The labor and employment legal landscape has changed in 2021. The California legislature and Governor Newsom have enacted many new labor and employment statutes that are important for all California employers to know, impacting key areas such as employee leave, arbitration, and Private Attorneys General Act (“PAGA”) claims.
Below is a short summary of 11 of the more important changes to California Labor and Employment law:
- California Family Rights Act Updated: AB 1033, which goes into effect on January 1, 2022, updates the California Family Rights Act (“CFRA”). CFRA leave has been expanded to allow the use of CFRA leave to care for parent-in-laws. This bill also entitles a small employer (between 5 – 19 employees at the time of the alleged violation) to stay (i.e., put on hold) any pending civil action of an employee alleging a CFRA violation if that employee failed to contact the Department of Fair Employment and Housing’s (“DFEH”) alternative dispute resolution department prior to filing the suit. The pending civil action would be stayed only until mediation is complete or deemed unsuccessful.
- Wage Theft by Employers is Now Grand Theft: AB 1003 makes the known theft of wages a form of grand theft, punishable as a felony or a misdemeanor. In other words, if an employer intentionally deprives an employee of wages or other compensation that the employer knows is owed to the employee, the employer may be guilty of grand theft. Common types of compensation include wages and overtime pay, but an employer may also be liable under AB 1003 for failure to provide employees meal and rest periods. The statute is written to include independent contractors and hiring entities of independent contractors under its reach. Under this statute, “theft of wages” is defined as the intentional deprivation of wages, gratuities, benefits, or other compensation, by unlawful means, with the knowledge that the wages, gratuities, benefits, or other compensation is due to the employee under the law. Employers are in violation if they take Nine Hundred Fifty Dollars ($950) from one employee, or Two Thousand Three Hundred Fifty Dollars ($2,350) in aggregate from two or more employees in a consecutive 12-month period.
- Settlement and Nondisclosure Agreement Restrictions: SB 331 clarifies that settlement agreements cannot prevent the disclosure of factual information relating to workplace sexual assault, sexual harassment, workplace harassment and discrimination based on sex, failure to prevent, or retaliation, or information relating to discrimination not based on sex. This law also prevents an employer from having an employee sign a nondisparagement agreement that denies an employee the right to disclose the above. The law also makes it an unlawful employment practice to have a policy or contractual provision limiting disclosure of information about unlawful acts in the workplace. Finally, this law Requires a nondisparagement or other contractual provision that restricts an employee’s ability to disclose information related to conditions in the workplace to include specified language relating to the employee’s right to disclose information about unlawful acts in the workplace.
- Exemptions from California’s Independent Contractor ABC Test: AB 1506 and AB 1561 exempts certain jobs from the “ABC” test under Labor Code Section 2750.3, which is used to determine whether a worker is an employee or an independent contractor. Under these laws, newspaper distributors working under contract with a newspaper publisher, newspaper carriers, licensed manicurists, construction trucking work performed by a licensed subcontractor performing work pursuant to a subcontract, data aggregators and research subjects, claims adjusters, third-party administrators, manufactured housing salespeople are all exempted from the ABC test until December 31, 2024.
- Required Postings may be Delivered by Email: When an employer is required to physically post information, such as the State and Federal employment law posters, an employer may also distribute this information to employees through email with the documents attached. This does not alter the employer’s obligation to physically post this information.
- Labor Commissioner Liens on Property: SB 572 authorizes the Labor Commissioner to create, as an alternative to a judgment lien, a lien on real property to secure amounts due to the Labor Commissioner under any final citation, findings, or decision. The law requires the Labor Commissioner to include specified information on the certificate of lien to be recorded on the relevant party’s real property and to issue a certificate of release once the amount due, including any interest and costs, has been paid.
- Production Quotas for Warehouse Workers: AB 701 applies to nonexempt employees working at a warehouse distribution center. This law requires employers to provide an employee, within 30 days of the effective start date, a written description of each quota to which the employee is subject and potential adverse employment actions for failing to meet this quota. This law also provides that employees need not meet quotas that prevent them from taking meal periods and rest breaks, use of bathroom facilities, and adhering to occupational health and safety laws.
- Regular Rate of Pay for Meal and Rest Premiums: This year, in Ferra v. Loews Hollywood Hotel, the California Supreme Court held that the regular rate of pay, as applied to calculating meal and rest premiums, must encompass all nondiscretionary payments, not just hourly rate of pay. Meal and rest premiums are required to be paid to employees that are prevented from taking their meal and/or rest premiums, or prevented from taking the full allotted time for such meal and/or rest premiums.
- Employers Cannot Compel Arbitration of PAGA Claims: In Herrera v. Doctors Med. Ctr. Of Modesto, Inc., the California Court of Appeals reaffirmed that employers cannot compel arbitration of PAGA claims, as the employee is acting as an agent of the state when bringing such PAGA claims; moreover, the state was not a party to and did not agree to the employer’s arbitration provisions.
- Joint Employment Relationship through Indirect Control: In Medina v. Equilon Enterprises, the California Court of Appeals found that Shell Gasoline and a local gasoline distributor were joint employers of an employee, because Shell exercised indirect control over the employee’s wages and working conditions, because Shell controlled the gas station hours, retained the right to audit, and retained the right to remove an operator for good cause.
- Statute of Limitations for Failure to Promote Claims: In Pollock v. Tri-Modal Distribution Services, Inc., the California Supreme Court held that, in cases where an employee is claiming the employer failed to promote the employee due to discrimination, the one year statute of limitation begins to run when the employee knew or should have known of the failure to promote.
While this summary should give you an overview of some of the important changes to the law, there are additional changes to labor and employment laws that you will need to know. Ferber Law will be hosting its annual labor and employment law seminar in early March of 2022 that will get you caught up on current legal issues and best practices to assist you and your company in complying with California’s strict employment laws. In the meantime, Ferber Law is available to handle any questions or concerns you may have.