As 2021 winds down, California has yet again passed a host of new employment laws that has been signed by Governor Newsom. Most of these new laws will take effect on January 1, 2022. The new employment laws cover a wide swath of issues, including medical leave, wage theft, settlement and severance agreements, Cal/OSHA regulations, and, of course, COVID-19.
CHANGES TO THE CALIFORNIA FAMILY RIGHTS ACT (CFRA)
Last year, California enacted sweeping changes to the California Family Rights Act (CFRA). The CFRA is the California equivalent to the federal Family and Medical Leave Act (FMLA). Both laws provide employees with protected, unpaid leave for qualifying events, including an employee’s own medical condition or to care for close family members who are suffering from a qualifying medical issue. The CFRA used to apply to businesses with 50 or more employees, but the 2021 changes expanded the CFRA to businesses with five or more employees.
Under the current version of the CFRA, employees are permitted CFRA leave to care for a child, parent, spouse, domestic partner, grandparent, grandchild, or sibling with a qualifying medical issue. AB 1003 expands the list to include parents-in-law, which includes the parents of an employee’s spouse or domestic partner.
Employers should, of course, comply with the changes to the CFRA when an employee requests qualified leave. Employers should also update their employee handbooks with the most up-to-date information regarding the CFRA.
Wage theft continues to be a significant problem in California and throughout the United States.
A 2017 study identified nearly $2 billion in annual minimum wage violations in California, and as much as $8 billion in minimum wage violations in the ten most populous states. California already has some of the strongest laws on the books for combatting wage theft, but in September, the legislature passed AB 1003 to add additional enforcement for intentional wage theft. Under AB 1003, intentional wage theft by an employer of greater than $950 from one employee or $2,350 from two or more employees over a 12-month period is criminally punishable as grand theft. Importantly, this law applies not only to wage earning employees, but also to wages paid to independent contractors.
Given the potential for both civil and criminal penalties, employers should immediately ensure their wage and hour policies are compliant. California has an abundance of wage and hour regulations, and it is possible for good-faith errors to potentially run afoul of AB 1003.
ELIMINATION OF SUBMINIMUM WAGE FOR DISABLED EMPLOYEES
Starting January 1, 2022, California is eliminating an exemption that permits certain disabled employees to be paid below the minimum wage. Currently, employers can apply for a permit to allow them to pay certain employees with physical or mental disabilities a subminimum wage that can be far below state or local minimum wages. SB 639 eliminates the ability to pay subminimum wages and prevents any licenses from being issued after January 1, 2022. Beginning January 1, 2025, employees with disabilities cannot be paid less than the state or local minimum wage, whichever is higher.
RECORD KEEPING REQUIREMENTS
California employees must currently maintain certain employment records for a period of at least two years. SB 807, however, updates Government Code § 12946 and requires records be kept a minimum of four years. Specifically, SB 807 requires an employer to maintain applications, personnel records, membership records, and employment referral records for four years from the date the records were made or received. SB 807 also requires an employer to maintain personnel files for employees and applicants for four years from the date where the employment action occurred (i.e. the date the employment relationship ended or the date the applicant was not selected for a position).
PROTECTIONS FOR WAREHOUSE DISTRIBUTION EMPLOYEES
In response to reports and media coverage of poor working conditions for warehouse distribution employees, the legislature passed AB 701 as a measure to increase protections for warehouse workers. Starting at the end of January 2022, warehouse workers in distribution centers with 100 or more employees in a single location or 1,000 or more employees at one or more locations in California will be entitled to information from their employer regarding quotas. Employers must provide employees with a written description of the quotas, including the number of tasks to perform, what they must do to handle or produce under the quotas, how long they have to do their work, and what happens if their fail to meet their quotas. Furthermore, employees cannot be subject to adverse employment actions if they did not meet their quotas because they were not aware of the quotas, because of rest or meal breaks that interfere with the ability to meet their quotas, or because meeting the quotas would violate health and safety laws.
If an employee believes that meeting quota would violate their meal and rest period or would make them violate health and safety laws may request from their employer, and the employer must provide within 21-days, a written description of each quota and a copy of the employee’s most recent 90 days of personal work speed data.
SILENCE NO MORE ACT
In 2018, the California legislature passed SB 820, known as the Stand Together Against Non-Disclosure (“STAND”) Act. The STAND Act prohibited the inclusion of confidentiality provisions in employment settlements that prevented disclosure of details regarding sexual harassment, retaliation, and discrimination. SB 331, the Silence No More Act, expands upon SB 820 and prohibits confidentiality provisions in settlement agreements for all claims of harassment, retaliation, and discrimination, not just those claims based on sex. The prohibition on confidentiality agreements applies to the facts and circumstances giving rise to the claims. SB 820 and SB 331, however, permit the identities of the claimant(s) and the value of the settlement to remain confidential.
