New Laws and Changes for 2016
With the start of 2016, employers should be aware of many new requirements. Below is an outline of significant changes that employers should be aware of:
AB 304 Paid Sick Leave
This law provides additional clarification in the alternative methods in which employers may accrue the Paid Sick Leave, provided that all other provisions of the law are met, such as the ability for the employee to determine the amount of time and when they need to take the time off for Paid Sick Leave.
The new revisions under AB 304 allow employers who provide employees with unlimited sick time to report this on the pay stub to meet the reporting requirement by merely showing “unlimited sick time” on the pay stub.
Employers who meet the requirement for Paid sick Leave by providing an alternate method, such as Paid Time Off (PTO), which has the requirement to pay any unused hours at the time of termination of employment will not be required to reinstate those hours if the employee is re-hired within 1 year of termination.
In August 2015, the Department of Labor Standard Enforcement (DLSE) issued an interpretation of the Paid Sick Leave law by saying that the law intends for the Paid Sick Leave to be three days. With this interpretation, the DLSE said that employees who regularly work a scheduled shift in excess of 8 hours, are entitled to 3 days calculated based on the number of hours that they work in a week. So for example, for an employee working a 10 hour day, the Labor Commissioner’s interpretation is that this employee should be given 3 days, in the form of 30 hours of Paid Sick Leave.
SB 588 Labor Commissioner’s Enforcement
This bill provides the Labor Commissioner with extensive enforcement authority that used to be limited to the powers of a court of law.
In the event of a ruling or judgment of non-payment of wages as required by law, the Commissioner now has the direct authority to issue levies and liens against personal property of the employer. Additionally the Commissioner now has the authority to issue a Stop Order which prevents an employer from operating their business. Lastly, in cases where the employer is required to hold a valid business license, the Commissioner is now able to revoke the business license.
This new law has some other important implications for persons who are charged with payment of wages on behalf of the employer as part of their job duties. The law allows that those persons can be personally liable on behalf of the employer when wages are not paid as required by law, as well as for failure to timely provide written wage statements (paystub), failure to pay for failed rest and meal period penalties, or business expense reimbursement request.
AB 970 Labor Commissioner Enforcement of “Local Law”
This law gives the Labor Commissioner the authority to enforce local ordinance laws regarding wages for employees. This applies to ordinances which have been passed in many cities such as a higher minimum wage in certain cities such as San Francisco, Oakland, San Jose, San Diego, Los Angeles County.
2016 Exempt Employment Pay Requirements
Listed below are the minimum rates of pay to qualify as exempt (along with all other duties tests) in California:
$800.00 per week;
$1,733.33 per month which is equivalent to $41,600.00 annually
Computer Software Exemption:
$41.85 per hour, or
$7,265.43 per month or
Physician and Surgeon:
$75.24 per hour
FLSA Changes in Independent Contractor Test
The FLSA recently revised some components of their “test” to determine if a worker qualifies as an independent contractor, or instead must be classified as an employee. The biggest change to the test is in the area of the “economic realities” part of the test. With this change the FLSA makes it clear that they intend to look very carefully at the following components of the “economic realities” test:
1. The extent to which the work being performed is an integral part of the employer’s business;
2. Whether or not the worker’s management skills or duties affect the worker’s chance for profit or loss;
3. The worker’s investment in facilities and/or equipment to enable them perform the job;
4. The worker’s skill and initiative;
5. The permanency of the worker’s relationship with the company where work is performed;
6. The nature and degree of control exercised by the company for whom the work is performed.
AB 987 Reasonable Accommodation Under ADA
Existing law requires employer to engage in an interactive process with employees with a disability in order to provide a reasonable accommodation to enable them to perform the essential functions of their job. The provisions of AB 987 prohibits the employer from retaliating against an employee for making a good faith request for an accommodation, even in instances where the employer ends up not providing any form of accommodation to the employee making the request.
ADA Accommodation – Recent Court Ruling – Nealy v. City of Santa Monica.
In this case, the court ruling gives employers guidance regarding the need to remove essential functions of a job as a form of a reasonable accommodation to an employee. The court reaffirmed that the ADA requires that an employer must work to make reasonable accommodation to enable the employee to do the essential functions of their job, not to remove essential functions from the job.
The ruling in this case also addressed an employee’s request for indefinite leave as a reasonable accommodation. The court held that the employer may look at when the condition reaches a place of “permanence”, and that beyond that point, the employer need not continue to make accommodation because it has been determined that the employee will permanently not be able to perform the essential functions of the job. Caution here to employers, that they should seek legal assistance to ensure that they are making the right employment decisions in such cases.
Rescinding Resignation Notice
In a recent court case, Porter v. Houma Terrebonne Housing Authority, the Federal Appellate court ruled that the employer’s refusal to allow an employee who resigned to rescind that resignation constitutes an adverse employment action by the employer, as well as retaliation. Caution here is to seek legal counsel prior to refusing to allow an employee to rescind a resignation of employment.
Joint Employer Status
Several court cases have put a light on the issue of Joint Employment Status, and who is actually held ultimately responsible for following the law. The cases make it clear that any person or party that exercises control over a worker is deemed under the law to be an employer who will be held responsible for adhering to law. This past year, many such determinations were made in situations involving Franchisor and Franchisee organizations. The courts have determined both the Franchisor and the Franchisee to be the employer with respect to the law, and responsible for the penalties for failure to adhere to the law.
SB 358 Fair Pay Act
With the passage of SB358, California now has one of the nation’s most aggressive fair pay standard.
