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California Leads Nation in New Employment Laws for 2020 | FFS Insights

by Teresa R. Tracy

Once again, California is on the leading edge of new laws designed to protect workers. Unless otherwise indicated, the following laws became effective January 1, 2020.

Worker Classification

AB 5, which adds new Labor Code section 2750.3, amends Labor Code section 3351 amends Unemployment Insurance Code sections 606.5 and 621, codifies an earlier California Supreme Court decision, and greatly limits the ability to classify a worker as an independent contractor. It applies not only to the state’s Wage Orders, but also to claims under the Labor Code that are not covered by the Wage Orders (e.g., expense reimbursement, paid sick leave, and waiting time penalties). In addition, it applies to the California Unemployment Insurance Code (e.g., state disability insurance, unemployment insurance) and, effective July 1, 2020, to workers’ compensation as well. There are a few occupations and professions identified in the law that will continue to be subject to the older Borello test, but the vast majority of workers will now be subject to the more stringent test set out in the new law.

Arbitration-Related Laws

  • Arbitration Agreements. AB 51, which adds Government Code section 12953 and Labor Code section 432.6, prohibits employers from requiring applicants or employees to agree, as a condition of employment, continued employment, or receipt of any employment-related benefit, to arbitrate claims involving violations of the Fair Employment and Housing Act (FEHA) or the California Labor Code. An agreement that requires an employee to opt out of a waiver or take any affirmative action in order to preserve their rights is deemed a condition of employment. The new law also prohibits threats, retaliation, discrimination, or retaliation. It applies to any contract of employment entered into, modified or extended on or after January 1, 2020 if the contract requires arbitration. It does not invalidate or apply to (a) existing arbitration agreements that are otherwise enforceable under the Federal Arbitration Act (FAA), (b) post-dispute settlement agreements or negotiated severance agreements, (c) arbitration agreements that are entered into voluntarily and not as a condition of employment, or (d) a person registered with a self-regulatory organization as defined by the Securities Exchange Act of 1934 or applicable regulations. In addition to other remedies, it provides for injunctive relief and reasonable attorneys for a prevailing plaintiff who enforces his/her rights under the statute, and requires the court to impose a monetary sanction on the drafting party who materially breaches an arbitration agreement and authorizes other sanctions, including evidentiary sanctions. It is a criminal misdemeanor offense to violate the law, as well as an unlawful employment practice under FEHA. Note: While this law is currently being challenged on the grounds of FAA preemption, a violation remains a crime under state law unless and until a federal court rules otherwise.
  • Timely Payment of Arbitration Fees and Costs, and Arbitrator Demographics. SB 707 amends Code of Civil Procedure sections 1280 and 1281.96, and adds Code of Civil Procedure sections 1281.97, 1281.98, and 1281.99. Under these new provisions, the employer must pay the required fees and costs to initiate arbitration within 30 days following the due date, or it is in material breach and default of the arbitration agreement and waives its rights to compel arbitration. If the employer fails to timely pay the required fees, the employee may either (a) withdraw the claim from arbitration and litigate in court with the statute of limitations rolled back to the date arbitration was filed, or (b) compel arbitration in which case the employer must pay the reasonable attorneys’ fees and costs related to the arbitration. Since the latter could result in significantly increased costs of arbitration, employers should carefully calendar the due date of the arbitration fees and costs. It also requires private arbitration companies to collect and report demographic data in the aggregate regarding the ethnicity, race, disability, veteran status, gender, gender identity, and sexual orientation of all arbitrators.

