CA Employers: Learn Your I-9 Rules or Pay Up to $10,000

The employment of more undocumented immigrants, formerly known as illegal aliens, remains a top priority for the California legislature.  Whatever you think of that, the policy creates a dilemma for employers. 

The dilemma is that it remains illegal under federal law for employers to knowingly hire or retain those who are not authorized to work in the U.S.  So, employers are supposed to follow immigration law. But the California Legislature does not want employers to follow it too hard, you know? 

This year's disincentive for employers to follow immigration law is called AB 1001 (here).  It will be Labor Code section 1019.1.  

First, this law provides it is unlawful for an employer, while doing its duty under federal immigration law, to 

(1) Request more or different documents than are required under Section 1324a(b) of Title 8 of the United States Code.

So, that means that the employer is limited to asking for what the I-9 authorizes. So far so good.  Employers should be doing that anyway. 

Second, the law makes it illegal for an employer to:

(2) Refuse to honor documents tendered that on their face reasonably appear to be genuine or 

(3) Refuse to honor documents or work authorization based upon the specific status or term of status that accompanies the authorization to work.

Who gets to decide what "reasonably appears to be genuine"? And what does (3) even mean? We should call a lawyer!  Anyway, this section will create an incentive for employers to let false documents pass.  Of course, if a federal I-9 audit reveals the employer should have caught the false documentation, well that's not part of the calculus.

Third,  if an employer learns that someone has falsified information or is illegal to work, or if the authorization documents expire, employers are supposed to re-verify authorization, no?  Not so fast, employers.  It's now illegal for an employer to 

(4) Attempt to reinvestigate or reverify an incumbent employee’s authorization to work using an unfair immigration-related practice.

Ok, I'll bite: What's an "unfair immigration-related practice" and how does one know she is engaging in that practice?

So, what are the consequences for violating section 1019.1? 

 - an applicant or a representative of the applicant, such a union, presumably, can file a complaint with the Labor Commissioner;

- The Labor Commissioner can make an order of "equitable relief."  Yes, back pay is a form of equitable relief.  So is reinstatement. 

- AND, the Labor Commissioner can assess a penalty of up to $10,000.

So, employers must ensure they are complying with the I-9 rules to the letter. Deviations regarding documentation and re verification can lead to heavy financial penalties under state law, in addition to penalties possible under federal law for being too lax. 

Yikes. 

A Couple of New California Employment Laws that Require Attention

Here are two recently signed laws that will go into effect 1/1/17.

First, the Legislature re-drafted the Labor Code provision that prohibits asking applicants about arrests, convictions that have been expunged, or about misdemeanor marijuana possession charges more than 2 years old, etc.

The new bill, numbered AB 1843 (here) makes it unlawful to ask applicants to disclose

an arrest, detention, processing, diversion, supervision, adjudication, or court disposition that occurred while the person was subject to the process and jurisdiction of juvenile court law.

Is a "court disposition" a conviction?  Don't know.  But the statute also cryptically says:

For purposes of this section, “conviction” does not include, and shall not be construed to include, any adjudication by a juvenile court or any other court order or action taken with respect to a person who is under the process and jurisdiction of the juvenile court law.

There are also special provisions regarding conviction / arrest inquiries applicable to public sector police / peace officer applicants, the health care industry, and certain occupations. So, read the law carefully and ask your lawyers for more detail.

And now, a mini-rant! I know that's why you come here.   

I'm not sure who's writing these statutes nowadays. But "does not include" and "shall not be construed to include" is entirely unnecessary repetition. And why say "court disposition" when they could say something more clear?  These California employment laws are getting longer and less comprehensible. Good for me; good for plaintiff lawyers; bad for our clients.

Anyway, you'll have to ensure conviction inquiries on application forms etc. are modified. 

* * * 

The second law could be a game changer for out of state and multi-state employers. 

SB 1241 (here) prohibits employers from requiring, as a condition of employment, that an employee agree to 

- litigate or arbitrate a dispute outside of California. For example a NY-based employee cannot require an employee to litigate or arbitrate his or her dispute in NY court.  This is a prohibition on "choice of venue" or "forum selection clauses." 

- a "choice of law" clause that requires another state's law to apply to a dispute.   So a multi-state employer that has a confidentiality / trade secret agreement cannot provide for another state's law to apply in the case of a dispute. 

