In 2021, California Gov. Gavin Newsom signed several laws impacting California employers. The new laws — some of which recently became effective and others were signed into law just weeks ago and take effect January 1, 2022 — address several topics, including employees of warehouse distribution centers, settlement and nondisparagement agreements, and workplace safety.
As a reminder, the minimum wage in California is increasing to $15.00 per hour on January 1, 2022, for employers with 26 or more employees based on previous legislation signed by Gov. Jerry Brown in 2015. The minimum wage for employers with 25 or fewer employees will increase to $14.00 per hour on January 1, 2022. Also, various cities and local governments in California have enacted minimum wage ordinances exceeding the state minimum wage.
All employers with operations in California should be aware of these new laws, understand how these laws may affect their operations and consult with counsel to address any compliance questions. The effective date of each new law is indicated in the heading of the Assembly Bill (AB) or Senate Bill (SB). The list below is in numerical order by AB or SB.
AB 73 – PPE Requirements for Wildfire Smoke Events and Agricultural Workers (Effective Sept. 27, 2021)
AB 73 requires that, in the event of a “wildfire smoke event,” “agricultural workers” be given access to the stockpile of personal protective equipment (PPE) the state was required to develop under a pre-existing law. AB 73 accomplishes this by adding “wildfire smoke events” to the kinds of emergencies contemplated by the law, and by including “agricultural workers” in the law’s definition of “essential workers.”
The bill also requires that the “Personal Protective Equipment Advisory Committee” established by pre-existing law and made up of representatives from various industries, include among its ranks “[o]ne representative of a labor organization that represents agricultural workers” and [o]ne representative of an organization that represents agricultural employers.”
Finally, AB 73 requires the California Division of Occupational Safety and Health to review and update the content of existing mandatory wildfire smoke training, and post the updated training to its website. The law notes that employers will be required to provide the training “in a language and manner readily understandable by employees, taking into account their ethnic and cultural backgrounds and educational levels, including the use of pictograms, as necessary.”
As an urgency statute, AB 73 took immediate effect upon its enactment on September 27, 2021. This bill amends Section 131021 of the Health and Safety Code.
AB 468 – Notice Obligations Relating to Emotional Support Animals (Effective Jan. 1, 2022)
AB 468 provides written notice requirements for those who sell “emotional support dogs” or items related to “emotional support animals” (defined as a dog or animal “that provides emotional, cognitive or other similar support to an individual with a disability, and that does not need to be trained or certified”). Specifically, AB 468 requires sellers to apprise buyers of the fact that an “emotional support” dog/animal is not entitled to the rights and privileges of a “guide, signal or service dog,” and that misrepresenting oneself as the owner of a “guide, signal or service dog” is a misdemeanor.
Additionally, AB 486 imposes criteria that must be met in order for a licensed “health care practitioner” (as defined in California’s Business and Professions Code) to provide documentation “relating to an individual’s need for an emotional support dog.”
Specifically relevant for employers, AB 486 expressly provides that it does not “restrict or change existing federal and state law related to a person’s rights for reasonable accommodation.”
This bill adds Article 4 to Chapter 5 of Part 6 of Division 105 of the Health and Safety Code.
AB 654 – COVID-19 Exposure Notification (Effective Oct. 5, 2021)
AB 654 amends Labor Code Section 6409.6 to require employers, when giving notice to the local public health agency of a COVID-19 outbreak, to give such notice within 48 hours or one business day, whichever is later. It also specifies the list of individuals and entities (including all employees, and the employers of subcontracted employees, who were on the premises at the same worksite) who must be notified of a potential exposure to COVID-19. Further, it expands the list of employers, which are exempt from the public health agency reporting requirements to include various licensed entities, including, but not limited to, community clinics, adult day health centers, community care facilities and child day care facilities.
AB 654 also amends Section 6325 of the Labor Code to add delivery of renewable natural gas to the list of critical governmental functions, which may not be materially interrupted by COVID-related OSHA prohibitions of use.
