January 26, 2021

New California Employment Laws for 2021

By Teresa McQueen, Western Growers Corporate Counsel

Even with an unprecedented legislative session that saw a two-month pause in activity and hundreds of bills set aside, Gov. Gavin Newsom managed to end this year’s bill-signing session with several significant new employment related laws which will impact California employers for years to come.

This year’s update includes several COVID-19-related laws, an update to the California Family Rights Act, and refinement of California’s existing worker classification laws. Prompt action will need to be taken to assure compliance with updated paid sick leave provisions and any revisions to existing employment policies and procedures. Below is a summary of many of the laws affecting employers in the state. All are effective January 1, 2021, unless otherwise noted.

AB 685 – Imminent Hazard to Employees

AB 685 requires employers to provide written notification to all impacted employees within one business day of receiving notice of potential exposure to COVID-19. If the number of potential exposures reported to the employer qualify as an “outbreak,” as defined by the California Department of Public Health, employers are required to provide notice of the outbreak to their local health department.

AB 685 expands existing Cal-OSHA enforcement authority regarding COVID-19 exposure in the workplace by granting enhanced enforcement abilities including the authority to prohibit operations, processes, and prevent entry into worksites that present a risk of infection to COVID-19 so severe as to represent an imminent hazard.

AB 1867: Small Employer Supplemental Paid Sick Leave

AB 1867 was enacted to fill a perceived gap created by the application of Emergency Paid Sick Leave, provided for under the Families First Coronavirus Relief Act (FFCRA), for employers with 500 or fewer employees. Consequently, AB 1867 applies to private sector employers with 500 or more employees nationwide.

AB 1867 took effect upon signing and requires covered employers to begin immediately providing COVID-19 related supplemental paid sick leave (SPSL) to all employees. The statute combines three separate laws into one legislative bill covering SPSL, mandated handwashing requirements for food service workers, and a pilot mediation program applicable to small employers. The law also contains important notice and posting requirements.

Covered employers are required to provide SPSL to all employees according to the pay schedule outlined in the statute which includes maximum and aggregate limits.

AB 1947: Extended Time For Filing of Employment Violation Complaints

AB 1947 extends the existing complaint period for an aggrieved employee’s filing an alleged complaint of discrimination or retaliation with the California Division of Labor Standards Enforcement (“DLSE” or “Labor Commissioner”) from 6 months to 1 year. The existing 3-year DLSE enforcement period remains unchanged. The 1-year statute of limitations is applicable to claims for discrimination or retaliation against an employer as to any law enforced by the DLSE.

AB 1947 also amends Cal. Labor Code section 1102.5 to allow an award of reasonable attorney’s fees to employees who brings a successful action for DLSE violations.

AB 2017: Employee Sick Leave (Kin Care)

AB 2017 amends existing California Labor Code section 233 (the “Kin Care” law) to make clear that the designation of sick leave taken under the statute is at the sole discretion of the employee. This clarification establishes the employee’s right to designate leave time provided under Labor Code section 233 as leave for kin-care, the employee’s own health condition, or for obtaining relief if they are a victim of sexual assault, stalking or domestic violence.

AB 2043: Cal/OSHA: COVID-19 Awareness

AB 2043 places new requirements on Cal-OSHA to provide agriculture employers with information on best practices for COVID-19 infection prevention. These best practices must be consistent with existing guidance documents currently available on the Cal-OSHA website. Mandated information is to include COVID-19 awareness and prevention measures aimed at and easily understood by agricultural employees from a variety of ethnic and cultural backgrounds. All materials must be provided in both English and Spanish. Employer duties under AB 2043 will expire when the COVID-19-related state of emergency is terminated by the Governor or the California Legislature.

AB 2257: Worker Classification

In yet another modification to California’s independent contractor (IC) laws, AB 2257 revises, expands, and attempts to clarify the state’s much maligned ABC Test for independent contractors.

January 1, 2020, saw the passing of AB 5, making the Dynamex ABC Test the test for determining IC status. The ABC test presumes a person providing labor or services for remuneration is considered an employee rather than an IC unless the hiring entity demonstrates that the person is: A) free from the control and direction of the hiring entity in connection with the performance of the work; B) the person performs work that is outside the usual course of the hiring entity’s business; and C) the person is customarily engaged in an independently established trade, occupation, or business.

