Is It 2021 Yet? Not Quite, But New 2021 California Laws Are Here!
2020 has been quite the year, but not the type of year any of us had in mind back on January 1. Sports, schools, theatre movies, and dining inside restaurants all were replaced by a “new normal” of remote work from home, face coverings, and social distancing. In this unprecedented time, there is still one thing California employers can count on: As it does every Fall, the California legislature has wrapped up its annual session with the passage of several new labor and employment-related laws. Governor Newsom had a September 30 deadline to approve or veto bills passed by the legislature. In this e-alert, we summarize the key new labor and employment laws, all of which become effective on January 1, 2021, unless identified as urgency legislation, in which case the requirements became effective immediately after the bill was signed by the Governor.
Independent Contractors (A.B. 2257). This eagerly anticipated bill revises various aspects of last year’s A.B. 5, the codification of the ABC test from Dynamex v. Superior Court, 4 Cal. 5th 903 (2018). Among other things, A.B. 2257 clarifies the “business-to-business” exception to the ABC test and adds a laundry list of new exemptions. The new law clarifies that a sole proprietorship may qualify for the business-to-business exemption and that a business services provider need only have the opportunity to contract with other clients, rather than actually have contracts with other clients. The law also clarifies that a business entity may potentially qualify for the business-to-business exemption even if it interacts directly with the contracting entity’s customers (e.g., in the delivery context). The new specific exemptions are too numerous to mention here, but include various members of the recording industry (i.e. recording artists, musicians, producers, etc.), freelance writers, translators, still photographers, photojournalists, freelance editors, newspaper cartoonists, insurance inspectors, and real estate appraisers. It is important to remember that meeting the criteria for a potential exemption to the ABC test does not mean the worker automatically qualifies as an independent contractor; it only means that worker’s status as employee or independent contractor will be governed by the Borello multi-factor test rather than the ABC test. This was an “urgency bill” so it took effect immediately after it was signed by the Governor on September 4, 2020.
Clearly, A.B. 2257 will not be the last word on this complicated and evolving area of the law. On September 25, 2020, the U.S. Department of Labor issued proposed Rules to clarify the determination of independent contractor status under federal law based on an “economic reality” test. Further, on November 3, California will vote on Proposition 22 to determine whether app-based drivers and delivery workers may operate as independent contractors or must remain subject to the ABC Test. Stay tuned…
California Family Rights Act Expanded (S.B. 1383). This new law significantly expands the California Family Rights Act (“CFRA”), the state family and medical leave law, by lowering the threshold for employer coverage from a minimum of 50 employees to 5 or more employees, effective January 1, 2021. In addition, while CFRA is currently available for the serious health condition of a child, spouse, or parent of an employee, the new law’s expanded reach covers leave to care for an employee’s child (including adult children), spouse or domestic partner, parent, grandparent, grandchild, or sibling who has a serious health condition. CFRA will also now be available for a qualifying exigency related to the covered active duty or call to covered active duty of an employee’s child, spouse or domestic partner, or parent in the Armed Forces of the United States. To be eligible for CFRA, an employee must still be employed at least 12 months and have worked at least 1250 hours in the previous 12 months.
Due to the lowered employer coverage threshold for CFRA, the New Parent Leave Act will be superfluous and is repealed effective January 1, 2021.
Paid Family Leave Benefits Expanded (A.B. 2399). Existing law established within the state disability insurance program a Paid Family Leave program that provides wage replacement benefits to employees who take time off to care for a family member with a serious illness or to bond with a new baby within 12 months of the child’s birth or placement for foster care or adoption. As of January 1, 2021, this law will be expanded to provide for use of this benefit to take time off due to a qualifying exigency related to the covered active duty or call to covered active duty of an employee’s spouse or domestic partner, child, or parent in the Armed Forces of the United States. A.B. 2399 revises certain definitions and documentation requirements within the existing statute for purposes of the qualifying exigency leave.
