Employment laws can feel like a moving target for employers trying to stay compliant and employers’ attorneys trying to help. Here we explore recent changes to some of California’s employment laws, with links to help you get directly to the letter of the law.
Minimum Wage Increase
California saw minimum wage increases go into effect on January 1, 2022, pursuant to Senate Bill 3 from 2016. Starting January 1, 2022, the minimum wage in California increased to $14.00 per hour for employers with 25 or fewer employees, and $15.00 per hour for employers with 26 or more employees. These increases are reflected in the minimum annual salary for exempt employees in California, which is now $58,240 for employers with 1-25 employees, and $62,400 for employers with 26 or more employees. Also starting January 1, 2022, the minimum pay for licensed physicians and surgeons increased to $91.07 per hour, and the minimum pay for computer software employees increased to $50.00 per hour (with the minimum annual salary for such workers increasing to $104,149.81 or $8,679.16 per month).
Settlement Agreements for Discrimination Claims
Senate Bill 331 (amending Civil Procedure Code 1001 and Government Code section 12964.5) applies to agreements entered on or after January 1, 2022 and significantly limits the use of confidentiality clauses in agreements settling litigation, as well as separation and severance agreements. Previously, settlement agreements resulting from litigation alleging sexual harassment, sexual assault, or discrimination based on sex could not require confidentiality of, or prohibit disclosure of information related to, the claims alleged. Now, under SB 331, such settlement agreements cannot require confidentiality of, or prohibit disclosure of information related to, claims generally alleging acts of workplace harassment or discrimination based on any characteristic protected under the Fair Employment and Housing Act (in addition to those based on sex). Employees can still be prohibited from disclosing the amount paid to settle the claim, but they cannot be prohibited from discussing the facts underlying their allegations. Employees may still request that any facts that might lead someone to discovering their identity be kept confidential.
SB 331’s addition of Government Code section 12964.5 adds related requirements for employers offering severance agreements and separations agreements containing non-disparagements clauses. Specifically, such agreements need to include language explaining the employee’s continued right to express allegations of unlawful acts by the employer.
SB 311 also requires employers to provide all employees (even those under the age for 40) entering a severance agreement with at least five (5) days to read and consider the agreement, and that they have the right to seek legal consultation regarding the agreement. Employees entering such agreements may waive this time period as long as they do so knowingly and voluntarily, and are not induced by any fraud, misrepresentation, or threat by the employer to withdraw the offer.
Expansion of the California Family Rights Act
Last year’s Senate Bill 1383 (amending and repealing Government Code section 12945.6, and amending, repealing, and adding Government Code section 12945.2) ultimately expanded the California Family Rights Act to cover small employers, and expanded the definition of family members for whom leave can be taken. This year’s Assembly Bill 1033 (amending Government Code section 12945.2 and Government Code section 12945.21) builds upon SB 1383 by making it clear that employees may take family and medical leave to care for a parent-in-law with a serious health condition.
AB 1033 also builds on and provides more detail to the small employer mediation program created by Assembly Bill 1867 in 2020. Specifically, AB 1033 requires participation in the mediation program prior to filing a civil action, which will hopefully allow small businesses to resolve disputes brought under the California Family Rights Act short of litigation.
Maintenance of Personnel Records
Under Senate Bill 807 (amending Government Code sections 12930, 12946, 12960, 12961, 12962, 12963.5, 12965, 12981, and 12989.1) employers are now required to maintain employee personnel records for four (4) years from they date the records are created (as opposed to the prior two (2) year requirement). Employers must also maintain employee records for four years from the date of termination of an employee or non-hiring of an applicant.
SB 807 added a number of other new requirements regarding procedures and timing of FEHA complaints and litigation. For example, if an employer is on notice that an employee has filed a verified FEHA complaint against the employer, the employer must preserve all records and files until either the time period for the employee to file a civil action against the employer has expired, or until the complaint, and all proceedings related to it have been terminated entirely.
Electronic Workplace Posting Requirements
Senate Bill 657 (adding Labor Code section 1207) changes workplace posting requirements now that many employees work remotely. Specifically, SB 657 allows employers to provide certain required workplace postings to their employees via email. However, employers do still need to meet the requirements of existing California law requiring that certain physical documents be posted in the workplace. These types of documents include relevant California Wage Orders, pay schedules, safety rules, and employee rights notices.
Labor Commissioner Property Liens
Senate Bill 572 (adding Labor Code section 90.8) gives the California Labor Commissioner the power to place a lien on real property (as opposed to only holding a judgment lien) to force payment due to the Commissioner under any final citation, findings, or decision.
Criminal Liability for Wage Theft
Assembly Bill 1003 (adding Penal Code section 487m) makes it grand theft under the California Penal Code for an employer to intentionally steal wages, benefits, or compensation of more than $950 for a single employee or $2,350 for two or more employees within 12 months. Such a crime can be charged as a misdemeanor or felony.
Independent Contractor ABC Test Exemptions
Assembly Bill 1506 (amending Labor Code section 2783) adds an exemption, making newspaper workers not subject to the ABC test typically used to determine whether workers are employees or independent contractors. Assembly Bill 1561 (amending Labor Code sections 2778, 2781, 2782, and 2783) adds similar exemptions for construction industry subcontractors, manicurists, insurance third-party administrators, and insurance claim adjusters. Instead of the ABC test, workers in these professions are subject to the multifactor test that was adopted by the California Supreme Court in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341. These ABC test exemptions expire on January 1, 2025.
New Cal/OSHA Violation Categories
Under Senate Bill 606 (amending Labor Code sections 6317, 6323, 6324, 6429, and adding sections 6317.8 and 6317.9), the California Division of Occupational Safety and Health (Cal/OSHA) can now issue citations under two new categories: “egregious” violations and “enterprise-wide” violations.
