New 2021 Employment Laws in California

Employment Law Alert | January.25.2021

2020 was a very busy year for everyone, including for California lawmakers.

Now that 2021 is well underway, we wanted to share with you two helpful resources. First, we invite you to check out this reference guide covering 16 new California laws, which we have organized into the following categories for your convenience: COVID-19, Independent Contractors, Leave, DEI and Equal Pay, Data Privacy, and Other Legal Changes Companies Care About. Second, we recently hosted a webinar discussing these new laws in greater length, which is available here on-demand.

And if you have any questions, we’re here to help.

2020 Laws Enacted Related to COVID-19

Notice and Reporting Obligations for Workplace Exposure to COVID-19

 

AB 685: Labor Code §§ 6325, 6432 (amended, repealed, and added); id. § 6409.6 (added and repealed)

As of January 1, 2021, employers must comply with certain notification and reporting requirements relating to potential COVID-19 exposure.

Two different events may trigger different notice requirements: when there is (1) a “notice of potential exposure” in the worksite; or (2) a “COVID-19 outbreak.”

Notice of Potential Exposure

What is it?

  1. A “notice of potential exposure” occurs when: (1) a public health official or licensed medical provider notifies the employer that an employee was exposed to a “qualifying individual” at the worksite; (2) an employee or their emergency contact notifies the employer that the employee is a “qualifying individual”; (3) the employer’s testing protocol reveals that an employee is a qualifying individual; or (4) a subcontracted employer notifies the employer that a qualifying individual was on the worksite of the employer receiving notification.
  2. A “qualifying individual” includes any person who has (1) a lab-confirmed case of COVID-19; (2) a positive COVID-19 diagnosis from a licensed health care provider (3) a COVID-19-related order to isolate provided by a public health official; or (4) died due to COVID-19 as determined by the county public health department.

Who must receive notice? When an employer receives “notice of a potential exposure,” the employer must provide notice to: (1) all employees, and the employees’ representatives (e.g., union representatives), who were on the premises at the same “worksite” as the qualifying individual within the “infectious period”; and (2) the employers of subcontracted employees who were on the premises at the same “worksite” as the qualifying individual within the “infectious period.”

Worksite” is defined as: “[t]he building, store, facility, agricultural field, or other location where a worker worked during the infectious period. It does not apply to buildings, floors, or other locations of the employer that a qualified individual did not enter. In a multi-worksite environment, the employer need only notify employees who were at the same worksite as the qualified individual.”

Infectious period” is defined by the State Department of Public Health and the current definition is: (1) for symptomatic persons, two days before symptom onset and 10 days after onset have passed with no fever, without use of fever reducing medications and symptoms have improved; and (2) for persons who test positive but never develop symptoms, two days before until 10 days after the specimen for their first positive test for COVID-19 was collected.

What must the notice say? The notice must:

  • Alert employees, the exclusive representatives of the employees (if any), and the employers of subcontracted employees, that the employees may have been exposed to COVID-19 at the worksite;
  • Provide employees and their exclusive representative, if any, with information regarding COVID-19-related benefits to which the employee may be entitled under applicable federal, state, or local laws, including, but not limited to, workers’ compensation, and options for exposed employees, including COVID-19-related leave, company sick leave, state-mandated leave, supplemental sick leave, or negotiated leave provisions, as well as anti-retaliation and anti-discrimination protections for the employee; and
  • Notify all employees, and the employers of subcontracted employees and the exclusive representative, if any, regarding the disinfection and safety plan that the employer plans to implement and complete per the guidelines of the federal Centers for Disease Control.

When and how must the employers provide notice? Notice must be provided within one business day of an employer learning of the potential exposure. It must be in writing and sent by (among other possible ways) personal service, email, or text message if it can reasonably be anticipated to be received by the employee within one business day of sending and shall be in both English and the language understood by the majority of the employees.

COVID-19 Outbreak

What is it? The statute provides that the definition of a “COVID-19 outbreak” is provided by the California Department of Public Health. While the Department’s current definition does not seem to align with the language of the new law, it appears that a “COVID-19 outbreak” is three or more cases of COVID-19 in the workplace within a two-week period among employees who live in different households.

If the employer is notified of a number of cases that meets the California Department of Public Health’s current definition of a COVID-19 outbreak (currently, three cases in 14 days), the employer must notify its local public health department within 48 hours and provide information on the number of COVID-19 cases, as well as the names, occupation, and worksite of any qualifying individuals. The State Department of Public Health must publish information it receives from local public health departments on their website.

