2017 California Legislative Updates ARREST AND CONVICTION RECORDS 1. Effective January 1, 2017, employers can t ask applicants to disclose certain information about their interactions with juvenile court law. Employers also can t seek related records or use these records as a factor in determining conditions of employment. 2. Effective January 1, 2017, employers can t access sealed criminal records related to a person s status as a human trafficking victim. Employees and applicants aren t required to disclose information about these records and can t be denied employment-related rights or benefits based on such nondisclosure. 3. Effective July 1, 2017, restrictions on pre-employment inquiries are revised under California fair employment practices law. The law also restricts employers use of criminal history information in employment decisions. CRIME VICTIM LEAVE Effective by July 1, 2017, employers must notify new employees upon hire and other employees upon request about their crime victim leave rights related to domestic violence, sexual assault or stalking. DISPUTE RESOLUTION Effective January 1, 2017, employers can t require employees, who primarily reside and work in California, to adjudicate in-state claims outside the state or to waive the substantive protections of state law regarding instate disputes. This prohibition applies to contracts entered into, modified or extended on or after January 1, 2017, except those with employees who are individually represented by legal counsel in negotiating the venue or forum for adjudicating employment contract disputes or the choice of law to be applied. DISTRACTED DRIVING Effective January 1, 2017, employees who drive as part of their job duties can t hold and operate hand-held wireless telephones or electronic wireless communications devices while driving. DRUG AND ALCOHOL USE On November 8, 2016, California voters approved a ballot measure that allows for recreational use of marijuana; however, employers can prohibit such use by employees and applicants. EMPLOYMENT ELIGIBILITY VERIFICATION Effective January 1, 2017, employers can t request or refuse to honor certain documents during the federal Form I-9 process. They also can t re-investigate or reverify employees work authorization using unfair immigration-related practices. 1
EQUAL EMPLOYMENT OPPORTUNITY: SEX DISCRIMINATION 1. Effective March 1, 2017, the California Health and Safety Code requires all single-occupancy restrooms in business establishments to be labeled with gender-neutral signs. 2. Effective July 1, 2017, new regulations clarify and expand the gender identity discrimination provisions related to sex and gender and gender identity and gender expression. Employers can t discriminate based on sex or gender, unless a permissible defense applies. They also can t discriminate based on perceived sex or gender, and can t discriminate based on an association with a person who belongs or is perceived to belong to this protected class. Sex includes pregnancy, childbirth, breast-feeding, or related medical conditions; gender, gender identity, or gender expression; and (effective July 1, 2017) a third party s perception of these traits. Gender means sex and includes gender identity and gender expression. The following situations don t justify employers use of the bona fide occupational qualification (BFOQ) defense: a correlation between persons of one sex and physical agility or strength; a correlation between persons of one sex and height; customer preferences for employees of one sex; the need to provide separate facilities for employees of one sex; effective July 1, 2017, the fact that a person is transgender or gender nonconforming or that the person s assigned sex at birth is different from the sex required for the job; or the fact that persons of one sex traditionally have been hired to perform a particular type of job. Personal privacy considerations can justify the BFOQ defense only when: a job requires an employee to observe other persons in a state of nudity or to conduct body searches; it would be offensive to prevailing social standards to have a person of the opposite sex (effective July 1, 2017, a different sex) present; and it is harmful to the mental or physical welfare of the person being observed or searched to have a person of the opposite sex (effective July 1, 2017, a different sex) present. Employers must assign job duties and make other reasonable accommodations in ways that minimize the number of jobs for which sex is a BFOQ. Sex discrimination includes discrimination based on pregnancy, childbirth, breast-feeding, or related medical conditions; discrimination based on gender identity or gender expression; sexual or gender harassment; and harassment based on pregnancy, childbirth, or related medical conditions. The sex discrimination prohibitions don t affect employers right to use veteran status as a factor in employee selection or to give special consideration to Vietnam-era veterans. They also don t affect bona fide retirement, pension, employee benefit, or insurance plan terms or conditions that follow customary and reasonable or actuarially sound underwriting