Seyfarth Synopsis: The California Legislature has just created yet another protected class of individuals entitled to sue employers under the Fair Employment and Housing Act. The new class of potential plaintiffs are applicants denied employment because of their conviction history, where the employer is unable to justify relying on that conviction history to deny employment.

We’ve reported on two January 2017 developments for California employers that use criminal records in employment decisions: (1) Los Angeles enacted a city-wide “ban-the-box” ordinance, and (2) the Fair Employment & Housing Council approved new regulations that borrow heavily from the EEOC’s April 2012 “Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964.”

The trend continues. Over the weekend, on October 14, 2017, Governor Jerry Brown announced that he has signed Assembly Bill 1008, which amends FEHA to add new Government Code section 12952. This section will restrict an employer’s ability to make hiring decisions based on an applicant’s conviction records, including a “ban-the-box” provision and a prohibition against considering conviction history until the applicant has received a conditional offer of employment. (It is only scant comfort to reflect that the final version of AB 1008 was not as stringent as the originally proposed bill, which would have placed even greater restrictions on consideration of criminal history.) With a fast-approaching effective date of January 1, 2018, California employers should review their policies and procedures now to ensure compliance.

Coverage

Section 12952, like other parts of FEHA, will apply to employers with five or more employees. Section 12592 exempts from its coverage only a small handful of positions:

  • positions for which government agencies are required by law to check conviction history,
  • positions with criminal justice agencies,
  • Farm Labor Contractors as defined in the Labor Code, and
  • positions as to which the law (g., SEC regulations) requires employers to check criminal history for employment purposes or restricts employment based on criminal history.

Inquiries About Conviction History

Section 12952 will make it unlawful for California employers to

  • include on a job application any question about conviction history, unless the application is presented after a conditional offer of employment,
  • inquire into or consider an applicant’s conviction history before extending a conditional offer of employment, and
  • consider, distribute, or disseminate information about criminal history that California already prohibits employers from considering, such as (a) an arrest not resulting in a conviction (except in the limited situations described in Labor Code section 432.7), (b) referral to or participation in a pretrial or post trial diversion program, and (c) convictions that have been sealed, dismissed, expunged, or statutorily eradicated pursuant to law.

Section 12952 expressly states that it will not prevent employers from conducting conviction history checks that are not covered by the new law.

Section 12952 borrows its definition of “conviction” from Labor Code section 432.7(a)(1), (3):  “a plea, verdict, or finding of guilt regardless of whether sentence is imposed by the court.” The term “conviction history” is somewhat broader, and can include certain arrests.

Individualized Assessment 

If an employer intends to deny hire because of a prior conviction, Section 12952 will require the employer to assess whether the individual applicant’s conviction history has a “direct and adverse relationship with the specific duties of the job that justify denying the applicant the position.” This individualized assessment must consider the nature and gravity of the criminal offense, the time that has passed since the offense and the completion of the sentence, and the nature of the job sought.

The employer, may, but need not, document the required individualized assessment.

Adverse Action Based on Conviction History

If the individualized assessment leads to a preliminary determination that the applicant’s conviction history is disqualifying, then the employer must provide a written notice. Section 12952 will require more than what the federal Fair Credit Reporting Act (FCRA) requires. Specifically, the written notice that Section 12952 will require must

  • identify the conviction at issue,
  • include a copy of any conviction history report (which means the notice is required regardless of the source of the conviction history),
  • explain the applicant’s right to respond to the notice before the employer’s decision becomes final,
  • state the deadline for that response, and
  • tell the applicant that the response may include evidence challenging the accuracy of the conviction history and evidence of rehabilitation or mitigating circumstances.

The applicant has five business days to respond to a preliminary notice. The employer, in then making its final employment decision, may, but need not, explain the reasoning for its final decision. (Note that the Los Angeles ordinance, by contrast, requires employers to document the individualized assessment and to give the applicant a copy of it before making a final decision.)

If the applicant timely notifies the employer that the applicant disputes the accuracy of the conviction history and is taking specific steps to obtain evidence, then the applicant has an additional five business days to respond. The employer must consider any information the applicant submits before the employer can make a final decision.

If an employer then makes a final decision to deny employment based solely or in part on conviction history, a second written notification must be provided to the applicant, which must include:

  • the final denial or disqualification,
  • any existing procedure the employer has to challenge the decision or request reconsideration, and
  • the right to file a complaint with the Department of Fair Employment and Housing.

Again, the employer may, but need not, explain its final decision. (Under the Los Angeles ordinance, new requirements arise when the applicant provides any additional information upon receipt of the employer’s first notice and its initial completed assessment: the employer receiving that additional information must then complete a re-assessment and provide the applicant with a copy of it while notifying the applicant of the final decision.)

Remedies 

Because Section 12952 will be part of the FEHA, an aggrieved individual may sue for the full range of FEHA damages available, including compensatory damages, attorney’s fees, and costs.

Next Steps

Most immediately, California employers should determine whether they need to revise job applications, interview guidelines, and policies and procedures for criminal background checks. Many employers will need to revise their pre-adverse and adverse action letters to comply with the many laws regulating criminal background checks, and to revamp the timing of events in their hiring process.

Employers throughout the United States, and particularly multi-state employers, should continue to monitor developments in this and related areas of the law, including laws restricting the use of credit history information and the fair credit reporting laws.

 

Seyfarth Synopsis:  As if high rent and California’s peculiar laws were not enough to worry about, San Francisco employers must also comply with City-specific ordinances. Trailblazing City requirements often exceed state laws and have sometimes been harbingers of state-level enactments. One might say that San Francisco, with its distinctive laws, is to California what California is to the rest of the country. We highlight the Big Eight SFO peculiarities, below.