These changes took effect the day the law was signed by Gov. Newsom, on October 5, 2021, and are effective until January 1, 2023.
This bill amends Section 6409.6 of the Labor Code.
AB 701 – Regulation of Production Quotas in Warehouse Distribution Centers (Effective Jan. 1, 2022)
This legislation establishes regulation of production quotas in warehouse distribution centers and applies to employers who directly or indirectly, or through an agent (including the services of a third-party employer, temporary service or staffing agency), employ or exercise control over the wages, hours or working conditions of 100 or more employees at a single warehouse distribution center or 1,000 or more employees at one or more warehouse distribution centers in California.
For purposes of AB 701, all employees of an employer’s commonly controlled group (as the term is defined in Section 25105 of the Revenue and Taxation Code) are counted in determining the total employee population.
AB 701 does not provide a clear definition of “warehouse distribution center” but instead relies on a standard used by federal statistical agencies in classifying business establishments, known as the North American Industry Classification System (NAICS) Codes, and identifies the following four industries: (1) 493110 – General Warehousing and Storage; (2) 423 – Merchant Wholesalers, Durable Goods; (3) 424 – Merchant Wholesalers, Nondurable Goods; and (4) 454110 – Electronic Shopping and Mail-Order Houses (“Warehouse distribution center” does not include 493130 — Farm Product Warehousing and Storage).
Employers must provide to each employee — upon hire or within 30 days of the effective date of this bill — a written description of each quota to which the employee is required to meet. This written description must include: (1) the quantified number of tasks to be performed or materials to be produced or handled, (2) the defined period to complete the quota, and (3) any potential adverse action that could result from failure to meet that quota.
An employee is not required to meet a quota if the employee’s compliance with the quota will not allow an employee to take legally-required meal or rest periods. Further, an employee is not required to meet a quota that is not compliant with occupational health and safety laws or was not previously discussed with the employee. An employer is prohibited from taking adverse employment action against that employee for failure to meet the quota.
Current or former employees who believe that compliance with a quota violated their right to meal or rest periods or any occupational health and safety laws can request a written description of each quota that applies to them and their personal work speed data over the previous 90 days. Employers must provide this information no later than 21 calendar days from the date of the request. Former employees may only make one such request. The law does not limit the number of requests current employees can make. Notably, the law allows current or former employees to make written or oral requests.
The law creates new opportunities for employees to enforce the law and creates a rebuttable presumption of unlawful retaliation if an employer discriminates, retaliates, or takes adverse action against an employee who, in the previous 90 days, has (1) requested for the first time in the calendar year their quota or personal work speed data or (2) complained to their employer or government agencies about an alleged violation of AB 701.
Current and former employees may bring an action for injunctive relief for any alleged violations of AB 701. They may recover costs and attorneys’ fees if they prevail. Current and former employees may also initiate an action under the Private Attorneys General Act of 2004, Labor Code Section 2689, et seq. (PAGA) for alleged violations of AB 701 however employers have the right to cure alleged violations before plaintiffs file a lawsuit as set forth in PAGA’s notice provisions under Section 2699.3.
The Labor Commissioner must coordinate with other government agencies to educate employees to increase compliance, track injury data, and enforce AB 701. The Labor Commissioner can also use already available enforcement mechanisms to enforce AB 701, seek injunctive relief to obtain compliance, and recover its costs and attorney’s fees.
The law also requires Cal/OSHA and the Division of Workers’ Compensation to notify the Labor Commissioner, who is required to determine whether an investigation of violations pursuant to AB 701 is appropriate, if a worksite or employer has an annual employee injury rate of at least 1.5 times higher than the industry average.
This bill amends Section 138.7 of, and adds Part 8.6 (commencing with Section 2100) to Division 2 of, the Labor Code.
AB 1003 – Wage Theft (Effective Jan. 1, 2022)
AB 1003 makes the intentional theft of wages by an employer punishable as grand theft if the wages equal more than $950 for one employee or $2,350 for two or more employees in any consecutive 12-month timeframe. Wages subject to this section also include gratuities, benefits and other compensation. The law applies to both employees and independent contractors.
