Another year has flown by while the California Legislature has been hard at work passing a variety of employment laws, ranging from pay transparency requirements to bereavement leave. In a sign of the times, employees’ use of cannabis off the job will become protected next year. In another unfortunate sign of the times, some of the temporary COVID-19-related requirements have been extended, which will hopefully be for the last time.
Pay Transparency and Pay Data Reporting Requirements (SB 1162)
The California Labor Code currently requires employers to provide applicants the pay scale for the position for which they are applying, upon reasonable request. Pay scale is defined as the salary or hourly wage range.
SB 1162 extends this requirement to current employees who must be provided the pay scale for their position, upon reasonable request. It further requires employers with 15 or more employees to include the pay scale for each position on job postings or announcements, whether the employer or a third party announces or posts the job openings.
This new law requires employers to maintain records of the job title and wage rate history for each employee for the duration of their employment plus three years after the end of the employment. These records must be made available for inspection by the Labor Commissioner to determine if there is a pattern of wage discrepancy.
In January 2021, California law began requiring private sector employers with 100 or more employees to report pay data annually to the California Department of Fair Employment and Housing (DFEH). The pay data reports must include the race, ethnicity and gender of employees by job category within pay bands used by the United States Bureau of Labor Statistics in the Occupational Employment Statistics survey.
SB 1162 requires that these pay data reports also include the median and mean hourly rate by race, ethnicity, and sex within each job category. It modifies the annual deadlines to submit this pay data to the DFEH to May of each year. This bill further requires employers that have 100 or more employees hired through labor contractors to comply with the reporting requirements.
This bill provides for civil penalties and private rights of action for violations.
Expansion of Family Leave Under California Family Rights Act and California Paid Sick Leave Law (AB 1041)
The California Family Rights Act entitles eligible employees to take up to 12 workweeks in any 12-month period to care for a family member, as defined, with a serious health condition. AB 1041 expands family member to include a “designated person,” which is defined as any individual related by blood or whose association with the employee is the equivalent of a family relationship. The bill provides that a designated person may be identified at the time the employee requests the leave. Employers may limit an employee’s time off to one designated person per 12-month period.
The California Paid Sick Leave law (known as the Healthy Workplaces, Healthy Families Act of 2014) entitles eligible employees to use paid sick leave for time off to care for an employee’s family member. AB 1041 expands this to include a “designated person” as defined in the preceding paragraph.
Bereavement Time Off Requirements (AB 1949)
Bereavement time off has been unsuccessfully proposed by the California legislature many times over the years. During this legislative session, it finally succeeded. AB 1949 applies to employers with five or more employees (as well as the public sector) and provides that eligible employees may take up to five days of bereavement leave upon the death of a family member, which is defined as a spouse, child, parent, sibling, grandparent, grandchild, domestic partner or parent-in-law. Employees must have been employed for at least 30 days prior to the leave to be eligible. The time off must be taken within three months of the date of death of the family member, but the days off do not need to be consecutive. Employers may require employees to provide documentation of the family member’s death, including a death certificate or published obituary.
Under this new law, if employers already have a bereavement leave policy that provides for up to five days of paid time off, then employees are entitled to take such leave pursuant to the terms of the policy. If an employer’s existing policy provides for less than five days of paid bereavement leave, their employees are entitled to the number of paid days under the policy and the remainder of the days off will be unpaid, except that employees may use accrued vacation, personal leave, sick leave or compensatory time off that is otherwise available to the employee. If the employer does not have a bereavement leave policy, then employees are entitled to up to five days of unpaid bereavement leave, and may use accrued paid time off.
The bill requires employers to maintain employee confidentiality relating to the employee’s time off. The new law does not apply to employees who are covered by a valid collective bargaining agreement that provides for prescribed bereavement leave.
Employment Discrimination Protections For Use of Cannabis (AB 2188)
The California Fair Employment and Housing Act (FEHA) prohibits employment discrimination based on a wide variety of protected characteristics. Beginning January 1, 2024, AB 2188 adds a person’s use of cannabis off the job and away from the workplace to be protected from discrimination in hiring, termination, or any terms and conditions of employment. Employees will further be protected from being penalized due to an employer-required drug screening test that has found the person to have nonpsychoactive cannabis metabolites in their hair, blood, urine, or other bodily fluids. However, employers may discriminate in hiring or otherwise penalize an employee based on scientifically valid preemployment drug screening conducted through methods that do not screen for nonpsychoactive cannabis metabolites.