Minimum Wage

Minimum wage is an example of San Francisco taking the lead and inspiring changes to state law. On July 1, 2017, San Francisco’s minimum wage officially increased to $14.00 per hour; on July 1, 2018, it will jump to $15.00. The rates apply to all employees who work at least two hours per week within the City or County of SF. The City approved these rate increases years before the California Legislature followed suit in passing the Fair Wage Act of 2016, which mandated an annual state-wide increase until it reaches $15.00 in 2020. Might the City then push to exceed this amount come 2020?

Paid Sick Leave

Paid sick leave is another area where City entitlements differ from those available under state law. San Francisco says that all employees, including part-time and temporary workers, are entitled to paid sick leave when they are ill, require medical care, or need to care for their family members or designated person. While state law currently provides employees with three days (24 hours) of paid sick leave for most of the same reasons, the City offers employees significantly more protected paid time off.

San Francisco employers with fewer than 10 employees must allow workers to accrue up to 40 hours, and those with 10 or more employees must allow accrual up to 72 hours. Not only are employees thus entitled to two to three times what the state mandates, but any unused days also carry over year to year (subject to the above accrual caps). Remember that employers must comply with both state and City laws, as satisfying one does not satisfy the other. Originally enacted in 2007, the City amended its paid sick law as of January 1, 2017, so check out the City’s FAQs for additional updates.

Paid Parental Leave & Family Friendly Workplace

San Francisco has its own take on California’s family-related leave programs—with two separate but related ordinances. You may recall that California’s Paid Family Leave offers six weeks of partial pay/wage replacement (after an eight-day waiting period) to employees who are otherwise entitled or permitted to take time off to bond with a new child or to care for a seriously ill family member. The California Family Rights Act (“CFRA”) also mandates that covered employers give 12 weeks of unpaid, protected leave within a year to eligible employees for a child’s birth, adoption, or foster placement, for the employee’s own serious medical condition, or to care for a seriously ill or injured family member. To be eligible for CFRA leave, an employee must have worked for the covered employer for at least a year and have clocked 1250+ hours.

In San Francisco, by contrast, an employee needs only eight hours per week on a regular basis for six months before taking advantage of its Paid Parental Leave benefits. While matching the state’s six weeks of state (EDD) paid time for new child bonding, San Francisco requires that the employer also pay the leave in the form of supplemental compensation that, in conjunction with California’s Paid Family Leave benefits, equals 100% of the employee’s gross weekly wages. Currently, this law applies to employers with 35 or more employees (regardless of location) and employees working 40% or more of their hours in San Francisco. Beginning January 1, 2018, this law will expand to include all employers with 20 or more employees.

San Francisco has a separate ordinance that attempts to make what is often a difficult time easier for individuals who have family caregiving obligations. Employees who have worked eight hours per week for six months can request a flexible or predictable schedule to assist with these responsibilities. Specifically, the law applies to employers with 20 or more workers (regardless of location) and covers caring for children under 18, seriously ill family members, and parents of the employee who are over 65. San Francisco wants the state to know that family friendliness begins here!

Health Care Security

San Francisco’s mandatory health care law ensures that employees are cared for, too. Employers must make health care expenditure payments each quarter for every employee who has been working more than 90 days. Employers with fewer than 20 employees are exempt altogether, but employers with 20-99 employees must spend $1.76 per hour payable per each employee, while those with 100+ must spend $2.64 per hour. The City allows these payments to be made to the employee directly, to the City, or as a contribution to a reimbursement program. Under this ordinance, the City may impose several different penalties for non-compliance, so getting caught not paying these expenditures would certainly be worse than catching a cold!

Fair Chance (SF’s Version of “Ban-the-Box”)

The City does not believe that having been behind bars should necessarily bar the employment of qualified individuals. The Fair Chance ordinance aims to make work more accessible and put applicants with prior arrests or convictions on an even playing field. All employers with more than 20 employees must state in job solicitations that qualified applicants with arrest or conviction records will be considered. Employers also must not ask about such records until after a live interview or a conditional offer, at which time only arrests or convictions directly related to the ability to perform a given job may be considered in the hiring decision. An employer that chooses not to employ an applicant with a record must first allow the individual a chance to respond with evidence of inaccurate information, rehabilitation, or other mitigating factors.

California currently prohibits employers from asking about certain criminal records, including arrests that did not result in criminal convictions and convictions that have been dismissed or expunged. As of July 1, 2017 (per new FEHC regulations that we discussed here that are similar to San Francisco’s law), California employers may not consider criminal records in hiring decisions that would adversely affect individuals belonging to a protected class. If there is a disparate impact, then employers must show that their background check policy is “job-related and consistent with business necessity.” Before making a decision based on criminal records, employers must conduct an individualized assessment that allows anyone screened out by the policy to respond with proof that the background check is inaccurate or with reasons why adverse action should not be taken.

Formula Retail Employee Rights

Whether it be disrupted budgeting, inconvenience, or some other reason, employees can get upset when their work schedule suddenly changes; San Francisco has a law for that. Chain stores with 40+ locations worldwide and 20 or more people working in San Francisco must provide notice of the work schedule two weeks in advance. In addition, employers must provide “predictability pay” whenever an employee’s schedule changes with less than a week’s notice, and if an on-call employee is required to be available but is not called into work during the shift, the employer must still pay them for that time.

These same employers must offer (in writing) any available extra hours to current qualified part-time employees before they can hire someone new to cover the workload. If an establishment is sold, the successor employer must retain, for 90 days, any eligible employee who worked longer than six months before the sale. San Jose voters passed a comparable ordinance, and new legislation was recently introduced in the California legislature with aims to enact a similar law. Beware of these special laws that apply “within the City and County” soon getting a California-sized expansion!

