Employee Benefits Compliance

New California Laws for 2018 – on Insurance and Employment

A new year always bring new legal and compliance requirements.  Below are summaries of California laws that have been signed by Governor Brown and will be effective January 1, 2018 (unless otherwise noted).  In addition to new laws, the following changes also are effective January 1, 2018:

  • California minimum wage (statewide) increases to $11.00/hour for employers with 26 or more employees, and increases to $10.50/hour for employers with 25 or fewer employees.  Additional information at https://www.dir.ca.gov/dlse/faq_minimumwage.htm
    • Note that many cities have higher minimum wage laws. Where applicable, these supercede the lower state minimum wage amounts.
  • California Paid Family Leave (PFL): The waiting period is eliminated (only for PFL, not also for SDI), and PFL benefits increase to 60-70% of wages, up to a cap.
  • San Francisco Health Care Security Ordinance (HCSO): The 2018 health care expenditure rates will increase to:
    • $2.83/hour for large business (with 100 or more employees worldwide)
    • $1.89/hour for medium-size business (a for-profit with 20-99 employees worldwide and a non-profit with 50-99 employees worldwide)


A.B. 168: Salary History

Why: The rationale behind this bill is that basing current compensation on past pay levels perpetuates historically lower pay rates for women and minorities. This bill aims to “level the playing field.”

What: This bill prohibits an employer from relying on the salary history information of an applicant for employment as a factor in determining whether to offer an applicant employment or what salary to offer. It also prohibits an employer from seeking salary history information about an applicant and requires an employer, upon reasonable request (not defined), to provide the pay scale for a position to an applicant for employment. The bill does not prohibit a job applicant from disclosing salary history information voluntarily and without prompting, and does not prohibit an employer from considering or relying on that voluntarily disclosed salary history information in determining salary, as specified. It also does not apply to salary history information disclosable to the public pursuant to federal or state law.

The bill applies to all employers, including state and local government employers and the Legislature. The bill specifies that a violation of its provisions is not subject to the misdemeanor provision. https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201720180AB168

Action Steps: Remove any questions on your employment applications that request prior wage information;  develop pay scales for positions; educate employees involved in the recruiting and hiring process so they will not request prior wage information. Also, consider documenting it if an applicant voluntarily discloses his/her prior wages. This could arise if the applicant asks for a signing bonus to make up for a bonus or other compensation s/he is foregoing from the prior employer.

A.B. 450: Immigration Enforcement

Why: As one commentator noted, this bill is “part of California’s efforts to thwart the Trump administration’s stated intent to tighten up immigration enforcement.”  It prohibits employers from voluntarily consenting to immigration enforcement actions unless the agent has a judicial warrant or subpoena.

What: This bill imposes various prohibitions and requirements on public and private employers regarding immigration enforcement actions by the federal immigration agency.  (These apply unless otherwise required or prohibited by federal law.)

  • It prohibits employers from:
  • 1) voluntarily allowing an immigration enforcement agent to enter nonpublic areas of a place of labor unless the agent provides a judicial warrant, except as specified;
  • 2) voluntarily allowing an immigration enforcement agent to access, review, or obtain the employer’s employee records without a subpoena or court order, subject to a specified exception.


  • It requires employers to:
  • 1) provide a notice to current employees, within 72 hours of receiving notice from an immigration agency of an upcoming inspection of I-9 Employment Eligibility Verification forms or other employment records. The notice must contain specified information and must be in the language the employer normally uses to communicate employment information.
  • 2) provide an affected employee, upon reasonable request, a copy of the aforementioned notice from the immigration agency; and
  • 3) provide to an affected current employee (and to the employee’s authorized representative, if any) a copy of the immigration agency’s written notice of the results of the inspection and any resulting obligations of the employer and the affected employee.

 Penalties for non-compliance or for not providing required notices are: $2,000 up to $5,000 for a first violation and $5,000 up to $10,000 for each subsequent violation, as defined. The bill specifies circumstances for which penalties do not apply. https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201720180AB450

SB 63: Parental Leave 

Why:  To expand existing unpaid, job-protected parental leave to employees of small employers

What: This bill extends current requirements for unpaid, job-protected parental leave for employees of employers with 50 or more employees within 75 miles of each other, to employees of employers (in California) with 20 or more employees within 75 miles. As under current law, employees are not eligible unless they have worked for the employer for more than 12 months and have at least 1,250 hours of service with the employer during the 12-month period prior to the start of the leave.  Eligible employees can take leave within one year of the child’s birth or placement for adoption or foster care. For additional details, see Leavitt article at https://news.leavitt.com/health-care-reform/state-specific-information/s-b-63-california-new-parent-leave-act-small-employers/

SB 396: Anti-Harassment Training

Why: To expand existing anti-sexual harassment training to include harassment based on gender identity, gender expression and sexual orientation.  Currently, employers with 50 or more employees must provide two hours of anti-harassment training every two years to supervisors.

What: This bill requires anti-harassment training to also include a component on gender identity, gender expression and sexual orientation and to include practical examples of these types of harassment in the training. The anti-harassment trainers or educators must have knowledge and experience in these areas. Additionally, this law requires employers with five or more employees to post a new workplace notice about transgender rights, such notice to be developed by the Department of Fair Employment and Housing (DFEH).

Action Steps: Make sure anti-harassment training is updated, and post the new workplace notice once the DFEH issues it.

SB 306:  Labor Commissioner Retaliation Investigations

Why: To expand the authority of the CA Labor Commissioner.

What: This bill authorizes the CA Labor Department “to commence an investigation of an employer, with or without a complaint being filed, when specified retaliation or discrimination is suspected during the course of a wage claim or other specified investigation being conducted by the Labor Commissioner.”  Prior to enactment of this law, the agency could take action only if an employee filed a complaint with the agency.  Now, the Labor commissioner can petition a superior court for injunctive relief, to stop an employer from engaging in alleged retaliation or discrimination in violation of California labor laws, if the labor commissioner finds reasonable cause to believe the employer is engaging in a violation.



AB 265: Prescription Drugs – Prohibition on Certain Price Discounts for Non-generic Drugs

Why: To prevent drug manufacturers from incentivizing insured individuals to use name-brand drugs by reducing their out-of-pocket cost, while their insurance will still have to pay more for the name-brand drug than it would have paid for a generic drug that is designated as therapeutically equivalent.

What: This bill prohibits drug manufacturers from offering any discount for a non-generic drug when a generic drug is available.  Specifically, prescription drug manufacturers may not offer in California a discount, repayment, voucher or other reduction in an individual’s out-of-pocket cost associated with his or her health insurance coverage for any prescription drug if a lower-cost generic drug is covered under the individual’s health insurance or a lower cost-sharing tier  is designated as therapeutically equivalent.  The bill includes several exceptions, such as if the individual has completed any applicable step therapy or prior authorization required by the health insurer.   Additionally, the bill does not prohibit a drug manufacturer from offering a prescription drug free of any cost to both the patient and the health insurer, and it does not prohibit a pharmacist from substituting a prescription drug.

SB 17: Prescription Drug Pricing Transparency – Disclosure about cost of Drugs 

Among other things, this bill requires certain manufacturers of prescription drugs to provide advance notice of rate increases.  Specifically, drug manufacturers must notify the purchasers at least 60 days in advance of the planned effective date of the increase, if the increase exceeds a specified threshold and the wholesale acquisition cost of the drug is more than $40.