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Labor and Employment, Key Changes to California Employment Law for 2020

by Gayle M. Athanacio , Sharon Ongerth Rossi , Virginia K. Young and Emily A. Wieser

2020 brings some major changes for California employers: AB 5 ushers in the codification—and expansion—of the stringent “ABC test” for independent contractor classifications set out in last year’s Dynamex decision; AB 51 bans most mandatory employment arbitration agreements entered after January 1, 2020; AB 9 effectively extends the statute of limitations for Fair Employment and Housing Act (FEHA) claims from one year to three years; and AB 1768 expands the definition of “public works” to include site assessments and feasibility studies, including pre-construction work.  These measures represent only some of the significant changes we should anticipate in the new year.

Anyone with people performing services in California should familiarize themselves with California’s new laws, as these new laws may affect your day-to-day operations.  Unless otherwise noted, the new law or amendment is effective January 1, 2020.

 

2020 New Laws You May Have Read About In The News:

“ABC” Test For Independent Contractor Classification

(AB 5: Adds Labor Code § 2750.3 and amends Unemployment Ins. Code § 621

AB 170: Amends Labor Code § 2750.3)

In 2018, the California Supreme Court issued its highly publicized decision in Dynamex Operations West v. Superior Court, (4 Cal. 5th 903), replacing the decades-old “totality-of-the-factors” analysis for determining whether workers were employees or independent contractors (the Borello test).  In its place, the Court established a much stricter “ABC” test, which requires ALL of the following conditions be met to have a valid independent contractor relationship:

  1. The worker is free from the control and direction of the hiring entity, both under the contract and in fact; and
  2. The worker performs work that is outside the hiring entity’s “usual course” of business, and
  3. The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work being performed.

Failure to meet any one of these criteria means the worker is deemed an employee.

 

While the Dynamex decision was limited to claims brought for violations under California’s industry-specific Wage Orders, AB 5 expands its application to all claims under California’s Labor and Unemployment Insurance Codes as well as workers’ compensation laws.  AB 5 also carves out several exceptions, some of which are open to interpretation given ambiguity in AB 5’s language.  Notable exceptions include persons or organizations licensed by the Department of Insurance, licensed accountants, architects, engineers and lawyers, physicians and surgeons, dentists, podiatrists, psychologists and veterinarians; marketing and human resources administration services performed under certain conditions; real estate licensees; subcontracts in the construction industry meeting certain requirements; and “business to business contracts” meeting specific requirements.  AB 170 allows a further exception for a newspaper carrier working under contract with a newspaper distributor or publisher, or a newspaper distributor working under contract with a newspaper publisher, until January 1, 2021.

Everyone with workers in California should remember that even if one of AB 5’s exceptions applies and thus avoids application of the ABC test, a service provider may still be deemed an independent contractor under another applicable test. In most circumstances, the multi-factor Borello test for determining independent contractor status applies when the ABC test does not, but there are specific provisions in California law outlining different criteria in some situations.

Although AB 5 is effective January 1, 2020, the law provides for retroactive application in certain areas and is not effective for workers’ compensation purposes until July 1, 2020. For details on AB 5 and its exemptions, please see RJO’s in-depth article, “Navigating AB 5: Independent Contractors in California.”

Anyone using independent contractors in California should immediately consult with counsel to evaluate whether their existing classifications and agreements pass scrutiny under the new law and/or need modification.

Ban on Most Mandatory Employment Arbitration Agreements

(AB 51: Adds Gov. Code § 12953; Adds Labor Code § 432.6)

AB 51 prohibits employers from requiring an employee or job applicant to waive any right, forum, or procedure for a violation of the Fair Employment and Housing Act (“FEHA”) or the Labor Code.  This includes a requirement that an individual “opt out” of arbitration or take affirmative action to preserve their right to pursue such claims in civil court or through an administrative action.  Employers are prohibited from retaliating against individuals who refuse to consent to waiver.  AB 51 also provides that those who violate this law will be subject to criminal liability, and authorizes individuals to seek injunctive relief and attorney’s fees.

