The New Year Brings the Typical Explosion of New California Employment Laws
by Teresa R. Tracy
Happy New Year! As in years gone by, the new year brings new laws that govern employment in California, summarized below. Unless otherwise noted, the new requirements become effective January 1, 2022.
Exceptions to Independent Contractor ABC Test
Certain exemptions to the so-called “AB 5” or “ABC test” for independent contractor status are extended and expanded. The exemptions for licensed manicurists and licensed construction trucking subcontractors are extended to 2025. The exemption for newspaper distributors and carriers is also extended. The exemptions are expanded for data aggregators and research subjects (no longer need to be compensated to be exempt), certain claims adjusters and third-party administrators in the insurance and financial services industries are now exempt, and the exemption for manufactured housing salespersons was clarified. (AB 1561, AB 1506; Labor Code sections 2778, 2781, 2782, 2783).
Wage and Hour
Minimum Wage – This increases to $14.00/hour for employers with 25 or fewer employees and $15.00 per hour for employers with 26 or more employees. Many local jurisdictions have their own minimum wages applicable to certain employees who work within their geographical boundaries, which may also increase.
Ripple Effect of Minimum Wage Increase – Employers need to remember that an increase in the state minimum wage triggers increases in other areas. For example, the minimum annual salary for exempt employees becomes $58,240 for the smaller employers and $62,400 for the larger employers. The tool reimbursement exemption, where applicable, also increases.
Wage Theft – Wrongfully and intentionally withholding wages, including tips in excess of $950 from one employee, or $2,350 in the aggregate from two or more employees in a 12-month period is now a felony, punishable by imprisonment in a county jail for up to three years. For this purpose, independent contractors are considered employees, and entities that hire such contractors are considered employers. An employer acts “intentionally” when it has the knowledge that what it is doing is wrong and acts with the intent of committing the wrong. (AB 1003; Penal Code section 487m). Although this law does not further define “employer,” it is wise to assume that it will be interpreted broadly.
Tips to Food Delivery Persons and Fees – Food-delivery platforms must pay the delivery worker the entire tip on an order whether the order is for delivery or pickup, and prohibits them from charging higher prices than posted on the platform’s website at the time of the order. (AB 286; Business & Professions Code sections 22598, 22599.1, 22599.6).
Leaves of Absence
California Family Rights Act (CFRA) – The group of qualifying family members expands to include “parent-in-law.” The pilot program for mediation of disputed CFRA claims involving employers with 5 to 19 employees is clarified to require the Department of Fair Employment and Housing (DFEH) to notify such an employer if an employee files a CFRA claim and requests a right to sue; the DFEH will notify the employee of the requirement to mediate if requested by any party prior to filing a lawsuit. The employee must then contact the DFEH’s dispute resolution division, which will notify the employer of the right to request mediation before a lawsuit is filed. If the employee fails to contact the dispute resolution division before suing (such that the employer does not receive the required notification), the employer may get a stay of the lawsuit until mediation is complete or deemed unsuccessful. The statute of limitations is tolled during the pendency of the mediation. (AB 1033; Government Code sections 12945.2 and 12942.21).
Non-Disclosure and Non-Disparagement Provisions Restricted
The existing restriction on the use of nondisclosure agreements in settlement agreements involving claims of sexual assault, sexual harassment and sex discrimination is expanded through amendments to the Fair Employment and Housing Act (FEHA) and the Code of Civil Procedure.
A settlement agreement cannot prevent or restrict the disclosure of factual information related to a claim filed in a civil action or a complaint filed in an administrative action with respect to an act of sexual assault, sexual harassment, or any prohibited workplace harassment or discrimination, failure to prevent an act of workplace harassment or discrimination, or retaliation against a person for reporting or opposing harassment or discrimination under FEHA. At the request of the claimant, a provision that shields the identity of the claimant and all facts that could lead to the discovery of the claimant’s identity (including pleadings filed in court) may be included within a settlement agreement at the request of the claimant, unless a governmental agency or public official is a party to the settlement agreement. The disclosure of the amount paid in settlement can still be prohibited.
