Don’t Let California’s New 2022 Employment Laws Haunt You!
As we enter the Halloween season, we hope you are not horror-stricken by the new labor and employment laws signed by Governor Newsom in 2021. Fear not, below we briefly summarize noteworthy provisions of some of these recently-enacted laws so as not to leave you alone in the dark. Unless otherwise stated, all new laws become effective on January 1, 2022. So please grab some witches’ brew and read about these bone-chilling additions to California law.
Productivity Quotas for Warehouse Distribution Center Employees (A.B. 701). This new law applies to employees of warehouse distribution centers who are required to meet productivity quotas. A.B. 701 requires covered employers to provide employees with written information regarding productivity quotas. A “covered employer” is one with 100 or more employees at a single warehouse distribution center or 1,000 or more employees at one or more warehouse distribution centers across the state. Covered employers must provide each employee, upon hire or within 30 days of January 1, 2022, a written description of each quota to which the employee is subject, including the quantified number of tasks to be performed or materials to be produced or handled within a defined period of time. The statute is silent on whether, and if so, how, changes in quota may be accomplished. Employers must also inform employees of any potential adverse employment action that could result from a failure to meet the quota. Significantly, an employee may not be required to meet a quota if doing so will prevent the employee from compliance with meal or rest breaks, use of bathroom facilities, including reasonable travel time to and from such facilities, or occupational health and safety laws in the Labor Code or Division of Occupational Safety and Health standards.
California Family Rights Act Expanded to Include Leave for Parent-in-Law Care and DFEH Mediation Processes (A.B. 1033). A.B. 1033 expands the California Family Rights Act (CFRA) by clarifying that covered employers must grant eligible employees up to 12 weeks of job-protected time off from work in a 12-month period for the purpose of providing care to a seriously ill parent-in-law. A.B. 1033 also expands on the small employer pilot mediation program established last year for employers of 5 to 19 employees by enacting extensive procedural changes that apply when an employee requests an immediate right to sue for an alleged violation of CFRA from the Department of Fair Employment and Housing (DFEH):
- When an employee requests an immediate right to sue from the DFEH, alleging an employer violated CFRA, the DFEH must notify the employee in writing of the requirement for mediation prior to filing a civil action, if mediation is requested by the employer or employee.
- The employee is now required to contact the DFEH’s dispute resolution division prior to filing an action and indicate whether they are requesting mediation.
- Upon the employee contacting the DFEH’s dispute resolution division, the DFEH must notify all named respondents of the alleged violation and the requirement for mediation, if mediation is requested by the employee or employer, in writing.
- The DFEH must terminate its activity if neither the employee nor the employer requests mediation within 30 days of receipt by all named respondents of the notification.
- If the DFEH receives a timely request for mediation from the employer or employee, it must initiate the mediation within 60 days of the Department’s receipt of the request or the receipt of the notification by all named respondents, whichever is later.
- Once mediation has been initiated and no later than 7 days before the mediation date, the mediator must notify the employee of their right to request certain labor-related information and to help facilitate other reasonable requests for information.
- The employee is prohibited from pursuing a civil action unless mediation is not initiated by the Department within the prescribed time period or until the mediation is complete or deemed unsuccessful.
- The law will toll the statute of limitations applicable to the employee’s claim from the date the employee contacts the DFEH’s dispute resolution division of the intent to file a legal action until the mediation is complete or deemed unsuccessful.
Settlement and Non-disparagement Agreements (S.B. 331). Under existing California law, employment settlement agreements cannot prevent the disclosure of factual information related to certain situations such as sexual assault, sexual harassment, and sex-based discrimination. S.B. 331 expands this prohibition to include any acts of harassment or discrimination, not just those based on sex. The new law further requires employers to include the following language in any agreement that has a non-disparagement clause:
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.
In addition, S.B. 331 requires that any agreement related to an employee’s separation from employment that includes a general release of all claims or non-disparagement clause must notify the employee of their right to consult an attorney and to provide the employee with no less than five business days to do so.
COVID-19 Exposure Notification (A.B. 654). Under existing California law, employers must notify workers and the local public health authority of a COVID-19 outbreak, and California Division of Occupational Safety and Health (Cal-OSHA) may fine employers and shut down workplaces for serious COVID-19 related violations. The new law also requires that employers, when giving notice to the local public health agency of a COVID-19 outbreak, give that notice within 48 hours or one business day, whichever is later. In addition, A.B. 654 expands which employers qualify as exempt from COVID-19 outbreak reporting requirements, including, but not limited to, community clinics, adult day health centers, community care facilities, and child day care facilities.