The law applies to all contracts for employment entered into, modified, or extended on or after January 1, 2020.  It does not apply to post-dispute settlement agreements or negotiated severance agreements.

Last year, Governor Brown vetoed a similar bill due to potential conflict with the Federal Arbitration Act (“FAA”).  Despite an express provision that AB 51 does not invalidate an arbitration agreement otherwise enforceable under the FAA, AB 51 has drawn at least one constitutional challenge in court and is likely to draw more challenges.

Employers using mandatory arbitration agreements in California, or contemplating using them, should consult with counsel now to evaluate their practices and plans going forward.

Administrative Exhaustion Period for FEHA Claims Expanded From One to 3 Years

(AB 9: Amends Gov. Code §§ 12960; 12965)

Individuals wishing to pursue a claim of employment discrimination, harassment or retaliation under the FEHA must first file a complaint with the Department of Fair Employment and Housing (“DFEH”).  Under current law, that administrative compliant must be filed within one year of the unlawful employment practice.  AB 9 extends this one-year statute of limitations to three years from the date of the unlawful employment practice.  The law further provides that the filing of an initial intake form with the DFEH constitutes the filing a complaint.  Despite this extension to the statute of limitations, AB 9 will not revive lapsed claims.

Lactation Accommodation Law

(SB 142: Amends Labor Code §§ 1030; 1031; 1033; Adds Labor Code § 1034))

Last year, AB 1976 changed existing law by requiring that California employers provide a location, other than a bathroom, for lactation purposes.  Beginning January 1, 2020, SB 142 requires all California employers to develop and implement a policy regarding lactation accommodation and provide a lactation room that meets the following requirements: the location is not a bathroom; is in close proximity to the employee’s work area; is shielded from view and intrusion; is safe, clean, and free of hazardous materials; contains a surface to place a breast pump and personal items; has a place to sit; and has access to electricity, extension cords, or a charging station.  The employer must also provide a sink with running water and a refrigerator or another cooling device with storage, such as a cooler, within close proximity to an employee’s workspace.  The lactation accommodation space may serve as a multi-purpose room; however, use of the room for lactation purposes must take precedence during the time the room is in use for lactation purposes.  These requirements are similar to San Francisco’s Lactation Accommodation Ordinance.

Denial of a reasonable break time to express milk or denial of space complying with these provisions will be deemed a failure to provide a rest period under California law and could subject an employer to the same rest period penalty, i.e., one hour of premium pay per day.  This is in addition to a $100 per day civil penalty which the Labor Commissioner may impose for violations. The bill further contains an anti-retaliation provision for employees exercising or attempting to exercise their rights under the new law.

SB 142 requires employers to have a lactation accommodation policy meeting specific requirements.  The policy must be included in employee handbooks or the set of policies provided to employees and distributed to new employees at the time of hire and when any employee requests or inquires about parental leave.

SB 142 provides a hardship exemption for employers with fewer than 50 employees.

Time to Complete Sexual Harassment Training Extended Until January 1, 2021

(SB 778, SB 530: Amend Gov. Code § 12950.1)

Last year, SB 1343 made significant changes to California’s sexual harassment prevention training law, which required employers of 50 or more employees to provide two hours of training to California-based supervisory employees every two years.  SB 1343 lowered the threshold number of employees an employer must have for the training law to apply from 50 to 5, and imposed a requirement of one hour of training every two years for all non-supervisory employees.  SB 1343 also established a training deadline of January 1, 2020.

SB 778 extends that deadline to January 1, 2021.  The DFEH has summarized the new timing requirements for covered employers in its recently posted Sexual Harassment Prevention Training FAQ dated November 21, 2019:

All employees must now receive training by January 1, 2021. Employers of 50 or more employees have an existing and ongoing obligation to train new supervisory employees within six months of assuming their supervisory position.  Beginning January 1, 2021, new supervisory employees in workplaces of 5 or more employees must be trained within six months of assuming their supervisory position, and new nonsupervisory employees must be trained within six months of hire. Employees must be retrained once every two years.

https://www.dfeh.ca.gov/

SB 778 provides that employers who have completed the training and education requirements in 2019 need not provide the training until two years thereafter.  Employers who provided training in 2018 should provide training in 2020 to maintain the two-year schedule.