This bill adds Section 487m to the Penal Code.
AB 1023 – Electronic Records for Contractors and Subcontractors (Effective Jan. 1, 2022)
AB 1023 specifies that “monthly” record submissions required under Labor Code Section 1771.4 should be made at least once every 30 days while work is being performed on the project and within 30 days after the final day of work performed on the project. Contractors and subcontractors are also required to furnish certain records electronically, in a manner specified by the Labor Commissioner’s website. A failure to submit records related to employees will subject employers to a fine of $100 a day for a maximum total of $5,000 per project. Funds received as a result of this fine will be deposited in the State Public Works Enforcement Fund.
Contractors and subcontractors are given a 14 day grace period after the date the record submission is due before any penalty will be levied. Penalties under this section only accrue to the actual contractor or subcontractor who failed to submit records.
This bill amends Section 1771.4 of the Labor Code relating to contractors on public works projects.
AB 1033 – California Family Rights Act (Effective Jan. 1, 2022)
AB 1033 amends the California Family Rights Act (CFRA) (Government Code Section 12945.2) to include parents-in-law in the list of family members for which an employee can take leave. This follows the passage of SB 1383 last year, which expanded CFRA to cover any employer with 5 or more employees and made other changes to the CFRA.
AB 1033 also amends Government Code Section 12945.21 to mandate that the Department of Fair Employment and Housing (DFEH) notify an employee in writing of the requirement for mediation under the DFEH’s small employer mediation program prior to the employee filing a civil action if mediation is requested by the employer or employee. The employee would be required to contact the DFEH’s dispute resolution division prior to filing a civil action, and indicate whether they are requesting mediation. The DFEH will then notify all respondents. The small employer mediation program covers employers with between 5 and 19 employees.
This bill amends Sections 12945.2 and 12945.21 of the Government Code.
AB 1506 – AB 5 Exemption for Newspaper Distributors and Carriers (Extended to January 1, 2025)
AB 1506 extends for three more years the temporary exemption for newspaper publishers and distributors from the application of the “ABC test” established in the California Supreme Court’s Dynamex decision to determine if workers are employees or independent contractors. The bill also imposes critical reporting requirements on publishers and distributors to ensure that they are complying with the multifactor test for employment status previously adopted in S.G. Borello & Sons, Inc. v. Department of Industrial Relations.
Specifically, this bill requires every newspaper publisher or distributor that hires or directly contracts with newspaper carriers to submit, on or before March 1, 2022, March 1, 2023, and March 1, 2024, the following information for the current year to the Labor and Workforce Development Agency: (1) the number of carriers for which the publisher or distributor paid payroll taxes in the previous year and the number of carriers for which the publisher or distributor did not pay payroll taxes in the previous year; (2) the average wage rate paid to carriers classified as independent contractors and as employees; and (3) the number of carrier wage claims filed, if any, with the Labor Commissioner (“LC”) or in a court of law.
For the March 1, 2022 reporting date only, every newspaper publisher and distributor must also report the number of carrier wage claims filed with the Labor Commissioner or in a court of law for the preceding three years.
This bill amends Section 2783 of the Labor Code.
AB 1561 – Classification of Independent Contractors (Generally Extends and/or Revises Certain Exemptions)
AB 1561 makes four key changes to California’s law on the proper classification of independent contractors and the application of the “ABC test” established in Dynamex.
- First, the bill amends Labor Code Section 2778 dealing with the “professional services” exemption from the “ABC test”, extending the sunset date on the provisions related to licensed manicurists by three years, to January 1, 2025.
- Second, the bill amends Labor Code Section 2781 dealing with the relationship between a contractor and an individual performing work as a subcontractor in the construction industry (to which the “ABC” test also does not apply), extending the sunset date on this section to work performed before January 1, 2025, rather than the current date of January 1, 2022.
