This year’s slate of new California employment laws primarily involves clarifications to existing laws, ranging from separation agreements to COVID-19 safety obligations to the continuing sagas of binding arbitration and independent contractor classifications. All in all, it was a quiet legislative year compared to others. However, employers should always stay vigilant with employment law compliance, and the 2022 HR Compliance Checklist at the end of this article provides some useful tips.
Separation Agreements Subject to the “Silenced No More Act” (SB 331)
The #MeToo movement highlighted the prevalence of settlement agreements in which victims of sexual harassment were prevented from disclosing anything regarding their alleged sexual perpetrators. In 2018, the California Stand Together Against Non-Disclosures Act (STAND) prohibited settlement agreements from preventing the disclosure of factual information regarding certain civil or administrative action claims of sexual assault, sexual harassment or sex discrimination.
The Silenced No More Act (SB 331) amends the STAND Act. It clarifies that settlement agreements for sexual harassment complaints cannot restrict the disclosure of the underlying facts, which goes beyond the prior prohibition of provisions that prevented the disclosure. The new law further expands the restriction on nondisclosure provisions to facts relating to other forms of harassment or discrimination (i.e., not limited to gender-based or sexual harassment) for settlement agreements entered into on or after January 1, 2022.
Settlement agreements commonly include provisions in which the departing employee agrees not to disparage the employer. The California Fair Employment and Housing Act has prohibited employers from requiring employees to sign a nondisparagment provision as a condition of employment or in exchange for a raise or bonus in which they are prohibited from disclosing information about unlawful acts in the workplace, including sexual harassment. The Silenced No More Act clarifies that “unlawful acts in the workplace” includes information pertaining to harassment, discrimination or any other conduct that the employee has reasonable cause to believe is unlawful. The new law requires verbiage to this effect be included in settlement agreements, as well as separation agreements (which are typically entered into when an employee is laid off or terminated when there is no pending formal legal complaint). Separation agreements must also notify employees that they have the right to consult an attorney regarding the agreement and provide at least five business days to do so. These agreements may continue to include general waivers and nondisclosure provisions regarding an employer’s confidential information and trade secrets.
Limitations on Binding Arbitration (Prior AB 51 and AB 762)
On January 1, 2020, AB 51 was slated to go into effect which would have added Labor Code Section 432.6, prohibiting employers from requiring employees and applicants to arbitrate employment claims under the Fair Employment and Housing Act (FEHA) and the Labor Code, encompassing discrimination, harassment, retaliation, and various wage and hour disputes. However, just prior to the effective date, the United States District Court for the Eastern District of California, in Chamber of Commerce v. Bonta, issued a restraining order, and later a preliminary injunction which prohibited its enforcement pending appeal.
In September 2021, the Ninth Circuit Court of Appeals ruled in the Chamber case and upheld a portion of AB 51. It held that employers are prohibited from conditioning employment or continued employment on an employee’s or applicant’s signing a binding arbitration agreement. However, if employees or applicants wish to sign such an agreement, then it would be enforceable. The court held that Labor Code Section 432.6 barred involuntary arbitration agreements and thus did not violate the Federal Arbitration Act, which requires enforcement of arbitration agreements. The court’s opinion has been roundly criticized as being illogical and it is currently on hold until the Ninth Circuit determines whether it will hear the case again in front of the full court (i.e., en banc review).
From the 2021 legislative session, AB 762 requires arbitration providers in employment or consumer arbitrations to send itemized invoices at specified times making payment due upon receipt if the arbitration agreement did not establish a time frame for payment. This bill was necessitated by some employers delaying arbitration by failing to timely pay arbitration fees.
Stay Tuned for Cal-OSHA Regulations Regarding Vaccine/Testing Mandate
California’s occupational safety and health agency, referred to as Cal-OSHA, is a “state plan” that is monitored by the federal OSHA agency. California must provide protections that are at a minimum in compliance with the federal regulations. The fate of the federal OSHA vaccine or testing mandate for employers with 100 or more employees will be decided by the United States Supreme Court after its hearing on January 7. Should the federal mandate remain in place, Cal-OSHA will be issuing comparable regulations.
In December, Cal-OSHA issued its most recent Emergency Temporary Standards regarding return to work criteria and related issues. Here is Fact Sheet: https://www.dir.ca.gov/dosh/dosh_publications/COVIDOnePageFS-12-16-2021.pdf
Cal-OSHA Enforcement of Enterprise-Wide Violations (SB 606)
SB 606 highlights the importance of employer compliance with Cal-OSHA’s various safety measures. The new law creates a rebuttable presumption that employers with multiple worksites have committed “enterprise-wide” violations if (1) the employer has a written policy or procedure that is not in compliance with safety regulations, or (2) Cal-OSHA has evidence of a pattern or practice of the same violation involving more than one of the employer’s worksites. If the employer does not rebut the presumption, Cal-OSHA may issue an enterprise-wide citation requiring enterprise-wide abatement. Enterprise-wide citations trigger the same fines as willful violations.
Employer Notice Requirements Regarding COVID-19 (AB 654)
AB 654 clarifies certain requirements for employers when they are on notice of a potential COVID-19 exposure at the workplace. Existing law requires employers to notify all employees who were on the premises at the same worksite as a “qualifying individual” (referring to a person who has tested positive, been diagnosed with or died from COVID-19 or is subject to a public health isolation order) within the infectious period.