Wage and Hour-Related Laws

  • Civil Penalties Allowed for Unpaid Wages. AB 673 amends Labor Code section 210 to permit employees to directly recover civil penalties for unpaid wages which were previously only available through an action brought by the Labor Commissioner, i.e., $100 for each initial violation for failure to pay each employee, and $200 for each subsequent violation or any willful or intentional such violation, plus 25% of the unpaid wages. It also limits an employee’s recovery to either (a) statutory penalties or (b) civil penalties under the Private Attorney’s General Act (PAGA), but not both, for the same violation.
  • Higher Minimum Wage and its Ripple Effects. The state minimum wage increases to $12/hour for employers of 25 or fewer employees, and to $13/hour for employers of 26 or more employees. This also results in an increase to the amount of salary required for exempt status to $49,920/year for employers of 25 or fewer employees and $54,080/year for employers of 26 or more employees. It also increases the minimum hourly rate payable to employees who are permissibly required to provide their own hand tools to twice the required minimum wage.
  • Public Works Definition Expanded for Prevailing Wage Requirements. AB 1768, which amends Labor Code section 1720 and expands the definition of public works to include work conducted during site assessment or feasibility studies. It also specifies that preconstruction work (including design, site assessment, feasibility studies, and land surveying) is deemed to be part of a public work, regardless of whether any further construction work is done.
  • Labor Commissioner Has Expanded Authority in Unpaid Wage Claims. SB 688 amends Labor Code section 1197.1 to expand the Labor Commissioner’s enforcement authority to allow it to issue citations to employers that pay employee wages that are less than the wage set by contract or agreement between the employer and employee, even if the agreed wage amount is in excess of the state minimum wage, and to recover restitution of those unpaid wages.
  • Labor Commissioner Anti-Retaliation Authority Expanded. SB 229, which amends Labor Code section 98.74, expands the appeal and enforcement powers of the Labor Commissioner when it issues a citation to an employer for having violated anti-retaliation provisions. In addition to other changes, it sets out the procedures for contesting the decision and order of the Labor Commissioner, including requiring a bond.

Discrimination-Related Laws

  • Lactation Accommodation Expanded. SB 142 amends Labor Code sections 1030, 1031, and 1033, and added Labor Code section 1034 to add requirements to the already-existing requirement that employers provide employees with break time and a place at work to express milk. Employers are now required to (a) provide a reasonable amount of break time to accommodate an employee who wants to express breast milk for her child each time the employee needs to do so, (b) provide the use of a room or other location (other than a bathroom) close to the employee’s work area that meets certain criteria, including that it be shielded from view and free from intrusion; be safe, clean and free of hazardous materials; contain a surface to place a breast pump and personal items; contain a place to sit; and have access to electricity or alternative devices such as extension cords or charging stations needed to operate an electric or battery-powered breast pump. The employer must also provide access to a sink with running water and a refrigerator suitable for storing milk close to the employee’s work-space, or another cooling device suitable for storing milk, such as an employer-provided cooler. In addition, the employer must develop and implement a policy regarding lactation accommodation that includes certain elements specified in the law, including the employee’s right to request lactation accommodation, the process to be used to make the request, the employer’s obligation to respond to the request, and a statement about the employee’s right to file a complaint with the Labor Commissioner for any violation. The lactation policy must be included in the employee handbook or other policies that the employer makes available to employees. Employers must distribute the lactation policy to new employees upon hiring and when an employee asks about or requests parental leave. If the employer cannot provide break time or a location that complies with the new law, the employer must provide a written response to the employee. The failure to provide an adequate room or location and/or the failure to provide reasonable time for lactation will be treated as a violation of the state’s rest period laws, requiring the employer to pay a one-hour premium per day for each day on which a violation occurs. Note: Small employers (less than 50 employees) can request an exemption if they can demonstrate that certain requirements of the law would impose an undue hardship by causing significant difficulty or expense when considered in relation to the size, financial resources, nature, or structure of the employer’s business; however, even if an exemption is granted, the employer will still be required to make reasonable efforts to provide the employee with use of a room or other location (other than a toilet stall) close to the employee’s work area for the employee to express milk in private.
  • Definition of Race Expanded To Include Hairstyles. SB 188 amends Government Code section 12926 and Education Code section 212.1 to expand FEHA’s definition of “race” to include traits historically associated with race, including but not limited to, hair texture and protective hairstyles. The latter includes, but is not limited to, “such hairstyles as braids, locks, and twists.”
  • Statute of Limitations Significantly Lengthened. AB 9 amends Government Code sections 12960 and 12965 to extend the deadline to file a verified FEHA claim from one year to three years from the date of the alleged unlawful action. It also relaxes the definition of filing an intake form with the DFEH (which often happens quite a bit earlier than the filing of a formal complaint). While it does not revive claims that have already expired under the current deadline, employers will be required to defend older claims than in the past.
  • Sexual Harassment Training. SB 778 amends Government Code section 12950.1 to extend the deadline for employers with 5 or more employees to provide sexual harassment training (both to supervisory and non-supervisory employees) by one year to January 1, 2021. The same training must also be provided once every two years, and within six months of hiring any supervisor. There are shorter time frames for the completion of the training for seasonal and temporary employees or for any employee hired to work for less than six months. Note: Deadlines for employers of 50 or more employees to provide two hours of training to supervisors is not extended or otherwise changed. Note: In 2022, lawyers and court staff must undergo implicit bias training as a component of continuing education and physicians, nurses, and surgeons must do so effective in 2023 under AB 241 and 242.

