Get ready for 2021! A roundup of new California employment laws

November 04, 2020

Employment Alert

Author(s): Hillary Baca, Seth L. Neulight

The California legislature has passed several new employment laws, most of which will take effect on January 1, 2021. We discuss what employers need to know.

Californians have faced significant challenges in 2020, from the COVID-19 pandemic and resulting economic shutdown, to raging wildfires and social unrest. Still the legislature produced a substantial number of new employment laws that will impact employers in the Golden State. Here is a roundup of these laws, which, unless indicated otherwise, will take effect on January 1, 2021.

AB 2257 — Amendment of AB 5 Independent Contractor Classification Law

AB 2257, which took effect on September 4, 2020, amends the AB 5 law governing classification of independent contractors. AB 5 codified the so-called “ABC” test for determining whether a worker is an independent contractor. Under that test, a worker is presumed to be an employee unless the hiring entity establishes three factors: (A) “[t]he worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract … and in fact”; (B) “[t[he worker performs work that is outside the usual course of the hiring entity’s business”; and (C) “[t]he worker is customarily engaged in an independently established trade, occupation, or business of the same nature” as the work performed for the hiring entity. AB 5 exempted many occupations and service providers from the ABC test, and made them subject to the more flexible, multi-factor Borello test instead.

AB 2257 retains the ABC test, but adds to the long list of occupations exempt from it, including but not limited to: performance artists, songwriters, and others involved in “creating, marketing, promoting, or distributing sound recordings or musical compositions”; other creative workers who provide services under contract, i.e., “freelance writer, translator, editor, copy editor, illustrator[,] or newspaper cartoonist”; insurance underwriting inspectors; a “manufactured housing salesperson”; licensed landscape architects; real estate appraisers; and home inspectors, among others.

AB 2257 also recasts and clarifies exemptions from the ABC test that existed in AB 5 for business-to-business relationships, referral agencies, and professional services.

SB 1383 — CFRA Expansion to Small Employers

Senate Bill 1383 expands the protections of the California Family Rights Act (CFRA) to employees of small employers. Specifically, the law prohibits any employer with five or more employees (versus the current 50 or more employees) from refusing to grant an employee’s request to take up to 12 workweeks of unpaid leave during any 12-month period to bond with a new child or to care for themselves or a family member (i.e., child, parent, grandparent, grandchild, sibling, spouse, or registered domestic partner). SB 1383 also makes it an unlawful employment practice for an employer to refuse to grant an employee’s request to take CFRA leave due to a qualifying exigency related to covered active duty or a call to covered active duty of an employee’s spouse, domestic partner, child, or parent in the Armed Forces.

SB 973 — Employer Pay Data Reporting

Senate Bill 973 requires large employers (with 100 or more employees) who must file an annual Employer Information Report (EEO-1) under federal law to submit an annual pay data report to the California Department of Fair Employment and Housing (DFEH) that contains specified wage information. The report must contain data, calculated in part based on a “snapshot” pay period within the reporting year, that includes the employer’s total number of employees, and total hours each of them worked, by race, ethnicity, and sex, in each job category listed in the EEO-1 report. The report also must contain the total number of employees, by race, ethnicity, and sex, whose annual earnings fall within each of the pay bands used by the federal Bureau of Labor Statistics in its Occupational Employment Statistics Survey. Covered employers must submit this report to the DFEH by March 31, 2021, and by March 31 each year thereafter. SB 973 authorizes the DFEH to share these reports with the California Division of Labor Standards Enforcement (DLSE) upon request. The law also empowers the DFEH to investigate and prosecute complaints alleging employer pay practices that discriminate based on race or gender.

AB 685 — COVID-19 Workplace Exposure Notice and Reporting

Assembly Bill 685 authorizes the California Division of Occupational Safety and Health (“Cal OSHA”) to issue an order prohibiting the entry into or use of a place of employment, machine, device, or equipment (also known as a “stop work order”) when it is deemed an “imminent hazard” that exposes workers to risk of COVID-19 infection. The law imposes specific notice requirements on employers upon learning of a potential COVID-19 exposure in the workplace. Specifically, within one business day of such notice, the employer must: (1) provide written notice to all employees, and to employers of subcontracted employees, who were at the worksite within the infectious period that they may have been exposed to COVID-19; (2) provide the same written notice to any union representative of the employees; (3) provide information to the same employees and union representative of: COVID-19-related benefits to which they may be entitled, including workers compensation; leave options such as paid sick leave; and anti-discrimination and anti-retaliation protections; and (4) notify the employees and union representative of the employer’s disinfection and safety plan to prevent further exposures, per the guidelines of the federal Centers for Disease Control (CDC). Additionally, AB 685 requires that if an employer is notified of a sufficient number of COVID-19 infections at a worksite constituting an “outbreak,” as defined by the State Department of Public Health, the employer must report certain specified information to the local public health agency with jurisdiction.

SB 1159 —Workers Compensation Claims for COVID-19 Infected Employees

Senate Bill 1159, which took effect on September 17, 2020, creates a disputable presumption that a COVID-positive illness is work-related under certain circumstances for purposes of workers’ compensation claims. This law codifies Executive Order N-62-20 in a new Labor Code section 3212.86. Specifically, if between March 19, 2020, and July 5, 2020, an employee tested positive for, or was diagnosed with, COVID-19 within 14 days after a day when the employee worked on site at the employer’s direction, the infection will be presumed to have arisen out of and in the course of employment, and therefore, eligible for workers’ compensation benefits. To qualify for the presumption, the employee must have had any diagnosis confirmed by testing or by a COVID-19 serologic test within 30 days of the date of the diagnosis.

