2022 New Employment Laws

November.16.2021

The 2021 California Legislative year resulted in a number of new laws affecting California employer practices.  This Alert summarizes key new laws that have either recently taken effect or will go into effect on January 1, 2022.  Companies should work with legal counsel to assess the best approach for complying with these new developments.  

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Part 1: Major Legislation

2022 Laws Enacted Related to the #MeToo Movement

Expansion of Prohibitions on Non-Disclosure and Non-Disparagement Agreements

SB 331: Code of Civil Procedure § 1001 (amended); Government Code § 12964.5 (amended)

Effective January 1, 2022, the “Silenced No More Act” will prevent settlement agreements from restricting the disclosure of underlying facts of workplace harassment, discrimination, or retaliation on any protected bases (see Government Code §§ 12940, 12955 for protected characteristics) related to a claim filed in a civil action or a complaint filed in an administrative action. Previously, the law only prohibited such clauses for settlement agreements regarding sexual assault, sex-based discrimination, sexual harassment, or retaliation for reporting sex discrimination or harassment. Agreements may continue to include provisions prohibiting disclosure of the settlement amount and lawfully protected confidential employer information (e.g., trade secrets). Claimants may continue to request provisions that shield their identity or facts that may lead to their identity.

The law further restricts non-disparagement agreements as a condition of bonuses, raises, employment, or as part of a severance plan. Such agreements may not deny an employee’s right to disclose information about unlawful acts in the workplace, with the legislation specifically enumerating discrimination and harassment. Non-disparagement or related provisions must include language to the substantial effect: “Nothing in this agreement prevents you from discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that you have reason to believe is unlawful” (emphasis added). Employers may still include a lawful and valid general release or waiver of all claims in a separation agreement.

Finally, the law requires employers offering an employee or former employee a separation agreement to notify the employee that they have the right to consult with an attorney. Employers must offer no less than five business days to do so. Employees may sign before the time period ends, but such a decision must be “knowing and voluntary” and not improperly induced by the employer (e.g., with fraud or threat).

Employer Pro Tips:

  • Act Before 2022: This law does not go into effect until January 1, 2022. If employers have pending matters with an employee alleging discrimination on a basis other than sex, employers may still include non-disclosure provisions as part of a settlement package before the end of the year.
  • Review and Update Settlement Agreements: Consult with legal counsel to ensure that standardized terms in your settlement agreements conform to the law.
  • Consider Litigating Meritless Claims: While the risk of litigation remains prevalent, this law may change the calculus of some employers. Previously, employers were often motivated to dispose of meritless claims with a non-disclosure agreement as part of that strategy. Now that aggrieved employees may speak openly about allegedly unlawful acts in the workplace regardless of settlement terms, employers may consider taking these matters to trial to vindicate their reputations.
  • Keep Settlement Amounts Confidential: While this law grants aggrieved employees substantially more freedom to discuss the alleged facts of their cases, employers may continue to prevent disclosure of settlement amounts. Employers should do so to prevent granting putative future plaintiffs that valuable information as a bargaining tool.
  • Employees Signing Without Counsel May Later Contest the Agreement: The law allows employees to enter a settlement agreement without counsel and before the end of a “reasonable time period” (no less than five business days). However, such a decision must be “knowing and voluntary,” and “not induced by the employer through fraud, misrepresentation, or a threat,” among other restrictions. Here, other areas of the law are instructive. These terms leave substantial room for later litigation where employees will post hoc challenge the voluntariness of such agreements. Any waivers of the right to counsel should be written and drafted by expert legal counsel.

2022 Laws Enacted Related to Arbitration

New Requirements for Arbitration Providers; Arbitration Fees Generally Due upon Receipt

SB 762: Civil Code § 1657.1 (added); Code of Civil Procedure §§ 1281.97 (amended) and 1281.98 (amended)

This bill expands upon employee and consumer arbitration requirements provided in SB 707 (2019). In California, employers must pay the costs of arbitration. Existing law requires these costs paid within 30 days of the due date, with failure to pay resulting in material breach, default, and a waiver of the right to compel arbitration. Now, once an employee or consumer meets the filing requirements of arbitration, the arbitration provider must “immediately” supply an invoice of any required fees to “all parties by the same means on the same day,” detailing costs and due dates. Absent an express provision in the arbitration agreement, the invoices shall be due upon receipt. All parties must agree to any extension of due dates. These changes are designed to expedite the arbitration process and put all parties on notice as to exactly when an employer has materially breached.

