CA Labor Law Update for 2014

It’s a new year and there are new changes for California employers!  There are a variety of changes on the employment law landscape this year.  We have recapped the most significant to most employers…you can either read them or listen to them in our podcast.  Additionally, we are suggesting what steps the average employer needs to take to assure compliance. You’ll notice that a few new amendments focus on higher penalties for employers…the best advice is to manage risk, audit pay and employment practices, correct errors quickly and treat your employees like you’d like to be treated!  An employee who feels cared for and happy in their job is usually productive, loyal and a joy to work with.

These are the most significant labor law updates for 2014:

Minimum wage:  The California minimum wage will increase from $8 per hour to $9 effective July 1, 2014 and to $10 effective Jan 1, 2016.  The new minimum wage is part of a three year plan that will make California’s rate one of the highest in the nation.  In addition to paying the new rate to employees currently earning less than $9, employers will be required to change their posting notices to reflect the new law.  Since one of the requirements for deeming a job as “exempt” is to pay two times the minimum wage, employers should also review their pay rates.  All commission agreements should ensure that the employee is earning at least the new minimum wage. Employers of workers in San Francisco:  the new minimum wage is $10.74 per hour.

Expansion of “meals and rest periods” to include heat recovery periods:  Requirements for heat recovery periods will now follow those for meals and rest periods.  Employees are entitled to no less than 5 minutes of cooling off in hot outdoor conditions and employers cannot force them to work during this time.  For every day a heat recovery period is not provided, the employee is entitled to one extra hour of pay.  It is advised that employers with employees who work outside in hot conditions review the guidelines set by Cal OSHA: “ train, water, shade, plan”.  See the CalOSHA website for more details.

Protection for employees re: complaints of unpaid wages:  Previously, the law protected employees from discharge or discrimination if they submitted a complaint of unpaid wages.  AB263 expands this protection to employees who assert their rights under Labor Code, including an oral or written complaint, from retaliation or adverse employment action.  The amended law adds a $10K penalty per employee per violation.  Employers should regularly audit their payrolls and time sheets to assure compliance with wage and hour requirements.  Make corrections to errors promptly.  Prevention is the best policy in this case.

Expansion of “sexual harassment”:  The Fair Employment and Housing Act (FEHA) prohibits “harassment because of sex”.  SB 292 broadens the definition of “harassment because of sex” to include behavior that is sexually harassing but is not motivated by sexually desire.  Employers should review their policies and assure that managers and employees understand the new provision and are trained properly.

Expansion of Paid Family Leave:  SB 770 amends the Paid Family Leave program to include payments for employees who take leave to care for a seriously ill grandparent, grandchild, sibling or parent-in-law, effective July 1, 2014.  Previously, the program only covered workers who requested time off to care for a child, spouse, or registered domestic partner. The California Paid Family Leave program allows eligible employees to take up to six weeks of partially paid leave from their jobs each year. Employers should understand that this does not require them to approve leaves for employees to care for a seriously ill grandparent, grandchild, sibling or parent-in-law.  This change will most likely cause confusion for employees.  Be prepared to explain the difference.  Employers may choose to voluntarily broaden their policies to include these new groups.

New protections for immigrants: Under AB263, an employer is prohibited from reporting or threatening an undocumented employee who complains about Labor Code violations to Immigration and Customs Enforcement. This is considered an “unfair immigration-related practice” and businesses may lose their licenses and/or face charges of criminal extortion.

Military veterans as protected class:  This bill, AB 556, amends the Fair Employment and Housing Act to add “military and veteran status” to the list of categories protected from discrimination, bringing the total number of protected categories to 16.  “Military and veteran status” is defined as a member or veteran of the United States Armed Forces, United States Armed Forces Reserve, the United States National Guard, and the California National Guard.  Employers may still identify military or veterans for the purpose of contract preference. The bill does not prohibit employers from identifying members of the military or veterans for purposes of awarding a veteran’s preference as permitted by law. It is suggested that employers review their discrimination policies and change their required postings to reflect inclusion of this new category.

