New Employment Laws for 2017

A number of employment-related measures were passed in 2016.  The measures became effective on January 1, 2017, unless otherwise specified.  Employers will want to be aware of the effect, if any, of these new measures on their day-to-day operations.  The highlights for the new employment-related measures follow:


California Fair Pay Act Amendments

The California Fair Pay Act significantly changed the approach employers should be taking when evaluating or developing their salary structures, and prohibits employers from paying members of one sex less than they pay to members of the opposite sex for substantially similar work when viewed as a composite of skill, effort, and responsibility, and when performed under similar working conditions.   Exceptions exist for wage differentials based on a seniority system, merit system, a system of earnings by quantity or quality of production, or a bona fide factor other than sex (e.g., education, training, experience).  SB 1063 and AB 1676 impose additional requirements for wage differentials among employees.

SB 1063:

SB 1063 expands the Fair Pay Act to race and ethnicity by prohibiting employers from paying members of one race or ethnicity less than they pay to members of the opposite race or ethnicity for substantially similar work.   The various exceptions for wage differentials continue to apply, and the onus to prove an exception justifies the differential remains on the employer.


AB 1676:

AB 1676 expands the California Fair Pay Act by specifying that prior salary, by itself, cannot justify any disparity in compensation for employees of another sex, race, or ethnicity for substantially similar work.

Minimum Wage & Exempt Employee Salary

SB 3

SB 3 will gradually increase the California minimum wage to $15 per hour.  It imposes six annual increases for employers based on the size of the employer, as follows:

Date of Increase
26 or more Employees
25 or fewer Employees
January 1, 2017
January 1, 2018
January 1, 2019
January 1, 2020
January 1, 2021
January 1, 2022
January 1, 2023

Employers should be aware of local minimum wage ordinances that may be more favorable than the state minimum wage during the increases.  Employers will also need to post the new Minimum Wage Order (MW-2017) in the workplace.

The increased minimum wage affects the minimum annual salary for exempt employees (employees who are exempt from overtime).  The exempt employee salary will increase to $43,680 in 2017 for employers with 26 or more employees, and remain the same for employers with 25 or fewer employees ($41,600).


Computer Software Employees

Certain computer software employees are exempt from overtime under California law when certain conditions are met, including the payment of a minimum hourly rate of pay or salary.  The minimum hourly rate, monthly salary, and annual salary for computer software employees increased to $42.35, $7,352.62, and $88,231.36, respectively.

Licensed Physicians and Surgeons

Certain licensed physicians and surgeons are exempt from overtime under California law when certain conditions are met, including payment of a minimum hourly rate of pay.  The minimum hourly rate of pay increased to $77.15.

SB 3- Sick Leave for In-Home Supportive Services Workers

The California Healthy Workplaces, Healthy Families Act of 2014 grants paid sick leave to most California employees.  In-home supportive services workers were previously exempt from the sick leave law.  SB 3 makes the law applicable to in-home supportive services workers, meaning they will also be entitled to paid sick leave beginning on or after July 1, 2018.
Federal Overtime Rule
Exempt employees must generally meet a duties test and a salary test in order to maintain their exempt status, meaning they are exempt from overtime.  The Wage and Hour Division of the U.S Department of Labor issued a final rule more than doubling the federal minimum annual salary. The minimum salary under federal law would have jumped from $23,660 to $47,476, with automatic updates every 3 years, beginning on January 1, 2020.  No change was made to the duties test under federal law.  The regulation was set to take place on December 1, 2016.  The regulation was enjoined by a federal court, and did not go into effect.  That injunction has been appealed, and is currently pending.


SB 1015

California passed the Domestic Worker Bill of Rights in 2013, which regulates personal attendants and requires that overtime be paid to them for work in excess of 9 hours in any workday or 45 hours in any workweek.  The Act was set to repeal as of January 1, 2017.  SB 1015 deletes the repeal date and does not create a new repeal date, meaning that the Act will continue in effect for the foreseeable future.

Discrimination Regulation and Enforcement

AB 1732

Currently, California employers with single-user restrooms may label them for use by males or females.  AB 1732 establishes new signage requirements for single-user restrooms, and requires that they be identified as “all-gender,” and not for use by only males or by females.  The new signage requirement starts on March 1, 2017.
SB 1001


Federal law requires verification of an employee’s eligibility to work using the Form I-9 process. Asking for more or different documentation than is required by the Form I-9, refusal to accept documents that appear genuine on their face or to engage in other types of document abuse is prohibited.  SB 1001 makes this conduct unlawful under California law, as well.

