Governor Gavin Newsom recently signed a slew of new bills into law at the close of California’s legislative season. Below is a summary of the new employment laws, all of which take effect on January 1, 2022.

Wage Theft Will Trigger Enhanced Criminal Liability

AB 1003 makes the intentional theft of wages by an employer, i.e., the intentional deprivation of wages due to an employee, punishable as grand theft if the wages equal $950 for one employee or $2,350 for two or more employees in any consecutive 12-month period. Notably:

  • Grand theft is punishable either as a misdemeanor by imprisonment in county jail for up to one year or as a felony by imprisonment in county jail for 16 months or two to three years;
  • “Employee” includes independent contractors, and “employer” includes the hiring entity of an independent contractor;
  • “Wages” includes gratuities, benefits and other compensation and wages subject to prosecution may be recovered as restitution; and
  • The employee or Labor Commissioner may also commence a civil action seeking remedies available under the Labor Code.

“Silenced No More” – Non-Disclosure Agreements

SB 331 expands existing coverage under the STAND (Stand Together Against Non-Disclosures) Act, which prohibits all California employers—in connection with lawsuits and administrative claims of sexual assault, or harassment, discrimination or retaliation based on sex—from entering into settlements of such formal legal actions that prevent disclosure of factual information regarding sexual assault, sexual harassment, workplace harassment and discrimination based on sex, failure to prevent acts of workplace harassment or sex discrimination and/or retaliation for reporting sexual harassment or sex discrimination.

Through SB 331, the STAND Act now (1) prohibits such nondisclosure provisions in “any agreement related to an employee’s separation from employment,” even where no lawsuit or administrative claim was filed; and (2) applies to factual information related to claims involving all forms of harassment, discrimination and/or retaliation (not merely sex-based).

Additionally, any such agreement must include a provision that the employee has the right to consult an attorney and must allow a “reasonable time” (at least five business days) to do so prior to accepting. That “reasonable time” period is waivable by the employee only if “knowing and voluntary” and not induced by the employer’s “fraud, misrepresentation or threat to withdraw or alter the offer.”

Non-disparagement or other contractual provisions that restrict an employee’s ability to disclose information “related to conditions in the workplace” must include the following language:

“Nothing in this agreement prevents you from discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that you have reason to believe is unlawful.”

Notably, SB 331 carves out a limited exception to the above “reasonable time to review” and non-disparagement notice requirements for settlement agreements negotiated to resolve an underlying claim (1) filed by an employee in court, before an administrative agency or in an alternative dispute resolution forum; or (2) pursued through an employer’s internal complaint process. SB 331 does not define “internal complaint process,” but, realistically, this would include any formal complaint process pursuant to a collective bargaining agreement or non-union personnel policy.

Clients on existing Fenwick forms should reach out to us for updated form agreements.

California Family Rights Act Expands Definition of “Family Member”

Under AB 1033, parents-in-law are now included in the definition of “family member” for whom an employee can take leave under the California Family Rights Act (CFRA).

Additionally, under the small employer (employers with between five and 19 employees) family leave mediation pilot program, when an employee requests an immediate right-to-sue letter alleging a violation of the family and medical leave provisions of CFRA, the Department of Fair Employment and Housing must provide notice of the pilot program and the mediation requirement prior to filing civil litigation if mediation is requested by the employee or the employer.

Electronic “Posting” of Workplace Notices

SB 657 codifies what many employers have long put into practice, permitting the electronic distribution of workplace notices they are required to physically post. This electronic notice, however, may only serve to supplement the physical posting, not replace it.

Workplace Safety

SB 606 creates two new categories of workplace health and safety violations for which the California Division of Occupational Safety and Health Administration (Cal/OSHA) can issue citations: (1) enterprise-wide violations; and (2) egregious violations.

Enterprise-Wide Violations

The new law creates a rebuttable presumption that a violation committed by an employer with more than one worksite is “enterprise-wide” if the employer has a written policy or procedure that violates workplace health and safety laws, or if Cal/OSHA “has evidence of a pattern or practice of the same violation . . . committed by that employer involving one or more of the employer’s worksites.” If the employer fails to rebut such a presumption, Cal/OSHA can issue a citation that requires enterprise-wide abatement.

Egregious Violations

If certain criteria are met, Cal/OSHA can deem a workplace health and safety violation as “egregious.” Repeat negligent or unintentional violations will not be deemed egregious unless the employer’s conduct, taken as a whole, amounts to clear bad faith in the performance of their duties. More specifically, an egregious violation may be issued where the employer:

  • “Intentionally, through conscious, voluntary action or inaction, 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”;
  • Has an extensive history of prior egregious violations;
  • Has intentionally disregarded their health and safety responsibilities; and/or
  • Committed a large number of violations so as to significantly undermine the effectiveness of any safety and health program that may be in place.

With narrow exceptions, “each instance of an employee exposed to an egregious violation shall be considered a separate violation for purposes of the issuance of fines and penalties.”

Additionally, the law authorizes Cal/OSHA to seek an injunction, “restraining certain uses or operations of employment if it has grounds to issue a citation,” to issue a subpoena during its investigation, and to enforce that subpoena if an employer fails to provide the requested information “within a reasonable period of time.”

“ABC” Exemptions Extended for Certain Independent Contractor Classifications

AB 1561 extends the sunset date on two “ABC test” exemptions—for licensed manicurists and those in a contractor-subcontractor relationship in the construction industry—from January 1, 2022, until January 1, 2025.