On or after July 6, 2020, if an employee tests positive for COVID-19 within 14 days after a day that the employee worked on site at the employer’s direction, there is a disputable presumption of workers’ compensation coverage provided that the test occurred during an outbreak in the workplace.

AB 1867 — COVID-19 Supplemental Paid Sick Leave

Assembly Bill 1867, which took effect on September 19, 2020, requires employers with 500 or more employees in the United States to provide its California employees with supplemental paid sick leave—in addition to any such leave they are entitled to under the state Healthy Workplaces, Healthy Families Act—for COVID-19 related reasons. AB 1867 expires on December 31, 2020, or upon the expiration of any extension of the federal Families First Coronavirus Response Act (FFCRA), whichever is later. The law expands paid sick leave eligibility to cover employers of health care providers or emergency first responders, who were excluded from emergency paid sick leave under the FFCRA.

AB 1867 requires that covered employers provide supplemental sick leave to employees if they are: (1) subject to a governmental COVID-19 quarantine or isolation order; (2) required by a health care provider to self-quarantine due to COVID-19 concerns; or (3) prohibited from working by the employer due to concerns related to potential COVID-19 transmission. A “full-time” employee working an average of 40 hours per week is entitled to up to 80 hours of supplemental paid sick leave taken for qualifying reasons. Such leave for other employees who work part-time or variable hours is calculated based upon specified formulas tied to their hours worked within defined periods. The supplemental paid sick leave provided by this law is paid at a maximum rate of $511 per day, and a total of $5,110 for all leave time taken.

AB 1867 also codifies Executive Order N-51-20, which the governor signed on April 16, 2020, to provide supplemental paid sick leave to food sector workers. The law also requires employers of food sector workers working in any food facility to permit such workers to wash their hands every 30 minutes and additionally as needed.

Covered employers must display a poster describing the COVID-19 supplemental paid sick leave rights and employer obligations at each of its worksites. A model poster is available for download on the DLSE website.

AB 2992 — Expands Protections for Victims of Crime, Domestic Violence, or Sexual Assault

Assembly Bill 2992 expands the protections of existing Labor Code provisions afforded to employees who are victims of crime, domestic violence, sexual assault, or stalking. The law prohibits employers from discharging, or discriminating, or retaliating against, an employee who is a victim of crime or abuse for taking time off work to obtain relief, as prescribed. AB 2992 also prohibits an employer from taking adverse action against such an employee for an unscheduled absence from work, if the employee provides documentation (including from a victim advocate) verifying that they were receiving services for their injuries, or that the crime or abuse occurred. The law expands the categories of protected time off work taken under these circumstances to include: seeking medical attention for injuries caused by the crime or abuse, obtaining services from certain types of entities, obtaining psychological counseling or mental health services, or participation in safety planning or other actions to increase safety from future crime or abuse.

AB 2143 — No-Rehire Clauses in Settlement Agreements

Assembly Bill 2143 amends Labor Code section 1002.5. The existing statute prohibits an agreement to settle an employment dispute from containing a no-rehire provision that prevents the aggrieved employee from, in the future, working for the employer against whom he or she has filed a claim. AB 2143 amends this statute to add that the prohibition on no re-hire clauses only applies if the aggrieved employee filed the claim in “good faith.”

Section 1002.5 provides that the prohibition on no-rehire clauses in settlement agreements will not apply if the employer has made a good faith determination that the aggrieved employee engaged in sexual harassment or sexual assault. AB 2143 amends this exception to require that the employer must have documented its determination before the aggrieved employee filed his or her claim. AB 2143 also expands this exception to include determinations by the employer that the aggrieved employee engaged in criminal conduct.

AB 3175 — Harassment Prevention Training for Minors in Entertainment Industry

Assembly Bill 3175, which took effect on September 25, 2020, amends Labor Code section 1700.52 pertaining to harassment training of age-eligible minors (14 to 17) working in the entertainment industry. The law requires that, before issuance of an entertainment work permit to a minor, the parent or legal guardian of the minor must ensure that the minor completes employer-provided sexual harassment training made available online by the California Department of Fair Employment and Housing. The parent or legal guardian must accompany the minor during the training, and certify to the Labor Commissioner that the training has been completed.

AB 3364 — Clarifies Military/Veteran Status Protection in FEHA

Assembly Bill 3364 clarifies existing provisions of the California Fair Employment and Housing Act (FEHA) that prohibit discrimination in employment and housing on the basis of “military and veteran status.” The law changes this language in the statute to make clear that these prohibitions apply inclusively to employees or applicants in a “veteran or military status.”

AB 1947 — Statute of Limitations Extended for Labor Commissioner Charges

Assembly Bill 1947 extends the time in which an employee has to file a complaint with the California Labor Commissioner from six months to one year after the occurrence of the violation of law. The law also provides that plaintiffs who bring successful whistleblower claims under California Labor Code section 1102.5 may recover attorney’s fees.

AB 1963 — HR Employees Added to List of Mandated Reporters

Assembly Bill 1963 provides that if an employer has five or more employees and employs minors, then its human resources employees are mandated reporters of child abuse or neglect.

The bottom line

Employers should review their personnel policies, procedures, and employment practices, and modify them as appropriate to comply with these new laws.

The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.

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