- Third, the bill amends Labor Code Section 2782 dealing with the relationship between a data aggregator and an individual providing feedback to the data aggregator (another exemption from the “ABC test”). Specifically, it (1) revises the exemption to instead apply to the relationship between a data aggregator and a “research subject”; (2) eliminates the requirement that “any consideration paid for the feedback provided, if prorated to an hourly basis, is an amount equivalent to or greater than the minimum wage”; and (3) defines “research subject” as “any person who willingly engages with a data aggregator in order to provide individualized feedback on user interface, products, services, people, concepts, ideas, offerings, or experiences, and does not engage solely for the purposes of completing individual tasks, except as the tasks relate to providing such feedback.”
- Fourth, the bill amends Labor Code Section 2783, extending the exemption for persons or organizations that are licensed by the Department of Insurance, and persons who provide underwriting inspections, premium audits, risk management, or loss control work for the insurance and financial service industries, to also apply to persons who provide claims adjusting or third-party administration. It defines “third-party administrator” by reference to the definition contained in California Code of Regulations Title 8, Section 10112.1(cc).
This bill amends Sections 2778, 2781, 2782 and 2783 of the Labor Code.
SB 62 – Garment Manufacturing (Effective Jan. 1, 2022)
SB 62 ushers in a variety of high-impact changes to labor laws covering the garment manufacturing industry and provides that garment manufacturing employees may not be paid by the piece or unit, or by the piece rate, but rather must be paid at an hourly rate. There is a limited exemption for employees covered by certain collective bargaining agreements. Employees may enforce Section 2673.2 by filing a claim with the Labor Commissioner and the Labor Commissioner may bring an action to enforce the statute or issue a citation. The penalty for violations is $200 “per employee for each pay period in which each employee is paid by the piece rate.”
In addition, SB 62 broadens the scope of persons and companies liable for labor violations in the garment manufacturing industry. Specifically, the law amends Labor Code Section 2670 to state that “a person contracting to have garments made” is liable for unpaid wages, including overtime and premium wages, and for reimbursements for expenses. The amended statute makes clear that this is the case “regardless of how many layers of contracting” exist.
Similarly, the law amends Labor Code Sections 2671 and 2673 to specify that “brand guarantors” (defined as “any person contracting for the performance of garment manufacturing…regardless of whether the person with whom they contract performs the manufacturing operations or hires contractors or subcontractors to perform the manufacturing operations”) must keep certain defined records regarding those contracts for four years. The law amends Labor Code Section 2673.1 to explicitly state that any garment manufacturer, contractor, or brand guarantor who enters into contracts for garment manufacturing operations is jointly and severally liable for unpaid wages (including overtime and premium wages), reimbursement for expenses, other unpaid compensation, attorneys’ fees, and civil penalties for failure to secure valid workers’ compensation coverage.
This bill adds Section 2673.2 to the Labor Code and amends Labor Code Sections 2671 and 2673.
SB 331 – Silenced No More Act: Settlements and Nondisparagement Agreements (Effective Jan. 1, 2022)
This bill expands coverage of existing law under Code of Civil Procedure Section 1001, known as the STAND (Stand Together Against Non-Disclosures) Act, which prohibits public and private employers of any size from settling lawsuits and administrative claims using agreements that prevent the disclosure of factual information regarding:
- Sexual assault
- Sexual harassment
- Workplace harassment and discrimination based on sex
- The failure to prevent acts of workplace harassment or sex discrimination
- Retaliation against workers who report sexual harassment or sex discrimination
SB 331 prohibits provisions in certain agreements that prevent or restrict the disclosure of factual information related to claims involving all forms of harassment, discrimination and retaliation (not just discrimination based on sex):
- Expands the prohibition to include acts of workplace harassment or discrimination not based on sex, and acts of harassment or discrimination not based on sex by the owner of a housing accommodation
- Prohibits employers from requiring an employee to sign a nondisparagement agreement or other document that has the purpose or effect of denying the employee the right to disclose information about unlawful acts in the workplace
- Prohibits any provision in an employee’s separation agreement that restricts the disclosure of information about unlawful acts in the workplace
- Requires that a nondisparagement or other contractual provision that restricts an employee’s ability to disclose information related to conditions in the workplace to include specific language about an employee’s right to disclose information about unlawful acts in the workplace
SB 331 applies to agreements:
- Made in exchange for a raise or bonus
- Made as a condition of employment or continued employment
- Related to an employee’s separation such as a severance agreement
This bill amends Section 1001 of the Code of Civil Procedure and amends Section 12964.5 of the Government Code.