Lactation Accommodation

In June 2017, the San Francisco Board of Supervisors approved specific legislation requiring employers to provide a private space for new mothers to pump their milk. The ordinance goes into effect January 1, 2018, and calls for a clean space that contains a chair, access to electricity, and surface space for a breast pump. In addition, the employee’s workspace must be in close proximity to a sink with running water as well as a refrigerator. Subject to certain exceptions, if such a space does not exist, then one must be constructed. Employers will be required to distribute the company’s lactation accommodation policy to all employees at the time of hiring.

While state and federal law mandate that employers make reasonable efforts to provide new mothers with lactation breaks throughout the workday, San Francisco’s more expansive legislation may very well be a predictor of what’s next to come on the state level.

We will keep you informed of updates and changes to these ordinances as violations can come with hefty penalties or result in administrative investigations and civil suits. It should be noted that some exceptions and exemptions apply, and those details and additional requirements can be found on the San Francisco Office of Labor Standards Enforcement website. To ensure your company is compliant, or if you have questions about anything mentioned here, Seyfarth’s Labor and Employment attorneys are available to assist you.

Edited by Michael A. Wahlander.

Seyfarth Synopsis: On July 17, 2017, the California Fair Employment and Housing Council (FEHC) heard public comments on its proposed regulations covering national origin discrimination under the FEHA. Discussion centered on employer-imposed language restrictions, English proficiency requirements, and immigration-related employment practices. Look for final regulations later this year. 

The FEHC kicked off its third meeting of the year, this time in San Francisco. Prominent on the agenda: the proposed and rapidly advancing national origin discrimination regulations. As stated in the FEHC’s notice of the meeting: “The overall objective of the proposed amendments is to describe how the [FEHA] applies to the protected class of national origin in the employment context, primarily by centralizing and codifying existing law, clarifying terms, and making technical corrections.”

A call to enact these regulations first came from Legal Aid at Work (an employee-oriented legal services organization formerly known as the Legal Aid Society, Employment Law Center), during the FEHC’s August 31, 2016 hearing. The FEHC quickly created a subcommittee and drafted regulations, which we previously reported on here, that largely mirrored the EEOC’s guidance on national origin discrimination.

At the July 17 hearing, public comments revolved around (a) language restrictions (“English only” rules), (b) employer requirements for English language proficiency, (c) discovery as to an individual’s immigration status during the liability phase of any lawsuit or other proceeding to enforce the FEHA’s prohibition of national origin discrimination, and (d) expanding the definition of what constitutes harassment on the basis of national origin. The only public comments received at the hearing were from employee-leaning individuals and groups.

English only. The draft regulations would make it an unlawful employment practice for an employer to adopt a policy that creates an “English only” rule, unless (1) the rule is job-related and consistent with business necessity, (2) the rule is narrowly tailored, and (3) employees get effective notice of when and where the rule applies and what consequences result from a violation.

The regulations would also provide that an English-only policy would not be valid simply for promoting business convenience or reflecting customer preference. Representatives of Legal Aid at Work emphasized at the hearing that the latter should be amended to state a co-worker preference, not the customer’s.

Further, the regulations would explicitly presume that English-only rules violate FEHA unless the employer can prove “business necessity”—defined narrowly as “an overriding legitimate business purpose” that is necessary to the safe and efficient operation of the business, where the policy effectively serves that purpose, and where there is no alternative to the language restriction that would serve the business purpose as well, with less discriminatory impact. One commentator at the hearing argued that the FEHC should expand this presumption to find a violation if there is no effective employee notification about the language restrictions. Legal Aid at Work also called for the FEHC to draft a new section to address how an English-proficiency requirement relates to an employee’s ability to perform the job. These folks would like CA to distinguish itself from the reasoning of Garcia v. Rush-Presbyterian-St. Luke’s Medical Center, in which the court approved an employer’s requirement for verbal and written English proficiency in part because English was the dominant language in the area.

Discovery of Immigration Status. The FEHC also heard public comments to clarify the complex rule about when discovery into an individual’s immigration status is allowed during the liability phase of a proceeding. The proposed regulations would permit such discovery “only when the person seeking to make the inquiry has shown by clear and convincing evidence that such inquiry is necessary to comply with federal immigration law.” The commentators argued that mere possession (or lack) of a driver’s license would not constitute “clear and convincing evidence,” as all California residents are eligible to receive a license, regardless of immigration status.

Expansion of “harassment.” A representative of the California Employment Lawyers Association (a group of plaintiffs’ lawyers calling themselves an employee-rights group) called for expansion of the harassment portion of the regulations, to include specific reference to banning creation of a hostile work environment on the basis of national origin. Speakers also asked that the FEHC expand what would constitute as per se harassment to include deportation threats against an individual’s blended family members (i.e., step-parents, step-aunts and uncles, and step-children).

The comment period for the proposed regulations closed at 5 p.m. on July 17th. We anticipate the FEHC will consider all comments before issuing a final statement of reasons and potentially revising the proposed regulations.

We will keep you apprised of what the FEHC opines next on the topic of national origin regulation. For advice on how these regulations may affect your business, reach out to your favorite Seyfarth attorney.

Edited by Colleen Regan.

Seyfarth Synopsis: Although there’s no right or wrong time to do a handbook update, we recommend them annually. Might as well take the opportunity when operations are typically slower, summertime, to give your handbook a shine. We’ve highlighted a few areas upon which to focus when you do so.

Ah, the joys of summer. Maybe it’s the heat, but everything seems a little harder in the summer. The sun is melting everything in sight, and sometimes it seems everyone is on vacation, leaving a little opportunity for the rest of us to have some *gasp* free time? This is the time of year, after all, when everything just seems to slooooooooooooooow dooooooooooooooooooown.