Under current law, seasonal, temporary, and other employees hired to work for less than six months must receive sexual harassment training within 30 days or 100 hours of employment beginning January 1, 2020.  SB 530 pushes that requirement out until January 1, 2021.

SB 778 took effect immediately (August 30, 2019).

California Consumer Privacy Act:

Some Employer Requirements Effective 1/1/2020

(AB 25: Amends Civ. Code §§ 1798.130; 1798.145)

California’s Consumer Privacy Act (“CCPA”) generally covers for-profit businesses that meet any of the following criteria (or control or are controlled by, and share common branding with, an entity that does):(1) gross annual revenues exceeding $25 million;  (2) buy, sell, or share personal information of 50,000 or more consumers; or (3) derive 50% or more of annual revenue from selling personal information.

The CCPA places significant requirements on covered businesses and entitles consumers to various data rights, including the right to pursue damages for data breaches.  For more information on CCPA see RJO’s CCPA Update.

Why am I reading about this in an article about new California employment laws?  – because the definition of “personal information” under the CCPA is very broad and includes data typically gathered by Human Resources on applicants, employees, contractors, and their emergency contacts and families.

While the CCPA goes into effect January 1, 2020, AB 25 gives HR a one-year reprieve from many of the requirements of the CCPA (until January 1, 2021) by exempting information collected in the course of a natural person acting as a job applicant, employee, director, officer, medical staff member, or contractor of the employer’s business.  This exemption includes emergency contact information and other personal information collected to administer benefits.  Nonetheless, January 1, 2020 is still an important date for employers covered by the CCPA: (1) covered employers must still comply with the CCPA’s notice provisions requiring disclosure of the categories of personal information to be collected and the business or commercial purposes for which each category of information will be used, including any secondary purposes, and (2) individuals will still have the right to statutory damages for data breaches as of that date.  The California Attorney General can also be expected to start bringing enforcement actions once the final regulations are published and the statutory six-month grace period lapses in mid-2020.

Legislators are expected to work with industry members and consumer advocates over the next year to further define regulations for employee personal information. Employers covered by the CCPA should work with counsel to ensure they are prepared and apprised of relevant legislation.

The California Attorney General has issued draft regulations relating to the CCPA.  They can be found here.

 

Other Significant 2020 New Laws Affecting California Employers

Wage and Hour

State Minimum Wage Increase On January 1, 2020, California’s minimum wage increases to $13.00 per hour for employers of 26 or more employees and $12.00 per hour for employers with 25 or fewer employees.  Minimum salaries for California’s white-collar exemptions, which are based on the minimum wage, will also increase.  Employers should also remember to check local minimum wage laws, many of which require higher hourly rates.
Expanded Labor Commissioner Authority to Collect Unpaid Wages Set By Contract In Excess of Minimum Wage (SB 688: Amends Labor Code § 1197.1)

Under current California law, the Labor Commissioner may order restitution and issue citations, penalties, and liquidated damages against employers for violations of the minimum wage.  SB 688 expands the Labor Commissioner’s power to issue citations for restitution where the Labor Commissioner determines an employer has paid a wage less than the amount of wages in excess of the minimum wage that are set by contract.

SB 688 also modifies existing law regarding the distribution of an undertaking required by the employer prior to filing a writ of mandate to contest a civil penalty imposed by the Labor Commissioner.  Presently, California law provides that some or all of the undertaking posted by the employer may be forfeited to the affected employee if the employer does not pay the court’s judgment regarding wages or damages owed within 10 days of entry of judgment.  SB 688 modifies existing law to provide that the undertaking may instead be forfeited to the Labor Commissioner for distribution.

