Special Report: Major Changes For California Employers in 2021

This year saw a host of changes to California employment laws, and not all of them resulted from the COVID-19 pandemic. While the laws changed rapidly to address the needs of employees and employers during these increasingly uncertain times, California laws changed significantly with regard to all sorts of everyday activities. Among other things:

Employees now have additional time to bring wage claims to the Division of Labor Standards Enforcement (DLSE)
Employees can recover attorney’s fees for certain “whistleblower” claims
Larger employers must submit pay data to the Department of Fair Employment & Housing (DFEH)
The California Family Rights Act (CFRA) now applies to more employees and more employers
Employees have more leeway to decide when sick leave is taken for “kin care”
Victims of crime and abuse are more free to take leave
The standards for no-rehire agreements have been loosened
Adjunct faculty are now considered exempt

Add all that to the many changes adopted to deal with the pandemic, and 2020 made for a busy year for the California State Legislature.

Take a look for yourself at all of these significant changes:

FILING PERIOD FOR DLSE CLAIMS EXTENDED, AND ATTORNEY’S FEES ALLOWED UNDER LABOR CODE 1102.5 (A.B. 1947)
Assembly Bill 1947 amends the California Labor Code in three substantive ways. First, A.B. 1947 amends Labor Code section 98.7 by extending the time period for employees to file a complaint with the Division of Labor Standards Enforcement (DLSE). Currently, an employee who believes he has been wrongfully discharged or discriminated against in violation of any of California’s labor laws has six months after the occurrence of the violation to file a claim with the DLSE, but under the new legislation, an employee has one year to do so.

Second, A.B. 1947 amends Labor Code section 1102.5 to prohibit an employer from retaliating against an employee who reports an employer’s actual violation or noncompliance with local, state, or federal statutes or regulations; or who has a reasonable cause to believe that his/her employer violated or failed to comply with the law.

Lastly, the new legislation permits a court to award reasonable attorney’s fees to a plaintiff who prevails on a “whistleblower” action under Labor Code section 1102.5.

EMPLOYERS WITH OVER 100 EMPLOYEES MUST SUBMIT PAY DATA TO DFEH (S.B. 973)
Senate Bill 973 requires that private employers with 100 or more employees, and who are required to file an annual Employer Information Report (EEO-1) pursuant to federal law, must submit an annual pay data report to California’s Department of Fair Employment & Housing (DFEH).

Per the new legislation, the pay data report must include the number of employees by race, ethnicity, and sex during a single pay period between October 1 and December 31 of the reporting year, in each of the following categories:

Executive or senior level officials and managers
First or mid-level officials and managers
Professionals
Technicians
Sales workers
Administrative support workers
Craft Workers
Operatives
Laborers and helpers
Service Workers

Employers are also required to identify the number of employees by race, ethnicity, and sex whose annual earnings fall within each of the pay bands used by the U.S. Bureau of Labor Statistics in the Occupational Employment Statistics survey. To do so, the employer must calculate the total earnings for each employee for the entire reporting year, whether or not the employee worked a full calendar year. Lastly, the report must include the total number of hours each employee worked in each pay band.

To avoid duplicative reporting, if an employer is required to submit an EEO-1 under federal law (which provides substantially similar data), the employer may submit a copy of the same report to the DFEH. However, if an employer has multiple establishments, it must file a report for each establishment, as well as a consolidated report. Per S.B. 973, the first annual report will be due on or before March 31, 2021, and subsequent annual reports will be due on or before March 31 each year thereafter.

PROTECTED LEAVE COVERAGE EXPANDED TO SMALLER EMPLOYERS AND ADDITIONAL FAMILY MEMBERS (S.B. 1383)
The California Family Rights Act (CFRA) ensures job-protected leave for California employees to bond with a newborn, care for a family member with a serious health condition, care for their own illness, or address a military exigency. Senate Bill 1383 significantly expands the application of CFRA in several respects.

Smaller Employers Are Now Covered. The CFRA previously applied to all public employers and private employers with 50 or more employees within 75 miles of the worksite. S.B. 1383 expands CFRA leave to private employers with at least 5 employees, and eliminates the requirement that employees work within 75 miles of the worksite. Therefore, employees who work for such employers will now be able to take up to 12 weeks of unpaid family care and medical leave, which includes leave for an employee to care for themselves, a family member, the birth or adoption of a child, and a qualifying military exigency. This will significantly impact small employers who were not previously required to provide such leave.

Expansion of “Family Members.” The CFRA currently allows employees to take leave to care for several purposes, including to care for a “family member,” which is defined to include a spouse, parent, or child (if the child is a minor or dependent adult). S.B. 1383 expands the scope of “family members” to include domestic partners, siblings, grandparents, grandchildren, children of a domestic partner, and adult children (whether or not they are a dependent). Therefore, large employers who were already covered by the CFRA will need to change their existing policies and practices to provide leave for a wider definition of family members.

New “Stacking” Issue with the federal FMLA. For employers with at least 50 employees who are covered by both the CFRA and Family Medical Leave Act (FMLA), the CFRA’s more expansive definition of “family member” may result in employees “stacking” leave under the two laws for varying purposes. Leave under the CFRA and the FMLA generally runs concurrently, meaning an employee is only eligible for a total of 12 weeks’ unpaid leave under both laws. However, the CFRA will now allow family leave for more family members than the FMLA permits (which limits family leave to care for an employee’s spouse, child, or parent who has a serious health condition). Therefore, an employee covered by both the CFRA and FMLA can take 12 weeks’ leave to care for a sibling under the CFRA, and another 12 weeks’ to care for a spouse under the FMLA, totaling 24 weeks’ leave.

Deletions from Existing Law. S.B. 1383 deleted two provisions from the CFRA. First, if both parents are employed by the same employer, an employer was previously not required to provide more than 12 weeks total leave for the birth, adoption or foster care placement of a child. Employers will now be required to provide 12 weeks’ leave to both employees for such purposes. Second, S.B. 1383 removes language that allowed an employer to refuse to reinstate highly compensated employees where necessary to prevent substantial economic injury.