practices. Appearance standards: Employers can t refuse to allow employees to wear pants based on their sex, although the California Fair Employment and Housing Council can exempt employers from this prohibition for good cause. Employers can require employees in a particular occupation to wear a uniform and can require employees to wear a costume while they are portraying a specific character or dramatic role. Employers can maintain physical appearance, grooming, or dress standards; however, these standards are unlawful if they discriminate based on sex and significantly burden employees. Compensation and benefits: Employers can t base any compensation on employees sex, unless required or permitted by regulation. They can provide or pay for childcare services for employees who are responsible for the care of their minor children. 2
Employers can t condition the availability of fringe benefits on employees sex. They also can t condition fringe benefits on employees status as a head of household, principal wage earner, or secondary wage earner if this practice discriminates against employees of one sex. Fringe benefit plans can t require contributions or set basic benefit amounts that differ for similarly situated male and female employees (effective July 1, 2017, similarly situated employees based on their sex), unless these differences are required by state law. Pension or retirement plans can t set different optional or compulsory retirement ages based on employees sex. Selection: Unless a permissible defense applies, employers can t discriminate based on sex in recruiting and can t refuse to provide, accept, and consider job applications from persons of one sex. Employers can t ask about applicants sex on job applications or pre-employment questionnaires, unless this question is based on a permissible defense or asked for record keeping purposes; however, they can record employees sex for nondiscriminatory personnel purposes. Employers also can t ask applicants questions about childbearing, pregnancy, birth control, or familial responsibilities, unless these questions are related to specific, relevant working conditions. Employers can t refuse to hire female applicants because they are of childbearing age. Unless a permissible defense applies, employers can t (until July 1, 2017) classify jobs as male or female, (effective July 1, 2017) designate jobs exclusively for employees of one sex, maintain separate lines of progression or separate seniority lists based on sex, or use selection criteria based on sex stereotypes. They also can t assign job duties based on sex stereotypes. Sex stereotypes include assumptions about a person s appearance or behavior; effective July 1, 2017, gender roles, expression, or identity; and ability or inability to perform certain kinds of work based on myths, social expectations, or generalizations about the person s sex. If employers consider paid work experience in selection or assignment decisions, they also must consider unpaid or volunteer work experience. Employers must provide equal hiring, promotion, and progression opportunities to all qualified employees, although they can use mobility programs to increase the promotion potential of underrepresented groups. Physical standards: Employers can t use physical agility or strength tests, unless they are administered pursuant to a permissible defense. If employers use these tests, they must give employees and applicants an opportunity to show that they have the required agility or strength to perform the job. Unless a permissible defense applies, employers can t use height or weight standards that discriminate against one sex and can t use separate height or weight standards for males and females. Work conditions: If work conditions pose a greater danger to health, safety, or reproductive functions for employees and applicants of one sex than those of the opposite sex (effective July 1, 2017, than those of another sex) working under the same conditions, employers must make reasonable accommodations for employees and applicants at higher risk. Specifically, employers must transfer employees to a less hazardous or strenuous job for the period of greater danger, upon their request, or modify work conditions to eliminate this danger. Employers aren t required to make these accommodations, however, if they can show that the accommodations would cause them undue hardship. Employers can require employees and applicants to provide a physician s certification of their higher risk. The existence of higher risk doesn t justify a BFOQ defense or discrimination based on sex. Employers can t discriminate based on sex in the provision of rest periods, support services, or facilities. Employers must provide employees of both sexes (effective July 1, 2017, employees of any sex) with equal access to comparable, adequate toilet facilities (effective July 1, 2017, equal access to comparable, safe, and adequate facilities), and can t use this requirement to justify discriminatory employment decisions. EQUAL EMPLOYMENT OPPORTUNITY: PAY DISCRIMINATION Effective January 1, 2017, employers can t pay employees of one race or ethnicity at lower wage rates than those paid to employees of another race or ethnicity for substantially similar work performed under similar working conditions. In addition, employees prior salary can t, by itself, justify any compensation disparity. 3