Employees May Collect Penalties For Violation of Certain Wage Payment Laws At Labor Commissioner Hearings Or In Independent Actions Under PAGA, but Not Both (AB 673: Amends Labor Code § 210) Labor Code Section 210 allows the Labor Commissioner to impose penalties for violations of pay-period requirements and violations of the equal pay provisions of the Labor Code.  Under existing law, the Labor Commissioner can recover these statutory penalties as part of an administrative hearing or in a civil action against the employer.  AB 673 removes the Labor Commissioner’s authority to recover them in a civil action but allows an employee to seek these statutory penalties through a private right of action under Section 210 or as a civil penalty via the Private Attorneys General Act.  However, an employee cannot recover under both for the same violation.
Exception From Final Payment Of Wages Laws For Print Shoot Employees (SB 671: Adds Labor Code § 201.6)

Under existing law, employees engaged in the production of broadcasting of motion pictures are entitled to the payment of wages earned and unpaid at the time of termination by the next regular payday.  SB 671 establishes a similar provision for print shoot employees (defined as individuals hired for a limited period of time to render services relating to or supporting a still image shoot for use in print, digital, or internet media) and provides that the wages may be mailed to the employee or made available at a location specified by the employer in the county where the employee was hired or performed labor.

SB 671 is effective immediately upon approval by Governor Newsom (September 5, 2019).

 

Equal Employment Opportunity, Harassment and Retaliation

Harassment Training
Harassment Training In Construction Industry (SB 530: Amends Gov. Code § 12950.1; Adds Labor Code § 107.5; Amends Labor Code § 3073.9)

As mentioned above, SB 530 extends the date employers must begin providing sexual harassment prevention training to seasonal, temporary, and other employees hired to work for less than six months until January 1, 2021.

SB 530 also provides special sexual harassment training provisions for construction industry employers who employ workers pursuant to a multiemployer collective bargaining agreement.  Pursuant to SB 530, the Division of Labor Standard Enforcement (“DLSE”) is required to develop recommendations for construction industry-specific harassment and discrimination prevention policy and training standards.

Janitorial Workers Sexual Violence Training and Registration (AB 547: Amends Labor Code §§ 1420; 1425; 1429; 1429.5; 1431; 1432) AB 547 requires the DLSE to organize a training committee to prepare a list of qualified organizations and trainers that janitorial employers will be required to use to provide biennial in-person sexual violence and harassment prevention training.
Implicit Bias Training for Lawyers, Doctors and Nurses (AB 241: Amends Bus. & Prof. Code §§ 2190.1; 3524.5; Adds Bus. & Prof. Code § 2736.5; AB 242: Adds Bus. & Prof. Code § 6070.5; Amends Gov. Code § 68088)

AB 241 requires the Board of Registered Nursing, the Physician Assistant Board, and associations responsible for accrediting continued education courses for physicians and surgeons to adopt regulations by January 1, 2022 mandating that physicians, surgeons, nurses, and physician assistants’ continuing education requirements include a course on implicit bias.

Similarly, AB 242 requires the Judicial Council to develop implicit bias training to be administered to all court staff who interact with the public.  It further requires the State Bar to adopt regulations to require implicit bias training be included in the mandatory continuing legal education curriculum.

 

Other New Laws Addressing EEO, Harassment and Retaliation
DFEH Can Now Bring Lawsuits Under Federal Antidiscrimination Statutes (AB 1820: Amends Gov. Code § 12930) Under existing law, the DFEH is tasked with receiving, investigating, mediating, and prosecuting complaints alleging violations of various California civil rights laws.  AB 1820 extends the DFEH’s power by authorizing it to pursue civil actions for violations of the following federal civil rights and antidiscrimination laws: Title VII of the Civil Rights Act of 1964, the federal Americans with Disabilities Act of 1990, and the federal Fair Housing Act.
Labor Commissioner Citations (SB 229: Amends Labor Code § 98.74) SB 229 expands the appeal procedures and enforcement mechanisms applicable to citations issued by the Labor Commissioner for employer discrimination and retaliation.
Definition of “Race” Includes Hair Texture and Protective Hairstyles (SB 188: Amends Education Code § 212.1; Amends Gov. Code § 12926) The Legislature enacted SB 188 to expand the FEHA’s definition of race to include traits historically associated with race, such as hair texture and protective hairstyle, which includes hairstyles such as braids, locks, and twists.

