Governor Brown has recently signed numerous bills that create new laws that will impact California employers.  While there are many new laws, there are several that are of concern as they will influence how employers interact with their employees – or job applicants – daily.  This article highlights some of the major changes related to six bills: (1) “Ban the Box”; (2) Salary History Inquiries; (3) Training on gender identity, gender expression and sexual orientation; (4) Changes in parental leave; (5) Implications of California’s sanctuary state requirements; and (6) Enhanced powers for Labor Commission investigations.

1. Statewide “Ban the Box”

Following the trend that included numerous states and municipalities such as Los Angeles and San Francisco, California has enacted a statute that prevents employers from inquiring about a job applicant’s criminal record until after making a conditional job offer.  See Rubiner, Los Angeles Adopts A “Ban the Box” Ordinance Applicable To Private Employers, https://www.gerardfoxlaw.com/news/thought-leadership/los-angeles-adopts-a-ban-the-box-ordinance-applicable-to-private-employers/ (December 23, 2016).

A.B. 1008 adds Section 12952 to the Government Code.  This provision makes it unlawful, with certain enumerated exceptions, for an employer with five or more employees to do any of the following:

• Include any question on an employment application that seeks the disclosure of an applicant’s criminal history before making a conditional offer of employment;
• Inquire, or consider, of an applicant’s conviction history, until after a conditional offer of employment is made; and
• Consider, distribute, or disseminate information about any of the following conduct relating to an employment decision: (a) arrest not followed by conviction, (b) referral to a pretrial or post-trial diversion program; or (c) convictions that have been sealed, dismissed, expunged, or statutorily eradicated.

If an employer makes a conditional offer of employment, the employer can then perform a background search, including a conviction analysis.  However, if an employer intends to deny an applicant a position based solely, or in part, because of the individual’s criminal history, the employer must make an individualized assessment of whether the applicant’s conviction history has a direct and adverse relationship to the job.  The employer must consider: (a) the nature and gravity of the offense or conduct; (b) the time that has passed since the offense or conduct and completion of the sentence; and (c) the nature of the job sought.  If the employer decides to rescind the conditional offer of employment, an employer must provide written notice to the applicant and explain its reasons.  The statute also requires an employer to give the applicant five business days to respond and sets up a procedure for the applicant to challenge the veracity of the employer’s information.

The new law does not require that the employer keep written records of its decision-making process, but we suggest that employers do so.  If challenged, the more evidence that the employer has, the better.  Additionally, every company that has a workforce of five or more employees should do the following:

• Update its employment applications to remove inquiries related to conviction history;
• Train managers and supervisors, as well as anyone else in the hiring process, to not inquire about an applicant's conviction history;
• If the company regularly does background searches, ensure that those who do so are trained on the types of information that may be obtained during a background search for conviction history information; and
• Develop an internal policy of protocols and notices for the process whereby applicants are notified of potentially disqualifying information and given an opportunity to respond within the mandated time frames.

Furthermore, employers should ensure that they review local ordinances (such as those in San Francisco and Los Angeles) for additional requirements or limitations regarding the use of conviction history information in the hiring process.

1. Salary History Inquiries Are Now Off-Limits

Keeping with the theme of improper questions in the job interview process, A.B. 168 restricts an employer’s ability to question an applicant about his or her salary history for use as a factor in the hiring decision or in determining what salary to offer the applicant.    Moreover, upon reasonable request, an employer is required to provide an applicant the pay scale for the job.

The purpose of this law is to help close a gender pay gap.  The theory is that women often start their careers at a pay disadvantage and questions about salary history tend to help ensure that women retain lower compensation for similar work.  California is joining a growing trend of states and municipalities, such as New York City, Philadelphia, San Francisco, Delaware, Massachusetts, and Oregon, among others, that have already enacted similar legislation.

We advise that employers: (a) ensure that their written employment applications do not inquire into salary history; and (b) train their hiring personnel to not ask questions relating to salary in the interviewing process.

• Training on Gender Identity, Gender Expression, and Sexual Orientation

The California Fair Employment and Housing Act (FEHA) provides a variety of remedies for discrimination and harassment in employment.  Employers that have 50 or more employees are required to provide supervisory employees at least two hours of training at least every two years.  S.B. 396 requires employers to include, as a component of that training, specific guidance concerning harassment based on gender identity, gender expression, and sexual orientation.  According to State Senator Richard Lara who sponsored the bill, the purpose is to combat discrimination and harassment of transgendered Californians.  This law is the first in the nation that is particularly focused on this type of discrimination.  The bill also requires employers to post a poster to be developed by the Department of Fair Employment and Housing (DFEH) regarding transgender rights.

We recommend that all employers review their managerial training to ensure compliance with S.B. 396 (which will be set forth in Government Code Sections 12950 and 12950.1) related to transgender issues. Moreover, employers should ensure they obtain and post the new poster the DFEH is creating.

