Winners, Losers, & Takeaways of the New CA Employment Laws
Maybe you heard about the new California employment laws.
If you shrugged off the news, you’re not alone.
But hey, if you’re in California this stuff is important, especially for those within the startup ecosystem.
Lucky for you, we’re making it easy. With the help of startup lawyer extraordinaire Paul Neibergs, we’ve mapped out the winners, losers, and important takeaways of the new legislation. So without further ado, here’s your five-minute crash-course.
First, some background.
As with each new year, January 1st introduced a long, exciting list of new state laws. Marijuana legalization stole the limelight, but several employment-related bills will impact how your company handles its recruiting efforts. To keep it simple, here are the hiring-related laws to know…
AB-168 — Salary Information
Employers may no longer ask about a potential employee’s salary — this goes for your applications, interviews, follow-up email correspondence, and even candidate research when preparing an offer. Even with the best of intentions (making sure you don’t low-ball a potential employee), salary banter is off limits!*
*If a potential employee volunteers salary information, it can be considered for setting a salary. However it cannot be considered in deciding whether or not to make an offer.
AB-1008 — Ban the Box
For companies with more than five employees, it is now illegal to ask potential employees about criminal convictions and/or criminal history. That means no more criminal-record-box-checking on your applications. Only AFTER making an offer can employers inquire about criminal records. Offers CAN be made contingent upon due diligence and a background check. From here, there are three potential scenarios:
- No criminal record — No problem.
- Criminal record but no conviction — May not be used in the hiring decision.
- Criminal record with a conviction — The offer may be rescinded, but this involves a complicated process that allows for the potential employee to contest the no-hire decision. If a conviction is discovered and the offer is rescinded for unrelated reasons, the potential employee may have a claim, as the law applies to any no-hire decision based even in part on a criminal conviction. Paul strongly suggests going through the process if you find yourself in this situation. Better safe than sorry.
So what do we make of all this?
Winners
- Freelancers — More hoops to jump through will only make employers want to avoid the hiring process even more. The gig economy has already taken off, but perhaps this is just the beginning…
- Lawyers — An employer trips up and accidentally asks, “How much did you make in your last position?” They’ve just broken the law. This means more work for attorneys, but those like Paul hardly rejoice. “You feel for these founders who just want to get their businesses up and running.”
- Friends and Family — As Paul notes, the “only hiring friends and family” culture of Silicon Valley (and beyond) will likely intensify. Hiring from the public brings risks that can generally be mitigated by working with those who are already trusted.
- Insurance providers — Make no mistake, insurance companies will sell rapid-growth-startups umbrella offerings and/or co-employment as a safety net. Hire enough people, and the likelihood of running afoul of the new rules will be high.
Losers
- Employers — Sorry, founders. Unfortunately, creating employment is a public service that gets taken for granted. But do yourself a favor and stay vigilant. Failing to comply with these new laws could land you in hot water. Worst case scenario, you could face civil liability charges.
Takeaways
- Keep in close touch with your lawyers — While we hope that this article is helpful, it is nowhere close to sufficient legal counsel. Your attorneys know this stuff. Trust them.
- Take advantage of HR services — HR services like ADP can help maintain your peace of mind. They act as a shield when creating applications, engaging in interviews, and negotiating offers.
- A word from Paul — “Remember that when you are in the hiring process and making offers, you are engaged in a legal process. It’s not simply a business decision or a business process. You have to imagine that a jury is present during your interviews. It’s not a comfortable position to be in, but it’s now a fact of business in California.”
Winners and losers aside, these changes quite literally come with the territory. California’s progressive social agenda leads the charge in promoting fair employment practices. Give it a few years and these laws will fall into the background of standard hiring practices. For now, take a minute to appreciate the underlying motive for these changes — equality in the workplace.