Note - though that the law is applicable only to an employee who "primarily" resides AND works in California.  In wage-hour law, primarily means more than 50%.  Here, however, that term is not defined.  The law, then, will not apply to employees who do not primarily live in California.  It also will not apply to employees who work in more than one state, if California is not the "primary" state. 

The bill says that the provision is "voidable" by the employee, which means it is not illegal as written, but the employee can object to it and have it struck.  If it is struck then the matter must be litigated in California under California law. 

The new law also allows employees to challenge these provisions and receive an award of attorney's fees. However, the fee provision is "one way" and employers therefore will not be awarded fees if they win. 

Finally, this new law does not apply if a lawyer represented the employee when the employee agreed to the choice of law / venue provisions in the employment agreement. 

The law takes effect January 1 and applies not only to new agreements, but also to any agreement "modified" or "extended" after that date. 

So, the new law does not appear to apply to post-hire agreements unless modified or extended after 1/1/17. But it  will apply if  employment is conditioned on the agreement (e.g., the employee is fired if s/he doesn't agree).  It also does not appear to apply to separation agreements. 

This new law, however, will affect offer letters, confidentiality agreements, bonus plans, and restrictive covenants.  

CA Governor Signs New Equal Pay Law

The California Legislature has turned its attention to anti-discrimination law: equal pay.  Now, who is against equal pay?  If you raised your hand, you violated at least four laws that already existed before Jerry Brown signed SB 358 (text is here).  Four laws?   At least.

1. Title VII of the Civil Rights Act of 1964 does not allow employers to set pay based on sex (or race or other protected criteria). So, if a restaurant employer paid female servers  $0.50 per hour less than male servers, that would violate Title VII absent a "legitimate, nondiscriminatory business reason."  The workers must be "similarly situated."

2. The California Fair Employment and Housing Act is analogous to Title VII.

3.  The federal Equal Pay Act of 1963 (here)  (yes, enacted a year earlier than Title VII) provides:

(1) No employer having employees subject to any provisions of this section shall discriminate, within any establishment in which such employees are employed, between employees on the basis of sex by paying wages to employees in such establishment at a rate less than the rate at which he pays wages to employees of the opposite sex in such establishment for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions, except where such payment is made pursuant to (i) a seniority system; (ii) a merit system; (iii) a system which measures earnings by quantity or quality of production; or (iv) a differential based on any other factor other than sex: Provided, That an employer who is paying a wage rate differential in violation of this subsection shall not, in order to comply with the provisions of this subsection, reduce the wage rate of any employee.

4. And the California Labor Code, section 1197.5  already says:

1197.5. (a) No employer shall pay any individual in the employer's employ at wage rates less than the rates paid to employees of the opposite sex in the same establishment for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions, except where the payment is made pursuant to a seniority system, a merit system, a system which measures earnings by quantity or quality of production, or a differential based on any bona fide factor other than sex.

That said, and dissatisfied with the "wage gap" that exists between the wages earned by all men and all women in all jobs (which has nothing to do with the equal pay laws), the Legislature has  modified section 1197.5, intending to strengthen it.

Here is the text of the new law's equal pay provisions:

1197.5. (a) An employer shall not pay any of its employees at wage rates less than the rates paid to employees of the opposite sex for substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions, except where the employer demonstrates: 

(1) The wage differential is based upon one or more of the following factors:
  (A) A seniority system.
  (B) A merit system.
  (C) A system that measures earnings by quantity or quality of production.
  (D) A bona fide factor other than sex, such as education, training, or experience. This factor shall apply only if the employer demonstrates that the factor is not based on or derived from a sex-based differential in compensation, is job related with respect to the position in question, and is consistent with a business necessity. For purposes of this subparagraph, “business necessity” means an overriding legitimate business purpose such that the factor relied upon effectively fulfills the business purpose it is supposed to serve. This defense shall not apply if the employee demonstrates that an alternative business practice exists that would serve the same business purpose without producing the wage differential.
(2) Each factor relied upon is applied reasonably.
(3) The one or more factors relied upon account for the entire wage differential.

The key changes are:

- "substantially similar" work rather than equal work.  What does "views as a composite of skill, effort, and responsibility" mean?  This will be the subject of litigation. 

