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2020 California Employment Law Changes

New Year! New You!

As we write every year, California has new rules, regulations and court rulings that have changed the employment law landscape.  Here is a summary of the key new laws for 2020 (meaning, not every law is covered here. And no case law is discussed.  Think: Summary!)

Hiring

Arbitration Agreements. California now prohibits employers from requiring employees and applicants to arbitrate claims under the Fair Employment and Housing Act (FEHA) and the Labor Code. These laws cover discrimination, harassment, retaliation and wage and hour. The new law also prohibits class action waivers and arbitration programs requiring employees to “opt out” if they do not want to be part of an arbitration program. There are exceptions to the new bar, including for settlement agreements and negotiated severance agreements.

This change takes effect January 1, 2020 and arbitration agreements signed before that will be subject to the prohibition.

Compensation

Minimum Wage. Effective January 1, 2020, California employers with at least 26 employees must pay minimum wage at the rate of $13.00 per hour. For employers with 25 or fewer employees, minimum wage will increase to $12.00 per hour.

Employers are generally subject to federal, state and local minimum wage laws and must follow the stricter standard; that is, the one that is the most beneficial to the employee.

Exempt employees. The minimum salary that must be paid to exempt employees in California corresponds to the state minimum wage. Exempt employees must earn at least twice the state’s minimum wage for full-time employment, e.g. $54,080 annually for employers with 26+ employees. For employers with 25 or fewer employees, the amount is $49,920. This minimum salary increases as minimum wage increases. As always, the “duties” tests must be satisfied for any employee classified as exempt. 

Overtime for the Computer Software Professional Exemption. As of January 1, 2020, the computer software employees’ minimum hourly rate of pay exemption increases to $46.55 per hour.  (The minimum monthly is $8080.71; annual is $96,968.33). The applicability of this exemption requires careful analysis to see if the worker is performing the necessary duties. And note that this exemption is only from overtime. Exempt Computer Software Professionals must still be afforded the opportunity to take meal and rest breaks.  

Independent Contractors. California’s AB 5 is getting a lot of news coverage – and rightfully so. If you have anyone performing services for you that isn’t paid as a W2 employee, careful review of that relationship is a must. Companies must confirm that an independent contractor is really an independent contractor, or suffer the consequences.

In many important ways, AB 5 is “just” a codification of the California Supreme Court’s 2018 Dynamex “A-B-C test.” Under the test, a worker is an employee unless:

  • she is free from the control and direction of the hirer in performance of the work; and
  • she performs work that is outside the usual course of the hiring entity’s business; and
  • she is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

One big expansion under AB 5 is that Dynamex applied to the Wage Orders of the California Industrial Welfare Commission, while AB 5 applies more broadly to the California Labor Code and Unemployment Insurance Code definitions of an “employee.” As before, we do not recommend trying to parse this too liberally when reviewing your work relationships. We strongly recommend that you analyze all persons who perform work for your business to see where they fit under the laws.

In the event the “ABC” test cannot be applied to a particular work relationship, AB 5 clarifies that the determination of independent contractor status is governed by an evaluation set forth in a case called S.G. Borello & Sons, Inc. v. Department of Industrial Relations. Many employers are familiar with this review with the most significant factor being the control of the business over the worker.

The law also specifies certain jobs as exempt from the “ABC” test – but the Borello test must still be met!  These include licensed insurance agents, certain licensed health care professionals, certain practicing licensed professions (attorneys, architects, engineers, private investigators and accountants), registered securities broker-dealers or investment advisors, direct salespersons and construction subcontractors.  Other “professional services” may fit in an exemption if they have a business license and negotiate their own rates of pay, including travel agents, graphic designers, certain human resources and marketing professionals, certain photographers, freelance writers, licensed barbers and cosmetologists. Real estate licensees are subject to provisions of the Business & Professions Code instead of the “ABC” test. And there are new rules for business-to-business situations and “referral agencies” that connect clients with service providers who provide graphic design, photography, event planning, minor home repairs, moving, home cleaning, errands, and dog walking, among others.

