California Legislative Update: California Employers Await Newsom’s Bill-Signing Results

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Seyfarth Synopsis: While the second half of the 2020-21 legislative session saw comparatively fewer employment-related bills than in previous years, those that made it to Governor Newsom’s desk carry some hefty obligations. The Governor has until October 10th to either sign or veto the bills presented. Here is our summary of the bills needing only the stroke of the Governor’s pen to become law.

Friday, September 10, 2021, marked the deadline for bills to pass out of both legislative houses and on to the Governor—and also marked the end of the road for the majority of the remaining employment-related bills. As we noted in our House of Origin Deadline Blog, relatively few employment-related bills introduced in January survived the House of Origin. The fate of those few bills that survived both houses’ scrutiny now lies solely in the hands of Governor Newsom, who just soundly defeated a recall election challenge, adding a unique dynamic to bill-signing season. Our summary outlines bills already signed into law, those awaiting the Governor’s approval or veto, and those that did not make the cut.

New Laws

COVID-19 Supplemental Paid Sick Leave: SB 95 was a budget trailer bill that—effective immediately upon its April 16 signing, and retroactive to January 1, 2021—extended COVID-19 supplemental paid sick leave (SPSL) to September 30, 2021 for employers with over 25 employers. The law provides an annual allotment of up to 80 hours of available SPSL, covers persons who telework, and extends SPSL entitlements to reasons related to vaccinations and family care. See our in-depth analysis of the bill here.

There were rumors of various measures that could have extended SB 95’s sunset date and/or codified an employer’s ability to mandate that its workforce get inoculated against COVID-19, such as a highly publicized gut-and-amend of a bill on an unrelated topic. All appear to have fallen through for now, meaning that there is currently no planned extension or replacement for CA COVID-19 Supplemental Paid Sick Leave.  However, these topics continue to be top of mind for employers and legislators.

Rehiring and Retention of Displaced Hospitality Workers: As we detailed hereSB 93 requires certain hospitality employers—hotels, private clubs, event centers, and airport hospitality services—and successor employers, to offer preferential hiring to employees laid off because of the pandemic. The bill carried an urgency clause, making it effective the same date the Governor signed it, April 16, 2021.

Bills Awaiting The Governor’s Approval

Paid Family Leave Weekly Benefit Increase: AB 123 would revise the formula for calculating benefits available under the family temporary disability insurance program for periods of disability commencing after January 1, 2023, by requiring the weekly benefit amount to be equal to 65% or 75% of the highest wages paid to an individual, divided by 13, but not exceeding the maximum workers’ compensation temporary disability weekly benefit amount established by the Department of Industrial Relations (DIR). Periods commencing after January 1, 2025, would increase the wage replacement percentages to be equal to 70% or 90% of the highest wages paid to an individual.

Small Employer Family Leave Mediation Pilot Program and CFRA Parent-in-Law Care Leave: AB 1033 would add leave to care for a parent-in-law to the permissible reasons to take family care and medical leave under the California Family Rights Act (CFRA). For employers of between 5 and 19 employees, the bill would also require the Department of Fair Employment and Housing (DFEH) to notify an employee who requests an immediate right-to-sue letter alleging CFRA violations of the requirement for mediation. It would also toll the statute of limitations applicable to an employee’s claim from the date the employee contacts the DFEH with the intent to pursue a legal action until the mediation is complete or deemed unsuccessful. Employers who are not notified when an employee fails to contact the DFEH would be entitled to stay any pending civil action until completion of mediation.

Enterprise-Wide Safety Citations: SB 606 would require that Cal/OSHA issue a citation to an egregious employer (defined as, among others, an employer that intentionally made no reasonable effort to eliminate a known violation) for each willful violation. Each employee exposed to that violation would be considered a separate violation for purposes of the issuance of fines and penalties.

The bill was amended to remove a rebuttable presumption of retaliation if an employer takes adverse action against an employee within 90 days of the employee taking any of a number of actions, such as disclosing a positive COVID-19 test or diagnosis of a communicable disease or reporting a possible violation of an OSHA standard. The bill would, however, establish a rebuttable presumption that a violation is enterprise-wide if OSHA has evidence of a pattern or practice of the same violation committed by that employer. Cal/OSHA would be authorized to issue an enterprise-wide citation requiring enterprise-wide abatement if the employer fails to rebut such a presumption.

Warehouse Distribution Centers Quota Disclosures: AB 701 would require that employers provide nonexempt employees who work at a warehouse distribution center a written description of each quota the employee must meet, including the quantified number of tasks that must be performed. The bill would prohibit an employer from requiring employees to meet a quota that causes them to miss a meal or rest period, and where an employee believes meeting a quota caused such a violation, the employer would be required to provide employees a copy of the most recent three months of the employee’s own personal work speed data. The bill would also require that when a complaint alleging violations of AB 701 is filed, the Labor Commissioner provide a written notice of the right to report violations. The bill includes anti-retaliation measures for reporting unsafe workplace conditions or participating in an investigation by an enforcement agency. The bill would also authorize a current or former employee to sue for injunctive relief, costs, and reasonable attorney’s fees in that action.