Victims of domestic violence protection:   The law currently prohibits employers from taking adverse action for victims of domestic violence and sexual assault to take time off from work to seek remedies and services related to such matters.  SB 400 extends protection to victims of stalking as well. An employer may nor discharge, discriminate or retaliate against an employee because of the employee’s known status as a victim of domestic violence, sexual assault, or stalking.  The employer must extend a reasonable accommodation for such a victim. Employers should amend their policies accordingly and assure managers are aware and understand the change.

Overtime rules for domestic work employees: Domestic workers will have to be paid time and a half if they work more than nine hours in a day or more than 45 hours in a week.  This law exempts parent, grandparent, spouse, sibling, child, or legally adopted child of the domestic work employer, casual babysitters or babysitters under 18.  This law is effective initially for the next three years, unless the legislature changes the provisions.  While this doesn’t directly affect employers, they may expect employees to request flexible work arrangements to handle the potential finanical impact.

Prevailing wage:  For employers required to pay employees prevailing wage, take note that there are seven changes for 2014. 

Successor farm labor contract liability:  SB 168 makes the successor or a farm labor contract liable for any wages owed by the predecessor contractor, as well as any penalties, under certain circumstances.  Successor contractors should perform a due diligence to identify this risk before the takeover.

Liquidated damages for wage order violation:  The law currently allows the Labor Commissioner to investigate and enforce  the  payment of wages.   The Labor Commissioner may impose civil and criminal Penalties for violations. The law grants a worker the right to recover, in a minimum wage claim hearing or lawsuit, restitution and liquidated damages.  However, currently the Labor Commissioner is not authorized to collect liquidated damages for the employee.   AB 442 extends the penalty and restitution provisions to include a citation requiring the employer to pay liquidated damages to the employee.  Employers should ascertain that their pay practices are compliant, audit their pay practices and take care that calculation of “regular rate” for overtime purposes is correct.  There has been an increase in class action lawsuits on this subject.

Employee complaints:  final orders:  AB1386 allows for a lien to be created and recorded on an employer’s real property once an award to an employee becomes final. The bill provides that the lien would continue on the employer’s real property for 10 years until satisfied or released.  Employers must take notices and citations seriously and act on them promptly.

Criminal penalties for employers who willfully fail to remit deductions:  SB390 makes it a crime to willfully withhold remittance of moneys deducted from employee checks in accordance with federal, state or local laws, with failure to remit over $500 constituting a felony.  This includes deductions for health insurance, pension funds, welfare funds or other benefit plans.   Employers should ensure that deductions are made and remitted properly and in a timely manner.

Employers who win wage claim lawsuits: Recovery of Fees only if Files in Bad Faith:  SB462 stipulates that employers who win wage claim lawsuits may only recover attorney fees if it is deemed that the employee filed the lawsuit in bad faith.  This places a burden on the employer for proof, which is often difficult to do.  Again, employers should audit their pay practices to assure compliance and deter any such claims in the first place.


For Businesses with employees working in San Francisco:

The Health Care Security Ordinance has published the new expenditure rate for 2014:  $2.44 per hour paid for large employers and $1.63 per hour paid for medium employers.  Small business (20 employees or less or nonprofits with 49 employees or less) are exempt.

The Family Friendly Workplace Ordinance takes effect January 1.  The Ordinance grants employees with six or more months’ of employment who regularly work as little as eight hours per week the right to request work modifications so that they may care for a child; a spouse, domestic partner, parent, sibling, grandchild, or grandchild with a serious health condition; or a parent age 65 or older. The modification can be a change in schedule, work hours, work assignment, location or the predictability of their schedule.  This ordinance is in effect for employers who regularly employ 20 or more employees and includes the employer’s agents.

New Minimum Wage:  The new minimum wage for San Francisco employees is $10.74 per hour effective January 14, 2014.