Vedder Price

Vedder Thinking | Articles California Employment Law Updates – Notable Changes in 2016


Reader View

The new year promises to be a busy one for California employers with the passage of numerous labor and employment laws and amendments. With most changes taking effect on January 1, 2016, employers are encouraged to review their policies and practices with knowledgeable counsel to ensure compliance. Below is an overview of many of the most notable changes coming in 2016.1

  • Minimum Wage Increase 
  • California Fair Pay Act 
  • Private Attorneys General Act (PAGA) and the Opportunity to Cure 
  • Discrimination, Retaliation and Whistleblower Protections 
  • Leave Law Expansions 
  • Unemployment and Disability Insurance 
  • Wage and Hour Laws 
  • Workers' Compensation Laws 
  • DMV Reports for Ride-Sharing Services Drivers 
  • Motor Carrier Employer Amnesty Program 
  • Use and Misuse of E-Verify Authorizations 
  • Successor Grocery Store Employers and Current Employees 
  • Cheerleaders Are Employees

Minimum Wage Increase

California's minimum wage increases to $10 per hour, effective January 1, 2016. Many cities also have local minimum wage ordinances that exceed the state minimum.

California Fair Pay Act

The California Fair Pay Act (CFPA), SB 358, seeks to remedy gender-based wage differentials and will be one of the strictest in the country.2 The old California law required that employees complaining of wage differentials point to comparator employees that perform the “same” job, with the "same" skill, effort and responsibility. The new standard requires employees to show others performing only "substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions"-- the comparators need not even work in the "same establishment." Further, employers now bear the burden of proof on these claims and must "affirmatively demonstrate" that a disparity is based entirely on one or more valid factors, e.g., a seniority system, a merit system, a system that measures earnings by quantity or quality of production, or a bona fide factor other than sex.

The law also targets “pay secrecy,” by allowing employees to disclose, discuss and inquire about their own and other employees' wages, and to aid other employees in exercising their rights under the CFPA. There is now a private right of action for retaliation or discharge in violation of the CFPA, with available relief including reinstatement, reimbursement for lost wages and benefits, and injunctive relief.

Private Attorneys General Act (PAGA) and the Opportunity to Cure

AB 1506 provides some solace for employers mired in wage statement issues. The bill amends PAGA to allow employers a limited right to cure wage statement violations, which involve failure to provide itemized wage statements containing 1) pay period dates and 2) the name and address of the legal entity, before individuals can bring civil suits for such alleged violations.

Discrimination, Retaliation and Whistleblower Protections

AB 1509 amends Labor Code sections 98.6, 1102.5, 2810.3 and 6310, expanding whistleblower and anti-retaliation protections to an employee who is a family member of a person engaged in protected conduct or who makes a complaint protected by the Labor Code. The law also expands joint employer liability, expanding the definition of employer to include "client employers" (i.e. companies who contract for labor).

AB 987 prohibits employers from discriminating or retaliating against employees who request an accommodation for a disability or religion, regardless of whether the request was granted. The law clarifies that the act of making the request is protected conduct and is actionable separate and apart from the protected-class status of the employee.

Under AB 560, the immigration status of a minor is irrelevant to liability, remedies and recovery under applicable labor laws, except for employment-related injunctive relief that would violate federal law.

Leave Law Expansions

SB 579 expands child-related leaves, allowing employees time off to find a school or a licensed child care provider and to enroll or re-enroll a child, and time off to address child care provider or school emergencies. It also expands the categories of employees who are eligible to take time off to care for a child. Employers with 25 or more employees are covered under the law.

AB 583 expands the list of employees eligible for California's military leave protections.

Unemployment and Disability Insurance

SB 667, effective July 1, 2016, changes eligibility waiting periods where an individual files a second disability claim for the same or related condition as his or her initial claim. It also extends the time between claims that will be considered one disability benefit period from 14 days to 60 days.

AB 1245 requires electronic reporting for unemployment insurance reports submitted to the Employment Development Department. The requirements take effect January 1, 2017 for employers with 10 or more employees and January 1, 2018 for all remaining employers.

Wage and Hour Laws

AB 1513 requires employers to pay piece rate workers for rest and recovery periods and other nonproductive time at specified minimum hourly rates, separate from the piece-rate compensation. This information must be included on piece-rate employees' itemized wage statements. The law has a "safe harbor" provision for employers who were not previously in compliance, but employers looking to take advantage of the safe harbor must meet the statutory requirements by December 15, 2016.

SB 327, which took effect October 5, 2015, affirms that employers in the health care industry can continue to allow employees to voluntarily waive one of their two meal periods, even when an employee's shift exceeds 12 hours.

SB 501, effective July 1, 2016, reduces the prohibited amount of weekly disposable earnings that may be garnished pursuant to a withholding order.

SB 588 allows the Labor Commissioner to place liens on employer property to remedy nonpayment of wages and to issue "stop orders" preventing the employer from continuing to conduct business in the state and it also allows for personal liability for individuals who violate certain Labor Code provisions while acting on behalf of employers.

AB 970 allows the Labor Commissioner to investigate and enforce local overtime and minimum wage laws and issue citations and penalties where employers fail to reimburse employees for employer-required expenses.

Workers' Compensation Laws

SB 623 provides that a person shall not be excluded from receiving benefits under the Uninsured Employers Fund or the Subsequent Injuries Benefits Trust Fund based on his or her citizenship or immigration status.

SB 542 clarifies medical provider network laws, including requirements regarding information that a medical provider network must post on its website.

SB 560 allows the Contractors State License Board to investigate and enforce the obligation of licensees to secure valid and current workers' compensation insurance. It also requires the licensing board to submit personal information regarding licensees, described above, to the Employment Development Department.

DMV Reports for Ride-Sharing Services Drivers

AB 1422 requires ride-sharing services, such as Uber and Lyft, to participate in the Department of Motor Vehicles' "pull-notice system" to regularly check the driving records of participating drivers, regardless of whether the driver is an employee or an independent contractor.3 The pull-notice system which allows employers to monitor employees' driver's license records, provides electronic reports showing "actions/activities" (i.e., accidents, license revocations/suspensions, DUIs and other actions taken against a license holder).

Motor Carrier Employer Amnesty Program

AB 621 establishes the Motor Carrier Employer Amnesty Program. Under the program, a motor carrier performing drayage services may be relieved of liability for misclassification of commercial drivers as independent contractors if the motor carrier enters into a settlement agreement with the Labor Commissioner prior to January 1, 2017. The motor carrier must agree to convert all of its commercial drivers to employees and pay all wages, benefits and taxes owed, if any.

Use and Misuse of E-Verify Authorizations

AB 622 prohibits employer misuse of E-Verify, the electronic federal verification system used to verify that workers are authorized to work in the United States. The law imposes penalties of $10,000 per violation. It also requires employers to comply with specific employee notification requirements when they receive notice from a federal agency that the submitted E-Verify information does not match federal records.

Successor Grocery Store Employers and Current Employees

AB 359 extends job protections to nonunionized grocery store workers when a grocery store changes ownership. Successor grocery store employers must hire from a list of current eligible employees during a 90-day transition period. Successor grocery store employers are also prohibited from discharging those workers without cause during that period and, upon the close of that period, must consider offering continued employment to those workers. Grocery establishments in "food deserts" are exempt. Collective bargaining agreements and local ordinances may supersede the law's requirements.

Cheerleaders Are Employees

AB 202 requires that California-based professional sports teams classify cheerleaders as employees, not independent contractors, when the cheerleaders are used by the team during its exhibitions, events or games. Standard California employment rules would govern.

Contact Us

Many of these new regulations expand the scope of risk for employers and require new workplace postings or changes to existing workplace policies. We recommend that all California employers consult with experienced employment counsel to ensure compliance going into 2016. If you have any questions regarding the topics discussed in this article, please contact Zachary Scott at +1 (415) 749 9535, any of our California labor & employment attorneys located in our San Francisco or Los Angeles offices, or your Vedder Price attorney with whom you have worked. Happy New Year.

1 Unless otherwise noted, the laws and amendments discussed take effect January 1, 2016.
2 An extensive write-up of the amendment is available
3 The employee vs. independent contractor debate surrounding ride-share drivers continues to be contentious and likely will need to be resolved in the courts.




Thomas H. Petrides