In his first legislative session since taking office in January 2019, Governor Newsom has signed off on several employment laws that will impact California employers starting January 1, 2020. Below is a brief summary of some of these laws:
AB 5 – Limitation on Independent Contractor Classifications: One of the most publicized new employment laws is Assembly Bill 5, which substantially limits the classification of workers as independent contractors as opposed to employees. Employers who currently pay workers on a 1099 basis must pay very careful attention to this new law.
By its terms, AB 5 codifies the “ABC Test” set forth by the California Supreme Court in Dynamex Operations West Inc. v. Superior Court, a case we discussed here. Under that test, a worker will be presumed to be an employee unless the hiring entity establishes all of the following:
- (A) The worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact;
- (B) The worker performs work that is outside the usual course of the hiring entity’s business; and
- (C) The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.
Employers found to have misclassified workers as independent contractors as opposed to employees can face significant penalties as well as liability for failure to properly pay overtime, failure to provide legally mandated meal and rest breaks and itemized paystubs, and failure to maintain workers’ compensation insurance, among other things.
Under AB 5, the ABC test will apply to every claim under the Labor Code and the Unemployment Insurance Code. AB 5 exempts a number of occupations, including physicians, dentists, attorneys, certain salespeople, as well as other categories of people providing “professional services.” If an occupation is considered exempt from AB 5, then the determination of whether the worker is properly classified as an independent contractor as opposed to an employee will be governed by an 11-factor test discussed in more detail here. The full text of AB 5 is available here.
AB 9 – Extended Time to File Discrimination, Harassment, and Retaliation Claims: Under existing law, with limited exceptions, in order to pursue in court a discrimination, harassment or retaliation claim under the California Fair Employment & Housing Act, an employee must first file a claim with the Department of Fair Employment and Housing within one year of the alleged discriminatory, harassing, or retaliatory act and obtain a “right to sue” – ie., a document authorizing an employee to file their claim in court. After obtaining the “right to sue,” the employee then has one year to file the discrimination, harassment or retaliation claim in court. Pursuant to AB 9, employees will now have three years to obtain the right to sue, which effectively means that employers can face a discrimination-, retaliation-, or harassment-based wrongful termination claim four years after terminating an employee. Given that the statute of limitations on this claim has now essentially doubled, it is more important than ever for employers to thoroughly document and retain documents evidencing their legitimate, non-discriminatory, non-retaliatory reasons for termination. The full text of AB 9 is available here.
SB 778 – Extension of Time to Provide Anti-Sexual Harassment Training: Last year, the Governor signed off on SB 1343, a law requiring all CA employers with 5 or more employees to provide anti-sexual harassment training to their staff at least once every two years or within six months of being hired. Specifically, the law requires employers to provide 2 hours of anti-harassment training to supervisory employees and 1 hour of anti-harassment training to non-supervisory employees. This new law clarifies that employers with 5 or more employees have until January 1, 2021 to complete this training and must provide this training at least once every two years thereafter. The law further clarifies that employers who have already completed their training in 2019 need not conduct additional training until the end of 2021. The full text of SB 778 is available here.
AB 51 – Prohibition on Forced Arbitration Agreements: Today’s law allows employers to require, as a condition of employment, that employees must agree that in the event of an employment-related dispute, such as a claim of harassment, unpaid wages, or wrongful termination, that such disputes will not be heard in court and instead may be heard only before a private arbitrator. Once AB 51 goes into effect, it will be illegal for employers to require employees to agree to arbitrate claims they may have for violations of the anti-discrimination, anti-harassment, and anti-retaliation provisions of the Fair Employment & Housing Act (FEHA) as well as claims under the Labor Code. FEHA and Labor Code claims are some of the most commonly filed employment-related claims in California, and therefore AB 51 aims to significantly curtail the volume of employment-related claims that may be heard under a mandatory arbitration program. The new law expressly states that arbitration agreements that require an employee to opt out of an arbitration program, or take any affirmative action in order to not be held to have agreed to arbitrate, are also now prohibited. The new law makes it illegal to threaten, retaliate against, discriminate against, or terminate an employee for refusing to consent to arbitration and provides that attorney’s fees may be awarded to an employee enforcing their rights under this law. Although we anticipate that AB 51 will face legal challenges by litigants who will argue that it is preempted by the Federal Arbitration Act, such challenges will take time to make their way through the courts, and until those challenges are resolved, AB 51 will be the law in California. The full text of AB 51 is available here.