But because we’re all looking for an excuse to spend a little more time in nice air conditioned comfort, and we need to cure that summer boredom, when was the last time you updated your handbook?

Here are a few areas you may want to check while you enjoy that recycled air:

Did you update when the FEHA Regulations were amended last year?

As we discussed here, the FEHA Regulations now include many new requirements for employer policies on harassment, discrimination, and retaliation. If you haven’t had an opportunity to do so, we recommend you dust off those old policies and go through the amended regulations with a fine-toothed comb to see where improvements can be made.

How about breaks?

As we reported here, the end of 2016 saw some developments in the world of rest breaks. Some traditional policies may exert a little too much control over how employees take breaks. We’d definitely use that occasional summer thunderstorm as an excuse to spend time carefully perusing that policy.

What am I wearing?

If your dress code includes gender-specific information, now is a good time to review and make some potential modifications in light of the FEHC regulations on transgender rights, described here.

Sick of sick time yet?

Not that anyone gets sick in the summer, but if your company operates in multiple jurisdictions, it’s a great time to make sure no new sick law affects your employees. California now has six jurisdictions (San Francisco, Oakland, Emeryville, Santa Monica, San Diego, and Los Angeles, summarized here) with sick leave laws for private employers, with Berkeley right around the corner. Take this time to compare these ordinances and the state law with your current policy to make sure you’re in great shape for the upcoming flu season.

It’s also a great opportunity to spruce up your attendance policies to make sure you’re not punishing your employees from properly taking absences covered by these or other leave laws.

Who’s on leave?

A few years back, the California Legislature expanded those activities covered by the Family School Partnership Act, described here. So if you haven’t taken a look at this policy in a while, might as well get that out of the way before school starts up this fall.

For your San Francisco folks, if you haven’t had an opportunity to put together a policy/protocol covering the responsibilities of the San Francisco Paid Parental Leave Ordinance, described here, now is as good a time as any.

Also, as we discussed here, we know the law requiring the notice and posting on Domestic Violence issues became effective on July 1. Perhaps now would be a good time to consider implementing a policy on this if you don’t already have one in place.

Workplace Solution?

Although not every change in the law will make you toss out that old handbook, we do think an annual review, whether over a relaxing summer break or as you shiver indoors this winter, is a great opportunity to ensure you’re complying with the ever-evolving California and local laws. It can also serve as a reminder to compare your handbook with any benefit documents referred to inside.

Go ahead and spend a few minutes with a nice icy glass of lemonade and curl up with your favorite summer read: the company handbook! And contact your favorite Seyfarth counselor to get yours in ship shape before the kiddos come home from camp, and everything gets crazy for back to school.

Seyfarth Synopsis: Just when you thought it was safe to relax for the summer, California is giving employers four new reasons to keep on their toes. Laws going into effect on July 1, 2017, will address (1) domestic violence, (2) the minimum wage, (3) criminal background checks, and (4) transgender rights.

Notice Posting and Leave for Domestic Violence Issues

Employers must now notify employees of workplace rights regarding domestic violence victims. By way of background, Labor Code section 230.1 forbids employers with 25 or more employees to discriminate against employees who take time off to

  • seek medical attention for injuries caused by domestic violence, sexual assault, or stalking,
  • obtain services from a domestic violence shelter, program, or rape crisis center as a result of domestic violence, sexual assault, or stalking,
  • obtain psychological counseling for domestic violence, sexual assault, or stalking, or
  • participate in safety planning or other actions (including temporary or permanent relocation) to increase safety from domestic violence, sexual assault, or stalking.

Employees taking time off must give the employer reasonable advance notice, unless the advance notice is not feasible. But if the employee takes an unscheduled absence, the employee remains protected by providing, within a reasonable time after the absence, a certification of the protected reason for leave. Employers must maintain the confidentiality of the reason.

The Labor Commissioner has developed a notice form for use which can be found here. You can find Section 230.1 here.

Minimum Wage Increases for Los Angeles, San Francisco, Santa Monica and Emeryville

Earlier this year, California once again hiked its minimum wage (to $10.50).  But for some municipalities that was not enough. On July 1, the minimum wage rises in certain California cities/counties:

Before Increase:                    July 1, 2017:

Emeryville:
(56 or more employees)         $14.82                                     $15.20
(55 or fewer employees)        $13.00                                     $14.00

Los Angeles:
(25 or more employees)         $10.50                                     $12.00
(25 or fewer employees)        $10.00                                     $10.50

San Francisco:                        $13.00                                     $14.00

Santa Monica:
(26 or more employees):        $10.50                                     $12.00
(25 or fewer employees):       $10.00                                     $10.50

For further information, visit your local website.

New Criminal Background Check Regulations

On July 1, the Fair Employment and Housing Council will begin to enforce new regulations which will impose additional burdens on use of criminal background checks in employment decisions. As with any criminal background check policy that creates an adverse impact on a protected class, the employer must justify the policy as job-related and consistent with business necessity.

The regulations identify two ways an employer could justify the policy: (1) show that a “bright-line” disqualification properly distinguishes those who do and do not pose an unacceptable level of risk; (2) individually assess the individual’s qualifications. The employer must also give the applicant or employee a reasonable opportunity to show that the conviction information is wrong. If the individual provides evidence of factual inaccuracy, then the conviction cannot be considered in the employment decision.

Even when an employer can show job-relatedness and business necessity, an individual can still prevail on a claim if there is a less discriminatory alternative (such as a narrower list of disqualifying convictions) that advances the employer’s legitimate concerns as effectively as the challenged practice would.

