State & Local Employment Law Developments: Q3 2018

State and local governments are increasingly regulating the workplace. Although it is not possible to discuss all state and local laws, this update provides an overview of recent and upcoming legislative developments to help you ensure that your organization stays in compliance.

Arizona

Minimum Wage: The minimum wage will increase from $10.50/hour to $11.00/hour effective January 1, 2019.

California

Minimum Wage: For employers with 26 or more employees, the minimum wage will increase from $11.00/hour to $12.00/hour effective January 1, 2019. For employers with 25 or fewer employees, the minimum wage will increase from $10.50/hour to $11.00/hour effective January 1, 2019.

Pay History: The California Equal Pay Act prohibits employers from seeking pay history information from applicants and relying on an applicant’s prior pay history in determining whether to offer employment or what pay to offer an applicant. On July 18, 2018, Governor Brown signed the Fair Pay Act into law, which takes effect on January 1, 2019, and clarifies the California Equal Pay Act. Under the California Equal Pay Act, employers must, upon request, provide an applicant with the pay scale for the position sought. The Fair Pay Act defines “pay scale” as a salary or hourly wage range and provides that employers are required to provide a pay scale upon request only after the applicant has completed an initial interview with the employer. The Fair Pay Act clarifies that employers may ask applicants about their pay expectations and provides that, when making pay decisions regarding current employees, an employer may base decisions on the current employee’s pay history.

Sexual Harassment/Defamation: On July 9, 2018, Governor Brown signed AB 2770 into law, which takes effect on January 1, 2019. The law is intended to protect employers and employees from defamation claims based on sexual harassment complaints and investigations. Under existing law, certain communications are privileged and, therefore, protected against defamation claims. AB 2770 provides that the following communications are privileged:

• Sexual harassment complaints by employees, without malice, based on credible evidence
• Communications between an employer and interested persons, without malice, regarding sexual harassment complaints
• An employer’s communications, without malice, regarding whether the employer would rehire an employee and whether the decision not to rehire is based upon the employer’s determination that the former employee engaged in sexual harassment

San Francisco Fair Chance Ordinance: The San Francisco Fair Chance Ordinance regulates employers’ use of criminal history in making employment decisions. San Francisco amended its Fair Chance Ordinance effective October 1, 2018.

• Before the amendment, the ordinance applied to employers with 20 or more employees. After the amendment, the ordinance generally applies to employers with five or more employees.
• The amended ordinance prohibits employers from inquiring about, requiring disclosure of, or basing employment decisions on a conviction for a crime that has been decriminalized (e.g., possession and use of marijuana).
• Under the amended ordinance, employers cannot inquire about criminal history until after making a conditional job offer.

Colorado

Minimum Wage: The minimum wage will increase from $10.20/hour to $11.10/hour effective January 1, 2019.

Delaware

Minimum Wage: Effective October 1, 2018, the minimum wage increased from $8.25/hour to $8.75/hour.

Hawaii

Pay History: Hawaii’s pay history law becomes effective January 1, 2019. Employers cannot inquire about an applicant’s current or prior compensation, cannot search publicly available records to ascertain an applicant’s pay history, and cannot rely on pay history to set the applicant’s compensation. Employers may discuss the applicant’s compensation expectations and objective measures of the applicant’s productivity such as revenue, sales or other production reports. An employer does not violate the law if it uses a background check to verify non-pay related information but the background check discloses pay history, as long as the employer does not rely on the pay history to determine the applicant’s compensation. The law does not apply to current employees (i.e., applicants for internal transfer or promotion with their current employer).

Maine

Minimum Wage: The minimum wage will increase from $10.00/hour to $11.00/hour effective January 1, 2019.

Massachusetts

Minimum Wage: The minimum wage will increase from $11.00/hour to $12.00/hour effective January 1, 2019.

Non-Competition Agreements: On August 10, 2018, Massachusetts passed a law applying to non-competition agreements entered into on or after October 1, 2018. The law applies whether the worker is an employee or an independent contractor. For a non-competition agreement to be valid, it must be limited to 12 months in duration, presented to the employee with the offer letter or 10 days before the employee’s start date (whichever is earlier), and signed by the employee and the employer. For existing employees, fair and reasonable consideration beyond continued employment is required. The agreement must inform employees of their right to consult counsel before signing it. The law includes a garden leave provision that requires payment of 50 percent of the employee’s base salary or other mutually agreed upon consideration during the restricted period. Non-competition agreements are not permissible for employees who are non-exempt under the Fair Labor Standards Act. Non-competition agreements are not enforceable against employees who are laid off or discharged without cause. A choice of law provision that applies the law of a state other than Massachusetts is unenforceable. The law does not apply to non-disclosure or non-solicitation agreements. The law does not apply to separation agreements provided that the employee receives at least seven business days to rescind acceptance.

Michigan

Sick Leave: On September 5, 2018, the Michigan legislature passed the Earned Sick Time Act. The law takes effect 90 days after the current legislative session ends. If the legislature adjourns as scheduled on December 20, 2018, the law will take effect on March 20, 2019. The law applies to all employers. Different requirements apply to small employers (i.e., employers with fewer than 10 employees) and other employers (i.e., employers with 10 or more employees). Employees accrue sick time at a rate of one hour for every 30 hours worked. Employees are not entitled to use more than 72 hours of sick time per year. Accrued unused leave carries over from year to year, and there is no cap on accrual or carryover. Employers are not required to pay out accrued unused sick time upon the end of employment. An employer complies with the law if its paid leave policy complies with the accrual and use provisions of the law.

New Jersey

Sick Leave: The New Jersey paid sick leave law takes effect on October 29, 2018. The law applies to all employers and preempts local sick leave ordinances. Employees accrue sick leave at a rate of one hour for every 30 hours worked, up to 40 hours of sick leave per year. Alternatively, an employer may provide the full 40 hours at the beginning of the year. Employees may use up to 40 hours of sick leave per year and carry over up to 40 hours of sick leave from year to year. An employer complies with the law if its existing paid time off policy complies with the accrual, use, payment and carryover provisions of the law.

New York

Minimum Wage: The minimum wage will increase from $10.40/hour to $11.10/hour effective December 31, 2018.

Sexual Harassment: Effective October 9, 2018, each employer must adopt a sexual harassment policy. Employers must provide each employee with sexual harassment training on an annual basis starting October 9, 2019. The sexual harassment policy and training must meet the requirements set by law.

Rhode Island

Minimum Wage: The minimum wage will increase from $10.10/hour to $10.50/hour effective January 1, 2019.

Washington

Minimum Wage: The minimum wage will increase from $11.50/hour to $12.00/hour effective January 1, 2019.