The new law clarifies that “close contact” means being within six feet of a qualifying individual for a cumulative total of 15 minutes or greater in any 24-hour period within or overlapping with the high-risk exposure period, regardless of the use of face coverings. The “high-risk exposure period” means from two days before symptoms until 10 days after the first symptoms and 24 hours have passed with no fever. Or, for those who test positive but do not develop symptoms, the period is from two days before until 10 days after being tested.
The new law further clarifies that employers must notify its local public health agency of a COVID-19 “outbreak” within 48 hours or one business day, whichever is later. An “outbreak” is defined by the California Department of Public Health as three or more COVID-19 cases within a two-week period of individuals who are in different households. The bill expands the employers exempt from this reporting requirement to certain entities, such as community clinics.
Rehiring Displaced Workers Due to COVID-19 in Certain Industries (SB 93)
Hotels, private clubs, event centers, airport hospitality operations, airport service providers, janitorial and building maintenance providers and security service providers who laid off certain employees due to COVID-19 reasons must offer to rehire them as job positions become available for which they are qualified until December 31, 2024. The job offer must be made within five business days of the position becoming available and must be made in writing, which includes email or text message. Laid off employees covered by this law must have worked at least six months during the 2019 calendar year.
Expansion of California Family Rights Act Definition of “Family Member” (AB 1033)
Last year, the California Family Rights Act (CFRA) significantly expanded its scope to cover employers with 5 or more employees. CFRA provides eligible employees with up to 12 weeks of unpaid, job-protected time off due to an employee’s serious health condition, to care for a family member with a serious health condition or for new child bonding. This new law expands the definition of family member to include parents-in-law.
AB 1033 made other changes to the dispute resolution procedures for the Department of Fair Employment and Housing, the enforcing agency for CFRA claims.
Legal Postings By Email Allowable (SB 657)
Various state and federal laws require employers to post information about employment laws so that all employees have access. At many workplaces, these postings are found in lunch or break rooms. The sudden rise in employees working from home during the pandemic highlighted the need to update these requirements. SB 657 provides that employers may email employees the required notices, although they nonetheless must continue to physically post the notices at the workplace.
Criminal Penalties for Wage Theft (AB 1003)
AB 1003 creates a new criminal offense for the intentional theft of wages by an employer which will be punishable as either a felony or misdemeanor. Intentionally unpaid wages, including tips, over $950 from any one employee, or $2,350, in the aggregate, from two or more employees, in any 12 consecutive months, will subject the employer to these potential criminal charges.
Continued Refinement of the ABC Test for Independent Contractors (AB 1561, AB 1506)
On January 1, 2020, AB 5 went into effect, establishing the ABC test for independent contractor classifications. The law also exempted certain professions and business relationships from the ABC test, thus making them subject to the multi-factor employment test, the so-called “Borello” test. Licensed manicurists were exempted from the ABC test until January 1, 2022 to provide the State time to adopt a regulatory framework. However, the framework was not completed and thus, AB 1561 extended the exemption to January 1, 2025.
AB 1561 makes various other clarifications. For example, it extends the AB 5 exemption for subcontractors in the construction trucking industry and for insurance claims adjusters.
AB 1506 extends the sunset date for the newspaper carriers’ exemption from the ABC test to January 1, 2025. It further requires newspaper publishers and distributors to annually report various data, including the average wage rate of its carriers.
New California Minimum Wage and Salary Requirements for Overtime Exemptions
On January 1, 2022, the California minimum wage will increase to $14 an hour for employers with less than 26 employees, and $15 an hour for employers with 26 or more employees.
In California, the Administrative, Executive and most Professional overtime exemptions require the payment of a monthly salary at the minimum rate of two times the California minimum wage times 2,080 hours. This means that beginning January 1, 2022, the minimum salary threshold is $58,240 per year for employers with less than 26 employees and $62,400 per year for employers with 26 or more employees.
The California computer software overtime exemption’s minimum thresholds are tied to the Consumer Price Index and adjust each year. For 2022, the minimum hourly rate of pay to qualify for this exemption is increasing to $50, the minimum monthly salary will increase to $8,679.16, and the minimum annual salary will be $104,149.81.
Your 2022 HR Compliance Checklist
- Review settlement and severance agreement templates and ensure that any nondisclosure requirements are in compliance.
- Determine, with counsel’s advice, whether to continue requiring binding arbitration agreements for new hires.
- Be vigilant and ensure compliance with all COVID-19 safety, notification and reporting requirements. Local public health orders and Executive Orders from the Governor should be regularly reviewed given the ever-changing COVID-19 landscape.
- Update your Leave of Absence policy to include the expanded CFRA-covered time off for employees’ family members.
- Determine which standards apply to independent contractors and have your legal counsel analyze whether they meet the applicable test.
- Review the salaries of all overtime exempt employees and ensure that the new minimum salary thresholds are met to maintain the exemption classifications.
- Review harassment prevention training records for all supervisory and non-supervisory staff and provide training to those who missed it in 2021.
For more information or assistance with employment law compliance matters, please contact Ms. Topliff at firstname.lastname@example.org.