The regulations pose a substantial new risk to employers who maintain no-hire policies for individuals with criminal convictions. Any such policy should be reviewed for compliance.

You can see the final regulations here.

FEHC Transgender Rights Regulations

On July 1, Fair Employment and Housing Council regulations will expand upon laws relating to gender identity and expression.

As background, note that as of March 1, 2017, all single-user toilet facilities in any California business establishment, place of public accommodation, or government agency must be identified as “all-gender.” As of July 1, transgender employees must have equal access to restrooms and other facilities, including locker rooms, dressing rooms, and dormitories. Employers now must allow employees to use those facilities without regard to the employee’s assigned sex at birth. The regulation provides that employers may make reasonable, confidential inquiries of employees to ensure that facilities are safe and adequate for use.

The July 1st regulation also

  • require employers to honor an employee’s request to be identified by a preferred gender or name,
  • forbid employers to impose appearance, grooming or dress standards inconsistent with an individual’s gender identify and gender expression,
  • forbid employers to require proof of an individual’s sex, gender, gender identity or gender expression, and
  • expand existing gender expression, gender identity and transgender definitions to include “transitioning” employees.

The expanded definition of this protected class may likewise expand liability for harassment, which is particularly likely with respect to a group traditionally subject to discrimination.

Employers should review policies and consider management training to ensure compliance with the California initiatives around gender identity and expression.

You can see the newly adopted regulation here.

Edited by Michael A. Wahlander.

Seyfarth Synopsis: Back from Spring Break, and Back to Work: Our List of L&E Bills to Watch in the remainder of the 2017-2018 California Legislative Session.

New LegislationCalifornia Legislators were, as always, very busy in the first few months of the 2017-18 Legislative Session, introducing well over 2000 bills by the February 17th bill introduction deadline. But, in comparison to prior years, the calendar has been surprisingly light for heavy-hitter labor and employment bills. The Legislature returned to work on April 17, after its spring break, and continued to push bills out of the house of origin in advance of the June 2nd deadline.

Here’s what we’re watching:

Opportunity to Work Act. Modeled after the City of San Jose’s November 2016 voter-approved Opportunity to Work Ordinance (effective April 1, 2017), AB 5 would require employers with 10 or more employees in California to offer additional hours of work to existing nonexempt employees in California before the employer may hire additional employees or temporary employees. The employer would not have to offer the hours to existing employees if those hours would result in the payment of overtime compensation to those employees. The bill would require employers to retain documents, including work schedules of all employees and documentation of offering additional hours to existing employees, prior to hiring new employees or subcontractors. The bill would also require employers to post a notice to be created by the Division of Labor Standards Enforcement (DLSE) outlining employee rights under this (proposed) new law. This Act would create a new Labor Code section, and provide for enforcement by the DLSE on its own accord or via complaint by an employee, or via employee private right of action. The Act would allow for an express CBA carve-out. The bill is scheduled for its initial hearing in the Assembly Committee on Labor and Employment on April 19. Stay tuned for an update on this bill following the hearing.

Rest Breaks. AB 817 would carve out an exception to Labor Code section 226.7’s off-duty “rest period” requirement for employers providing emergency medical services to the public. The bill would authorize those EMS employers to require employees to monitor and respond to calls for emergency response purposes during rest or recovery periods without penalty, as long as the rest break is rescheduled. The bill expressly states that it is declaratory of existing law. Likely in response to the California Supreme Court’s December 22, 2016 ruling in Augustus v. ABM Security Services, Inc. (holding that no true rest break was permitted when security guards were required to carry radios or pagers and respond to calls during rest breaks), this bill is one to watch.

Retail employees: Holiday Overtime. AB 1173 would establish an overtime exemption for “a holiday season employee-selected flexible work schedule,” requested in writing by individual nonexempt retail employees and approved by the employer. The exemption would allow the employee to work up to 10 hours per workday with no overtime pay. Hours worked between 10 and 12 in a workday, or over 40 hours in a workweek would be paid at one and one-half the regular rate of pay. All hours over 12 in a workday and over eight on a fifth, sixth, or seventh day in a workweek would be paid at double time. This bill contains a CBA carve-out, and clearly has many details to still be ironed out, as it contains a blank in the bill text for the definition of “retail industry.”

Pay Equity: salary inquiry ban. Once again, AB 168 seeks to ban employers, including state and local government employers, from asking job applicants about their salary history, as well as compensation and benefit information. The bill would also require that private employers, upon reasonable request, provide the applicant with the position’s pay scale. AB 168 brings back language that was shot down twice—first by Governor Brown in his October 2015 veto of AB 1017, then removed from 2016’s AB 1676 (fair pay legislation) before it received the Governor’s approval in September 2016.

Pay Equity: Gender Pay Gap Transparency Act. Dubbed the “Gender Pay Gap Transparency Act,” by author Assembly Member Gonzalez-Fletcher in her April 4, 2017 Equal Pay Day press release, AB 1209 would “require companies with more than 250 employees to include gender pay data as part of their annual reporting to the Secretary of State.” If passed, AB 1209 would require employers, beginning July 1, 2020, to publish and update yearly the difference between the mean salary and median salary of male exempt employees and female exempt employees broken down by job classification or title and the difference between the mean compensation and median compensation for male board members and female board members. Arguments against this bill will likely mirror those made in response to the EEOC’s revised EEO-1 rule.

