Why it matters

California employers should brace themselves for a busy year. Several bills took effect as of January 1, 2016, including legislation that provided some much-needed clarity to the state's new law establishing paid sick leave, an amended equal pay bill shifting the burden of proving that an employee's higher rate of pay is based on factors other than gender to employers, recognition that a request for a reasonable accommodation based on religion or disability constitutes protected activity under the state's Fair Employment and Housing Act (including protection from retaliation), and the establishment of a safe harbor for employers with piece-rate workers. Although it took immediate effect last October, employers should also keep in mind a measure that permits the cure of potential violations under the California Labor Code for neglecting to provide certain information on wage statements.

Detailed discussion

Several new laws impacting California employers took effect as of January 1, 2016. Below is a summary of some of the major changes.

  • In 2013, a pair of appellate panels ruled in favor of piece-rate workers, recognizing that the employees should be paid separately for rest and recovery time in Bluford v. Safeway, followed by a decision in Gonzalez v. Downtown Motors requiring payment for other non-productive time, including substantial waiting time for work. With employers facing the potential for significant retroactively liability as a result of the decisions, the Legislature stepped in and passed Assembly Bill 1513. The law established a safe harbor for employers to avoid retroactive liability if they provide a fixed payment to their workers for periods between July 2012 and the present. Employers that provide such a payment to their workers have an affirmative defense to retroactive claims until January 1, 2021. In addition, the legislation provided a clear definition of the term "non-productive time," left unclear by the decisions, as "time under the employer's control, exclusive of rest and recovery periods that is not directly related to the activity being paid on a piece-rate basis." Employers were given options on how to calculate non-productive time, such as paying the minimum wage for each hour worked on top of the piece-rate pay or using a "reasonable estimate." Addressing another unanswered question from the Bluford case, AB 1513 recognized that the required rate of pay for rest periods should be based on the average pay received by an employee in any week including work paid on a piece-rate basis.
  • Although the state's Healthy Workplaces, Healthy Families Act took effect on July 1, mandating that employers provide three paid sick days per year for employees that have worked in the state for at least 30 days in a calendar year (regardless of whether they are full- or part-time workers), the law left employers with several unanswered questions. To provide clarity on certain issues, the Legislature enacted Assembly Bill 304. Specifically, the new bill made clear that the 30 days of work required to trigger paid sick leave must all be worked for the same employer. Employers were also provided with an option on how to pay sick days for nonexempt employees as well as methods of how to accrue paid leave—in lieu of the strict 1 hour per 30 hours worked, employers were offered the choice to use other accrual methods within certain parameters. If an employer already had a paid sick leave or paid time off policy in existence that satisfied the requirements of the Act as of January 1, 2015, AB 304 clarified that the employer was not required to provide additional paid sick days.
  • Touted as the toughest law of its kind in the nation, Senate Bill 358 expanded California's Fair Pay Act by shifting the burden to employers to prove that an employee's higher rate of pay is based on factors other than gender and providing employees with the ability to sue if they are paid less than coworkers of a different gender performing "substantially similar" work. As originally enacted in 1949, the statute provided that an employer may not pay an employee at a rate less than that paid to employees of the opposite sex in the same establishment for equal work performed on equal jobs. The new law lowered the burden on employees by requiring them to prove only that they received lower wages for "substantially similar" work and by eliminating the "same establishment" requirement. The new law identified limited circumstances where an employer can show that wage disparity is based on a legitimate factor other than sex. Only a seniority system, a merit system, a system that measures earnings by quantity or quality of production, or a differential based on any bona fide factor other than sex (such as geographic location, education, experience, or training) will suffice. Employers were also hit with record-keeping requirements to maintain records of wages and wage rates, job classification, and related terms and conditions of employment for a three-year period. SB 358 added a prohibition regarding retaliation and bans employers from interfering with workers' ability to discuss and share information about their wages.
  • Employers will want to review their wage statements in light of a new law that took immediate effect last October permitting the cure of potential violations that could lead to a lawsuit under the Private Attorneys General Act (PAGA). An employer may be liable under the California Labor Code for neglecting to provide certain information, including the name and address of the legal entity that is the employer and the inclusive dates of the pay period, in an employee's wage statement, with damages of up to $200 per pay period for violations, plus attorneys' fees and costs. The new law, Assembly Bill 1506, provided employers with the right to cure such a violation with a showing that every employee received a "fully compliant, itemized wage statement" for each pay period for the three-year period prior to the date of the employee's written notice. The right to cure is not unlimited, however, with employers allowed just one opportunity per 12-month period to fix any mistakes and a 33-day window to correct the error upon notice from an employee identifying wage statement defects before liability attaches. AB 1506 is limited to just two specific subsections of the California Labor Code, Section 226(a)(6) and Section 226(a)(8), although the Code requires employers to provide additional information on wage statements.
  • Initiated in reaction to a decision from a California appellate panel, Assembly Bill 987 amended the Fair Employment and Housing Act (FEHA) to provide protections for employees who make a request for an accommodation for a disability or religion. The issue arose in a case that began when an employee requested a leave of absence to donate a kidney to his sister five months prior to the surgery. Two months before the surgery the employee was terminated. He sued for associational disability discrimination under FEHA, but the appellate panel in Rope v. Auto-Chlor System of Washington affirmed dismissal of his suit, holding that "a mere request—or even repeated requests—for an accommodation, without more" does not constitute protected activity sufficient to support a claim for retaliation in violation of FEHA. AB 987 amended the statute to establish that "[a] request for reasonable accommodation based on religion or disability constitutes protected activity … such that when a person makes such a request, he or she is protected against retaliation for making the request."

To read AB 1513 (workers' compensation and piece-rate compensation), click here.

To read AB 304 (sick leave: accrual and limitations), click here.

To read SB 358 (gender wage differential), click here.

To read AB 1506 (PAGA amendment to cure labor code violations), click here.

To read AB 987 (FEHA amendment), click here.