Summary of California Employment Law Changes for 2020

Holland & Hart - Employers' Lawyers

Holland & Hart - Employers' Lawyers

AB 5 (Codifies the “ABC” Test for Contractor Status)

AB 5 codifies the “ABC” Test for determining contractor status which was adopted by the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court of Los Angeles. Under the “ABC” Test, a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the employer demonstrates that all of the following conditions are satisfied:

  1. The worker is free from the control and direction of the employer in connection
    with the performance of his or her work—both in contract and in fact;
  2. The worker performs work that is outside the usual course of the employer’s
    business; and
  3. The worker is customarily engaged in an independently established trade,
    occupation, or business that is of the same nature as the work being performed.


Subject to specific exceptions from the definitions of “employee” in the appropriate context, AB 5 applies to claims rooted in: (1) the California Labor Code, (2) California Wage Orders, (3) the California Unemployment Insurance Code, and effective July 1, 2020 (4) the Workers Compensation Code.

There are a number of industry-specific exceptions to AB 5, which must be evaluated on a case-by-case basis. Independent contractors who are members of these industries and meet certain conditions are exempted from AB 5. The bill also exempts business-to-business contracting relationships from the ABC Test if specified conditions are met.

If the ABC Test requirements do not apply to the particular situation, then the employee vs. independent contractor status will be determined by using the multi-factor test articulated in S.G. Borello & Sons, Inc. v. Department of Industrial Relations, 48 Cal.3d
341 (1989).

AB 9 (Extends the FEHA Claims Statute of Limitations)

Effective January 1, 2020, AB 9 extends the period in which an employee alleging discrimination and/or harassment in violation of FEHA may file a complaint with the California Department of Employment and Fair Housing. AB 9 extends the complaint period from one (1) year to three (3) years from the date that the employer allegedly engaged in the prohibited practice. For purposes of the bill, filing a complaint means filing an intake form.

AB 25 (Employee Personal Information and the CCPA)

AB 25 establishes that personal information regarding employees collected solely for employment purposes is exempt from the California Consumer Privacy Act (CCPA) until January 1, 2021. The only exception to this rule is the employer’s obligation to disclose what categories of personal information will be collected and the purpose for which the information will be used.

AB 51 (Bans Mandatory Employment Arbitration)

Effective January 1, 2020, employers may not require applicants or employees to agree to arbitrate claims for violations of the California Fair Employment and Housing Act (FEHA) or the California Labor Code as a condition of employment. AB 51 does not invalidate arbitration agreements that are voluntary or otherwise enforceable under the Federal Arbitration Act (FAA). Notably, on December 30, 2019, a federal judge enjoined the enforcement of AB 51, pending a preliminary injunction hearing set for January 10, 2020.

AB 673 (Civil Penalties for Unpaid Wages)

AB 673, effective January 1, 2020, permits employees to recover statutory penalties for unpaid wages under Labor Code Section 210. AB 673 limits employee recovery to either statutory penalties or civil penalties under PAGA (but not both) for the same violation.

AB 749 (Bans No-Rehire Provisions in Settlement Agreements)

Effective January 1, 2020, AB 749 prohibits and invalidates provisions within settlement agreements which proport to prohibit, prevent, or otherwise restrict a settling employee from working for the employer or any parent company, subsidiary, division, affiliate, or contractor of the employer.

AB 749 applies to any employee who has filed a claim against his or her employer (a) in court, (b) before an administrative agency, (c) in an alternative dispute resolution forum, or (d) through an employer’s internal complaint process. That said, AB 749 will not apply if the employer has made a good faith determination that the employee had engaged in sexual harassment or sexual assault.

AB 1223 (Extension of Time-off for Organ Donation)

Currently, private employers with fifteen (15) or more employees are required to grant an employee up to thirty (30) business days of paid leave for the purpose of organ donation. AB 1223 requires employers to give employees another thirty (30) business days of unpaid leave. Employees are entitled to claim these leaves once during a twelve (12) month period measured from the start of the employee’s leave.

AB 1554 (Notices Related to Flexible Spending Accounts)

AB 1554 requires employers to provide employee participants in a flexible spending account (including but not limited to a dependent care flexible spending account, a health flexible spending account, or an adoption assistance flexible spending account) with at least two (2) separate notices of any deadline to withdraw funds from the account before the end of the plan year. One of these notices may be electronic.

AB 1804 (Revises the Reporting Period for Cal OSHA Illnesses and Injuries)

Effective January 1, 2020, AB 1804 requires employers to immediately report serious occupational injuries, illnesses, or deaths to the Division of Occupational Safety and Health by telephone or through the Division’s online system. Until the Division establishes its online system, reporting via e-mail or telephone is permitted.

SB 83 (Increase in the Length of Paid Family Leave)

Effective July 1, 2020, the duration of wage replacement benefits associated with paid family leave will increase from six (6) weeks to eight (8) weeks.

SB 142 (Lactation Accommodation in the Workplace)

SB 142 expands an employer’s duties and responsibilities for providing accommodations for employees who need to express breast milk.