Finally, this legislation requires that any time “specified in a contract of adhesion for the performance of an act required to be performed shall be reasonable.” This is broad language, but its addition in SB 762 suggests that the drafter of an arbitration agreement cannot provide themselves an unreasonably long time to pay required fees, thus defeating the purpose of the bill.

Employer Pro Tips:

  • Update Arbitration Agreements to Conform: As the drafter, build in an express provision specifying the number of days (a reasonable period of time) for the Company to pay the invoice from the arbitration provider to avoid a situation where the invoice would be due upon receipt.
  • Timely Pay Arbitration Fees: Where the drafting party fails to pay within the applicable timeline, that party is in material breach of the arbitration agreement. The employee may then withdraw from arbitration and proceed to court or compel arbitration with the drafting party facing a sanction of attorney’s fees and costs. This bill is designed to target strategic delays through a failure to pay or unilateral requests for extensions.
  • Anticipate Further Anti-Arbitration Legislation: Anti-arbitration bills in California are a perennial tradition. In comments to this legislation, the bill’s author unapologetically criticizes the one-sided nature of the agreements, along with the federal courts that uphold them. The bill’s sponsor was an association of employment plaintiffs’ attorneys. Companies relying on arbitration agreements should expect such agreements to be the subject of continued legislative scrutiny.

2022 Laws Enacted Related to DFEH, FEHA & CFRA

Procedural Changes to DFEH Enforcement & Expansion of Employer Record Retention Requirements

SB 807: Government Code §§ 12930, 12946, 12960, 12961, 12962, 12963.5, 12965, 12981, 12989.1 (amended)

Beginning January 1, 2022, employers will be required to retain personnel records for applicants and employees for four years from the date the records were created or the date the employment action was taken. When a complaint is filed, employers will be required to retain the records until the matter reaches its final resolution, either because the entire administrative and court dispute process has concluded, or because the employee’s statute of limitations has expired.

Additionally, the bill makes procedural changes to how the Department of Fair Employment and Housing (DFEH) enforces California’s civil rights laws. These changes include: (1) authorizing DFEH to appeal court decisions regarding the scope of the agency’s power to compel cooperation with its investigations; (2) pausing otherwise applicable statutes of limitation, including retroactively without reviving lapsed claims, while DFEH is conducting investigations or attempting mediation; (3) expanding the methods through which DFEH may serve process of a verified civil rights complaint to include methods authorized in other civil legal disputes; and (4) allowing DFEH to file civil rights actions in any county if the civil action includes class or group allegations on behalf of DFEH.

Employer Pro Tips:

  • Prepare for a Longer Retention Period: The longer record period aims to match the filing period that was enacted under AB 9 of 2019. The longer retention period aids the employer’s ability to investigate and ensures sufficient information exists to defend the company against any potential complaints.
  • Update Internal Policies: Company policies should reflect the longer retention period. Train employees responsible for retaining records on the new procedures quickly, preferably before the start of the 2022. Note any auto-delete functions on company communications.
  • Train Your Staff: Prepare employees on how to promptly report any complaints of discrimination, harassment, and retaliation in the workplace. Ensure that appropriate personnel understand how to promptly respond, including issuing legal hold notices when threatened with litigation.
  • Thoroughly Document Important Employment Events: Instruct all managers and supervisors how to properly and thoroughly document all employee write-ups, performance reviews, adverse personnel actions, etc. Review your document retention systems. Consider retaining outside counsel to conduct a privileged investigation into any allegation of discrimination, harassment, or retaliation.

Expansion of CFRA Leave to Include Parents-in-Law and Modifications to DFEH Small Employer Mediation Program

AB 1033: Government Code §§ 12945.2 and 12945.21 (amended)

This law adds onto 2020’s expansion of the California Family Rights Act. First, the law will allow employees to take leave to care for “designated persons.” The designated person can be identified at the time of leave and does not need to be named before then. Additionally, the employee can designate a different designated person every 12 months.

Second, the law adds “parent-in-law” to the list of individuals with serious health conditions for whom employees can take leave to care for.

Third, for employers with between 5 and 19 employees, the law alters the notice provisions of the small employer family leave mediation pilot program. The alteration requires the employee alleging a violation of job protected leave to contact the department’s dispute resolution division prior to filing an action. It also clarifies the duty of an employee or employer to request mediation and dictates the appropriate timelines for the process.

