California Employment Legislative Update: Time for Governor Newsom to Get to Work

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Seyfarth Synopsis: The California Legislature has passed a series of employment-related bills for Governor Newsom to consider. He has until September 30 to approve or veto these bills, most of which relate to leaves of absence and COVID relief.

Monday, August 31st (or, really, the wee hours of September 1) marked the Legislature’s last day to pass bills to Governor Newsom’s desk for approval during the second year of the 2019-2020 Legislative Session. COVID-19 affected the focus of the Legislative session and limited its calendar: the Senate sent only 10 employment-related bills to the Assembly this year. Below are the most significant bills that the Governor has already approved or that await his action by the September 30 deadline. Most bills awaiting gubernatorial review are related to leaves of absence and COVID-19 relief. All approved bills will be effective January 1, 2021, unless otherwise noted.

APPROVED

FEHA: Veteran or Military Status. AB 3364, a Judiciary omnibus bill, clarifies in sections 31-33 that the Fair Employment and Housing Act (FEHA) protects military or veteran status (as opposed to veteran and military status). Approved by the Governor August 31, 2020.

AWAITING THE GOVERNOR’S APPROVAL

Paid Sick Leave Designation. AB 2017 would provide employees sole discretion to designate days taken as paid sick leave under Section 233 of the Labor Code. Enrolled August 31, 2020.

Paid Family Leave: Military Members & Care Recipients. AB 2399 would, in Sections 3302 and 3307 of the Unemployment Insurance Code, define “military member” for—and revise definitions of “care recipient,” “care provider,” and “family care leave” in—the family temporary disability insurance program (paid family leave). These definitions would apply for purposes of the employee’s “qualifying exigency” to covered active duty or call to covered active duty for members of the military. Enrolled August 31, 2020.

CFRA Expansion. SB 1383 would expand CFRA to require businesses with as few as five employees to provide 12 weeks of mandatory family leave per year. SB 1383 would also expand family care and medical leave to include leave (1) to care for grandparents, grandchildren, siblings, domestic partners with a serious health condition (in addition to existing leave to care for a parent or spouse), and (2) because of a qualifying exigency related to covered active duty or call to covered active duty of an employee’s spouse, domestic partner, child, or parent in the US Armed forces. SB 1383 would also expand the definition of child to include child of a domestic partner. Ordered to engrossing and enrolling August 31, 2020.

Victims Protected Time Off. AB 2992 would amend Labor Code sections 230 and 230.1 to expand the prohibition on discrimination or retaliation against employees for taking time off who are victims of domestic violence, sexual assault, or stalking to include “or other crime or abuse” “that caused physical injury or that caused mental injury and a threat of physical injury” and “a person whose immediate family member is deceased as the direct result of the crime.” AB 2992 would define “crime” as “a crime or public offense as set forth in Section 13951 of the Government Code, and regardless of whether any person is arrested for, prosecuted for, or convicted of, committing the crime.”

Supplemental Paid Sick Leave & Small Employer Family Leave Mediation. AB 1867 would codify Executive Order N-51-20 related to sick leave for food sector workers, requiring a hiring entity to provide a number of hours of COVID-19 supplemental paid sick leave to each food sector worker who is unable to work due to specified reasons relating to COVID-19. AB 1867 would also establish COVID-19 supplemental paid sick leave for certain workers employed by private businesses of 500 or more employees, or persons employed as certain types of health care providers or emergency responders by public or private entities. The rate of compensation would be the highest of the worker’s regular rate of pay in the last pay period, the state minimum wage, or an applicable local minimum wage, up to daily and aggregate total maximum payments. AB 1867 would require the Labor Commissioner to make publicly available a model posting relating to COVID-19 supplemental paid sick leave for covered workers, and would allow this notice to be provided by electronic means in lieu of posting if the hiring entity’s covered workers do not frequent a workplace. These provisions would expire on December 31, 2020, or upon the expiration of any federal extension of the Emergency Paid Sick Leave Act established by the federal Families First Coronavirus Response Act, whichever is later.

AB 1867 would also, under certain circumstances, require the DFEH to create a small employer family leave mediation pilot program, which would authorize a small employer or the employee to request all parties to participate in mediation through the DFEH’s dispute resolution division within a specified timeframe. AB 1867 would prohibit an employee from pursuing civil action until the mediation is complete, and would toll the statute of limitations for the employee, including for additional related claims, from receipt of a request to participate in the program until the mediation is complete. These provisions would be repealed on January 1, 2024.

