Five must-watch areas for California employers in 2022

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Constangy, Brooks, Smith & Prophete, LLP

Here's what employers need to heed in 2022.

No. 1:  Settlement and separation agreements. Pay attention to any new settlement, employment, or severance agreements. We already know that settlement agreement provisions that restrict the disclosure of facts related to a civil or administrative claim of sexual assault or sexual harassment are prohibited. As of January 1, these agreements also cannot restrict the disclosure of facts relating to any act of workplace harassment or discrimination, failure to prevent an act of workplace harassment or discrimination, or an act of retaliation against a person for reporting or opposing harassment or discrimination. Nondisparagement agreements that have the purpose and effect of denying an employee the right to disclose information about unlawful acts in the workplace are also prohibited, and employment and separation agreements must include safe-harbor language to that effect. Finally, separation agreements have to provide the individual with a reasonable time to consider the agreement and consult an attorney, similar to what is required for a valid waiver of age discrimination claims. Settlement and severance amounts can still remain confidential. 

           Employer Tip: Familiarize yourself with amended Code of Civil Procedure section 1001 and Government Code section 12964.5, so you can ensure your settlement, employment, and separation agreements are compliant.

No. 2:  Arbitration agreements. The attack on arbitration continues in California. Now, any failure to pay arbitration fees in a timely manner will result in the loss of the employer's right to arbitrate. Plaintiffs can even prevent an extension of time to pay. New claims of “illegal clauses in arbitration agreements” are also generating lawsuits under the California Private Attorneys General Act. On the positive side, the U.S. Supreme Court has agreed to review a case involving Viking Cruise Lines. We may see the SCOTUS decide that PAGA cases can be forced into individual arbitrations. 

            Employer Tip: Review and scrub your arbitration agreements, and make them “voluntary.” The agreements are still the best defense against class action liability, but the courts have made employers “thread the needle” to keep that advantage. Also, check to see how PAGA is handled, and if drafting a new agreement, make sure the PAGA “carve-out” allows you to compel arbitration of a PAGA case, just in case the SCOTUS changes the law in favor of enforcement. And don’t ignore those periodic invoices from your arbitration providers. Make sure all fee payments are up to date.

No. 3: Wage/hour. The courts are restricting the scope of releases, and allowing novel theories to proceed in newly filed PAGA claims covering the same pay periods.

            Employer Tip:  When settling PAGA lawsuits, it may be an advantage to have a revised, over-inclusive PAGA notice letter submitted in connection with the settlement.

No. 4: Staffing companies. The courts are attacking use of staffing companies in general and penalizing both staffing companies and their clients.

            Employer Tip: Staffing companies and businesses who use staffing companies should make sure any settlement includes releases of both entities, identified by name.

No. 5: Record retention. Employment records must be kept for four years (previously, the retention requirement was two years).

            Employer Tip: Best practice is to retain everything for 10 years in some form. 

Last and not least:

Parents-in-law are now covered family members under the California Family Rights Act; eliminate any rounding; provide 35-minute lunches; pay meal and rest premiums regularly; and critically review your policies, paystubs and on-boarding packages this year. 

Happy New Year!

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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