Happy New Year! Now that we are back from the holidays, it’s time to dust off the employee handbook, review your policies and procedures, and make sure they are compliant with the new employment laws taking effect in 2017. This year, we have a combination of new laws, and existing laws that have been updated with additional protections.
1. California Minimum Wage Raised – On January 1, 2017, employers of 26 or more employees must pay $10.50 per hour as the minimum wage. Employers of less than 26 employees will not be required to raise the minimum wage to $10.50 until beginning January 1, 2018. Action: Review your pay policies to ensure they meet the minimum wage requirements. Please note that many cities and counties in California have passed higher minimum wage requirements (Berkeley, Cupertino, El Cerrito, Emeryville, Los Altos, Los Angeles City and County, Malibu, Mountain View, Oakland, Palo Alto, Pasadena, Richmond, San Diego, San Francisco, San Jose, San Leandro, San Mateo, Santa Clara, Santa Monica and Sunnyvale).
2. Federal Salary Basis Adjustment – Under state and federal law, employees may be deemed exempt from overtime if their positions meet certain criteria, including salary paid above a set rate. In May of 2016, the DOL amended the federal rule to increase the minimum salary requirement from $455 per week to $913 per week ($47,476/year) exceeding the minimum salary set by California. This new salary minimum was scheduled to go into effect on December 1, 2016. However, the rule change was put on hold while the question of whether the DOL exceeded its authority in making this new rule is litigated. The DOL may end up withdrawing the rule when the new administration takes over. Thus, the California minimum salary requirement of two times the minimum wage (now $41,600 for employers under 26 people and $43,680 for larger employers) remains in effect. Action: Ensure your pay policy meets the minimum salary requirement for all exempt employees as the minimum wage increases. Also, keep an ear out for any policy shifts from the DOL as the administration changes.
3. Change to the I-9 Form – The government has issued a new I-9 form that must be used beginning January 1, 2017 for all new employees. The form is available online at the USCIS website: www.uscis.gov/i-9
4. California’s Legalization of Recreational Marijuana Use – With the passage of Proposition 64, California now allows people over the age of 21 to smoke or ingest marijuana, grow up to 6 plants and transfer up to 28.5 grams of marijuana without compensation. Employers may implement policies limiting the use of marijuana by their employees, up to and including total prohibition. Action: (i) Confirm your company’s stance on employee marijuana use (both on and off the clock); (ii) review your employee handbook to make sure it is consistent with your position; (iii) make necessary changes to the handbook; and (iv) communicate those changes to employees.
5. Trade Secrets [Handbook Edits Suggested] – In May of 2016, a federal law was created governing trade secrets, which supplements existing California law. The federal law is substantially similar to the laws in California, but provides a better mechanism for immediate relief from trade secret misappropriation, along with the ability to seek punitive damages and reasonable attorney’s fees and costs. Action: To take advantage of the new federal law, employers must notify their employees that whistleblowers of trade secret violations will receive criminal and civil immunity against claims of trade secret misappropriation so long as the report was made confidentially to a federal, state or local government official, an attorney or under seal in a lawsuit. The inclusion of this notice into new agreements governing confidential information or trade secrets and in handbooks is voluntary, but makes these significant additional remedies available to the employer.
6. Notice Required of Leave Available for Victims of Domestic Violence, Sexual Assault or Stalking [Handbook Edits Required] – Several years ago, Labor Code 230.1 was enacted, requiring employers of 25 or more employees to provide time off to victims of domestic violence, sexual assault or stalking to obtain medical attention, obtain services from a shelter or program, counseling or to plan for their safety. Beginning in 2017, employers are required to notify new employees of certain rights under this law. Current employees need only be notified of their rights upon request. Action: Employers must notify new employees of several rights under the law: (1) that the employer prohibits retaliation against employees who use this leave, (2) that employees can use vacation, sick or any other time off they are already entitled to, and (3) that the right does not extend the amount of time off they are entitled to under the FMLA. The Labor Commissioner will be creating a form for employers to use for this purpose. In lieu of the form, handbooks can include the required language.
7. Single-Occupant Restrooms Must Be Identified as “All-Gender” – By March 1, 2017, all business establishments that have single-user toilet facilities are required to change the sign to identify the restroom as “all-gender” and conform generally with normal signage requirements.
8. Venue and Choice of Law – Labor Code section 925 now prohibits employers from obligating California-based employees to sign agreements that require lawsuits to be brought outside of California or under other states’ laws, if the employee “primarily” works in California. This new law expands California’s right to adjudicate disputes between employers and employees. Previously, out of state employers could insert terms into their employment contracts applying their home state’s law and forums, making it difficult for California employees to sue their employer. Action: Review your employment contracts for any offending language and amend them to identify California as the choice of venue and law for California employees.
9. EEOC Defines Rules Regarding National Origin Discrimination – The federal EEOC implemented new guidelines that are similar to California law. The EEOC prohibits discrimination based on “national origin.” The guidelines state that the place of origin can be a country, former country, or geographic region closely associated with a particular national origin group. National origin discrimination includes discrimination based on:
- Ethnicity: A person can not be discriminated against because he or she either belongs, or doesn’t belong, to a particular ethnic group;
- Physical, linguistic, or cultural traits: Subjecting a person to adverse employment action due to his or her accent, style of dress, or other traits associated with a certain origin may constitute discrimination;
- Perception: Regardless of a person’s actual origin, if he or she is discriminated against due to the belief that he or she is of that origin;
- Association: A person’s association with someone of a particular national origin (for example, his or her spouse or child);
- Citizenship: Employers may not make hiring decisions based on an applicant’s status as a citizen or permanent resident (other than the fact that the applicant must be legally able to work in the U.S.).
Employers must have a legitimate business reason for making employment decisions based on accents, such as: (1) the ability to communicate in spoken English is required to perform job duties effectively; and (2) the individual’s accent materially interferes with job performance. There must be a legitimate business reason to make decisions based on fluency, if it is necessary for the effective performance of the position. Finally, “English-only policies” are only legal if they are required to promote safe and efficient job performance or business operations, and are only enforced for those purposes. Action: Review handbook language and other management training documents to ensure they are compliant with the law.
10. Workers’ Compensation Coverage Exclusions Narrow for Business Owners – Previously, officers, directors and working partners were not required to be covered by a company’s Workers’ Compensation (WC) policy unless they opted in for coverage. Beginning January 1, 2017 (and including in-force policies), officers, directors and partners are required to be covered unless they meet the narrow exception to allow them to opt out. For corporations, only corporate officers and members of the Boards of Directors who own 15% or more of the issued and outstanding stock of a corporation may opt out of WC. General partners of partnerships and managing members of limited liability companies can also opt out of coverage. This law is intended to prevent employers (usually in high risk industries) from giving employees a small (e.g., 1%) ownership interest to avoid paying Workers’ Compensation insurance premiums. Action: contact your WC insurance carrier to ask for details on the new rules and for an opt in/opt out form.
Change on the Horizon: Agricultural Workers Right to Overtime Phase In Beginning 2019-AB 1066. The overtime rules for agricultural employees working for employers with 25 or more employees are changing beginning January 1, 2019. Agricultural workers who work more than 9.5 hours per day and/or 55 hours per week will be entitled to 1.5 times their regular hourly rate. The law will continue to roll-out between 2020 and 2025 until the overtime rules are in alignment with those for non-agricultural employees. Action: No action is required this year. However, we encourage agricultural employers to review their policies and increase their staffing if necessary to ensure they will be ready when the law goes into effect on January 1, 2019.