The California Legislature passed and Governor Newsom signed several new or amended employment laws covering topics ranging from non-disparagement and separation agreements, the California Family Rights Act, and warehouse production quotas. Unless otherwise noted, these laws take effect January 1, 2022, so now is a good time for employers to evaluate their personnel rules and practices to ensure they keep pace with these changes.
SB 331 – Silenced No More Act: Settlements and Non-Disparagement Agreements
Existing law in California prohibits any provision within a settlement agreement for a claim filed in a civil action or before an administrative agency that would prevent the disclosure of factual information related to allegations of sexual assault or sex-based harassment or discrimination in the workplace. Senate Bill 331 expands this prohibition on settlement confidentiality to include all types of workplace harassment or discrimination (not just sex-based).
Existing law had already prohibited employers from requiring, “in exchange for a raise or bonus, or as a condition of employment or continued employment,” that employees sign an agreement preventing them from disclosing information about unlawful acts in the workplace. SB 331 expands this prohibition to also include “any agreement related to an employee’s separation from employment.” Any such agreement that includes a confidentiality or non-disparagement provision must include, “in substantial form,” 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.’
Lastly, SB 331 requires that any agreement related to an employee’s separation from employment contain notice that the employee has a right to consult an attorney regarding the agreement and provide the employee with a reasonable period of not less than five business days in which to do so. The employee may sign the agreement before the end of the reasonable period, so long as the employee’s decision to do so is knowing, voluntary, and not induced by the employer.
Starting on January 1, 2022, California employers should ensure that any agreement to settle a civil claim or administrative complaint does not include a confidentiality provision that would prohibit the disclosure of factual information relating to any kind of workplace harassment or discrimination. In addition, employers should review their template employment-related agreements to ensure that they (1) contain the required non-disparagement carveout language allowing employees to disclose information about conduct they believe to be unlawful and (2) as to separation agreements, provide a reasonable period during which the employee may consult an attorney.
AB 1003 – Wage Theft
AB 1003 will expand an employer’s potential liability – making intentional wage theft punishable as felony grand theft under the Penal Code – if, over a twelve-month period, one employee’s lost wages exceed $950 or multiple employees’ total lost wages exceed $2,350. The law applies to wages, gratuities, benefits, and other compensation owed to employees or independent contractors.
AB 1033 – CFRA Expansion of “Parent” and DFEH Mediation Program
Under the California Family Rights Act (CFRA), eligible employees may take 12 weeks of leave per year to provide care to family members, including parents, with serious medical conditions. Effective January 1, 2022, AB 1033 expands the definition of “parent” under the CFRA to include parents-in-law.
AB 1033 also revises certain procedural aspects of the Department of Fair Employment and Housing’s (DFEH) pilot mediation program for resolving family leave disputes between small employers (5-19 employees) and their employees, including making participation in the mediation program a prerequisite to filing a civil action if the employee or employer requests it.
Employers should update their policies to reflect that the CFRA now protects employees caring for a parent-in-law, and small employers should be prepared for increased mediation requests from the DFEH.
AB 701 – Warehouse Production Quotas
AB 701 is a first-in-the-nation law designed to target warehouse fulfillment and distribution centers that set productivity quotas and pace-of-work standards for their nonexempt employees.
Which Employers Are Covered?
The law will apply to companies that employ or exercise control over 100+ employees at a single warehouse distribution center or 1,000+ employees at multiple warehouses in California. The employee population count includes contingent workers staffed through third-party agencies and workers employed by a “commonly controlled group” as defined by Cal. Revenue and Taxation Code § 25105(b ). Commonly controlled groups include chains of corporations connected through majority stock ownership (e.g., a parent corporation that owns greater than 50% of a subsidiary’s stock).
Which Kinds of Warehouses Are Covered?
AB 701 refers to the North American Industry System (NAICS) to define covered “warehouse distribution centers” and specifically enumerates the following NAICS codes:
- 493110 for General Warehousing and Storage.
- 423 for Merchant Wholesalers, Durable Goods.
- 424 for Merchant Wholesalers, Nondurable Goods.
- 454110 for Electronic Shopping and MailOrder Houses.
493130 Farm Product Warehousing and Storage is excluded from coverage.
How Are Quotas Defined and Regulated?
Employers are still able to set quotas for warehouse workers but must adhere to strict requirements and provide each new hire “a written description of each quota to which the employee is subject to, including the quantified number of tasks to be performed or materials to be produced or handled, within a defined period of time, and any potential adverse employment action that may result from failure to meet the quota.”
AB 701 defines a “quota” as a work standard assigned to an employee that the employee must complete within a defined time period or face an adverse employment action. A work standard is a requirement that the employee performs a specified productivity speed or a quantified number of tasks, or handles or produces a quantified amount of material. In setting work standards, employers are prohibited from interfering with employees taking legally mandated meal or rest breaks, use of bathroom facilities (including travel time to and from those facilities), occupational health and safety laws, or from taking an adverse employment action against an employee who has failed to meet a quota that has not been previously disclosed in writing.
