‘Tis the season of making lists and checking them twice. The same is true for California employers. As we have previously written, in January, many new laws affecting California employers go into effect. Below is a brief overview of the main changes businesses and organizations of all sizes should consider reviewing with legal counsel to ensure your company is ready.
California Employer’s Holiday Checklist
New Minimum Wage and Minimum Salary
Under existing laws, the California state minimum wage will increase on January 1, 2020 to $12 per hour for employers of 25 or fewer employees and to $13 per hour for employers of 26 or more employees. With this increase, the minimum salary permitted in California will automatically increase to $49,920 annually for employers of 25 or fewer employees and $54,080 annually for employers of 26 or more employees.
Many cities also have local ordinances that set minimum wages higher than the state minimum wage, and may have changes going into effect on January 1, 2020. Employers should review employee wages and salaries and make any necessary increases starting January 1, 2020. If you are unsure about the applicable minimum wage, contact legal counsel.
Independent Contractor Test
AB 5 codifies the “ABC” test adopted by the California Supreme Court for the classification of workers as employees or independent contractors under the California Wage Orders. It also sets forth 7 broad categories of exceptions for which the ABC test is not applied, and the existing Borello test will continue to apply. If you have anyone classified as an independent contractor, you should review with legal counsel in light of this new law and make any necessary changes.
Deadline to Complete Sexual Harassment Prevention Training Extended
Employers have until January 1, 2021 to provide sexual harassment prevention training under the expanded law to all employees. As an employer, if you did not provide sexual harassment training this past year, plan to provide it in 2020. The content of the training is specified by law, and legal counsel can provide the training and make sure you have a compliant training schedule in place.
Hairstyle Discrimination Banned
Effective on January 1, 2020, SB 188 expands the definition of race under FEHA to prohibit racial discrimination and harassment based upon a person’s natural hairstyle. Policies that prohibit natural hair, including afros, braids, twists and locks, will be unlawful. Employers should review and revise any dress codes or grooming policies to ensure protected hairstyles are not prohibited or discouraged.
Employees May Now Recover Civil Penalties for Unpaid Wages
Effective January 1, 2020, employees will be able to recover penalties for unpaid wages which were previously only available through an action by the Labor Commissioner. Employees are entitled to recover $100 for each initial violation for failure to pay each employee, and $200 for each subsequent violation or any willful or intentional violation, for each failure to pay each employee, plus 25% of the unpaid wages. If employers have any concerns about their pay practices, they should reach out to legal counsel for review.
Statute of Limitations for FEHA Claims Extended
Employees will have three years instead of one year to file a complaint with the DFEH for violations of FEHA. As always, employers should ensure that their policies and practices prohibit and prevent discrimination and harassment based on protected classifications, and that they are prepared to investigate any complaints.
Small Businesses May Be Covered by FEHA
FEHA applies to employers “regularly employing five or more persons.” The old regulations stated that “regularly employing” meant five or more individuals each working day in any 20 consecutive calendar weeks. Now “regularly employing” means employing five or more individuals “for any part of the day on which the unlawful conduct allegedly occurred” or on a “regular basis.” While this new law is already in effect, small businesses should review with legal counsel whether they are subject to FEHA and if so, make sure they have applicable policies in place as we move into a new year.
Ban of Mandatory Arbitration of Employment Claims
Effective January 1, 2020, employers are prohibited from requiring an applicant or employee as a condition of employment, continued employment, or the receipt of any employment-related benefit to agree to mandatory arbitration of alleged violations of FEHA or the entire Labor Code. The new law also prohibits employers from implementing arbitration agreements using a voluntary opt-out procedure. There are significant questions about whether this new statute is invalid based on conflict with the Federal Arbitration Act (FAA). Legal challenges are likely, and the law may be scaled back or found entirely unenforceable. In the meantime, employers should review any arbitration agreements, including arbitration clauses within other employment agreements, with their legal counsel and decide how to proceed.
