Employers face an ever-changing landscape in complying with California Law. 2020 brings a multitude of changes for California employers from extending the statute of limitations on FEHA claims to prohibiting certain terms in settlement agreements. Below is a summary of the most significant laws impacting California employers in 2020.
AB 9 – The Statute of Limitations on FEHA Claims is Extended to Three Years to File a Claim
California will now allow employees up to three years to file an administrative charge with the Department of Fair Employment and Housing (DFEH). While the extension is meant to address issues brought up by the #metoo movement, the extended statute of limitations applies to all claims under California’s Fair Employment & Housing Act (“FEHA”) including discrimination, harassment, retaliation, failure to accommodate, etc. Filing a complaint with the DFEH is required before filing a lawsuit alleging FEHA violations.
After filing a charge with the DFEH, a person then has a year to file a lawsuit. This means that some lawsuits will be referring to incidents that occurred up to four years ago or longer. The increased statute of limitation means it is more important than ever that employers have proper policies in place to prevent discrimination, harassment, and retaliation as well as proper document retention policies.
AB 51 – Arbitration Agreements Can No Longer be a Condition of Employment
California law will ban arbitration agreements as a required condition of employment starting in 2020. Even an agreement that requires an employee to opt out of arbitration or take any action to avoid arbitration is invalid under the new law. Employers may still enter into voluntary arbitration agreements with employees though what is “voluntary” has not been defined. Employers should be careful to update their employee handbooks to the extent the handbooks refer to arbitration as a condition of employment. Arbitration agreements that were valid as of December 31, 2019 remain in effect.
Challenges are expected to the new law. Employers will need to decide whether to march forward with mandatory arbitration agreements (expecting the law to be overturned), to scrap their arbitration agreements until there is more clarity on the law’s status or consider a voluntary arbitration agreement. Each carries risk (e.g. violating the new law is a misdemeanor) that should be discussed with counsel.
AB 5 – California Codifies the
Dynamex
test for Determining Independent Contractor Status
California has further tightened the controls on businesses using “independent contractors” by making the California Supreme Court’s decision in
Dynamex Operations West, Inc. v. Superior Court of Los Angeles
(2018) 4 Cal.5th 903 (
Dynamex
) a part of the California Labor Code. Under the
Dynamex
test, a person providing labor or services is considered an employee unless the business can demonstrate three things: (A) the person is free from the control and direction of the business in connection with the performance of the work; (B) the person performs work that is outside the usual course of the business; and (C) the person is customarily engaged in an independently established trade, occupation, or business.
California’s new law provides exceptions for certain professions such as direct sales salespersons, insurance agents, doctors, lawyers, real estate licensees, and construction subcontractors to name a few. If a profession is exempt from AB5, whether they are considered an employee is determined under California’s
Borello
test which considers the most significant factor to be whether the business has control or the right to control what work is done and how the work is performed. Lastly, AB 5 also clarifies that the
Dynamex
test applies retroactively to current claims under the Labor Code.
SB 778 – Employers Have Until 2021 to Provide Sexual Harassment Training
In 2018, California passed SB 1343 requiring employers with 5 or more employees to provide two hours of sexual harassment training to supervisory employees and one hour of sexual harassment training to non-supervisory employees. The training must then be provided every two years. SB 778 was passed to extend the deadline to provide the sexual harassment training to January 1, 2021.
The requirement that seasonal, temporary, or other employees hired to work for less than six months be provided sexual harassment training within 30 days of their hire was also extended to 2021.
SB 530 – The DLSE will Establish A Construction Industry Specific Harassment and Discrimination Prevention Policy
The DLSE is required to create a construction industry-specific harassment and discrimination prevention policy. An advisory committee must be convened by March 1, 2020 and provide its recommendations for the policy by January 1, 2021. Employers with workers that are subject to multiemployer collective bargaining agreements may show that sexual harassment training was completed by the worker in the past two years. If it cannot be verified that a worker received such training, the employer must provide that training by January 1, 2021.
AB 203 – Construction Employers Must Provide Valley Fever Awareness Training
Construction employers whose work includes digging, grading, or other earth moving operations, or vehicle operation on dirt roads, or high winds are required to provide awareness training on Valley Fever. The training must be provided by May 1, 2020
and
before an employee begins work that is reasonably anticipated to cause exposure to a substantial dust disturbance. Construction employers must also provide the training at least once per year thereafter and prior to work with exposure to substantial dust disturbance. Employers with employees in the counties of Fresno, Kern, Kings, Madera, Merced, Monterey, San Joaquin, San Luis Obispo, Santa Barbara, Tulare, and Ventura, or any other county where Valley Fever is highly endemic must receive the training. The new law provides a list of requirements for the awareness training to ensure its effectiveness in Labor Code section 6709(c).
AB 673 – California Adds a New Civil Penalty Recovery for Individual Employees for Violations of the Labor Code
Employees will be able to recover even more penalties for violations of the Labor Code under AB 673. A new penalty was created for failing to pay an employee in a timely fashion after the end of a work period as required under Labor Code section 204. Penalties for these violations were previously only recoverable through the Labor Commissioner or through an action under the Private Attorney’s General Act (PAGA). Now these employees are recoverable through a private action.
An employee seeking recovery for failure to pay timely wages in a work period can now receive a civil penalty of $100 for the initial violation, $200 for each subsequent violation, and 25% of the amount unlawfully withheld. The bill states that civil penalties are recoverable in an action by the employee or through PAGA, but not both. When employees seek recovery for unpaid wages/overtime, employers can expect a derivative claim for failing to pay those wages/overtime within the requirements Labor Code section 204. There is no cap on the penalties, so employers who pay weekly could face substantial penalties if they are not paying their employees properly.