AB 1867 is an urgency statute, which would go into effect immediately upon the Governor’s approval. The sick leave provision of the measure, however, would not be effective until 10 days after the Governor signs the measure. A similar budget trailer bill, SB 822, did not make the cut.

Unemployment: State of Emergency Rehire of Laid Off Employees. AB 3216 would require certain employers to offer employees who were laid off due to a state of emergency job positions that become available and for which the laid-off employees are qualified, based upon a preference system, and in accordance with certain timelines and procedures. According to Cal Chamber, AB 3216 would impose an onerous and stringent process for specific employers to return employees to the workforce, which would delay rehiring and subject employers to litigation for any alleged mistakes. An 11th-hour amendment removed a private right of action, leaving enforcement of AB 3216 exclusively a matter for the DLSE. AB 3216 establishes a new section of the Labor Code such that any violation could subject a business to liability under PAGA. Ordered to engrossing and enrolling August 31, 2020.

Workers’ Compensation: COVID-19. SB 1159 would create a rebuttable presumption that an employee contracted COVID-19 in the workplace if certain circumstances are met for purposes of workers’ compensation.

Employers: Annual Report: Pay Data. SB 973 would provide that private employers with 100 or more employees required to file the federal annual Employer Information Report (EEO-1) must also—on or before March 31, 2021, and each year after—submit a pay data report to the DFEH that states the number of employees by race, ethnicity, and sex in the following categories: all levels of officials and managers, professionals, technicians, sales workers, administrative support workers, craft workers, operatives, laborers and helpers, and service workers. SB 973 would require the DFEH to make the reports available to the DLSE upon request and to maintain the pay data reports for at least 10 years, and would authorize the DFEH to seek an order requiring non-reporting employers to comply. SB 973 would prohibit any officer or employee of the DFEH or DLSE from making public any individually identifiable information obtained from the report prior to the institution of certain investigation or enforcement proceedings, and would require the EDD to provide the DFEH with the names and addresses of all businesses with 100 or more employees. SB 973 is a repeat of SB 171 (2019, held in committee), SB 1284 (2018, held in committee) and AB 2019 (2017, vetoed). Critics say that SB 973 would require California companies to report potentially incomplete or misleading pay data that the companies’ adversaries could use to falsely claim wage disparities.

Entertainment Industry: Age-eligible Minors Sexual Harassment Training. AB 3175 would amend Section 1700.52 of the Labor Code to require that a parent or legal guardian accompany age-eligible minors during employer-provided sexual harassment training made available online by the DFEH, and certify to the Labor Commissioner that the training has been completed. AB 3175 is an urgency statute, which would go into effect immediately upon the Governor’s approval.

Settlement Agreements: No-hire Provisions. Existing law, Section 1002.5 of the Code of Civil Procedure, prohibits no-hire provisions in settlement agreements unless the employer has determined in good faith that the aggrieved person engaged in sexual harassment or sexual assault. AB 2143 would revise that law to require that the employee filed the claim in good faith for the prohibition to apply, and that the employer document the determination of sexual assault or sexual harassment before the aggrieved person filed the claim. AB 2143 would also expand the exceptions to the no-hire provision prohibition to include a determination that the aggrieved person engaged in any criminal conduct, in addition to the existing sexual harassment and sexual assault exceptions.

DLSE Complaints Statute of Limitations. AB 1947 would amend Section 98.7 of the Labor Code to extend the deadline for filing Labor Commissioner complaints from six months to one year after a violation and to amend Section 1102.5 of the Labor Code to authorize courts to award reasonable attorney’s fees to plaintiffs who bring a successful Section 1102.5 whistleblower action. Critics say AB 1947 would undermine administrative resolution of whistleblower cases by authorizing attorney’s fees for retaliation claims, thereby incentivizing litigation over resolution. Governor Newsom vetoed similar legislation last year.

OSHA: COVID-19 Awareness. AB 2043 would require Cal-OSHA to disseminate information on best practices for COVID-19 infection prevention in English and Spanish, together with other awareness and prevention measures, targeted at and to be easily understood by agricultural employees from a variety of ethnic and cultural backgrounds. AB 2043 provisions would expire when the state of emergency has been terminated by the Governor or Legislature. Adds and repeals Labor Code Section 6725. Enrolled September 1, 2020. AB 2043 is an urgency statute, which would go into effect immediately upon the Governor’s signing.

