With the New Year rapidly approaching, employers should prepare for the flurry of new California employment legislation. The recent legislation presents new compliance challenges and requirements for California employers, including obligations related to the ongoing pandemic, reinforcing or expanding leave protections, wage and hour compliance risks, and much more. We discuss some of the most notable developments below. Employers should review their policies and procedures in light of these developments.
COVID-19
AB 685 imposes new COVID-19-related notification and reporting obligations and authorizes Cal/OSHA to shut down operations that place workers at risk of exposure.
Effective January 1, 2021, AB 685 requires employers that receive a “notice of potential exposure” (which may come from a variety of sources, as discussed below) to COVID-19 to take the following actions within one business day of the notice:
- Provide written notice to all employees, and the employers of subcontracted employees, who were at the same worksite as a “qualifying individual” within the “infectious period” that they may have been potentially exposed to COVID-19. If the employees are unionized, written notice must also be provided to the exclusive representative of the employees. The “infectious period” is currently at or around 10 days, depending on whether the individual actually develops symptoms. The State Department of Public Health will be responsible for determining the length of the “infectious period.”[1]
- Provide all employees who may have been exposed (and their exclusive representative, if any,) with information regarding COVID-19-related benefits to which the employees may be entitled under applicable federal, state, or local laws, including, but not limited to, workers’ compensation, COVID-19-related leave, company sick leave, state-mandated leave, supplemental sick leave, or negotiated leave provisions, as well as anti-retaliation and anti-discrimination protections.
- Notify all employees, and the employers of subcontracted employees (and their exclusive representative, if any) of the disinfection and safety plan that the employer plans to implement and complete, which must be consistent with the guidelines of the federal Centers for Disease Control.
A “qualifying individual” includes someone who has a positive test for COVID-19, is diagnosed with COVID-19 by a licensed health care provider, is ordered to isolate for COVID-19 by a public health official, or dies due to COVID-19, as determined by a public health department. The “notice of potential exposure” may come from a variety of sources, including a public health official or licensed medical practitioner, a qualifying individual’s representative or emergency contact, the employer’s own testing protocol, or a subcontracted employer.
AB 685 also requires employers with a COVID-19 “outbreak” within its premises to notify, within 48 hours, the local public health agency of the names, number, occupation, and worksite of the employees who meet the definition of a “qualifying individual” under AB 685. The term “outbreak” is to be defined by the State Department of Public Health, which currently defines “outbreak” as “at least three COVID-19 cases among workers at the same worksite within a 14-day period.”
AB 685 also provides that employers should not disclose employees’ “medical information unless otherwise required by law” or “retaliate against a worker for disclosing a positive COVID-19 test or diagnosis or order to quarantine or isolate.”
From January 1, 2021, until January 1, 2023, AB 685 authorizes Cal/OSHA to shut down an entire worksite or a specific worksite area that exposes employees to an imminent hazard related to COVID-19. An imminent hazard is defined as any condition or practice that poses a hazard to employees, which could reasonably be expected to cause death or physical harm immediately or before the imminence of such hazard can be eliminated through Cal/OSHA’s enforcement process. Any shutdown order must not “materially interrupt the performance of critical governmental functions essential to ensuring public health and safety functions or the delivery of electrical power or water.” From January 1, 2021, until January 1, 2023, Cal/OSHA can also issue citations to employers for serious violations related to COVID-19 without providing 15-day advance notice.
AB 1867 provides supplemental COVID-19 paid sick leave to employees.
Effective September 19, 2020, AB 1867 provides supplemental paid sick leave until the later of December 31, 2020, or the expiration of any federal extension of the Emergency Paid Sick Leave Act. AB 1867 applies to private employers with more than 500 or more employees and certain employers who employ health care providers or emergency responders or operate a food facility. It requires these employers to provide supplemental COVID-19 paid sick leave to employees who are unable to work due to: (1) COVID-19-related federal, state, or local quarantine or isolation orders; (2) self-quarantine or isolation order by health care provider due to COVID-19-related concerns; or (3) their employer barring them from the worksite due to health concerns related to COVID-19.
AB 1867 provides 80 hours of supplemental COVID-19 paid sick leave to an employee whom the employer considers “full time” or has worked or was scheduled to work, on average, at least 40 hours per week in the two weeks preceding the date the employee took COVID-19 supplemental paid sick leave. If the employee is not “full-time,” the employee’s supplemental paid sick leave is based on his or her normal schedule over the prior two weeks. The employer is not required to pay more than $511 per day or more than $5,110 in the aggregate to an employee for COVID-19 supplemental paid sick leave.