AB 1768 – Prevailing Wages Must be Paid for Pre-Construction Work on Public Works Projects
This bill now requires that prevailing wages be paid on pre-construction work such as site assessments and feasibility studies on public works projects. The bill further states that prevailing wages are to be paid even if no further construction work is conducted. Employers working on public works projects should ensure that wages are paid at the proper rate during all aspects of pre-construction and construction work.
SB 142 – New Requirements for Lactations Accommodations
There are new requirements for providing employees with lactation accommodations. Employers must provide access to a lactation room or a location that is close to the employee’s work area that has a seat and electricity, is shielded from view, and free from intrusion while the employee expresses milk. Employers must also provide access to a cooler or refrigeration and provide access to running water. Employers must provide a reasonable amount of break time every time an employee has to express milk. There is a narrow exception for employers with under 50 employees may be exempt from the requirements of providing a compliant location if it can demonstrate that providing such a location would impose an undue hardship on the employer.
SB 229 – The Labor Commissioner Citations & Appeals
California has also changed the process for finalizing rulings from the Labor Commissioner. If the Labor Commissioner cites a person for unlawful discrimination or retaliation, the Labor Commissioner must file the citation in the superior court where the person has or had a place of business. The clerk of the court is now required to enter judgment for the amount in the citation and set a hearing for why injunctive and nonmonetary relief should also not be granted. A person cited by the Labor Commissioner may seek review of the citation by filing a writ of mandate and posting a bond equal to the total amount of lost wages, interest, liquidated damages, and any other monetary relief that the Labor Commissioner finds are due.
SB 688 – The Labor Commissioner May Award Restitution of Unpaid Contract Wages
The Labor Commissioner may now issue a citation to an employer to recover restitution of amounts owed when a contractual wage is more than the minimum wage. Previously, the Labor Commissioner was unable to collect unpaid wages under an employee contract where the wages were paid above the minimum wages.
AB 749 – No Reemployment Provisions are Prohibited in Settlement Agreements Under Certain Circumstances
It has been commonplace that employers in California request a provision in settlement agreements preventing an employee from obtaining reemployment or applying for reemployment. As of January 1, 2020, an agreement prohibiting, preventing, or restricting reemployment will be deemed void as a matter of law. A no reemployment clause cannot be included if the employee has filed a claim against the person’s employer in court, before an administrative agency, in an alternative dispute resolution forum, or even through the employer’s internal complaint process. As an exception, employers may put a no reemployment clause in a settlement agreement if the employer made a good faith determination that the employee engaged in sexual harassment or sexual assault. The law also does not mandate rehire if there was a legitimate non-discriminatory, non-retaliatory reason to end the employment relationship, though sets no parameters on what constitutes a legitimate reason.
An employer and employee may end a current employment relationship with a severance agreement that includes a no re-hire provision.
Crown Act – SB-188 – Hair Texture and Hairstyle Discrimination is Prohibited
California now extends protection from employment discrimination to an employee’s or applicant’s hair texture or hairstyle. The prohibition of discrimination will extend to protective hairstyles and hair texture that are traits historically associated with race. The act specifically notes that the definition of “protective hairstyles” includes braids, locks, and twists.
SB 707 - Enforcement of Arbitration Agreements
California employers seeking to enforce arbitration agreements should be careful to make their payments on time. Under SB 707 the party that drafts the arbitration agreement and fails to pay fees and costs within 30 days of the due date is considered to have materially breached the arbitration agreement, to be in default, and to have waived the right to arbitration. Even an employer’s failure to pay a small amount of the fees and costs could be considered a material breach. The failure to pay fees and costs for the arbitration would also subject the drafting party to a monetary sanction. The law also mandates arbitration companies report demographic data related to race and gender of arbitrators.
California Consumer Privacy Act (CCPA)
The CCPA is set to go live on January 1, 2020 and will be the most expansive consumer data protection law in the United States. Fortunately, typical information employers gather on employees such as on applications are exempt through at least January 2021.
Employers should still be aware of the basics of this new law. The law applies to for-profit companies doing business in California that collect or sell consumer data and meet one of the following criteria: (a) has annual revenues in excess of $25 million; (b) possess the personal information of 50,000 or more consumers, households or devices per year; or (c) earn half your annual revenue from selling consumers’ personal information. Companies also fall under the CCPA if they are controlled by an entity that meets this criteria and share common branding with that entity. The Act gives “consumers” (defined as natural persons who are California residents) basic rights in relation to their personal information including the following:
1. the right to know, through a general privacy policy and with more specifics available upon request, what personal information a business has collected about them, where it was sourced from, what it is being used for, whether it is being disclosed or sold, and to whom it is being disclosed or sold;
2. the right to “opt out” of allowing a business to sell their personal information to third parties (or, for consumers who are under 16 years old, the right not to have their personal information sold absent their, or their parent’s, opt-in);
3. the right to have a business delete their personal information, with some exceptions; and
4. the right to receive equal service and pricing from a business, even if they exercise their privacy rights under the Act.
The Act requires that companies make certain disclosures to consumers via their privacy policies, or otherwise at the time the personal data is collected.
SB 83- Paid Family Leave
As of July 1, 2020, paid family leave benefits are extended from six to eight weeks. The bill also creates a task force to discuss job protections, and an increased wage replacement rate.
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