Who must receive notice? When an employer is notified of a COVID-19 outbreak, the employer must provide notice to the local public health agency in the worksite’s jurisdiction.

What must the notice say? The notice must include: (1) name, number, occupation, and worksite of employees who meet the definition of a qualifying individual; and (2) the business address and NAICS code of the worksite where the qualifying individuals work.

When and how must the employers provide notice?

Notice must be provided within 48 hours of becoming aware of the potential outbreak and the statute does not indicate any particular method or means for sending the notice.

Enforcement

Until January 1, 2023, Cal/OSHA is authorized to shut down operations, processes, and prevent entry into workplaces when, “in its opinion,” employees are exposed to conditions that constitute an imminent hazard due to a risk of exposure to COVID-19. If Cal/OSHA exercises this authority, it must provide the employer with notice and post the notice in a conspicuous place at the worksite. Any restrictions imposed by Cal/OSHA must be limited to the immediate area where the hazard was identified. Cal/OSHA may not materially interrupt “critical government functions” essential to ensuring public health and safety functions, or the delivery of electrical power or water.

Also until January 1, 2023, Cal/OSHA may issue streamlined citations for serious violations related to COVID-19, without the need to comply with certain pre-citation requirements such as notifying the employer of an alleged violation at least 15 days before issuing a citation.

 

Employer Pro Tips

 

  • Employers should coordinate their AB 685 compliance efforts with their obligations under Cal/OSHA’s recently issued Emergency Temporary Standards (“ETS”) on COVID-19 infection prevention. Under these standards, employers are required to establish and implement a written COVID-19 prevention program. The plan must address several issues, including a system for communication with employees; identification and evaluation of COVID-19 hazards; investigating and responding to COVID-19 cases in the workplace; correction of COVID-19 hazards; training and instruction; physical distancing; face coverings; other engineering controls, administrative controls, and personal protective equipment; reporting, recordkeeping, and access; and return to work criteria. A more detailed description of these requirements is set forth here. The Department of Industrial Relations’ website offers a model plan that employers may use in crafting their own written plans.
  • The new law applies to all public and private employers in California, regardless of the number of employees.
  • Though the new law allows for a streamlined citation process, employers are still entitled to appeal a Cal/OSHA citation.
  • Employers should be sure to keep records of written COVID-19-related notifications for at least three years.
  • Because COVID-19 outbreaks may prompt attention from the media, employers should consider developing a media strategy.
  • Employers should ensure their employee contact information is accurate and up to date, particularly for workforces that do not use work-issued emails or phones.
  • Though the definition of “worksite” is ambiguous, it suggests that, for multi-level buildings, employers need only provide notice to employees (or their representatives or subcontract employers) if they were present on the same floor of a building where the qualifying individual entered. Accordingly, employers may want to consider proactively limiting an employee’s access to areas outside of their usual workspace.

 

COVID-19 Workers’ Compensation Presumption and New Employer Reporting Requirement

 

SB 1159: Labor Code § 77.8 (added); id. §§ 3212.86, 3212.87, 3212.88 (added and repealed).

For employers who employ 5+ employees, an employee who tests positive for COVID-19 is entitled to a presumption that illness or death resulting from COVID-19 on or after July 6, 2020 through January 1, 2023 arose in the course of their employment. This presumption only applies if the employee tests positive for COVID-19 within 14 days of working at their place of employment and their positive test occurs during a period of an “outbreak” at their place of work. An “outbreak” exists when, within 14 days: (1) there have been four positive COVID-19 tests for workplaces with 100 or fewer employees; (2) 4% of the employee population tests positive at workplaces with over 100 employees; or (3) the workplace is ordered to close by a specified entity due to a risk of COVID-19 infection.

Employers may dispute the presumption with evidence such as measures in place to reduce COVID-19 transmission in the employee’s place of employment and the employee’s nonoccupational risks of COVID-19 infection.

When an employer with 5+ employees knows or reasonably should know that an employee has tested positive for COVID-19, they must report certain information to their claims administrator in writing via electronic mail or fax within three business days. For example, employers must report that an employee has tested positive, the date of the positive test, location the employee worked during the preceding 14 days, and the highest number of employees who worked at the same site as the infected employee in the 45-day period preceding the last day the employee worked at each location.

Check out our recent blog post for more details about these new reporting requirements.

