Schiff Hardin’s Labor and Employment Group presents our annual legislative update, summarizing legislation slated to take effect in 2019 under federal law and in Illinois, California, New York, Michigan, and District of Columbia.

Federal

Executive Order 13658 Minimum Wage Increase: The hourly wages of employees working under federal contracts covered under Executive Order (EO) 13658 will receive another boost by the Secretary of Labor, who adjusts the rate annually for inflation. Starting January 1, 2019, the minimum wage for employees working on or with covered contracts is increased to $10.60/hour, and the minimum cash wage for tipped employees performing work on or with covered contracts generally must be $7.40/hour. The updated poster setting forth the new rates is available here.

Religious and Moral Exemptions for Contraceptive Coverage: Current law mandates that employers must provide contraceptive services to employees through their insurance. Effective January 14, 2019, certain employers will be exempt from the mandate and will not be required to provide such coverage if the employer objects on the basis of a sincerely held religious or moral belief. The moral exemption does not apply to publically traded company employers and neither the religious nor the moral exemption applies to government employers. See 45 C.F.R. § 147.132 (religious exemption); 45 C.F.R. § 147.133 (moral exemption). On December 13, 2018, the Ninth Circuit affirmed a preliminary injunction that prevents the new rules from going into effect in California, Delaware, Virginia, Maryland, and New York.

Removal of Incentive Programs from EEOC Wellness Rules: Effective January 1, 2019, the incentive portions of the EEOC’s wellness rules under the Americans with Disabilities Act (ADA) and Genetic Information Nondiscrimination Act (GINA) have been removed. The eliminated rules had permitted employers to offer employees up to 30% off insurance premiums if the employee participated in an employer-sponsored wellness program. On December 20, 2018, the EEOC published rules removing these incentive provisions, pursuant to a decision from the U.S. District Court for the District of Columbia holding that the incentives could render the wellness program involuntary and in conflict with the ADA and GINA. The ADA and GINA allow employees to disclose protected health or genetic information, so long as the disclosure is voluntary.

OSHA Final Rule for Crane Operators: The Occupational Safety and Health Administration (OSHA) issued a final rule regarding certification and training requirements for crane operators. The final rule became effective on December 9, 2018, and the evaluation and documentation requirements must be completed by February 7, 2019.

Illinois

Equal Pay Act Amendment: Effective January 1, 2019, the Illinois Equal Pay Act (IEPA) prohibits employers from paying black employees at a rate less than the rate paid to non-black employees for the same or substantially similar work on a job that requires equal skill, effort, and responsibility and is performed under the same conditions. As with equal pay claims on the basis of sex, the IEPA contains an exception for payments made under a seniority system, merit system, a system measuring earnings by quantity or quality, or a differential based on any factor other than race.

Expense Reimbursement: Under an amendment to the Illinois Wage Payment and Collection Act (IWPCA), employers must reimburse employees for all necessary expenses or losses incurred by the employee related to their job if the expenses were authorized or required. To be reimbursable, an employee request must be submitted no later than 30 calendar days after the employee incurs the expense, but an employer’s policy may provide for a longer submission period. Employers may no longer require employees to submit a receipt to receive the reimbursement; a signed, written statement submitted by the employee must be accepted as sufficient proof. The law became effective January 1, 2019. Employers that have BYOD policies, or allow or require employees to work remotely, may be impacted by this amendment, and should consider, with the assistance of counsel, whether device-related expenses should be reimbursed. Reimbursement is not required where employees do not follow company reimbursement guidelines, so a carefully drafted expense reimbursement policy may limit employer exposure.

Military Leave: Effective January 1, 2019, the Illinois Service-Member Employment and Reemployment Rights Act (ISERRA) combined and clarified legal protections for service member employees under several existing state laws and repealed the state’s Military Leave of Absence Act, the Public Employee Armed Services Rights Act, the Municipal Employees Military Active Duty Act, and the Local Government Employees Benefits Continuation Act. ISERRA also incorporates the benefits and protections under the federal Uniformed Services Employment and Reemployment Rights Act (USERRA) and expands the definition of military service. For private sector employers, ISERRA also provides a framework for assigning performance ratings to employees on military leave. For the period of military leave, employees must be credited with a performance rating that is no lower than the average of the three years immediately preceding the leave and no lower than the most recent performance rating. The law requires covered employers to provide notice to covered service members and/or display a posting, available here and here.