What Are the “Written Disclosure Requirements?”
Upon hire or within 30 days of the January 1, 2022 effective date, employers must provide each employee a written description of each quota that applies to that employee, including “the quantified number of tasks to be performed or materials to be produced or handled, within the defined time period, and any potential adverse employment action that could result from failure to meet the quota.”
Current and former employees have a right to request “a written description of each quota to which the employee is subject and a copy of the most recent 90 days of the employee’s own personal work speed data.” Employers must comply with the oral or written request within 21 calendar days but need not include qualitative performance assessments, personnel files, or wage statements unless they include employee work speed data.
Former employees are limited to one request, and employers that do not monitor quotas need not provide any information.
What Are the Legal Ramifications for Employers?
AB 701 imputes a rebuttable presumption of unlawful retaliation if an employer takes adverse action against any employee within 90 days of an employee: (1) initiating the first request in a calendar year for information about a quota or personal speed data or (2) making a complaint related to a quota alleging a violation of the labor code.
AB 701 further authorizes both current and former employees to seek injunctive relief and to recover attorneys’ fees and costs upon prevailing in an action. Representative actions may also be brought under the Private Attorney General Act (PAGA). However, if a PAGA claim is filed, employers can cure the alleged violations under Cal. Labor Code § 2699.3.
SB 807 – Personnel Record Retention and DFEH Authority and Procedures.
Currently, employers are required to maintain employees’ personnel records for two years. SB 807 lengthens this requirement to four years. If employers receive notice that a complaint has been filed with the DFEH, the employer must maintain the personnel records until the later of the matter reaching resolution or the applicable statute of limitations running. Employers should amend their record retention policies and practices to account for these new timelines.
SB 807 makes several other changes to the DFEH’s authority and investigative procedures. Of note, SB 807 allows for tolling of the DFEH’s deadline to file a civil action if dispute resolution is pending. It also tolls the statute of limitations—including retroactively, but without reviving lapsed claims—for filing a civil action based on specified civil rights complaints under investigation by the DFEH until (1) the DFEH files a civil action for the alleged violation or (2) one year after the DFEH issues written notice to a complainant that it has closed its investigation without electing to file a civil action. SB 807 also extends to two years the period that the DFEH has to complete its investigation and issue a right-to-sue notice for employment discrimination complaints treated by the DFEH as a class or group complaint.
AB 468 – Emotional Support Animals
Currently, California law regulates the sale of dogs and makes it a misdemeanor, punishable by imprisonment in county jail and/or by fine, to misrepresent an animal as a guide, signal, or service dog. AB 468, purposed to combat an uptick in fraudulent emotional support animals, imposes new notice obligations on any person or business who sells a dog for use as an emotional support animal.
Of interest to employers, healthcare providers certifying emotional support animals as a medical accommodation must now comply with specific requirements: (1) possess a valid and active license to provide such professional services, (2) have established a client relationship with the individual seeking documentation for at least 30 days before providing the documentation, (3) have completed a clinical evaluation of the individual prior to providing the documentation, and (4) provide verbal or written notice that fraudulently representing the dog is a misdemeanor.
AB 468 expressly does not “restrict or change existing federal and state law related to a person’s rights for reasonable accommodation.” However, employers should consider reviewing documentation submitted in support of emotional support animal accommodations for compliance with these new requirements, in conjunction with the existing California regulations at Cal. Code Regs. tit. 2 § 11069(e).
SB 639 – Minimum Wages: People With Disabilities
Existing law permits the Industrial Welfare Commission (IWC) to issue special licenses that authorize employing persons with disabilities for less than the mandated minimum wage. These licenses are authorized for one year from the date of issue and are renewable on yearly basis. The special minimum wage for the licensee is set by the IWC.
Beginning January 1, 2022, this bill prohibits any new such licenses from being issued. For existing licensee holders, the bill implements a three-year phasing plan. Stakeholders who currently hold licenses, such as state agencies, university organizations, and others, are required to work with the State Council on Developmental Disabilities to draft a plan that will transition disabled employees working under these licenses to other types of employment. They are required to deliver this plan to the Legislature by January 1, 2023.
By January 1, 2025, it will be illegal to pay any employee with disabilities less than the minimum wage, regardless of prior license status.
SB 646 – PAGA Exception for Janitorial Workers Under a CBA
SB 646 exempts from the PAGA certain janitorial employees (1) represented by a labor organization that has represented janitors before January 1, 2021 and (2) employed by a janitorial contractor who registered with the Labor Commissioner as a property service employer in calendar year 2020, with respect to work performed under a valid collective bargaining agreement in effect before July 1, 2028, that contains certain provisions. For this exemption to apply, the CBA must expressly provide for grievance and binding arbitration procedures, which is notable because PAGA claims cannot typically be compelled to arbitration. The CBA must also provide for wages, work hours, and working conditions.
The definition of “janitorial employees” does not include housekeeping staff who make beds as a primary responsibility, workers at airports, workers at hotels and restaurants, or drug and grocery store employees. SB 646 will not apply to PAGA claims brought before the end of 2021. This law sunsets on July 1, 2028.