Of note, employers may not reclassify an individual who was an employee on January 1, 2019 to an independent contractor because of these exemptions! But, the bill’s exemptions do apply retroactively if a worker fits under one.

Fair Employment

Hairstyle Discrimination Prohibited. California’s Fair Employment and Housing Act is expanded with regard to race. The definition of “race” now includes “traits historically associated with race, including, but not limited to hair texture and protective hairstyles,” including “braids, locks, and twists.” During the legislative process, lawmakers pointed to the fact that workplace dress code and grooming policies that prohibit natural hair, including afros, braids, twists and locks, have a disparate impact on Black individuals. Hair has historically been a determining factor of a person’s race, thus targeting certain hairstyles constitutes racial discrimination.

Revised Lactation Accommodation Requirements. Employers must provide employees the use of a room or other location that is in close proximity to the employee’s work area. The space has to be free from intrusion and it cannot be a bathroom. It has to be safe, clean, and free of hazardous materials. The employer must provide a place to sit, a surface to set the breast pump on (along with other personal items) and access to electricity. A sink and refrigerator must also be available.

The lactation space does not need to be used solely for lactation, but when a lactating employee needs to use it, they get priority.

Employers with less than 50 employees may be exempt from the specific requirements if they can demonstrate undue hardship (meaning compliance would create significant difficulty or expense in light of the employer’s size and financial resources). We suggest assuming that this is a very difficult standard to meet and you should talk with counsel before trying to rely upon hardship.

Employers must provide a reasonable break time for lactation. The new law provides that a failure to provide this break time or a location as described above, is a failure to provide a rest break. And when you fail to provide a rest break, there is a penalty of one additional hour’s pay per violation (limited to one per day).

Employers must implement a written policy describing the process for requesting lactation accommodation and informing employees of their right file a complaint with the Labor Commissioner. This policy should be in your handbook, in a separate document given to new hires, and to employees who ask about or ask for parental leave.

Expanded Time to File Claims of Harassment, Discrimination and Retaliation.  Under current law, a victim had one year from the last act to file a claim of harassment, discrimination or retaliation.  This time is now extended to three years.

“No-Rehire” Provisions Barred from Settlement Agreements. Often, when employers and employees enter into settlement agreements about employment law claims, the employee agrees never to seek employment from the employer (and any related companies).  Starting January 1, 2020, these provisions are not permitted. This rule covers matters resolved internally and those that have progressed to litigation.

The parties to the agreement may agree to end an employment relationship or prevent the employee from working for the employer again, if the employer made a good faith determination that the employee engaged in sexual harassment or sexual assault.  The employer is not required to keep that employee on or rehire them.

Training Requirements. Last year, harassment prevention training requirements were expanded to include small employers (employers with five or more employees) and for all employees to receive some training. Over the summer, the deadline for such training was extended to allow companies to comply.

By January 1, 2021, employers with five or more employees must provide two hours of training to supervisory employees and one hour to all non-supervisory employees in California.  The training must be repeated every two years. New hires must receive the training within six months of hire or promotion to a supervisory position.

Seasonal, temporary, and employees hired to work for less than six months must be trained within 30 calendar days after their hire date, or within 100 hours worked, whichever occurs first.  If the employee is employed by a temporary services employer, that company is to provide the training, not the end-client.

Time off

Organ Donation Time Off Expanded. Current law provides that employers with 15 or more employees must provide a paid leave of absence to an employee for the purpose of being an organ donor. The time off was for 30 days in a one-year period. The new law (AB 1223) gives the organ donor another 30 days of unpaid time off.  As before, any time off under this law may run concurrently with time off under the FMLA and CFRA.

Paid Family Leave.  Later this year (July 2020), California’s Paid Family Leave wage replacement benefits will increase from six to eight weeks of benefits.  These benefits are for employees who are on protected (or granted) time off to care for another – an ill family member or for new child bonding.  As before, this is not the right to take time off, but access to wage replacement while on leave. In San Francisco, the San Francisco Paid Parental Leave Ordinance will extend to eight weeks as well.

