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November 2015:

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Dear Don,

New CA Employment Laws
The most significant new employment laws for CA are no surprise 
  1. Increase in CA Minimum Wage to $10.00/hour effective 1/1/2016
  2. Paid Sick Leave law which took effect July 1, 2015
Employers Know About The Six New Laws Too:
  1. California Fair Pay Act - equal pay for substantially similar work
  2. Electronic Reporting for Unemployment Insurance
  3. E-Verify - allowing employees information about any non-confirmation notices
  4. Protection for requests for accommodation due to disability or religion
  5. Can't force employee to sign arbitration agreement as a "condition of employment" and
  6. Payment and calculations of Piece Rate Wages
California Fair Pay Act:
For January 1, 2016: the new California Fair Pay Act takes effect. The new law expands equal pay requirements to all "substantially similar work," regardless of location. Employers must now retain wage records (including the records of wages, wage rates, job classifications, and "other terms and conditions of employment of the persons employed by the employer") for 3 years.
The new law also greatly increases the burden of proof for an employer in defending against an equal pay lawsuit. For instance, once a pay differential has been shown, it is now the employer's burden to establish that the differential exists entirely for nondiscriminatory reasons.   Acceptable exceptions that businesses can cite to explain gender-based differences in wages include seniority, education, and productivity measures that can be tracked by "quantity or quality of production."
This law also includes a provision that allows an employee to ask about or freely discuss a co-worker's pay without fear of retaliation from their employer. An employer shall not prohibit an employee from disclosing the employee's own wages, discussing the wages of others, inquiring about another employee's wages, or aiding or encouraging any other employee to exercise his or her rights under this section.
Arbitration Agreements - The legislative session is notable for one proposal which did not become law, a proposal to outlaw arbitration of employment disputes. Fortunately, Governor Brown vetoed this proposal. As a result, employers who have not used arbitration agreements to protect themselves from harassing court litigation should take a new look at the advantages of having employment arbitration agreements. Many time, what seem to be frivolous law suits or legal claims threaten employers - whether for "failure to engage in the interactive process regarding an employee with disabilities, a discrimination claim or alleged wrongful termination.  While arbitration agreements cannot protect an employer from so called Private Attorneys General lawsuits (PAGA), they are effective in dealing with other types of employment related matters including limiting class action law suits - other than PAGA cases.
Unemployment Insurance Electronic Reporting
AB 1245 requires an employer with 10 or more employees to fill an EDD unemployment insurance reports electronically and remit all unemployment insurance taxes by electronic funds beginning no later than January 1, 2017. These requirements will apply to all employers beginning January 1, 2018
Information from E-Verify
AB 622 requires an employer that uses the E-Verify system to provide to the affected employee any notification issued by the Social Security Administration or the US Department of Homeland Security containing information specific to the employee's E-Verify case or any tentative non-confirmation notice.

Reasonable Accommodation Requests Protected
AB 987 clarifies that an employer cannot retaliate or discriminate against an employee for requesting a reasonable accommodation for a disability or for religious purposes. Requesting an accommodation is protected by the Fair Employment and Housing Act, whether any accommodation is made or not.