Expansion of Liability for Garment Manufacturer Wage/Hour Violations: As summarized in greater depth hereSB 62 would expose entities (such as large retailers) contracting for the performance of garment manufacturing to joint and several liability with any manufacturer and contractor for the full amount of any unpaid wages, any other compensation, damages, liquidated damages, attorney’s fees, civil penalties, and any other penalties to aggrieved employees who performed garment manufacturing operations. The measure would also eliminate piece rate compensation in the garment industry. This measure almost precisely replicates SB 1399, which did not quite make it to the Governor’s desk in 2020.

Wage Theft as Grand Theft: AB 1003 would amend the Penal Code to make an employer’s intentional theft of wages, payments, or gratuities over $950 punishable as grand theft. The bill would apply to employees and independent contractors.

Court/Litigation-Related Procedure Changes: SB 241, the “2021 California Court Efficiency Act,” was originally a spot bill aimed at streamlining discovery processes to reduce costs to the courts and litigants. The measure was significantly amended, and now would authorize an entity that is not a shorthand reporting corporation to engage in shorthand reporting if the entity is approved for registration by the Court Reporters Board of California. The bill would also require courts to electronically serve documents on a party that has agreed or consented to accept electronic service. It would also authorize, until January 1, 2024, a witness in a proceeding to appear and give testimony by remote electronic means that provide a live audiovisual connection to the court, if the parties stipulate to this manner of appearance.

Another Potential Restriction on Settlement Agreements: SB 331, the “Silenced No More Act,” would amend Section 12964.5 of the Government Code (enacted by SB 1300 of 2018) so that employers implementing non-disparagement agreements as a condition of employment (or in a separation agreement) would need to carve out an employee’s ability to discuss conduct the employee has reason to believe is unlawful. The bill would also amend Section 1001 of the Code of Civil Procedure (enacted by SB 820 of 2018) to extend the prohibition on confidentiality provisions in settlement agreements to all forms of workplace discrimination—not just discrimination based on sex. This bill would build upon CCP Section 1002.5 (enacted by AB 749 of 2019 and amended by AB 2143 in 2020) by expanding the prohibition to include acts of workplace harassment or discrimination regardless of sex.

Unionization Process for Agricultural Employees: AB 616 would eliminate secret ballot union elections by permitting a labor organization to be certified as the exclusive bargaining representative of a bargaining unit through a representation ballot card election where at least 50 percent of the employer’s workforce votes in favor of unionization. The bill would create a presumption of retaliation—which can be rebutted only by clear, convincing, and overwhelming evidence—whenever an employer disciplines, suspends, demotes, lays off, or terminates a worker during a labor organization’s representation ballot card campaign.

Gender Neutral Retail Departments: AB 1084 would require a retail department store with 500 or more employees that sells childcare items to maintain a gender-neutral section, displaying a “reasonable selection” of items for children, regardless of whether they have been traditionally marketed for either girls or for boys. The requirements of this bill would be enforced by the State of California through the Attorney General, a district attorney, or city attorney, and provides for recovery of attorneys’ fees. Failure to comply with the measure’s requirements would yield a civil penalty not to exceed $250 for a first violation, and $500 for a subsequent violation.

Displaced Janitor and Hotel Worker Opportunity Act: After the passage of SB 93, discussed above under bills already signed into law, AB 1074 was amended to simply rename the “Displaced Janitor Opportunity Act” the “Displaced Janitor And Hotel Worker Opportunity Act” and to extend the provisions of the Act to hotel workers.

Large Group Health Insurance: SB 255 would authorize an association of employers to offer a large group health care service plan contract or large group health insurance policy consistent with ERISA if certain requirements are met, including: (1) that the association is headquartered in California; (2) has continuously been a Multi-Employer Welfare Arrangement under ERISA (MEWA) since before March 23, 2010; (3) and that the large group health care service plan contract or large group health insurance policy have provided a specified level of coverage since January 1, 2019.

Bills that Failed to Make the Cut

As noted above, and as we blogged about here, the vast majority of bills that were introduced back in January failed to pass the House of Origin deadline. For example, a package of bills that would have limited the reach of PAGA, limited the reach of AB 5, addressed the COVID-19 pandemic, enhanced unemployment insurance benefits, and increased employer leave requirements died at the House of Origin deadline in June.

Of those relevant bills that passed the House of Origin deadline, the following failed to pass both houses to the Governor’s desk: (1) AB 1041, ordered to inactive file at the request of Senator Wiener, would have amended CFRA, Gov’t Code § 12945.2, to add a “designated person,” chosen by the employee as a person for whom an employee may take leave for family care and medical leave; (2) SB 505, which never made it out of committee once it moved to the Assembly, would have required public employers to make a good faith effort to consult with an employee to resolve monetary obligations before garnishing any of the employee’s wages; and (3) AB 857, ordered to inactive file at the request of Senator Durazo, would have prohibited employers from retaliating against an H-2A employee for raising questions that relate to employment, housing, or working conditions. We may see these bills again in 2022; indeed, we’ve seen some of these before, and the author of AB 1041 has promised its return in 2022.

Workplace Solutions

Now that Governor Newsom has survived the recall election, employers should brace for him to sign many of the above bills, and begin preparation to ensure compliance as soon as possible. For example, in light of SB 62, entities that contract for garment manufacturing should begin auditing their vendors’ compliance with California wage and hour laws now and implementing related recordkeeping practices.

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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