 

Leave and Benefits

Paid Family Leave Wage Replacement Benefits for New Child Bonding Will Be Extended to 8 Weeks beginning July 1, 2020 (SB 83)

SB 83 extends the wage replacement benefits under the Paid Family Leave Program (PFL) to workers who take time off to care for a seriously ill family member or to bond with a new child from six weeks to eight weeks beginning July 1, 2020.

San Francisco’s Paid Parental Leave Ordinance, which requires employers to pay “supplemental compensation” for the period in which an employee receives PFL benefits to bond with a new child, will also be extended from six to eight weeks for all claims starting on or after July 1, 2020.

Expanded Leave for Organ Donation (AB 1223) Existing law requires private employers with 15 or more employees to permit employees 30 business days in one year of paid leave for the purpose of organ donation.  AB 1223 requires covered employers to provide an additional 30 business days of unpaid leave for the purpose of organ donation.
New Notice Requirement for FSA Withdrawal Deadlines (AB 1554: Adds Labor Code § 2810.7) AB 1554 requires employers to notify employees participating in flexible spending account programs of any deadline to withdraw funds before the end of the plan year by two different forms (one of which may be electronic).
Changes to Domestic Partnership Definition (SB 30) In addition to other requirements, current law requires that one of the following two conditions be met in order to form a domestic partnership: (1) both individuals in the relationship are of the same sex or (2) at least one individual in the relationship is over 62 years of age.  SB 30 removes both of these conditions.

 

Arbitration and Settlement Agreements

Limitations on “No Rehire” Provisions (AB 749: Adds Code of Civ. Proc. § 1002.5) AB 749 prohibits employment dispute settlement agreements from preventing or otherwise restricting an employee who has made a claim against the employer in court, before an administrative agency, in alternative dispute resolution, or through the employer’s internal complaint procedures, from working for the settling employer.  AB 749 carves out an exception to this prohibition on “no rehire” provisions where the employer has made a good faith determination that the person engaged in sexual harassment or sexual assault.
Arbitration (SB 707: Amends Code of Civ. Proc. §§ 1280; 1281.96; Adds Code of Civ. Proc. §§ 1281.94; 1281.98; 1281.99)

SB 707 provides a drafting party in an employment or consumer arbitration is in material breach of the arbitration agreement and waives the right to compel arbitration where it is required to pay certain fees and costs prior to the arbitration proceeding but fails to do so within 30 days of the due date.  Where the drafting party is in material breach, SB 707 authorizes the employee or consumer to compel arbitration and seek attorney’s fees and costs or withdraw from the arbitration and proceed in court.  Under either option, appropriate sanctions will be imposed on the breaching party.

SB 707 also requires private arbitration companies to collect and report demographic data regarding the ethnicity, race, disability, veteran status, gender, gender identity, and sexual orientation of all arbitrators.

 

Health and Safety

Expanded Definition of “serious illness or injury” for OSHA reporting (AB 1804: Amends Labor Code § 6409.1; AB 1805: Amends Labor Code §§ 6302; 6309)

Current law requires employers to immediately report a serious occupational injury, illness, or death to the Division of Occupational Safety and Health either by phone or email.  AB 1804 revises the reporting requirements by mandating that such reports be made immediately by telephone or through an online mechanism established by the Division.  Employers are required to continue reporting via telephone or email until the Division has made the online mechanism available.

AB 1805 redefines the definition of “serious injury or illness” by eliminating the 24-hour minimum hospital stay requirement for inpatient hospitalization to qualify as a “serious injury or illness.”

The definition of “serious exposure” is amended to include any exposure to a hazardous substance in a degree or amount sufficient to create a realistic possibility of resulting death or serious physical harm.