No Forced Waiver of Right to Sue (cannot require signing an arbitration agreement as a condition of employment.)
AB 465 provides any waiver of any legal right, remedy, or forum for a violation of this code, including the right to file and pursue a civil action or complaint with, or otherwise notify, the Labor Commissioner, law enforcement agency, or any court or other governmental entity shall be knowing and voluntary and in writing, and expressly not made as a condition of
Pay for "Piece-Rate" Employees (Very important for employers using piece rate pay)
New Labor Code Section 226.2 Requires Separate Hourly Pay for Rest and Recovery Periods and "Nonproductive" Time Worked by Piece-Rate Employees
AB 1513 creates new section 226.2 of the California Labor Code, which applies to all employees compensated on a piece-rate basis.1  The new section, which will become effective January 1, 2016, codifies three basic statutory requirements for the payment of employees on a piece-rate basis: 
  1. Employees must be separately compensated for the time to take rest and recovery breaks.  These breaks must be paid at an hourly rate no less than the greater of either the applicable minimum wage or the employee's average hourly wage for all time worked (exclusive of break time) during the work week.
  2. Employees must be separately compensated for "other nonproductive time," which is defined as "time under the employer's control, exclusive of rest and recovery periods, that is not directly related to the activity being compensated on a piece-rate basis."  Notably, the statute does not define "activity," and thus does not resolve the practical difficulty created by Cardenas, Gonzalez, and related cases holding a piece rate must separately compensate each duty performed.  Employers will still face challenges defining what "activity" is compensated by a piece-rate and what closely related activities are not compensated by the piece rate.  Employers will have the additional complication of determining what work time is spent in activities that are not "directly related" to the piece rate compensation plan.
  3. Section 226.2 provides that this "other non-production time" time must be compensated at an hourly rate no less than the applicable minimum wage.  The statute provides that the amount of "other nonproductive time" to be paid may be determined either by actual records or by the employer's "reasonable estimate," but the statute provides no further direction on what differences may exist between the "actual records" or the employer's "reasonable estimate." 
  4. Employee wage statements will be required to include the following information, besides that which is already required under existing Labor Code section 226(a):
    • The total hours of compensable rest and recovery periods, the rate of compensation for those periods, and the gross wages paid for those periods during the pay period.
    • The total hours of other nonproductive time, the rate of compensation for that time, and the gross wages paid for that time during the pay period.
Employers will be able to satisfy the requirement to pay for other nonproductive time by paying minimum wage for all hours worked, in addition to any piece rate.  The employer is not required to specify information regarding the other nonproductive time on its wage statements. 
Employers who have employees in California paid on any productivity or piece-rate basis should examine the statute carefully and consult counsel to be sure they comply with these requirements by the end of the year.
The Limited Safe Harbor May Provide Some Relief for Employers Who Have Piece Rates and Who Were or Could be Sued for Failing to Pay for "Nonproductive" Time
Section 226.2 provides that an employer may assert an affirmative defense to all liability for failure to compensate for rest and recovery periods and other non-productive time if it satisfies all of the following requirements by December 15, 2016:
  • The employer makes payments to each of its current and former employees for the amount of break and other non-productive time not separately compensated as now required by the statute during the period July 1, 2012 through December 31, 2015.  These payments may be calculated using either of the following methods (at the employer's election):
    • The actual amount of wages due for the break and nonproductive time that must be separately compensated, plus interest.
    • Four percent (4%) of the employee's gross earnings during that period.  If the employer paid additional amounts to cover some of what is now considered other nonproductive time, those amounts (up to 1% of gross earnings) may be deducted from the payments, for a minimum payment of 3% of gross earnings.
    • The employer makes a good faith effort to locate and provide these payments to each of its former employees who would qualify.
    • The employer provides written notice to the Department of Industrial Relations by July 1, 2016 of its intention to make these payments.
If an employer satisfies these requirements, it can assert this affirmative defense in any claim or action filed on or after March 1, 2014, unless judgment has already been entered and the time for appeal expired by the end of 2015.  The affirmative defense precludes any liability, whether asserted as wages, damages, liquidated damages, statutory penalties, or civil penalties, based solely on the employer's failure to timely pay the employee separately for rest and recovery periods and other nonproductive time for time through 12-31-15.

Depending on the calculation of the payment required under this safe harbor, some employers may be able to take advantage of significant relief from potential liability in current or probable litigation, easing the transition to an alternative compensation plan that complies with the payment requirements of the new statute.
Thank you to Richard H. Rahm and Angela J. Rafoth on
Littler Mendelson P.C. for information regarding AB 1513.
New 2016 Laws Require Your Adherence! ...
For a personal discussion:
Call Don Dressler: 949-533-3742  


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