Leaves of Absence, Benefits, and Protections

AB 908

Employees are eligible for California wage replacement benefits provided by the Paid Family Leave and State Disability insurance programs for specific purposes, including caring for specified persons and bonding with a child.  Currently an employee receives up to 55% of their base wages for up to 6 weeks. AB 908 will increase the amount of wage replacement benefits.  Many low wage workers will see an increase to 70%, while higher wage earners will see an increase to 60%.  AB 908 also eliminates the 7-day waiting period for family temporary disability benefits.  The law takes effect January 1, 2018.


AB 1847

AB 1874 specifies that employers who are currently required to notify employees of their eligibility for the Federal Earned Income Tax Credit must also notify employees of their potential eligibility for the California Earned Income Tax Credit.  California employers will need to provide updated notification forms to employees.

AB 2337

Existing California law permits employees who are victims of domestic violence, sexual assault and stalking to take time off for medical treatment or legal proceedings. AB 2337 requires employers to provide written notice to employees about those existing rights.  The California Labor Commissioner is required to develop the notification form on or before July 1, 2017. The required form must be given to all new employees when hired and to current employees upon request.  Employers are not required to comply with this notice requirement until the Commissioner makes the form available on its website.

AB 1843

California’s AB 1843 prohibits an employer from inquiring into an applicant’s juvenile conviction history. The bill also prohibits using those convictions as a factor in determining any condition of employment.

Employment Contracts & Workplace Policies

SB 1241

Employment contracts frequently designate venue (where employment disputes will be arbitrated or litigated) and choice of law (the law that will apply to the dispute).  The venue may not be in California and the law chosen may not be California law.  Under California’s SB 1241, employers will not be able to require employees who primarily work and reside in California to agree to non-California venue or choice of law provisions in new employment contracts or in preexisting employment contracts that are modified or extended after January 1.  An exception exists when an employee is represented by an attorney in negotiating the venue and choice of law provisions in the employee’s employment contract.


2 CCR § 11023


The Fair Employment and Housing Act (FEHA), and its implementing regulations, constitute California’s discrimination, harassment and retaliation law.  New regulations went into effect earlier this year on April 1, 2016.  Among the new requirements, employers must now have harassment, discrimination and retaliation policies that meet certain criteria, including that the policy is in writing, lists each and every protected category under the FEHA, and provides a process for receiving and responding to complaints.  Employers must disseminate the policy, and provide translated copies of the policy when 10% or more of their workforce speaks a language other than English.


ABX2-5 & ABX2-7
California employers were prohibited from allowing a person to smoke tobacco products in an enclosed space in the workplace, subject to exceptions.  ABX2-5 added electronic cigarettes and other vapor/electronic and oral smoking devices to the prohibition on smoking.  ABX2-7 extends the smoking prohibition to owner-operated businesses, and eliminates many of the prior exemptions (e.g., hotel lobbies, bars and taverns, banquet rooms, warehouse facilities, and employee break rooms).  The laws went into effect on June 9, 2016.


Proposition 64 – The Control, Regulate and Tax Adult Use of Marijuana Act

Proposition 64 legalizes recreational use of marijuana in California by individuals who are 21 years of age or older.  Notwithstanding this new law, employers can still enact and enforce workplace policies concerning marijuana.  The law does not require employers to permit or accommodate the use of marijuana in the workplace, or affect the ability of employers to have workplace policies prohibiting the use of marijuana.  Portions of the law went into effect on November 9, 2016.
Cell Phones
AB 1785

Under existing California law, drivers could not use handheld wireless telephones or electronic wireless communications devices to text and drive unless they were configured to allow voice-operated or hands-free operation.  AB 1785 now prohibits drivers from holding and operating wireless telephones or electronic wireless communications while driving.  Drivers can only operate wireless telephones or electronic wireless communications while driving if they are mounted on the windshield, dashboard or center console, and the driver only needs to activate or deactivate them with a tap of the finger or a single swipe.

By Alicia R. Lewis and Samson R. Elsbernd, Esq.