 

Employer Pro Tips

 

  • Employers should continue to work quickly and diligently to investigate and track each positive COVID-19 test from employees.
  • Employers should implement and document measures to reduce COVID-19 transmission at their worksites so they are prepared to quickly and effectively dispute workers’ compensation claims.
  • An employee’s home or residence is excluded from the reporting requirement, meaning unless an employee performed labor or services at the employee’s place of employment in the 14 days before he or she tests positive, the employer is not required to report this to the claims administrator.
  • The new law sunsets on January 1, 2023, so if an employee suffers illness or death from COVID-19 after January 1, 2023, the presumption no longer applies.
  • Employers should be aware that they have just three business days to report to their claims administrator that they know or reasonably should know that an employee has tested positive for COVID-19. This reporting obligation applies regardless of whether the employer plans to dispute whether the employee contracted COVID-19 in the workplace.
  • Employers should act quickly to rebut the presumption and, for workers’ compensation injuries occurring on or after July 6, 2020, the employer has just 45 days from the date of the claim to gather and submit evidence to deny that the claim or injury is presumed compensable.
  • Compliance is critical. Employers who fail to report the required information, or who intentionally submit false or misleading information, are subject to a $10,000 penalty from the California Labor Commissioner.
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2020 Laws Enacted Related to Independent Contractors

New (and Clarified) Exemptions to the “ABC” Test for Independent Contractors

 

AB 2257: Labor Code §§ 2775, et seq. (added), id. § 275.3 (repealed); id. §§ 17020.12, 23045.6 (amended); Revenue and Taxation Code §§ 18406, 21003.5, 61001 (added)

Last year, AB 5 implemented the rigid ABC test for independent contractor classification under the California Labor Code, Unemployment Insurance Code, and wage orders of the Industrial Welfare Commission, with limited exemptions for certain occupations and industries. AB 2257 leaves the ABC test untouched, but adds a number of new exemptions and clarifies some of the existing exemptions. The recent passage of Proposition 22, discussed below, also carves out app-based drivers from the scope of AB 5.

Additional Occupations Exempted from the ABC Test. The new law exempts additional occupations from the ABC test, including: individuals providing underwriting inspections and other services for the insurance industry, real estate appraisers, manufactured housing salespersons, certain international exchange visitor program workers, certain animal service workers, specialized performers teaching master classes, registered professional foresters, competition judges, licensed landscape architects, and certain occupations in connection with creating, marketing, promoting, or distributing sound recordings or musical competitions.

Changes to the Business-to-Business Exemption. The business-to-business exception under AB 5 had 12 prongs, some of which were quite difficult to satisfy. AB 2257 makes several changes, some of which relax the standards a bit, including, for example, eliminating the requirement that the business service provider “actually contract” with other businesses and instead simply requiring that they “can” contract with other businesses. Additionally, previously the exemption only applied when services were provided directly to the contracting entity and not to the contracting entity’s customers. AB 2257 specifies that this requirement does not apply “if the service provider’s employees are solely performing the services under the contract under the name of the business service provider and the business service provider regularly contracts with other businesses.”

Changes to the Referral Agency Exemption. The new law revises the criterion for determining which referral agencies and service providers are exempt from the ABC test. It also includes a number of definitions and expands the types of services that may use the referral agency exemption to include consulting, youth sports coaching, caddying, wedding planning, services provided by wedding and event vendors, and interpreting services by a certified service provider. At the same time, it carves out several services that do not qualify for the exemption, including high-hazard industry services, or referrals for businesses that provide janitorial, delivery, courier, transportation, trucking, agricultural labor, retail, logging, in-home care, or construction services (other than minor home repair).

Changes to the Professional Services Exemption. Among other changes, AB 2257 eliminates the per-year cap on submissions of work by freelance writers and photographers and replaces the cap with certain other requirements. It also adds new professions that may qualify under the exception, including specialized performers hired by a performing arts company or organization to teach a master class for no more than one week, services provided by an appraiser, registered professional and licensed foresters, and home inspectors.

New Categories of Exemptions. AB 2257 adds several new exemptions to the ABC test, provided certain requirements are met as to each exemption. These exemptions relate to single engagement events, music and recording industry occupations, single engagement live performances, individual performance artists, and data aggregators.

Broader Governmental Enforcement Powers. District attorneys may now file an action for injunctive relief against businesses suspected of misclassification. Under existing law, only the Attorney General and certain city attorneys had this authority.

