5 Hiring Mistakes to Avoid in California

Few states regulate hiring the way that California does, so it's critical for employers to keep up with the growing legal obligations in the state, said Jonathan Siegel, an attorney with Jackson Lewis in Irvine.

Recently, there's been a proliferation of laws restricting the hiring process, such as city and statewide "ban-the-box" laws and bars on salary history inquiries, he said during a preconference workshop at the SHRM 2018 Annual Conference & Exposition.

Additionally, there are more protected characteristics under California's anti-discrimination laws than there are in other states. Sexual orientation, gender identity, political affiliation, veteran and military status, and marital status are all protected, just to name a few.

Multistate employers can't simply use the same hiring forms, policies and processes that they do in other locations. Jen Gere, a conference attendee from Irving, Texas, attended the workshop to get a fresh perspective on the changing laws in California and insight on what might be coming down the pike. She is the director of HR operations for Epsilon, a global marketing company that has multiple offices in California.

[SHRM members-only HR Q&A: What questions are employers in California prohibited from asking applicants?]

The state's abundance of employee-friendly laws make compliance difficult. Here are some common mistakes that employers should avoid in California's unique employment landscape.

1.    Misclassifying New Hires

Is a worker an employee or an independent contractor? This is the No. 1 issue in the state right now, Siegel said.

The California Supreme Court's recent ruling in Dynamex Operations West v. Superior Court fundamentally changed the law and made it extremely difficult to establish an independent-contractor relationship, he said. Under the new California analysis, all three of the following factors must be met for a worker to be properly classified as an independent contractor:

• The employer can't control how the individual performs the work.
  
• The worker must be providing a service that is not part of the employer's usual business.
  
• The worker must customarily engage in an established business, trade or profession that is independent of the employer's business.
  

Unless workers are clearly independent contractors, employers should classify them as employees, Siegel noted. Misclassification lawsuits can be time-consuming and costly to defend.

2.    Asking About Prior Salary

Employers in California can no longer ask job applicants about their past salary and benefits. The theory behind the law is that using prior compensation to determine a new hire's starting salary may perpetuate pay disparities that were based on gender, race or other discrimination, Siegel explained.

Employers also need to share the pay range for a job opening if an applicant requests it. This was incorporated into the law to create pay transparency. Hiring managers should base starting pay on the salary range for the job and the candidate's qualifications, rather than trying to "get someone on the cheap," he said.

3.    Asking About Criminal History

Under California's "ban-the-box" law, employers can't ask about an applicant's criminal history until a conditional offer has been made—although there are exceptions for positions that legally require a criminal background check.

Furthermore, if an employer decides not to hire someone because of his or her criminal history, it must follow notice requirements under the ban-the-box law as well as the federal Fair Credit Reporting Act and California's Investigative Consumer Reporting Agencies Act.

4.    Failing to Comply with City Laws

Compliance in California doesn't end with federal and state laws. Employers must also understand any local ordinances that affect the hiring process. For example, some cities have their own ban-the-box, minimum-wage and pay-equity laws. These ordinances are usually similar to state law, but they may have some additional requirements or exceptions.

Local laws are common in Emeryville, Los Angeles, Oakland, San Diego, San Francisco, San Jose and Santa Monica—but other cities have them, too. Some local laws are limited to the city's borders, so make sure to check whether the business is technically in the relevant city, Siegel said.

5.    Failing to Revise Forms

Multistate employers usually can't use the same forms in California as they do in other states. Job postings, applications and new-hire forms must be reviewed for compliance with California law. Make sure job applications don't have impermissible questions about salary history, criminal background or other topics that are regulated in the state, Siegel said.

Employers need to train everyone who is interviewing and hiring workers in California, he added. Many state agencies—such as the Employment Development Department, the Department of Fair Employment and Housing, and the Division of Labor Standards Enforcement—have helpful training resources and templates available on their websites.