AB 73 – Training and PPE for Agricultural Workers During Wildfire Smoke Events
Existing law requires California to establish a stockpile of personal protective equipment sufficient to supply essential workers for 90 days during a health emergency. AB 73 broadens the definition of essential workers to include agricultural workers and now includes wildfire smoke in the definition of a health emergency.
This bill will also require the Division of Occupational Safety and Health to review and update wildfire smoke training that employers must follow to ensure training is provided in a language and manner readily understandable by employees.
SB 93 – Requirement to “Recall” Hospitality Workers (effective April 16, 2021-Dec. 31, 2024)
SB 93 requires some employers to recall employees who were laid off due to the COVID-19 pandemic.
Covered employers are certain hotels, private clubs, event centers, and airport service providers, as well as janitorial, maintenance, and security services providers in commercial buildings.
Qualified former employees are those who (1) held the same or similar position as the one for which the employer is now hiring, (2) were employed for 6+ months in the 2019 calendar year, working at least 2 hours per week, and (3) were separated from their employment due to COVID-19 (e.g., due to a government shutdown order, lack of business, or other economic reason due to the pandemic).
Within five business days of establishing a position, covered employers must extend a written job offer to qualified former employees and give them five business days to consider the offer. If there are multiple qualified employees, employers must prioritize the employee with the earliest hire date. Employers must maintain records relating to recall offers for three years.
SB 93 establishes a civil penalty for an employer that fails to recall qualified former employees of up to $600 per day per employee. The law took effect April 16, 2021 and expires December 31, 2024.
SB 606 – Expansion of Cal/OSHA Authority
SB 606 expands the authority of Cal/OSHA by creating two new workplace health and safety violations: “enterprise-wide” and “egregious” violations.
For an employer with multiple worksites, the bill creates a rebuttable presumption that the employer has committed an enterprise-wide violation when either: (1) the employer has a written policy or procedure that violates Cal/OSHA rules or the Health and Safety Code or (2) Cal/OSHA finds evidence of a pattern or practice of the same violation(s) by that employer involving more than one of the employer’s worksites. Failure to rebut the presumption will result in Cal/OSHA issuing a citation requiring abatement of the alleged violation for the employer’s entire enterprise, which would affect even worksites where the specific violation was not found.
An egregious violation occurs when Cal/OSHA believes that an employer has willfully and egregiously violated a Cal/OSHA rule. The law outlines numerous ways that an employer can commit an egregious violation, including: intentionally, through conscious, voluntary action or inaction, making no reasonable effort to eliminate the known violation; violations resulting in worker fatality, a worksite catastrophe, or a large number of injuries or illnesses; violations resulting in persistently high rates of worker injuries or illnesses; having an extensive history of prior violations; intentionally disregarding its health and safety responsibilities; and committing numerous violations so as to significantly undermine the effectiveness of health and safety programs that may be in place. If Cal/OSHA finds an employer to have committed an egregious violation, the determination remains in effect for five years.
Penalties for egregious violations are assessed per employee exposed to the violation.
AB 654 – Notification of COVID-19 Exposure (effective October 5, 2021-January 1, 2023)
A law that took effect immediately after its signing on October 5, 2021, AB 654 amends existing law surrounding an employer’s obligations when it receives notice of potential exposure to COVID-19. Within one business day of an employer receiving such notice of exposure, the employer must: (1) provide written notice to all employees who were on the premises at the same worksite as the individual within the infectious period, (2) provide written notice to the exclusive representative, if any, of qualifying individuals and employees who had close contact with the qualifying individuals, (3) provide all employees who were on the premises at the same worksite as the qualifying individual within the infectious period with information regarding COVID-19-related benefits to which the employee may be entitled under applicable laws, and (4) notify all employees who were on the premises at the same worksite as the qualifying individual within the infectious period of the cleaning and disinfection plan that the employer is implementing.
Additionally, the law requires the employer to provide notice to the local public health agency of a COVID-19 outbreak within 48 hours or one business day, whichever is later. The law exempts various licensed entities from these reporting requirements, including, but not limited to, health facilities, community clinics, community care facilities, and child daycare facilities.
These notice provisions will sunset on January 1, 2023.
AB 1506 and 1561 – Amendments To Certain AB 5 Exemptions From ABC Test for Contractor Classification
AB 1506 extends from January 1, 2022 to January 1, 2025 the temporary newspaper-publishers and distributors exemption from the application of the “ABC test” established in Dynamex for determining if workers are employees or independent contractors. The bill also imposes various reporting requirements on publishers and distributors to ensure that they are complying with the multifactor Borello test.
AB 1561 makes additional changes to the professional services, construction subcontractor, data aggregator, and insurance and financial service industry exemptions from the ABC test.
SB 657 – Electronic Delivery of Workplace Notices
SB 657 provides that whenever an employer is required to post information about employee rights under applicable statutes, it “may also distribute that information to employees by email.” The statute does not negate an employer’s pre-existing obligation to post physical copies of such notices in workplaces.