or the gratuitous sabotage or undermining of a person’s work performance.” The bill specifies that “a single act shall not constitute abusive conduct, unless especially severe and egregious.”
Notably, this bill only would require such “abusive conduct” prevention training within the already required AB 1825 harassment training, and it does not otherwise amend the Fair Employment and Housing Act to prohibit “abusive conduct” unrelated to an already protected criterion.
Michael Kalt, an attorney at Wilson Turner Kosmo in San Diego, serves as the government affairs director for CalSHRM, the California State Council of the Society for Human Resource Management.
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