Benefits-Related Laws

  • Paid Family Leave Benefits Increases. Under SB 83, which amends, repeals, and adds multiple sections of the Government Labor and Unemployment Insurance Codes, paid family leave (a wage replacement benefit available to an employee upon application to the state to care for a seriously ill family member or to bond with a child within one year of the child’s birth, adoption, or foster care placement) increases from six (6) weeks to eight (8) weeks, effective July 1, 2020. Note: This is not a job-protection benefit and does not affect the amount of time that an employee is entitled to take or other provisions of other applicable laws; the new law only affects the number of weeks that the state will pay this benefit to the employee.
  • Organ Donation Leave Lengthened. AB 1223 amends Education Code sections 89519.5 and 92611.5, Government Code section 19991.11, Labor Code section 1510, and adds Insurance Code section 1011.8 and 10233.8. Under existing law, private employers with 15 or more employees must allow an employee to take a paid leave of absence for up to 30 business days in a one-year period for the purpose of organ donation. The new law requires such employer to grant an employee an additional unpaid leave of absence of up to 30 business days in a one-year period for this purpose. The one-year period is measured from the date the employee’s leave begins and consists of twelve consecutive months.
  • Employee Notice Re FSA Deadlines. AB 1554, which adds Labor Code section 2810.5, requires employers to notify an employee who participates in a flexible spending account of any deadline to withdraw funds before the end of the plan year. The notice can include, but is not limited to, electronic mail, telephone, text message, mail, or in person.

Settlement-Related Restrictions

AB 749, which adds Code of Civil Procedure section 1002.5, et seq., prohibits “no rehire” provisions in employment settlement agreements entered into on and after January 1, 2020, except where the employer has made a good faith determination that the employee engaged in sexual harassment or assault. The “no rehire” prohibition extends to not only the employer but also its parents, subsidiaries, affiliates, divisions, and contractors. Any such provisions will be void as a matter of law and a violation of public policy. The prohibition applies to all “aggrieved persons,” which is defined as employees who have filed a claim against the employer in court, before an administrative agency, in an alternative dispute resolution forum, or through the employer’s internal complaint procedure. Note: “No rehire” provisions can still be included in severance or settlement agreements that are entered into in response to demand letters or unfiled claims. Furthermore, the new law only applies to an agreement with the employee; it does not prohibit an employer from deciding, based on the conduct of a particular employee, that it will not rehire that employee at any time in the future.

Workplace and School Gun Violence Restraining Orders

AB 61, which makes changes to Penal Code sections 18150, 18170, and 18190, is effective September 1, 2020. It authorizes an employer, co-worker who has substantial and regular interactions with the person and approval of their employer, or an employee or teacher of a secondary or post-secondary school, with the approval of the school administrator, to file a petition for an ex parte, one year, or renewed gun violence restraining order. The restraining order can prohibit the subject of the petition from having in their custody or control, owning, purchasing, possessing, or receiving, or attempting to purchase or receive, a firearm or ammunition when it is shown that there is a substantial likelihood that the subject of the petition poses a significant danger of self-harm or harm to another in the near future by having in their custody or control a firearm, and that the order is necessary to prevent personal injury to the subject of the petition or another person.

Compliance with CCPA Delayed

The California Consumer Privacy Act (CCPA) was passed in 2018 and is meant to give “consumers” certain knowledge about what data companies are collecting about them, and then request that the data be deleted, in addition to other rights. “Consumers” was defined so broadly that it encompasses job applicants and employees. AB 25, which amends Civil Code sections 1798.130 and 1798.145, excludes employees and prospective employees from the definition of “consumer” until January 1, 2021. It also exempts any individuals “acting as a job applicant to, an employee of, owner of, director of, officer of, medical staff member of, or contractor of that business.” Therefore, employers have an additional year to comply with the requirements of the CCPA with respect to applicants’ and employees’ information.

