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July 2017’s Top Five California Employment Law Updates Employees Should Know

There are top five California employment law updates we should know details.

(1) Effective July 1, 2017, California’s Fair Employment and Housing Council (“FEHC”) introduced new regulations which require employers to allow employees the use of restrooms, and other similar facilities, such as locker rooms, which align with their gender identity/expression. The new regulations also guarantee employees the right to dress in accordance with their gender identity/expression and to be addressed by their preferred name and gender pronoun.

The new regulations further expand California’s legislatively progressive approach to addressing the workplace challenges faced by transgender and gender non-conforming employees. Earlier this year, California took a step in this direction via the enactment of Assembly Bill 1732 (“AB 1732”). Effective as of March 1, AB 1732 required employers who had single-occupancy restroom facilities, to designate these restrooms as open to all genders. These single-occupancy restrooms (defined as rest room facilities with no more than one toilet and one urinal with a locking mechanism controlled by the user) must now contain signage indicating that either gender is permitted use of that restroom facility. It should be noted that the bill does not require employers to install new single-occupancy restroom facilities (or convert existing multi-occupancy facilities to single-occupancy).

(2) The new FEHC regulations also included protections for employees specific to the use for criminal history in employment decisions. The new regulations restrict employers from considering a job applicant’s prior criminal history and conviction information except where it is explicitly job-related and consistent with a business necessity. Further, such consideration must be appropriately tailored to the job so that it does not create adverse impact.

Before making an adverse employment decision, employers will now be required to provide the applicant notice of disqualifying conviction, and, to provide a “reasonable” opportunity to respond and demonstrate that the exclusion should not apply in the applicant’s specific circumstances. In addition, employers must be prepared to demonstrate that their conviction disqualification policy appropriately identifies only those applicants and employees who may pose an unacceptable level of risk, and, that the specific disqualifying convictions definitively negatively impact the applicant’s or employee’s ability to perform the position’s necessary duties and responsibilities. These new protections operate in tandem with the new law, effective this year, which forbids employers from asking applicants about arrests, detention or adjudication of offenses under the juvenile court system.

The City of Los Angeles’, under its “Ban the Box” ordinance, requires that employers not ask applicants about their criminal background until after the conditional offer to hire is made. Additionally, the ordinance requires that employer’s implement a “fair chance” process if an offer is withdrawn based on the results of the criminal history check. This “fair chance” process requires the employer to prepare a written assessment, which would be provided to the applicant that clearly articulates the link between the applicant’s conviction and the unacceptable risk which would result from allowing the applicant to perform the job duties of the position. The applicant will then have an opportunity to provide the employer an explanation demonstrating why their conviction history should not result in ineligibility. The employer must consider the explanation, and then prepare a written re-assessment after a five day waiting period.

(3) July 1 also marks an important expansion of protections for victims of domestic abuse. Effective on this date, all employers with 25 or more employees must provide employees, at the time of their hire, written notification of their right to request leave if they have been the victim of domestic violence, sexual assault or stalking.

(4) The Fair Pay Act, which focuses on preventing and addressing gender based wage disparities, has been expanded to cover ethnicity/raced based pay inequalities as well. Prior to the enactment of the Fair Pay Act, in 2016, the burden of proof in gender-based wage inequity litigation lay with the plaintiff, and the narrow definition of “equal work”, heavily favored employers in defending against such claims. The Fair Pay Act brought sweeping changes, among them, replacing the “equal work” requirement in favor of “substantially similar work” and, allowing for the comparison of employees in different locations (though these locations do still need to be in California). In addition, the new law specifies that wage differences among genders doing “substantially similar work” may only exist for bona fide business reasons, as follows: (1) Seniority System (practice where employee pay rates are based on seniority/experience); (2) Merit System (performance basis for pay rates); (3) Output Quality or Quantity System (i.e. pay is based on production; employees that produce more units or sell more goods make more); (4) Other Bona-Fide Factor such as training or education (i.e. higher wages paid based on employees holding certain degrees and certifications or for possessing more training, or specialized industry knowledge.)

Now, in 2017, the Fair Pay Act has been expanded to prohibit pay disparities based on the protected characteristics of ethnicity and race. Therefore, wage differences, between genders, ethnicities, and race, are now unlawful unless an employer can prove they are the sole result of bona fide factors. Interestingly, geography is not included as a valid basis for wage disparity. For example, if employees of a certain race, who are a minority in a geographic region, happen to have higher wages that those of another race, who form the majority in that region, that fact would not result in a defensible claim by the employer. Additionally, prior pay history is also not an acceptable defense for wage inequalities, and, to the extent that knowledge of prior pay influences pay decisions, employers may find themselves liable. As a result, the act of asking applicants for prior pay history could create a liability for the employer.

Already, the enactment of the Fair Pay Act, and its recent expansion, have resulted in several pay equity settlements (e.g. Qualcomm settled for $19.5 million pre-litigation, and settled for $3 million in back-wages.).

(5) Finally, also as of July 1, 2017, employees within the City of Los Angeles (and its unincorporated areas of the county) who work at least two hours a week within this area will receive higher wages under the new minimum wage ordinance. All employees must be given a notice of the new minimum wage and signs must be posted at all locations where they work. Larger employers (defined as employing 26 individuals or more), will be required to pay employees $12 per hour, and this rate will rise at a rate of about one dollar each year until 2022 (at which time it will be adjusted based on the rate of inflation.) In addition, unused sick leave will now carry over to the next year, but, will be capped at 72 hours. Notably, Orange, San Bernardino, and Riverside Counties do not yet have these wage ordinance requirements.

Although not effective July 1, 2017, another significant change adopted in 2017 (which will go into effect as of January 1, 2018) is an increase in California’s Paid Family Leave (“PFL”) benefits. Under this new change, wage replacement will increase to 60% of wages for most employees, and the seven day waiting period to collect benefits will be eliminated.

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