What Should Employers Do Now?
S.B. 1383 goes into effect on January 1, 2021. Small businesses who were not previously covered by the CFRA need to develop policies and procedures to implement and administer the new leave requirements. Employers who were previously covered by CFRA need to update their policies to incorporate the revisions to CFRA, and ensure that FMLA and CFRA properly track when such leaves run concurrently or separately.

PAID SICK LEAVE DESIGNATION FOR KIN CARE (A.B. 2017)
California Labor Code Section 233 requires employers to permit employees to use their accrued and available sick leave entitlement to attend to the illness of a family member (known as “kin care”). It also prohibits employers from denying an employee the right to use sick leave or taking specific discriminatory action against an employee for using, or attempting to exercise the right to use, sick leave to attend to such an illness. “Family member” for purposes of kin care includes an employee’s child, parent or guardian, spouse or registered domestic partner, grandchild, grandparent, and sibling.

Assembly Bill 2017 revises Labor Code section 233 to provide employees the sole discretion to designate such leave as paid sick leave.

What Should Employers Do Now?
Employers should review their paid sick leave policies and implement procedures that allow employees to make such designations for kin care. Employers may also want to consider differentiating kin care from other protected leaves in their processes for tracking paid sick leave.

EXPANDED LEAVE PROTECTIONS FOR VICTIMS OF CRIME OR ABUSE (A.B. 2992)
Assembly Bill 2992 expands existing prohibitions on employers from discharging, discriminating, or retaliating against employees who are crime victims who take time off from work to obtain medical attention for injuries suffered, psychological counseling, mental health services, or similar relief.

Prior to A.B. 2992, such protections extended only to victims of domestic violence, sexual assault, or stalking. By amending Labor Code sections 230 and 230.1, these protections now broadly apply to crime victims outlined in Government Code section 13951 which comprehensively include any crime victim who has experienced physical or mental injury, or a threat of physical injury, including persons who experience the death of a family member as the result of a crime. Employee crime victims are covered regardless of whether any person is ever arrested for, prosecuted for, or convicted of committing the alleged crime. To qualify under A.B. 2992, however, an employee must provide advance notice of the requested absence unless it is unfeasible to do so. In those circumstances, the employee must provide their employer with a police report, court order, or other form of documentation that verifies that a crime or abuse occurred within a “reasonable” amount of time.

NO-REHIRE AGREEMENTS AND NEW “GOOD FAITH” REQUIREMENT (A.B. 2143)
Assembly Bill 2143 augments existing law prohibiting “no-rehire” clauses in settlement agreements in two important ways.

Currently, employers are prohibited from including “no-rehire” clauses in settlement agreements that prohibit, prevent, or otherwise restrict an aggrieved employee from obtaining future employment with an employer where the aggrieved employee has filed a claim against the employer either in court or through the employer’s internal compliant process.

Born out of the #MeToo movement, the policy behind the existing law was to avoid situations where a victimized employee was forced from their employment in connection with a settlement agreement while their harasser or abuser remained employed. Following the passage of A.B. 2143, an aggrieved employee must not only have filed a claim against their employer for the prohibition to apply, but the claim must have been filed in “good faith.” Notably, A.B. 2143 does not define or clarify what a “good faith” showing would require.

Second, A.B. 2143 creates additional exceptions from the prohibition if the employer has documented its own good faith determination that the aggrieved employee: (a) engaged in sexual harassment or sexual assault themselves, or (b) engaged in criminal conduct, either of which the employer must have documented prior to the filing of the aggrieved employee’s claim. The inclusion of a “no-rehire” clause in an employment settlement agreement under those circumstances would be permissible under the new law.

ADJUNCT FACULTY ARE NOW EXEMPT PROFESSIONALS (A.B. 736)
Although adjunct professors historically performed exempt duties and qualified as exempt professionals under federal law, they typically did not meet the full-time salary threshold under California law to be exempt from California wage and hour laws, due to the part-time nature of their work.

A recent surge of litigation caused some colleges and universities to reclassify their adjunct faculty as hourly paid employees. As a result, the Association of Independent California Colleges and Universities sponsored Assembly Bill 736, which the Service Employees International Union supported, to allow independent colleges and universities in California to appropriately treat adjunct faculty as professional employees.

Effective September 9, 2020, A.B. 736 amends Labor Code Section 515.7 to expand the California professional exemption under Industrial Welfare Commission Wage Order Nos. 4-2001 and 5-2001 to include part-time faculty employed by independent institutions of higher education in California, as long as the employee meets the existing professional exemption duties test, as well as a new salary test.

The duties test requires the employee to both: (1) be engaged in an occupation commonly recognized as a learned or artistic profession, and (2) customarily and regularly exercise discretion and independent judgment in the performance of their duties. The law further details work recognized as a learned or artistic profession.

The new salary test also mandates that employees who meet the duties test qualify for the exemption if they either: (1) are paid a monthly salary that is at least two times the state minimum wage for at least 40 hours per week; or (2) are paid per course or laboratory in accordance with rates set forth in Labor Code Section 515.7 (i.e., $117 per hour for 2020; $126 per hour for 2021; $135 per hour for 2022; with increases thereafter coinciding with increases in the state minimum wage).

Independent higher education intuitions with adjunct faculty who are classified as exempt should consult with counsel to review their employees’ duties and compensation structure to ensure compliance with Labor Code Section 515.7.

COVID-19 AND WORKERS’ COMPENSATION (S.B. 1159)
Governor Newsom previously issued Executive Order No. N-62-20 (the “Order”), which created a rebuttable presumption that any employee who contracted COVID-19 contracted the illness at work for workers’ compensation purposes. The Order expired July 5, 2020; however, the California legislature passed S.B. 1159, adding sections 3212.86, 3212.87, and 3212.88 to the California Labor Code to address COVID-19 in the workers’ compensation system. These added provisions create a new framework for COVID-19 related workers’ compensation claims and impose strict reporting requirements on employers.

Rebuttable Presumption. If an employee suffers from illness or death resulting from COVID-19, it is presumed that employee contracted the virus at work. An employer may rebut this presumption, but must do so quickly.

