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California Employers Face Various New Laws in January 2021

December 11, 2020 Articles

The California Legislature passed and Governor Newsom signed several new laws covering topics ranging from COVID-19 to leaves of absence to data reporting. Most of these laws take effect January 1, so now is a good time for employers to evaluate their personnel rules and practices to ensure they keep pace with these changes.

COVID-19

Potential Exposure Notification (Effective January 1, 2021)

AB 685 requires employers to promptly notify employees of potential COVID-19 exposure upon notice that any person at the worksite has received a laboratory-confirmed COVID-19 case, medical diagnosis, or isolation order. Within one business day of learning about potential exposure, the employer must provide written notification to potentially infected employees about the potential exposure, COVID-19-related benefits and protections, and the company’s disinfection and safety plans.

AB 685 also requires employers to notify local public health agencies within 48 hours of becoming aware of a COVID-19 outbreak, defined as three or more laboratory-confirmed COVID-19 cases among employees who live in different households within a two-week period.

Lastly, AB 685 temporarily gives Cal/OSHA increased authority to shut down a worksite if it determines there is an imminent hazard. These sections expire on January 1, 2023.

Workers’ Compensation Presumption (Effective September 17, 2020)

SB 1159 modifies and extends Governor Newsom’s Executive Order N-62-20, creating a rebuttable presumption that for certain “critical workers” or employees who test positive during a COVID-19 “outbreak” at the workplace, illness related to COVID-19 is an occupational injury and therefore eligible for specified workers’ compensation benefits. Employers have 30 days to accept or deny claims by employees falling under the “critical worker” presumption, and 45 days to accept or deny claims by employees falling under the “outbreak” presumption. Evidence to controvert the presumption may include:

  1. Measures in place to reduce potential transmission of COVID-19 in the employee’s place of employment.
  2. The employee’s non-occupational risks of COVID-19 infection.
  3. Any other evidence normally used to dispute a work-related injury. The law requires that employers report to their claims administrators specified information about the positive test and number of potentially exposed employees within three business days.

SB 1159 establishes a civil penalty of up to $10,000 for an employer that fails to report or submits false or misleading information. The law expires January 1, 2023.

Leaves of Absence

Expansion of Family and Medical Leave to Small Employers (Effective January 1, 2021)

SB 1383 expands California’s Family Rights Act provisions to employers with as few as five employees. Any such employer is required to provide up to 12 workweeks of unpaid, job-protected leave for an employee’s own serious health condition or that of a qualifying family member, for the birth or adoption of a child, or for a qualifying exigency related to a qualifying family member’s active duty in the U.S. Armed Services. Only employees who have worked for the employer for more than 12 months, and for more than 1,250 hours during the previous 12-month period are eligible for such leaves. Upon completion of the leave, the employee is entitled to return to the same or a comparable position.

SB 1383 expands the family members for whom a qualified employee may take leave to grandparents, grandchildren, and siblings. In addition, the law requires an employer that employs both parents of a child to grant 12 workweeks’ leave to each employee; previously an employer was only required to grant both employees a combined total of 12 workweeks.

Expanded Leave for Crime Victims (Effective January 1, 2021)

In addition to victims of domestic violence, sexual assault, and stalking, AB 2992 extends job-protected leave for a victim of a crime or abuse that caused physical injury or mental injury and a threat of physical injury. Such victims may take leaves to ensure their own or their family members’ safety by seeking a restraining order or other court assistance. Employers with 25 or more employees must also provide such victims time off work to seek medical attention for injuries, to seek psychological counseling, to participate in safety planning, or to obtain services from a victims’ services organization.

Sick Leave for Kin Care at the Employee’s Sole Discretion (Effective November 18, 2020)

Existing law requires employers to permit employees to use accrued sick leave to attend to the illness of a family member and prohibits employers from denying employees the right to use sick leave or from taking discriminatory action against an employee for exercising the right to use sick leave. As of November 18, 2020, AB 2017 amends Cal. Lab. Code § 233 to provide that the designation of sick leave to care for a family member is at the sole discretion of the employee.