Cook County/Chicago Minimum Wage Increase: The minimum wage in Chicago will increase on July 1, 2019 to $13.00/hour, under Chicago’s Minimum Wage Ordinance enacted in 2014. The minimum wage in Cook County will increase on July 1, 2019 to $12.00/hour, under Cook County’s Minimum Wage Ordinance enacted in 2016. The minimum wage rate for Illinois employees working outside of Cook County and/or Chicago will remain unchanged at $8.25/hour.

New City of Chicago Enforcement Agency: The Department of Consumer Affairs and Consumer Protection no longer handles employee complaints alleging violations of Chicago’s employment ordinances. Effective January 1, 2019, the new Office of Labor Standards (OLS) is responsible for investigating and enforcing Chapter 1-24 of the city’s employment ordinances, which includes its minimum wage and sick leave laws. The OLS will not be responsible for enforcing laws under the Chicago Human Rights Ordinance, nor will the OLS alter the powers or duties of the Chicago Commission on Human Relations.

California

Minimum Wage: The state of California has implemented a minimum wage increase. Effective January 1, 2019, the minimum wage for employers with 25 or fewer employees is $11.00/hour and the minimum wage for employers with more than 25 employees is $12.00/hour.

In addition, many municipalities in California have increased their minimum wages beyond the statewide minimums:

Applicant Criminal History: Effective January 1, 2019, SB 1412 limits employers’ ability to obtain applicants’ criminal conviction history or use such information in making hiring decisions to four instances: 1) if, during the course of his or her employment, the employee would be required to possess or use a gun; 2) if the applicant with a particular conviction is prohibited, by law, from holding the position applied for, even if the conviction is sealed, statutorily eradicated, judicially dismissed after probation, or expunged; 3) if the employer is prohibited by law from hiring an applicant with a specific conviction, even if the conviction is sealed, statutorily eradicated, judicially dismissed after probation, or expunged; or 4) if the employer is mandated by law to obtain from the applicant information about a specific conviction, even if the conviction is sealed, statutorily eradicated, judicially dismissed after probation, or expunged.

Applicant and Employee Salary History: AB 2282, effective January 1, 2019, clarifies existing law that restricts employers from inquiring into the salary history of job applicants. Under existing law, enacted in 2017 as AB 168, employers cannot inquire about an applicant’s salary history or benefits, or rely on salary history in determining whether to offer employment and what salary to offer. AB 168 also requires employers to provide a position’s pay scale to an applicant upon reasonable request. AB 2282 defines certain terms, including “pay scale” (now defined to mean salary or hourly wage range); “reasonable request” (now defined to mean a request made after an applicant has completed an initial interview with the employer); and “applicant” (now defined to mean an individual who is seeking employment with the employer and is not currently employed with that employer in any capacity or position). AB 2282 further clarifies that employers may ask applicants about their salary expectations without violating the law’s prohibition. Finally, AB 2282 clarifies that an employer can make compensation decisions for a current employee based on that employee’s existing salary, so long as any resulting wage differential is justified by one or more of the AB 168 factors: 1) a seniority system; 2) a system measuring earnings by quality or quantity of production; 3) a bona fide factor other than those prohibited including education, training, or experience, that is job related; or 4) a merit system.

Employment References: Under existing California law, certain communications are privileged and therefore cannot be used as a basis for a defamation or libel claim by a former employee. For example, existing law authorizes an employer to answer whether or not the employer would rehire an employee. Effective January 1, 2019, AB 2770 adds to those privileged communications information regarding sexual harassment complaint(s) regarding the former employee, if the complaint was made without malice and based on credible evidence.  The privilege also covers communications between the employer and interested persons regarding such a complaint of sexual harassment. AB 2770 also authorizes an employer to answer, without malice, whether the employer would rehire the former employee and whether or not a decision to not rehire is based on the employer’s determination that the former employee engaged in sexual harassment. In this context, “malice” means statements made with complete disregard for the truth, or statements made out of spite, ill will, or hatred towards the alleged harasser.

