6 California HR Issues to Watch in 2019

Employers should review harassment training programs, gender equity and pay practices

By June Bell January 4, 2019
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In light of recent developments in California, HR teams are likely focused on creating meaningful anti-harassment training programs, complying with pay-equity laws, reviewing employee classifications and more. Here are the key issues to watch in the months ahead.

1. Sexual-Harassment-Prevention Training

A priority for many California HR professionals this year will be to develop meaningful, relevant and engaging sexual-harassment-prevention training programs. All employers in the state with at least five workers must provide such training. So, HR professionals are exploring anti-harassment education options to meet the new mandate—two hours for supervisors and an hour for all nonsupervisory employees—by Jan. 1, 2020.  The training must be conducted every two years. 

The training must cover abusive conduct, prevention, discrimination and retaliation, and it must include instruction on harassment tied to gender identity, gender expression and sexual orientation. Even temporary, seasonal and migrant agricultural workers must participate.

2. Women on Boards

Publicly held companies headquartered in California can no longer have all-male boards because of a new law requiring at least one female director by the end of 2019. While boards with four or fewer members only need to have one female director, five-person boards must have at least two women by the end of 2021 and six-member boards must be at least half female.

The law, which the California Chamber of Commerce opposed, is ripe for legal challenges, said Kelly Gemelli, an attorney with Jackson Lewis in San Diego. "The motivation behind it is admirable, but it is going to be challenged," she said. "Are businesses obliged to accept someone who's not qualified?"

3. Fair Pay and Salary History

Setting salaries and awarding bonuses and raises will remain potentially volatile areas for employers, who are forbidden from asking prospective hires for their salary history and must provide a pay scale to applicants who request it. "Executives understand what the law says, but do your hiring managers? Have they been trained on this point?" asked Anthony Zaller, founder of the Zaller Law Group in El Segundo.

Businesses based in California or with offices in the state are voluntarily undergoing pay audits to determine if they are unwittingly responsible for pay disparities tied to race, gender or ethnicity. Initial audits may uncover what appear to be inequities, but once permissible bona fide factors such as education, experience and seniority are considered, those disparities may be justified, said Kate Gold, an attorney with Drinker Biddle & Reath in Los Angeles.

"In general, employers are pretty rational in how they are approaching setting people's compensation, but it varies by industry," she said.

Pay remains a complex issue in California in part because of big variations between housing costs in rural regions and pricey areas such as San Francisco, Silicon Valley and Los Angeles. "Employers are very conscious of that discrepancy," Zaller said.

4. Gig Workers

A spring decision by the California Supreme Court roiled businesses that employ or rely on independent contractors, including those who power the so-called gig economy.

The court spelled out three conditions—an "ABC test"—that workers must meet to be classified as independent contractors and therefore be exempt from minimum-wage laws, overtime-pay requirements and other benefits. Under the new test, it's more difficult to meet the standard for independent-contractor status, Gold said.

5. De Minimis Standard

Some employers are concerned about the implications of a state Supreme Court opinion involving a Starbucks hourly worker who claimed he was owed compensation for uncaptured time spent closing the store. The worker said closers were required to clock out on the company's computer system before submitting sales and inventory data to headquarters, activating the alarm, and locking up for the night.

Under the federal "de minimis" rule, businesses can require employees to work a trivial amount of time (up to 10 minutes) each day without compensation if the time is administratively difficult to track. But the California high court said that the de minimis rule has not been adopted under the state's wage and hour laws and that the rule didn't otherwise apply in the Starbucks case.

[SHRM members-only toolkit: Complying with California Wage Payment and Hours of Work Laws]

The court suggested that employers add a few minutes of pay to compensate employees for routine work they perform before or after clocking out.

Smart HR professionals will review hourly workers' duties and, if needed, adjust their pay to protect the employer from potential litigation over miniscule amounts of unpaid work. "Taking affirmative steps like that puts employers in a really good defensive position," Zaller said.

6. Minimum Wage

On Jan. 1, the statewide minimum wage was raised to $11 an hour for businesses with 25 or fewer workers and to $12 an hour for employers with more workers. HR professionals should note that many localities in the state have higher minimum-wage rates. Emeryville is expected to have the state's highest rate—$16 an hour—by July, but the actual rate will be based on the consumer price index.

Additionally, the state's salary threshold for the executive, administrative and professional exemptions from overtime pay is directly tied to the statewide minimum wage. Employers should ensure that workers who meet the respective exemption's duties test are also earning a fixed monthly salary of at least double the minimum wage for full-time employment.

June D. Bell, a regular contributor to SHRM, covers legal issues for a variety of publications. Contact her at june@junebell.com.

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