“No-Rehire or Future Employment” Clauses Now Prohibited
Agreements settling employment disputes entered into on or after January 1, 2020 may not have a provision that prohibits, prevents, or otherwise restricts the current/former employee from working for the employer. This does not apply if the employer has made a good faith determination that the person engaged in sexual harassment or sexual assault, and clarifies that an employer does not have to continue to employ or rehire a person if a legitimate nondiscriminatory or non-retaliatory reason exists for terminating or refusing to rehire. If you have a standard settlement or severance agreement that you use, have legal counsel review it to make sure it is in compliance.
New Lactation Accommodation Requirements
This new law requires employers provide a lactation room or location for expressing breastmilk that has specific things, including a surface to place a breast pump and personal items, a place to sit, and that allows access to a sink and refrigerator suitable for storing milk in close proximity to the employee’s workspace. This law also requires that employers develop and implement a policy regarding lactation accommodation that includes a statement about the employee’s right to request lactation accommodation, how to make that request, and a statement about the employee’s right to file a complaint with the Labor Commissioner for violations. Further, the law makes a denial of reasonable break time or adequate space to express milk the same as a failure to provide a rest period in accordance with state law (and with the corresponding penalties).
Employers should review their existing lactation accommodation policy and lactation area to make sure they are in compliance. Employers who do not currently have a lactation policy must implement one.
Additional Days for Organ Donation-Related Leave
Under existing law, employers with 15 or more employees must permit an employee to take a paid leave of absence of 30 business days in a one-year period for the purpose of organ donation. Effective January 1, 2020, employers will also be required to grant up to 30 business days of unpaid leave for the same purpose. Employers should update their leave policies to reflect this change.
New Penalties for Failing to Timely Pay Arbitration Costs
Effective January 1, 2020, an employer who fails to pay within 30 days after the due date the costs and fees necessary for arbitration to begin or continue will be in material breach and default of the arbitration agreement and will waive its right to compel arbitration. Any employer who uses arbitration should make sure all fees are timely paid.
New Reporting Requirements for Occupational Injuries and Illnesses
Effective January 1, 2020, employers are required to report serious workplace injuries, illnesses or death immediately by telephone or through Cal OSHA’s online platform. Noncompliance carries a $5,000 civil penalty. Employers should review injury-reporting policies to ensure they are promptly reporting serious injuries as required, and update anyone who reports injuries as to the new policies.
Paid Family Leave Benefits Extended to 8 Weeks
Effective July 1, 2020, the maximum duration of Paid Family Leave (PFL) will be increased from 6 to 8 weeks. This new law affects only the number of weeks for which the state will pay family leave benefits to the employee, but if employers have any policies or paperwork that mention the leave length, they should update such documents.
Expanded Requirements for Labor Peace Agreements
Effective on January 1, 2020, under AB 1291, any company with 20 or more employees applying for a license from California’s Bureau of Cannabis Control must "provide a notarized statement that [it] will enter into, or demonstrate that it has already entered into, and will abide by the terms of a labor peace agreement." Employers with fewer than 20 employees must agree to enter into the agreement within 60 days of hiring its 20th employee. Cannabis employers should consult with legal counsel to plan for and obtain advice concerning entering into a labor peace agreement, as such an agreement may lead to union organizing efforts.
Now that the California legislative session for 2019 has come to a close, it’s time to review the new laws that impact the workplace, update policies accordingly, and train relevant managers and staff. Below we highlight four new laws that will impact all workplaces in California:
1. AB 8 – Extends Time To File A Complaint With the Department of Fair Employment and Housing (DFEH) from One to Three Years
The California Fair Employment and Housing Act (“FEHA”) prohibits discrimination, harassment, and retaliation in employment based on protected classifications such as race, national origin, sex, sexual orientation, religion, age over 40, disability, and medical condition, among others. Under the old law, an employee who believed he or she had been aggrieved by an unlawful practice under FEHA had one year from the date of such unlawful practice to file a complaint with the DFEH. Assembly Bill 9 (AB-9), signed by Governor Newsom this month, extends the time period to file a complaint from one year to three years for complaints alleging employment discrimination. This new law specifies that it does not revive lapsed claims, but does not specify what happens to existing claims for which the previous one year statute of limitations has not yet lapsed. We advise seeking legal counsel to assess the impact of this law on any pending DFEH complaints.