An employer, or former employer, cannot include in any separation agreement a provision that prohibits the disclosure of unlawful acts in the workplace. A non-disparagement, or other contractual provision, that restricts an employee’s ability to disclose information related to the workplace must include, in substantial form, the following: “Nothing in this agreement prevents you from discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that you have reason to believe is unlawful.” Any provision that does not comply is against public policy and enforceable. The new law makes it clear that including a general release of waiver of all claims in a separation agreement is still permitted, provided that the release or waiver is otherwise lawful and valid. However, any offer to an employee, or former employee, of a separation agreement must notify the employee that the employee has the right to consult an attorney regarding the agreement and must provide the employee with a reasonable time period of not less than five (5) business days in which to do so. An employee may sign such an agreement prior to the end of the reasonable time period as long as the employee’s decision to accept this shortening of time is knowing and voluntary, and is not induced by the employer through fraud, misrepresentation, or a threat to withdraw or alter the offer prior to the expiration of the reasonable time period, or by providing different terms to employees who sign such an agreement prior to the expiration of such time period.
Furthermore, an employer, in exchange for a raise, bonus, or as a condition of employment or continued employment, cannot require an employee to sign a release of claims under FEHA, including a statement that the individual does not possess any claim or injury against the employer or covered entity and includes the release of a right to file and pursue a civil action or complaint with, or otherwise notify, a state agency, other public prosecutor, law enforcement agency, court, or other government entity. Additionally, an employer cannot require an employee to sign a non-disparagement agreement or other document to the extent it has the purpose of effect of denying the employee the right to disclose information about workplace acts that are unlawful under FEHA. Any agreement or document in violation of these restrictions is contrary to public policy and unenforceable.
“Information about unlawful acts in the workplace” includes, but is not limited to, information pertaining to harassment, discrimination or any other conduct that the employee has reasonable cause to believe is unlawful.
The above expansions in general apply to agreements entered into on or after January 1, 2022.
Note: the new provisions do not apply to a negotiated settlement agreement to resolve an underlying claim under FEHA that has been filed by an employee in court, before an administrative agency, in an alternative dispute resolution forum, or through an employer’s internal complaint process. “Negotiated” for this purpose means the agreement is voluntary, deliberate and informed, provides consideration of value to the employee, and that the employee is given notice and an opportunity to retain or is represented by an attorney.
Nothing in the new provisions forbid either (a) the disclosure of the severance amount, or (b) the protection of trade secrets, proprietary information, or confidential information that does not involve unlawful acts in the workplace.
Requiring an employee to prospectively release a claim or right under the Fair Employment and Housing Act is prohibited. (SB 331; Code of Civil Procedure 1001 and Government Code 12964.5).
Electronic Transmission of Workplace Notices
Any notice that must be posted in the California workplace may also be sent to employees as an attachment to an email. Such notices must still be physically posted in the workplace, however. (SB 657; Labor Code section 1207).
Power to Compel Cooperation with DFEH Civil Rights Investigation Increased, Timelines Tolled, and Obligation to Keep Employment Records Extended
The new law increases the time that an employer must maintain employment records from the previous two years to four years after an employee separates.
If a superior court denies a DFEH petition to compel compliance with an investigation, the decision is subject to immediate, mandatory review by the appellate court. The court is also authorized to award attorney’s fees to the prevailing party for frivolous or unreasonable petitions or appeals. The DFEH can file its civil action in any county where (a) in which it has an office, (b) the unlawful practice allegedly occurred, (c) relevant documents are maintained, (d) the complainant would have worked or would have had access to public accommodation; (e) the defendant has its residence or principal office; or (f) any county in the state if the civil action includes class or group allegations. The law tolls the deadline for employees to sue while the DFEH is conducting investigations or mediation. Once an employee files a complaint with the DFEH, the deadline for the employee to sue is tolled until either the DFEH files a lawsuit or one year after it closes its investigation without filing a lawsuit. The law applies retroactively to claims, although it does not revive ones that have already lapsed due to deadlines. (SB 807; Government Code sections 12930, 12946, 12960, 12961, 12962, 12963.5, 12965, 12981, 12989.1).
