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Note: All bills become effective January 1, 2018 unless stated otherwise.

AB 168 – Ban on Salary History Inquiries

NEW LAW: Effective January 1, 2018, California employers cannot ask a job applicant about his or her prior salary or seek out an applicant’s salary history through a third party. Employers may consider prior salary information that an applicant voluntarily discloses (but don’t forget that under Labor Code Section 1197.5, employees may not use an applicant’s salary history alone to justify a pay disparity). Furthermore, employers will now be required to provide a pay scale for a position whenever a job applicant inquires.

The intent of this law is to narrow the gender wage gap by preventing employers from basing offers on prior salary information and, thus, perpetuating historical lower pay for female employees. In that regard, California has followed a recent trend of “salary history ban” legislation; San Francisco banned salary history questions earlier this year and other jurisdictions, including New York City, Philadelphia, Puerto Rico, Delaware, Oregon, and Massachusetts, have all adopted similar laws.

REED SMITH RECOMMENDS: All recruiters and interviewers should be informed of the ban on salary history inquiries, and any job application materials or interview scripts which ask for such information should be revised immediately. Employers may still ask an applicant how much he or she would like to be paid or expects to be paid, which will provide a sense of the employment market and an applicant’s salary expectations without violating this new law. Employers should also prepare basic informational forms providing the pay scale for open positions or positions that may become open within the next few years so that this information is readily available if requested by job applicants. Finally, given the pay scale requirement of AB 168 and the potential liability facing employers for any gender wage gap following the passage of California’s Fair Pay Act in 2016, employers should seriously consider conducting a compensation audit to internally evaluate whether any gender-based wage discrepancies exist.
Continue Reading California’s Employment Law Class of 2017: The Summarized Laws and Recommendations for Compliance

Recently, a Texas federal judge struck down an Obama administration Department of Labor rule that doubled the salary employees must make to be considered exempt from overtime pay.  The rule’s invalidation should provide immediate relief to employers concerned about additional overtime pay, or increased salaries that the Obama administration’s overtime rule would have required.

In 2016, after years of consideration, the Obama administration issued the long-anticipated DOL rule that increased the minimum salary for exempt workers (workers exempt from receiving overtime pay) from $23,600 to just more than $47,000, and the minimum salary for workers who qualify for the “highly compensated” exemption from $100,000 to about $134,000.  Late last year, U.S. District Judge Amos Mazzant issued a preliminary injunction that blocked the rule from coming into effect.  Judge Mazzant granted summary judgment in favor of certain business groups that had challenged the Obama administration’s rule.  Judge Mazzant reasoned that the significant salary increase would render the analysis of employees’ duties, functions, and tasks meaningless, and exclude from the exemption many employees who perform primarily exempt duties.
Continue Reading DOL’s Overtime Rule Invalidated

In a recent Wage and Hour development, the Fifth Circuit held that the “fluctuating workweek method,” which allows employers to decrease their liability for overtime payments in situations where they misclassify exempt employees, should not automatically be used where the employee works a different number of hours each week, based on a recurring, fixed schedule.

Calculating Hourly Rates: Fixed Method vs. Fluctuating Workweek Method

Since overtime pay is computed in terms of an hourly rate based on an employee’s regular rate of pay, to determine how much overtime pay a misclassified employee may be due, courts must first determine an employee’s regular rate of pay. Where the misclassified employee is paid on a salary basis, courts must convert the employee’s salary compensation to an hourly rate.

The “fixed” or “standard” method of calculating a salaried employee’s regular hourly rate of pay is to divide the employee’s salary by the number of hours that the salary is intended to compensate. However, for some salaried arrangements, the employee is not expected to work a fixed number of hours each week.  Many salaries are intended to compensate however many hours the job demands in a particular week, with the weekly salary staying the same whether many or few hours are actually worked.  When an employee agrees to such an arrangement, the hours worked in each workweek fluctuate, and the appropriate way to determine the regular hourly rate of pay is through what is called the “fluctuating workweek method.”  Using this method, the regular rate of pay is calculated by dividing the salary paid in a workweek by the total of number of hours worked.  As a result, the use of the “fluctuating workweek method” almost always results in a lower regular rate of pay than under the “fixed method.”
Continue Reading Employers Beware: Fifth Circuit Narrows ‘Fluctuating’ Workweek