 

Employer Pro Tips

 

  • Work with counsel to ensure that your workers are properly classified (e.g., develop an internal classification checklist, conduct a privileged audit, etc.).
  • Be cautious when classifying workers as misclassification may give rise to personal and criminal liability, government enforcement actions, greater exposure to lawsuits, Labor Commissioner charges, and more.
  • Review the new exemptions to determine whether any may apply to independent contractors with whom your company engages. Evaluate existing agreements with independent contractors and assess the impact of the new law on their business practices.
  • Because of the complexity of these issues, employers should consult legal counsel to review their processes and ensure compliance with all applicable laws and relevant best practices.
  • Consider including arbitration agreements with class action waivers in all independent contractor engagements.

 

App-Based Drivers/Delivery Workers Exempted from the “ABC” Test for Independent Contractors

 

Proposition 22: Business & Professions Code §§ 7448, et seq. (added); Revenue & Taxation Code § 1037 (amended)

 

Effective December 16, 2020, Proposition 22 allows certain app-based drivers and delivery workers to retain their independent contractor status, if they satisfy certain requirements and provide some specific designated benefits.

Workers Covered by Prop. 22: The new law applies to app-based drivers and delivery workers who either (1) provide delivery services on an on-demand basis through a business’s online-enabled application or platform; or (2) use a personal vehicle to provide prearranged transportation services for compensation via a business’s online-enabled application or platform.

Prop. 22 provides that app-based drivers and delivery workers are independent contractors, and not employees, of their network company if certain requirements are met, namely the company: (1) does not unilaterally prescribe the worker’s schedule or a minimum number of hours; (2) does not require drivers or delivery workers to accept any specific ride or delivery request to maintain access to the network; and (3) allows drivers and delivery workers to work for other network-based companies or hold other jobs.

Benefits Provided by Prop. 22: Prop. 22 requires that drivers and delivery workers be paid no less than 120% of minimum wage, with no maximum, as well as per-mile compensation for vehicle expenses. Network companies must also give applicable workers occupational accident insurance to cover medical expenses and lost income resulting from on-the-job injuries and provide a quarterly health care subsidy to qualifying drivers. The new law also imposes additional anti-discrimination and public safety requirements on network companies, such as requiring companies to develop sexual harassment policies, conduct criminal background checks for each app-based worker, providing workers with mandatory safety training, and mandating that companies implement zero tolerance policies relating to a worker’s suspected use of drugs or alcohol while providing services.

 

Employer Pro Tips

 

  • Prop. 22 only affects app-based drivers and delivery workers. Companies that do not contract qualifying delivery and rideshare service drivers and workers must still comply with AB 5, as further modified by the recent passage of AB 2257 (see above).
  • App-based rideshare and delivery companies must ensure they satisfy the benefits requirements of Prop. 22, including implementing sexual harassment policies and providing drivers with mandatory safety training.

 

 

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2020 Laws Enacted Related to Leave

Expanded CFRA Family and Medical Leave

 

SB 1383: Government Code § 12945.6 (amended and repealed); id. § 12945.2 (amended, repealed, and added).

As of January 1, 2021, SB 1383 implemented many significant changes to the California Family Rights Act (“CFRA”).

Expands CFRA to cover employers with 5+ employees. Under the CFRA as previously written, CFRA only applied to employers with 50+ employees. Under SB 1383, CFRA was expanded to cover employers with 5+ employees company-wide (regardless of location). SB 1383 also repealed the New Parent Leave Act on January 1 (the NPLA previously required employers with 20+ employees to provide baby bonding leave).

Expands list of covered family members. Under previous law, CFRA provides family and medical leave to care for a child, parent, or spouse. SB 1383 expands CFRA coverage to also include care for a grandparent, grandchild, sibling, or domestic partner.

Adds new military emergency leave. Borrowing from the FMLA, SB 1383 adds a new type of leave to CFRA’s family care and medical leave definition to cover qualifying exigencies related to the covered active duty or call to covered active duty of a family member in the Armed Forces.

Removes cap for spouses who share an employer. Under previous law, if both parents worked for the same employer, the employer was only obligated to provide a total of 12 weeks of bonding leave to both parents. Under SB 1383, the employer must provide 12 weeks of bonding leave to each parent.

Removes key employee exception. Under previous law, employers could refuse to reinstate salaried employees who were among the highest paid 10% of the company’s employees within a 75-mile radius. SB 1383 repeals this exception in its entirety.

