In the past year, Governor Gavin Newsom signed several new workplace-related bills addressing wage and hour, workplace safety, and other issues impacting California employers. Below, we highlight some key employment-related bills signed in 2021 as well as summarize key court decisions issued throughout the year. All new bills take effect January 1, 2022, unless otherwise noted.
Wage and Hour Bills
Warehouse Distribution Center Quotas – AB 701
AB 701 outlines employee rights pertaining to the use of productivity quotas in warehouse fulfillment and distribution centers in California. Either upon hire, or within thirty days of the bill’s effective date, warehouse distribution centers must provide non-exempt employees with a written description of each productivity quota to which the employee is subject. Moreover, both current and former employees have a right to request a written description of his or her quotas and employers must comply with the request within 21 calendar days. There is a rebuttable presumption of unlawful retaliation if an employer takes an adverse employment action against the employee within 90 days of the employee’s request for quota information or complaint alleging quota related Labor Code violation(s). Effective January 1, 2022, the bill will apply to companies with an employee population count of 100 or more employees at a single warehouse distribution center or more than 1,000 employees at multiple warehouses in California.
Wage Theft – AB 1003
AB 1003 expands an employer’s potential liability for intentional wage theft under California’s Penal Code. The bill permits an employer to be convicted of “grand theft” for theft of wages exceeding $950 for one employee, or $2,350 in the aggregate from two or more employees. The bill requires that the theft be intentional, through fraud and while knowing that the wages are due to the employee. The bill also defines “wages” to include “wages, gratuities, benefits, or other compensation". Independent contractors are also considered employees under AB 1003.
Food Delivery Tips – AB 286
AB 286 amends the Fair Food Delivery Act of 2020, making it unlawful for food delivery platforms to retain any portion of amounts designated as tips or gratuity. The bill mandates that those tips and gratuities are paid in entirety to the person performing the delivery.
New Garment Manufacturing Wage and Hour Rules – SB 62
SB 62 alters the payment practices of employers in the garment manufacturing industry. This bill prohibits garment manufacturers from paying employees by piece rate; however, SB 62 does not apply to workplaces covered by a collective bargaining agreement, wherein employees must be paid no less than the applicable minimum wage. SB 62 also extends employers’ record retention obligations for wages to four years and includes brand guarantors (person who contracts for the performance of garment manufacturing) in the definition of the garment manufacturing industry for purposes of wage claim enforcement. Therefore, garment manufacturers and their contractors may be jointly liable for payment of wages.
Phasing Out Sub-Minimum Wage Permits for Disabled Employees – SB 639
Industrial Welfare Commission ("IWC") issued licenses authorizing employers to employ persons with disability for less than the mandated minimum wage will be phased out by January 1, 2025. Beginning January 1, 2022, the issuance of new licenses is prohibited. By January 1, 2023, stakeholders currently holding licenses must deliver a plan to the legislature for transitioning disabled employees working under these licenses to other types of employment. By January 1, 2025, it will be illegal to pay an employee with disabilities less than the minimum wage irrespective of prior license status.
Computer Professional Exemption Increases
In order to be in compliance with the California computer professional exemption increases effective January 1, 2022, employers must compensate employees covered by the statute according to the minimum pay rate increases to $50.00 per hour, $8,679.16 monthly salary, and $104,149.81 annual salary.
California Minimum Wage Increase
On January 1, 2022, the minimum wage in California increases to $14.00 per hour for employers with 25 or fewer employees, and to $15.00 per hour for employers with 26 or more employees. The City of San Diego also approved increasing the minimum wage to $15.00 per hour effective January 1, 2022. The following year, the minimum wage in California for employers with 25 or fewer employees will also increase to $15.00 per hour, effective January 1, 2023.
Leave and Accommodation
CFRA Expansion and DFEH Mediation Program – AB 1033
Under the California Family Rights Act ("CFRA"), eligible employees are permitted to take up to 12 weeks of leave annually to provide care to family members, including parents, with serious medical conditions. Effective January 1, 2022, AB 1033 expands CFRA’s definition of “parent” to include parents-in-law. Additionally, AB 1033 makes participation in the Department of Fair Employment and Housing’s ("DFEH") pilot mediation program for small employers and employees to resolve family leave disputes, a prerequisite to filling a civil action if requested by either the employee or employer.