Voluntary Veterans’ Preference Employment Policy Act. Dubbed the “Voluntary Veterans’ Preference Employment Policy Act,” AB 353 and AB 1477 would allow private employers to establish a veterans’ preference policy  and uniformly grant a hiring preference to veteran applicants, regardless of when the veteran served. These bills would expand Government code section 12940(a)(4), which currently allows for a veterans’ preference policy for Vietnam-era veterans only. The bill would provide that the granting of a veterans’ preference will not violate any local or state equal employment opportunity law or regulation, including FEHA, as long as the policy is not applied for the purpose of discriminating against an employment applicant on the basis of any protected classification.

Applicants: prior criminal history. The Legislature is joining the flurry of “Ban-the-Box” initiatives throughout California with AB 1008, which would make it unlawful for an employer to: 1) include on any job application questions that seek the disclosure of an applicant’s criminal history; 2) inquire or consider an applicant’s prior convictions before extending a conditional offer; and 3) when conducting a background check, to consider or disclose  various information. The bill would also require employers that intend to deny employment to an applicant because of prior convictions to perform an individualized assessment of whether the applicant’s conviction history has a direct and adverse relationship to the specific job duties, considering the nature and gravity of the offense, the time passed since the completion of the sentence, and the nature of the job. Then, the employer must notify the applicant of the reasons for the decision and provide the applicant 10 days to respond and challenge the accuracy of that information or provide evidence of rehabilitation which it must consider before making a final employment decision, in writing. This bill is substantially similar to the recent Fair Employment and Housing Council regulations, which go into effect in July 2017; and would thus largely codify what will soon be required by regulation.

Health professional interns: minimum wage. Following the recent increases in minimum wage, AB 387 would expand the definition of “employer” to include a person who employs any person engaged in supervised work experience (i.e., clinical hours) to satisfy the requirements for licensure, registration, or certification as an allied health professional. Cal Chamber opposes this bill, as it could cause internships provided for educational credit to be eliminated.

Resident apartment manager wages. AB 543 would authorize, under a voluntary written agreement, an employer that doesn’t charge a resident apartment manager monthly rent, to apply up to one-half of the fair market rental value of the apartment to meet minimum wage obligations to the apartment manager. Existing law allows employers to take a credit against minimum wage for two-thirds of the ordinary rental value, up to $564.81 per month for a single occupant and $835.49 per month for couples.

Credit Card gratuities. AB 1099 would require employers that are lodging establishments, car washes, barber shops and beauty salons, massage parlors, restaurants, and on-demand service providers such as transportation network companies that allow debit or credit card payment for services to also accept a debit or credit card for gratuities or tips. This bill would require the tip payment to be made to the employee by the next regular payday following the date the credit card authorized payment.

Overtime compensation: executive, administrative, or professional employees. AB 1565 would exempt from overtime compensation an executive, administrative, or professional employee, if the employee earns a monthly salary of either $3,956 or no less than twice the state minimum wage for full-time employment, whichever amount is higher.

Labor organizations: compulsory fee payments. AB 1174 would, beginning January 1, 2018, prohibit a person from requiring employees, as a condition of employment, to pay union dues or contribute financially to any charity sponsored by or at the behest of a labor organization.

Employer liability: small business and microbusiness. AB 442 would prohibit Cal OSHA from bringing an enforcement action for any “nonserious violation” against any employers with 100 or fewer employees and an average gross of $10,000,000 or less over the past three years, or microbusinesses  with 25 or fewer employees and an average gross of $2,500,000 or less over the past three years, without first giving the employer written notice of the violation and providing 30 days to cure. AB 442 would authorize Cal OSHA to assess a reasonable fee, up to $50, to cover its costs for enforcement.

Immigration: worksite enforcement actions. AB 450, the “Immigrant Worker Protection Act,” would impose several requirements on public and private employers dealing with federal ICE workplace raids or enforcement actions. Assemblymember Chiu has described the key components as:

  • Requiring employers to ask for a warrant before granting ICE access to a worksite.
  • Preventing employers from releasing employee records without a subpoena.
  • Requiring employers to notify the Labor Commissioner and employee representative of a worksite raid and notifying the Labor Commissioner, employees, and employee representatives of an I-9 audit (i.e., employment eligibility verification).
  • Preventing retaliation by enabling workers crucial to a labor claim investigation to receive certification from the Labor Commissioner that employee complainant or employee witness has submitted a valid complaint for violations of the Code and is cooperating in the investigation and prosecution of the violations.

The bill would authorize the Labor Commissioner to asses penalties of at least $10,000 to $25,000 for each violation against employers for failure to satisfy the bill’s requirements and prohibitions.

FEHA enforcement expansion. SB 491 would expand Government Code section 12993 and allow local jurisdictions, such as cities and counties, to enforce FEHA discrimination regulations. Cal Chamber opposes this bill.

Good faith defense: employment violations. SB 524 would permit an employer to raise an affirmative defense that, at the time of a violation, the employer was acting in good faith when the employer relied upon a valid published DLSE opinion letter or enforcement policy. SB 524 would only apply after January 1, 2018 to DLSE opinion letters or enforcement policies that are still in effect at the time of the violation. Employers would not be able to claim an affirmative defense when a DLSE opinion letter or enforcement policy has been modified, rescinded, or deemed invalid. Cal Chamber supports this bill but hearings for SB 524 have been canceled at the request of the author, Senator Vidak. We’ll keep our eye on this to see if there is any further movement.

Reproductive health. AB 569 would prohibit employers from taking any adverse employment action against an employee based on the employee or employee’s dependent’s reproductive health decisions. The bill would also prohibit employers from requiring employees to sign a waiver or any document denying an employee the right to make his or her own reproductive health care decisions, including the use of a particular drug, device, or medical service (e.g., in vitro fertilization). The bill would require an employer to include in its handbook a notice of the employee rights and remedies under this bill.