Labor Commissioner: Required Disclosures. SB 1102 would amend Section 2810.5 of the Labor Code to provide that the notice employers are to provide at the start of employment must contain information regarding the existence of either a federal or state emergency or disaster declaration issued within 30 days prior to the employee’s first day of employment that may affect health and safety during the employee’s employment. SB 1102 would also add Sections 2810.6 and 2810.65 to the Labor Code, aimed at foreign agricultural workers, which are patterned after existing California law that requires employers to provide basic wage and hour information to all employees at the time of hire, and which add new disclosure requirements with respect to H-2A farmworkers who are brought into California for work in agriculture on a temporary basis.

Mandated Reporters: Human Resource Employees. AB 1963 would amend Section 11165.7 of the Penal Code to expand the list of mandated reporters to include human resource employees of a business of five or more employees that employs minors, as well as adults whose duties require direct contact with and supervision of minors in the performance of the minors’ duties in the workplace. AB 1963 would require those employers to provide mandated reporters with training on identification and reporting of child abuse and neglect.

Direct Patient Care Employees: Educational Programs and Training Costs. AB 2855 would require employers to reimburse employees providing direct patient care or an applicant for direct patient care employment for the costs of any employer-provided or employer-required educational program or training.

Worker Classification: Employees and Independent Contractors. AB 2257 would recast and revise the provisions added by AB 5, to exempt bona fide business-to-business contracting relationships from the law’s application, as well as to add industry-specific exemptions (including proofers and record directors, persons who provide underwriting inspection, home inspectors, and individuals who contract for the purpose of providing services at a single-engagement event), and to clarify existing industry-specific exemptions.

New Mandated COVID-19 Reporting. AB 685 would require employers, within one business day of receiving notice of potential exposure to COVID-19 by an employee, to: (1) provide written notice to all employees and the employers of subcontracted employees who were on the premises at the same worksite, (2) provide all employees who may have been exposed and their exclusive representative with information regarding COVID-19-related benefits, including, but not limited to, workers’ compensation, COVID-19-related leave, company sick leave, state-mandated leave, or supplemental sick leave, and (3) notify all employees, the employers of subcontracted employees, and the exclusive representative on the disinfection and safety plan the employer intends to implement.

FAILED TO MAKE THE CUT

Workers’ Compensation. AB 196 would have created a presumption that contraction of COVID-19 by all essential workers is a workplace injury for purposes of workers’ compensation. Died on Senate floor.

Telecommuting Act. AB 1492 would have prohibited an employer from retaliating against an employee who seeks reimbursement or indemnification for the allowable expenses. August 2020 committee hearing canceled at request of author.

Bereavement Act of 2020. AB 2999 would have required employers with 25 or more employees to grant employees up to 10 business days, and those with fewer than 25 employees up to 3 business days, of unpaid bereavement leave upon the death of a spouse, child, parent, sibling, grandparent, grandchild, or domestic partner. It also would have prohibited an employer from interfering with an employee exercising his/her right to take this leave, and authorized filing of a complaint with the DLSE or a civil action for reinstatement, specified damages, attorneys’ fees. It would have contained a CBA exemption. Held in committee in July 2020.

Paid Sick Leave: Behavioral Health Conditions. AB 1844 would have specified that “existing health condition” also includes “existing behavioral health condition” purposes for paid sick leave. Held in committee in May 2020.

AB 5 Independent Contractors. AB 1850 was originally drafted to remove the submission cap previously required for the AB 5 exemption for photographers, photojournalists, freelance writers, editors, and newspaper cartoonists. As amended, the bill would have expanded exemptions for certain industries and revived the business-to-business exemption so that it can apply to an individual worker, revised referral agency exemption, and add other industry-specific exemptions. Held in committee in July 2020.

Predictive Scheduling. SB 850 would have required a grocery store, restaurant, or retail employer to provide work schedules at least seven calendar days prior to the first shift on that schedule; pay employees modification pay for each previously scheduled shift that the employer cancels and each unscheduled shift that the employer requires an employee to work, or for each on-call shift for which an employee is required to be available but is not called in to work that shift; and post a poster regarding an employee’s right to receive modification pay, which the Labor Commissioner would have been required to create and make available. May 2020 committee referral rescinded due to shortened legislative calendar.

Wage Statements: Notice & Cure. SB 1129 would have required an employee alleging a violation of the itemized wage statement provision of Section 226 of the Labor Code to provide written notice employer, including the facts and theories to support the alleged violation, and would have allowed the employer 65 calendar days to cure the violation. The bill would have limited the amount of penalties that could be recovered to $5,000 if the aggrieved employee did not suffer actual economic or physical harm. May 2020 committee referral rescinded due to shortened legislative calendar.

