Employment-related bills passed this legislative session

This year the California Legislature has sent over 2,000 bills to Gov. Jerry Brown’s desk. Some of the bills passed in this legislative session would have a significant impact on California employers. In the final installment of this two-part series, I will discuss several more of the employment-related bills that could soon become California law.

Salary History

Assembly Bill 168 seeks to remedy the gender pay gap by preventing employers from considering salary history unless that information is voluntarily provided by job applicants. The bill prohibits employers from relying on the salary history information of an applicant as a factor in determining whether to offer employment and what salary to offer. This law would apply to all California employers, including government employers. Under the bill, employers would not be able to ask applicants to provide their salary history at any point during the job hiring and negotiation process. Employers also have to provide the pay scale for positions if requested to do so by the applicant.

However, if a job applicant voluntarily provides their salary information without prompting from the potential employer, the employer would be able to use that information in making a salary determination.

Just last year, the Legislature passed another law on the use of salary history. This law went into effect on Jan. 1 of this year, and amended the California Fair Pay Act to bar employers form using prior salary as the sole justification for any disparity in compensation. It specifies that prior salary is not a bona fide factor to justify a difference between employees of different genders or races for doing the same work.

Several business groups, including the California Chamber of Commerce, the California Restaurant Association, and the California Retailers Association vehemently opposed the bill. First, they argued that the bill unnecessarily increases employers’ exposure to litigation. Second, they decried the additional hurdles in the hiring process necessitated by the bill and noted that employers could have legitimate reasons to ask for salary information. Third, they pointed out that this issue had just been addressed in legislation last year, and suggested waiting for the impact before passing further legislation.

The bill passed 57-15 in the Assembly (with seven members not voting), and 27-10 in the Senate (with three senators not voting). If it is passed, employers and those in the recruiting and human resources field will have to review their hiring process to avoid liability for asking job candidates about their salary history.

Immigration Enforcement in the Workplace

Assembly Bill 450 would impose requirements on all California employers with regard to cooperating with federal immigration agency worksite enforcement actions. Unless they are required to do so by federal law, the bill prohibits employers from providing voluntary consent to an immigration enforcement agent to enter nonpublic areas of a place of labor unless the agent provides a judicial warrant. Employers also may not voluntarily consent to allowing federal immigration agents to access, review, or obtain the employer’s employee records without a subpoena or court order. Employers face a penalty of up to $5,000 for a first violation and up to $10,000 for each subsequent violation. Additionally, the bill requires employers to provide notice to employees within 72 hours of receiving a federal notice of inspection.

The bill also prevents employers from re-verifying that a current employee is eligible for employment, unless the verification is required by specified federal law. Employers would be subject to a penalty of up to $10,000 for a violation of this prohibition to be recoverable by the labor commissioner.

The purpose of the bill is to protect California workers and ensure that they understand their rights The Senate analysis notes that “ICE has routinely violated basic constitutional rights, such as the 4th amendment’s protections against unreasonable search and seizure. ICE has detained all workers, without any individualized suspicion, regardless of status when conducting workplace raids.”

The bill sets the stage for a clash between federal and state law, which will put employers in a precarious position. The Society for Human Resource Management was a major opponent of the bill, and argued that the bill would require employers to expend significant resources to comply, and would require multiple employees to have a comprehensive understanding of federal and state immigration law.

The bill passed 53-22 in the Assembly (with four members not voting) and 27-10 in the Senate (with three senators not voting). If Gov. Brown signs the bill into law, future litigation is almost certain to determine the lines between state and federal powers.

“Ban the Box”

Assembly Bill 1008 creates a new procedure for employers to consider the criminal conviction history of job applicants before making employment decision. It also gives applicants who are rejected from jobs because of their criminal history the right to be informed of this reason and to respond before employers can make a final decision.

The bill makes it unlawful under the California Fair Employment and Housing Act for employers with five or more employees to have an employment application question seeking the disclosure of an applicant’s conviction history until they have given the applicant a conditional offer.

Once they have given the applicant a conditional offer, employers are able to conduct a limited conviction history background check. However, this background check may not consider non-conviction history, such as arrests not followed by conviction, referrals to pre-trial or post-trial diversion programs, or convictions that have been expunged, sealed or dismissed convictions.

If the employer then decides to deny the applicant the job based on their past conviction, the employer must “make an individualized assessment of whether the applicant’s conviction history has a direct and adverse relationship with the specific duties of the job.” The assessment must consider three factors: (1) the nature and gravity of the offense; (2) the time passed since the offense; and (3) the nature of the job.

Once the employer decides to reject the applicant because of a past conviction, the employer is required to notify the applicant of that decision in writing. At this point, the decision is considered preliminary. The applicant then has five business days to respond to the notice and provide an explanation or challenge the conviction history report. At that point, the employer makes a final decision about employment. If the employer’s final decision is based solely on the conviction history, the employer must tell the applicant this and inform the applicant of his or her right to file a complaint.

The elaborate procedure contemplated by the bill may create confusion and opportunities for future litigation. Employers should closely evaluate their written job applications and interview process, and ensure that they have a system in place to give notice to applicants.

The bill passed 42-30 in the Assembly (with seven members not voting) and 27-13 in the Senate.

Expanding Parental Leave to Small Business Employees

Senate Bill 63 makes it unlawful for an employer, of 20 or more employees, to refuse to allow an eligible employee to take up to 12 weeks of job protected parental leave. Eligible employees would have worked at least 1,250 hours in the 12 months before they take parental leave. This bill also prohibits an employer from refusing to maintain and pay for the employee’s continued group health coverage during the duration of the leave.

Existing California law on parental leave (the California Family Rights Act) already provides these rights to employees working for companies with 50 or more employees. SB 63 would apply these requirements to businesses with between 20 and 49 employers, which represents an additional 16 percent of the California workforce.

The bill was vigorously opposed by chambers of commerce and various business groups, and supported by labor organizations and women’s rights groups. The bill passed 25-13 in the Senate (with two senators not voting) and 51-15 in the Assembly (with 13 people not voting).

Overtime Compensation

Assembly Bill 1565 raises the threshold employees to be exempt from overtime. Employees are exempt if they earn a monthly salary equivalent to either $3,956 or an amount no less than twice the state minimum wage for full-time employment, as defined, whichever amount is higher.

This bill follows the Department of Labor’s stymied attempt to increase this salary threshold through regulations. The Department issued a regulation moving the existing $23,660 per year threshold for exemption to $47,476 per year. However, implementation of the regulation was halted by a judge in the Eastern District of Texas, and the Department of Labor in the current administration dismissed its appeal.

California employers should keep a close eye on these bills. Their effects could be significant, and failure to update internal hiring and employee procedures could expose businesses to large litigation risks.