Legal changes affecting business owners
If you are a small business in California, you should be aware of new mandates
for 2017 that could affect your personnel practices.
For larger employers, the HR department will absorb the extra work created
by the new requirements. But small employers in California often don’t
have the luxury of a dedicated HR department. For these employers, several
new mandates will create additional administrative burdens. Employers
need to be aware of significant changes in key areas, such as the state
minimum wage. Other new laws make small changes to different parts of
existing law or may relate only to specific industries.
Unless specified, all new legislation went into effect on January 1, 2017.
This year, many bills feature delayed or phased-in implementation.
1. New State Minimum Wage Depends on Employer Size
Effective January 1, 2017, businesses with 26 or more employees must pay
a minimum wage of $10.50 per hour. These businesses will reach $15 per
hour in 2022.
Small businesses with 25 or fewer employees are required to pay $10 per
hour — the same as the 2016 rate. The scheduled increase for small
businesses does not begin until 2018, and small businesses will have until
2023 to reach the $15 per hour rate.
The minimum wage increase requires all employers, regardless of size,
to post a new Minimum Wage Order. The minimum wage increase also has an
effect on other pay practices, such as the overtime rate.
*Once the minimum wage reaches $15 per hour for all businesses, wages
could then be increased each year up to 3.5 percent (rounded to the nearest
10 cents) for inflation as measured by the national Consumer Price Index.
Businesses also need to pay close attention to rapidly multiplying local
ordinances which impose minimum wage rates separate from, and higher than,
the state rate. Eligibility rules vary from city to city. Moreover, the
minimum wage rates in these cities may change at any time; employers should
closely monitor them.
Check with your local city government as to whether any local minimum
wage ordinance might apply to your workforce.
2. Important Payroll Change
Small businesses already know about the laundry list of required employee
forms and these requirements keep increasing.
A new law effective January 1, 2017, requires employers who must notify
employees of their eligibility for the federal Earned Income Tax Credit
(EITC) to now also notify these employees that they may be eligible for
the California EITC.
The specific language for the required notice regarding the federal and
California EITC is contained in the statute. The notice must be provided
one week before or after, or at the same time, the employer provides an
annual wage summary, including but not limited to a Form W-2 or a Form 1099.
3. New Form I-9 and Immigration-Related Protections
Federal law requires employers to verify an employee’s eligibility
to work using the Form I-9 process.
The U.S. Citizenship and Immigration Services recently published a revised
version of the Form I-9. Employers are required to use only the version
dated 11/14/2016 N.
Several changes were made to the Form I-9 to help reduce technical errors
and also to make it easier for the user to download and complete on a
computer. In addition, the instructions for completing the Form I-9 are
now separate from the form itself and contain instructions for completing
each field.
In addition, a new state law strengthens immigration-related protections.
Under federal law, it’s unlawful for employers to ask for more or
different documentation than is required by the Form I-9, refuse to accept
documents that appear genuine on their face or engage in other types of
document abuse.
The new law makes this type of conduct unlawful under state law as well.
Violators may be subject to a penalty of up to $10,000.
4. All-Gender Restrooms and Signage Requirement
If your business has single-user toilet facilities, you need to be aware
of a new law that became effective March 1, 2017, requires all single-user
toilet facilities in any business establishment, place of public accommodation
or government agency to be identified as “all gender” toilet
facilities.
A “single-user toilet facility” is defined as “a toilet
facility with no more than one water closet and one urinal with a locking
mechanism controlled by the user.” Businesses will need to check
their signs for compliance and make sure that the signs comply with Building
Code Standards relating to all gender or unisex signs.
Be careful; many online retailers sell signs that might not comply with
the law. In addition, some pictograms can be considered offensive.
5. Fair Pay for Employees
California’s Fair Pay Act applies to all employers, regardless of
size, and provides protections against wage discrimination. Significant
amendments
(effective in 2016) were made to California’s equal pay laws to
address gender wage inequality and also to address “pay secrecy.”
For 2017, two new bills expand California’s Fair Pay Act.
The first of the two acts prohibits an employer from paying any of its
employees at wage rates that are less than the rates paid to employees
of another race or ethnicity for substantially similar work.
The second specifies that, under the Fair Pay Act, prior salary cannot,
by itself, justify any disparity in compensation. The law is intended
to “help ensure that both employers and workers are able to negotiate
and set salaries based on the requirements, expectations, and qualifications of the
person and the job in question, rather than on an individual’s prior
earnings, which may reflect widespread, long-standing, gender-based wage
disparities in the labor market.”
