Each year we prepare a summary of key legislative changes in the California labor and employment arena, along with some guidance on how to prepare for their implementation in 2017. The highlights of the most recent legislative session are as follows:

Employment Contracts

SB 1241 bars employers from imposing, as a condition of employment, any non-California choice of law provisions on employees who primarily live and work in California, and also from requiring such employees to adjudicate in a forum outside of California a claim arising in California. The only exception is where an employee is represented by an attorney in negotiating the employment contract. If an employer includes such provisions any way, they are voidable by the employee, who also can collect reasonable attorneys' fees for enforcing such rights. This bill adds Section 925 to California's Labor Code, which shall apply to a contract entered into, modified, or extended on or after January 1, 2017.

Fair Hiring Practices 

AB 1676 initially was a second attempt to make it illegal for employers to request an applicant's compensation history. Last year Governor Brown vetoed a similar bill (AB 1017), saying at the time that he wanted to wait and see if California's new Fair Pay Act would help address pay inequities before passing further legislation on the subject. Governor Brown approved AB 1676, as amended, so that it now prohibits employers from considering prior salary as the sole justification for differences in compensation. This bill amends California Labor Code Section 1197.5.

SB 1063 expands California's Fair Pay Act beyond gender to also prohibit employers from paying lower wages for substantially similar work performed by others of a different race or ethnicity. This bill amends California Labor Code Sections 1197.5 and 1199.5.

AB 1843 bans employers from asking job applicants about juvenile convictions, or from using any information about juvenile arrests or detentions in employment decision-making. The only exception is for health care facility employers. However, no employers can make inquiries into or consider sealed juvenile records. This bill amends California Labor Code Section 432.7.

SB 1001 is the latest bill to address discrimination on the basis of immigration status. SB 1001 prohibits employers from requesting additional documentation to verify an applicant's ability to legally work in the U.S. once the applicant has provided information that appears on its face to be genuine. The bill also prohibits employers from refusing to honor specific categories of documents for this purpose, or from attempting to reinvestigate or re-verify status. Applicants or employees who are subjected to "unfair immigration-related practices" can file charges with California's Department of Labor Standards Enforcement (DLSE). Employers who violate this provision face penalties of up to $10,000. This bill adds new Section 1019.1 to the Labor Code.

AB 1289 requires all transportation network companies to conduct criminal background checks on their drivers. Transportation network companies are barred from contracting with drivers who are registered on the National Sex Offender Public Website or who have been convicted of certain other felonies, assault, battery, domestic violence, or DUI within the past seven years. Similarly, AB 2687 lowers the level for DUI for drivers of passengers-for-hire to 0.04% from 0.08%, thus matching the DUI limit for commercial drivers.

Paid Family Leave and State Disability Insurance 

AB 908 increases, effective January 1, 2018, the weekly benefit amount paid by the state for paid family leave and state disability insurance from 55 percent of the employee's weekly compensation to 60 or 70 percent of weekly compensation, depending on the employee's income, up to a maximum weekly amount established by the state. AB 908 also removes the current 7-day waiting period for paid family leave benefits. This bill amends Unemployment Insurance Code Sections 2655 and 3303, and adds Section 2655.1.

Workplace Rights and Training 

AB 2337 provides that employers with 25 or more employees must give each new hire (and others upon request) written notice of their rights protecting victims of domestic violence. The Labor Commissioner will issue a form for this purpose by July 1, 2017, at which time the notice requirement will be triggered. This bill amends Labor Code Section 230.1.

AB 488 extends the protections of California's Fair Employment and Housing Act (FEHA) to individuals with disabilities and who work in nonprofit sheltered workshops or rehabilitation facilities. This was a follow-on to the 2014 bill extending FEHA protections to interns and volunteers. This bill amended Government Code Section 12926 and added Section 12926.05.

AB 1978 passed in response to janitors protesting outside the State Capitol. The bill creates the "Property Services Workers Protection Act," which requires all janitorial companies to register annually with the DLSE, which will then maintain a database and develop harassment and violence prevention training for all janitorial employees. If a janitorial company has any outstanding wage judgment or has been found not to have made proper payroll withholdings, it will not be allowed to renew its registration with the State. Of note, successor companies will be held liable for any such unpaid wages or penalties created by an earlier employer. While this bill does not go into effect until July 1, 2018, we have included it here because of the significant industry change.

AB 1732 specifies that single-use restrooms in all business facilities must accommodate all genders.

Wage & Hour 

AB 2535 clarifies Labor Code Section 226 by explaining that employers are not required to include on paystubs the number of hours worked by employees who are exempt from overtime.

AB 2899 imposes an appellate bond requirement on any employer appealing pursuant to a writ of mandate in Superior Court a Labor Commissioner's decision ruling that the employer had failed to pay the required minimum wages. The employer must file a bond equal to the total amount of wages, liquidated damages, and overtime found to be owing, with the bond amount payable to the employee if the employer fails to pay within 10 days of a final ruling. This bill amends California Labor Code Section 1197.1.

AB 2063 allows students who are 14 years old or older to participate in work experience education and shadow an employee for 25-40 hours per semester if the school certifies the application of the experience to the student’s technical career education curriculum.

Additional Notes 

While the above legislation is not insignificant, California did not pass proposed legislation that, among other things, would have mandated double pay for retail and grocery employees who work on Thanksgiving, would have required 21-day advance scheduling for restaurant, grocery, and retail employees, would have required up to eight hours per year of paid leave to attend children’s school events, would have allowed employees to request flexible 4/10 work schedules without overtime liability, and would have allowed the DLSE the independent right to bring discrimination actions against employers, even absent an employee complaint.

This legislative session also saw several proposed bills aimed at further revising the Private Attorneys General Act (PAGA). None of the bills made it out of the Assembly or Senate, respectively. PAGA remains expansive and largely subject to interpretation on a case-by-case basis, but the fact that business groups continue to propose legislation to clarify the scope and intent of PAGA suggests this is something the Legislature will need to act on in the near future. Stay tuned for further developments in the coming session.