If the date of injury is prior to July 6, 2020, the employer’s claims administrator has 30 days to deny the claim. If the date of injury is on or after July 6, 2020, the claims administrator has 45 days to deny the claim. If the claims administrator does not deny the claim, the claim is presumed compensable.

Evidence an employer may use to rebut the presumption includes any measures taken by the employer to prevent transmission of COVID-19, and any evidence that an employee may have contracted the virus elsewhere.

Notably, the presumption is only rebuttable with evidence that is discovered subsequent to the applicable investigation period. Meaning: evidence discovered within the 30 and 45 day deadlines discussed above cannot be later used to rebut the presumption of compensability. However, if an employee is “essential,” as defined by Labor Code section 3212.87 (active firefighters, peace officers, or healthcare workers) the 30-day deadline applies regardless of the date of injury.

Employees Covered by the Presumption. Labor Code sections 3212.86 and 3212.88 apply to all employees who:

Test positive during an outbreak at the employee’s specific place of employment; and
Whose employer has five or more employees.

An “outbreak” exists if within 14 calendar days one of the below occurs at a specific place of employment:

“If the employer has 100 employees or fewer at a specific place of employment, 4 employees test positive for COVID-19;”
“If the employer has more than 100 employees at a specific place of employment, 4 percent of the number of employees who reported to the specific place of employment, test positive for COVID-19;” or
“A specific place of employment is ordered to close by a local public health department, the State Department of Public Health, the Division of Occupational Safety and Health, or a school superintendent due to a risk of infection with COVID-19.”

“Specific place of employment” is anywhere the employee performs work at the employer’s direction; however, it does not include an employee’s home or residence. If an employee performs work at multiple locations, the employee’s positive test must be counted at each location when determining whether there is an outbreak.

When the Presumption Applies. For the presumption to apply, the below conditions must be met:

“The employee tests positive for COVID-19 within 14 days after a day that the employee performed labor or services at the employee’s place of employment at the employer’s direction;”
The last day that the employee performed work at the employee’s place of employment at the employer’s direction was on or after March 19, 2020 and before July 5, 2020 (Labor Code section 2312.86) or on or after July 6, 2020 (Labor Code section 3212.88); and
“The employee’s positive test occurred during a period of an outbreak at the employee’s specific place of employment.”

Employers Can Require Exhaustion of COVID-19 Related Benefits. If the presumption applies, the employee is entitled to “full hospital, surgical, medical treatment, disability indemnity, and death benefits.” However, if an employee is eligible for paid leave benefits the employee would not have received but for COVID-19, those benefits must be exhausted before using any temporary disability. If an employee has no benefits available to them, then the employee must be provided with benefits without any waiting period.

Employer Reporting Requirements. Labor Code section 3212.88(i) requires employees who know, or reasonably should know, that an employee has tested positive for COVID-19 report the below information to their workers’ compensation claims administrator (via electronic mail or facsimile) within three business days:

An employee has tested positive (the employer is prohibited from providing personally identifiable information unless the employee has filed a claim under Labor Code section 5401);
The date the employee tested positive (i.e. the date the specimen was collected for testing);
The specific address or addresses of the employee’s place of employment during the 14 days preceding the date of the positive test; and
The highest number of employees who reported to work at the employee’s place of employment during the 45 days preceding the employee’s last day of work.

Retroactive Reporting Requirements. An employer who is aware of an employee testing positive on or after July 6, 2020 and before September 17, 2020, must also prepare a report to the claims administrator (via electronic mail or facsimilia) within 30 business days of September 17, 2020 (i.e., October 17, 2020). The report must contain the same information as outlined above, except rather than identifying the highest number of employees who reported to work at the employee’s place of employment during the 45 preceding days, the employer is instead required report the “highest number of employees who reported to work at each of the employee’s [work site] on any given work day between July 6, 2020 and September 17, 2020.

Penalties for Submission of False and/or Misleading Information. Any employer, or agent acting on behalf of the employer, who intentionally submits false or misleading information, or fails to submit the required reporting information outlined above, is subject to a civil penalty in the amount of $10,000.

COVID-19 NOTICE TO EMPLOYEES (A.B. 685)
On September 17, 2020, Governor Newsom signed Assembly Bill 685, placing strict COVID-19 related reporting requirements on employers and expanding the Division of Occupational Safety and Health’s (Cal/OSHA) powers.

While A.B. 685 does not go into effect until January 1, 2021, employers should act now to review existing policies and put procedures in place to ensure compliance with A.B. 685 in the new year.

When Notice to Employees is Required. When an employer, or its representative, receives notice that a “qualifying individual” was in the workplace, the employer is required to issue notice within one business day to affected employees.

A “qualifying individual” is any person who:

Has a confirmed case of COVID-19;
Has a positive COVID-19 diagnosis from a licensed health care provider;
Has received a COVID-19-related order to isolate from a public health official; or
Has died due to COVID-19.

Who Must Be Notified. The employer must notify all employees, including employees of any subcontractors, who worked as the same worksite during the infectious period and the employees’ “exclusive representative,” if any.

Information the Employer Needs to Provide. Notice provided to employees must:

Advise the employee that he/she “may have been exposed to COVID-19;”
Be in writing;
Be in English and any other language understood by the majority of employees;
Transmitted to employees in the same manner the employer normally uses to communicate with employees.
Identify COVID-19 related benefits the employees may be entitled to under federal, state, or local law and under the employer’s policies;
Identify antiretaliation and antidiscrimination protections of the employees; and
Identify the disinfection and safety plan the employer plans to implement and complete pursuant to Centers for Disease Control guidelines.

Importantly, the notice should not disclose the names of any infected employees. Employers must maintain records of any written notifications made pursuant to A.B. 685 for a period of three years.

Notice to Local Health Officials. In addition to notice to employees, an employer may also be required to notify the local public health agency in the jurisdiction of the worksite if the employer is experiencing an “outbreak” within 48 hours. An “outbreak” is “three or more laboratory-confirmed cases of COVID-19 among employees who live in different households within a two-week period.” (See the California Department of Public Health’s COVID-19 Employer Playbook – Supporting a Safer Environment for Workers and Customers.)