Questions? Please do not hesitate to contact me!

www.mstpartners.com •  408.293.1900 jdebacker@mstpartners.com

Harassment Prevention Training Deadlines Extended!

Last week, California employers got the Back-to-School gift of an extension (to train some employees) and some clarity about when employees need to be re-trained.

Governor Newsom signed Senate Bill 778.  The bill delays some of the mandatory anti-harassment training deadlines, and clarifies the retraining requirements for certain employees who already received training in 2018 or 2019.

Starting this past January, California law (specifically, SB 1343), extended the requirement that employers provide supervisory employees with two hours of anti-harassment training to businesses with five or more employees, including temporary or seasonal workers. Before SB 1343, the training requirement was only for employers with 50 or more employees. The law also expanded the training requirement—which had applied only to supervisory employees—to include one hour of training every two years for all non-supervisory employees for covered employers. The initial deadline for providing new training to those employees not previously covered under prior state law was January 1, 2020. Now, with the passage of SB 778, the deadline for training non-supervisory employees has been extended to January 1, 2021.

Last year’s law also created confusion about the time cycle for when supervisors had to be retrained.  The law had said that supervisors who had been trained in 2018 had to be retrained by January 1, 2020.  But SB 778 fixes that issue.  Under SB 778 employees who are or were trained in 2019 do not need to be retrained until two years have passed, sometime in 2021, and then every two years thereafter.

This bill was passed with an urgency clause, so it becomes effective last week. This new law is good news – smaller companies have more time to implement a program and supervisors trained recently don’t have to participate again so soon.

As before, the trainings can be done individually or as part of a group, and may be completed in shorter segments adding up to the total time requirement. The DFEH is required to develop sample one- and two-hour online training courses on the prevention of sexual harassment for non-supervisory and supervisory personnel, respectively. Alternatively, employers may create their own anti-harassment training modules as long as they meet the compliance requirements.

Finally . . . my firm does these trainings!  Feel free to give us a call or email us – we do lively one- and two-hour presentations that are “as enjoyable as they can be.”

 

Review Your Settlement Agreement Templates to Revise the “Waiver of Unknown Claims” Language

If you have template settlement agreements, release agreements or severance agreements, it is time to pull them up and make some quick amendments to what is often language in ALL CAPS – what is called the “1542” language. (And, of course, check with your employment counsel – there may be some other modifications needed if you are using a template.)

Effective January 1, 2019, Section 1542 now reads (with new language in bold):

A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.

***

Basically, California Code of Civil Procedure Section 1542 precludes the waiver of unknown claims unless the protections of the section are expressly released. To make that waiver of unknown claims effective, the actual language of Section 1542 must be included in any agreement, and the parties to the agreement must acknowledge that they are waiving their rights under the law. All this has been around for years, but now there are the slight changes highlighted above in the language of the statute. And since the language must be included (exactly), you need to update your agreements!

E-Verify is part of the Government Shutdown

Who knew? Actually, well, most of us who actually have to use E-Verify or support those who do. . .  (Snarky comments thus limited).

In the event you use E-Verify, and have tried to process new hires, this is to let you know that it is not you (the company), its them (DHS). E-Verify is not available – it is part of the federal government shutdown. Here is a link to the E-Verify announcement.

The Department of Homeland Security is “not actively managing the website.” A large red banner at the top now reads: “Information on this website may not be up to date. Transactions submitted via this website might not be processed and we will not be able to respond to inquiries until after appropriations are enacted.”

Until the shutdown is over, funding is authorized, and DHS has a chance to ramp the program back up, employers cannot enroll in E-Verify. Those already participating cannot access their E-Verify accounts; create a case; view or take action on any case; add, delete, or edit accounts; reset passwords; edit company information; terminate accounts; or run reports.

Workers will not be able to resolve questions about their status.  They cannot resolve E-Verify Tentative Nonconfirmations (TNCs) during the shutdown. In addition, myE-Verify will be unavailable, and employees will not be able to access their myE-Verify accounts.

During the shutdown, DHS announced the following as the status:

• The three-day rule for creating E-Verify cases is suspended for cases affected by the unavailability of the service (but see below about employer’s continuing obligation to verify new employees).

