California is known for some of the toughest employment and labor laws in the United States. In this blog post DLA Piper answers some important questions for businesses looking to employ and/or stay compliant with California-based workers. At iWorkGlobal, we’re here to help you navigate these complexities in all 50 states and 170 countries and counting, learn more here.
Which issues would you most highlight to someone new to your state?
California is infamous for its worker-friendly laws, which provide for greater levels of protection and entitlement than those of other states or at the federal level. The Plaintiff’s Bar in California is also among the most active in the nation, and employers there face a 42% higher chance of being sued by an employee than the national average (www.insurancejournal.com/news/national/2014/04/01/324942.htm).
New employers should be aware of the state’s increasing focus on equal pay issues, which have now been expanded to race and ethnicity and will likely continue to expand to other protected classes. New employers in California should also be aware of increasing requirements at the local level, as major cities now have ordinances on minimum wage, paid sick leave, work scheduling, and laws restricting pre-employment screening and inquiry (ban-the-box). The state also continues to protect immigrant workforce—which is among the highest in the nation—by criminalizing employers’ attempts to harass and exploit such employees.
What do you consider unique to those doing business in your state?
Doing business in the sixth largest economy can be rewarding, but carries a high risk for those who are unprepared when it comes to the state’s employment laws. California’s anti-discrimination law expands traditional protected classes to also include sexual orientation, gender identity/expression, political activities or affiliations, and military or veteran status, among others.
Wage and hour laws continue to be a difficult area for new employers, and mistakes here are especially unforgiving because of California’s Private Attorneys General Act, which allows employees to sue on behalf of the state in order to recovery additional penalties for Labor Code violations. California’s stringent laws on daily overtime, meal and rest breaks, “use-it-or-lose-it” policies, timely final wage payments, and wage statement reporting create a potential minefield for unwary employers.
Is there any general advice you would give in the labor/employment area?
Be ready to adapt to rapid and continuous change. The California legislature has been a key driver of pro-worker rights, so it is important to monitor key legislative developments that may affect employers. California regulations are also subject to enforcement by up to six different state regulatory agencies (far more than in other states), so an understanding of administrative rulemaking and enforcement is crucial.
Proposals for reform
Are there any noteworthy proposals for reform in your state?
Due to the high rate of Private Attorneys General Act lawsuits filed in recent years, attempts at reform have been made to curtail the frequency of such suits by private employees. The initiatives were not entirely successful, but are expected to continue in order to provide some relief to the state’s overburdened courts.
What are the emerging trends in employment law in your state, including the interplay with other areas of law, such as firearms legislation, legalization of marijuana and privacy?
California continues to expand its equal pay law, which now prohibits wage disparities due to gender, race, and ethnicity. This expansion is expected to eventually include the remaining California protected classes. An offshoot of these efforts is the recent prohibition of prior salary as the sole justification for pay disparities. In addition, employers are prohibited from even asking job applicants about their prior salary (this prohibition does not bar an employer from asking an applicant about their salary expectations for the applied for position).
Local ordinances in California’s major cities have expanded minimum wage and paid sick leave requirements above and beyond state requirements. More local jurisdictions are also joining the “ban the box” movement.
In the past few months, California’s employment law space has seen a flurry of activity illustrating the impact of the #MeToo movement. On September 30, 2018, Governor Brown approved bills conceived in response to the #MeToo movement that expand sexual harassment training to more employers and limit the employer’s ability to require employees to sign non-disparagement agreements. Specifically, SB 1343 reduces the requirement for sexual harassment training from employers with 50 or more employees to employers with five or more employees and includes non-supervisorial employees in the training. The bill requires at least two hours of sexual harassment training for supervisory employees and at least one hour of training for non-supervisory employees by January 1, 2020, and once every two years thereafter, as specified. Meanwhile, SB 1300 makes its unlawful for an employer in certain instances (e.g., as a condition of employment or continued employment) to require an employee to sign a non-disparagement agreement that denies the employee the ability to disclose information about unlawful acts in the workplace. SB 1300 creates an exception and does not apply to a negotiated settlement agreement to resolve a claim filed by an employee in court, before an administrative agency, alternative dispute resolution forum, or through an employer’s internal complaint process.
In addition, SB 1300 essentially eliminates the standard that the existence of a hostile work environment must be based on conduct that is sufficiency severe or pervasive. In other words, a single incident of harassing conduct is sufficient to create a triable issue on the existence of a hostile work environment if the harassing conduct unreasonably interfered with the plaintiff’s work performance or created an intimidating, hostile, or offensive working environment. Finally, SB 1300 makes clear that harassment cases are rarely appropriate for summary judgment disposition.
What state-specific laws govern the employment relationship?
The sources of California employment law are numerous, including a number of statutory codes and administrative regulations. California’s anti-discrimination and disability accommodation law is the Fair Employment and Housing Act. The California Labor Code contains expansive laws governing wages, working conditions, worker’s compensation, employment relations, among others. The Industrial Welfare Commission (IWC) Wage Orders contain additional wage and hour requirements for employees in specific industries. Employee leave laws include the California Family Rights Act and pregnancy disability leave laws. Article 1 Section 1 of the California Constitution provides all citizens with privacy, and this extends to employees. The Cal-WARN Act adds certain protections to employees in the event of mass layoffs, relocations, or plant closings.
Who do these cover, including categories of workers?
The Fair Employment and Housing Act covers an employee, an applicant, or a person providing services pursuant to a contract (Cal. Govt. Code § 12940). The meaning of “person providing services pursuant to a contract” has been interpreted broadly to also include contract workers and employees of an independent contractor (Hirst v. City of Oceanside, 236 Cal. App. 4th 774 (2015)). Volunteers and unpaid interns are now also protected under the act from discrimination and harassment (Cal. Govt. Code § 12940). Employers must also reasonably accommodate the religious beliefs of volunteers and unpaid interns (Cal. Govt. Code § 12940 (l)).
Independent contractors may file harassment claims against the employing entity but may not file discrimination or retaliation claims under the act. California independent contractors are not covered by requirements for payment of minimum wage, overtime, meal periods, rest breaks, vacation pay out, reimbursement of work-related expenses, or other similar benefits under wage/hour laws.
Are there state-specific rules regarding employee/contractor misclassification?
Sections 226.8 and 2753 of the California Labor Code prohibit the willful misclassification of individuals as independent contractors, and imposes civil penalties of between $5,000 and $25,000 per violation. There is no single definition of “independent contractor”, and different tests have been applied depending on the law implicated and context. For example, under the Fair Employment and Housing Act, an independent contractor:
- has the right to control the performance of the contract for services and discretion on the manner of performance;
- is customarily engaged in an independent business;
- has control over the time and place the work is performed;
- supplies the tools and instruments used in the work; and
- performs work that requires a particular skill not ordinarily used in the course of the employer’s work (Cal. Govt. Code § 12940(j)(5)).
For purposes of determining whether an independent contractor is properly classified for wage and hour purposes, the Department of Labor Standards Enforcement (DLSE) follows the workers’ compensation standard’s multi-factor or economic realities test (see DLSE Enforcement Policies and Interpretations Manual §28 (2002 edition).
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Original post by: DLA Piper