The new law specifies that it does not permit employees to possess, to be impaired by, or to use, cannabis on the job. It does not affect employers’ rights and obligations to maintain a drug- and alcohol-free workplace, as provided under California and federal law. The legislature’s stated findings to explain the new law refer to the intent of drug tests to identify employees who may be impaired, yet most drug testing shows only the presence of nonpsychoactive cannabis metabolites which do not indicate impairment, and reflect only that cannabis was consumed within the prior few weeks. It further noted that developments in scientific drug testing can test the level of the chemical compound indicating impairment in an individual’s bodily fluids.
The new law does not apply to applicants and employees in the building and construction trades or individuals in positions requiring a federal background investigation or clearance. The bill does not preempt state or federal laws requiring applicants or employees to be tested for controlled substances as a condition of employment, receiving federal funding or federal licensing-related benefits, or entering into a federal contract.
Increases to State Disability Insurance and Paid Family Leave Wage Replacement Benefits (SB 951)
Employees in California have taxes withheld from their paychecks to fund the State Disability Insurance (SDI) and Paid Family Leave (PFL) programs, which provide wage replacement benefits for designated periods of time when employees are unable to work due to their own or a family member’s health condition and for new child bonding time. Currently, there is a taxable wage ceiling for purposes of calculating contributions that fund these programs. SB 951 will end this ceiling on January 1, 2024, meaning that the tax will apply to all wages.
SDI and PFL benefits are calculated based on a formula, depending on the wages earned by the employee. Currently, employees earning less than about $27,000 annually receive the higher wage replacement rate of 70 percent. All other workers receive 60 percent of their income up to a cap.
Beginning January 1, 2025, SB 951 will increase the wage replacement rate from 60 to 90 percent for those earning less than 70 percent of the State’s average quarterly wage rate. Employees who earn more than 70 percent of the State’s average quarterly wage will receive a wage replacement rate of 70 percent.
Small Business Grants to Cover COVID-19 Supplemental Paid Sick Leave Requirements (AB 152)
Throughout the pandemic, California law required most employers to provide employees with supplemental paid sick leave during periods of time off due to COVID-19 illness, exposure and related issues. AB 152, enacted September 29, 2022, extended this requirement through December 31, 2022.
AB 152 establishes the California Small Business and Nonprofit COVID-19 Relief Grant Program within the Governor’s Office of Business and Economic Development (GO-Biz) to assist qualified small businesses and nonprofit entities that incurred costs for COVID-19 supplemental paid sick leave. This new law requires GO-Biz to provide grants of up to $50,000 to eligible employers with 26 to 49 employees who incurred COVID-19 paid sick leave costs. Employers must have been operating prior to June 1, 2021 with a physical presence in California. Certain types of businesses are excluded, such as financial institutions.
Extensions of COVID-19-Related Requirements (AB 1751 & AB 2693)
AB 1751 extends prior requirements relating to COVID-19 illnesses covered by workers’ compensation insurance until January 1, 2024. Among other requirements, “injury,” for purposes of workers’ compensation insurance, includes illness or death resulting from COVID-19 under certain circumstances. Claims relating to a COVID-19 illness are presumptively compensable when a workplace experiences specified levels of positive COVID-19 testing. This applies to employers with five or more employees.
Through December 2022, employers who received notice of an employee’s potential exposure to COVID-19 were required to take specified actions within one business day of the notice, including providing written notice to all employees on the premises that they may have been exposed to COVID-19. AB 2693 revises this requirement and authorizes employers to satisfy employee notification requirements by prominently displaying a notice in all places where notices to employees concerning workplace rules are customarily posted that includes the dates on which an employee with a confirmed case of COVID-19 was on the worksite premises within the infectious period and the location of the exposure. The notice must be posted for 15 days. Employers must also keep a log of all the dates the notice was posted, and allow the Labor Commissioner to access those records.
AB 2693 no longer requires employers to notify their local public health agency within 48 hours if the number of COVID-19 cases in the workplace meets the definition of a COVID-19 outbreak.
Emergency Workplace Conditions (SB 1044)
SB 1044 is in response to various recent incidents in which workers were not allowed to leave their workplaces during wildfires and others in which employees were prohibited from using their cell phones when there were active shooters in the area. This bill prohibits employers, in the event of an emergency workplace condition, from taking or threatening adverse action against any employee for refusing to report to work, or for leaving work early when the employee has a reasonable belief that the worksite is unsafe, except as specified. “Emergency conditions” are conditions of disaster or extreme peril to the safety of persons or property at the worksite caused by natural forces or a criminal act, or in which there is an order to evacuate a workplace, a worksite, a worker’s home, or the school of a worker’s child due to natural disaster or a criminal act. Notably, it does not include a health pandemic.