• The time period during which employees may resolve TNCs will be extended. The number of days E-Verify is not available will not count toward the days the employee has to begin the process of resolving their TNCs.

• Additional guidance regarding the three-day rule and time period to resolve TNC deadlines will be provided once operations resume.

The Big News to remember is this:

The availability or unavailability of the E-Verify website / program does not change employers obligation to complete work authorization. Employers must complete the Form I-9 no later than the third business day after an employee starts work for pay, and comply with all other Form I-9 requirements.

2019 Employment Law Update

A New Year is Coming! Which means. . . new laws for California employers!  Here is a brief summary of the new rules for your business.  Please do not hesitate to contact me with questions.

Compensation

Minimum Wage. Effective January 1, 2019, California employers with at least 26 employees must pay minimum wage at the rate of $12.00 per hour. For employers with 25 or fewer employees, minimum wage will increase to $11.00 per hour.

Employers are generally subject to federal, state and local minimum wage laws and must follow the stricter standard; that is, the one that is the most beneficial to the employee. Here is a not-exhaustive list of local minimum wages as of January 1, 2019: San Francisco, Sunnyvale, San Jose, Emeryville, Palo Alto, Milpitas, and Berkeley all require a minimum wage of $15.00 per hour as of January 1, 2019 (it may already be that for a particular location). Milpitas will join the $15.00 per hour list in July 2019.

Exempt employees. The minimum salary that must be paid to exempt employees in California corresponds to the state minimum wage. Exempt employees must earn at least twice the state’s minimum wage for full-time employment, e.g. $49,920 annually for employers with 26+ employees.  This minimum salary increases as minimum wage increases. As always, the “duties” tests must be satisfied for any employee classified as exempt. 

Independent Contractors. Every year, courts and government agencies give more and more warnings that employers must confirm that an independent contractor is really an independent contractor, or suffer the consequences. Generally, complying with the California Supreme Court’s 2018 Dynamex “A-B-C test” can help employers reduce liability. Under the test, a worker is an employee unless:

  • she is free from the control and direction of the hirer in performance of the work; and
  • she performs work that is outside the usual course of the hiring entity’s business; and
  • she is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

Fair Employment

Sexual Harassment. The biggest list of changes in California law is in the area of sexual harassment.

By January 2020, employers with five or more employees must provide harassment prevention training to all employees every two years. Supervisors must attend a two-hour training and non-supervisory employees must attend a one hour training.

The Fair Employment and Housing Act was amended to make it an unlawful practice for an employer to require an employee to release a FEHA claim in exchange for a bonus, raise, or continued employment. FEHA now also makes employers liable for any kind of unlawful harassment by non-employees (not just for sexual harassment as under existing law) where the employer knew or should have known of the harassment and failed to take appropriate remedial action. FEHA now also includes statements of legislative intent to make it harder for employers to prevail on harassment claims, such as a declaration that a single act of harassment may suffice to support a finding of a hostile work environment.

Any provision of a contract or settlement agreement that prevents a party to the contract from testifying about criminal conduct or harassment in an administrative, legislative or judicial procedure is void and unenforceable.

Also, settlement agreements entered into after January 1, 2019 cannot prevent disclosure of factual information about claims of sexual assault, sexual harassment, gender discrimination or related retaliation that have been filed in court or before an administrative agency (but does not apply to settlements reached before any filing). The parties may limit disclosure of the amount of a settlement. And the claimant can request that the agreement protect his or her identity (and facts that would lead to the discovery of his or her identity).

A Civil Code section defining privileged communications has been amended to state that a sexual harassment complaint cannot be the basis of a defamation claim. The rule now protects three new categories of communications: Sexual harassment complaints by an employee to an employer based on credible evidence and made without malice; Communications during a harassment investigation between an employer and interested persons (witnesses, etc.) regarding a sexual harassment complaint; Responses by an employer to a reference check as to whether the employer would rehire an employee and, if not, whether that decision is based on the employer’s determination that the former employee was involved in sexual harassment. The rule is not particularly clear as to what the former employer should disclose during a reference check, so it is our recommendation that you work with your employment law counsel to craft a thoughtful response in each situation. Of note, this rule is only about sexual harassment claims; it does not similarly protect from a defamation claim complaints for other forms of harassment (race, religion, national origin, age, etc.).