COVID-19 Supplemental Paid Sick Leave, Hand Washing, and CFRA Mediation (A.B. 1867). California has its Blueprint for a Safer Economy and numerous Executive Orders from Governor Newsom, not to mention local public health ordinances in virtually every county and major city, that impose a new framework on employers as they navigate the COVID-19 pandemic. The state legislature also did its part. In A.B. 1867, the legislature passed a multifaceted law intended to provide, among other things, a comprehensive codified supplemental paid sick leave benefit program to Californians. First, new Labor Code section 248 codifies Executive Order 51-20 providing COVID-19 Supplemental Paid Sick Leave (“COVID-19 SPSL”) to food sector employees who work for employers with 500 or more employees nationwide. Next, new Labor Code section 248.1 fills in gaps in coverage in other laws by providing COVID-19 SPSL to non-food sector employees of employers with 500 or more employees nationwide. (The Families First Coronavirus Response Act (“FFCRA”) provided COVID-19 SPSL to employees who work for employers with less than 500 employees nationwide.) Labor Code 248.1 also provides COVID-19 SPSL to health care employees and emergency responders who were excluded from the FFCRA’s emergency paid sick leave provisions.
New Labor Code section 248.1 provides covered workers COVID-19 SPSL if that worker cannot work due to any of the following reasons: (a) the worker is subject to a federal, state, or local quarantine or isolation order related to COVID-19; (b) the worker is advised by a health care provider to self-quarantine or self-isolate due to concerns related to COVID-19; or (c) the worker is prohibited from working by the worker’s hiring entity due to health concerns related to the potential transmission of COVID-19. The provisions that apply to food sector workers are retroactive to April 16, 2020 (the date of Executive Order 51-20), and the provisions for nonfood sector employee are effective as of September 19, 2020. The COVID-19 SPSL provisions are set to expire on December 31, 2020, or the date of the expiration of any extension of the Emergency Paid Sick Leave Act established by the FFCRA. See https://www.dir.ca.gov/dlse/FAQ-for-PSL.html
As with standard paid sick leave, employers must record the amount of COVID-19 SPSL available for use to employees either as part of employees’ itemized wage statements or in a separate writing each payday. A model notice about COVID-19 SPSL must be posted in the workplace. The model notice for food sector workers can be found here: https://www.dir.ca.gov/dlse/COVID-19-Food-Sector-Workers-poster.pdf. The model notice for non-food sector employees can be found here: https://www.dir.ca.gov/dlse/COVID-19-Non-Food-Sector-Employees-poster.pdf
A.B. 1867 also adds Health and Safety Code section 113963 to specifically authorize food employees in any food facilities to wash their hands every 30 minutes, and more often if needed.
Finally, in anticipation of the expansion of CFRA to small employers, A.B. 1867 enacts a small employer family leave mediation pilot program. Under this program, small employers (i.e., those with between 5 and 19 employees) or employees can, within specified time frames (i.e., within 30 days of the receipt of a right to sue notice for CFRA claims), request all parties to participate in a dispute resolution program to be established by the Department of Fair Employment and Housing (“DFEH”). Such a request would preclude the employee from initiating a civil action until the mediation is completed, but the statute of limitations for the CFRA and all related claims would also be tolled. This pilot program will remain in effect until January 1, 2024.
COVID-19 Imminent Hazard Notice (A.B. 685). Another COVID-19 related law, A.B. 685, establishes standards for employers to follow in handling potential COVID-19 exposures and outbreaks and provides the Division of Occupational Health and Safety (“Cal-OSHA”) with the means to protect employees from an imminent hazard due to COVID-19. Cal-OSHA will be allowed to shut down a place of employment or operation or process when, in its opinion, workers are exposed to the risk of infection from COVID-19 so as to constitute an imminent hazard. Cal-OSHA will provide a Notice to the employer to be posted in a conspicuous place. The shutdown will be limited to the immediate area of the imminent hazard.
This law also requires an employer who receives notice of potential COVID-19 exposure to do all of the following within one business day: (a) provide written notice to all employees and the exclusive representative of such employees, if any, and the employers of all subcontracted employees, who were onsite within the infectious period (currently 14 days, including 48 hours before the individual developed any symptoms) that they may have been exposed to COVID-19; (b) provide all employees who may have been exposed and their exclusive representative, if any, with information about all COVID-19-related benefits to which the employee may be entitled including workers’ compensation, paid sick leave, supplemental paid sick leave, state mandated leave, and anti-retaliation and anti-discrimination protections; and (c) notify all employees and the exclusive representative of such employees, if any, and the employers of all subcontracted employees, of the disinfection and safety plan the employer plans to implement and complete per Centers for Disease Control guidelines.
Additionally, an employer must notify the local public health agency of a COVID-19 “outbreak” (currently three or more cases in a 14-day period) within 48 hours of learning of the outbreak. The employer must continue to notify the local health department of any subsequent laboratory-confirmed cases of COVID-19 at the workplace.