Employers are prohibited from preventing any employee from accessing their mobile or other communication device to seek emergency assistance, assess the safety of the situation, or communicate with a person to confirm their safety. Employees must notify their employer of the emergency condition requiring the employee to leave or refuse to report to work.
Fast Food Accountability Act (AB 257)
AB 257 sets forth the Fast Food Accountability and Standards Recovery Act (FAST Recovery Act). This includes the creation of a Fast Food Council to determine sector-wide minimum standards on wages, working hours, and other working conditions for fast food restaurants consisting of 100 or more establishments nationally that share a common brand, or that are characterized by standardized options for decor, marketing, packaging, products, and services. Various procedures regarding the Council are described in the bill.
Layoff Notice Requirements for Call Centers (AB 1601)
AB 1601 authorizes the Labor Commissioner to enforce notice requirements concerning a mass layoff, relocation, or termination of employees, including call center employees. It prohibits a call center employer from ordering a relocation of its call center, or one or more of its facilities or operating units within a call center, unless notice of the relocation is provided to the affected employees and the Employment Development Department, local workforce investment board, and the chief elected official of each city and county government within which the termination, relocation, or mass layoff occurs.
Call center employers who fail to provide the required notice will be ineligible for state grants or state-guaranteed loans for five years. Such employers will also be ineligible to claim a tax credit for five taxable years.
CalSavers Retirement Savings Accounts (SB 1126)
Employers with five or more employees which satisfy certain requirements to establish or participate in a payroll deposit retirement savings arrangement are required to offer a payroll deposit retirement savings arrangement so that eligible employees may contribute a portion of their salary or wages to a retirement savings program account in the CalSavers Retirement Savings Program. SB 1126 expands the definition of “eligible employer” to include a person or entity that has at least one eligible employee and that satisfies the requirements to establish or participate in a payroll deposit retirement savings arrangement. It excludes sole proprietorships, self-employed individuals, or other business entities that do not employ any individuals other than the owners of the business.
This bill requires eligible employers with five or more employees to have a payroll deposit savings arrangement to allow employee participation in the program within 36 months after the board opens the program for enrollment. By December 31, 2025, employers with one or more eligible employees that do not provide a retirement savings program will be required to have a payroll deposit savings arrangement.
California Privacy Rights Act Requirements
The California Consumer Privacy Act (CCPA) provides various privacy rights to consumers. The California Privacy Rights Act became effective on January 1, 2023, which amends and extends the privacy rights under the CCPA. Some of these provisions apply to personal information which employers maintain and use regarding employees. Among other things, employees must receive a written privacy notice which describes the categories of sensitive personal information which is maintained and for what purpose, whether that information is sold or shared and the length of the time the employer intends to retain each category of sensitive personal information.
New California Minimum Wage and Salary Requirements for Overtime Exemptions
On January 1, 2023, the California minimum wage will increase to $15.50 an hour for all employers, regardless of the number of employees they have.
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. Thus, beginning January 1, 2023, the minimum salary threshold is $64,480 per year.
The California computer software overtime exemption’s minimum thresholds are tied to the Consumer Price Index and adjust each year. For 2023, the minimum hourly rate of pay to qualify for this exemption is increasing to $53.80, the minimum monthly salary will increase to $9,338.78, and the minimum annual salary will be $112,065.20.
Your 2023 HR Compliance Checklist
- Ensure all job postings for positions in California include the job’s pay range, update your Employee Handbook to include the process for employees to follow to request information regarding the pay scale for their position, and ensure that managers are aware of these requirements.
- Update your Leave of Absence policy to include the expanded CFRA-covered and California Paid Sick Leave time off for “designated persons.”
- Add or edit your Bereavement Leave policy to provide for up to five days of time off.
- Prepare for upcoming changes to drug testing requirements and protections for employees’ use of cannabis.
- Continue to be vigilant and ensure compliance with all COVID-19 safety, notification and reporting requirements.
- Notify managers of employees’ rights regarding leaving work early in the event of an emergency workplace condition.
- Ensure compliance with the CalSavers Retirement Savings Accounts requirements.
- Review and update employee privacy notices in accordance with the CCPA.
- 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 2022.
For more information or assistance with employment law compliance matters, please contact Ms. Topliff at email@example.com.