Below is a summary of several important new laws that impact California employers.
Pay Data Reporting and Pay Scale Transparency (SB 1162)
On September 27, 2022, Governor Newsom signed Senate Bill (SB) 1162 into law. SB 1162, which will become effective January 1, 2023, (1) broadens the information employers must include in their pay data reports to the California Civil Rights Department, and (2) expands the pay scale information employers must disclose to both current and prospective employees.
Pay Data Reports:
Prior to SB 1162, California required private employers with 100 or more employees to file an annual “pay data report” to the California Civil Rights Department (formerly the DFEH) that included the number of employees by race, ethnicity, and sex in specified job categories. Employers with multiple establishments were required to submit a separate report for each establishment, as well as a consolidated report that included all employees.
Starting next year, these pay data reports will be expanded to include the median and mean hourly rate for each combination of race, ethnicity, and sex within each job category. Further, private employers with 100 or more employees must also submit a separate pay data report for employees hired through “labor contractors,” such as temporary employee staffing agencies. Pay data reports must be filed on or before the second Wednesday of May of every year (the first deadline is May 10, 2023). Under the new law, employers with multiple establishments will no longer be required to submit a consolidated report.
Employers who fail to file the required pay data reports can face civil penalties of up to $100 per employee (and penalties of up to $200 per employee for subsequent violations).
Pay Scale Transparency:
Prior to SB 1162, California required employers to provide the “pay scale” (mean salary or hourly wage range) for the position for which an applicant applied whenever the applicant submitted a reasonable request for this information.
Effective next year, all employers must, upon request, provide an employee the pay scale for the position in which the employee is currently employed. Employers must also maintain records of the job title and wage rate history for each employee for a specified timeframe. These records will be open to inspection by the California Labor Commissioner.
Further, employers with 15 or more employees must include the pay scale for any position in any job posting.
No Discrimination For Off-the-Job Cannabis Use (AB 2188)
On September 18, 2022, Governor Newsom signed Assembly Bill (AB) 2188 into law. AB 2188, which will become effective January 1, 2024, will in most situations make it unlawful for an employer to discriminate against a person in hiring, termination, or any term or condition of employment, based upon the person’s use of cannabis off-the-job and away from the workplace.
Once AB 2188 becomes effective, employers may not discriminate against employees and applicants who engage in the off-the-job cannabis use, regardless of whether or not the use is for medical purposes. There are, however, exceptions to this law.
AB 2188 also does not permit employees to possess, be impaired by, or to use cannabis while on the job. The law does not restrict the rights or obligations of employers to maintain a drug- and alcohol-free workplace, or any other rights or obligations of employers specified by federal law or regulation. AB 2188 does not prohibit an employer from penalizing a person for cannabis use or being under the influence of cannabis while at work.
For purposes of any approved drug screening, employers may not rely on testing methods that measure only “nonpsychoactive cannabis metabolites” which by themselves do not indicate physical or psychological impairment. The justification behind this exception is that cannabis metabolites remain in one’s system even after the active psychoactive effects of THC have worn off.
AB 2188 does not apply to specific employees and applicants, including those in the building and construction trades, or those hired for positions that require a federal government background investigation or security clearance in accordance with regulations issued by the United States Department of Defense or equivalent regulations applicable to other agencies.
Required Unpaid Bereavement Leave (AB 1949)
On September 29, 2022, Governor Newsom signed Assembly Bill (AB) 1949 into law. AB 1949, which will become effective January 1, 2023, will require employers to provide up to five days of unpaid leave to employees upon the death of a family member. Under the law, a “family member” means an employee’s spouse, child, parent, sibling, grandparent, grandchild, domestic partner, or parent-in-law.
Employees with over 30 days of service will be entitled to up to use bereavement leave so long as the leave is completed within three months of the date of the family member’s death. Employers may not require that the leave be taken on consecutive days. Employers are not required to pay for bereavement leave, but employees must be allowed to use accrued vacation, personal leave, sick leave, or compensatory time off that is otherwise available to them.
Employers may require employees to provide documentation of a family member’s death (such as a death certificate, published obituary, or other written verification of death) within 30 days of the first day of the leave. Employers are required to maintain the confidentiality of employees who request bereavement leave, and any documents provided to employers for such leave may not be disclosed except to internal personnel or counsel, as necessary, or as required by law.
Extension of COVID-19 Supplemental Paid Sick Leave (AB 152)
On September 29, 2022, Governor Newsom signed Assembly Bill (AB) 152 into law. AB 152, which took effect immediately, extends and modifies certain provisions of the State’s COVID-19 Supplemental Paid Sick Leave (SPSL), which would have expired on September 30, 2022, through December 31, 2022.