These provisions are effective immediately (as of Governor’s signing on September 17, 2020) and will expire on January 1, 2023.
Workers’ Compensation COVID-19 Presumption (S.B. 1159). In another COVID-19-related law, S.B. 1159 modifies and extends Executive Order 62-20, creating a disputable presumption that illness or death related to COVID 19 is an occupational injury for the purpose of workers’ compensation benefits eligibility. The presumption applies if the employer has at least 5 employees, the employee tests positive within 14 days after the employee performed work at the employer’s place of employment at the employer’s direction, the work date was July 6, 2020, or later, and the positive test occurred during a period of an “outbreak,” as defined in this statute, at the employer’s place of employment. An employee’s home is excluded from the definition of “place of employment.” This urgency legislation was effective as of September 17, 2020, and expires January 1, 2023.
Leave for Victims of Crime or Abuse (A.B. 2992). Labor Code sections 320 and 230.1 currently prohibit an employer from discharging, discriminating, or retaliating against an employee who is a victim of domestic violence, sexual assault, or stalking, for taking time off work: 1) to obtain relief for the health and safety of themselves or their children, or 2) for employers with 25 or more employees, to obtain medical attention. A.B. 2992 amends these statutes, expanding their protections to “victims” of any violent crime and to immediate family members of a homicide victim. The new law will also allow additional reasonable forms of documentation to verify a crime or abuse has occurred.
Sick Leave Kin Care (A. B. 2017). This new law merely clarifies that employees have the right to decide when they will use accrued and unused paid sick leave to care for a family member. Employers may not designate the use of paid sick leave for kin care without the employee’s consent.
Corporate Board of Directors (A.B. 979). This law requires publicly-held corporations whose principal executive office is in the state of California to include at least one director from underrepresented communities on its board by the end of 2021. By the end of 2022, boards with five to eight directors must include two directors from underrepresented communities, and boards with more than nine directors must include a minimum of three directors from underrepresented communities. A member of an underrepresented community is defined as anyone who self-identifies as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, Alaska Native, gay, lesbian, bisexual, or transgender.
Annual Report Pay Data (S.B. 973). This law requires private employers with 100 or more employees, and that are required to ﬁle an annual Employer Information Report under federal law, to submit a pay data report to the DFEH that contains speciﬁed wage information tied to race, ethnicity and sex, on or before March 31, 2021, and on or before March 31 each year thereafter. If the DFEH does not receive the required report from an employer, it may seek an order requiring the employer to comply. The DFEH will maintain the pay data reports for a minimum of 10 years and it will be unlawful for the DFEH to make public any individually identiﬁable information obtained from the report prior to the institution of certain investigation or enforcement proceedings. The law requires the Employment Development Department to provide DFEH, upon its request, the names and addresses of all businesses with 100 or more employees.
Time to Bring DLSE Complaints Expanded (A.B. 1947). Existing law authorizes people who believe that they have been discharged or otherwise discriminated against in violation of any law enforced by the Labor Commissioner to ﬁle a complaint with the Division of Labor Standards Enforcement (“DLSE”) within six months after the occurrence of the violation. The Labor Commissioner then has three years to commence actions to enforce labor standards. This law amends Labor Code section 98.7 to extend the period of time within which people may ﬁle complaints subject to the six-month deadline, described above, to within one year after the occurrence of the violations. This law also authorizes a court to award reasonable attorney’s fees to a plaintiff who brings a successful action for a violation of these provisions.
Settlement Agreements (A.B. 2143). Existing law prohibits an employer from requiring a “no hire” provision as a condition of settling an employment dispute, unless the employee had engaged in sexual harassment or sexual assault. This new law adds a requirement that the aggrieved person’s (the employee) claim against the employer must have been filed in good faith, for the “no hire” clause prohibition to apply. To avail itself of the exception, the law now requires that the employer’s determination that the employee engaged in sexual harassment or sexual assault be documented before the aggrieved person files their claim, and also expands the exception to a documented good faith determination, before the employee filed his or her claim against the employer, that the employee engaged in any criminal conduct.
