New Laws for California Employers

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With the clock ticking, Gov. Gavin Newsom signed into law on September 30 several employment-related bills enacted by the California legislature. Below, we highlight some of the new laws employers should begin preparing for.

  • Wage order enforcement. The new law expands existing reporting obligations for California businesses to include disclosure of wage order violations, effective January 1, 2021. Specifically, it requires California businesses to include in their corporate filings a statement indicating whether any officer or director (or any member or managers of an LLC) has an outstanding final judgment issued by the Division of Labor Standards Enforcement (DLSE) or a court of law (with no appeal pending) for the violation of any wage order or provision of the Labor Code. In addition, AB 3075 provides that a successor to any judgment debtor will be liable for any wages, damages and penalties owed to any of the judgment debtor’s former workforce. The legislation sets forth the criteria for establishing successorship, including that the successor has substantially the same owners or managers who control labor relations as the predecessor employer and is “an immediate family member of any owner, partner, officer, or director of the predecessor employer.” Finally, the law—which takes effect January 1, 2021—authorizes local jurisdictions to enforce local standards relating to the payment of wages that are more stringent than state standards. 
  • Pay data reporting. This new law creates a reporting obligation for California employers, effective March 31, 2021, after the same requirements were dropped by federal agencies. Pursuant to SB 973, private employers with 100 or more employees that file the federal annual Employer Information Report (EEO-1) must now include employee pay data in a report to the Department of Fair Employment and Housing (DFEH). The report must share the number of employees by race, ethnicity and sex categorized by position: officials and managers, professionals, technicians, sales workers, administrative support workers, craft workers, operatives, laborers and helpers, and service workers. In turn, DFEH will maintain the pay data reports for at least ten years and must make the information available to the DLSE upon request. The law also provides the DFEH with authority to seek an order requiring non-reporting employers to comply. Reporting will begin on or before March 31, 2021, and on or before March 31 each following year. In 2016, the Equal Employment Opportunity Commission (EEOC) proposed a revision to the EEO-1 form that would have required private employers with at least 100 employees nationwide to make such a report; the rule was put on indefinite hold in 2017 after the change in administration
  • Board diversity mandate. A first-of-its kind law, AB 979 mandates that publicly held corporations headquartered in California must include a minimum of one person from an “underrepresented community” on their boards by December 31, 2021. Larger boards will be required to increase their minimum by December 31, 2022 (for boards with more than four but fewer than nine members, the corporation needs a minimum of two directors from underrepresented communities; boards with nine or more directors need a minimum of three directors from underrepresented communities). The new law defines “person from an underrepresented community” as someone who self-identifies as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian or Alaska Native, or who self-identifies as gay, lesbian, bisexual or transgender. The statute builds upon last year’s SB 826, which requires public companies to have a minimum number of women on their board of directors (the number varies depending upon the size of the board). AB 979 includes penalties beginning at a fine of $100,000 for the first violation and increasing to $300,000 for subsequent violations. 
  • Leave for active military. AB 2399 extends paid family leave to provide additional coverage for active military members and their families by revising the definitions of “care recipient,” “care provider” and “family care leave” found in Sections 3302 and 3307 of the Unemployment Insurance Code. The current law provides wage replacement benefits to workers who take time off to care for a seriously ill family member or bond with a minor child within one year of birth or placement. As of January 1, 2021, paid family leave now covers time off for participation in a qualifying exigency related to the active duty or call to active duty of the individual’s spouse, domestic partner, child or parent in the armed forces. 

To read AB 3075, click here.

To read SB 973, click here.

To read AB 979, click here.

To read AB 2399, click here.

Why it matters: California employers are facing a host of new requirements. In addition to the bills signed into law by Gov. Newsom detailed above, the month of September saw other new laws including an expansion of the state’s Family Medical Rights Act and another tweaking of the exemptions to AB 5’s presumption that workers are employees and not independent contractors, a measure adding leave for certain categories of workers not covered by the Families First Coronavirus Response Act, and another law requiring that employers notify employees of potential exposure to COVID-19 in the workplace.

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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