- the employee need not compare herself to others only within the same location, but may look to other job sites.  This change likely expands the new law beyond all four laws discussed above. When employers have multiple facilities and pay different rates based on location, this section could result in claims of pay disparity.  It is still lawful to do pay geographic differentials as far as I know. But employers will have to ensure that wage differentials based on geography are applied equally and do not create sex-based disparities.

-  the employer has to prove that wage disparities based on factors "other than sex, such as education, training or experience" are job-related, consistent with business necessity, and that the employee cannot prove a less discriminatory alternative.

- the court / jury gets to decide if the employer's reason for wage disparities are "reasonable."  

- the employer must prove the entire wage disparity is due to one or more of the defenses.

Other major changes:

 - Recordkeeping under this section goes from 2 years to 3.

-  It is already the law (in the Labor Code, even) that an employer cannot prohibit an employee from disclosing her own wages or discussing wages at work.  But this new law prohibits employers from preventing employees from "inquiring about another employee's wages" or "aiding or encouraging any other employee to exercise his or her rights under this section."  However, the new law says that it does not require anyone, including the employer, to disclose others' wages.  There is no exception for payroll or HR workers who may "discuss the wages of others" under this new law.  So, can the payroll manager chat with Sally about Bob's pay?  It also will be interesting to see if this law is preempted by the National Labor Relations Act, which also covers this area. 

- New private rights of action and remedies for violations. However, these existed in one form or another under the old laws as well.

Effective date and final thoughts:

This law takes effect on January 1, 2016.

Employers will have to revise payroll and confidentiality policies before then. It will also serve employers well do analyze compensation systems to ensure that wage disparities are justified in accordance with the defenses stated above.

Oh, and this law will do little to nothing to address the "wage gap" that you may have read about, or heard Patricia Arquette discuss at the Oscars.  That wage gap is a function of the average wage paid to women for all jobs compared with the average wage paid to men.   It's not a comparison of men and women doing the same job for the same employer.

If the politicians want to pass a law to address the overall wage gap and stop using it as a political talking point, they can do so.  But they will have to pass a law that sets wages for male-dominated occupations lower, set wages for female-dominated occupations higher,  and/or somehow balance the mix of males and females in each job category.  I have to go now.  I have an appointment in Room 101.

Finally finally, I think the law actually has a typo in it.  The usual way one refers to the commencement of the statute of limitations is when the cause of action "accrues."   This law reads, at least on the internet, and as of right now:

A civil action to recover wages under subdivision (a) may be commenced no later than two years after the cause of action occurs.

(emphasis mine).  I make typos too.  But I don't pass landmark legislation that affects millions of Californians.

CA Governor Signs AB 1506, a Bill Granting Limited PAGA Relief Re Wage Statements

Governor Jerry Brown signed AB 1506 (text here), which amends the Private Attorneys General Act, or PAGA.

This law affects only PAGA claims that are based on defective wage statement claims asserting violations of Labor Code section 226. And only those claims were the alleged defects are that the employer does not include on the wage statement:

(6) the inclusive dates of the period for which the employee is paid, 

(8) the name and address of the legal entity that is the employer

So, a PAGA claim based on those two criteria may be avoided if the employer "cures" the defect upon receiving notice from the employee.   How do you cure?

A violation of paragraph (6) or (8) of subdivision (a) of Section 226 shall only be considered cured upon a showing that the employer has provided a fully compliant, itemized wage statement to each aggrieved employee for each pay period for the three-year period prior to the date of the written notice sent pursuant to paragraph (1) of subdivision (c) of Section 2699.3.

So, to "cure" you just have to re-do your wage statements for three years and re-issue them to all employees who received the defective ones.   It also means that the "aggrieved employees" must be "made whole," but it's unclear what that means unless someone has suffered some harm because the proper weeks or employer name were not listed on the wage statement.

The cure must occur after the employer receives notice of a PAGA claim within the 33 day period before the employee can file a lawsuit. If the employee claims the employer has not cured the defect, the employee may appeal to the DLSE. The DLSE has 17 days to rule on whether or not the defect was cured.  If not, the employer has three more days to cure.  If the employee still disagrees, he may appeal to the superior court.  If the DLSE finds the the employer did not cure, then the employee may file suit.

So, this is a very minor amendment to PAGA, but one that may help employers avoid an expensive claim in limited circumstances.

This is an "urgency" measure, which means it takes effect right away. Stay tuned for explanations of some of the other legislation that will take effect in January.