Part 2: New Labor & Employment Laws for Businesses and Public Agencies in 2021
While much of the legislation state lawmakers passed in 2020 was in response to the COVID-19 pandemic, California also adopted an array of labor and employment laws expanding new leave and pay reporting mandates and carving out further exemptions to Assembly Bill 5’s independent contractor classifications.
In Part 2 of our annual Labor & Employment Legal Alert series, Best Best & Krieger LLP looks at the most critical workplace-related legislation passed in 2020 to ensure California employers stay up to date, and in compliance, with state law. Unless otherwise noted, all laws went into effect Jan. 1.
Where previous Legal Alerts were written on any new law, links are provided.
Wage & Hour
Minimum Wage and Salary Increases
Minimum wage workers across California saw another increase in their hourly rate. Wages rose to $14 on Jan. 1 for employees of companies with 26 or more employees. The minimum hourly wage for employees at workplaces with 25 people or fewer climbed to $13. This annual wage hike marks another consecutive year of minimum wage increases that were set in motion back in 2016.
Because employees who are exempt from state overtime requirements must be paid a salary that is at least twice the minimum wage based on a 40-hour workweek, these increases to the minimum wage have also increased the minimum salary paid to these exempt employees. For businesses with 26 or more employees, the minimum salary for its exempt employees is now $58,240 per year. The minimum annual salary for those employers with fewer than 26 employees is $54,080.
California’s minimum wage will increase to $15 for all employees by January 2023.
Employers should also be aware that many localities have passed ordinances with minimum wages and salaries for business located or operating within their jurisdictions that are higher than those set by the State. Employers should check with their legal counsel to determine whether their employees are subject to a higher minimum wage or salary.
AB 2257 Worker classification: employees and independent contractors: occupations: professional services
California’s controversial AB 5 governing the classification of independent contractors saw significant changes with the passage of AB 2257. The emergency measure, which took immediate effect on Sept. 4, contains several new exemptions and revises existing state law related to exemptions for business-to-business relationships, referral agencies, professional services and performance artists (including content contributors, producers, narrators, etc.) provided they do not displace existing employers.
Proposition 22 Protect App-Based Drivers & Services Act
Backed by app-based services such as Uber, Lyft, DoorDash and Instacart, Proposition 22 garnered voter support last November to override AB 5 and exclude app-based, ride-hailing and delivery drivers from the law’s independent contractor oversights. The law, which provides a narrow exemption to AB 5, won’t impact most California employers but will have a large impact on a number of California workers.
AB 2765 Public works: prevailing wages
California law defines “public works,” for the purposes of regulating public works contracts, as, among other things, construction, alteration, demolition, installation or repair work done under contract and paid for, in whole or in part, out of public funds. AB 2765 expands the definition of “public works” for the purposes of provisions related to the prevailing rate of per diem wages to include any of the work listed above done under private contract on a project for a charter school when the project is paid for, in whole or in part, with the proceeds of conduit revenue bonds issued on or after Jan. 1, 2021 by a public agency.
AB 3075 Wages: enforcement
Corporations and foreign corporations, limited liability companies, both foreign and domestic, are required to file specific documents disclosing information regarding the entity with the Secretary of State, including, but not limited to, a statement of information. Within this statement, beginning Jan. 1, 2022 or upon certification that California Business Connect (the State’s information technology project) is implemented, entities will be required to include whether any officer, director, member or manager (for a limited liability company) has an outstanding final judgment issued by the DLSE or court, for a violation of any provision of a wage order or the Labor Code, and where an appeal of the judgment is not pending.
This law also provides that a successor to any judgment debtor shall be liable for any wages, damages and penalties owed to any of the judgment debtor’s former workforce under a final judgment.
Additionally, Labor Code section 1205 was amended to provide that statutory provisions do not preclude a local jurisdiction from enforcing local labor standards and expressly authorize local jurisdictions to enforce local wage payment standards that are more stringent than state standards.
SB 973 Employers: annual report: pay data
In a continued effort to reduce gender and racial pay gaps and more effectively enforce equal pay or discrimination laws, Senate Bill 973 creates extensive pay reporting requirements for employers. Specifically, the new law requires private employers employing 100 or more employees (in and out of California) that are required to file an annual EEO-1 Report under federal law, to submit an annual pay data report to the Department of Fair and Equal Housing. Employers with multiple locations are required to submit a report for each location as well as a consolidated report that includes data on all employees. The first reports are due March 31. Further data reporting guidance can be found on the DFEH website.
Sick Leave, Board Representation and Other New Legislation
AB 979 Corporations: board of directors: underrepresented communities
Passed and signed in 2018, SB 826 required all publicly held corporations headquartered in California to include women on their board of directors. The law set various targets to meet. Now, AB 979 aims to further diversify executive boards by requiring publicly held corporations to include individuals from historically underrepresented communities on their boards. By Dec. 31, 2021, corporations are required to have one board member who identifies as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian or Alaska Native, or who identifies as gay, lesbian, bisexual or transgender. Corporations that fail to comply with the State’s new diversity requirement will be fined $100,000 for the first violation and $300,000 for each subsequent violation of the law.