COVID-19 SPSL provides for 40 hours of supplemental paid sick leave for covered employees who are unable to work or telework due to certain reasons related to COVID-19, as specified. COVID-19 SPSL also entitles covered employees to take an additional 40 hours of COVID-19 supplemental paid sick leave if they, or a family member for whom they are providing care, tests positive for COVID-19. AB 152 extends these provisions through the end of 2022 but does not require employers to provide new or additional leave, and does not impose any new obligations for employers.
AB 152 also expands permissible diagnostic testing that employers may require. Prior to this law, employers could require covered employees who tested positive for COVID-19 to submit to another test on or after the fifth day after the first positive test and to provide documentation of those results. Through the rest of the year, in addition the testing requirements above, employers are permitted to require employees to submit to a second diagnostic test within no less than 24 hours of the first test. Employers must continue to provide these tests at no cost to employees.
Further, AB 152 establishes the California Small Business and Nonprofit COVID-19 Relief Grant Program (Program) to assist qualified small businesses or nonprofits that are incurring costs for COVID-19 SPSL. The Program is set to be repealed on January 1, 2024. The small business and nonprofits that qualify under this Program must meet certain criteria. For more information regarding whether you may qualify for a grant, please contact Hill Farrer.
Expansion of CFRA and Paid Sick Leave for “Designated Persons” (AB 1041)
On September 29, 2022, Governor Newsom signed Assembly Bill (AB) 1041 into law. AB 1041, which will become effective January 1, 2023, will expand the class of people for whom employees may take paid sick leave or unpaid leave under the California Family Rights Act (CFRA) to include “designated persons.”
CFRA requires employers to provide qualifying employees to take up to a total of 12 work weeks in any 12-month period for family care and medical leave for certain family members, including children, domestic partners, grandchildren, grandparents, parents, parents-in-law, siblings, and spouses.
Starting next year, CFRA leave will also apply to a qualifying employee’s “designated person,” which is defined as “any individual related by blood or whose association with the employee is the equivalent of a family relationship.” An employee must identify the designated person at the time the leave is requested, and employers may limit an employee to one designated person per 12-month period for family care and medical leave.
California’s paid sick leave law (the “Healthy Workplaces Healthy Families Act”) requires employers to provide paid leave for the diagnosis, care, or treatment of an existing health condition of, or preventive care for, a family member, which, before AB 1041, included a child, grandchild, grandparent, parent, registered domestic partner, sibling, and spouse. On or after January 1, 2023, eligible employees will also be able to use their mandatory paid sick leave to care for or assist a designated person under these circumstances.
Other California Employment Laws to Consider
City of West Hollywood’s Compensated Time Off Ordinance
The City of West Hollywood adopted an ordinance that requires employers to provide up to 96 hours of compensated time off per year and an additional 80 hours of uncompensated sick leave per year for full-time employees. This ordinance became effective on July 1, 2022 and applies to employees performing at least two hours of work in West Hollywood per week, which presumably includes employees who work remotely from West Hollywood. Part-time employees must be provided compensated and uncompensated hours in increments proportional to that accrued by someone who works 40 hours in a week.
Applying the Correct Minimum Wage and Sick Leave Laws to Remote Employees
Many employees work remotely in our current employment environment. Employers should be aware that if employees are working remotely in localities other than where the Employer’s office is located, then they should be applying the minimum wage/sick leave laws of those localities. Typically, city minimum wage ordinances apply to employees performing two (2) or more hours of work in the locality.
Changes to Employment Eligibility Verification (Form I-9) Compliance
Starting August 1, 2023, the U.S. Department of Homeland Security (DHS) intends to implement new compliance guidelines for Employment Eligibility Verification (Form I-9). Since March 20, 2020, in response to COVID-19, DHS has been using a more flexible approach around Form I-9. For example, DHS has deferred the “physical presence” requirements of Form I-9 for employers and workplaces that have been operating remotely. Beginning August 1, 2023, this “flexible” period will end, and new guidelines must be followed. All new employees will need to have their Form I-9 documents verified in person, and employers must update their Form I-9 by adding the language “documents physically examined” to section 2 or 3, as applicable. Current employees who had their documents verified remotely (i.e., since March 2020) will also need to provide their documents to their employer in person. DHS had until recently vowed to end the COVID-19 era flexible Form I-9 policy on October 31, 2022. However, as of October 11, 2022, the policy was extended until July 31, 2023. At some point, a new Form I-9 will be required for all new employees (current employees with a valid Form I-9 will not need the new version). The new Form I-9 is not yet available, so employers may continue to use the current version until further notice.
Call Hill Farrer for Further Information
These new laws and their specific requirements are vast and complex. Please contact your Hill Farrer attorney or any member of our Labor and Employment department at (213) 620-0460 to discuss how these news laws may affect your business.