Employer Pro Tips:

  • Review Relevant Policies: Given the significant expansion of the CFRA in 2020, it is important to continue any review of policies relevant to these updates.
  • Update Procedures: CUpdate policies containing the list of approved individuals qualifying for family leave to include “parent-in-law” as a covered individual.
  • Inform Employees: Update CFRA policies to include the ability for employees to take leave to care for designated persons and explain they may designate a new person every 12 months.
  • Note for Small Businesses: If you are an employer with between 5 and 19 employees, further consult the legislation or outside counsel to understand the procedural strategies that may aid in protecting against any potential claims of violation of job protected leave.

Part 2: Additional Developments in CA Legislation Relating to COVID-19, Wage & Hour Laws, and Workplace Safety

COVID-19

  • AB 654: (Employers’ notification, benefits, and disinfecting requirements after COVID-19 exposure have been clarified).
    • This law is already in effect and expands upon COVID-19 requirements enacted in 2020. Previously, employers were required to notify “employees who may have been exposed” to a person with COVID-19 in the workplace. Now, within one business day of notice of potential exposure, employers must notify “all employees, and the employers of subcontracted employees, who were on the premises at the same worksite as the qualifying individual within the infectious period.” Notice must be written, but this may include email or text message if that is a reasonable form of communication.
    • In the notice, employers must explain any applicable benefits (e.g., workers’ compensation, sick leave, etc.) to which the exposed may be entitled, along with the cleaning and disinfection plan the employer has implemented under CDC and Cal/OSHA standards.
    • If any employer sustains the number of cases that qualify as a “COVID-19 outbreak” (as defined by the State Department of Public Health), the employer must notify the local public health agency with requisite details within 48 hours or one business day, whichever is later.
    • The law enumerates some industries that are exempt from these requirements (e.g., certain health clinics and residential care facilities). The provisions sunset January 1, 2023.

Wage & Hour

  • AB 286: (Food delivery and facility personnel will keep their tips).
    • This law makes it unlawful for any food delivery service to retain any money designated as a tip or gratuity. For deliveries, the service must provide the entire gratuity to the delivery person. For pick-up orders, the platform must provide the money to the food facility.
    • The law also expands consumer disclosure requirements as to how prices are calculated.
  • AB 701: (Warehouse distribution centers required to disclose quotas to nonexempt employees).
    • Effective January 1, 2022, this law requires covered warehouses to provide a written description of any quota to which an employee is subject, such as tasks to be performed or products generated. The explanation must provide potential adverse actions for failure to meet the quota. Covered warehouses are those with 100 or more employees at a single warehouse center, or 1,000 or more at one or more warehouses in the state.
    • Employers may not take adverse action against employees who fail to meet undisclosed quotas, or quotas that do not allow a worker to comply with rest, health, or safety laws.
    • Upon request of a current or former employee who believes that a quota violated their right to rest periods or laws protecting their health and safety, an employer must provide a written description of each quota and the most recent 90 days of the employee’s work speed data.
  • AB 1003: (Intentional wage theft will be punishable as grand theft).
    • Intentional theft of wages, including gratuities, greater than $950 from any one employee, or $2,350 in the aggregate from two or more employees, by an employer in any consecutive 12-month period will be punishable as grand theft.
    • Any wages, gratuities, benefits, or other compensation that are the subject of a prosecution under these provisions can be recovered as restitution.
    • Independent contractors are included within the meaning of employee and hiring entities of independent contractors are included within the meaning of employer for the purposes of these provisions.
  • SB 657: (Employers will be permitted to distribute required employment-related posters via e-mail).
    • Employers may distribute any information that they are required to physically post to employees via email.
    • However, the distribution by email will not change the employer’s obligation to physically display the required posting.

Workplace Safety

  • SB 606: (Cal/OSHA can issue citations for two new categories of health and safety violations).
    • There will be a rebuttable presumption that an employer’s written policy that violates specified health and safety regulations exists at all of the employer’s worksites.
    • Cal/OSHA can issue an “egregious violation” if one of seven criteria is true; the egregious violation carries specified additional penalties.
    • Cal/OSHA will have the power to seek an injunction restraining certain uses or operations of employment if it has grounds to issue a citation.
    • Cal/OSHA has the authority to issue a subpoena during an inspection if the employer fails to promptly provide the requested information.