1. Parental Leave for Small and Mid-Size Employers

S.B. 63 expanded parental leave to midsize employers reducing the minimum number of employees required to 20.  The new law makes it illegal for companies that employ 20 to 49 workers to refuse to grant new parents up to 12 weeks of unpaid leave within one year of their child’s birth, adoption, or foster care placement.  Employees must have at least one year of experience and 1,250 hours on the job to be eligible for job-protected leave under the bill.

All employers with at least 20 employees should review their leave policies to ensure that they provide appropriate leave under this provision and the California Family Rights Act.

1. California’s Sanctuary State Program

In perhaps California’s most aggressive position against the Trump Administration’s rhetoric concerning immigration enforcement, Governor Brown signed A.B. 450 which puts employers in a bind between California authorities and the federal government in relation to immigration.  Starting January 1, 2018, California employers can no longer voluntarily consent to federal Immigration and Customs Enforcement (ICE) worksite inspections.  Instead, under the new law:

• Employers must receive warrants and subpoenas from federal immigration agents before granting them access to nonpublic areas of the worksite or permitting them to inspect certain employee records;
• Employers must notify workers and their labor unions about an ICE enforcement activity within 72 hours of receiving notice of the inspection; and
• Employers must provide each current affected employee and the employee's authorized representative with the results of an inspection within 72 hours of receiving such information from ICE.

Penalties for violations of this statute range from $2,000 to $5,000 for the first violation and from $5,000 to $10,000 for each subsequent violation. Except as required by federal law, A.B. 450 prohibits an employer from reverifying the employment eligibility of a current employee at a time or in a manner not required by specified federal law.  A violation of this prohibition could result in a $10,000 fine.  The bill grants the Labor Commissioner or the Attorney General the exclusive authority to enforce these provisions and requires that any penalty recovered be deposited in the Labor Enforcement and Compliance Fund.

Given the highly political nature of this statute as a direct rebuke of the Trump Administration’s immigration policies, employers should tread carefully and review their immigration compliance policies to ensure compliance with both federal and state laws. 

Employers cannot simply allow federal agents on to their premises to conduct immigration inspections.  HR departments should create policies and procedures for both responding to investigation requests and, if necessary, for informing employees of such compliance.  They cannot simply “open their doors” and voluntarily respond to information requests.  Additionally, every employer should review its procedures and practices for verifying all its employees’ legal status and in what to do if a DHS inspector comes knocking.  Make sure that the I-9 files are in good shape and ready to be turned over to the government.  It is also a good time to review all aspects of employing non-Americans to ensure compliance with all laws and regulations.  If the government calls (or just shows up), be polite and call your counsel.

1. Labor Commissioner Retaliation Investigations

S.B. 306, which goes into effect on January 1, 2018, considerably increases the Labor Commissioner’s authority to investigate discrimination and harassment claims and to obtain preliminary injunctive relief during those investigations.  This expanded authority allows the Labor Commissioner to seek a preliminary injunction during an investigation if the Labor Commissioner has “reasonable cause” (which is not defined in the statute) to believe a violation has occurred.  Under existing law, the Labor Commissioner needed to wait until after its investigation was complete to seek relief.  Additionally, the “reasonable cause” standard is new and appears to be substantially easier to meet than traditional test for injunctive relief (which requires the following familiar formula – (1) irreparable harm if the injunctive relief is not granted, (2) likelihood of success on the merits of the claim, and (3) that these interests outweigh the harm that the defendant will suffer from granting the injunctive relief).

Moreover, the law permits the commissioner “to commence an investigation of an employer, with or without a complaint being filed, when specified retaliation or discrimination is suspected during a wage claim or other specified investigation being conducted by the Labor Commissioner.”  Previously, the Labor Commissioner could act only upon receipt of an employee complaint.  This means the Labor Commissioner can now, sua sponte, commence an investigation of an employer.

The Labor Commissioner can now make findings through a process that is called the “citation” process.  After an investigation, the Labor Commissioner may issue a citation.  If an employer wants to challenge the citation, it is required to file a writ of mandate with the superior court (and post a bond), instead of trial de novo. An employer who willfully refuses to comply with a final order of the court shall be subject to a civil penalty of $100 per day of noncompliance, up to $20,000.  This “citation” process is new and stacks the deck in the Labor Commissioner’s favor.

It will take some time to see the impact of this bill.  The Labor Commissioner’s office is generally understaffed and underfunded and may have difficulty in following through on many of the bill’s mandates.  However, it is quite likely that the Labor Commissioner will actively pursue – and seek preliminary relief – on pay equity claims and retaliation claims.  This statute provides an additional incentive for an employer to properly document its reasons for an adverse employment action.  There is likely to be substantial communications during the investigations and the better an employer’s records, the more likely that employer can convince the Labor Commissioner not to pursue it.  Similarly, employers should be careful when presented with an employee whistleblower complaint or Labor Commissioner inquiry.

If you have questions about this article or any other employment-related matter, please call John Rubiner at 310/441-0500 or email him at jrubiner@gerardfoxlaw.com.  Mr. Rubiner chairs Gerard Fox Law’s Labor and Employment Group.