Egregious Violations: If Cal/OSHA believes an employer’s violation of an occupational safety or health standard, order, special order, or regulation to be egregious (based on factors specified in the statute), Cal/OSHA can issue an “egregious citation.” Cal/OSHA can issue separate fines and penalties to an employer for each instance of an employee’s exposure to such a violation.
Enterprise-Wide Violations: There is now a rebuttable presumption of an “enterprise-wide” violation by employers which have multiple worksites and either (1) a written policy or procedure that violates certain safety rules; or (2) Cal/OSHA has evidence of a pattern or practice of violations by the employer. If the offending employer cannot rebut the presumption, Cal/OSHA can issue the “enterprise-wide” citation which carries the same penalties as citations for repeated or willful violations.
Agricultural Employers: Personal Protective Equipment State Stockpile and Wildfire Smoke
Last year, Senate Bill 275 established a stock pile of personal protective equipment in case of a pandemic. This year’s Assembly Bill 73 (amending Health and Safety Code section 131021 and adding Part 12 to Division 5 of the Labor Code (commencing with section 9110)) expands SB 275’s definition of essential workers to include agricultural workers, and expands the definition of health emergency to include wildfire smoke events. Under AB 73, Cal/OSHA must review and update the wildfire smoke training that employers are required to follow.
New Requirements for Warehouse Distribution Centers
Assembly Bill 701 (amending Labor Code section 138.7 and adding section 8.6 to Division 2 of the Labor Code (commencing with section 2100)) applies to large Merchant Wholesalers of Durable and/or Non-Durable Goods, Electronic Shopping and Mail-Order Houses, and General Warehousing and Storage employers. If covered by AB 701, employers must provide all non-exempt employees at warehouse distribution centers with written descriptions of each quota they are expected to meet (including tasks to be performed, materials to be produced or handled, time period expectations, and potential adverse employment actions if the quota is not met). Further, employers cannot apply quotas that prevent compliance with other health and safety laws, meal and rest periods, or bathroom breaks. Employees that believe an employer’s quota requirements are interfering with such compliance can request a copy of the employer’s applicable quotas and the employee’s last 90 days of “personal work speed data.” The employer must provide such documentation within three weeks. And, if the employer takes adverse action against an employee within 90 days of the employee requesting such records, or complaining about a quota, there is a rebuttable presumption that the adverse action was taken in retaliation.
Senate Bill 62 (amending Labor Code sections 1174.1, 2670, 2671, 2673, 2673.1, and 2675.5, and adding Labor Code section 2673.2) expands the definition of employers in the “garment manufacturing” industry and applies joint and several liability for wage violations by garment manufacturers and “brand guarantors” that contract with such garment manufacturers. SB 62 also prohibits piece-rate compensation for garment manufacturing (except where employees are covered by a valid collective bargaining agreement). Garment manufacturers, or contractors thereof, are now subject to a $200 per employee penalty against the garment manufacturer or contractor for each pay period that the employee is paid piece-rate compensation.
Employer COVID-19 Notice and Reporting
Assembly Bill 654 (amending Labor Code section 6325 and amending and repealing Labor Code section 6409.6) cleans up prior COVID-19 notice and reporting bills to make clear when employers have to notify employees and subcontractors that they may have been exposed to COVID-19. That is, within one business day of the employer receiving notice, they must provide notice to employees and subcontractors who were “on the premises at the same worksite as the qualifying individual within the infectious period.” The “infectious period” for asymptomatic individuals is 10 days after the first positive test, and for symptomatic individuals is 10 days after the onset and subsequent improvement of symptoms. “Workplace” in this context does not include places where the employee worked alone without exposure to others.
AB 654 does exempt certain industries from these COVID-19 reporting requirements, including: health facilities, community clinics, rural health clinics, federally qualified health centers, chronic dialysis clinics, adult day health centers, home health agencies, pediatric day health and respite case facilities, hospices, community care facilities, residential care facilities for persons with chronic life-threatening illnesses, residential care facilities for the elderly, and child day care facilities.
Rehiring Employees Laid Off Due to COVID
From April 16, 2021 to December 31, 2024, Senate Bill 93 (repealing Labor Code section 2810.8) requires employers in specific industries to re-hire employees that they previously laid off due to COVID-19. Such employers include hotels with 50 or more guest rooms, private clubs with 50 or more guest rooms where members can stay overnight, event centers with 1,000 seats or 50,000 square feet used for events, airport hospitality operations and services providers, and office services including building security and cleaning. The re-hiring requirement applies if the employees worked for the employer for at least six (6) months prior to being laid off, and were let go due to COVID-19.
Re-opened positions must be offered to “qualified” former employees (employees that held the same or a similar position prior to being laid off) within five (5) business days of re-establishment of the position. Notice of rehiring must be communicated to the former employee in writing, by hand, or to their last know address and by email and text if possible. If more than one former employee is qualified, they may each be offered the position, but those with the most seniority must receive priority. Employers must give the former employees five (5) days to respond after they receive the offer. And, if the employer hires a new employee for the same position, rather than rehiring the former employee, the employer must provide written notice to the former employee explaining the reasons for such decision within 30 days.
This law is enforced by the Division of Labor Standards Enforcement, which can seek reinstatement of former employees as well as back pay, front pay, payment of the value of any benefits employees would have received, interest on such amounts, and fines. Employers that are out of compliance with these requirements can face penalties of $100 per employee, plus $500 for each day the former employee’s rights are violated, until the employer fixes any such violation.
To find out how to keep you and your business compliant, and keep you up to date with the laws that affect you, please contact our office.