New Parent Leave Act. Likely DOA, but resurrected for another go from its 2016 veto, SB 63, the “New Parent Leave Act,” would prohibit employers with at least 20 employees within 75 miles, from refusing to allow an employee to take up to 12 weeks of parental leave to bond with a new child within one year of the child’s birth, adoption, or foster care placement. Like under CFRA, to be eligible, the employee must have more than 12 months and at least 1,250 hours of service with the employer during the previous 12-month period. The bill would require the employer to maintain and pay for the employee’s coverage under a group health plan during this leave. SB 63 would also allow—but not require—an employer to grant simultaneous leave when two employees are entitled to leave for the same birth, adoption, or foster care placement. This bill is almost identical to 2016’s SB 654, which Governor Brown vetoed, and only provided for 6 weeks of leave, rather than the 12 weeks SB 63 would provide. The Governor’s veto message expressed his concerns for impact the leave would have on small business and pointed lawmakers to explore an amendment that would have made mediation an option—which the SB 63 does not have.

PAGA: Three New Valiant Efforts. AB 281 attempts to reform PAGA by: 1)  requiring an actual injury for an aggrieved employee to be awarded civil penalties; 2) excluding health and safety violations from the employer right to cure provisions; and 3) increasing employers’ cure period to 65 calendar days from 33.

AB 1429 would limit the violations an aggrieved employee can bring, require the employee follow specific procedural prerequisites to filing suit, limit civil penalties recoverable to $10,000 per claimant and exclude the recovery of filing fees, and require the superior court to review any penalties sought as part of a settlement agreement.

AB 1430 would require the Labor and Workforce Development Agency (LWDA) to investigate alleged Labor Code violations and issue a citation or determination regarding a reasonable basis for a claim within 120 calendar days; and allow an employee private action only after the LWDA’s reasonable basis notification or the expiration of the 120 day period. Read our further analysis of PAGA proposed amendments here.

Workplace Solutions

We will continue to monitor and report on these potential Peculiarities, as well as any other significant legislative developments over the course of the 2017 Legislative Session. Contact your favorite Seyfarth attorney with any questions.

Edited by Colleen Regan.

Seyfarth Synopsis: On March 30, 2017, the California Fair Employment and Housing Council (“FEHC”) considered proposed regulations on transgender employees. The FEHC also discussed draft regulations on national origin discrimination in the workplace.

Transgender Identity. On March 30, 2017, the FEHC, convened in Sacramento for its second meeting of the year, voted unanimously to adopt proposed regulations on transgender identity and expression, which will go to the Office of Administrative Law for approval. We expect a final text in July. The FEHC first proposed these amended regulations in 2016, which we covered here.

Some highlights: the amended proposed regs would

  • prohibit employers from requiring applicants to disclose their sex, gender, gender identity or expression,
  • protect transitioning employees by expanding the definitions of gender identity and expression,
  • ensure that employees are addressed by their preferred name, gender, and pronoun, and
  • require employers to provide equal access to comparable, safe, and adequate bathrooms, locker rooms, and similar facilities.

Employers can familiarize themselves with the approved regulations now to anticipate questions that may arise in this context.

The FEHC heard public comment over a perceived conflict in bathroom signage required by the proposed regulations and pre-existing Cal-OSHA regulations. The proposed FEHC regulations, consistent with recently enacted legislation (discussed here), require that single-user bathrooms have gender-neutral signage. But the Cal-OSHA regulation, which predates both the FEHC regs and the recent legislation, calls for single-user bathrooms to be for a single gender. The conflict is one of perception only, as the Department of Industrial Relations has clarified that Cal-OSHA will not enforce its rule, and instead will follow the gender-neutral requirement found in the statute (and the proposed FEHC regs). We expect that other agencies may adopt the DIR’s approach, favoring transgender protections over conflicting pre-existing regulations.

Kevin Kish, Director of the Department of Fair Employment and Housing, confirmed the DFEH would consult with the Labor and Workforce Development Agency and Cal-OSHA to ensure consistency in the implementation and enforcement of the regulations.

National Origin Discrimination. The FEHC has also drafted proposed regulations regarding national origin discrimination in the workplace, following recommendations by Legal Aid at Work. The proposed regulations are still in their early stages; as yet, there has been no formal notice of the proposed regulations or a public hearing.

The proposed regulations largely track the EEOC’s new guidance on national origin, which we summarized in our Employment Law Lookout blog here. The draft FEHC regulations address these issues:

  • Defining national origin to include place of birth or ancestor’s place of birth, association or perceived association with a person of a national origin group or ethnicity, Native American Tribe, language, and accent.
  • Harassment and retaliation against undocumented workers.
  • Discrimination based on immigration status, accent, or English proficiency.
  • Workplace language restrictions.

Public comments have addressed the proposed provisions that would curb employer inquiry into an individual’s immigration status. The proposed regulations would permit such an inquiry only where clear and convincing evidence shows the inquiry is needed to comply with federal law. Based on further comment by Legal Aid at Work, we anticipate that further modifications may provide guidance on workplace language policies.

What’s Next? We expect to see more activity from the FEHC in the months ahead. The FEHC will likely revise its proposed regulations on national original discrimination before it issues formal notice of proposed action of the regulation. The FEHC also plans to expand its outreach efforts, seeking further comment from the public and civil rights groups to shape the FEHC’s future agenda. We will continue to monitor and report further developments.

Edited by Colleen Regan.

Seyfarth Synopsis:  The California Fair Employment and Housing Council (“FEHC”) has approved new regulations, effective July 1, 2017, to limit employers’ use of criminal history when making employment decisions.

Request for a criminal background checkNew Regulation Highlights

Updating our prior post, the FEHC has finalized new regulations on employer consideration of criminal history, largely adopting the guidance set forth by the Equal Employment Opportunity Commission (“EEOC”) in its April 2012 “Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964.