AB 1223 – Additional (Unpaid) Organ Donation Leave: California employers with 15 or more employees already have a legal obligation to provide an employee up to 30 days of paid leave per year for purposes of organ donation. This law now enables employees to take an additional 30 days of unpaid leave for this purpose. The full text of AB 1223 is available here.
AB 673 – Penalties for the Late Payment of Wages: AB 673 amends Labor Code Section 210 to authorize an employee to recover penalties for the late payment of wages by either filing a claim with the Labor Commissioner or by seeking civil penalties under the Private Attorneys General Act in court.
AB 749 – Limitation on No-Rehire Provisions in Settlement Agreements: Employment-related settlement agreements often contain provisions in which the employee agrees that they will never again be eligible for rehire by the employer. AB 749 puts an end to this practice, prohibiting employers from entering into settlement agreements with employees on or after January 1, 2020 that contain a provision whereby the settling employee agrees that they may not seek re-employment with the employer or the employer’s parent company, subsidiary, division, affiliate or a contractor of the employer. AB 749 contains one exception which applies when the employer has found, in good faith, that the settling employee committed sexual harassment or sexual assault; under those limited circumstances, no-rehire provisions may be permissible. Also important, this law only applies to settlement agreements relating to a claim brought by an employee in court, before an administrative agency, in an alternative dispute forum, or through an employer’s internal complaint process and does not apply to standard severance agreements provided to an employee who has not brought a complaint before the employer.
SB 142 – Lactation Accommodation: This law requires all CA employers to “provide a reasonable amount of break time to accommodate an employee desiring to express breast milk for the employee’s infant child each time the employee has a need to express milk.” Where possible, this break time should run concurrently with any break time already provided to the employee, such as meal or rest breaks. Break time for an employee that does not run concurrently with an employee’s statutorily mandated paid rest breaks are unpaid. In addition, the new law requires employers to provide a private location for lactating employees that may not be a bathroom and that must be in close proximity to the employee’s work area, shielded from view and free from intrusion while the employee is expressing milk. This private location must be safe and clean, free of hazardous materials, contain a surface to place a breast pump and personal items, contain a place to sit, and have access to electricity. Employers must also provide access to a sink with running water and a refrigerator or another suitable cooling device for storing milk in close proximity to the employee’s workspace. Employers with less than 50 employees may be exempt from certain requirements of the new law if they can demonstrate that the requirement would impose an undue hardship. The bill makes a failure to comply with these provisions a failure to provide a rest break under the Labor Code (with associated penalties) and mandates that employers develop a written policy regarding lactation accommodation containing specified language. SB 142 is available here.
SB 188 – Prohibits Discrimination Based on Traits Associated with Race, Such as Hair: This law amends the definition of “race” in the Fair Employment and Housing Act to include “traits historically associated with race, including, but not limited to, hair texture and protective hairstyles.” The bill aims to chip away at “Eurocentric” professional norms by outlawing “workplace dress code and grooming policies that prohibit natural hair, including afros, braids, twists, and locks.” The Legislature has concluded that these policies “have a disparate impact on Black individuals as these policies are more likely to deter Black applicants and burden or punish Black employees than any other group.” SB 188 is available here.
The above summary has been prepared for general informational purposes only and is not intended as legal advice.
Bernstein & Friedland, P.C. is a boutique employment law firm in Los Angeles specializing in wrongful termination, discrimination, harassment, retaliation, and unpaid wage and overtime matters. Please visit our website at www.laemploymentcounsel.com to learn more about us.