Notice to local health officials must contain the following information:

Name, number, occupation, and worksite of a qualifying individual; and
Business address and NAICS code of the worksite.

The employer is required to provide further notice of any subsequent laboratory-confirmed cases of COVID-19 at the worksite.

Exemptions to Notice and Reporting Requirements. The above notice and reporting requirements apply to all private and public employees, with two exceptions: (1) health facilities as defined in section 1250 of the Health and Safety Code; and (2) employees whose regular duties include COVID-19 testing or screening, or who provide patient care to individuals who are known or suspected to have COVID-19, unless the “qualifying individual” is also an employee at the same worksite.

Cal/OSHA’s Authority to Shut Down a Workplace Due to COVID-19. Current law vests Cal/OSHA with the authority to prohibit entry into a workplace or prohibit use of dangerous equipment in the workplace where there is an imminent hazard to employees. A.B. 685 specifically extends this authority to COVID-19 related issues.

If Cal/OSHA finds that a workplace, operation, or process exposes employees to a risk infection, it has the authority to prohibit entry to the workplace or the performance of an operation and/or process. However, the restriction must be only to the areas of the worksite that pose a risk to employees. Cal/OSHA must notify employers and post conspicuous notice.

Serious Violation Citations Regarding COVID-19. A.B. 685 removes the prior 15-day notice period for COVID-19-related serious violation citations. Typically, Cal/OSHA will provide at least 15 days’ notice before issuing a citation. Now, and until January 1, 2023, Cal/OSHA no longer must provide 15 days’ notice, but can issues citations immediately. Employers are still able to contest the citation through the appropriate procedures.

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CONCLUSION
While many of us are ready to put 2020 in the rear-view mirror, challenges for the new year abound. We wish everyone a happy, healthy and safe holiday season, and we are ready to assist you with all of your employment needs in the new year.

This special report was compiled by Michelle Freeman, Alison Hamer, Dan Handman, Ferry Lopez, Adam Maldonado, Anna Pham, and Felicia Reid. For more information, please contact any of them, or the Hirschfeld Kraemer lawyer who normally provides your legal counsel.

EEOC Issues Employer Vaccination Guidance

As COVID-19 cases surge, doses of emergency-approved vaccinations begin to be administered to first responders and the availability of a vaccine for the greater public seems more promising, the Equal Employment Opportunity Commission (EEOC) recently issued its highly anticipated guidance regarding employer-mandated COVID-19 vaccines.

Under EEOC Guidance, Employers May Generally Require Employees to Receive a COVID-19 Vaccine and Ask For Proof

The new EEOC guidance allows employers to require employees to get vaccinated for COVID-19, and to request proof of vaccination from employees. However, rather than prohibiting or endorsing mandatory vaccinations, the EEOC guidance recommends protocols for employers who decide to implement such mandates, to ensure they aren’t running afoul of anti-discrimination laws.

For example, if an employer seeks to require employees to receive the vaccination and have that vaccine administered by the employer (or a third party contractor), the employer must show that screening inquiries confirming that no medical reason would prevent the employee from receiving the vaccination are “job-related and consistent with business necessity.

Further, if a vaccination requirement would screen out an individual with a disability, the employer must show that an unvaccinated employee would pose a direct threat due to a “significant risk of substantial harm to the health or safety of the individual or others that cannot be eliminated or reduced by reasonable accommodation.”

What If An Employee Claims He Cannot Be Vaccinated Because of a Disability?

Under the ADA and California law, an employer can exclude an employee from the workplace because his condition constitutes a “direct threat to the health or safety of individuals in the workplace” which would place the employee or his co-workers at “significant risk of substantial harm.” Like many disability discrimination-related issues, this is a very fact-intensive inquiry and you should carefully consider each request individually, taking into account “the duration of the risk; the nature and severity of the potential harm; the likelihood that the potential harm will occur; and the imminence of the potential harm.”

If you conclude that an unvaccinated individual will expose others to the virus at the worksite based on these factors, you should then consider whether there is any reasonable accommodation that will suit the employee, and you should carefully consider remote work or offering them another position where remote work may be possible.

What If An Employee Claims She Cannot Be Vaccinated Because of a Religious Belief?

The analysis is generally the same, except instead of analyzing whether an employee poses a direct threat to herself or others, you analyze the basis of the employee’s religious belief, whether it is “sincerely held” and whether the religious belief actually prohibits vaccination. If it does, then you must engage in the same reasonable accommodation analysis.

For more information, contact Dan Handman at dhandman@hkemploymentlaw.com, (310) 255-1820, or Netta Rotstein at nrotstein@hkemploymentlaw.com, or (310) 255-1807. Both are in Hirschfeld Kraemer’s Santa Monica office.

Cal/OSHA’s 14-Day Quarantine Requirement Reduced to 10 Days (If Local Requirements Allow)

On December 14, 2020, Governor Newsom issued an Executive Order which changes the quarantine requirements of Cal/OSHA’s recently implemented Emergency Temporary Standards (ETS) .

Reduced Quarantine Period for Asymptomatic Exposures

As we previously reported, Cal/OSHA’s ETS require that employers remove all employees exposed to COVID-19 in the workplace for 14 days. (“Exposed” means the employee was within six feet of a COVID-19 case for 15 or more cumulative minutes in a 24-hour period during the high-risk exposure period.) Employers are required to pay employees during the 14-day quarantine period.

Incorporating new guidance from the California Department of Public Health (CDPH), Governor Newsom’s Executive Order relaxes the 14-day quarantine period for asymptomatic exposures. Now, asymptomatic employees may return to work 10 days after the employee’s last exposure, with or without testing.

However, the 10-day quarantine period will only apply if it exceeds “any applicable quarantine or isolation period recommended or ordered by a local health officer who has jurisdiction over the workplace.” Accordingly, employers must consult local quarantine orders before implementing a 10-day quarantine period. If a local order requires a 14-day quarantine period, then the employer must continue to abide by that rule until when, and if, local requirements are updated.

CDPH guidance further limits the quarantine period for certain health workers to seven days when certain requirements are met.