 

Employer Pro Tips

 

  • Smaller employers who were not previously covered by CFRA must now have CFRA-compliant leave policies and procedures.
  • Employers that were previously subject to CFRA should update their policies, procedures, and forms to account for these substantial changes. As this new law deepens the differences between FMLA and CFRA, multi-state employers that previously used a singular family and medical leave policy may consider drafting a separate California policy or addendum.
  • Potential stacking problem: Employers with 50+ employees covered by both CFRA and the FMLA face a unique situation because the reasons for which leave may be taken under FMLA and CFRA do not fully overlap. For example, leave to care for a grandparent is not provided under the FMLA, which means an employee who takes 12 weeks of CFRA leave to care for their grandparent could still take an additional 12 weeks of FMLA for other qualifying reasons—stacking to 24 weeks of leave in the same year.
  • Supervisors and HR staff should be trained on the application of CFRA leave and the applicable forms and procedures that should be implemented.
  • Because this new law may increase the risk of litigation for employers, small employers with between five and 19 employees should consider taking advantage of the “small employer family leave mediation pilot program” established by AB 1867, which was also chaptered this year. This program provides that qualifying employers may request mediation through the DFEH within 30 days of receipt of a right-to-sue letter. Until mediation is complete, employees may not pursue a civil claim in court.

Expanded Paid Family Leave Related to Active Duty

 

AB 2399: Unemployment Insurance Code §§ 3302, 3307 (amended)

Under previous law, the Paid Family Leave program provided eligible employees with up to eight weeks of wage replacement benefits to take time off work for two reasons: (1) to care for a seriously ill child, parent, spouse, grandparent, grandchild, sibling, or domestic partner; or (2) to bond with a minor child within one year of its birth or placement in connection with foster care or adoption. Effective January 1, 2021, the Paid Family Leave program now also covers qualifying absences related to the active duty or call to active duty of an employee’s child, spouse, domestic partner, or parent in the Armed Forces.

 

Employer Pro Tips

 

  • Employers should be aware that employees may now take advantage of the Paid Family Leave program to participate in a qualifying exigency relating to the active duty, or call to active duty, of the employee’s family members.

Expanded Leave Protections for Crime Victims

 

AB 2992: Labor Code §§ 230, 230.1 (amended)

Under previous law, an employer was prohibited from discharging, discriminating, or retaliating against an employee who is a victim (defined to include victims of domestic violence, sexual assault, or stalking) for taking time off from work to recover or obtain relief. Effective January 1, 2021, the new law expands the definition of “victim” to include not only victims of stalking, domestic violence, and sexual assault, but also (a) victims of a crime that caused physical injury or that caused mental injury and a threat of physical injury; and (b) a person whose immediate family member has died as a result of a crime. It also expands the categories of authorized reasons for taking time off work, including to seek medical attention, to obtain services from prescribed entities or psychological counseling or mental health services, or to participate in safety planning and other actions to increase their safety from future crime or abuse.

Previous law prohibited employers from taking action against an employee in the event of an unscheduled absence, as long as the victim provided a certification to the employer. AB 2992 expands the types of certification that are sufficient, adding: (1) documentation from a victim advocate or other designated individual indicating that the employee was undergoing treatment or receiving services for their injuries or abuse; and (2) any other form of documentation that reasonably verifies the crime or abuse occurred, including (though not limited to) a written statement signed by the employee (or person acting on their behalf) certifying the absence is for an authorized purpose.

 

Employer Pro Tips

 

  • Employers now have an expanded obligation to provide time off for victim-employees to obtain relief. The new provisions also apply to employees whose family member has suffered a crime-related death. This includes any variety of child (biological, adoptive, foster, etc.), parent, partner, and “any individual whose close association with the employee is the equivalent of a family relationship.” Employers should be aware of these changes and educate their supervisors, managers, and HR staff regarding these changes.
  • Employers should immediately review and revise their leave policies and procedures.
  • Violations of these leave requirements may result in the employer being ordered to reinstate the employee and provide reimbursement for all lost wages and benefits, among other things.

Designation of Sick Leave at Employee’s Discretion

 

AB 2017: Labor Code § 233 (amended)

Effective January 1, 2021, California’s “Kin Care law” (i.e., Labor Code § 233) is amended to provide that employees have the sole discretion to designate sick leave as protected sick leave under Labor Code section 233 (i.e., protected sick leave taken for kin care, the employee’s own health condition, or for obtaining relief if the employee is a victim of domestic violence, sexual assault, or stalking).