Gender Equality on Boards of Directors: SB 826 requires that all publicly held corporations with principal executive offices in the state of California have a specific number of women on their boards of directors. By December 31, 2019, all publicly held corporations must have at least one woman on their board of directors; by December 31, 2021, all publicly held corporations with a five-member board must have at least two women directors, and publicly held corporations with six or more board members must have at least three women directors. A company’s first violation can result in a fine up to $100,000, and subsequent violations can result in fines of up to $300,000 per violation.

Sexual Harassment Training: Effective January 1, 2019, SB 1343 requires all employers with five or more employees to provide a minimum of two hours of sexual harassment training to all supervisory employees, and a minimum of one hour of sexual harassment training to all nonsupervisory employees, by January 1, 2020. Employers must provide this training once every two years thereafter.

California Fair Employment and Housing Act Amendment: Effective January 1, 2019, SB 1300 amends the FEHA to provide that: 1) employers may (but are not required to) provide employee bystander intervention training that includes guidance on how to enable bystanders to recognize potentially problematic behaviors in the workplace and motivate bystanders to take action when they observe such behaviors; 2) employers are liable for all types of unlawful harassment (not just sexual harassment) by nonemployees (such as applicants, volunteers, interns, contract workers, etc.); and 3) a defendant that prevails in a FEHA lawsuit may not be awarded its attorney’s fees and costs unless the court finds the lawsuit was frivolous, unreasonable, or groundless when brought, or that the plaintiff continued to litigate after it clearly became so. SB 1300 also restricts an employer’s ability to require FEHA waivers from employees.

Terms of Employment Contracts and Settlement Agreements: Several laws going into effect on January 1, 2019 impose new restrictions on the terms of employment-related agreements, including employment contracts and settlement agreements.

– SB 3109 prohibits and voids any contract or settlement provision that waives a party’s right to testify in a legal proceeding concerning sexual harassment or criminal conduct on the part of the other party or the other party’s employees or agents.

– SB 820 voids any provision in a settlement agreement to settle a lawsuit or administrative complaint that prevents a party from disclosing “factual information” about sexual harassment or related retaliatory conduct. SB 820 applies to settlements of claims made in an administrative or civil action for sexual harassment under California Civil Code section 51.9, employment-related harassment or discrimination based on sex, failure to prevent such discrimination or harassment, or an act of retaliation for reporting such harassment or discrimination. SB 820 creates an exception for a provision that shields the identity of the claimant and all facts that could lead to the discovery of his or her identity, if the provision is included within the settlement agreement at the request of the claimant. It also provides an exception for a confidentiality provision that precludes the disclosure of the settlement amount.

– SB 1300 makes it an unlawful employment practice for employers to require employees to agree, as a condition of employment, to release FEHA claims or refrain from disclosing information about “unlawful acts in the workplace.” This prohibition does not extend to an agreement that is a negotiated resolution of a lawsuit, an agency complaint, or an internal complaint brought by an employee. In such cases, the employer is still able to get an enforceable release and require confidentiality concerning allegedly unlawful acts. SB 1300 amends the FEHA (see above).

Releases of Claims: SB 1431, effective January 1, 2019, amends the settlement agreement language of California Civil Code Section 1542 such that the following disclosure is now required to obtain a waiver or release of an employee’s benefits under section 1542: “A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.” California law also requires that a settlement agreement include additional content, other than the words of the release itself, to indicate that the parties intended to release unknown claims.

Anti-Harassment Materials for Talent Agencies: AB 2338 requires talent agencies to distribute anti-sexual harassment materials to its adult artists and provide materials on eating disorders and nutrition to its adult model artists. Talent agencies must keep records for three years confirming they provided artists with the required educational materials. The law is effective January 1, 2019.