The law also amends Labor Code Section 2782 to:

  • Revise the data aggregator exemption to apply to the relationship between a data aggregator and a “research subject,” eliminate the requirement that “any consideration paid for the feedback provided, if prorated to an hourly basis, is in an amount equivalent to or greater than the minimum wage and 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.”
  • Extend the exemption for persons or organizations 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.
  • Extend the temporary exemption for newspaper publishers and distributors for three more years and imposes reporting requirements on publishers and distributors (beginning March 1, 2022) to ensure they are complying with the multi-factor test to determine independent contractor status established in S.G. Borello & Sons. v. Department of Industrial Relations.

Record Retention and DFEH Investigation Timeline Extensions

Under SB 807, employers must now preserve personnel records for employees and applicants for four years from the date they were created, after an employee is terminated and when an applicant is not hired. Upon receiving notice that a verified complaint has been filed, an employer must also preserve all relevant records until the later of the resolution of the complaint or the expiration of the statute of limitations for the claims.

Additionally, the Department of Fair Employment and Housing’s (DFEH) deadline to complete its investigation and issue a right-to-sue letter for employment discrimination complaints treated as class or representative actions is extended to two years, and the time in which an individual can file a civil action for statutory violations is extended by tolling that period while the DFEH investigates.

Production Quotas in Warehouses

Warehouse Distribution Centers

Under AB 701, warehouse distribution centers that directly or indirectly employ or exercise control over wages, hours or working conditions of 100 or more employees at a single warehouse site or of 1,000 or more employees at one or more warehouse distribution sites in California must provide each non-exempt employee who is subject to a production or other performance-based quota with a written description of each such quota.

AB 701 defines “quota” as a work standard under which an employee is assigned or required to (1) perform at a specified productivity speed; (2) perform a quantified number of tasks; or (3) to handle or produce a quantified amount of material within a defined time period and under which the employee may suffer an adverse employment action if they fail to complete the performance standard.

The written description must:

  • Be provided upon hire or within 30 days of January 1, 2022 (the effective date of the law);
  • Describe the quantified number of tasks to be performed or materials to be produced/handled;
  • Define the time period within which the quota must be completed; and
  • Describe any potential adverse action that could result from failure to meet the quota.

Additionally, under the new law, an employee is not required to meet a quota if (1) compliance with the quota does not allow the employee to take a legally required meal or rest break; (2) the quota is not compliant with occupational health and safety laws; or (3) the quota was not previously discussed with the employee.

If a current or former employee believes that compliance with a quota violated either their right to a meal or rest break or an occupational health and safety law, the employee can request, orally or in writing, a written description of each quota that applies to them and their personal work speed data over the prior 90 days.

Employers have no later than 21 calendar days from the date of request to provide that information. Former employees are limited to one such request; current employees are not limited. There is a rebuttable presumption of unlawful retaliation if an employer takes adverse action against an employee who, in the preceding 90 days, has either requested for the first time in the calendar year their quota and personal work speed data or complained to their employer or government agency about an alleged violation of this law.

Current and former employees can also bring an action for injunctive relief and can recover attorney’s fees and costs if they prevail.

Costs and Fees in Arbitration – Timing

SB 762 requires arbitration services to provide, immediately after the initial filing requirements are met, an invoice for any fees and costs required for arbitration to begin. The invoice must be provided to all parties to the arbitration on the same day and by the same means. Payment is due upon receipt, unless the arbitration agreement provides otherwise. For fees and costs due during the pendency of the arbitration, any extension of time for the due date must be agreed upon by all parties.

Emotional Support Animals

Requests for emotional support animals in the workplace have increased in recent years. Under AB 468, healthcare providers are prohibited from issuing “emotional support dog” certifications unless the provider:

  • Has a valid, active license and includes certain enumerated information concerning that license in the certification;
  • Is licensed to provide services within the scope of the license in the jurisdiction in which the certification is provided;
  • Establishes a client-provider relationship with the individual at least 30 days before providing certification concerning the individual’s need for an emotional support dog;
  • Completes a clinical evaluation of the individual regarding the need for an emotional support dog; and
  • Provides verbal or written notice to the individual that knowingly and fraudulently representing themselves as the owner or trainer of a guide, signal or service dog is a misdemeanor

Expansion of Direct Contractor Liability

SB 727 amends Labor Code Section 218.7 to extend joint liability to a direct contractor 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. It also imposes liability for the failure of a subcontractor to make payments to the California unemployment insurance fund or for failure to provide workers’ compensation benefits.

Garment Manufacturing

SB 62 provides 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 now maintain certain work-related documentation, including (1) the names and addresses of all garment workers directly employed by such person; (2) the hours worked daily by employees; (3) the daily production sheets (including piece rates); (4) the wage rate paid each pay period; and (5) all contracts, invoices and purchase orders for a period of four years (existing law required this record retention for three years).

The amended bill also provides that any garment manufacturer, contractor or brand guarantor who enters into contracts for garment manufacturing operations will be jointly and severally liable for any violation of wage and hour laws, including failure to reimburse for business expenses, to employees of their contractors. The parties may also be held jointly liable for attorneys’ fees and civil penalties for failure to obtain valid workers’ compensation coverage.

Lastly, SB 62 prohibits garment manufacturers from paying their employees piece-rate compensation. To ensure that employees are paid for all hours worked, an employee engaged in the performance of garment manufacturing must be paid at an hourly rate not less than the applicable minimum wage.

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