2019 California Legislative Update For Employers
It’s been a busy session for the California Legislature, passing multiple employment-related bills that Governor Newsom has signed or that are awaiting his signature. The Governor has until October 13 to sign the pending bills. Below is a topline summary of important bills, some of which will or could have significant impacts on California businesses.
Signed by the Governor
Employee/Independent Contractor Worker Classification (A.B. 5) – On September 18, 2019, Governor Newsom signed A.B. 5, which we recently blogged about here. A.B. 5 codifies the California Supreme Court’s Dynamex Operations West v. Superior Court decision, requiring employers in the state to reclassify workers from independent contractors to employees unless the workers meet the “ABC” test, but providing a litany of specific exemptions.
The A.B. 5 exemptions cover several industries and professions, including doctors, lawyers, real estate, insurance, referral agencies, and others who meet very specific qualifications. In addition to matters we blogged about previously, A.B. 5 appears to provide a logical and important exemption from the ABC test for “a bona fide business to business contracting relationship.” However, before companies jump for joy, the exemption contains additional requirements, including that the contractor exist as a legal entity and not as an individual worker, that there is in place a written contract between the business parties, and significantly that the services under the contract are provided to the contracting business and not directly to that business’ customers.
Although A.B. 5’s sponsor and the Governor have made pronouncements that suggest that A.B. 5 was not intended to change the law regarding the joint-employer analysis between two businesses, contracting parties should nonetheless review this exemption closely and carefully monitor developments, including reported case decisions interpreting the new statute. Finally, despite their well-funded lobbying efforts, “gig” economy companies like Uber, Lyft, and DoorDash did not receive an exemption although a potential ballot initiative by the major “gig” players is in the works. A.B. 5 takes effect on January 1, 2020.
On October 17, 2019, we will offer a complimentary informational webinar to help employers learn how to navigate the sweeping changes that are coming with the passage of A.B. 5. More information about the webinar and how to register can be found here.
Also signed by the Governor:
- Sexual Harassment Prevention Training & Education (S.B. 778) – Signed August 30, 2019, this bill extends an employer’s deadline to provide sexual harassment training and education to supervisory and non-supervisory employees by a full year, to January 1, 2021. It also makes clear that an employer who has provided the required training and education to an employee in 2019 is not required to provide refresher training and education again until two years thereafter. Therefore, employers already offering training in 2019 can delay refresher training until two years after the date of the training, rather than providing the training again by the January 1, 2021 deadline. Similarly, the law clarifies that employees trained in 2018 do not need to be re-trained in 2019, and that such employees could wait two full years for their next training.
- Hairstyle Discrimination (S.B. 188) – Signed July 9, 2019, S.B.188 expands the definition of the term “race” in the California Fair Employment and Housing Act (FEHA) to include traits traditionally associated with race such as hair texture and hairstyles like braids, afros, locks, and twists. As a result, employers are now prohibited from discriminating against employees based on certain protected hairstyles. The law takes effect on January 1, 2020. Going forward, employers should ensure that any existing dress code or grooming policies, whether stand-alone or in an Employee Handbook, comply with the new law, and that managers understand that they cannot make employment decisions based on such hairstyles.
- Final Wages for Print and Shoot Employees in the Entertainment Industry (S.B. 671) – Signed September 5, 2019, S.B. 671, the “Photoshoot Pay Easement Act,” permits an employer of a “print and shoot employee,” defined as an individual hired for a limited duration to render services relating to or supporting a still-image shoot for use in print, digital, or internet media, to pay the employee his or her final wages at the time of termination by the next regular payday. Previously, employers were required to pay such employees final wages on the last day of employment. The bill also allows final wages to be mailed to the employee or made available to the employee at a location specified by the employer in the county where the employee was hired or performed labor. This law took effect on September 5, 2019.
- Infant Employment in the Entertainment Industry (A.B. 267) – Signed September 12, 2019, A.B. 267 expands the definition of “entertainment industry” beyond a movie set or location to include motion pictures, theater, television, photography, recording, modeling, rodeos, circuses, advertising, and any other performance to the public. Doing so makes clear that the rules governing the employment of infants under current law apply to infants working in the entire entertainment industry, rather than just motion pictures. The bill also requires that as a condition of employing an infant under one month of age, a licensed, board-certified, pediatric or family doctor must certify that the infant is healthy enough to work in the entertainment industry.
Awaiting Signature By The Governor
Governor Newsom has until October 13 to sign or veto the following bills passed by the Legislature in September 2019:
- Exempt Status of Adjunct Workers (A.B. 1466) – A.B. 1466 would allow California non-profit independent colleges and universities to treat certain adjunct faculty members as exempt employees under the Labor Code and relevant Wage Orders, exempting these employees from certain rules on the payment of wages, overtime wages, and provision of breaks. As a new way for adjunct faculty members to qualify as exempt, the bill provides a per classroom hour/credit minimum weekly pay rate that increases annually.
