Extensive Changes In Employment Law Coming for California Employers In 2020
The new year brings another wave of sweeping changes for California employers. Although what is highlighted below is not a comprehensive list of all the new employment laws going into effect in 2020, it is designed to provide an overview of those likely to have the widest impact. Please note this article is meant to be informational only and does not constitute legal advice.
New ABC test for classifying a worker as an independent contractor
Probably the most widely publicized bill passed this year is AB5, the new “independent contractor v. employee” law which codifies and expands the “ABC test” established by the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court of Los Angeles, 4 Cal. 5th 903 (2018). Now under AB5, the ABC test will apply not just to California wage orders but also the California Labor and Unemployment Insurance Codes, among other things. Under the ABC test, a worker is classified as an employee unless the employer can establish all three of the following:
A. The worker is free from the hiring entity’s control and direction in connection with the performance of the work, both under the contract for the performance of the work and in actually performing the work;
B. The worker performs work that’s outside the usual course of the hiring entity’s business; and
C. The worker is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed.
AB5 carves out exceptions for various industries including lawyers, accountants, broker-dealers, and certain professions in the creative and entertainment industry. If an exception applies, the “Borello test” that preceded Dynamex and which is not nearly as stringent as the ABC test will apply. Even those exceptions, however, have created significant confusion and uncertainty.
Employers should consult with counsel to make the best possible decision in light of the uncertainties, as AB5 and its meaning will be debated and litigated for years to come. In fact, the litigation over AB5 has already started, with truck drivers and freelance journalists being just some of the industries that have already filed lawsuits challenging AB5’s legality.
Banning of mandatory arbitration agreements
Also widely discussed this year was the passing of AB51, which effectively bans mandatory arbitration agreements between employers and employees. The bill prohibits “a person” from requiring an applicant or employee, as a condition of employment, continued employment, or the receipt of any employment-related benefit, “to waive any right, forum, or procedure” for a violation of the California Fair Employment and Housing Act (FEHA) or the California Labor Code.
For employers thinking they can simply make such a waiver voluntary by including an “opt-out” provision, under AB51 requiring an employee to opt out or to take any affirmative action to preserve his or her rights will still be “deemed a condition of employment.”
In better news for employers, AB 51 contains exceptions including post-dispute settlement agreements, negotiated severance agreements, and a person registered with a self-regulatory organization under the Securities Exchange Act. Additionally, it remains to be seen if AB51 will ultimately be shot down by the courts as unconstitutional, given that in past years very similar laws banning arbitration have been thrown out on those grounds.
California Consumer Privacy Act
The 2018 California Consumer Privacy Act (CCPA) will go into effect on January 1, 2020. Although its target was consumers, it arguably also includes employees and job applicants. Its ultimate impact is to arm employees with the right to potentially have information from their personnel files deleted by employers.
While an amendment to the law in 2019 had the effect of exempting employee data from certain obligations of the CCPA until January 1, 2021, after that one-year exemption expires job applicants and employees may seek access to and disclosure of the personal information about them that an employer has collected, request its deletion, and learn what third parties have received it, among other things.
Additionally, employers subject to the CCPA must still comply, as of January 1, 2020, with two of the act’s other requirements: 1) ensuring that they have implemented reasonable security measures, both physical and electronic, to safeguard the personal information of employees and job applicants; and 2) disclose, at or before the time of collection, the categories of personal information collected about an applicant or employee and the purposes for which the information will be used. This disclosure must be made before or at the time you receive personal information of any employee or job applicant.
Note that CCPA’s requirements apply only to for-profit businesses that (a) do business in California, (b) collect the personal information of consumers including employees, and (c) satisfy any of the following three criteria: have annual gross revenues over $25 million; OR annually receive, sell, or share personal information about 50,000 or more California residents, households, or devices; OR derive 50% or more of their annual revenue from selling personal information of consumers.
Extension of statute of limitations to file a claim with the DFEH
While under existing law a claimant had one year to file a complaint for employment law violations such as discrimination, harassment, or retaliation with the Department of Fair Employment and Housing, under new AB9 the statute of limitations is now extended to three years to file such a complaint.
Extension of harassment training deadline
The Legislature has extended the deadline by one year for employers to provide the sexual harassment training mandated by last year’s newest employment laws. Now employers with five or more employees must provide an hour of sexual harassment prevention training to nonsupervisory employees and two hours of such training to supervisors by January 1, 2021 (instead of January 1, 2020, under the prior law). Employers who have already provided the training are not required to provide it again until two years from the last time the employee was trained.
