October 13, 2019 was the deadline for Governor Newsom to decide whether to approve or veto several employment bills that were passed by the California Legislature in 2019. The laws signed by Governor Newsom are summarized below and will become effective January 1, 2020 unless otherwise noted.
AB 5 (Independent Contractor v. Employee)
AB 5 codifies Dynamex, a 2018 California Supreme Court decision, and makes workers employees unless the hiring entity demonstrates each of the following factors under the so-called “ABC” test: (A) the person is free from the control and direction of the hiring entity in connection with the performance of the work; (B) the person performs work that is outside the usual course of the hiring entity’s business; and (C) the person is customarily engaged in an independently established trade, occupation, or business.
There are enumerated exemptions, including for certain healthcare professionals, lawyers, architects, engineers, private investigators, accountants, registered securities broker-dealers or investment advisers, direct salespersons, real estate licensees, hair dressers and certain other cosmetologists, and individuals performing work under a contract for professional services, with another business entity, or pursuant to a subcontract in the construction industry. A separate bill, AB 170, provides an additional exemption for newspaper distributors and carriers. These exemptions are very fact-specific. Please consult with HFB to determine whether one of these exemptions applies to your business.
AB 9 (FEHA Statute of Limitations)
AB 9 expands the statute of limitations from one year to three years from the date of an alleged unlawful employment practice to file a claim with the Department of Fair Employment and Housing (“DFEH”). Employees then have one year after the DFEH issues a right to sue notice to file a civil action in court. Employees can now file lawsuits against their employers 4+ years after the alleged unlawful employment practice. Employers should evaluate their recordkeeping practices to ensure that they are able to adequately defend lawsuits brought by employees more than four years after the alleged unlawful employment practice. Although existing law only requires employers to keep personnel records for three years, employers should consider retaining personnel records for at least five years.
AB 51 (Employment Arbitration Agreements)
AB 51 makes it unlawful for an employer to require employees to agree to arbitrate FEHA/Labor Code claims. AB 51 applies to contracts for employment entered into or modified on or after January 1, 2020. Even voluntary arbitration agreements are unlawful if the employee must opt out of the arbitration agreement or take any affirmative action in order to preserve their right to bring a court action. This section is not intended to invalidate arbitration agreements that are otherwise enforceable under the Federal Arbitration Act (“FAA”).
Employers should ensure that they have arbitration agreements in place and that any necessary modifications are made prior to January 1, 2020. If the employer and employee are covered by the FAA, the arbitration agreement should state that it is governed by the FAA.
SB 707 (Failure to Pay Arbitration Fees)
SB 707 makes an employer’s failure to pay fees associated with arbitration within 30 days of their due date a waiver of the right to compel arbitration. If an employer fails to pay the arbitration fees/costs within 30 days after the due date, the employee can withdraw the claim in arbitration, proceed in a court of appropriate jurisdiction, and seek sanctions.
AB 749 (“No-rehire” Provisions in Settlement Agreements)
AB 749 prohibits a settlement agreement from containing a “no-rehire provision” unless the employer found, in good faith, that the setting employee committed sexual harassment or sexual assault.
SB 188 (Racial Hairstyles)
SB 188 declares hairstyle a proxy for race and states that employers cannot discriminate against an employee based on hair texture or a protected hairstyle, including dreadlocks, afros, braids, and twists. Even race-neutral grooming policies are prohibited if they disparately impact Black employees.
SB 778 (Clarification of Harassment Training Laws)
Existing law requires employers with 5+ employees to provide one hour of sexual harassment training to non-supervisory employees and two hours of sexual harassment training to supervisors every two years. SB 778, which became effective on August 30, 2019 when it was signed, gives employers an additional year (until January 1, 2021) to provide the initial training to non-supervisory employees. This law also clarifies that if employers have already provided the initial training to non-supervisory employees after January 1, 2019, they do not need to provide additional training until two years thereafter. This law further clarifies that new employees or supervisors must receive the training within six months of hire or assuming their supervisory role.
Beginning January 1, 2020, employers using seasonal, temporary, or other employees that are hired to work for less than six months must provide those seasonal or temporary employees training within 30 calendar days of the hire date or within 100 hours worked, whichever occurs first. However, if the temporary employee is employed by a temporary services employer, the training should be provided by the temporary services employer rather than the client.
SB 83 (Paid Family Leave Expansion)
Beginning July 1, 2020, employees are now eligible for up to eight weeks of Paid Family Leave benefits. Currently, employees are only eligible for up to six weeks of Paid Family Leave benefits.
SB 142 (Lactation Accommodation)
SB 142 requires employers to provide a private space (other than the bathroom) for lactation that is near the employee’s work area, shielded from view, and free from intrusion. The space must (1) be safe, clean, and free of toxic or hazardous materials; (2) have electricity and a table or other surface to hold equipment; and (3) have a place to sit. There must also be a refrigerator or other cooling device and a sink with running water in close proximity to the employee’s workspace to store milk.
Employers must have lactation accommodation policies, which can be freestanding or in the employee handbook, and must distribute those policies upon hire and at the time an employee makes an inquiry regarding parental leave. Employers should review their handbook to ensure that there is a lactation accommodation policy and should consult with HFB if they need to revise their handbooks or implement such a policy.
SB 142 makes failure to comply with these provisions a rest break violation under the California Labor Code, which entitles an employee to one hour of pay at their regular rate of pay. Employers are also subject to a $100 penalty per violation.
Employers with fewer than 50 employees are authorized to seek an exemption from the requirements of these provisions if the employer demonstrates that the requirements pose an undue hardship by causing the employer significant difficulty or expense.
AB 1223 (Additional Leave for Organ Donation)
Existing law requires an employer to permit an employee to take a paid leave of absence, not exceeding 30 business days in a one-year period, for the purpose of organ donation. AB 1223 requires employers to grant an additional unpaid leave of absence, not exceeding 30 business days in a one-year period, for the purpose of organ donation.
AB 673 (Additional PAGA Penalties)
AB 673 amends the Labor Code to add a new penalty against “every person who fails to pay the wages of each employee.” Employees may pursue penalties of $200 per violation (per pay period), plus 25% of the amount of wage unlawfully withheld. In the alternative, employees are now authorized to pursue a private right of action to recover penalties for the late payment of wages through the Private Attorneys General Act (“PAGA”).
AB 1804 (Occupational Injuries and Illness Reporting)
AB 1804 requires employers to report serious occupational injury, illness, or death to the Division of Occupational Safety via telephone or via an online mechanism established by the Division instead of via email.
There is some good news for employers. Governor Newsom vetoed some employment bills that would have been unfavorable for employers, including the following bills:
- AB 403, which would have extended the time to file a complaint with the Labor Commissioner from six months to two years;
- AB 171, which would have created a rebuttable presumption that the employer retaliated against the employee if the employer took an adverse action within 90 days of the employee informing the employer that s/he is the victim of sexual harassment, domestic violence, sexual assault, or stalking; and
- AB 1478, which would have authorized employees to bring a private cause of action for claims that they were discriminated against or retaliated against for taking time off of work to obtain judicial or medical relief relating to domestic violence, sexual assault, or stalking.
Employers doing business in California should review these new laws and should contact legal counsel before January 1, 2020 to make sure they are in compliance.