AB 1731 Unemployment insurance: work sharing plans
The law directs the Employment Development Department to create an online portal for employers to submit and be approved for work-sharing plan programs. Through participation in an approved work-sharing plan, both regular full- and part-time workers whose hours and wages have been reduced are eligible to receive unemployment compensation while keeping their current job. Approved plans shall be deemed approved for one year. The law took effect on Sept. 28 and remains in effect until Jan. 1, 2024.
AB 1947 Employment violation complaints: requirements: time
California law has generally granted employees with a six-month timeframe to file a complaint with the Division of Labor Standards Enforcement if they believe they have been discharged or otherwise discriminated against. AB 1947 extends the period of time in which employees can file a complaint to within 1 year after an alleged violation occurs. The law also authorizes courts to award reasonable attorney’s fees to plaintiffs who prevail on whistleblower claims under Labor Code section 1102.5.
AB 2143 Settlement agreements: employment disputes
In 2019, AB 749 prohibited the use of no-rehire provisions in settlement agreements in which an aggrieved party was restricted from working for an employer they had filed a claim against. Included in the law was a narrow exception allowing a no-rehire provision if an employer made a good faith determination that the former employee engaged in sexual harassment or sexual assault. AB 2143 expands the narrow exception to allow no-rehire provisions if an employer determines the aggrieved party engaged in criminal conduct as well as sexual assault or sexual harassment. It also requires that employers document their good faith determinations before a claim is filed by an aggrieved employee.
AB 2399 Paid family leave: qualifying exigency
The law has expanded paid leave under California’s Paid Family Leave, the State’s disability insurance program, for participation in a qualifying exigency related to the active duty (or call to active duty) of an individual’s spouse, domestic partner, child or parent in the U.S. Armed Forces. The State’s PFL program previously only provided paid leave benefits to workers taking time off to care for a seriously ill family member or bond with a child within 1 year of birth or foster/adoption placement.
AB 2017 Employee: sick leave: kin care
Previously, California law required employers that provide sick leave to allow employees to use their accrued and available sick leave for time off needed to care for an ill family member. It also barred employers from denying an employee the right to use sick leave or take discriminatory action against them for using, or attempting to use, sick leave for this purpose. Employers are now prohibited from requiring an employee to use accrued and available paid sick leave to care for an ill family member and now have the right to use sick leave with Kin Care leave at their sole discretion.
AB 2992 Employment practices: leave time
California employers are prohibited from discharging, discriminating or retaliating against an employee who is a victim of domestic violence, sexual assault or stalking. This includes taking time off of work to obtain relief to ensure the health, safety or welfare of the victim or their child. These protections, set forth in Labor Code section 230 and 230.1, have been expanded to include victims of a crime or abuse and has expanded the definition of the term “victim” itself. AB 2992 also amended the categories of authorized reasons for time off work under the Labor Code to include crime or abuse and seeking medical attention for injuries caused by crime or abuse.
SB 1383 Expands California Family Rights Act – SB 1383 Unlawful employment practice: California Family Rights Act
The California Family Rights Act makes it unlawful to any employer with 50 or more employees to refuse to grant to an eligible employee a request to take up to 12 workweeks of unpaid leave during any 12-month period to bond with a new child, placement of child related to adoption or foster care, for the employee’s own serious medical condition or to care for a parent, spouse or domestic partner with a serious medical condition. SB 1383 expands the CFRA to apply to employers with five or more employees. It adds additional provisions including providing protected leave due to a qualifying exigency, expands covered family members to include siblings, grandparents, grandchild and children of any age, among other key provisions. Since CFRA is expanded to include employers with five or more employees, the New Parent Leave Act, which applied to employers with 20 to 49 employees, is repealed.
SB 1384 Labor Commissioner: financially disabled persons: representation
Under Labor Code section 98.4, the California Labor Commissioner is permitted, upon request, to represent an indigent claimant in a judicial hearing where an employer is appealing an order of the commissioner. This authority has been extended with the passage of SB 1384 to include representing an indigent claimant in a hearing where a court order has compelled arbitration.
Proposition 24 California Privacy Rights Act
A strong majority of California voters supported Proposition 24 on the November ballot, which was aimed at reinforcing parts of the California Consumer Privacy Act — a 2019 law that granted California residents new rights in regard to how companies collect and use their personal data.
The privacy law exempts certain information collected by a business about job applicants, employees, owners, directors, officers, medical staff members and contractors. It further excludes personal information reflecting communication or a transaction between the business and a consumer, if the consumer is acting as an employee, owner, director, officer or contractor of a company, partnership, sole proprietorship, nonprofit or government agency and whose communications or transaction with the business occur solely within the context of the business conducting due diligence regarding, or providing or receiving a product or service to or from that business entity.
Under last year’s AB 25, each of these exemptions were set to expire on Jan. 1, 2021. Proposition 24 extends these exemptions to Jan. 1, 2023 when the CPRA becomes effective. The proposition established the CPRA to close several loopholes in the earlier CCPA.