This new law doesn’t specifically prohibit an employer from asking
about prior salary, but does prohibit the use of that information as a
sole factor
to determine compensation. Accordingly, when determining starting pay
for a new hire, prior salary history should not be the sole determining factor.
6. New Smoking Rules
California generally bans smoking in the workplace, and a package of bills
effective last year expanded already-existing smoke-free workplace protections.
Under the new legislation, the following rules are now active:
• Smoking ban areas at workplaces now apply to private business owners
and businesses operated by the owner. Formerly, small businesses with
five or fewer employees were exempt from this law, but they are no longer.
• E-cigarettes and other nicotinedelivery devices, such as vaporizers,
are now considered “smoking,” which places them subject to
smoking bans as well.
• Smoke-free workplace protections have been expanded such that most
of the exceptions certain work environments formerly had regarding the
smoking ban have now been removed. Exceptions have been removed for places
like bars, hotel lobbies, and warehouse facilities.
• Employers are no longer permitted to provide smoking break rooms
for employees.
7. Legalization of Recreational Marijuana
In November 2016, California joined several other states in legalizing
recreational use of marijuana by adults. Proposition 64, also known as
the Adult Use of Marijuana Act, legalized the recreational use of marijuana
for adults 21 years old and over.
Proposition 64 maintains the status quo for employers seeking to maintain
a drug- and alcohol free workplace. In other words, employer policies
related to drug possession, use and impairment as well as testing are
not compromised with the legalization of marijuana use under Proposition 64.
Proposition 64 explicitly states that it is intended to “allow public
and private employers to enact and enforce workplace policies pertaining
to marijuana.”
Therefore, even with the passage of Proposition 64, employers may continue
to prohibit use, possession and impairment at work and may continue to
test for use when appropriate. Proposition 64 is not intended to interfere
with these workplace policies or practices.
8. Use of Juvenile Criminal History Information
Employers conducting criminal background checks in California are limited
in terms of the information that can be obtained and how it can be used.
A new law, further restricts the type of information that can be obtained.
The new law prohibits employers from inquiring into an applicant’s
juvenile criminal history information or using such information as a factor
in determining any condition of employment.
Also, please be aware of local ordinances that may ban employers from
asking applicants about any criminal convictions on the employment application.
Both Los Angeles and San Francisco have such ordinances.
9. Notice of Domestic Violence, Sexual Assault and Stalking Protections
Adding to growing employee paperwork requirements, AB 2337 requires employers
with 25 or more employees to provide employees with written notice about
the rights of victims of domestic violence, sexual assault and stalking
to take protected time off for medical treatment or legal proceedings.
A required form must be given to all new employees when hired and to current
employees upon request.
The Labor Commissioner is required to develop the form on or before July 1, 2017.
Employers are not required to comply with this notice requirement until
the Labor Commissioner posts the new form on its website.
10. Paid Family Leave Benefit Changes in 2018
Effective January 1, 2018, AB 908 increases the amount of paid family
leave (PFL) benefits an employee can receive from 55 percent of earnings to
either 60 percent or 70 percent of earnings, depending on the employee’s
income. There still will be a maximum weekly benefit on the amount received.
The new law also will remove the current seven-day waiting period that
exists before an employee is eligible to receive PFL benefits.
Remember that PFL is a partial wage replacement program. PFL does not
create the right to a leave of absence or guarantee reinstatement rights
unless already mandated by another law.
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Compliance Tips for Small Businesses in California
• Make sure you are using the correct minimum wage rate. Also examine
how the minimum wage rate affects other practices.
• Provide required notices and stay on top of change, such as the
new EITC notice that must contain language regarding the credit under
both federal and state law.
• Review your company’s practices on criminal background checks
to make certain that they comply with legal requirements, including a
review of your job application forms.
• Review all policies and practices to make sure they are current.
• Notify employees of any policy changes by sending out a new or
revised policy or by sending out an entirely new employee handbook, when
warranted. For instance, review your smoking and drug and alcohol policies.
• If you have single-user toilet facilities, comply with the new
signage requirement and make certain that these restrooms can be used
for all genders.
• Check with your local city/county government to see if any local
ordinances apply to your practices.
• Don’t just revise policies; put them into practice and apply
them consistently.
If you have any questions or concerns, please do not hesitate to contact us. We are happy to keep you up to date and in compliance.