New Year’s Resolutions for California Businesses in 2016

Hilary Weddell

California begins 2016 with a number of new employment laws, ranging from compensation rates for piece-rate employees to permissible uses of the Federal E-Verify system.  Employers should familiarize themselves with the requirements of these new laws, and include compliance with them on their list of New Year’s resolutions.  Here are a few of the most notable new employment laws for 2016:

Enhanced Whistleblower and Anti-Retaliation Protections (AB 1509)

AB 1509 closes the gap in existing whistleblower and anti-retaliation protections by prohibiting an employer from retaliating against an employee because the employee is a family member of a person who has engaged in protected activity.  The bill also clarifies that the prohibitions against retaliation apply to “client employers” or “controlling employers,” business entities that obtain or are provided workers from a labor contractor.

Private Attorneys General Act (AB 1506)

AB 1506—urgency legislation that took effect on October 2, 2015—amends California’s Private Attorneys General Act (“PAGA”) to give employers the ability to cure pay stub violations that otherwise might have triggered PAGA liability.  California law requires employers provide employees with specific information on each pay statement, including the name and address of the legal entity of the employer, and the dates of the period for which the employee is paid.  Under PAGA, an employee who does not receive this information may bring a civil action to recover specified civil penalties.  AB 1506 allows an employer to cure a pay stub violation by showing that it provided a fully compliant pay stub to each aggrieved employee.  An employer is only allowed to cure alleged violations once in a 12-month period.

Piece-Rate Compensation (AB 1513)

AB 1513, which adds section 226.2 to the Labor Code, affects all employees compensated on a piece-rate basis.  The new law requires employers pay piece-rate employees for rest and recovery time at a regular rate of pay.  The employee’s regular hourly rate must be no less than the greater of either the applicable minimum wage or the employee’s average hourly wage for all time worked during the week.  AB 1513 also mandates payment for other “nonproductive time,” which is defined as “time under the employer’s control, exclusive of rest and recovery periods, that is not directly related to the activity being compensated on a piece-rate basis,” at an hourly rate no less than the applicable minimum wage.  

The new law also creates a limited safe harbor provision for employers who may face liability for previous failures to compensate for rest and recovery periods and other nonproductive time if they satisfy certain requirements by December 15, 2016.

California Fair Pay Act (SB 358)

SB 358, the California Fair Pay Act, amends Labor Code section 1197.5 in an attempt to eliminate the California gender wage gap.  Section 1197.5 now requires employees be paid equal pay for “substantially similar” work when viewed as a composite of skill, effort, and responsibility.  “Substantially similar” requires the work to be performed under similar working conditions, but does not require performance of the same exact job. 

The new amendment also eliminates the outdated “same establishment” requirement, which previously required wage differentials be within the same establishment.  Under the Fair Pay Act, employers are explicitly prohibited from retaliating or discriminating against employees who disclose their own wages, or inquire about their co-workers’ wages, for the purpose of enforcing their rights under the Act. For more information about the CA Fair Pay Act amendments, click here.

Labor Commissioner’s Increased Enforcement Powers (AB 970 and SB 588)

Two new laws will increase the Labor Commissioner’s enforcement powers in 2016.  AB 970 grants the Labor Commissioner the ability to investigate and enforce local wage and hour laws, such as violations of the minimum wage ordinances enacted by many cities.  It also gives the Labor Commission the power to issue citations and penalties for violations of Labor Code section 2802, which requires an employer reimburse employees for costs incurred in discharging their employment duties.

SB 588 enhances the Labor Commissioner’s ability to enforce a judgement against an employer for unpaid wages.  The bill gives the Labor Commissioner the power to issue levies and liens on the debtor-employer’s property for the full amount of any wages, interest, and penalties owed.  It also allows the Labor Commissioner to issue “stop orders,” which prevent the employer from conducting business in the state.

Employers Use of Federal E-Verify System (AB 622)

AB 622 adds section 2814 to the Labor Code to explicitly prohibit employers from using E-Verify for any reason other than when required by federal law to check the employment authorization status of a current employee or applicant.  As allowed by existing federal law, employers are permitted to continue to use E-Verify to check the employment authorization status of an applicant who has been offered employment.  The law requires an employer who receives a tentative non-confirmation, which indicates the information entered in E-Verify did not match federal records, comply with certain employee notification procedures.  Employers violating the new law face a $10,000 civil penalty per violation.

California Minimum Wage Increase

Also, although not technically a new law this year, employers should remember that on January 1, 2016, California’s minimum wage will increase from $9 to $10 per hour.  The increase is the result of AB 10, passed in 2013.  This is the last increase of the minimum wage under AB 10.  Employers should be mindful that the state minimum wage can affect a number of other aspects of wage and hour law, such as the analysis for exempt employees.

Now is the time to review employee handbooks and other policies to ensure they are compliant with the new requirements.  If you have questions about any of these new laws or how they will affect your business, consult your attorney.


Hilary Weddell is an attorney with McManis Faulkner whose practice focus is employment law. 

About the author Hilary Weddell

Hilary’s inquisitive mind, strength, and dependability make her an excellent trial lawyer.