Operating Under a 10-Day Quarantine Period

The new CDPH guidance places requirements on asymptomatic exposed employees who return to work under the shortened 10-day quarantine period. Specifically, employees must:

Strictly adhere to all recommended non-pharmaceutical interventions, which include wearing face coverings at all times, frequent handwashing, and social distancing until 14 days after the employee’s exposure; and
Self-monitor for COVID-19 symptoms. If an employee experiences a COVID-19 symptom within 14 days of exposure, the employee is required to immediately self-isolate and contact their local public health department or healthcare provider and seek testing.

In addition to the above requirements, healthcare workers who return to work after a seven-day quarantine period must wear a surgical mask at all times until 14 days after the employee’s exposure.

What Employers Should Do Next
Employers should immediately consult local quarantine orders to determine whether they can implement a 10-day quarantine period. If so, employers should update their policies and procedures, including their COVID-19 Prevention Program, which employers are now required to have under Cal/OSHA’s ETS.

Still Struggling to Understand Cal/OSHA’s ETS?
The Department of Industrial Relations has issued guidance and a model COVID-19 Prevention Program, available here. Additionally, check out Michelle Freeman’s podcast on this subject. (Note this podcast was recorded prior to Governor Newsom’s December 14, 2020 Executive Order and therefore does not address the 10-day quarantine period discussed above.)

For further information, please reach out to the Hirschfeld Kraemer lawyer who normally provides your legal counsel, or contact Michelle Freeman, mfreeman@hkemploymentlaw.com, (415) 835-9003.

UPDATE: New California COVID-19 Health & Safety Rules Effective Immediately

** UPDATE ** Dec. 18, 2020 — Rules are changing rapidly – see also this post on changes to quarantine limits.

** UPDATE ** Dec. 14, 2020 — Listen to Michelle Freeman’s podcast on this subject here.

** UPDATE ** Dec. 2, 2020 — As we previously reported (below), on Nov. 19, Cal/OSHA approved new safety regulations targeted to reduce COVID-19 infection rates in the workplace. On Monday, Dec. 1, these regulations went into effect following approval by the Office of Administrative Law. The regulations will now appear in the California Code of Regulations, Title 8, sections 3205 – 3205.4.

An immediate review of your company’s COVID-19 procedures is necessary to ensure compliance with the new rules.

Our previous post outlining the new regulations is below.

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Nov. 24, 2020 – The board that oversees the California Department of Industrial Relations, Division of Occupational Safety and Health (Cal/OSHA) voted unanimously last week to advance new safety regulations targeted to reduce COVID-19 infection rates in the workplace. These regulations are set to take effect pending a review and comment period.

Many employers have already created policies and implemented procedures that adhere to the new regulations. Still, you should carefully review your existing policies and practices in light of these new guidelines, to determine if any additional changes are needed.

Employees Excluded From the Workplace Are Still Entitled to Pay
Employers are required to exclude all COVID-19 cases from the workplace until certain return to work requirements are met, as well as COVID-19 exposures for a 14-day quarantine period.

A COVID-19 case refers to any individual who:

has a positive COVID-19 test;
is subject to an order to isolate issued by a local or state health official; or
has died due to COVID-19.

A COVID-19 exposure refers to any person who was within six feet of a COVID-19 case for a cumulative total of 15 minutes or more during any 24-hour period.

If an employee is excluded from the workplace, the employer must continue an employee’s earnings, seniority, and all other rights and benefits. Employers are permitted to use employer-provided sick leave benefits and may “consider benefits payments from public sources in determining how to maintain earnings.” If an employer can prove that an employee’s exposure is not work-related, they are not required to continue an employee’s earnings.

Written COVID-19 Prevention Program
All employers must create a written COVID-19 Prevention Program, which may be integrated into the employer’s injury and illness prevention program, or maintained as a separate document. A COVID-19 Prevention Program must include a form that communicates specific COVID-19 information to employees, and identifies and evaluates COVID-19 hazards.

Specifically, the COVID-19 information form must include:

A request that employees report, without fear of reprisal, COVID-19 symptoms, possible COVID-19 exposures, and potential COVID-19 hazards in the workplace
The policies and procedures for accommodating employees with medical conditions or other conditions putting them at increased risk for COVID-19
Directions about access to COVID-19 testing. If an employee must be tested as a result of workplace exposure, the employer must inform affected employees about the possible consequences of a positive test
Additional information concerning COVID-19 hazards and employer’s policies and practices

With respect to identifying and evaluating COVID-19 hazards, employers must also:

Allow employees to participate in the identification and evaluation of COVID-19 hazards
Implement a procedure for screening employees for COVID-19 and responding to employees with COVID-19 symptoms
Develop policies and procedures regarding how to handle a COVID-19 case in the workplace
Conduct work-specific identification of all interactions, areas, activities, processes, equipment, and materials that could potentially expose employees to COVID-19
Evaluate how to maximize the quantity of outdoor air and whether it is possible to increase filtration efficiency to the highest level compatible with existing ventilation system
Review state and local guidance regarding COVID-19 hazards and prevention
Evaluate existing COVID-19 prevention controls and determine if there is a need for different or additional controls
Conduct periodic inspections of the workplace to identify potential COVID-19 hazards and ensure compliance with employer’s COVID-19 policies and procedures

Procedures to Investigate COVID-19 Cases in the Workplace
Employers must create and implement a procedure for investigation of, and responding to, COVID-19 cases in the workplace. If an employee in the workplace tests positive for the virus, an employer must perform contact tracing and provide notice to exposed employees within one business day. Employers are prohibited for revealing any personal identifying information of a COVID-19 case to other employees.

If an employee is exposed to COVID-19 in the workplace, an employer must provide COVID-19 testing, COVID-19 benefit information, and advise the employee they are entitled to pay during the 14-day quarantine period.

