Employment Law Alerts

January 7th, 2020

New California Employment Law Changes You Need to Know

2019 was a historic year for employment law in California. In case you missed them, below is a summary of the key employment law changes that may fundamentally affect businesses with California employees in 2020.  

Worker Classification 

The California courts and legislature have radically changed the rules governing classification of workers as independent contractors or employees. In 2018, the California Supreme Court came out with the Dynamex decision which introduced California businesses to the ABC Test. Under Dynamex‘s ABC Test, all workers in the state are presumed to be employees unless the hiring entity can prove that: (a) the worker is free from the control and direction of the hirer in connection with the performance of the work; (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, business, or occupation. In 2019, the California General Assembly introduced AB 5 which codifies the Dynamex presumption, burden and ABC Test and expands them to all aspects of the Labor Code including workers’ compensation and unemployment insurance. AB 5 was signed into law by Governor Newsom in September 2019 and is now the law of California as of January 1, 2020. The new law (which can be found in Sections 2750.3 and 3351 of the Labor Code and Sections 606.5 and 621 of the Unemployment Insurance Code) has very limited exemptions and provides that local prosecutors and the Attorney General can bring actions against businesses that are not in compliance. Also in October 2019, the California Court of Appeals, in the case of Gonzales v. San Gabriel Transit, held that the ABC test from Dynamex is retroactive, potentially exposing businesses to misclassification lawsuits dating back 4 years.

Several lawsuits have been filed challenging AB 5 and more are undoubtedly in the works. For example, on December 30th—two days before AB 5 was scheduled to take effect, Uber and Postmates filed a lawsuit alleging, among other things, that AB 5 is unconstitutional. And, on December 31st, one day before AB 5’s effective date, a judge issued a temporary restraining order preventing the application of AB 5 to commercial truck drivers. We will continue to update our clients on these cases and on any legislative clarification of the ABC Test and its exemptions (which lawmakers have promised in response to the negative backlash to AB 5). In the meantime, anyone that employs people in California whose work even arguably touches on its core business (prong B of the ABC Test) should reevaluate and confirm that the arrangement passes the ABC Test or qualifies for one of the exemptions. 

Workplace Discrimination 

There are several new laws that refine what constitutes discrimination in the workplace and expand the rights of workers to bring discrimination claims.

Time to file. AB 9 which is known as the SHARE Act (Stop Harassment and Reporting Extension) extends the deadline for an aggrieved employee to file a claim with the Department of Fair Employment and Housing (DFEH) from one year to three years from the date of the alleged employment discrimination. 

Arbitration provisions. Under AB 51 as of January 1, 2020, California employers are prohibited from conditioning employment, continued employment, or the receipt of any employment benefit (e.g. bonuses) on an employee agreeing to arbitrate claims that could be brought under the Fair Employment and Housing Act. Moreover, employees cannot be required to “check the box” to opt out of a mandatory arbitration provision. AB 51 does not apply to arbitration agreements entered into prior to January 1, 2020 and it does not apply to “postdispute settlement agreements or negotiated severance agreements.” Several lawsuits have been filed challenging the validity of AB 51 given that the Federal Arbitration Act (the “FAA”) invalidates state laws that openly or covertly discourage arbitration agreements. However, until a court rules that the FAA preempts AB 51, it is the law of the Golden State. 

Presumption of "retaliation." AB 171 creates a rebuttable presumption of retaliation if an employer takes adverse action against an employee within 90 days after the employer becomes aware that the employee is a victim of domestic violence, sexual assault, sexual harassment, or stalking.

Labor Code violations. AB 673 expands the ability of employees to recover penalties for Labor Code Violations.

"No hire" provisions. AB 749 prevents “no-hire” provisions in settlement agreements entered into between an employer and former employee after January 1, 2020. Now post-separation agreements cannot contain any provision that prohibits, prevents, or otherwise restricts an employee from obtaining future employment with that employer or any of its related entities. However, this law does not apply in cases in which the employer has made a good faith determination that the separating employee engaged in sexual harassment or sexual assault, or where there is a nondiscriminatory or nonretaliatory reason for terminating or refusing to rehire the person.  

Organ donors. AB 1223 expands the Michelle Maykin Memorial Donation Protection act, which requires private employers to permit an employee who is donating an organ to take a leave of absence with pay not exceeding 30 business days in a one-year period, to include an additional 30 days of unpaid leave in connection with leave taken for the purpose of organ donation. 

Lactation accommodations. SB 142 expands California’s mandatory lactation accommodations by requiring companies to provide a “reasonable break time” to express breast milk each time the employee must do so and requires that companies provide “adequate space” to express milk (other than a bathroom stall or office closet) that is close to the employee’s work area, has electrical plugs, and has a place to sit. Employers may not discriminate or retaliate against any employee for exercising the rights afforded under this law and failure to provide either the time or the adequate space for lactation is treated as a failure to provide a rest period under current law. 

Hair. SB 188 is known as The CROWN ACT (Create a Respectful and Open Workplace for Natural Hair) and makes it illegal to discriminate against a person in the workplace based on hairstyle traits that are normally associated with race (e.g. hair texture and styles). 

Training. SB 778 extends the deadline for companies with five or more employees to provide two hours of sexual harassment training for supervisory employees every two years and one hour of training for nonsupervisory employees every one year to January 1, 2021. Any employer who provided trainings in 2019 is not required to provide additional trainings for two years.

Laws Affecting Compensation, Benefits, and Leave 

Minimum wage. The state-wide minimum wage in California increased as of January 1, 2020 to $12 per hour for companies with fewer than 25 employees and $13 per hour for companies with 26 or more employees. Employers should also check the minimum wages set by various cities throughout the state to make sure they are in compliance by visiting: https://www.govdocs.com/2020-minimum-wage-rates-for-california-cities/

Paid Family Leave. SB 83 increases Paid Family Leave from six to eight weeks. 

Motion pictures; unemployment compensation. SB 271 provides that a person working on a motion picture production temporarily outside the state is eligible for unemployment compensation at the conclusion of the production, provided that the worker resides in California, was hired and dispatched from the state, performed part of the work on the production in California, and intends to return to the state to seek re-employment at the conclusion of the production. 

"Print Shoot Employees"; final wages. SB 671 is known as the “Photoshoot Pay Easement Act” and it creates an exception for “Print Shoot Employees” to Labor Code Section 201 that requires employers to pay discharged employees all final wages upon termination. Now, Print Shoot Employees, who are defined as individuals hired for a limited duration to render services relating to or supporting a still-image shoot for use in print, digital, or internet media, may be paid at the employer’s “next regular payday after the employment ends.” This means that anyone involved in a “print shoot production” including talent, stylists, photo assistants, and other crew can be paid via a production company’s regular payroll process without implicating statutory waiting time penalties. The final wages can either be mailed to the employee or be made available to the employee at a location specified by the employer in the county where the person was hired to work. 

If you have questions about California employment law developments, please contact Tricia Legittino at (310) 579 9632 or tlegittino@fkks.com or any other member of the Frankfurt Employment Compliance, Training & Litigation Group.