A.B. 654 takes effect immediately as an urgency statute.
COVID-19 Pandemic—Rehiring Displaced Workers (S.B. 93). Another COVID-19 related law, S.B. 93, requires certain employers to offer employees who were laid off due to the COVID-19 pandemic information about job positions for which they are qualified and to offer positions to those laid-off employees based on a preference system detailed by law. Covered employers are prohibited from taking other adverse action against any laid-off employee for seeking to enforce their rights under S.B. 93.
Covered employers include (1) hotels with 50 or more guest rooms, (2) private clubs that operate “a building or complex of buildings containing at least 50 guest rooms” for overnight lodging, (3) event centers “of more than 50,000 square feet or 1,000 seats that [are] used for … public performances, sporting events, business meetings, or similar events[,]” and (4) employers that provide “janitorial, building maintenance, or security services” to office, retail, or other commercial buildings.
S.B. 93 also requires covered employers to maintain related records for three years, “measured from the date of the written notice regarding the layoff, for each laid-off employee.”
S.B. 93 takes effect immediately and many of its provisions run until December 31, 2024.
Modification of ABC Test Exemptions (A.B. 1561). In what has now become an annual “treat,” California legislators further amended the codification of the “ABC Test,” a three-part test from Dynamex v. Superior Court, 4 Cal. 5th 903 (2018), used to determine whether workers are employees or independent contractors. Last year, A.B. 2257 added multiple new exemptions to the ABC Test. This year, among other modifications, A.B. 1561 extends the sunset date for the following exemptions to the ABC Test: (1) for licensed manicurists, and (2) for the relationship between a contractor and an individual performing work as a subcontractor in the construction industry. The bill also updates the Department of Insurance licensee exemption to the ABC Test to include individuals providing claims adjusting and third-party administration work for the insurance and financial service industries.
Electronic Distribution of Posted Employment Documents (S.B. 657). S.B. 657 provides that in any situation where an employer is required to physically post information, that employer may also distribute the information to employees via email. However, S.B. 657 does not change the employer’s obligation to physically display legally required postings.
Expanded Employment Record Retention Requirements (S.B. 807). S.B. 807 modifies certain procedural rules involving the DFEH. These modifications include (1) changing when and how the DFEH can appeal certain types of adverse superior court decisions, (2) tolling the time the DFEH has to file a civil action while a dispute resolution proceeding is pending, and (3) extending the period of time that the DFEH has to complete its investigation and issue a right-to-sue notice for employment discrimination complaints.
For California employers, S.B. 807 expands record retention requirements by requiring employers to retain personnel records for applicants and employees for four years (increased from two years) from the date the records were created or the date an employment action was taken.
Expanded Enforcement Power of Cal-OSHA (S.B. 606). S.B. 606 expands the enforcement power of Cal-OSHA by creating a rebuttable presumption that an employer with a workplace safety violation at one worksite is presumed to have similar violations at other worksites if the employer has a written policy or procedure that violates the law or the division has evidence of a pattern or practice of the same violation committed by the employer and involving more than one worksite. This law would authorize the division to issue an enterprise-wide citation and require enterprise-wide abatement, unless the employer can rebut the presumption. The law also allows Cal-OSHA to issue citations to an “egregious” employer for willful violations and provides Cal-OSHA with additional subpoena power during investigations.
Increased Penalties for Wage Theft (A.B. 1003). This law creates a new offense for an employer’s intentional theft of wages or gratuities that is punishable as a misdemeanor or felony. The greater penalty is intended by the bill’s sponsors as a deterrent to wage theft. The offense is considered a “grand theft” if the intentional theft is of wages, gratuities, benefits, or other compensation in an amount greater than $950 for one employee, or $2,350 in the aggregate for two or more employees, in any 12 consecutive month period. Grand theft is punishable either as a misdemeanor by imprisonment in a county jail for up to 1 year or as a felony by imprisonment in county jail for up to 3 years. Wages, tips, or other compensation subject to the prosecution may be recovered as restitution. For the purpose of these provisions, A.B. 1003 treats independent contractors as “employees” and the hiring entity of an independent contract as “employers.”