PAGA Reform. AB 2530 would have required employees asserting PAGA claims to identify which provisions of the Labor Code are allegedly violated and inform the employer if there is a statutory right to cure. Stalled in committee in March 2020.

Medical Cannabis: Discrimination and Accommodation. AB 2355 would have made it an unlawful for employers to discriminate against employees who are qualified patients for purposes of medical cannabis and would have required employers to grant employees who use medical cannabis the reasonable accommodation rights held by workers who are prescribed other legal drugs. Hearing postponed by committee in March 2020.

FEHA Standard of Proof. AB 2947 would have provided that an intentional violation of FEHA regarding employment occurs when a person intends to discriminate using any of the protected characteristics of any person as a motivating factor in the employment action or decision even though other factors may have also motivated the action or decision, as proven by direct or circumstantial evidence. AB 2947 also would have also required an employer to maintain records of employee complaints for at least five years. Held in committee March 2020.

Settlement Agreement Confidentiality Revision. SB 1135 would have provided that, in sex harassment cases, a court may no longer consider “other findings of the court,” and may only rely only on the record itself, in determining the factual foundation for civil damages for violation of the law prohibiting confidentiality clauses in sexual harassment settlement agreements. Held in committee in March 2020.

Employment Tests and Selection Procedures. SB 1241 would have created a presumption that an employer’s decision relating to hiring or promotion based on a test or other selection procedure is not discriminatory if the test resulted in an increase in the hiring or promotion of a protected class compared to prior workforce composition. Stalled in committee in March 2020.

Garment Manufacturing. SB 1399 would have potentially exposed persons or entities contracting for the performance of garment manufacturing to joint and several liability with any manufacturer and contractor for the full amount of unpaid wages, any other compensation, damages, and penalties to any and all employees who performed garment manufacturing operations for any violation, liquidated damages, attorney’s fees, and civil penalties. The measure would have also eliminated piece rate compensation in the garment industry. Held in committee in August 2020.

Website Accessibility. AB 2123 would have authorized recovery of statutory damages based upon the inaccessibility of an internet website only if the business establishment fails to provide equally effective communication or to facilitate full and equal enjoyment of the entity’s goods and services to the public and if the plaintiff personally encountered a barrier to accessing the website or have been deterred from accessing all or part of the website of a place of public accommodation. Hearing cancelled at request of author May 2020.

Labor Disputes. AB 3240 would have prohibited an employer of 100 or more employees from terminating, reducing, or modifying the employer’s contribution to an employee’s health care coverage while the employee is engaged in a lawful strike. Hearing canceled in May 2020 at request of author.

Gender neutral retail departments. AB 2826 would have required a retail department store with 500 or more employees to maintain undivided areas of its sales floor where, if it sells childcare articles, children’s clothing, or toys, all childcare items, all clothing for children, or all toys, regardless of whether a particular item has traditionally been marketed for either girls or for boys, are displayed. Failure to adhere after receiving written notice from the Attorney General would have resulted in a civil penalty of $1,000. Never made it to first committee in February 2020.

Pink Tax Bill. SB 873 would have prohibited a business establishment from discriminating against a person because of gender with respect to the price charged for any two consumer products from the same manufacturer that are substantially similar if those products are priced differently based on the gender of the individuals for whose use the products are intended or marketed, as specified. Referral to committee rescinded due to shortened 2020 Legislative Calendar.

Meal and Rest Breaks for Remote Work. SB 729 as originally drafted would have codified Executive Order N-51-20 related to COVID paid sick leave. At the 11th hour of session, it was “gutted and amended” to instead prohibit an employee from recovering civil penalties under Labor Code Section 2699 for meal and rest break violations, if the employee is engaged in remote work during the COVID-19 pandemic. Held in committee in August 2020.

Independent Contractor Status. SB 806 would have added flexibility to the ABC test so that individuals who choose to be independent contractors can continue to work and earn income and SB 900, the Senate’s version of AB 2257, would have provided similar exemptions. Held in committee May 2020.

Workplace Solutions

These bills are affecting businesses across the spectrum, and Seyfarth is following their passage (and potential passage) closely. We will continue to keep you informed of new developments as they arise, and please do not hesitate to reach out to your favorite Seyfarth counselors to discuss how to approach these new developments for your company.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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