Training and Instruction to All Employees
Employers will be required to provide employees with extensive training on a number of COVID-19-related topics, including:

The employer’s COVID-19 policies and procedures
Information regarding COVID-19 related benefits (i.e., FFCRA, sick pay, workers’ compensation)
Transmission education, including that COVID-19 is an infectious disease that can be transmitted through the air or coming into contact with contaminated objects, and that infectious persons may have no symptoms
Methods of social distancing and the importance of combining social distancing with wearing face coverings
That particles containing the virus can travel more than six feet, and therefore, social distancing must be combined with other controls like face coverings and hand hygiene
Importance of frequent handwashing with soap and water for at least 20 seconds, or using hand sanitizer when an employee does not have immediate access to a sink
Proper use of face coverings
COVID-19 symptoms
The importance of not coming to work if an employee is experiencing symptoms

Social Distancing, Face Coverings, and Cleaning and Disinfecting Requirements
Employers must ensure that all employees are separated by at least six feet, unless the employer can demonstrate that six feet of separation is not possible. At fixed workstations where social distancing is not possible, employers must install cleanable solid partitions.

Employers must provide face coverings and ensure they are worn properly. There are narrow exceptions to this rule, including when an employee is alone in a room, or is eating or drinking in the workplace, or cannot wear a face covering due to a medical or mental health condition or disability, or is hearing-impaired or communicating with a hearing-impaired person.

Employers must implement cleaning and disinfecting procedures, which include regular cleaning of frequently touched surfaces, and prohibiting sharing of PPE and other items employees come into frequent physical contact with (i.e., desks, keyboards, tools, etc.).

Reporting and Record Keeping
Employers are expected to report any workplace COVID-19 case to the local health department as required by law. In addition, employers must report any COVID-19-related serious illness or death that arises from employment to Cal-OSHA.

In addition to making a written COVID-19 Prevention Program available to employees, an employer is required to keep a record of all COVID-19 cases. This information must be made available to employees, with all personal identifying information removed.

Takeaway
Although these new rules will not have the full force of law until after the comment period (likely a few months), employers should review their COVID-19 plans sooner, rather than later, to ensure these new guidelines are incorporated.

We will continue to monitor developments closely and will keep you informed.

For more information, please contact the Hirschfeld Kraemer lawyer who normally provides your legal counsel, or you can reach out to Michelle Freeman in the San Francisco office, mfreeman@hkemploymentlaw.com, or (415) 835-9003.

SEC Proposes Rules to Help Gig Companies Compensate Their Workers

Every offer and sale of securities in the United States must either be registered with the Securities and Exchange Commission (SEC), or exempt from registration under rules established by the SEC. Recognizing that the registration process is cumbersome and expensive, and that incentivizing employees through the offering of stock, options, and other equity-based awards is a vital tool for employers and is not principally undertaken to raise capital for the issuer, the SEC many years ago adopted Rule 701.

Rule 701 provides an exemption from registration for offerings by non-public companies under written compensation plans to employees, directors, officers, consultants, and advisors, as long as certain limits on the size and other conditions of the offering are met.

However, in recent years as the gig economy has blossomed, it has become clear that gig economy workers do not fit comfortably within the categories of individuals eligible under Rule 701. Now the SEC is proposing for public comment amendments to Rule 701 that, for a five-year trial basis, would specify a new category of eligible recipients—platform workers—defined as workers who provide services through the issuer’s internet-based marketplace platform or another widespread technology-based marketplace platform or system.

The SEC is also proposing amendments, on a five-year trial basis, that would allow public companies to include such workers in compensation plans registered in short-form registration statements on Form S-8.

We will monitor the public comment period and report further if the SEC ultimately adopts any amendments to its rules in this area.

For more information, please reach out to William Ross in the Los Angeles office of Hirschfeld Kraemer LLP, wross@hkemploymentlaw.com, or (310) 255-1828.

Invention Assignment Agreements Can Be Unenforceable Covenants Not to Compete

Last week, we blogged about how a recent California appellate court decision effectively rendered an employee confidentiality agreement as an unenforceable covenant not to compete.

In a similar decision, Whitewater West Indus., Ltd. v. Alleshouse, 2020 U.S. App. LEXIS 36394, the Court of Appeals for the Federal Circuit recently reversed a U.S. district court decision and held that under California law, an invention assignment provision signed by an employee that assigned to the employer patents developed after employment had ceased and without use of the employer’s trade secrets or confidential information violated California’s strong public policy against restraints on trade/covenants not to compete embodied in Section 16600 of the California Business and Professions Code.

In reaching this decision, the federal Court of Appeals rejected the argument that Section 2870(a) of the California Labor Code permits such invention assignments.

Section 16600 of the Business and Professions Code provides that “Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” There are statutory exceptions in sections 16601, 16602, and 16602.5 for restraint on trade/noncompete provisions relating to sales of businesses, dissolutions of partnerships or dissociations of a partner from a partnership, and a dissolution of a limited liability company or a termination of a member’s interest in a limited liability company, but not for noncompete provisions against former employees.

Section 2870(a) of the Labor Code provides that:

(a) Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer’s equipment, supplies, facilities, or trade secret information except for those inventions that either:

(1) Relate at the time of conception or reduction to practice of the invention to the employer’s business, or actual or demonstrably anticipated research or development of the employer; or
(2) Result from any work performed by the employee for the employer.

In this case, while employed by Wave Loch, Inc., Richard Alleshouse had entered into an agreement with Wave Loch that contained the following assignment provisions:

a. Assignment: In consideration of compensation paid by Company, Employee agrees that all right, title and interest in all inventions, improvements, developments, trade-secret, copyrightable or patentable material that Employee conceives or hereafter may make or conceive, whether solely or jointly with others:
(a) with the use of Company’s time, materials, or facilities; or
(b) resulting from or suggested by Employee’s work for Company; or
(c) in any way connected to any subject matter within the existing or contemplated business of Company
shall automatically be deemed to become the property of Company as soon as made or conceived, and Employee agrees to assign to Company, its successors, assigns, or nominees, all of Employee’s rights and interests in said inventions, improvements, and developments in all countries worldwide. Employee’s obligation to assign the rights to such inventions shall survive the discontinuance or termination of this Agreement for any reason.

After Alleshouse had ceased being employed by Wave Loch, he and another party filed for and eventually were awarded three patents. Wave Loch’s successor in interest then filed suit, claiming that the invention assignment agreement had been breached by Alleshouse and that the patents should be assigned to Wave Loch’s successor. The district court agreed, and held that the agreement was valid under California law.