 

Employer Pro Tips

 

  • Employers should revise their sick leave policies to ensure their employees are aware of their right to designate sick leave.
  • Employers should consider implementing sick leave tracking procedures to account for employees’ designations. Employers should also ensure they are providing adequate kin care leave.
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2020 Laws Enacted Related to DEI and Equal Pay

Opening the Boardroom Doors to Underrepresented Communities

 

AB 979: Corporations Code § 301.3 (amended); id. §§ 301.4, 2115.6 (added)

By December 31, 2021, all publicly held corporations headquartered in California must have a minimum of one director from an unrepresented community. By the end of 2022, corporations with over four but fewer than nine board members must have at least two directors from an underrepresented community, and corporations with more than nine board members must have at least three directors from an underrepresented community. A “director from an underrepresented community” means a director 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 new law builds on the existing requirement that at least one woman sit on any corporate board headquartered in California.

For more information, check out our blog post here.

Employer Pro Tips

 

  • Public companies and their boards should evaluate their compliance with the new law and consider recruiting and selecting new directors in preparation for the December 31, 2021 compliance deadline.
  • Companies that fail to comply with this new requirement may face a $100,000 to $300,000 fine and each director seat which should be held by a director from an underrepresented community, but is not, counts as a violation.
  • Companies should develop a process for gathering and disclosing relevant self-identification information from its board members.
  • In recruiting and selecting new directors, the board should follow its normal procedures for identifying qualified director nominees without regard to their race, gender, or sexual orientation.
  • Companies should also be mindful of Senate Bill 826, signed into law in 2018, which requires gender diversity on corporate boards in California. By the end of the 2021 calendar year, a board of five directors must include a minimum of two female directors and a board of six or more directors must include a minimum of three female directors.
  • As with its predecessor, SB 826, AB 979 has already been challenged in court on constitutional and other grounds. This lawsuit is ongoing.
  • The new law expressly allows companies to increase the size of their boards to accommodate adding new directors, so companies should review their bylaws and charter documents to assess the necessary actions to increase the size of the board, if needed.

 

Employers Now Required to Report Employee Pay Data by Race and Gender

 

SB 973: Government Code § 12930 (amended); id. §§ 12999, et seq. (added)

Effective March 31, 2021, employers with 100 or more employees must submit a pay data report to the California Department of Fair Employment and Housing (“DFEH”) disclosing: (1) the number of employees by race, ethnicity, and sex in each of 10 broad job categories (e.g., technicians, sales workers, etc.); and (2) the number of employees by race, ethnicity, and sex whose annual earnings (defined as W-2 income) fall within each of the pay bands used by the U.S. Bureau of Labor Statistics in the Occupational Employment Statistics survey. If an employer has multiple establishments, it must submit a consolidated report and a report for each establishment.

For more information, check out our blog post here.

Employer Pro Tips

 

  • Failure to comply with this reporting requirement may result in the DFEH seeking an order requiring compliance. If that happens, the employer will be responsible for costs incurred by the DFEH’s compliance efforts.
  • Employers should begin evaluating their readiness for compliance as soon as possible. For example, employers should decide how they can adjust their practices and procedures to ensure the data will be searchable and sortable by the DFEH using readily available software, as required by the new law.
  • Employers should be prepared for heightened scrutiny relating to pay equity and begin conducting a proactive analysis of their current pay data to identify any areas of concern before the end of the year. Employers should consider engaging counsel when conducting these analyses to ensure the maximum level of privilege possible and to develop a viable and effective strategy for compliance. For more information, check out Orrick’s Pay Equity Hub, which highlights current pay equity developments in the U.S. and offers tools to help employers develop best practices when dealing with pay equity issues.
  • Employers may want to review federal identified job categories for each of their jobs to ensure the category is still the most accurate fit.
  • Because the new law does not specify whether only California employees must be included in the pay report, nor does it specify whether the reporting requirements apply to employers with 100 or more employees overall or to employers with 100 or more employees just in California, additional guidance from the DFEH will likely be forthcoming.

 

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2020 Laws Related to Data Privacy

Changes to the California Consumer Privacy Act Relevant to Employers

 

Proposition 24: Civil Code §§ 1798.100– 1798.145, 1798.155–1798.192 (amended); id. §§ 1798.121, 1798.199.10–1798.199.100 (added)

Proposition 24, i.e., the California Privacy Rights Act of 2020 (“CPRA”), amends key portions of the 2018 California Consumer Privacy Act (“CCPA”), which went into effect earlier this year.