- Mandatory Arbitration Bans in Employment (A.B. 51) – A.B. 51 would ban mandatory arbitration agreements for nearly all types of employment law claims in California. Former Governor Jerry Brown vetoed similar legislation last year (A.B. 3080), noting that it would be preempted by the Federal Arbitration Act (FAA) and “plainly violates federal law.” A.B. 51 is widely expected to fare better under Governor Newsom, setting up a potentially lengthy court battle over whether the law is preempted by federal law.
- Three-Year Statute of Limitations for FEHA Claims (A.B. 9) – A.B. 9 would extend the time period from one to three years for an employee to file an administrative claim for employment discrimination or harassment based on any protected category, and retaliation with the Department of Fair Employment and Housing (DFEH).
- Amendments to California Consumer Privacy Act for Employee/Applicant Data (A.B. 25) – The California Consumer Privacy Act (CCPA), which was passed in 2018 and will go into effect on January 1, 2020, creates consumer rights regarding personal information and mandates among other things disclosures regarding collection and use of the personal information and deletion. The law does not delineate whether its protections of consumers includes employees and job applicants. A.B. 25 would exempt – for one year – applicant and employee data from many of the CCPA’s requirements. However, under A.B. 25, employers as of January 1, 2020 will still need to begin disclosing to employees and applicants what personal data they collect and how they use that data. If A.B. 25 is not signed, employers will need to assess their need to comply with all of the CCPA’s provisions as of January 1, 2020. To complicate matters further, it is widely anticipated that a Ballot Initiative with more expansive and comprehensive provisions than even the CCPA will be on the ballot in November 2020.
- Lactation Accommodation (S.B. 142) – S.B. 142 would expand existing law relating to lactation accommodation in the workplace, using the similar San Francisco ordinance as a model. The bill would require employers to provide a lactation room for employees that meets certain features and requirements, including that it: (1) not be a bathroom; (2) be in close proximity to the employee’s work area; (3) be shielded from view; (4) be free from intrusion while the employee is lactating; (5) be safe, clean, and free of hazardous materials; (6) contain a surface to place a breast pump and personal items; (7) contain a place to sit; (8) have access to electricity or alternative devices that may be needed to operate an electric or battery-powered breast pump; and (9) have access to a sink with running water and a refrigerator appropriate for storing milk. The bill also would make denial of reasonable break time or adequate space to express milk a failure to provide a rest period under state law. Employers also would be required to develop and deploy a specific policy on lactation accommodation.
- Local Employment Discrimination Laws (S.B. 218) – S.B. 218 would allow local governments within the County of Los Angeles to enact their own anti-discrimination ordinances relating to employment, including establishing remedies and penalties. It also would allow for the creation of local agencies to enforce local anti-discrimination laws, including claims that would come within the FEHA, potentially giving multiple agencies in Los Angeles County jurisdiction over claims reserved for the DFEH. This raises the potential for widely differing interpretations of discrimination and harassment laws for employers in the County.
- Two-Year Statute of Limitations to File Certain Retaliation Claims with Labor Commissioner (A.B. 403) – A.B. 403 would extend the filing period from six months to two years for filing workplace retaliation claims under Labor Code Section 98.7 with the California Labor Commissioner. Employees also would be entitled to seek their attorneys’ fees in successful whistleblower cases.
- Rebuttable Presumption of Unlawful Retaliation (A.B. 171) – A.B. 171 would provide additional protections for victims of domestic violence, stalking, and sexual assault. The bill also would establish a “rebuttable presumption” that an employer unlawfully retaliated against an employee if within 90 days of notice to the employer of sexual harassment, domestic violence, stalking, or sexual assault, the employee suffers an adverse employment action (e.g., discharge, suspension, unwanted transfer or duty change, etc.)
- Paid Pregnancy Disability Leave for Teachers and Other Employees (A.B. 500) – A.B. 500 would require that school districts, charter schools, and community colleges provide at least six weeks of full pay for pregnancy-related leaves of absence taken by certain employees, including teachers.
- Prohibition on “No-Rehire” Clause in Settlement Agreements (A.B. 749) – A.B. 749 would prohibit an agreement to settle an employment dispute from containing a provision that prohibits, prevents or otherwise restricts a settling party from working for the employer, commonly known as a “no-rehire” clause. However, such clauses would still be allowed in situations where the employer makes a good faith determination that the employee engaged in sexual harassment or sexual assault, as defined in the bill.
We are monitoring and will report further on the impact of the bills signed into law by Governor Newsom. Stay tuned.
Keith Grossman is a partner and Sean Kramer is an associate with Hirschfeld Kraemer LLP. They can be reached at email@example.com and firstname.lastname@example.org, respectively.