SB 572 – Enforcement Liens on Real Property (Effective Jan. 1, 2022)
This bill adds Section 90.8 to the Labor Code as an alternative to judgment liens and authorizes the Labor Commissioner to create a lien on real property to secure amounts due under any final citation, findings, or decisions. The Commissioner has the authority to hear employee complaints regarding the payment of wages and other employment-related issues, including but not limited to, the nonpayment of wages, overtime or vacation pay.
Unless the lien is satisfied or released, a lien would continue until 10 years from the date of creation, and may be renewed for additional periods of 10 years at any time prior to its expiration.
This bill adds Section 90.8 to the Labor Code.
SB 606 – Workplace safety: Enterprise-Wide and Egregious Health and Safety Violations (Effective January 1, 2022)
SB 606 creates new categories of workplace health and safety violations – “enterprise-wide” violations and “egregious” violations. Specifically, SB 606 allows Cal/OSHA to issue “enterprise-wide” violations for employers with more than one worksite under certain circumstances. The bill provides that there is a “rebuttable presumption” a violation is “enterprise-wide” if the employer has a written policy or procedure that violates workplace health and safety laws, or Cal/OSHA “has evidence of a pattern or practice of the same violation … committed by that employer involving more than one of the employer’s worksites.” Thereafter, if the employer fails to rebut the presumption of an “enterprise-wide” violation, Cal/OSHA “may issue an enterprise-wide citation requiring enterprise-wide abatement.”
SB 606 also allows Cal/OSHA to deem a workplace health and safety violation “egregious” if certain criteria are met. Specifically, Cal/OSHA may issue a citation for an “egregious violation” where, for instance, the employer:
- “[I]ntentionally … made no reasonable effort to eliminate the known violation”
- Committed willful violations that “resulted in worker fatalities, a worksite catastrophe, or a large number of injuries or illnesses”
- Committed willful violations resulting in “persistently high rates of worker injuries or illnesses”
SB 606 provides that, subject to certain narrow exceptions, “each instance of an employee exposed to [an egregious] violation shall be considered a separate violation for the purposes of the issuance of fines and penalties.”
Further, SB 606 empowers Cal/OSHA to issue a subpoena during its investigation of the policies and practices or an employer or related employer entity, and to enforce the subpoena if the employer “fails to provide the requested information within a reasonable period of time.”
This bill amends Sections 6317, 6323, 6324, 6429, and 6602 of the Labor Code, and adds Sections 6317.8 and 6317.9 to the Labor Code.
SB 646 – PAGA Exemption for Janitorial Employers Working Under a CBA (Effective January 1, 2022)
This bill limits janitorial employees represented by a labor organization and performing work under a collective bargaining agreement (CBA) in effect before July 1, 2028, from filing a suit under PAGA.
“Janitorial employee” means an employee whose primary duties are “to clean and keep in an orderly condition commercial working areas and washrooms, or the premises of an office, multiunit residential facility, industrial facility, health care facility, amusement park, convention center, stadium, racetrack, arena, or retail establishment.”
The exemption does not cover:
- Workers who specialize in window washing
- Housekeeping staff who make beds and change linens as a primary responsibility
- Workers working at airport facilities or cabin cleaning
- Workers at hotels, card clubs, restaurants, or other good service operations
- Grocery store employee and drug-retail employees
SB 646 does not preclude janitorial employees from pursuing any other civil action against their employer, including an action for a violation of the Fair Employment and Housing Act, Title VII of the Civil Rights Act of 1964, or any other prohibition of discrimination or harassment. The PAGA exemption expires on the date the CBA expires or July 1, 2028, whichever is earlier.