California has added further requirements for lactation accommodation. While current law already requires employers to provide a location other than a bathroom for lactation accommodation, starting in 2020 the lactation room must also be:
close to the employee’s work area, shielded from view and free from intrusion;
safe, clean and free of toxic or hazardous materials;
Contain a surface to place a breast pump and other personal items;
Contain seating; and
Have access to electricity.
The employer also must provide access to a sink with running water and a refrigerator suitable for storing breast milk close to the employee’s workspace.
Existing law already included an undue hardship exemption for the lactation accommodation, but in 2020 this exemption will be limited to employers with fewer than 50 employees.
Discrimination based on hairstyle
It is, of course, already unlawful under FEHA to discriminate on the basis of race. SB 188, however, expands the law to prohibit discrimination against employees and students based on their natural hairstyles after it was determined that dress codes and grooming policies that do not allow certain hairstyles can have a disparate impact on race and could be used as a pretext for racial discrimination. The new law amends the definition of “race” under the FEHA and the California Education Code to include “traits historically associated with race, including, but not limited to, hair texture and protective hairstyles,” such as “braids, locks, and twists.”
Paid Family Leave extended from six to eight weeks
Beginning July 1, 2020, the maximum duration of Paid Family Leave (PFL) benefits individuals may receive from California’s State Disability Insurance (SDI) program will be extended from six to eight weeks, per SB 83.
Restraints on trade
Just when you thought that after settling a claim with a former employee you would never have to hear from him or her again, AB749 now prohibits any clause that restricts a settling employee from obtaining future employment with the employer against whom he or she filed a claim. Such provisions will be void as a matter of law and against public policy. The new law applies only to agreements entered on or after January 1, 2020. Additionally, the law does not apply if the employer has made a good-faith determination that the settling employee engaged in sexual harassment or sexual assault. It also does not require employers to rehire or continue to employ persons who are terminated or not hired for a legitimate nondiscriminatory and non-retaliatory reason.
The yearly changes in California employment law can be daunting to wade through and comprehend. Having good counsel to assist is critical. Please contact us to learn how these and other changes in employment law may impact your business.
Important New California Employment Laws In 2019
As with prior years, there were many changes in California employment law in 2019 that directly impact employers, their ongoing obligations to employees, and how employers may address litigation and claims brought by employees. Some of the most notable changes are highlighted below.
Stand Together Against Non-Disclosure Act ("STAND" Act)
Under this new law, employers that settle an employment claim may no longer require the employee to agree not to disclose factual information related to a claim about sexual assault, workplace harassment or discrimination based on sex, the failure to prevent such harassment or discrimination, or retaliation for reporting such harassment or discrimination. However, the claimant may still ask that their identity be concealed. And, the parties may still agree to keep the settlement amount confidential.
Rights to Testify
Also no longer permitted are settlement agreement provisions that prohibit a settling party from testifying in an administrative, judicial, or legislative proceeding. This law covers only testimony that is required, such as by subpoena or court order, or in response to a written request in an administrative or legislative hearing.
Employers now must make reasonable efforts to provide a room “other than a bathroom” to accommodate employees to express breast milk in private. Under previous law a bathroom was sufficient as long as it was not a toilet stall. The new law authorizes employers to make temporary lactation locations available if it is unable to provide a permanent location because of operational, financial, or space limitations, the location is private/free from intrusion, and the temporary location is used only for lactation while an employee expresses milk.
Expansion of liability for unlawful harassment
This new law expands an employer’s potential liability for behavior by nonemployees (customers, vendors, and other third parties) to all forms of unlawful harassment, including but not limited to harassment based on race, color, national origin, religion, or disability. Under prior law, an employer was only responsible for sexual harassment committed by nonemployees.
Expansion of sexual harassment training requirements
Employers with five or more employees must provide sexual harassment prevention training to both supervisory (2 hours) and non-supervisory (1 hour) employees by January 1, 2020. Training requirements previously only applied to employers with 50 or more employees, and training was only required for supervisors.
California Now Mandates Female Corporate Board Members:
All California-based publicly traded corporations must have at least one female director on their board of directors by the end of 2019. In 2021, this requirement increases depending on the total number of directors on the board.
By 2020, all hotel or motel employers must provide 20 minutes of training to employees that are likely to come into contact with victims of human trafficking. Thereafter, training has to be provided once every two years.
By 2021, operators of mass transit intercity passenger rail systems, light rail systems, and bus stations must provide employees who may interact with human trafficking victims with 20 minutes of training on recognizing the signs of human trafficking and similar matters.