HEALTH BENEFIT MANDATES 1. Effective for healthcare plans issued, amended, renewed or delivered on or after January 1, 2017, plans must permit participants, including minors, to access reproductive and sexual health-care services without prior referrals. If the plans provide coverage for outpatient prescription drugs, they must cover up to a 12-month supply of prescription contraceptives dispensed at one time. 2. The Jan. 1, 2017, sunset date for coverage of behavioral health treatment for pervasive developmental disorders or autism is repealed. 3. Effective January 1, 2018, small and large group health insurance policies and plans must provide all covered mental and substance use disorder benefits in accordance with the federal Mental Health Parity and Addiction Equity Act and all applicable rules, regulations, and guidance issued pursuant to the federal Public Health Service Act. For information on the MHPAEA visit: www.cms.gov/cciio/programs-and-initiatives/other-insurance-protections/mhpaea_factsheet.html For information on the Public Health Service Act visit: www.law.cornell.edu/uscode/text/42/chapter-6a INCOME TAX WITHHOLDING 1. Effective January 1 through December 31, 2017, the interest rate on tax underpayments is 4 percent. 2. Effective for tax year 2017, the taxable valuations for employer-provided meals and lodging are revised. MINIMUM WAGE Effective January 1, 2017, credit limits are increased for employer-provided meal and lodging expenses that can be applied toward the minimum wage for covered employees. PAYROLL On February 28, 2017, A California appellate court ruled that workers paid on a commission must be separately compensated for legally required rest periods. PAID SICK LEAVE On March 29, 2017, the California Division of Labor Standards Enforcement updated its FAQs on the state s paid sick leave law to clarify how the law interacts with pre-existing paid-time-off plans and attendance policies. www.dir.ca.gov/dlse/paid_sick_leave.htm PERSONAL INFORMATION PROTECTION Effective January 1, 2017, employers must notify employees and applicants if their encrypted personal information is or likely was acquired by unauthorized persons, along with an encryption key or security credential that could make the information readable or usable. RETIREMENT SAVINGS PROGRAM On September 29, 2016, the California Secure Choice Retirement Savings Program was established to help employees save money for retirement. The program is expected to be implemented by January 1, 2017. TEMPORARY DISABILITY INSURANCE Effective for 2017, a tax rate of 4.55 percent applies to employers, partners and self-employed persons who choose to be covered by California s temporary disability insurance program. 4
UNEMPLOYMENT INSURANCE 1. Effective for 2017, the taxable wage base is $7,000, tax rates for experienced employers range from 1.5 percent to 6.2 percent and the tax rate for new employers is 3.4 percent. 2. Effective for 2017, taxable values for meals and lodging are increased. WAGE PAYMENT REQUIREMENTS 1. Effective January 1, 2017, employers can t require employees who live and work in California to agree to adjudicate in-state claims outside the state or to waive their legal protections for disputes arising in the state. In addition, employees seeking to contest the California labor commissioner s rulings on wagehour citations must post a bond with the commissioner. 2. Effective January 1, 2017, employees who are exempt from minimum wage and overtime requirements are also are exempt from the requirement that their pay stub or itemized statement include information on total hours worked. WORKPLACE VIOLENCE Effective by July 1, 2017, employers must notify new employees upon hire and other employees upon request about their rights under the safety accommodation requirements. Updated September 5, 2017 Select content in this document is provided by HRWorkplace Services and presented to you by Crystal & Company without further verification. We cannot and do not guarantee the accuracy, timeliness or completeness of such information for any particular purpose. Please be advised that this document is neither intended to be an interpretation of any policy language nor is it to be construed as a contract or providing legal or tax advice. Crystal & Company is the home for talented insurance professionals: creative, committed to their clients and driven to deliver extraordinary results. The company drives the strategy and execution behind insurance and employee benefits programs for businesses that want to be smart about risk. Crystal & Company is the insurance brokerage of choice for leading financial institutions, corporations and nonprofit organizations. Headquartered in New York City, the firm has 11 offices throughout the United States and is founding partner of Brokerslink, a global alliance of independent insurance brokerages with members in more than 95 countries around the world. 5