Wage and Hour

New Minimum Wage Increase

As of January 1, 2021, California’s minimum wage increases to $14.00 per hour for employers with 26 or more employees and $13.00 per hour for employers with 25 or fewer employees. Local ordinances may impose further increases to the minimum wage.

Employers should review base salaries for all employees exempt from receiving overtime pay to ensure they still satisfy the requirement under California Labor Code § 515(a) that exempt employees be paid “a monthly salary equivalent to no less than two times the state minimum wage for full-time employment.” This determination is made according to the California state minimum wage, regardless of any locally mandated, higher minimum wage. So, as of January 1, 2021, employees working for employers with 25 or less employees must earn at least $54,080 per year to be exempt, and employees working for employers with 26 or more employees must earn at least $58,240 per year to be exempt.

Labor Commissioner May Represent Indigent Claimants in Arbitration

Currently, the California Labor Commissioner can only represent indigent claimants during hearings and appeals. SB 1384 authorizes the Commissioner to provide legal representation to claimants who have been court-ordered to arbitration but cannot afford counsel.

Corporate Board Composition

Expansion of Corporate Board Diversity (Incremental Deadlines beginning End of 2021)

AB 979 requires all publicly held companies with principal executive offices in California to have at least one director from an underrepresented community by the end of 2021. Depending on the size of the board, companies may need to add members from underrepresented communities by the end of 2022:

Board Size Directors From Underrepresented Communities by End of 2022
1-4 At least 1
5-8 At least 2
9+ At least 3


Corporations may increase the number of directors on their boards to comply with these requirements. A director is from an underrepresented community if they self-identify as Black, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, Alaska Native, gay, lesbian, bisexual, or transgender.

AB 979 adds to the gender diversity requirements previously imposed by SB 826 (passed in 2018).

Employer Reporting Requirements

New Successor Liability Risks and Secretary of State Disclosure Requirements (Beginning January 1, 2022)

AB 3075 will expand potential liability for successor employers, defined as entities that have acquired a business through a merger or consolidation, and use substantially the same workforce as the original employer to offer the same services as the original business. Successor employers will now be liable for any wages, damages, and penalties owed by the predecessor to its employees. Thus, if an original employer defaults on a wage and hour judgment, employees will be permitted to collect debts from a successor employer.

Along this note, AB 3075 will also require business entities to add information about pending wage and hour judgments to the statement of information they are required to file with the California Secretary of State. Entities must now report whether they have an outstanding final judgement from the Division of Labor Standards Enforcement (DLSE) for a wage and hour violation.

Lastly, AB 3075 authorizes local jurisdictions to enforce local labor standards relating to wage payment that are more strict than state standards.

This law is effective January 1, 2022 or once the Secretary of State certifies that the online submission platform is implemented, whichever is earlier.

New Pay Data Reporting Requirements (Beginning March 31, 2021)

SB 973 requires that on or before March 31 every year beginning in 2021, employers with more than 100 employees submit a pay data report to the California Department of Fair Employment and Housing (DFEH). The report must include the following information for the prior calendar year, calculated by choosing a “snapshot,” defined as a single pay period of the employer’s choice between October 1 and December 31, 2019:

  1. The number of employees in each of 10 specified job categories, categorized by their (1) race, (2) sex, and (3) ethnicity. This requirement is similar to the federal EEO-1 reports that employers with more than 100 employees are already required to file with the U.S. Equal Employment Opportunity Commission. Thus, employers will be in compliance with this new law if they submit to the DFEH a copy of their EEO-1 reports (ensuring it contains the pay data information required below) in lieu of creating a separate report.
     
  2. The number of employees whose annualized earnings (regardless of whether the employees actually worked the full year) fell within each of the specified pay bands used by the U.S. Bureau of Labor Statistics in the Occupational Employment Statistics (OES) survey. This reporting must also be categorized by each employee’s (1) race, (2) sex, and (3) ethnicity. For each employee included in the respective pay bands, the employer must also report the total number of hours worked by each employee during the reporting year.

