January 21, 2020

California Legislature and Governor Newsom were busy in 2019 passing many new laws directly affecting California employers and employees. Please remember, only summaries are provided herein and legal advice should be sought prior to enactment of any new employment policy.

Independent Contractors

Following the California Supreme Court’s 2018 decision in Dynamex Operations West v. Superior Court, the requirement that properly classified independent contractors only perform work outside the scope of the company’s business has caused many companies to reclassify their independent contractors as employees.

Legislative Relation to Dynamex: AB5 codifies and expands Dynamex beyond the original application and creates several exemptions for specified occupations from the application of the draconian Dynamex analysis and instead applies the pre-Dynamex multifactor Borello test to those occupations.

Remember, if your industry is one of the chosen few included in the exemptions of AB5, it only provides application of a different analysis and does not mean the independent contractor relationship will be unchallenged. Businesses should examine any use of independent contractors for an assessment of the legality of the relationship in advance of a claim, audit, or other challenge.

Sexual Harassment

(AB9) Stop Harassment and Reporting Extension (“SHARE”) Act. This bill extends the statute of limitations for the state’s Fair Employment and Housing Act (FEHA) to three years from one year. The bill will not revive “lapsed claims;” however, the effect on cases based on events less than one-year prior is unclear.

(SB1343)Sexual Harassment Training Requirement.

Effective January 1, 2019, employers with at least five employees were required to provide sexual harassment training to all employees by January 1, 2020. SB778 amends the deadline, now requiring compliance by January 1, 2021. Training previously conducted in 2018 or 2019 must still be conducted on two-year intervals.

Mandatory Arbitration Agreements

AB51 adds Section 432.6 to the Labor Code, outlawing mandatory employment arbitration of claims by current or former employees. AB51, as written, prohibits mandatory arbitration agreements for any discrimination claims covered under the Fair Employment and Housing Act (not just sexual harassment) and for any claims under the Labor Code (including wage and hour and other protections.) This was the same bill vetoed repeatedly by Governor Brown, as it was a clear violation of the Federal Arbitration Act. A legal challenge has recently been lodged against this legislation and its enforcement has been stayed. It remains to be seen whether this law will be allowed to take effect.

Settlement Agreements

AB749 prohibits employment dispute settlement agreements (entered into after January 1, 2020) from excluding an employee/claimant from future employment with the defendant employer (“no re-hire” provisions). Any settlement agreement violating this no re-hire prohibition are deemed void as a matter of law and against public policy.

Extension of Paid Family Leave Benefits

(SB83) Beginning on July 1, 2020, the maximum time employees may receive Paid Family Leave (PFL) benefits from California’s State Disability Insurance program will extend from six to eight weeks. The new law becomes effective July 1, 2020, and remains effective through January 1, 2021, unless expanded by future legislation.

The Crown Act

(SB188) The Creating a Respectful and Open Workplace for Natural Hair (CROWN) Act, made California the first state to ban discrimination on the basis of hairstyles associated with race. The CROWN Act adds hairstyles that are closely associated with race to the class of protected racial characteristics under state law.

California Consumer Privacy Act (CCPA)

This Act applies to businesses — whether or not located in California — with applicants, employees, or contractors who are California residents. Employers subject to the CCPA must satisfy detailed and onerous notice obligations, if they suffer a security breach, and may potentially face exposure to class action litigation.

AB25 excludes employees and prospective employees from the “Consumer” definition under the CCPA until January 1, 2021, so the above requirement will not yet apply in 2020.

Mileage Rate

The standard mileage rate pursuant to IRS standards is reduced for 2020 from 58.0 cents per mile to 57.5 cents per mile.

Minimum Wage

Minimum Wage: The hourly minimum wage beginning on January 1, 2020, for the state of California is $13.00 ($12.00 for employers with 25 or fewer employees). For companies with employees working in Los Angeles city or unincorporated areas of Los Angeles County, the hourly minimum wage will increase on July 1, 2020, from $14.25 to $15.00 (employers with 25 or fewer employees have an extra year to comply, facing an increase from $13.25to $14.25 on July 1, 2020). Please check local ordinances for other cities where employees perform services to determine the applicable minimum wage.

Disclaimer: This article has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice.