It’s a new year and, for California business owners, 2016 brings more new laws to comply with.  Governor Brown signed into law several new bills (and amended others) that will have a significant impact on employers and their employees.  Unlike the resolutions so many of us make and forget, forgetting (or refusing) to comply with these new laws could have dire consequences for your business.

Below is a brief summary of some of the new California laws that will affect business owners.

The California Fair Pay Act (SB 358)

On January 1, 2016, the Fair Pay Act, which revises Labor Code Section 1197.5, went into effect.  The Act seeks to address the disparity in earnings between women and men by prohibiting employers from paying less to one gender versus the other for substantially similar work.  While California has had laws on the books addressing gender inequality in pay for almost 70 years, this amendment to the Labor Code significantly broadens California’s existing law. 

The major takeaways for employers from this law include:

  • Permits employees to compare their pay with that of employees of a different gender who have “substantially similar positions.”
  • The law will consider factors such as the amount of skill required, effort expended and the amount of responsibility given. Job titles alone will not be sufficient to meet the standard for “substantially similar positions”.
  • Imposes an affirmative burden of proof on employers to justify pay differentials. Employers now must “affirmatively demonstrate” that a disparity is based entirely on one or more valid factors, e.g., a seniority system, a merit system, or a system that measures earnings by quantity or quality of production.  One or more of these factors must also be coupled with a showing of business necessity.
  • Makes it easier for plaintiffs to bring claims under Labor Code Section 1197.5.
  • Targets “pay secrecy” by strengthening prohibitions against employers’ bans on employees disclosing their wages and bars retaliation against employees who discuss pay or ask about the pay of coworkers.
  • Allows employees to challenge wage gaps that exist at different worksites.

Increase in Minimum Wage

On January 1, 2016, the California minimum wage rate increased to $10.00/hour, up from $9.00.  Many cities also have local minimum wage ordinances that exceed the state minimum.  This increase also impacts who qualifies as an overtime “exempt” employee.

E- Verify Abuse (AB 622)

This law adds Section 2814 to the California Labor Code, and makes it unlawful for an employer to use E-Verify to check the employment authorization status of an existing employee or applicant who has not been offered employment, except as required by federal law or as a condition of receiving federal funds.  The law does not prohibit employers from using the E-Verify, in accordance with federal law, to check the employment authorization status of a person who has been offered employment.  Finally, in addition to other remedies available, an employer who violates this new law may be liable for a civil penalty up to $10,000 for each violation, and each unlawful use of the E-Verify system on an employee or applicant constitutes a separate violation.

Family School Partnership Act (SB 579)

This Act amends Section 2308 of the Labor Code to allow workers to take job-protected time off from work for school or child-care activities and applies to companies with 25 or more employees.  Those activities include finding a school or a licensed childcare provider or to address school emergencies or childcare provider issues.

Additionally, this law amends Labor Code Section 233, which applies to all employers.  Under Section 233 (California’s “Kin Care Law”), employees may use one-half of their accrued sick leave to care for a family member.  “Family member” now includes: a child regardless of age or dependency (including adopted, foster, step, or legal ward), siblings, parent (biological, adoptive, foster, step, in-law, or registered domestic partner’s parent), spouse, registered domestic partner, grandchild or grandparent.

Employment Discrimination (AB 987)

This law amends Section 12940 of the Government Code, making it unlawful for employers to retaliate or discriminate against an employee for requesting a reasonable accommodation on the basis of disability, religious belief or observance, regardless of whether the request was granted.  The request for a reasonable accommodation is protected under the Fair Employment and Housing Act.

California Franchise Relations Act – Franchisor / Franchisees (AB 525)

This law makes it more difficult for major chains to unfairly terminate franchisees.  The Act also updates current laws to prohibit a corporation from closing a franchise business unless the franchise owner has significantly violated the franchise contract or the law.  If a franchisor terminates the franchise agreement in violation of the Act, the franchisor must pay the fair market value of the franchise business and assets, as well as any resulting damages.

Other Noteworthy Employment Laws

  • Cheerleaders for professional sports teams are considered employees, not independent contractors.  As a result, they are entitled to minimum wage compensation, workers’ compensation, paid sick leave, meal and rest breaks and other benefits afforded to hourly workers. 
  • Companies with state contracts worth at least $100,000 must provide equal benefits to transgender employees.
  • A new law expands the list of employees eligible for California’s military leave protections, such as return rights and other job protections.