At a recent workshop, local Employment Law attorneys, Lou Storrow and Chris Olmsted, presented a summary of new legislation and compliance requirements coming January 1, 2018 that may require you to adjust your HR processes and policies. Even though you may not have time to adapt to legislative changes, employee complaints may result in legal fees, penalties, and payouts. It is important to also be aware that the Labor Commissioner has stepped up enforcement efforts and can now conduct an investigation without an employee complaint. 2016 amendments to PAGA1 also gave the Labor Commissioner more time and funds to investigate. With increased DLSE funding investigative staff are projected to grow from the current 82 to 141 by 2018/19.  

Now that I’ve made you a bit more aware of the risks of non-compliance (sorry for the negative news) let me outline some of the most relevant changes you need to be aware of.

A. Applications & Interviews: 

There are two changes that impact what you can ask both on an application and in an interview.

1. AB168 (adding Section 423.3 to the California Labor Code) prohibits asking for a job applicant’s salary history.

  • The applicant may voluntarily disclose this information but you are still prohibited from considering salary history as a factor in the hiring decision.
  • So update your job applications to remove salary history questions and educate your interviewers to only ask about salary expectations (vs. history).
  • The new law also says you must provide a “pay scale” to applicants upon request. The law doesn’t define “pay scale” so it’s probably advisable to have at least a pay range for the position.

2. For employers with 5 or more employees - AB 1008 (replacing a Labor Code section with a new section 12952 of the Government Code) prohibits inquiries regarding a job applicant’s criminal history, until a job offer is made (unless the law requires a criminal background check, such as for childcare workers).  When you make the offer, it can be contingent on passing a criminal background check, but you’ll have to be able to justify rescinding the offer based on what it reveals.  You’ll want to update your job applications and inform your interviewers.

  • If a criminal history is found then an individualized assessment is required for the job in question. Any guidelines should take into account the severity of the activity, how long ago it took place, its frequency, and its relation to the nature of the job.
  • If you disqualify the candidate, you’ll have to give a written notice telling them they have 5 days to inform you if they want to rebut the report, and then they have another 5 days to provide the details of their rebuttal. There is specific wording required so make sure you have this included in your process.
  • If after the rebuttal you still decline to hire, you’ll have to give a written notice with information on how to appeal.
  • Good idea – advertise that your hiring is conditioned on background and/or drug screening tests.

B. Sick Pay:

  • CA Sick Pay – The Labor Commissioner has updated its FAQ page, stating that it is improper to assign an attendance “point” for absences covered by sick pay.  Examine your attendance policy to ensure there are no negative consequences to anyone using this benefit.
  • San Diego Sick Pay – The City of San Diego has clarified that this benefit does not cover exempt (salaried) employees.

C. Harassment Updates:

  • Harassment Prevention Training – SB 396 requires supervisor’s harassment training to include gender identity, gender expression, and sexual orientation. (for employers with >50 employees)
  • DFEH Transgender regulations prohibit discrimination against “transitioning” employees and must allow employees to use facilities that correspond to their gender identity or gender expression, not the sex assigned to them at birth.
  • DFEH has outlined components of an effective anti-harassment program (DFEH Workplace Harassment Guide). These would be good to follow especially if you ended up in court.
  • Based on a recent opinion of the California Court of Appeal in M.F. v Pacific Pearl Hotel Mgmt., an employer is obligated to try to prevent harassment from a non-employee, even if the harasser is trespassing! The employer was held liable since they knew or should have known of the potential threat and did not take effective action.

D. 10 minute rest breaks:

  • CA law prohibits “on-duty” and “on-call” rest breaks – the employee must be free from all work-related duties and free from employer control during breaks.
  • Make sure your handbooks are updated and clearly state that on break you are relieved of all duties including answering the phone or emails.
  • If you cannot provide this then you should pay an hour of extra pay for any day in which a break is lost. 

E. Pay Stubs:

  • This deserves your constant attention to ensure that all the required information is on the pay stub – otherwise the penalties are stiff. A recent ruling confirmed that the employer can be penalized under the pay stub statute or under PAGA1 – the latter may apply even if the deficiency was unknown or a mistake.

F. Labor Commissioner Investigations:

  • SB306 authorizes the Labor Commissioner to investigate retaliation or discrimination claims, even without an employee complaint. So be careful when you appear for a conference or hearing, not to reveal unnecessary information that could trigger an investigation.

G. Independent Contractors

  • The use of 1099s continues to be scrutinized and there are some upcoming cases that will be influential.  However, the bottom line comes down to the right to control, even if you don’t exercise it.  And if you have people doing what your company does, then most likely they are your employees. Read more here.

H. Arbitration

  • This is a good clause to have in your employment agreement and you can include a clause waiving the right to a class action – but you cannot waive PAGA. Recent court rulings have stated that, since PAGA1 claims belong to the state, you can’t force arbitration, even if some claims are for individual relief.

1 PAGA – Employees continue to use this law to impose large penalties on employers.  An employee can act as the State and keep a share of the penalties.

And finally, AB450 continues California’s push back against Federal Immigration authorities who have stepped up enforcement.  It adds sections to the Government Code and the Labor Code that order employers not to cooperate voluntarily with US Immigration & Customs Enforcement (“ICE”), unless they show up with a warrant or court order.  The law still permits employers to produce their I-9s for inspection, which Federal law demands.  More important, if ICE is coming to inspect your I-9s, you have to tell your employees within 72 hours of getting notice of the inspection.

If you need further insight or direction on any of these items, Lou or Chris would welcome your questions.  Lou can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.

Make sure you join us for North County HR’s next legal update June 2018. Additional workshops will be held throughout the year on specific topics. 

Additional resources can be found on the SHRM website OR at the San Diego Employers Association.

By Leanne Abraham, President, Premierehire  Edited by Lou Storrow, Employment Law Attorney. Original presentation by Lou Storrow & Chris Olmsted

Leanne Abraham, is the President of Premierehire, an executive search and staffing company that helps companies recruit and retain top talent in a variety of disciplines including engineering, IT, finance, marketing, operations, administration, customer service, and inside sales. Please call us for a free consultation on how we can solve your hiring challenges or email This email address is being protected from spambots. You need JavaScript enabled to view it..

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