  • Expanding the Types of Criminal History Employers May Consider: Employers will be prohibited from considering any non-felony convictions for marijuana possession if the conviction is more than two years old. (Current California law prohibits asking applicants to provide information concerning convictions for marijuana-related offenses that are more than two years old; detentions or arrests not resulting in conviction (except for those pending); convictions that have been judicially dismissed or ordered sealed; and information concerning a referral to or participation in a work/education program as part of probation.)
  • Requiring Notice to the Applicant/Employee of a Disqualifying Conviction and Providing a Reasonable Opportunity to Present Evidence of Factual Inaccuracy: Under the new regs, prior to taking adverse action, an employer must provide the applicant notice of the disqualifying conviction and give the applicant a reasonable opportunity to present evidence of factual inaccuracy. If the applicant produces such evidence, the conviction cannot be considered in the employment decision. The notice is only required when the criminal history is obtained from a source other than the applicant or employee (e.g., through a consumer report or internally generated search). This notice differs from the notice required by the Fair Credit Report Act (“FCRA”), which mandates notices only if the employer takes adverse action based on information contained in a third-party background check. This notice also differs from those in “Ban the Box” city ordinances, such as Los Angeles and San Francisco, where notice may be required if adverse action is taken from criminal history information from any source, including disclosure from the candidate.
  • Prohibiting Consideration of Criminal History When Doing So Will Result in an Adverse Impact on Individuals Within a Protected Class: Employers will also be prohibited from considering criminal history if doing so will result in an adverse impact (referred to by the EEOC as “disparate impact”) on individuals within a certain class (e.g., race, national origin, etc.). The regs bring California into explicit alignment with federal law on this point. Applicants bear the initial burden of proof with respect to establishing that the employer’s background screening policy has an adverse impact on a protected class, e.g., conviction statistics or other types of evidence. If adverse impact is demonstrated, the burden shifts to the employer to demonstrate that its policy is “job related and consistent with business necessity,” and tailored to the specific circumstances, taking into account factors such as those set forth in Green v. Missouri Pacific Railroad, 549 F.2d 1158 (8th Cir. 1975), i.e.,: (i) nature and gravity of the offense or conduct; (ii) amount of time since the offense or conduct and/or completion of the sentence; and (iii) nature of the job held or sought. (Bright-line disqualification policies that include convictions that are older than seven years create a rebuttable presumption that they are not sufficiently tailored.) Even if an employer can demonstrate job-relatedness and consistency with business necessity, an applicant or employee can still bring a claim if they can show that there is a less discriminatory alternative (such as a narrower list of disqualifying convictions) that advance the employer’s legitimate concerns as effectively as the current policy or practice.

Employer Outlook

Employers in California should review their policies on use of criminal history in hiring and modify any practices to ensure compliance with the new FEHC regulation (as well as the FCRA and applicable municipal Ban the Box ordinances, such as Los Angeles and San Francisco).

Pamela Q. Devata is a partner in Seyfarth Shaw’s Chicago office. Stacey L. Blecher is counsel in the firm’s New York office. If you would like further information, please contact your Seyfarth Shaw LLP attorney, Pamela Q. Devata at pdevata@seyfarth.com or Stacey L. Blecher at sblecher@seyfarth.com.

As a loyal reader of our CalPecs Blog, you know that last year’s Senate Bill 1038 eliminated the Fair Employment and Housing Commission, including its administrative adjudication of FEHA claims. The bill created a Fair Employment and Housing Council, to perform the former Commission’s regulatory functions. 

Is the Council a new and improved “FEHC”?  Time will tell, but we got our first peek when we attended the Council’s very first meeting on Monday, June 18. 

Here’s a brief summary of the proceedings:

Swearing In:  The councilmembers Governor Brown appointed to serve until January 1, 2017 were sworn in:  Chair Chaya Mandelbaum, Dale Brodsky, Chanée Franklin Minor, Patricia Perez, and Andrew Schneiderman.

DFEH Updates: DFEH Director (and past CalPecs guest blogger) Phyllis Cheng made these observations:

  • Increased numbers of Complaints have been filed through the DFEH’s new online complaint filing system, and pursued by the DFEH;
  • Disability discrimination complaints are currently the most common, followed by retaliation, race, gender discrimination, and sexual harassment (precise statistics on this and the above to be posted on www.dfeh.ca.gov);
  • Some pending legislation that would amend the FEHA in various respects:

◊   AB 556 — addressing discrimination toward veterans and members of the armed services;

◊   SB 292 — to clarify that sexual harassment does not require proof of sexual desire under FEHA;

◊   SB 404 — to add “familial status” as a protected characteristic; and

◊   SB 655 — to modify the California Supreme Court’s decision in Harris v. City of Santa Monica, by defining what a “substantial factor” is in a “mixed-motive” defense action, and providing a statutory penalty of $25,000 if a plaintiff proves that a protected characteristic was a substantial factor in the adverse employment action. 

More on these bills and others in upcoming Legislative Update blogs.

Substantive Regulatory Changes to Come? 

  • The Council has formed subcommittees to craft proposals for substantive changes to the FEHA implementing regulations in the areas of the California Family Rights Act (the CA analog to the FMLA) and hate crimes, in addition to other broad housing and employment topics. 
  • Each councilmember volunteered to serve on at least two subcommittees, and all members will evaluate any proposed changes.  Any proposed changes to the Regulations that are substantive in nature will follow the formal rulemaking process.

We’ll continue to follow the new FEHC’s activities to keep you informed of developments. 

Special thanks to Seyfarth Summer Diversity Fellow Dia Kirby for her assistance with this blog entry.