SB 358 outlines that an employer MAY NOT enact rules or policies which forbid an employee from engaging in conduct of disclosing their wage information, asking other employees what their wages are, or discussing the wages of others in the workplace. Employees are granted the right under this law to encourage other employees to discuss their wage information.
The law prohibits an employer from retaliating or otherwise discriminating against an employee engaged in these wage activities, or discharging and employee who engages in the protected activities.
This law also provides that employers must pay men and women the same pay for substantially similar job duties, viewed as the composition of skills, effort required, and the responsibilities of the job. The test for similar job duties is not based on the job title, but instead based on a detailed analysis of the actual nature of the duties performed within any given job. Under the new law, differences in pay for substantially similar work may only be justified using the following criteria:
A bona fide seniority system;
A merit system which has been clearly defined and is measurable;
A well-defined system that measures quality or quantity of work performed;
A bona fide factor other than gender (sex) such as education, training, or years of specific job related experience.
Lastly the law provides that claims by employees must be filed within 1 year of the allegation, and that an employee who prevails in entitled to recover any wages lost as a result of the action by the employer, plus liquidated damages in an equal amount of the successful claim, as well as all attorney fees.
AB 1506 Employer Cure of PAGA Claim
AB 1506 provides for a few very narrowly defined areas in which an employer can “Cure” a cause of action brought be an employee or former employee by an attorney under the California Private Attorney General Act (PAGA). This bill provides employers with 2 specific areas where they may cure a PAGA claim, specifically pertaining to wage statements the employer is required to provide to employees each pay day. The two areas are:
Providing the inclusive dates of the pay period for which wages are being paid on the pay stub, and
Providing the legal name, address and phone number of the employer.
Violation of these two requirements under existing California law under Labor Code 226 may be “cured” by the employer only 1 time in a 1 year period of time, and the employer will only be given 33 days in which to accomplish the cure.
Current and/or former employees have the right to bring a PAGA claim with a 3 year backward statute of limitations. If the employee prevails in their cause of action, by statute, they are entitled to payment of all of their attorney fees by the employer.
AB 1245 Electronic Unemployment Wage Reporting
This law enacts a requirement that employers with 10 or more employees must file all of their unemployment insurance wage reports and returns by electronic format starting January 1, 2017. As of January 1, 2018 ALL employers will be required to do electronic reporting.
SB 501 Wage Garnishment Restriction
SB 501 significantly changes the maximum amount that an employee’s weekly income can be subject to wage garnishment. The new threshold is the lesser of either 25% of weekly gross wages, or 50% of the employee’s wages that exceeds 40 times the current minimum wage. This law takes effect as of July 1, 2016.
SB 579 Kin Care Law Definition Change.
SB 579 amends the existing California “Kin Care” law under Labor Code 233 to define a family member as the same as was defined under SB 1522 for Paid Sick Leave. This new law also adds additional qualifying events that enable the employee to have protected time off work under Kin Care. The additional activities are outlined as finding, enrolling and re-enrolling a covered child in school or day care.
The law expands to include the protected time off to step-parents, foster parents or other adult who “stand” in loco-parentis status for a covered child.
AB 622 E-Verify System
Many employers are enrolled through the Department of Homeland security to use the E-verify system to check employment authorization status of individuals. This law prohibits any employer from using the e-verify system to check employment authorization status (verifying social security numbers, work authorization documents etc.) of job applicants and existing employees unless doing so is required under a federal contract or by federal law. Specifically this law prohibits an employer from using the e-verify system prior to issuing a bona fide offer of employment unless the employer is mandated to do so by the terms of a federal government contract or federal law. The fine per individual breach of the e-verify regulation in this manner carries a $10,000.00 penalty per violation (impermissible inquiry).
SB 570 Employee Information Data Breach
Any employer that sustains a data breach of unencrypted employee data is required to provide notice to those employees in a prescribed format. In the event of a data breach of over 500 employee records, the employer is required to electronically report the breach to the California Attorney General’s office. Employers can find a model notice as well as the electronic report the Attorney General’s Office on their website.
SB 600 Discrimination
SB 600 prohibits employers from discriminating or retaliating against an applicant or an employee on the basis of their citizenship, primary language spoken, or their immigration status.
AB 583 National Guard
Current law provides for protected time off work and certain reinstatement rights for an employee who is called into service by the California National Guard. This bill extends those same rights to an employee who is called into service by any other U.S. State’s National Guard.
AB 1509 Retaliation Against Family Members
Current law prohibits employers from retaliating against employees who exercise their rights under law as outlined in California Labor Code 98.6, 1102.5, and 6310. This law extends the existing law to protecting an employee from retaliation in employment when one of their family members has, or is perceived as having engaged in protected activities as outlined under the same Labor Code sections.
AB 1513 Piece Rate Compensation
As of January 1, 2016, employers who pay employees on any form of a “piece rate” system must pay the employee for all time that the employee is at the employer’s place of business for rest and recovery periods, as well as “stand by” time. Effectively this means that employers who pay by ANY form of piece rate must show that they have paid separately for the rest, recovery and/or other “non-productive” time.
The separate pay must be reflected on the employee’s pay stub in a manner that shows the number of “non-productive” hours being paid, and the rate of pay per hour for this time, which cannot be less than minimum wage. The pay stub must also show all the detail of how the piece rate is paid, specifically, how many “pieces” at what rate of pay per piece, along with the total gross wages, deductions and net pay for the pay period.
IRS Mileage Reimbursement Rate for 2016
Effective 1/1/16, the IRS allowable reimbursement rate for business mileage is $.54 per mile.