The above list is non-exhaustive and is intended only to highlight several new laws that now impact California employers.
Important New California Employment Laws In 2018
There were many changes in California employment law in 2018 that impact how employers pay their employees, grant leave requests, and vet job applicants, among other things. Some of the most notable changes are highlighted below, although this list is again not exhaustive.
Minimum Wage Increases
What employers may have heard the most about is the fact that on January 1, 2018, the state minimum wage increases to $10.50 per hour for employers with 25 or fewer employees, and to $11 per hour for employers with 26 or more employees. For the full schedule of minimum wage increases in California during the course of the next several years, see www.dir.ca.gov/dlse/faq_minimumwage.htm.
Compare this to local increases that occurred earlier this year in the City of Los Angeles, where the minimum wage increased from $10.50 to $12 per hour for employers with 26 or more employees, and from $10 to $10.50 per hour for businesses having 25 or fewer workers. For the full schedule of minimum wage increases in Los Angeles during the course of the next several years, see wagesla.lacity.org/
Employers who have hourly employees currently paid at minimum wage should immediately amend their payroll systems to ensure that on January 1, 2018, those employees' hours are clocked at the new hourly rates.
New Parent Leave Act
This new bill prohibits an employer with 20 or more employees in California from refusing eligible employees up to 12 weeks of parental leave to bond with their new child within one year of a child’s birth, adoption, or foster care placement. If the employee takes leave under this law, the employer also has to maintain and pay for health coverage under a group plan at the same level and conditions that coverage would have been provided if the employee had continued working.
This new law will have the greatest impact on small employers with no more than 49 employees, who were not previously subject to the federal Family Medical Leave Act (FMLA) or the California Family Rights Act (CFRA). Employers with 20 to 49 employees who currently have no parental leave policy allowing for 12 weeks leave should revise their employment policies to ensure they are compliant with the new law. Employers should also ensure that all managers or other employees responsible for communicating company policy are aware of the new law and trained to properly address and communicate with employees about leave requests.
Ban the Box Law
Similar to the Fair Chance Initiative for Hiring already in place for employers in the City of Los Angeles, California's Fair Chance Act (the "ban the box" law) prohibits an employer with 5 or more employees from asking about a job applicant's conviction history on any application for employment, or from asking about or considering conviction history until the applicant has first received a conditional offer of employment.
It also requires an employer who intends to deny an applicant a job, solely or in part because of the applicant’s conviction history, to make an individualized assessment of whether that history has a direct and adverse relationship with the duties of the job, and to consider certain topics when making that assessment. The employer also has to give the applicant written notice if they are denied employment based on that assessment as well as a chance to respond.
For employers who use written job applications, those applications should be immediately reviewed and any questions seeking conviction history removed. Employers should also educate their managers and other interviewing employees about not asking questions about conviction history during the interview process.
Salary Inquiry Not Permitted
California's new salary inquiry ban makes it unlawful for all employers to ask job applicants about their prior salary, compensation, and benefits. It does not prohibit, however, employers from using such information that the applicant provides voluntarily and without prompting. This new law also requires an employer to provide a job applicant, upon reasonable request, with the pay scale for the position.
For those employers using written job applications, any questions seeking salary or benefit history should again be removed from those applications. Additionally, employers should educate their managers and other interviewing employees about not soliciting information about salary or benefits history during the interview process.
Immigrant Worker Protection Act
It will come as no surprise that the current political climate in the country is already having an impact on California employment law. The Immigration Worker Protection Act prohibits an employer from allowing an immigration enforcement agent to enter nonpublic areas of the workplace unless the agent provides a judicial warrant, except as specified. Additionally, the bill prohibits an employer form voluntarily allowing an immigration enforcement agent to access, review, or obtain employee records without a subpoena or court order, subject to a specified exception. This law also requires an employer to provide a current employee with notice that an inspection of I-9 Employment Eligibility Verification forms or other employment records is going to be conducted by an immigration agency, within 72 hours of receiving the federal notice of inspection, unless otherwise required by federal law. Upon reasonable request, the employer must also provide an affected employee with a copy of the notice of inspection.
Employers should ensure that their managers and other staff are trained in how to respond should an immigration agency call upon their business. An unannounced visit from any government agent can be scary, and the more knowledge employers and their workers have the less stressful the event will be.
All of the above is meant to be informational only and does not constitute legal advice. Please contact us to learn how these and other changes in employment law may impact your business.