This bill adds Section 2699.8 of the Labor Code until July 1, 2028.
SB 657 – Electronic Delivery of Workplace Notices (Effective January 1, 2022)
SB 657 provides that whenever an employer is required to physically post information meant to apprise employees of their rights under applicable statutes, it “may also distribute that information to employees by email.” As noted here, the statute merely allows employers to provide required notice via email, and does not negate employer’s pre-existing obligation to post physical copies of such notices in workplaces.
This bill adds Section 1207 to the Labor Code.
SB 727 – Direct Contractor Liability (Effective Jan. 1, 2022)
SB 727 extends a direct contractor’s liability for penalties, liquidated damages, and interest owed by a subcontractor on account of the performance of the labor, for contracts entered into on or after January 1, 2022. For contracts entered into on or after January 1, 2022, this bill also removes the limitation of liability.
At least 30 days prior to taking action, the Labor Commissioner must notify the direct contractor and subcontractor on a private works project of the failure of a subcontractor to pay wages and/or other applicable benefit owed to workers. This notice must include the project name and name of the employer and provide that any liquidated damages awarded by the Labor Commissioner or the court shall be payable to the aggrieved employee.
This bill amends Section 218.7, and adds Section 218.8 to the Labor Code.
SB 762 – Timing of Fees and Costs Due in Arbitration (Effective Jan. 1, 2022)
Under existing law, in an employment or consumer arbitration that requires, either expressly or through application of state or federal law or the rules of the arbitration provider, the drafting party to pay certain fees and costs before the arbitration can proceed and/or during the pendency of the arbitration proceeding, the fees or costs must be paid within 30 days after the due date. Otherwise, the drafting party is in material breach of the arbitration agreement, is in default of the arbitration, and waives its right to compel arbitration.
SB 762 requires the arbitration provider – immediately after an employee or consumer meets the filing requirements necessary to initiate an arbitration – to provide all parties to the arbitration an invoice, for any fees and costs required before the arbitration can proceed, by the same means on the same day. It requires those invoices to be issued as due upon receipt, unless the arbitration agreement expressly provides a different time for payment. For fees and costs due during the pendency of the arbitration, SB 762 requires any extension of time for the due date to be agreed upon by all parties to the arbitration.
SB 762 does not alter existing provisions which provide that if the drafting party materially breaches the agreement by failing to pay all fees and costs when due, the employee has the option of withdrawing the claim from arbitration and proceeding in a court of appropriate jurisdiction, in which case the court shall impose sanctions on the drafting party.
SB 762 also requires any time specified in a contract of adhesion for the performance of an act required to be performed to be reasonable.
This bill adds Section 1657.1 to the Civil Code, and amends Sections 1281.97 and 1281.98 of the Code of Civil Procedure.
SB 807 – DFEH: Enforcement of Civil Rights (Effective Jan. 1, 2022)
SB 807 sets forth procedural modifications regarding the DFEH’s enforcement. These changes include new processes for when and how the DFEH can appeal adverse superior court decisions regarding compelling cooperation in investigations and allows for tolling of the DFEH’s deadline to file a civil action if dispute resolution is pending.
Beginning on January 1, 2022, SB 807 also extends current record retention requirements for employers, requiring them to preserve personnel records for applicants and employees pursuant to Government Code Section 12946 for four years from the date that the records were created, after an employee is terminated, or when an applicant is not hired by a company. Once an employer receives notice that a verified complaint has been filed under this section, the employer must preserve all relevant records until after the resolution of the complaint or the expiration of the statute of limitations for the claims, whichever is later.
This bill also extends the time by which an individual can file a civil action for statutory violations by tolling that period while the DFEH investigates. The DFEH’s deadline to complete its investigation and issue a right-to-sue notice for employment discrimination complaints treated as class or representative complaints is extended to two years by this amendment.
This bill amends Government Code Sections 12930, 12946, 12960, 12961, 12962, 12963.5, 12965, 12981, and 12989.1.