California Legislative Recap
Topics: New Laws & Legislation
We previously reported on several employment-related bills passed by California's Legislature and signed by the Governor. These include AB 304 (which clarifies certain aspects of the state paid sick leave law), AB 1506 (which provides a limited right to cure certain wage statement violations), SB 327 (which clarifies the law surrounding meal period waivers in the health care industry), SB 358 (which strengthens laws against wage differentials on gender lines), and AB 622 (which provides a private right of action for misuse of E-Verify). Yesterday was the last day for the Governor to sign or veto bills so we are now reporting on the outcome of other employment bills that were passed by the Legislature this term.
Bills Signed Into Law Over the Last Few Days
SB 588 (wage and hour violations)—this bill, which was signed into law yesterday, appears to allow for individual liability for many wage and hour violations (contrary to the holdings of court cases rejecting individual liability). It amends Labor Code section 558.1 to provide that any employer or “other person acting on behalf of an employer” may be held liable for violating or causing to be violated any provision regulating the minimum wages or hours and days of work in any Wage Order, or for violating or causing to be violated Labor Code section 203 (timing of payment of wages), Labor Code 226 (wage statements), Labor Code 226.7 (meal and rest periods), 1193.6 (minimum wage and overtime), 1194 (minimum wage and overtime), or 2802 (expense reimbursement). The statute expressly defines “other person acting on behalf of an employer” to mean a natural person who is an owner, director, officer, or managing agent of the employer. The term “managing agent” means the same thing as it does under California Civil Code section 3294 (which provides for punitive damages in civil actions in certain circumstances).
SB 588 also greatly increases the power of the Labor Commissioner's office to enforce judgments for nonpayment of wages against California employers, including by giving the agency the power to issue levies and liens against employer property and to issue stop orders requiring the cessation of business operations on the part of employers who have judgments against them for nonpayment of wages that are outstanding for more than 30 days after the time to appeal has passed (and no appeal is pending).
SB 588 also has special provisions targeting the property services and long term care industries, providing for joint and several liability for unsatisfied judgments on the part of parties who contract for these services. The new law defines “property services” to include janitorial services, security guard services, valet parking services, and landscaping and gardening services. This does not extend to such services performed at individual primary residences. The long term care industry refers to skilled nursing facilities, retirement communities, hospices, and similar businesses. The new law requires an employer who contracts to provide such services to provide written notice to the other party to the prospective contract of any unsatisfied final judgments against the employer for nonpayment of wages. However, the failure to give such notice does not provide a defense to joint and several liability. Instead, in the event of an unsatisfied judgment for nonpayment of wages arising from work performed under the contract, both parties to the contract may be held jointly and severally liable for the judgment.
AB 970 (Labor Commissioner enforcement power)—this bill, which was signed into law yesterday, expands the Labor Commissioner's enforcement authority to extend to violations of local wage ordinances (e.g. minimum wage ordinances in effect in many California cities). It also provides for Labor Commissioner authority to investigate claims for failure to reimburse expenses and to issue awards for any amounts due to an employee in unreimbursed expenses.
AB 1513 (piece rate workers)—This bill imposes new burdens on employers with piece rate workers. First, it requires that the itemized wages statements provided to piece rate workers separately state the total hours of compensable rest and recovery periods, the rate of compensation, and the gross wages paid for those periods during the pay period, along with the total hours of other nonproductive time, the rate of compensation, and the gross wages paid for that time. The statute defines “nonproductive time” to mean all 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. Finally, the statute requires that these employees be compensated for rest and recovery periods and other nonproductive time at specified minimum rates, separate and apart from the piece rate compensation. This statute is very technical and any employer with piece rate workers should carefully read its provisions.
AB 1509 (protected activity by a family member of an employee)—This bill expands certain non-retaliation provisions of the Labor Code that currently prohibit retaliation against an employee for making certain complaints (e.g. wage complaints) or for opposing practices reasonably believed to be unlawful. This bill expands the non-retaliation provisions to protect employees from retaliation where a family member of the employee (rather than the employee directly) engaged in the protected activity.
SB 579 (school activities leave)—This bill expands Labor Code section 230.8, which requires employers with 25 or more employees to provide up to 40 hours of leave per year to employees who are the parent, guardian, or grandparent of a child enrolled in a licensed day care facility or in grades K-12, for purposes of participating in school activities. This bill expands the scope of covered employees to include step-parents and foster parents, and also expands coverage for absences to include activities related to finding, enrolling and/or re-enrolling a child in school or in day care, and/or attending to child care emergencies and school emergencies. Finally, the statute no longer requires that a child attend a day care facility in order for an absence to be covered. The statute now more broadly and generally refers to “day care providers.” SB 579 also makes some technical changes to California's kin-care leave law (Labor Code section 233) simply for purposes of conforming to the statewide paid sick leave law that went into effect earlier this year.
SB 501 (wage garnishments)—This bill generally changes the amount of an employee's weekly earnings that is exempt from a garnishment order, effective July 1, 2016. Current law provides that the amount subject to garnishment cannot exceed the lesser of 25% of an employee's weekly disposable earnings or the amount by which the employee's weekly disposable earnings exceed 40 times the minimum hourly wage in effect. Under the new law, the amount subject to garnishment cannot exceed the lesser of 25% of an employee's weekly disposable earnings or 50 percent of the amount by which the employee's weekly disposable earnings exceed 40 times the minimum hourly wage in effect.
Bills the Governor Vetoed
In a bit of a good news for California employers, the Governor vetoed two awful bills that the Legislature had passed. First, the Governor vetoed AB 465, which would have prohibited mandatory agreements to arbitrate Labor Code claims. Second, the Governor vetoed SB 406, which would have expanded coverage of the California Family Rights Act (“CFRA”) to allow leave to be taken to care for a more broadly defined group of family members. This would have created a conflict between CFRA and the federal FMLA, potentially resulting in employees being able to take up to 24 weeks of protected leave (12 weeks under the CFRA and 12 weeks under the FMLA) in one year. The Governor's veto of these bills was very good for California employers.
Most of the bills signed into law this term do not require employers to modify or revise personnel policies or practices. A notable exception is AB 1513, which, as discussed above, requires modification of practices relating to piece rate worker compensation and wage statements. Employers with piece rate workers must review their compensation practices and wage statements to ensure compliance with this new law. Additionally, employers with 25 or more employees who are subject to California's unique school activity leave law should review their policies in this regard to ensure compliance with SB 579's amendment of this law. Employers are also reminded that they should review paid sick leave policies to ensure compliance with the statewide paid sick leave mandate that took effect earlier this year, including the amendments imposed by AB 304 and DLSE interpretive guidance that already took effect this summer (including a clarification of the rate of pay for sick leave used by non-exempt employees in some circumstances, and interpretive clarification that “24 hours or 3 days” means whichever of the two is greater). Finally, proactive employers should regularly and continually review wage and hour policies and practices as this area continues to be the hottest area for new claims and lawsuits and SB 588 “ups” the exposure and risk factor by providing for potential individual liability on the part of owners, officers, directors, and managing agents.