Pay Equity. Last year, California enacted rules to limit the ongoing effect of salary history on future salary in an effort to reduce the gender pay gap. Last year’s bill required California employers to provide “applicants” with the “pay scale” for a position upon “reasonable request.” These terms were undefined and thus open to interpretation. This past summer, the legislature clarified parts of this rule. The term “applicant” or “applicant for employment” means an external individual seeking a position with the employer. Current employees are excluded. The term “pay scale” means a salary or hourly wage range. It does not include bonus or equity ranges. And the term “reasonable request” is a request made only after an applicant has completed an initial interview with the employer. The new law also clarified that an employer may ask an applicant what they expect or want to be paid, but may not ask what they were paid at a previous job.

National Origin Discrimination. California’s Fair Employment and Housing Council enacted new regulations to help employers better understand the long-protected characteristic of national origin. National origin is defined to include, without limitation, the following actual or perceived characteristics of an individual or her ancestors, including physical, cultural, or linguistic characteristics associated with a national origin group; marriage to or association with persons of a national origin group; tribal affiliation; membership in or association with an organization identified with the interests of a national origin group; participation in schools, churches, temples, mosques, or other religious institutions generally used by persons of a national origin group; and a name that is associated with a national origin group. The section defines “national origin groups” to include “ethnic groups, geographic places of origin, and countries that are not presently in existence.”

Finally, the new rules address “English-only” policies. Before, the rules allowed such policies where “justified by business necessity.” Now, the rules specifically prohibit any policy that “limits” the use of any language in the workplace unless the employer can show the restriction is “narrowly tailored” and justified by business necessity, and making clear that customer or co-worker preferences do not suffice. Also, English-only rules are never lawful during an employee’s non-work time (e.g., meal and break periods, unpaid employer-sponsored events). In fact, such restrictions during nonworking hours could lead to wage and hour violations. Employers cannot discriminate based on an employee or applicant’s “accent” unless it “interferes materially” with job performance. The new rules also specifically state that it is unlawful retaliation to threaten to contact immigration authorities.

Lactation accommodation. Existing law requires employers to make reasonable efforts to provide a location other than a toilet stall to be used for lactation. Under the new law, the location should be something other than a bathroom. (This is a slight change and puts a higher obligation on the employer for the facility). In addition, the location should be a permanent one, but it can be a temporary location under certain conditions.

Military Discrimination. California expanded discrimination protections to members of the Federal Reserve components of the Armed Forces of the United States and members of the State Military Reserve. California law already protects members of the military or naval forces of the state or of the United States or a person ordered to military duty or training or by reason of being a member of the military or naval forces of the state or U.S. In addition, the law specifically provides that no business and other covered establishments may deny a member of the Armed Forces of the United States entrance when the member is dressed in uniform.

Sexual Orientation Discrimination. As a reminder, the U.S. Supreme Court’s decision in Masterpiece Cakeshop, Inc. v. Colorado Civil Rights Commission (the “wedding cake decision”) does not grant businesses the right to discriminate.  In that case, the Court ruled that a baker’s Free Exercise Clause rights under the Constitution were not properly considered by the Colorado Civil Rights Commission when that agency held that the baker was legally required to bake and sell a wedding cake for a same-sex couple. This was actually a very narrow decision focused on the Commission’s impermissible hostility toward the baker’s religious beliefs. The ruling does not give businesses or employers the right to discriminate against customers, guests, or employees due to their sexual orientation or any other protected class status.

Hiring

Background Checks. With a few exceptions, most California employers cannot ask job applicants about their criminal histories until a conditional offer is made. Then, employers can ask job applicants about criminal convictions, including expunged records, for certain roles, particularly if such inquiries are mandated by federal or other state laws. SB 1412 requires employers to ensure that they are not receiving or considering information about convictions beyond the particular conviction that would disqualify the applicant for the role.