SB 1159 makes injury from COVID-19 presumptively compensable under workers’ compensation law.
For an employee who tested positive or was diagnosed with COVID-19 within 14 days after a day that the employee worked at a worksite at the employer’s direction, SB 1159 provides a rebuttal presumption that the employee’s COVID-19-related illness is an occupational injury that is eligible for workers’ compensation benefits. SB 1159 is effective through January 1, 2023.
Protected Leave
SB 1383 significantly expands California Family Rights Act rights for employees of small businesses.
The California Family Rights Act (“CFRA”) authorizes eligible employees to take up to 12 weeks of unpaid, job-protected family and medical leave in a 12-month period. Currently, the CFRA applies to private employers with 50 or more employees within 75 miles of the employer’s worksite. Effective January 1, 2021, SB 1383 expands the CFRA to employers with five or more employees and eliminates the 75 mile requirement.
SB 1383 also expands the types of leave that can be used under CFRA. CFRA currently allows employees to take leave to care for a “family member” who has a serious health condition. “Family member” is currently defined as a minor child, a spouse, or a parent. SB 1383 expands the definition to include adult children, siblings, grandparents, grandchildren, and domestic partners. SB 1383 additionally eliminates the CFRA restriction that allows an employer employing both parents of a child to limit CFRA leave to a total of 12 weeks for both parents due to bonding with a newborn child, adopting a child, or foster care placement. Moreover, SB 1383 eliminates the “key employee” exemption, allowing an employer to deny reinstatement to an employee who takes CFRA leave if the employee is among the highest paid 10% of the employer’s employees and the denial is necessary to prevent “substantial and grievous economic injury” to the employer.
- AB 2017 amends section 233 of the California Labor Code by providing employees with the “sole discretion” to designate the type of paid sick leave used. Currently, employers must permit an employee to use half of the employee’s sick leave entitlement to attend to the illness of a family member. Effective January 1, 2021, AB 2017 will prevent employers from incorrectly designating an employee’s sick leave as kin care and unintentionally depleting the number of hours an employee has to take leave when caring for a family member.
- AB 2992 expands protections under sections 230 and 230.1 of the California Labor Code. Currently, those laws require employers to provide protected leave for employees who are victims of domestic violence, sexual assault, or stalking. Starting January 1, 2021, AB 2992 will expand the protected leave to employees who are victims “of a crime that caused physical injury or that caused mental injury and a threat of physical injury.”
Independent Contractors
AB 2257 and AB 323 exempt more California workers from the ABC test under AB 5. As we reported, AB 5 codified the expansive ABC test under the California Supreme Court’s Dynamex decision for purposes of determining whether a worker was misclassified as an independent contractor. AB 5 exempted numerous occupations from the ABC test.
After challenges from various industries and professions, the California legislature passed AB 2257 and AB 323 to expand the number of exemptions under AB 5. For example, AB 2257 creates a new “single-engagement” business-to-business exemption from the ABC test for a “stand-alone non-recurring event in a single location, or a series of events in the same location no more than once a week” (e.g., an indie music band performing at a non-recurring event). Additional requirements must still be met for this exemption to apply, including that neither party is subject to the control and direction of the other, each party has the ability to negotiate its own rates, each party maintains its own business location, and each party provides its own tools, vehicles, and equipment to perform services under the parties’ contract.
AB 2257 also creates new entertainment industry exemptions from the ABC test, including: (1) recording artists; (2) songwriters, lyricists, composers, and proofers; (3) managers of recording artists; (4) record producers and directors; (5) musical engineers and mixers engaged in the creation of sound recordings; (6) musicians engaged in the creation of sound records; (7) vocalists; (8) photographers working on recording photo shoots, album covers, and other items for press and publicity purposes; (9) independent radio promoters; and (10) any other individual “engaged to render any creative, production, marketing, or independent music publicist services related primarily to the creation, marketing, promotion, or distribution of sound recordings or musical compositions.” Musicians and vocalists who are not royalty-based participants in the work created during any specific engagement will be considered employees. Additional exemptions include, but are not limited to, licensed landscape architects, specialized performers teaching master classes, registered professional foresters, real estate appraisers and home inspectors, and feedback aggregators. Referral agencies for a non-exhaustive list of occupations such as caddies, photographers, and interpreters were also exempted from AB 5.
AB 323, dubbed the “Save Local Journalism Act,” provides for a one-year extension until January 1, 2022, of the exemption of newspaper distributors and publishers from the ABC test.
In addition, California voters recently approved an additional exemption to AB 5, Proposition 22, a California ballot that provides for classification of drivers who offer their services through app-based platforms as independent contractors. Adoption of Proposition 22 shows that it is indeed possible, albeit expensive, for industry and professional groups to make their case for AB 5 exemption directly to voters.
EEO Reporting
SB 973 requires California private employers with 100 or more employees to submit pay data for its workforce to the Department of Fair Employment and Housing (“DFEH”) on an annual basis. The first submission deadline is March 31, 2021. The pay data must include information about the number of employees by race, ethnicity, and sex in the following categories: (1) executive or senior level officials and managers; (2) first or mid-level officials and managers; (3) professionals; (4) technicians; (5) sales workers; (6) administrative support workers; (7) craft workers; (8) operatives; (9) laborers and helpers; and (10) service workers. Employers must also provide previous year W-2 earnings and hours worked for all employees in a searchable and sortable format.
DLSE Complaints and Whistleblowers
Starting January 1, 2021, AB 1947 expands the statute of limitations from six months to one year to bring a complaint with the Division of Labor Standards Enforcement (“DFEH”) for any employee who believes that he or she was discharged or otherwise discriminated against in violation of any law enforced by the Labor Commissioner. AB 1947 also amends Labor Code section 1102.5, which provides whistleblower protections, to allow a court to award reasonable attorney’s fees to a prevailing plaintiff.
No-Rehire Clauses in Settlement Agreements
We reported last year that AB 749 prohibited no-rehire provisions in settlement agreements with employees who filed a claim against an employer in court, before an administrative agency, in an alternative dispute resolution forum, or through the employer’s internal complaint process. One notable exception to AB 749 was where the employer had made a good faith determination that the employee engaged in sexual harassment or assault or “if there is a legitimate non‑discriminatory or non-retaliatory reason for terminating the employment relationship or refusing to rehire the person.” AB 2143, effective January 1, 2021, expands the no-rehire clause prohibition exception to include good-faith determination that the employee engaged in criminal conduct. AB 2143 was also amended to require employees to make “good faith” complaints to qualify for the no-rehire clause protection.
Corporate Board Composition
AB 979 requires publicly held companies whose principal executive office is located in California to have a minimum of one director from an underrepresented community by the end of 2021. For companies with more than four but fewer than nine directors, AB 979 requires a minimum of two directors from underrepresented communities by the close of 2022. For companies with nine or more directors, AB 979 requires a minimum of three directors from underrepresented communities by the end of 2022. “Director from an underrepresented community” is defined as an “individual who self-identifies as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaska Native, or who self-identifies as gay, lesbian, bisexual, or transgender.” A company is subject to a fine of $100,000 for a first violation of AB 979 and $300,000 for a second or subsequent violation. Similar to SB 826, which contains similar provisions for companies to have a minimum number of female directors, AB 979 may be subject to various legal challenges.
Wage and Hour Enforcement
AB 3075 requires a company, when filing the company’s statement of information with the California Secretary of State, to include information about whether any officer, director, member, or manager of the company has an outstanding final judgment issued by the DFEH or a court of law, for which no appeal is pending, for the violation of any wage order or provision of the Labor Code.
AB 3075 also lowers the bar for an employee to establish successor liability for “any wages, damages, and penalties owed to any of the judgment debtor’s former workforce.” Under AB 3075, successorship may be established if any of the following criteria are established: (1) company uses substantially the same facilities or substantially the same workforce to offer substantially the same services as the judgment debtor; (2) company has substantially the same owners or managers that control the labor relations as the judgment debtor; (3) company employs as a managing agent any person who directly controlled the wages, hours, or working conditions of the affected workforce of the judgment debtor; or (4) company operates a business in the same industry and the business has an owner, partner, officer, or director who is an immediate family member of any owner, partner, officer, or director of the judgment debtor. While legislative history suggests that AB 3075 was introduced to prevent businesses from closing their operations and starting new ones to avoid liability for payments to employees, AB 3075’s language appears to go beyond this narrow scenario and potentially apply, for example, to a third-party company engaged in an asset purchase.
[1] See the State Department of Public Health’s website for the latest guidance on this topic: https://www.cdph.ca.gov/Programs/CID/DCDC/Pages/COVID-19/Employer-Guidance-on-AB-685-Definitions.aspx.