Employment - Related Bills Pending in California Legislature

It's that time again to take a look at just some of the employment-related bills that are pending in the California Legislature. Most employers are still reeling from the historic paid sick leave bill that became effective July 1, 2015. However, there are a few bills that are steadily making their way through the Assembly and Senate that bear review and monitoring.

We will provide a more detailed update in December 2015 regarding the status of these and other bills and any notice or implementation requirements that may occur if and when these bills get passed and signed into law.

BREAKING NEWS! AB 304, the cleanup bill to the Paid Sick Leave was just passed on July 15, 2015. It makes the following changes:

  • Specifies that an "employee in the construction industry" means an employee performing work and deleting reference to "onsite work."
  • Specifies that the law applies to an employee who works in California for the same employer for 30-days. Previously, it just stated an employee needed to work in California for 30-days.
  • For those employers electing to use the accrual method, provides that an employer may use a different accrual method, other than providing one hour per hour for every 30 hours worked, provided that the accrual is on a regular basis so that an employee has no less than 24 hours of accrued sick leave or paid time off by the 120th calendar day of employment.
  • For those employers electing to use the accrual method, provides that an employer may satisfy the accrual requirements by providing not less than 24 hours or 3 days of paid sick leave that is available to the employee to use by the completion of his or her 120th calendar day of employment.
  • Provides that an employer is not required to reinstate accrued paid time off to a rehired employee that was paid out at the time of termination, resignation or separation of employment. Remember, that pay out of accrued but unused sick leave at the time of termination, resignation or separation of employment is not required. If you have a PTO plan, payout of any unused PTO is required.

SB 3 (Minimum Wage Increases) - This bill would increase California's minimum wage to $11.00 per hour effective January 1, 2016 and $13.00 per hour, effective January 1, 2017. The bill was recently passed out of the Assembly's Labor & Employment Committee and is on its way to Assembly Appropriations. Having already passed through the Senate there is a very high chance this bill will get approved and end up on Governor Brown's desk. Politically, this is the kind of bill we can expect Governor Brown signing.

It is important to note that any minimum wage increase should always be monitored, because minimum wage increases do not just effect hourly employees. Employers need to ensure that their exempt employees are receiving twice minimum wage as a minimum salary. So, if this bill gets passed, exempt employees will need to make a salary of at least $54,080 ($26 per hour) as of January 1, 2016.

SB 358 (Right to Discuss Wages and Equal Pay) - This bill would expand current protections of an employee's right to discuss their wages with other employees. The bill would also expand the CA Equal Pay Act prohibition of paying employees of one sex, typically males more than employees of the other sex, typically females. If passed, the bill will require employers to be able to justify pay differentials, using bona fide factors, such as seniority, experience or education, other than sex.

The bill was passed unanimously in the Senate and after recent amendments in the Assembly is being sent back to Assembly Appropriations. It is very likely this bill will get passed in the Assembly and will likely be signed by Governor Brown.

SB 406 (Expansion of CFRA) - California Family Rights Act currently only applies to employers with 50 or more employees. This bill would expand coverage to employers with 5 or more employees. The bill also amends the definition of "child" to include the son or daughter of a domestic partner and deletes provisions regarding the age and dependent status of a child. It further would expand permissible leave to include leave to care for a sibling, grandparent, grandchild, parent-in-law, or domestic partner with a serious health condition.

This bill had some "no" votes in the Assembly Labor & Employment Committee, but recently passed and is headed to Assembly Appropriations. This bill should pass, but may be considered premature at this point in light of the current opposition. According to the bill analysis, a coalition of employers, opposes the bill arguing that it will overwhelm small businesses by mandating businesses with 25 or more employees to provide a 12-week protected leave of absence, much like FMLA provides. Opponents argue that this will put a greater burden on both small and large businesses while creating an even further disconnect from the FMLA.

AB 1470 (Overtime Exemption For High Salary Employees) - There are two parts to test whether an employee is exempt. First, the employee's must be engaged in duties 51% of the time that meet one of the exemptions, such as professional, executive, administrative, creative, etc. Second, the employee must meet the salary test (2x minimum wage). This bill would create a presumption that an employee that makes more than $100,000 per year, who regularly performs any of the duties of an exempt executive, administrative, or professional, is automatically exempt from overtime.

While still technically an "active" bill, it has been languishing in the Assembly, where it was introduced. It is highly unlikely that this bill will get its way out of both houses this year.

AB 1038 (Alternative Workweek Schedules on an Individual Basis) - The Department of Industrial Relations has very strict rules for how employers can adopt an "alternative work week" which voted on and approved, allows all employees to work more than 8 hours a day or more than 40 hours a week without the employer having to pay overtime. This bill would allow an individual non-exempt employee and an employer to agree that the employee may work up to 10 hours a day without the need for payment of daily overtime.

This bill initially failed passage in the Assembly Labor & Employment. Despite the fact that reconsideration was granted, it is almost surely not going to be passed and signed into law.

AB 67 (Double Time for Certain Holidays) - Currently, employers are not required to observe holidays (with some exception for religious holidays). This bill would require employers with 25 or more employees to pay double time to non-exempt employees working on "family holidays" Thanksgiving or Christmas. Supporters argue that this bill guarantees that employees are fairly compensated for the undue hardships associated with working on the traditional family holiday of Thanksgiving and Christmas. Opponents argue that this bill would create a competitive disadvantage for "brick-and-mortar" stores, arguing that the bill would unilaterally increase the cost of doing business only for those employers who have a physical presence in California, placing them at a competitive disadvantage with online companies and out-of-state businesses that would not be subject to this cost.

Don't plan on working on Christmas just yet, as the bill was placed on the "inactive" list at the request of its author.

Allyson K. Thompson is a Partner with Kring & Chung, LLP's Irvine, CA office. She can be reached at (949) 261-7700 or athompson@kringandchung.com

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