SB 331 also places restrictions on non-disclosure clauses in severance agreements, even if no lawsuit has been filed. If an employer is offering an employee a severance agreement, the employer must notify the employee that the employee has a right to consult an attorney. The employer must provide the employee with a reasonable time, at least five business days, to consult counsel. An employee may elect to sign the severance agreement before five days have elapsed so long as the decision is knowing and voluntary. An employer may not induce signature through fraud, misrepresentation, or threat to withdraw or change an offer if the employee does not immediately sign. The severance provisions, however, do not apply to negotiated settlement agreements resolved in litigation, in an administrative process, in an alternative dispute forum, or through an employer’s internal complaint process.
CAL/OSHA WORKPLACE SAFETY
The legislature has expanded Cal/OSHA’s authority with the passage of SB 606. SB 606 creates a rebuttable presumption that an employer with multiple worksites have committed an enterprise-wide violation if the employer either has a non-compliant written policy or procedure or if there is evidence of a pattern or practice of the same violation involving one or more worksites. In the event of an enterprise-wide violation, Cal/OSHA can order abatement across all worksites and include penalties of up to $134,334 per violation.
SB 606 also expands Cal/OSHA’s power to bring injunctive actions against employers in situations where the agency has grounds to issue a citation. The current standard gives Cal/OSHA the power to bring injunctions only when the condition of employment, place of employment, or operation of any machine “constitutes a serious menace to the lives or safety of persons about it.”
The new legislation also establishes an egregious violation category. An egregious violation occurs if one or more of the following are true:
(1) The employer, intentionally, through conscious, voluntary action or inaction, made no reasonable effort to eliminate the known violation.
(2) The violations resulted in worker fatalities, a worksite catastrophe, or a large number of injuries or illnesses. For purposes of this paragraph, “catastrophe” means the inpatient hospitalization, regardless of duration, of three or more employees resulting from an injury, illness, or exposure caused by a workplace hazard or condition.
(3) The violations resulted in persistently high rates of worker injuries or illnesses.
(4) The employer has an extensive history of prior violations of this part.
(5) The employer has intentionally disregarded their health and safety responsibilities.
(6) The employer’s conduct, taken as a whole, amounts to clear bad faith in the performance of their duties under this part.
(7) The employer has committed a large number of violations so as to undermine significantly the effectiveness of any safety and health program that may be in place.
Importantly, if an egregious violation is found, Cal/OSHA can issue fines and penalties on a per-employee basis, not just a per-violation basis.
AB 654 extends provisions requiring employers to notify employees who may have been in close contact with a person infected with COVID-19. Unlike most of the other laws listed here, AB 654 immediately took effect when approved on October 5, 2021. AB 654 adds some clarity to prior notification requirements, stating that employers must notify “all employees who were on the premises at the same worksite as the qualifying individual within the infectious period,” Employers must also provide employees with notice of available benefits as well as the employer’s cleaning and disinfection plan.
California has made significant changes over the last few years regarding classification of independent contractors. An overview of these changes can be found here. In summary, California codified the ABC test for determining a worker’s classification, making it more difficult to classify someone as an independent contractor. The legislature, however, included exemptions to the ABC test for workers in certain fields. Last year, the legislature passed AB 2257, which carved out additional exemptions to the ABC test. This year, the legislature passed AB 1506 which extends the exception for newspaper carriers through December 31, 2024 and AB 1561, which extends the exception for manicurists and construction trucking contractors/subcontractors to December 31, 2024.
JOINT LIABILITY FOR CONTRACTORS
California passed an important new law concerning joint liability for penalties and liquidated damages for contractors. Labor Code section 218.7 currently requires “direct contractors” to assume liability for unpaid wages and benefits for the employees of subcontractors, but excludes joint liability for penalties and liquidated damages. SB 727 amends the law to also impose joint liability on direct contractors for penalties and liquidated damages. SB 727 creates further liability for direct contractors for the failure of subcontractors to make payments to the California unemployment insurance fund or for the subcontractor’s failure to provide workers compensation benefits.
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Matthew Wallin is a senior associate in the Los Angeles office where he practices labor and employment law. He has extensive experience defending private business and public entities in litigation and advising clients on labor compliance issues.
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