Consumer Privacy Protection Act Amendments (A.B. 1281). The California Consumer Privacy Act of 2018 (CCPA) granted consumers certain privacy rights with respect to personal information collected by a business, including personal information collected by covered businesses regarding applicants, employees, contractors (and specified others) (“HR Data”). Notably, the CCPA was previously amended to exempt until January 2021, all the CCPA’s requirements pertaining to HR Data except for two: (1) providing reasonable security measures to safeguard the HR Data from a breach, and (2) providing a Notice of Collection at or before the point of collection that describes i) the personal information the company will collect about these individuals, and ii) the business purposes for which the company will use that information. AB 1281 extends the exemptions until January 1, 2022, provided, however, if voters pass the California Privacy Rights and Enforcement Act of 2020 in the November 3, 2020 statewide general election it would extend the HR Data exemption until January 1, 2023.
Security Officer Rest Breaks (A.B. 1512). Existing law prohibits an employer from requiring an employee to work during a mandated meal or rest or recovery period. AB 512 authorizes unionized security ofﬁcers who are registered pursuant to the Private Security Services Act and whose employer is a registered private patrol operator, to be required to remain on the premises during rest periods and to remain on call, and carry and monitor a communication device, during rest periods. The security ofﬁcer must be permitted to restart a rest period anew as soon as practicable if the ofﬁcer’s rest period is interrupted. If a security ofﬁcer is not permitted to take an uninterrupted rest period of at least 10 minutes for every 4 hours worked or major fraction thereof, the ofﬁcer must be paid one additional hour of pay at the employee’s regular base hourly rate of compensation. This provision only applies if the employee is covered by a valid collective bargaining agreement that expressly provides for the wages, hours of work, and working conditions of employees, and expressly provides for rest periods for those employees, ﬁnal and binding arbitration of disputes concerning rest period provisions, premium wage rates for all overtime hours worked, and a regular hourly rate of pay of not less than one dollar more than the state minimum wage rate. This is urgency legislation, and was effective immediately upon signing (September 30, 2020), but does not apply to cases filed before January 1, 2021, and will be automatically repealed as of January 1, 2027. The intent of the Legislature is to abrogate, for the security services industry only, the California Supreme Court’s decision in Augustus v. ABM Security Services, Inc., 2 Cal. 5th 257 (2016).
Mandated Child Abuse Reporting (A. B. 1963) This law amends Penal Code 11165.7 to add to the list of mandated reporters of child abuse: (1) Human Resources employees of a business of 5 or more employees that employs minors and (2) for the purpose of reporting sexual abuse, an adult whose duties require direct contact with and supervision of minors in the performance of the minors’ duties in the workplace of a business of 5 or more employees. The bill requires employers who are subject to this law to provide to employees who are mandated reporters training on child abuse and neglect.
Statement of Information Reporting Wage and Hour Violations (A. B. 3075) This law requires that as of the earlier of January 1, 2022 or the date the Secretary of State certifies that California Business Connect is implemented, every corporation must include in its Statement of Information (filed at the time a corporation’s original articles are filed and at regular intervals thereafter) a statement indicating whether any officer or director, or in the case of a limited liability corporation, a manager or member, has an outstanding final judgment issued by the Division of Labor Standards Enforcement or a court of law, for which no appeal is pending, for the violation of any wage order or provision of the Labor Code. The law also makes a successor to any judgment debtor liable for any wages, damages and penalties owed to any of the judgment debtor’s former employees pursuant to a final judgment. Finally, this law expressly authorizes local jurisdictions to enforce local labor standards relating to the payment of wages that are more stringent than the state labor standards.
As we continue to work to flatten the curve, here are some recommended action items:
- Review and update your employee handbooks, specifically including policies on family and medical leave, paid sick leave, leave for crime victims, and paid family leave benefits.
- Make sure you understand your COVID-19 notice and reporting obligations.
- Review your independent contractor arrangements to ensure you have applied the correct test.
- If you are a public corporation with headquarters in California, ensure your board of directors has the appropriate number of directors from underrepresented communities.
- If you are a private employer with 100 or more employees, make sure to submit a pay data report to the DFEH by March 31, 2021.
- If you have minor employees, be aware of your mandated child abuse reporting obligations and provide training on the subject to human resources and supervisors.
- If you file a Statement of Information, remember to include whether any officer or director, or for LLC’s manager or member, has an outstanding final judgment for any wage and hour violation.
- Stop wearing pajamas as you work from home. You never know when an unexpected Zoom meeting will pop up!
Please contact your Sacks, Ricketts & Case employment attorney for further guidance in navigating new California employment laws.
SMART. RESOURCEFUL. COMMITTED.
The contents of this newsletter are intended for general informational purposes only and should not be construed as legal advice or a legal opinion. You are advised to consult an attorney about any specific legal question.