With the passage of Proposition 24, certain employee, job applicant, and independent contractor data is exempt from the California Consumer Privacy Act (“CCPA”) until January 1, 2023. Specifically, the exemption covers: (1) personal information collected about a person in the course of the person acting as a job applicant, employee, or independent contractor, used solely within that individual’s role with the business; (2) emergency contact information of an applicant, employee, or independent contractor; and (3) personal information of an applicant, employee, or independent contractor necessary for the business to administer benefits. Critically, however, the exemption does not extend to the CCPA’s existing requirements for: (1) disclosure of the categories of personal information collected about employees and job applicants and the business purposes for which the information is used; and (2) the need to take reasonable security measures to protect applicant and employee personal information.

Proposition 24 also creates a new category of protected data called “sensitive personal information,” which is broadly defined to include not only Social Security number, driver’s license number, passport number, and account information, but also geolocation, racial or ethnic origin, religious or philosophical beliefs, union membership, personal communications (meaning, the content of emails and text messages), genetic data, biometric or health information, and sex life or sexual orientation.

Also effective January 1, 2023, the CPRA gives California residents the right to request that a business maintaining inaccurate information about the individual correct this information upon a verifiable request.

For more information, check out our Cyber, Privacy & Data Innovation Insights here and here.

 

Employer Pro Tips

 

  • Employers must still comply with pre-collection notice requirements of the CCPA, which require employers to provide a privacy notice to employees, applicants, and contractors regarding the categories of personal information to be collected by the company and the purposes for which the information will be used.
  • Even currently CCPA-compliant employers will likely need to update their disclosure notices by 2023. Effective January 1, 2023, CPRA also requires businesses to provide notice of the categories of sensitive personal information (not just personal information) collected and the purpose for which they are collected or used. Also, employers are required to inform employees which categories of personal information or sensitive information are being sold or shared and the time the employer intends to retain each category (or the criteria used to determine such period).
  • Identify and inventory all data collected about applicants, current and former employees, independent contractors, emergency contacts, and dependents/spouses for purposes of administering benefits. Assess what data might be considered personal information or sensitive personal information that could give rise to notice obligations.
  • The CPRA’s expanded category of “sensitive personal information” likely encompasses much of the information contained in an employee’s personnel file, medical file (which would include FMLA/CFRA documentation), or other documentation maintained by the employer.
  • Train and educate individuals involved in hiring regarding new processes for CPRA-compliance.
  • Be aware that employees may attempt to use their right to correct inaccurate personal information to change negative performance evaluations and remove discipline from their personnel file.
  • Confirm all sensitive employee data is reasonably secure.
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Other Important Developments Employers Should Care About

Employees Have More Time to File DLSE Discrimination/Retaliation Complaints & Attorneys’ Fees Are Available in Section 1102.5 Whistleblower Actions

 

AB 1947: Labor Code §§ 98.7, 1102.5 (amended).

Prior to AB 1947, Labor Code §98.7 allowed any person who believed he or she had been unlawfully discharged from employment or discriminated against to file a complaint with the California Division of Labor Standards Enforcement (DLSE) within six months after the occurrence of the alleged violation. Effective January 1, 2021, any person who believes they have been discharged from employment or discriminated against will have one year to file such a complaint.

The new law also authorizes a court to award reasonable attorneys’ fees to plaintiffs who bring a successful section 1102.5 whistleblower action.

 

Employer Pro Tips

 

  • Because employees now have more time to file their DSLE complaints, employers might be defending themselves against claims in both administrative and court proceedings more frequently.
  • Additionally, because the new law provides for attorneys’ fees in section 1102.5 whistleblower actions, this may disincentivize resolution and lead to increased litigation.

 

New Exception for Use of No-Rehire Agreements

 

AB 2143: Code of Civil Procedure § 1002.5 (amended)

Last year, the legislature passed AB 749, which prohibited the use of no re-hire provisions in settlement agreements. AB 749 also created an exception to the prohibition of no re-hire provisions if the employer had made a good faith determination that the aggrieved party engaged in sexual harassment or sexual assault.

As of January 1, 2021, this exception is expanded to include sexual harassment, sexual assault, or criminal conduct. However, in order to take advantage of the revised exception, the employer must have made and documented the good faith determination before the aggrieved person filed their claim.