Employers are permitted to send clarifying remarks with their reports and must be prepared to make the reports available to the DFEH upon request. The DFEH will be authorized to order employers to comply, and to receive, investigate, conciliate, mediate, and prosecute any complaints alleging pay disparity.

Mandated Child Abuse Reporting (Effective January 1, 2021)

AB 1963 only applies to businesses that employ minors and have five or more employees. For these businesses, AB 1963 makes two types of employees “mandated reporters” under the Child Abuse and Neglect Reporting Act: (1) Human resource employees must report any suspected child abuse or neglect; and (2) Adult employees who supervise and are in direct contact with minor employees must report suspected sexual abuse. Businesses must train these employees on their duties as mandated reporters.

Clarifications of Prior Law

New Carve-outs from ABC Contractor Classification Test (Now Effective)

AB 2257, which took effect upon Governor Newson’s signature in September, amended AB 5 by adding to the list of occupations exempt from the so-called “ABC Test” used to determine whether a worker is properly classified as an employee or independent contractor. Among the myriad exempted occupations are certain photographers, photojournalists, videographers, photo editors, landscape architects, real estate appraisers, home inspectors, professional foresters, manufactured housing salespersons, competition judges, and various media-related professions.

Other significant changes include revisions to the business-to-business and referral agency exemptions, and a new exemption for business-to-business relationships between two or more sole proprietors.

As under AB 5, if an exemption applies, the worker must still satisfy the multi-factor Borello test in order to be properly classified as an independent contractor.

This bill also authorizes a district attorney to prosecute an action for injunctive relief, where AB 5 had authorized the Attorney General or city attorney to bring such an action.

Modifications to No-Rehire Provisions in Settlements (Effective January 1, 2021)

Legislation effective January 1, 2020, prohibited a “no-hire provision” in employment settlement agreements, except in limited circumstances. AB 2143 clarifies those exceptions. Specifically, no-rehire provisions are now allowed if either (1) the employee’s complaint was not made in good-faith or (2) if – prior to the employee’s complaint – the employer made a documented, good-faith determination that the employee engaged in sexual assault, sexual harassment, or any criminal conduct.

One-Year Extension of CCPA Application to Human Resources Data

On January 1, 2020, the California Consumer Privacy Act (CCPA) took effect, granting consumers various rights with regard to businesses’ collection, storage, and retention of their personal information. Although the CCPA is expressly directed at consumer privacy, it also has implications for employment-related data. Because the CCPA defines “personal information” broadly, courts may interpret that term to cover many categories of data collected from employees, applicants, directors, contractors, or other personnel.

Last year, the California legislature delayed most of the CCPA’s application to employers until January 1, 2021 (though two specific provisions took effect in 2020, as detailed here). With AB 1281, the legislature has further delayed the application of the CCPA to most employer-held personnel data until January 1, 2022. Until that date, the law exempts from the CCPA’s coverage personal information collected by a business: (1) about a person in the context of acting as a job applicant, employee, owner, director, officer, staff member, or contractor to the extent the personal information is used solely within that context; (2) that is emergency contact information for a job applicant, employee, owner, director, officer, staff member, or contractor to the extent the personal information is used solely within the context of having an emergency contact on file; or (3) that is necessary to administer benefits for a job applicant, employee, owner, director, officer, staff member, or contractor to the extent the personal information is used solely within the context of administering benefits.

In addition, AB 1281 exempts from CCPA coverage (until January 1, 2022) personal information reflecting written or verbal communication or a transaction between the business and the consumer, if (1) the consumer is acting as an employee, owner, director, officer, or contractor of a company, partnership, sole proprietorship, nonprofit, or government agency and (2) the consumer’s communications or transaction with the business occur solely within the context of the business conducting due diligence regarding, or providing or receiving a product or service to or from that company, partnership, sole proprietorship, nonprofit, or government agency.

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