More specifically, the bill requires employers to provide employees with a lactation room
or location that:

a) Is not a bathroom;
b) Is in close proximity to the employee’s work area;
c) Is shielded from view and private;
d) Is free from intrusion while the employee is expressing milk;
e) Is safe, clean and free of hazardous materials;
f) Contains a surface to place a breast pump and personal items;
g) Contains a place to sit; and
h) Has access to electricity or alternative devices, including but not limited to
extension cords or charging stations, needed to operate an electric or
battery-powered breast pump.

Additionally, the employer must provide the employee access to the following amenities within close proximity to the employee’s work area:

i) A sink with running water; and
j) A refrigerator suitable for storing breast milk. However, if a refrigerator
cannot be provided then the employer must provide an alternativ container suitable for storing breast milk.

The room or location may include the place where the employee normally works if it otherwise meets the bill requirements. If a multi-purpose room is used for lactation, the use of the room for lactation must take precedence over all other uses (but only while in use for lactation purposes).

The bill applies to employers with more than 50 employees. Employers with 50 or fewer employees may be exempt if they can show that the law would impose an undue hardship considering the size, financial resources, nature, or structure of the employer’s business. If an employer fails to comply with SB 142, the employer’s failure to comply is treated like a rest/meal period violation under Labor Code Section 226.7. In addition, the Labor Commissioner may impose a $100 civil penalty on the employer for each day that the employee is denied a reasonable break time or adequate facilities.

SB 188 (Bans Policies that Prohibit Natural Hairstyles)

SB 188 expands the FEHA definition of “race” to include traits historically associated with race, including hair texture and hairstyles. This expansion of protection under FEHA prohibits discrimination based on an individual’s natural hairstyle. As such, employers are prohibited from instituting workplace dress codes and/or grooming policies that prevent employees from wearing their hair in a natural manner, including wearing hair in natural styles such as braids, twists, and locks.

SB 688 (Wages Owed Under a Contract in Excess of Minimum Wage)

SB 688 expands the authority of the Labor Commissioner in connection with actions for unpaid wages. Effective January 1, 2020, the Labor Commissioner will have the authority to cite an employer who fails to pay wages in accordance with a contract, even if the employer’s payments are in excess of the minimum wage. This citation can require the employer to pay restitution wages of the amount owed to the employee under the contract. SB 688 establishes a procedure for an employer to appeal the Labor Commissioner’s decision. Part of this procedure requires an employer to post a bond which will be forfeited to the Labor Commissioner if the appeal is unsuccessful.

SB 707 (Fees and Costs Associated with Arbitration)

SB 707 provides that where the employer is required to pay certain fees and costs before arbitration can proceed (i.e., the initiation fees), but fails to do so within 30 days after these fees and costs become due, the employer is in material breach of the arbitration agreement, is in default of the arbitration, and waives the right to arbitrate. If this happens, the employee may withdraw his or her claim from arbitration and proceed in court or compel arbitration in which the breaching employer would pay reasonable attorney’s fees and costs related to the arbitration. If the employee choses to bring his or her claim in court, the statute of limitations for all claims brought or that relate back to a claim brought in arbitration will be tolled.

Where the employer is in material breach, and the employee takes his or her claims to court, the bill requires the court to impose sanctions on the employer. Similarly, where the employee seeks to compel arbitration, the bill requires the arbitrator to impose sanctions on the employer. The employee may also petition the court for an order compelling the employer to pay all arbitration fees that the employer is obligated to pay under the arbitration agreement or applicable arbitration rules. If the employee brings an action in
court, the employee may also file a motion (or a separate action) to recover all attorney’s fees and costs associated with the abandoned arbitration proceeding.

SB 778 (Amends the Compliance Deadline for SB 1343 (2018) – Harassment Training)

SB 1343 requires any employer with five (5) or more employees to provide two (2) hours of sexual harassment training to supervisors and to provide at least one (1) hour of training to all non-supervisory employees by January 1, 2020—within 6 months of their assumption of a position. Trainings were to be provided once every two (2) years moving forward, and employers who provided the requisite training in 2019 were not required to provide it again by the January 1, 2020 deadline.

SB 778 extends the compliance deadline to January 1, 2021, clarifying that an employer who has provided the appropriate training and education in 2019 is not required to provide refresher training and education again until two (2) years thereafter. The bill also requires that new supervisory employees be provided sexual harassment training within six (6) months of their hire date or the date of their promotion to a supervisory position. Nonsupervisory employees must receive the training within six (6) months of hire. Special rules apply for seasonal, temporary, or other employees who are hired to work for less than six (6) months.

On a side note, AB 241 and AB 242 go hand in hand with SB 778, by requiring physicians, nurses, surgeons, lawyers, and court staff to undergo implicit bias training as part of their continuing education. Training for medical professionals becomes mandatory in 2023 and training for legal professionals becomes mandatory in 2022.

Minimum Wage Increases

Effective January 1, 2020, the California state minimum wage will increase to twelve dollars ($12) per hour for employers with twenty-five (25) or fewer employees, and to thirteen dollars ($13) for employers with twenty-six (26) or more employees.

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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