Employee Access to Payroll Records: Effective January 1, 2019, SB 1252 amends Section 226 of the California Labor Code by clarifying that employees have the right to “inspect or receive a copy of” their payroll records instead of having the right to “inspect or copy” their payroll records.

Cal-OSHA Training for Marijuana Sellers: Effective January 1, 2019, AB 2799 requires employers submitting initial or renewal applications to sell marijuana to include a statement that within one year from the application, the employer does or will have one supervisor and one employee who has completed the Cal-OSHA 30-hour general industry outreach course. The law applies to employers with more than one employee.

Lactation Accommodation: AB 1976 changes current lactation location requirements. Effective January 1, 2019, employers are required to provide nursing employees with a space that is used only for lactation purposes while the employee expresses milk. The location cannot be a bathroom. If an employer can show that the new requirements would cause an undue hardship, then the prior requirements shall apply, requiring an employer to provide a room or location for expressing milk that is not a toilet stall.

Parental Leave for School Districts: Effective January 1, 2019, AB 2012 standardizes paid parental leave for school districts and community college districts,  and grants employees 50% of their salaries after the employee has exhausted their paid sick leave for the remainder of the employee’s parental leave period.

Paid Family Leave/Family Temporary Disability: SB 1123 extends the state’s family temporary disability insurance program to provide time off for employees (and the employee’s domestic partner, spouse, parent, or child) in the armed forces who participates in a qualifying emergency related to an active duty call. The law is effective January 1, 2021.

Equal Employment Obligations for Construction/Building Trades: Effective January 1, 2019, AB 2358 prohibits construction and building trades’ apprenticeship programs from discriminating against participants or applicants on the basis of sex, religion, race, or national origin, and requires the apprenticeship programs to have at least one individual oversee equal opportunity compliance, maintain records demonstrating compliance, and include equal opportunity pledges in the apprenticeship standards and other publications. All current apprenticeship programs must comply within 180 days after the law’s effective date. New programs must comply at the time of registration or 180 days after the effective date, whichever is later.

Anti-Human Trafficking Training for Hotel Employers: SB 970 requires motel and hotel employers (excluding bed-and-breakfast inns) to provide at least 20 minutes of interactive human trafficking training to employees who are likely to interact with sex trafficking victims. Training must be provided by January 1, 2020 and once every two years thereafter.

New York

Sexual Harassment: N.Y. Lab. Law 201-g, effective October 9, 2018, requires employers to provide sexual harassment prevention training to their employees on an annual basis. The first sexual harassment prevention training must be completed by October 9, 2019. The sexual harassment prevention training must be interactive and must cover specific topics including an explanation of sexual harassment consistent with state-issued guidance, examples of conduct that would constitute sexual harassment, and remedies available to victims of sexual harassment. Employers may use the model sexual harassment prevention training program provided by the state or establish their own sexual harassment training program. This new harassment training requirement accompanied a separate mandate under N.Y. Lab. Law 201-g that New York employers adopt a sexual harassment policy that meets or exceeds the standards of the state’s model policy.

Minimum Wage/Overtime: New York minimum wage increases went into effect December 31, 2018 as follows:

Salary thresholds for the executive and administrative exemptions also increased effective December 31, 2018 as follows:

Paid Family Leave: Certain changes to the New York Paid Family Leave benefit go into effect in 2019. As of January 1, 2019, the number of weeks eligible employees can take to bond with a new child, care for a sick family member, or assist loved ones when a family member is deployed increases from eight to 10 weeks. The number of weeks of paid leave for eligible employees will continue to rise through 2021, at which time employees will be able to take up to 12 weeks of paid, job-protected leave. Also effective January 1, 2019, employees taking leave will receive 55% of their average weekly wage, up to a cap of$746.41 per week. The 2019 employee contribution rate is 0.153% of an employee’s gross wages each pay period, with a maximum annual contribution of $107.97.