In overturning that decision, the Court of Appeals noted that the parties in the case agreed that the patented inventions had not been conceived until after Alleshouse had left Wave Loch’s employment and that no trade secrets or confidential information of Wave Loch had been used. The Court of Appeals reasoned that to give effect to the assignment provisions—which were unlimited in time and geography and would apply to a post-employment invention that was merely “suggested by” his work for Wave Loch—would significantly impair Alleshouse’s ability to work in his chosen profession.

The Court of Appeals then determined that the assignment provisions in Section 2870(a) of the Labor Code only applied to inventions conceived during employment. To hold otherwise, “to authoriz[e] temporally unlimited assignment requirements through its exceptions, would produce a conflict with what we think is otherwise the clear prohibition of §16600 on agreements like the one at issue here.”

The Court of Appeals decision is another timely reminder that courts will not enforce overbroad clauses in agreements with employees that, although not explicitly prohibiting competition, have the practical effect of doing so.

For more information, please reach out to William Ross in the Los Angeles office of Hirschfeld Kraemer LLP, wross@hkemploymentlaw.com, or (310) 255-1828.

Cal/OSHA Approves New COVID-19 Health and Safety Regulations

** UPDATE ** Dec. 18, 2020 — Rules are changing rapidly – see also this post on changes to quarantine limits.

** UPDATE ** Dec. 14, 2020 — Listen to Michelle Freeman’s podcast on this subject here.

** UPDATE ** – Dec. 2, 2020 – These rules are effective immediately, see updated post here.

A COVID-19 case refers to any individual who:

has a positive COVID-19 test;
is subject to an order to isolate issued by a local or state health official; or
has died due to COVID-19.

A COVID-19 exposure refers to any person who was within six feet of a COVID-19 case for a cumulative total of 15 minutes or more during any 24-hour period.

Specifically, the COVID-19 information form must include:

A request that employees report, without fear of reprisal, COVID-19 symptoms, possible COVID-19 exposures, and potential COVID-19 hazards in the workplace
The policies and procedures for accommodating employees with medical conditions or other conditions putting them at increased risk for COVID-19
Directions about access to COVID-19 testing. If an employee must be tested as a result of workplace exposure, the employer must inform affected employees about the possible consequences of a positive test
Additional information concerning COVID-19 hazards and employer’s policies and practices

With respect to identifying and evaluating COVID-19 hazards, employers must also:

Allow employees to participate in the identification and evaluation of COVID-19 hazards
Implement a procedure for screening employees for COVID-19 and responding to employees with COVID-19 symptoms
Develop policies and procedures regarding how to handle a COVID-19 case in the workplace
Conduct work-specific identification of all interactions, areas, activities, processes, equipment, and materials that could potentially expose employees to COVID-19
Evaluate how to maximize the quantity of outdoor air and whether it is possible to increase filtration efficiency to the highest level compatible with existing ventilation system
Review state and local guidance regarding COVID-19 hazards and prevention
Evaluate existing COVID-19 prevention controls and determine if there is a need for different or additional controls
Conduct periodic inspections of the workplace to identify potential COVID-19 hazards and ensure compliance with employer’s COVID-19 policies and procedures

Training and Instruction to All Employees
Employers will be required to provide employees with extensive training on a number of COVID-19-related topics, including:

The employer’s COVID-19 policies and procedures
Information regarding COVID-19 related benefits (i.e., FFCRA, sick pay, workers’ compensation)
Transmission education, including that COVID-19 is an infectious disease that can be transmitted through the air or coming into contact with contaminated objects, and that infectious persons may have no symptoms
Methods of social distancing and the importance of combining social distancing with wearing face coverings
That particles containing the virus can travel more than six feet, and therefore, social distancing must be combined with other controls like face coverings and hand hygiene
Importance of frequent handwashing with soap and water for at least 20 seconds, or using hand sanitizer when an employee does not have immediate access to a sink
Proper use of face coverings
COVID-19 symptoms
The importance of not coming to work if an employee is experiencing symptoms

We will continue to monitor developments closely and will keep you informed.

Confidentiality Agreements Can Be Unenforceable Covenants Not to Compete

In Brown v. TGS Management Company, LLC (2020) Cal. App. LEXIS 1074, the California Court of Appeal, Fourth District, recently held, in a case appealed from a trial court decision affirming an arbitration award in favor of the former employer of the plaintiff, an equities trader, that the arbitration award should be vacated and that the confidential information clause in the employee’s employment agreement was so broad that it violated California’s strong public policy against covenants not to compete, since its practical effect was to prevent the employee from ever trading securities in any capacity for the rest of his life.

Section 16600 of California’s Business and Professions Code provides that “Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” There are statutory exceptions in sections 16601, 16602 and 16602.5 for noncompete provisions relating to sales of businesses, dissolutions of partnerships or dissociations of a partner from a partnership, and a dissolution of a limited liability company or a termination of a member’s interest in a limited liability company, but not for noncompete provisions against former employees.

The appeals court decision is a timely reminder that although reasonably tailored confidentiality provisions that protect an employer’s trade secrets and proprietary information will be enforced, overbroad clauses that have the practical effect of a covenant not to compete will not be enforced.

For more information, please reach out to William Ross in the Los Angeles office of Hirschfeld Kraemer LLP, wross@hkemploymentlaw.com, or (310) 255-1828.

New Law Mandates Diversity on Corporate Boards in California

Governor Newsom has signed into law a bill, patterned after California’s ground-breaking gender diversity bill adopted two years ago, requiring publicly-held corporations that have their principal executive offices here, to have at least one director from an underrepresented community on their board by December 31, 2021. No later than December 31, 2022, such corporations must have at least one underrepresented director if their number of directors is four or fewer, at least two underrepresented directors if their number of directors is between five and eight, and at least three underrepresented directors if their number of directors is nine or more.

Under the law, a director from an underrepresented community means someone who self-identifies as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaska Native, or as gay, lesbian, bisexual or transgender.