Phasing Out Program Allowing Disabled Employees to Receive Less than Minimum Wage (S.B. 639). By 2025, S.B. 639 requires that workers with disabilities must be paid at least the state’s minimum wage. This effectively ends a practice known as 14(c) or sheltered workshops, where employers were allowed to pay workers with disabilities less than the state’s minimum wage. Effective January 1, 2022, new special licenses to pay a subminimum wage will no longer be issued and existing licenses may be renewed only for license holders who meet certain benchmarks. The State Council on Developmental Disabilities must create a plan for how California can help workers with disabilities get the services and support needed to obtain jobs that pay at least minimum wage. If no such plan is released by January 1, 2025, the law will revert and allow employers to pay such workers with disabilities subminimum wages.
Labor Commissioner’s Power to Create a Real Property Lien to Enforce Judgment (S.B. 572). S.B. 572 allows the Labor Commissioner to create, as an alternative to a judgment lien, a lien on real property to secure amounts due to it. The Labor Commissioner must include specific information on the certificate of lien and issue a certificate of release once the amount due has been paid.
Contracts – Payment of Arbitration Fees (S.B. 762). Existing law requires that if an employment or consumer arbitration requires the party who drafted the arbitration agreement to pay initial arbitration-related fees and costs, the drafting party must pay the fees within 30 days after they are due or face waiving their right to compel arbitration. S.B. 762 requires arbitration providers to deliver invoices for such fees and costs, in their entirety, to all parties to the arbitration on the same day and by the same means. The invoices are considered due upon receipt unless the arbitration agreement expressly provides a different time for payment.
Food Delivery Purchase Prices and Tipping (A.B. 286). This new law prohibits a food delivery platform from charging a customer a purchase price for food or beverage that is higher than the price listed on the food delivery platform’s website by the food facility at the time of the order. A.B. 286 also makes it unlawful for a food delivery platform to retain any amounts designated as a tip or gratuity. A food delivery platform must provide any tip or gratuity for a delivery order, in its entirety, to the person delivering the food or beverage or to the food facility in cases where there is a pickup order. Finally, A.B. 286 requires food delivery platforms to disclose to the customer and the food facility a cost breakdown of each transaction.
Updated Requirement for Public Works Contractors to Furnish Pay Records (A.B. 1023). Contractors and subcontractors on public works projects must furnish certain payroll records to the California Labor Commissioner on at least a monthly basis. A.B. 1023 updates this requirement by clarifying that a contractor or subcontractor must furnish the specific records every 30 days while work is being performed on the project and within 30 days after the final day of work performed on the project. A.B. 1023 also requires that these records be furnished in an electronic format, as prescribed by the Labor Commissioner on its website. The failure to furnish these records will result in a penalty of $100 per day, and up to $5,000 per project.
To ensure you are not haunted by these new California labor and employment laws, employers with California employees are encouraged to do the following:
- If you have a warehouse and distribution center and 100 or more employees, you must prepare written information regarding productivity quotas to provide to employees.
- Review your independent contractor relationships to ensure you apply the ABC Test correctly.
- Reassess or revise employee separation agreements that include non-disparagement clauses.
- Make sure you understand your COVID-19 notice, hiring, and leave policies.
- Review your record retention and reporting policies to make sure you comply with new state requirements, including that you are maintaining personnel records for four years (instead of two years) from the date the records were created or the date an employment action was taken.
- Review your pay practices and policies. As a reminder, employers should also ensure that the premiums paid for meal or rest break violations are paid at the regular rate per the California Supreme Court Ferra v. Loews Hollywood Hotel, LLC decision earlier this year. See our prior e-alert: https://rcllp.com/california-supreme-court-proclaims-that-employees-must-be-paid-for-meal-and-rest-break-violations-at-the-same-regular-rate-of-pay-used-for-calculating-overtime-pay/. Pay particular attention to pay rates if you employ non-exempt employees with disabilities who are paid a subminimum wage.
- Provide training to managers on the new legal requirements and refresher training on other topics to minimize potential liability.
- Review and update your employee handbooks, specifically including policies on family and medical leave.
For further information about these new laws, please contact your Sacks, Ricketts & Case employment attorney.
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.