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Update on New Employment Laws for 2017

By Faith Driscoll, Esq.

Each year the governor signs and vetoes bills approved by the Legislature.  This year over 70 different bills impacting employers and employees were signed by Governor Jerry Brown.  This article highlights the most new laws that will result in changes in the workplace.  Human resource professionals should take the time to prepare for the new laws and make adjustments to policies and procedures as appropriate.  The bills covered here all effective January 1, 2017, unless a different date is provided.

Fair Pay Act: Prior Salary & Race/Ethnicity.    AB 1676 amends last year’s Fair Pay Act, Section 1197.5 of the Labor Code, to prohibit employers from considering prior salary as the sole justification for any disparity in compensation. SB 1063 expands the Fair Pay Act (SB 358) from gender based to also include difference in compensation based on race and ethnicity.  Specifically, it would prohibit employers from paying employees less than the wage paid to employees of a different race or ethnicity for substantially similar work.

As with gender, the employer bears the burden to demonstrate that the wage differential is based upon one or more of the following factors: (a) a seniority system; (b) a merit system; (c) a system that measures earnings by quantity or quality of production; or (d) a bona fide factor other than race or ethnicity, such as education, training, or experience.  As with the “bona fide factor” exception following SB 358’s enactment, the employer must demonstrate that the factor is not derived from a race or ethnicity-based differential, is job-related to the position in question, and is consistent with a business necessity (i.e., an overriding legitimate business purpose that cannot be achieved through an alternative business practice).  The employer must also demonstrate that each factor relied upon is applied reasonably and the one or more factors relied upon account for the entire wage differential.

Employers should audit the compensation paid to employees performing substantially similar work to determine if there is a disparity between compensation paid to employees of different races or ethnicities.

Juvenile Criminal History.  Consistent with the “ban the box” trend advancing nationwide, Labor Code section 432.7 prohibits employers from requesting applicants to disclose, or from using as a factor in determining employment conditions, information concerning an arrest or detention that did not result in a conviction, or information concerning a referral to or participation in a pre- or post-trial diversion program.  Since 2014 (SB 530), California employers have also generally been prohibited from inquiring about or using information related to a conviction that has been judicially dismissed or ordered sealed.

New AB 1843 prohibits employers from asking an applicant to disclose any information regarding juvenile convictions as well as seeking or using any information related to juvenile arrests, detentions, or court dispositions as a factor in whether to hire the applicant. There are some exceptions for health facility employers, but they still cannot inquire into an applicant’s sealed juvenile criminal records.

Employers should review their applications and interview questions to ensure that information prohibited under this new law is not required to be disclosed by applicants.

Unfair Immigration-Related Practices.  SB 1001 makes it an unlawful employment practice to request more or different documents than required under federal law to verify that an individual is not an unauthorized immigrant, or to refuse to honor documents tendered that on their face reasonably appear to be genuine, refuse to honor documents or work authorization based on specific status or term that accompanies the authorization to work, or to attempt to reinvestigate or re-verify an incumbent employee’s authorization to work using an unfair immigration-related practice. This bill provision states that job applicants and employees who suffer an “unfair immigration-related practice” can file a complaint with the DLSE for enforcement and provides that a violation of these provisions can result in a penalty of up to $10,000.

Employment Contracts.  SB 1241 prohibits an employer from requiring an employee, who resides and works in California, as a condition of employment, to agree to a contract provision that would either require the employee to litigate or arbitrate employment disputes (1) outside of California or (2) under the laws of another state. The only exception is where the employee was individually represented by a lawyer in negotiating the employment contract. The bill provides that any contract that violates these provisions is voidable by the employee. A court may award an employee reasonable attorney’s fees, among other remedies, for enforcing rights under the act.  Any employer who requires an employee to sign an employment contract or agreement should carefully review it to ensure that it does not require the employee to litigate out-of-state. These provisions are common for businesses that are headquartered or have operations outside of California.

Single-User Restrooms.  This bill applies to not only employers, but all businesses that are open to the public. AB 1732 requires all single-user toilet facilities in any business establishment, place of accommodation, or government agency to be identified as all-gender toilet facilities by March 1, 2017. The bill also provides that local officials responsible for code enforcement are to inspect for compliance. This new law establishes the nation’s most inclusive restroom access law.

Are you ready to implement the changes created by the new laws?  How will they affect your workplace?  SHRM Tulare/Kings is hosting a workshop on January 10th covering these and many of the other new laws.  Attendees will have an opportunity to ask questions and learn best practices to stay compliant with California's new requirements.  Register today to reserve your spot!

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