2. AB 749 – A “No-Rehire or Future Employment” Clause is Now Prohibited in Settlement Agreements Resolving Employment DisputesThis new law prohibits an employer who settles an employment dispute from including in the settlement agreement a provision that prohibits, prevents, or otherwise restricts the current/former employee from working for the employer. This does not apply if the employer has made a good faith determination that the person engaged in sexual harassment or sexual assault, and clarifies that an employer does not have to continue to employ or rehire a person if a legitimate nondiscriminatory or non-retaliatory reason exists for terminating or refusing to rehire. This law applies to agreements entered into on or after January 1, 2020. We advise seeking legal counsel to review any settlement/severance agreements that may be impacted by this new law.
3. AB 51 – Ban on Mandatory Arbitration of Employment Claims This new law set to take effect on January 1, 2020, adds a new Section 432.6 to the Labor Code prohibiting employers from requiring an applicant or employee as a condition of employment, continued employment, or the receipt of any employment-related benefit to agree to mandatory arbitration of alleged violations of FEHA or the entire Labor Code. The new law also prohibits employers from implementing arbitration agreements using a voluntary opt-out procedure. There are significant questions about whether this new statute is invalid based on conflict with the Federal Arbitration Act (FAA). Legal challenges are likely, and the law may be scaled back or found entirely unenforceable. In the meantime, employers should review any arbitration agreements, including arbitration clauses within other employment agreements, with their legal counsel and decide how to proceed.
4. SB 142 – New Requirements for Employee Lactation Accommodations This new law requires employers provide a lactation room or location for expressing breastmilk that has specific requirements, including a surface to place a breast pump and personal items, a place to sit, and access to a sink and refrigerator suitable for storing milk in close proximity to the employee’s workspace. This law also requires that employers develop and implement a policy regarding lactation accommodation that includes a statement about the employee’s right to request lactation accommodation, how to make that request, and a statement about the employee’s right to file a complaint with the Labor Commissioner for violations. Further, the law makes a denial of reasonable break time or adequate space to express milk the same as a failure to provide a rest period in accordance with state law (and with the corresponding penalties). We have developed several California-compliant lactation accommodation policies and training programs, and are happy to talk with your team on developing one for your company.
This is bill-signing season in California, and in the last few weeks, the Legislature has approved two bills of note.
Sexual Harassment Training Deadline Extended
On January 1, 2019, a new law (SB 1343) went into effect that significantly expanded California's mandatory sexual harassment prevention training requirements. Under SB 1343, all California employers with 5 or more employees must provide two hours of sexual harassment training to all supervisory employees, and one hour of training to nonsupervisory employees. The training must take place within 6 months of hire or promotion to a supervisory position, and every two years thereafter.
SB 1343 required employers to provide this training by January 1, 2020, unless the employer already provided this training after January 1, 2019. This meant that for employers who provided training in 2018, they would have to again provide training in 2019 instead of waiting the two years.
Based on employers' concerns, Governor Newsom signed SB 778 on August 30, 2019 - an emergency clean-up bill that took immediate effect. SB 778 extends the sexual harassment prevention training deadline under SB 1343 from January 1, 2020 to January 1, 2021. Now, employers who trained their employees in 2018 can maintain their two-year cycle, and will not be required to provide training 2 years in a row. SB 778 further clarifies that employers who train their employees in 2019 are not required to provide refresher training until two years from the time to employee was trained.
The law also requires training for seasonal/temporary employees and migrant or seasonal agricultural workers.
What Does This Mean for Your Company?
The content of the training is also specified by law and employers should ensure their training meets these requirements.
Please reach out if you have questions about your training schedule or the content of your training. We can provide trainings at your workplace, or help you select a compliant program and set a schedule.
California Wades Further Into Worker Classification Debate
On September 18th, Governor Gavin Newsom signed Assembly Bill 5, which is aimed at requiring companies in the gig economy, including on-demand and ride-hailing companies such as Uber, Lyft, and DoorDash, to treat workers as employees rather than independent contractors. The legislation codifies a recent California Supreme Court decision, Dynamex Operations West v. Superior Court, 4 Cal. 5th 903 (2018).
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