New York City Sexual Harassment Law: Effective April 1, 2019, Local Law 96 requires New York City employers with 15 or more employees to establish a comprehensive and interactive sexual harassment training course for employees. The training must be provided within one year after the effective date of the law and annually thereafter. New employees must be trained within 90 days after hire. The New York City Commission on Human Rights will create a sample training that employers may use to train employees. Employers also have the option to establish their own training program. The training must cover a variety of topics, including bystander intervention, details on how to report sexual harassment, and the responsibilities supervisors and managers have in preventing sexual harassment and retaliation. Employers must keep records of trainings and include signed employee acknowledgements of receipt of training.

New York City Lactation Policy and Accommodation Requirements: Effective March 18, 2019, an amendment to the New York City Administrative Code requires employers to provide a shielded private lactation room, other than a restroom, for breastfeeding mothers that includes an electrical outlet, a chair, and a surface to place a breast pump. The lactation room and a refrigerator suitable for breastmilk storage must be in reasonable proximity to the breastfeeding employee’s work area. Also effective March 18, 2019, employers must establish a written lactation policy and provide the policy to all employees upon hire. The policy must include a statement that employees have a right to request a lactation room, describe the process by which employees may request a lactation room, including the procedure when more than one person needs to use the room at the same time. The policy must also state that employers must provide reasonable break times for employees to express breast milk, respond to employee requests for access to a lactation room within five days, and engage in a cooperative dialogue with the employee if the request for a lactation room poses an undue hardship on the employer.

Westchester County Paid Sick Leave: Effective April 10, 2019, Westchester County’s new Earned Sick Leave Law (ESLL) requires employers to provide paid sick leave to employees who work in Westchester County for 80 or more hours a year at an accrual rate of one hour for every 30 hours worked. Employers may cap employee accrual of paid leave to 40 hours per year. Subject to specified exceptions, the ESLL applies to employers with five or more employees and covers part-time and exempt employees.

Michigan

Minimum Wage: Under SB 1171, the minimum wage in Michigan increased on January 1, 2019 to $9.45/hour for non-tipped workers (up from $9.25/hour) and to $3.59/hour for tipped workers (up from $3.52/hour).

Paid Sick Leave: Effective April 1, 2019, SB 1175 requires employers to provide paid sick leave to employees who work in Michigan at an accrual rate of one hour for every 35 hours worked, which may be capped at 40 hours per year. The new law applies to employers with 50 or more employees, and covers full-time employees, part-time employees who work an average of 25 or more hours per week, and seasonal employees who work at least 25 weeks in a calendar year. FLSA-exempt employees, government employees, and employees covered by an existing collective bargaining agreement are excluded from coverage. There is no private right of action, but aggrieved employees may file an administrative complaint with the Michigan Department of Licensing and Regulatory Affairs within six months of a suspected violation.

District of Columbia

Minimum Wage: Effective July 1, 2019, B21-0712 will increase the minimum wage rate in the District of Columbia to $14.00/hour for non-tipped workers (up from $13.25/hour) and $4.45/hour for tipped workers (up from $3.89/hour).

Tipped Workers: D.C. Law 22-196 will require employers with tipped workers to establish, distribute, and post in a conspicuous place, a written sexual harassment policy that outlines how employees can report instances of sexual harassment to both management and to the Office of Human Rights (“Office”). Employers will be required to annually document and report to the Office the number of sexual harassment instances reported to the employer “and the total number of reported harassers who were non-managerial employees, managerial employees, owners, or operators.” The policy, posting, documentation, and reporting requirements must all be completed by July 1, 2019. By November 1, 2020, employers must begin providing sexual harassment training to current employees and within 90 days of hire for new employees hired thereafter. Training for managerial and business owners must be completed every two years.

Paid Leave: Beginning July 1, 2019, the Universal Paid Leave Amendment Act will increase Washington D.C. employer’s payroll taxes by 0.62%. The increased revenue will be used to provide paid leave benefits to eligible employees. Beginning on July 1, 2020, subject to certain restrictions, the law will provide up to eight weeks of paid parental leave to bond with a new child, six weeks of paid family leave to care for an ill family member with a serious health condition, and two weeks of paid medical leave to care for one’s own serious health condition.