Enhanced Workplace Safety Requirements for Multiple-Site Employers
If Cal/OSHA finds that an employer who has multiple worksites has a “pattern or practice” of a safety violation at more than one worksite, there is now a rebuttable presumption that the same violation exists throughout the employer’s enterprise. This same presumption is created if the employer has a written policy or procedure that violates a Cal/OSHA safety regulation. The employer’s failure to rebut this presumption allows Cal/OSHA to issue an enterprise-wide citation requiring enterprise-wide abatement. (SB 606; Labor Code sections 6317, 6323, 6324, 6429, 6602, 6317.8, 6317.9). Enterprise-wide citations carry the same penalties a repeated or willful citations, which can be as high as $134,334 per violation.
Increased COVID-19 Reporting and Employers Exempt From Reporting
Employers must notify the local public health agency of a COVID-19 outbreak (defined in a non-healthcare workplace as three or more cases among workers at the same worksite within a 14-day period), within 48 hours or one business day, whichever is later. The law specifies the list of individual and entities (including all employees, and employers of subcontracted employees, who were on the premises of at the same worksite) who must be notified of a potential exposure to COVID-19. It expands the list of employers that are exempt from the public health agency reporting requirements to include various licensed entities (e.g., community clinics, adult day health centers, community care facilities and child care facilities). It also added the delivery of renewable natural gas to the list of critical governmental functions that may not be materially interrupted by COVID-related OSHA prohibitions of use. These changes became effective on October 6, 2021 and are effective until January 1, 2023. (AB 654; Labor Code sections 6409.6, 6325)
Limit on Production Quotas
Large Warehouses – Businesses, staffing agencies, and individual owners who employ 100 employees at a single warehouse distribution center, or 1,000 or more employees at one or more warehouse distribution centers in California, and who use quotas in their performance metrics, must now disclose those production quotas to workers. Covered employers cannot set quotas that prevent employees from taking meal and rest breaks, using bathroom facilities, or that otherwise result in violations of occupational health and safety laws. (AB 701; Labor Code section 138.7 and 2100, et seq.).
Pharmacies – Chain community pharmacies cannot set task quotas. A quota for this purpose is a fixed number, or formula, related to the duties for which a pharmacist, or pharmacy technician, is required to measure or evaluate the number of times either an individual pharmacist or pharmacy technician performs tasks or provides services while on duty. It also prohibits chain community pharmacies from communicating the existence of quotas to pharmacists or pharmacy technicians who are its employees or with whom it contracts. (SB 362; Business & Professions Code sections 4113.7 and 4317).
PPE and Training Requirements for Wildfire Smoke Events and Agricultural Workers
This amendment, which became effective on September 27, 2021, requires in the event of a “wildfire smoke event,” “agricultural workers” must be given access to the stockpile of personal protective equipment (PPE) that the state was required to develop under a pre-existing law. It requires the advisory committee that was established by pre-existing law to include one representative from both a labor organization and non-labor organization that represents agricultural workers. It also requires Cal/OSHA to review and update the content of existing mandatory wildfire smoke training and post the updated training to its website. Employers will be required to provide the training in a language and manner readily understandable by employees, taking into account their ethnic and cultural backgrounds and educational levels, including the use of pictograms, as necessary. (AB 73; Health and Safety Code section 131021).
Notice Obligations Relating to Emotional Support Animals
Anyone who sells “emotional support dogs” or items related to “emotional support animals” (i.e., an animal that provides emotional, cognitive or other similar support to an individual with a disability, and that does not need to be trained or certified) must notify the buyer of such an animal that it is not entitled to the rights and privileges of a “guide, signal or service dog,” and that misrepresenting oneself as the owner of a “guide, signal or service dog” is a misdemeanor. There are new criteria for a licensed health care practitioner to provide documentation relating to an individual’s need for an emotional support dog. Nothing in the new law restricts or changes existing federal or state law related to a person’s rights for reasonable accommodation. (AB 468; Health & Safety Code Division 105, Part 6, Chapter 5, Article 4).
Personnel Record Retention Period Lengthened
The current requirement to retain employee personnel records has been increased from two years to four years. The statute of limitations is tolled while the DFEH investigates complaints of unlawful actions. (SB 807; Government Code sections 12930, 12946, 12960, 12961, 12962, 12963.5, 12965, 12981, 12989.1).
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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.