In addition, this past year saw several courts give expensive reminders to employers that they should always err on the side of giving written notice and acquiring written consent before doing background checks. And make sure you are the type of employer that can (or should) even do particular background checks. Be thoughtful (and talk with your employment law counsel) about what your goal is in getting background information.

Employee Post-Employment Non-Solicitation Restrictions. In early November, a California Appeals Court invalidated an employer’s contract that restrained former employees from soliciting current employees for a one-year period. These types of restrictions had been a gray area. California’s general rule against noncompetition agreements is that “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” In a ruling directed at medical industry recruiters, the Court held that provisions barring solicitation of employees also violate the non-compete rules.  And, more importantly, the Court indicated that any employee non-solicitation provisions are void under the law.

Arbitration Agreements. Recently, Facebook and Google announced that they will no longer require employees to arbitrate sexual harassment cases. Please note, our current aim with such agreements is not to compel arbitration of harassment or discrimination cases, but to limit the crushing financial consequences to the employer of wage and hour collective actions.

Questions? Please do not hesitate to contact me!

jdebacker@mstpartners.com • 408.293.1900

 

What to do if ICE comes to your worksite

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The San Francisco Chronicle reported Tuesday that Immigration and Customs Enforcement officials plan a major sweep in Northern California. The article, which cited an unnamed source familiar with the operation, said the raids could occur in the coming weeks and would aim to arrest more than 1,500 undocumented immigrants.

As a California employer, you must know that just because an ICE officer visits your workplace, that does not mean that the agent has permission to talk to your employees or walk the premises without a proper warrant.  In fact, you must prevent this from happening! 

Also, ICE agents are not allowed to simply get documents without complying with notice obligations.  While perhaps not the most pleasant encounter, you and your employees don’t need to be combative or aggressive in order to prevent ICE from entering your workplace. You just need to be prepared and follow your procedure.  

As mentioned in this blog before, this year the Immigrant Worker Protection Act (AB 450) provides California workers with protection from immigration enforcement while on the job.  The new rules apply to all employers, regardless of size.

Employers must comply with strict rules limiting when ICE can be given access to the worksite or employee records. Employers must also comply with new notice obligations.

California employers cannot voluntarily allow ICE to enter nonpublic work areas or to access company records. Instead, ICE must present legal documentation in the form of a judicial warrant or subpoena before you can allow access. This is a warrant or subpoena issued by a court, not just a document issued by ICE itself.

If the ICE agent presents an ICE Notice of Inspection, ICE does not have the authority to simply enter the premises.  Rather, this Notice provides notice to the employer and a three-day response window to produce the Forms I-9 and other documents such as payroll records, list of current employees, articles of incorporation and business licenses.

Employers must follow specific requirements related to Form I-9 inspections. Within 72 hours of receiving a Notice of Inspection, California employers must post a notice to all current employees informing them of any federal immigration agency’s inspections of Forms I-9 or other employment records.

After the inspection concludes, employers have 72 hours to provide each “affected employee” a copy of the results and a written notice of the employer’s and employee’s obligations arising from the inspection. An “affected employee” is one identified by the inspection results as potentially lacking work authorization or having document deficiencies.

California employers must ensure that supervisors and any employees who may interact with ICE agents know the rules.  These employees must make sure that ICE agents are not simply voluntarily granted access without particular documentation –the judicial warrant or subpoena — in place.  You may want to train your public facing staff on their responsibilities and have a prompt response system in place. At a minimum, these individuals should be trained to ask for a judicial warrant or subpoena. (And not assume that any document is valid – even one with an ICE insignia. It must be a judicial warrant or subpoena).

In addition to the emotional havoc these ICE encounters have on your staff and the potential life-changing consequences if documentation is not deemed satisfactory, the penalties to California employers for violating the new state law can be up to $10,000 per violation. At the same time, federal penalties for Form I-9 violations can range from a $110 to $20,000.

Leaves of Absence – Updated Chart

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Happy New Year!  I updated my LOA Chart Jan 2018 PDF.  If you have a more clever way of saying something, or think this chart could be “better” – let me know!