Further, in order for the prohibition on no-rehire provisions to apply, the aggrieved person must have filed their claim in good faith.

Employer Pro Tips

 

  • Employers should document all determinations that an employee engaged in sexual harassment, sexual assault, or criminal conduct. It is important to do so in a timely manner because this documentation must occur before the aggrieved party files a claim in order to take advantage of this exception.
  • It is still permissible to use a no re-hire provision (1) in standard separation agreements (those used in the absence of a specific dispute or claim); and (2) when the revised exception applies.
  • This law does not prevent an employer from internally coding individuals as not eligible for rehire in the ordinary course of business.
  • This law does not appear to apply to agreements with independent contractors, applicants, or any other nonemployees.
  • The statute makes clear that employers are not required to continue to employ an employee or rehire a former employee if there is a legitimate nondiscriminatory or non-retaliatory reason for terminating the relationship or refusing to rehire that individual.

 

Successor Employers Liable for Unpaid Wages

 

AB 3075: Corporations Code §§ 1502, 2117, 17702.09 (amended, repealed, and added); Labor Code § 1205 (amended); id. § 200.3 (added)

Effective January 1, 2021, successor employers are liable for any wages, damages, and penalties that its predecessor employer owes in connection with a final judgment after the time to appeal has expired. Under the new law, successorship is established if the employer meets any of the following criteria: (1) uses substantially the same facilities or workplace to offer substantially the same services as the predecessor employer; (2) has substantially the same owners/managers that control the labor relations as the predecessor employer; (3) employs as a managing agent a person who directly controlled the wages, hours, or working conditions of the predecessor employer’s workforce; or (4) operates a business in the same industry and the business has an owner, partner, officer, or director who is an immediate family member of any owner, partner, officer, or director of the predecessor employer.

Also effective January 1, 2021, local jurisdictions are expressly authorized to enforce labor standards relating to wage payments that are at least as stringent as the state standards.

Effective January 1, 2022 or upon the Secretary of State’s Confirmation that the new California Business Connect program (which will automate paper-based processes and allow businesses to file and request records online 24/7) is implemented, whichever is earlier, certain business entities are required to include an attestation in required business filings indicating whether any filer has an outstanding DLSE judgment for a violation of a wage order or the Labor Code.

 

Employer Pro Tips

 

  • Employers should be cautious about whether they could be exposed to liability based on this new predecessor employer liability provision. They should evaluate their relationship with predecessor entities carefully, considering the overlap and similarity between operations of the predecessor and successor companies.
  • Employers with any familial ties in the industry should take note that the definition of successor is especially broad regarding immediate family members. The new law, in relevant part, establishes successorship when someone “[o]perates a business in the same industry and the business has an owner, partner, officer, or director who is an immediate family member of any owner, partner, officer, or director of the judgment debtor.”

 

Expanding Labor Commissioner Representation to Arbitrations

 

SB 1384: Labor Code § 98.4 (amended)

Effective January 1, 2021, the new law expands the Labor Commissioner’s representation of indigent claimants to arbitrations. When a claimant cannot have their wage claim adjudicated by the Labor Commissioner due to a court order compelling arbitration, the Labor Commissioner must represent the claimant in the arbitration if the claimant is financially unable to afford counsel and the Labor Commissioner determines that the claim has merit.

Additionally, employers must now serve petitions to compel arbitration on the Labor Commissioner if the underlying wage claim is pending before the Labor Commissioner or on appeal. Moreover, the Labor Commissioner, upon the claimant’s request, may represent a claimant in proceedings to determine the enforceability of an arbitration agreement.

 

Employer Pro Tips

 

  • Employers will need to be sure to serve petitions to compel arbitration of wage claims on the Labor Commissioner.
  • Employers will likely see an increase in claimants’ legal representation in arbitration of their wage claims.

Clarifying Military/Veteran Status Protections In FEHA

 

AB 3364: Government Code §§ 12921, 12926, 12940 (amended)

The new law clarifies that the Fair Employment and Housing Act (“FEHA”) prohibits discrimination against individuals because they are veterans or because of their military status. Under existing law, the provisions of FEHA prohibited discrimination in employment and housing on the basis of “military and veteran status.”

 

Employer Pro Tips

 

  • Employers should review their existing policies to ensure they accurately reflect the recent changes to the language of FEHA.
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