The failure to timely file board member information with the California Secretary of State pursuant to regulations to be adopted by the agency can result in a fine of $100,000. In addition, a first violation in failing to meet the diversity requirements can result in a fine of $100,000; each violation thereafter can result in a fine of $300,000.

The law is already facing legal challenges, including a claim that the expenditure of taxpayer funds or taxpayer-financed resources on the statute is an unconstitutional quota that violates the California Constitution. The same group that is challenging this new law filed a similar claim two years ago against California’s gender diversity law.

For more information, please reach out to William Ross in the Los Angeles office of Hirschfeld Kraemer LLP, wross@hkemploymentlaw.com, or (310) 255-1828.

Doe v. Google: PAGA Extends to Confidentiality Agreements Between Employers and Employees

Unless you have been living under a rock for, oh, the last 15 years or so, you know how vexing PAGA (the California Private Attorneys General Act of 2004) can be for employers.

As we have blogged in the past, PAGA is an extraordinarily broad law that provides a private right of action to “aggrieved employees,” on a quasi-class action basis, for any violation of the California Labor Code. This can mean massive civil penalties paid out both to the State of California (75% of the total recovery) and to the quasi-class of such allegedly aggrieved employees (25% of the total recovery). And all of this occurs without having to go through the gatekeeping function of a class certification process, which, in traditional class actions, weeds out cases that are not well suited for class treatment.

Most of the PAGA actions that we see focus on the same traditional wage and hour claims that one would see in class actions—overtime, failure to pay minimum wage, missed meal periods, and the like. However, on September 21, 2020, in Doe v. Google, the California Court of Appeal upped the ante considerably, holding that Labor Code claims for violation of employment-related free speech rights could proceed under PAGA and were not preempted by the National Labor Relations Act. As detailed below, if this decision stands and is not reversed by a higher court, employers may suddenly be on the hook for millions of dollars of penalties where previously there were none.

BACKGROUND

The National Labor Relations Act

Section 7 of the National Labor Relations Act (NLRA) gives non-exempt employees the right to self-organize, bargain collectively, and “engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” It is a violation of Section 7 for an employer to interfere with these rights. Generally speaking, this means that employees have the right to discuss with each other their wages, working conditions, and other related matters. The penalties for such a violation under the NLRA, however, are quite minimal: ordinarily, an employer will be required only to revise a policy that interferes with Section 7 rights and post something promising not to violate it in the future. Normally, there are no financial penalties for such a violation.

The Lawsuit

Plaintiffs, all former Google employees (or contract employees) were required to sign confidentiality agreements with Google upon their hire. Plaintiffs alleged that Google violated provisions of the California Labor Code and the Business and Professions Code by essentially barring them from “using or disclosing the skills, knowledge and experience they obtained at Google for purposes of competing with Google.” Examples included a bar from disclosing wages or working conditions at Google and from disclosing the identities of other employees at Google. Plaintiffs also claimed that they were barred under these policies/agreements from reporting, internally to Google or externally to government authorities, unsafe or discriminatory working conditions or wage and hour violations.

Notably, there was a “savings clause” in the agreements at issue that the company’s rules were not intended to limit employees’ rights to discuss wages, terms or conditions of employment with other employees, or their right to communicate with government agencies regarding violations of law.

Google demurred to the plaintiffs’ complaint, asserting that the claims were preempted by the NLRA. The trial court sustained most of the demurrers (effectively ending the lawsuit), but the plaintiffs appealed.

The NLRB Charge

Prior to filing the PAGA lawsuit, the lead plaintiff (Doe) filed an unfair labor practice charge with the National Labor Relations Board, (NLRB), alleging that he had been terminated for exercising his rights under the NLRA. The NLRB did not take up Doe’s charge, determining that he was not covered under the NLRA as a supervisor. The NLRB did issue a complaint against Google based upon Doe’s allegations, and subsequently, the NLRB and Google entered into an informal settlement agreement: Google put up a workplace posting for 60 days, affirming that its employees had the right to discuss wages, working conditions, and the like.

The Court of Appeal’s Decision

On appeal, the plaintiffs asserted that the trial court got it wrong—that the PAGA claims were not, in fact, preempted by the NLRA. The Court of Appeal, in a two-to-one decision, agreed. The preemption analysis is complicated, but for present purposes, we can summarize it like this: the NLRB has jurisdiction over disputes involving “unfair labor practices,” as that term is defined under the NLRA and the case law that has emerged over the last 80 or so years since the NLRA came into being in 1935.

But the analysis is case-specific. There is a presumption that the state action is preempted when it would fall under the NLRA, but if the state has a “local interest” in the issues at stake, or if it is “merely peripheral concern” of the NLRA, the state action is allowed. In this case, the Court of Appeal found that both factors warranted reversing the trial court and allowing the PAGA suit to proceed. This meant that the plaintiffs were allowed to pursue claims for PAGA penalties for hundreds of thousands of employees, all based on supposedly non-compliant policies.

TAKEAWAY

First, a reality check: Google’s confidentiality agreement and its provisions, as alleged in the plaintiffs’ complaint, were really overbroad, and it is not surprising that they were challenged.

That said, this decision has meaning for all California employers. Regardless of whether an individual employer’s confidentiality agreements are broadly or narrowly tailored, employers have safely assumed for many years that the consequence of an overbroad provision would be, at worst, a slap on the wrist from the NLRB: injunctive relief from the NLRB, such as the workplace notice that was posted at Google’s premises. Such a posting might be embarrassing, but there is no monetary effect.

Now, if claims such as the plaintiffs’ here can proceed under PAGA, the consequence could be millions of dollars in civil penalties.

Google will almost certainly seek review of this decision by the California Supreme Court, and the California high court may well oblige and, if not, the U.S. Supreme Court may step in.

But this decision should strike fear into California employers. Seemingly ambiguous policies which touch on confidential speech are now squarely in the target for PAGA representative actions. What before would have been minor wordsmithing issues could now result in million-dollar penalties.

For more information, please reach out to Monte Grix in the Los Angeles office of Hirschfeld Kraemer LLP, mgrix@hkemploymentlaw.com, or (310) 255-1827.