Occupational Injuries and Illnesses

  • Immediate Reporting of Certain Occupational Injuries and Illnesses. AB 1804 amends Labor Code section 6409.1 to require employers to report serious workplace injuries, illnesses or death immediately by telephone or through an online platform to be developed by Cal-OSHA. Until the online platform is available, employers can make these reports by telephone or email. There is a $5,000 civil penalty for the failure to make a timely report as required.
  • Definitions Revised. AB 1805, which amends Labor Code section 6302 and 6309, removes the 24-hour inpatient hospitalization minimum time requirement from the definition of “serious injury or illness.” It also excludes inpatient hospitalization for medical observation or diagnostic testing, and explicitly includes the loss of an eye as a qualifying injury. It deletes, among other things, loss of a body member from the definition of serious injury and instead includes amputation. In addition, it redefines “serious exposure” to a hazardous substance in a degree or amount sufficient to create a realistic possibility that death or serious physical harm in the future could result from the actual hazard created by the exposure. It also establishes that a serious violation exists when the Division determines that there is a realistic possibility that death or serious injury could result from the actual hazard created by the condition alleged in the complaint.

Industry-Specific Laws

There are also several industry-specific laws:

  • Labor Peace Agreements in the Cannabis Industry. AB 1291 amends Business & Professions Code section 16051.5, which now requires any employer with 20 or more employees applying for a license from the state Bureau of Cannabis Control to provide a notarized statement that it will enter into, or demonstrating that it has already entered into, and will abide by the terms of a labor peace agreement. A labor peace agreement is a contract between an employer and an organized labor union in which the employer agrees to help the union organize the employer’s workforce and not to disrupt union organizing efforts, in return for the union’s agreement not to strike or cause other disruptions at the employer’s workplace during a union organizing campaign. Employers with fewer than 20 employees must agree to enter in such an agreement within 60 days of hiring the 20th employee. Supervisors do not count toward the 20-employee threshold. A violation of the law will result in revocation or suspension of the employer’s license.
  • CFRA Rights Extended to Flight Crew Members. AB 1748 amends Government Code section 12945.2 to conform flight deck and cabin crew-member eligibility requirements with the federal Family and Medical Leave Act (FMLA), which has special hours of eligibility for airline flight attendants and other crew members.
  • Sexual Harassment Training in the Janitorial Industry. AB 547, which amends Labor Code sections 1420, 1425, 1429, 1429.5, 1431, and 1432, requires the director of the Department of Industrial Relations to convene an advisory committee to identify qualified organizations that janitorial employers must use for in-person training on sexual violence and harassment prevention for janitorial employees.
  • Sexual Harassment Training for Construction and Temporary Employees. SB 530, which amends Government Code section 12950.1, amends Labor Code section 3073.9 and adds Labor Code section 107.5, et seq., extends the deadline for mandatory sexual harassment training to January 1, 2021 for employers of seasonal, temporary, or other employees “hired to work for less than 6 months.” The law also has special provisions for construction industry employers who employ workers under multi-employer collective bargaining agreements.
  • Valley Fever Training for Certain Construction Employees. AB 203, which adds Labor Code section 6709, now requires certain construction employers in counties where Valley Fever is highly endemic to provide effective awareness training on Valley Fever to all employees annually and before an employee begins work that is reasonably anticipated to cause substantial soil disturbance where work activities disturb the soil. The training must cover specific topics.
  • Print Shoot Employee Wage Payments. SB 671, which amends Labor Code sections 203, 203.1, and 220, and adds Labor Code section 201.6 on an emergency basis, became effective September 5, 2019. It establishes an exception from the normal requirement that an employer who discharges an employee must pay all wages earned at the time of termination to print shoot employees. Employers of those employees can pay the employee’s final pay by the next regular payday without penalty.
  • Skilled Nursing Facility Personnel Actions Restricted. AB 1695, which adds Health & Safety Code sections 1267.61 and 1267.62, prohibits a prospective transferee, in the capacity of a prospective licensee of a skilled nursing facility, during a 60-day transition period, from discharging an employee without cause, other than the nursing home administrator and the director of nursing. In addition, during this 60-day period, employers are prohibited from reducing an employee’s wages, benefits, or other terms and conditions of employment as the result of the transfer or change of ownership. It is only applicable to license applications submitted after January 1, 2020, and does not apply to skilled nursing facilities that are operated as a distinct part of an acute care hospital.

Local Ordinances

Employers should also be mindful that an increasing number of local ordinances provide for higher minimum wages and additional benefits than state law.

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This article is made available for educational purposes and to provide general information on current legal topics, not to provide specific legal advice. The publication of this article does not create any attorney-client relationship and should not be used as a substitute for competent legal advice from a licensed professional attorney.

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