Harassment Discrimination Retaliation
Silenced No More Act – SB 331
Existing California law prohibits any provision in a settlement agreement that would restrict disclosure of factual information in a claim filed before an administrative agency or in a civil action, related to sex-based harassment, discrimination, or assault in the workplace. SB 331 expands this prohibition on settlement confidentiality and non-disparagement provisions to include all types of workplace harassment or discrimination. Meaning, under SB 331, any agreement related to an employee’s separation from employment cannot include a provision that would prohibit the disclosure of factual information related to any kind of workplace harassment or discrimination. Moreover, employers should ensure separation-related agreements contain: non-disparagement carve out language permitting employees to disclose information about conduct believed to be unlawful; and notice of an employee’s right to consult an attorney regarding the agreement within a reasonable period of no less than five days.
Personnel Record Retention and DFEH Authority & Procedural Changes – SB 807
SB 807 requires certain employers, labor organizations, and employment agencies to maintain all application, personnel, membership, and referral records and files for at least four years from the date the records were initially created or received; and employers must retain applicant and terminated employees’ personnel files for a minimum of four years from the date the employment action taken. The bill also amends several other procedural requirements including removal of the State Personnel Board exemption, tolling the statute of limitations during the investigation period, and extending the DFEH right-to-sue issue period for class actions to 2 years.
Workplace Safety
Agricultural Worker Protection - AB 73
AB 73 expands training and personal protective equipment ("PPE") requirements for agricultural workers during wildfire smoke events. Under existing law, California must establish a stockpile of PPE to supply essential workers for 90 days during a health emergency. This bill broadened existing California law with the addition of agricultural workers to the definition of essential workers, and wildfire smoke to the definition of a health emergency. AB 73 will also require the Division of Occupational Safety and Health to update wildfire smoke trainings to ensure such is provided in a language and manner understandable by employees.
Electronic Posting of Workplace Notices – SB 657
SB 657 provides that when an employer is required to physically post information in the workplace, related to employee rights under applicable statutes, it may also distribute that information to employees via email. However, electronic distribution via email is not a substitute for physical postings.
Cal/OSHA Expansion Enforcement– SB 606
SB 606 expands the enforcement authority of California's Division of Occupational Safety and Health ("Cal/OSHA") by creating two new workplace health and safety violations: (1) enterprise-wide violations; and (2) egregious violations. The bill creates a rebuttable presumption of an enterprise violation when an employer with multiple worksites has committed an enterprise-wide violation or there is evidence of a pattern or practice of a Cal/OSHA rule or Health and Safety Code violation(s) at more than one of the employer’s worksites. If an employer fails to rebut the presumption of an enterprise-wide violation, Cal/OSHA will issue a citation requiring abatement of the alleged violation for the employer’s enterprise. Alternatively, an employer has committed an egregious violation when Cal/OSHA believes the employer has willfully and egregiously violated a Cal/OSHA rule as outlined in the bill; egregious violations include: intentional violations through voluntary action or inaction, making no reasonable effort to eliminate known violations. An egregious violation determination is effective for five years and penalties are assessed per the number of employees exposed to the violation. Lastly, SB 606 also gives Cal/OSHA subpoena authority where an employer fails to provide requested information.
COVID-19 Updates
COVID-19 Exposure Reporting Expansion – AB 654
Effective as an emergency statute on October 5, 2021, AB 654 revises some of the existing law under AB 685, which regulates employers’ reporting obligations after receiving notice of potential exposure to COVID-19. AB 654 requires that within one business day of receiving notice of potential COVID-19 exposure, employers must provide all employees who were at the same worksite as the qualifying individual within the infectious period, with the following: (1) written notice that the employee may have been exposed to COVID-19; (2) information regarding COVID-19-related benefits that the employee may be entitled to; and (3) notice of the cleaning and disinfection plan that the employer is implementing. Additionally, AB 654 amends existing law under AB 685 to require an employer who is notified of enough COVID-19 cases to meet the definition of an outbreak to notify the local public health agency of a COVID-19 outbreak within 48 hours or one business day, whichever is later (health facilities are exempt). AB 654 also expands the list of employers exempt from the COVID-19 outbreak reporting requirement under AB 685 to cover various licensed entities, including but not limited to: community clinics; adult day health centers; community care facilities; and child day care facilities. The California Department of Public Health defines a COVID-19 outbreak in a non-healthcare and non-residential congregate setting, e.g., workplaces, as at least three probable or confirmed COVID-19 cases within a 14-day period in people who are epidemiologically linked in the setting, from different households and not identified as close contacts of each other in any other case investigation. These reporting requirements will expire on January 1, 2023.
