As another year draws to a close, new laws are set to take effect once the calendar flips to January 2020. The California Consumer Privacy Act (CCPA) is on the forefront of most minds, but that does not mean California employers should take other new laws any less seriously. We summarize below several important new laws, effective January 1, 2020, unless otherwise noted. These laws will impact how employers in California conduct their businesses. Please contact one of our employment lawyers should you find yourself needing any further guidance on these issues.
1. Codification of Independent Contractor Standard (AB 5).
This law codifies the California Supreme Court’s 2018 decision in Dynamex Operations West, Inc. v. Superior Court. The test outlined by that decision, commonly called the “ABC test,” provides that, in order for an employer to designate a worker as an independent contractor instead of an employee, the following three factors must be met: (A) The worker is free from the hiring entity’s control and direction in connection with performing the work, both in the language of the contract for the performance of the work and when actually performing the work; (B) The worker performs work that is outside the hiring entity’s usual course of business; and (C) the worker is usually engaged in an independently established trade, occupation, or business similar to the work performed for the hiring entity. Numerous exceptions for this test exist based both on industry and contract. Occupations exempted from AB 5 — including securities brokers/dealers, investment advisers, doctors, lawyers and insurance brokers — will continue to be interpreted under prior California Supreme Court authority, adding some flexibility for those industries.
2. Ban on Mandatory Arbitration Agreements (AB 51).
AB 51 bans mandatory arbitration agreements between employers and employees by prohibiting an employer from conditioning employment on the waiver of any right, forum, or procedure for any alleged FEHA or Labor Code violations by the employer. The law further prohibits retaliation against individuals refusing to sign such a waiver. We expect this law will see challenges as a violation of the Federal Arbitration Act — former Governor Brown’s justification for vetoing a substantially identical bill in 2018. However, unless and until such challenges prevail, California employers need to review their standard arbitration provisions. The law does not apply to arbitration agreements entered into prior to January 1, 2020.
3. One-Year Exemption for Employee Data Under the CCPA (AB 25).
The CCPA is set to make a major impact on business operations throughout the state, though AB 25 will temporarily alleviate that impact on employers. AB 25 exempts employee data — including data collected and used in the context of applying for employment — from the CCPA for one year. This provides businesses time to determine what data they currently collect, how they store it, and what they plan to do once the CCPA does apply in 2021. The CCPA should prove to be a particularly complex legislative framework. It is imperative to begin addressing data collection practices and policies immediately.
4. Lengthening the Statute of Limitations for Discrimination / Harassment Claims (AB 9).
Prior to this law’s effect, individuals had one year to file a harassment/discrimination/retaliation charge with the Department of Fair Employment and Housing (DFEH). This law increases the statute of limitations from one year to three. If an individual fails to bring a charge within the new statute of limitations, the individual waives his or her right to pursue that complaint in court. With the tripling of the statute of limitations, employers must now take additional care to preserve employment records in order to defend themselves against potential complaints.
5. Increase in Paid Family Leave (SB 83).
Previously, the maximum amount of Paid Family Leave individuals could receive from California’s State Disability Insurance program was six weeks. Under SB 83, that maximum is now eight weeks. Individuals can obtain benefits when caring for a seriously ill family member or to bond with a minor child within one year of the child’s birth or placement via foster care or adoption. The law also requires the Governor to propose additional protections for employees when they take an absence from work, as well as a proposal to increase the wage replacement rate for low-wage workers collecting Paid Family Leave benefits.
6. Stiffer Penalties for Non-Payment of Wages (AB 673).
Current law allows the Labor Commissioner to recover penalties for failing to pay wages under certain sections of the Labor Code. AB 673 creates new options for employees to also bring a private cause of action. Employees may now choose between either: (A) recovering statutory penalties against the employer in a hearing before the Labor Commissioner; or (B) seeking civil penalties under the Private Attorneys General Act.
7. Clarifications Regarding Harassment Prevention Training (SB 778).
This law clarifies and re-establishes timelines for mandated harassment prevention training put into effect via SB 1343 in 2018. SB 778 requires employers with five or more employees to provide one hour of sexual harassment prevention training to nonsupervisory employees and two hours of training to supervisors by January 1, 2021. Under this law, employers who have previously provided training do not need to retrain employees for two years.
8. Ban on “no re-hire” clauses in settlement agreements (AB 749).
Employers may no longer prohibit a current or former employee from working for the employer in the future as a term of a settlement agreement with the employee. This rule does not apply when the employer has made a good faith determination that the employee engaged in sexual assault or sexual harassment. The #MeToo movement-inspired law aims to make it easier for employees to bring claims against their employers without worrying about losing their job as a term of a potential settlement.
9. Lactation accommodation standards broadened (SB 142).
Modeled after a similar San Francisco ordinance, SB 142 requires employers to provide lactation accommodations for employees. Building off an existing requirement that the room be separate from a bathroom, lactation accommodations must now be close to the employee’s work area, shielded from view, and free from intrusion. The accommodations must also: (A) be safe, clean, and free of toxic or hazardous materials; (B) contain a surface to place a breast pump and other personal items; (C) contain seating; and (D) have access to electricity. Employers must also create a lactation access policy, publish it in the employee handbook, and provide it to any employee requesting parental leave. Exceptions exist for employers with fewer than 50 employees.
10. Prohibition on discrimination based on natural hairstyles (SB 188).
This law clarifies that the definition of “race” under California’s anti-discrimination laws includes “traits historically associated with race, including, but not limited to, hair texture and protective hairstyles” including “braids, locks, and twists.” Employers should ensure their dress codes and grooming policies comply with these changes. While the statute focuses on hairstyles, the language, “traits historically associated with race” can apply to other traits outside of hairstyles. Businesses can still implement dress codes and grooming policies, as long as they are non-discriminatory and do not result in disparate impact.
– Keesal, Young & Logan Employment Group
This information has been prepared by Keesal, Young & Logan for informational purposes only and is not legal advice. Transmission of the information is not intended to create, and receipt does not constitute, an attorney-client relationship between you and Keesal, Young & Logan. You should not act upon this information without seeking professional counsel.