In part I of this two part series reviewing the employment law class of 2017 we focused on developments in discrimination, anti-retaliation and discharge, hiring and background checks, and workplace health and safety. In part II we will focus on developments in wage and hour law, leave laws, industry-specific regulations, and California’s recent legislation affecting choice-of-law in employment contracts. Similar to the laws featured in part I, a majority of these laws amend previous employment legislation. This trend demonstrates that the 2016 legislative session focused more on expanding and addressing lingering questions that stem from existing workplace mandates, than creating new rights under California law. As the majority of the laws take effect on January 1, 2017, HR departments and employment counsel are off and running, to get employers prepared for a new year of implementation.
Continue Reading California’s Employment Law Class of 2017 (Part II): The Laws, Their Effects and Some Recommendations for Compliance

Amend, extend and clarify: the 2016 legislative session was not so much about creating new rights and responsibilities under California employment law, but more about expanding and addressing lingering questions that stem from existing workplace mandates. However, don’t be fooled by the lack of “new” regulations. By amending many of California’s complex existing laws, the legislature certainly placed HR departments and employment counsel in a difficult position to prepare for compliance by the looming January 2017 implementation date (for most of these laws). With a full plate of issues, such as workplace health and safety, pay equity, hiring, leave laws, harassment and discrimination, and, of course, wage and hour updates (no big surprise there), the class of 2017 will make an impact that will last for years and spur on dramatic change.

In this first portion of our two-part review of the employment law class of 2017, we will focus on developments in discrimination, anti-Retaliation and discharge, hiring and background checks, and workplace health and safety. In part II we will focus on developments in wage and hour law, leave laws, industry-specific regulations, and California’s recent legislation affecting choice-of-law in employment contracts.
Continue Reading California’s Employment Law Class of 2017 (Part I): The Laws, Their Effects and Some Recommendations for Compliance

San Francisco has just given the employees of its resident companies quite the baby shower gift. On April 5, 2016, San Francisco passed its Paid Parental Leave law. The local ordinance will leverage off of the California Paid Family Leave law passed in 2004, which allows employees to take time off to bond with a newborn baby, newly adopted child, or newly placed foster child. California Paid Family Leave currently entitles workers to receive 55 percent of their pay for up to six weeks through payments made by the California State Disability Insurance (SDI) fund, a fund financed by the payroll contributions of workers. San Francisco will now require private employers to make up the remaining 45 percent of the parent’s full pay to ensure they receive 100 percent of their normal wages over the six weeks’ leave period.

Paid parental leave has become a hot topic in U.S. employment law over the past few years, as evidenced by New York’s approval of parental leave legislation just last month. San Francisco’s law gives additional volume to the national conversation by passing a measure that requires employers to provide six weeks of fully paid parental leave for mothers and fathers, including same-sex couples, to spend time at home with their newborns.

Employees, both mothers and fathers, who have been employed for at least 180 days, work as least eight hours a week, and spend at least 40 percent of their workweek in San Francisco, qualify for this benefit. The six weeks off can be taken at any time during the newborn’s first year or the first year following placement of an adopted or foster child.Continue Reading San Francisco Becomes the First City to Provide Fully Paid Parental Leave

Not to be outdone by New York’s pending move to increase its minimum wage to $15.00 per hour for non-exempt employees in the coming years, on April 4, 2016, California Gov. Jerry Brown signed into law a bill that will increase California’s statewide minimum wage to $15.00 per hour by 2022. The bill sets out gradual increases in the California minimum wage, starting with a move up to $10.50 per hour January 1, 2017, for all employees working for an employer of 26 or more employees. Smaller businesses with 25 or fewer employees will follow the same incremental increases as larger employers, but starting a year later, with a move up to $10.50 per hour January 1, 2018.

The incremental increases every January 1 will be as follows:
Continue Reading California Governor Signs into Law New Bill Raising Minimum Wage to $15 per Hour

California is home to a burgeoning nontraditional workforce. The state’s laws and regulations recognize many types of engagements beyond the traditional employer-employee relationship, so long as the rules and regulations that establish and maintain these arrangements are respected. This program will examine just how companies and nontraditional workers get the job done, while remaining compliant

Each year, the California legislature – historically the most active of state regulators – reexamines the relationship between employers and their workforces and emerges with a multitude of employment law protections. 2015 was no exception. Lawmakers created novel and expansive measures, affecting companies throughout the state in varying degrees. Some of the laws, most of which take effect January 1, 2016, are reactions to cases decided, while others are sweeping remedies to historic and longstanding issues.

As we close out 2015, we prepare for 2016, by providing an overview of specific areas of employment law (discrimination/anti-retaliation/discharge; wage and hour; leave laws), the effect the new laws will have on employers, and some basic recommendations to help prepare for compliance. Our recommendations are limited, as the impact of these new laws are yet unknown.Continue Reading California’s Employment Law Class of 2016: The Laws, Their Effects and Our Recommendations for Compliance