Recall Rights for Certain Hospitality-Industry Employees – SB 93
Effective April 16, 2021, SB 93 requires covered employers to recall qualified former employees who were laid off due to a non-disciplinary reason related to the COVID-19 pandemic. Covered employers include: hotels, private clubs, event centers, airport hospitality operations, airport service providers and janitorial, maintenance, and security services providers in commercial buildings. Qualified former employees include: employees who (1) held the same or similar position as the position for which the employer is now hiring; (2) were employed for a minimum of six months in the 2019 calendar year and worked at least two hours per week; and (3) COVID-19 was the cause of the interference in employment (i.e., government shutdown and or order, loss of business, pandemic-related economic changes). The bill specifically requires covered employers to extend a written job offer to qualified employees within five days of establishing the position; employees are entitled to five business days to consider the offer. Employers must prioritize qualified employees in order of the earliest hire date. Pursuant to SB 93, an employer must maintain records pertaining to recall offers for three years and any employer that fails to recall qualified former employees is subject to a civil penalty of up to $600 per employee, per day. Recall rights are set to expire December 31, 2024.
Other CA Legislative and Regulatory Updates and Trends
PAGA Exception for Janitorial Workers – SB 646
SB 646 exempts certain janitorial employees under a collective bargaining agreement from the Private Attorney General Act ("PAGA"). For this exemption to apply, the employee must be represented by a labor organization and employed by a janitorial contractor who registered with the Labor Commissioner as a property service employer in 2020 regarding work performed under a valid CBA in effect before July 1, 2018. The CBA must also expressly provide for grievance and binding arbitration procedures, as well as wages, work hours, and working conditions. This bill will not apply to PAGA claims brought before the end of 2021.
Nurse Implicit Bias Training Requirement – AB 1407
AB 1407 requires approved nursing schools and nursing programs to require students complete a one-hour implicit bias training as a graduation requirement.
AB 51 Update – AB 51
AB 51 was originally to be effective January 1, 2020, but the law could not be enforced when a court granted a preliminary injunction in February 2020. In September 2021, the Ninth Circuit Court of Appeals overturned the lower court’s injunction; subsequently a party petitioned the Court for rehearing. At present, AB 51 is not in effect.
Amendments to AB 5 Exemptions – AB 1506 and AB 1561
AB 1506 extends the temporary exemption for newspaper-publishers and distributors exemption from the application of the “ABC test” established in Dynamex for determining employee or independent contractor status, from January 1 2022 to January 1, 2025. AB 1561 revises the ABC exemptions applicable to the professional services, construction subcontractor, data aggregator, and insurance and finical service industry.
Dynamex’s ABC Test Applies Retroactively
In response to a request from the Ninth Circuit, the California Supreme Court clarified in Vazquez v.Jan-Pro Franchising Int’l Inc. (Ca S. Ct. 2021) that its decision in Dynamex Operations West, Inc. v. Superior Court (4 Cal.5th 903, 2018), which established the ABC three-part test for classifying a worker as an employee or independent contractor, applies retroactively.
Meal/Rest Premiums Must be Based on Regular Rate of Pay
In Ferra v. Lowes Hollywood Hotel, LLC (Ca. S. Ct. 2021), the California Supreme Court clarified that the “regular rate of compensation” as used in Labor Code Section 226.7 is synonymous with “regular rate of pay.” Thus, when calculating premium pay owed to an employee for a noncompliant meal, rest, or recovery period, pursuant to Labor Code Section 226.7, the employer must account for the employee’s hourly wages and other nondiscretionary payments made to the employee for worked performed.
Rounding of Meal Periods Not Permissible
The California Supreme Court established that rounding time punches is an unlawful employment practice, which means in the meal period context that employers are prohibited from adjusting the hours an employee has actually worked to the nearest present time increment. (Donohue v. AMN Services, LLC (CA S.Ct 2021)) Premium pay is required for all time requirement violations – including seemingly minor violations.
Conclusion
Given California’s robust economy and active legislature, it is no surprise that employers are forced to constantly grapple with ever-changing employment laws. Unfortunately, many of these laws will form the basis for new employer-side challenges including lawsuits and administrative actions. The above represents just some of the numerous laws enacted by the legislature over the last year and employers should consult their legal counsel as to how these laws may affect their businesses and whether other laws not highlighted above may apply.