Valley Fever Training for Construction Employees (AB 203: Adds Labor Code § 6709) This bill requires employers with work activities that disturb the soil working in counties where Valley Fever is highly endemic to provide awareness training on Valley Fever to all employees by May 1, 2020, and annually thereafter.  If a county is identified as being highly endemic in the annual report published by the State Department of Public Health, training is not required in the initial year of that county’s listing in the report, but training is required in subsequent years.
Authorization to Seek Gun Violence Restraining Order Extended to Employers and Employees (AB 61; Amends Penal Code § 18150; Adds Penal Code §§ 18170; 18190)

Existing law authorizes immediate family members and law enforcement to seek gun violence restraining orders prohibiting the subject of the petition from owning, purchasing, possessing, or receiving, or attempting to purchase or receive, a firearm or ammunition.

Beginning September 1, 2020, AB 61 authorizes employers, coworkers, and an employee or teacher of a secondary or postsecondary school to seek a gun violence restraining order.

 

Public Works/Prevailing Wage

Expansion to Definition of “public works” (AB 1768: Amends Labor Code § 1720) Existing law provides requirements for the payment of prevailing wages, regulation of working hours, and securing of workers’ compensation for workers employed on public works projects.  AB 1738 expands the current definition of “public works” to include work conducted during site assessment or feasibility studies as well as preconstruction work.

 

Vetoed Bills

The Governor vetoed the following bills employers have been watching closely over the year:

  • AB 589 –would have created a Workers Bill of Rights and imposed civil and criminal penalties for employer’s knowing concealment, destruction, or possession of immigration documents in the course of committing trafficking, involuntary servitude, slavery, or a coercive labor practice;
  • SB 218 –would have allowed the County of Los Angeles to enact and enforce antidiscrimination ordinances similar to FEHA;
  • AB 625 –would have extended bid preference for worker retention in local service contractors for solid waste collection or public transit to state contracts;
  • AB 1466 –would have provided a professional exemption for teachers;
  • AB 1478 – would have removed the administrative exhaustion requirement for domestic violence retaliation claims;
  • AB 1613 –would have extended the prevailing wage to workers on charter school projects funded by conduit revenue bonds;
  • AB 403 –would have extended the statute of limitations for filing a complaint with the Labor Commissioner alleging discrimination or retaliation from 6 months to 2 years;
  • AB 520 –would have further defined the term “public subsidy” as found in the definition of “public works” for the prevailing wage requirement;
  • AB 171 – would have expanded the definition of “employer” for purposes of filing complaints with the Division of Labor Standards Enforcement alleging discrimination or retaliation against domestic violence, sexual assault, or stalking victims and provided a rebuttable presumption of retaliation under specific circumstances; and
  • AB 1677 –would have required employers of call center employees to provide notice to the Labor Commissioner of its intent to relocate from California to a foreign country at least 120 days prior to its relocation.

 

About Rogers Joseph O’Donnell Labor & Employment Law Practice Group

Rogers Joseph O’Donnell’s Labor and Employment Law Practice Group is comprised of experienced labor and employment attorneys with extensive experience representing and advising individuals, businesses, government contractors, and public entity employers.

The depth and breadth of our employment law experience allows us to offer the same quality of representation usually expected from much larger law firms, while our relatively small size enables us to maintain highly competitive rates and a more direct and personal relationship with our clients.

Our labor and employment practice focuses on counseling – guiding employers as to how to navigate the patchwork of employment laws and avoid litigation before it starts – while also defending against single and multiple plaintiff litigation, class and collective actions, and PAGA actions. While we believe that early case evaluation and mediation are often advantageous ways to minimize the costs and disruption of protracted litigation, we are also skilled, trial-ready attorneys with a winning record in court, administrative hearings and arbitration.

If you have questions about California labor and employment law, please contact the Rogers Joseph O’Donnell attorney with whom you regularly work, or the authors of this legal update: Gayle M. Athanacio, Sharon Ongerth Rossi, Virginia K. Young, or Emily Wieser.

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