AB 5 makes clear that the ABC Test is to be applied unless a court of law determines it cannot be applied in a particular context or an express exception applies. This remains unchanged under AB 2257, however the new statute provides numerous exceptions and clarifications to this baseline rule.

Most significant, are the exceptions for: 1) Business-to-business service type relationships; 2) Single-engagement business-to-business service type relationships; and 3) Referral business-to-business service type relationships. There are also carves outs and additional criteria for a variety of specific professions and occupations.

Keep in mind, AB 2257’s exceptions to the ABC Test are not outright exemptions from performing an IC analysis. In almost all instances where the exception applies, the relationship is instead governed by the multi-factor test outlined in the California Supreme Court’s decision in the Borello case. It is therefore important to review each exception to understand which IC analysis is to be applied to any specific occupation or situation.

AB 2992: Expanded Protections for Victims of Crime or Abuse

AB 2992 provides additional protections for employees who become victims of crime or abuse. To ensure the health, safety or welfare of victims of domestic violence, sexual assault, or stalking, existing law provides time off work to allow the victim to obtain or attempt to obtain assistance for themselves or their child. These specific protections are broadened under AB 2992 to include more generalized actions which would fall under the statute’s definition of “crime” for those considered “victims.”

Protected activities for time off have also been broadened under the new statute to include time off, in advance or unscheduled, to seek medical attention for injuries suffered as a result of crime or abuse, services from specific entities, psychological counseling or mental health services or engage in safety planning or other actions designed to increase safety from possible future crimes or abuses. Certification requirements have also been relaxed to include any form of documentation—including a written statement signed by the victim—is allowed so long as it reasonably verifies a crime or abuse took place.

SB 1159: COVID-19 Workers’ Compensation Presumption

SB 1159 codifies and supersedes Gov. Newsom’s Executive Order No-62-20 covering all California employees—including farmworkers—who worked at jobsites outside their homes between March 19 and July 5, 2020. The statute applies to California employers with five or more employees and employees who test positive for COVID-19 during an outbreak at their place of work on or after July 6, 2020.

The statute establishes a rebuttable presumption of an industrial injury or illness where the employee’s positive test occurred during a period of outbreak at the employee’s place of employment. Evidence controverting the presumption may include, but is not limited to, evidence of measures in place to reduce potential transmission of COVID-19 in the employee’s place of employment and evidence of an employee’s nonoccupational risks of COVID-19 infection. The statute also places a burden on employers to notify their claims administrator within 3 days of being made aware of an employee positive test. The claims administrator is then charged with determining if an “outbreak” has occurred. SB 1159 remains in effect until January 1, 2023.

SB 973: Pay Data Reporting

SB 973 requires qualified private employers to report detailed pay-related data (e.g., hours worked data according to job category and by sex, race and ethnicity) on an annual basis to the Department of Fair Employment and Housing (DFEH) beginning March 31, 2021. California’s self-assessment system mirrors that of the Equal Employment Opportunity Commission’s Employer Information Report (EEO-1).

On or before the deadline, and annually thereafter, employers with 100 or more employees, who are also required to file an annual EEO-1, and has at least one California employee, must submit a pay data report to the DFEH. The pay data report covers a “Reporting Year” (i.e., the prior calendar year). In addition, employers are required to choose a single pay period between October 1 and December 31 of the Reporting Year which will act as the “Snapshot Period.” The Snapshot period is to be used by the employer to then identify employees who are to be reported on in the pay data report submitted to the DFEH.

DFEH guidance is still incomplete and with the March 2021 deadline fast approaching, employers should frequently check the DFEH website for current information and changes https://www.dfeh.ca.gov/paydatareporting/.

AB 979: Corporate Board of Directors; Underrepresented Communities

Publicly held corporations headquartered in California are required to diversify their board of directors on or before December 31, 2021, by appointing directors from “underrepresented communities.” A “director from an underrepresented community” is defined as an individual who self-identifies as: Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaska Native, or who self-identifies as gay, lesbian, bisexual, or transgender.” Diversity is achieved if at least one director from an underrepresented community is appointed to the company’s board of directors by the deadline. Depending on board size, additional appointments may be required in subsequent years.

Penalties for noncompliance are steep: $100,000 for the first violation; $300,000 thereafter.

AB 2479: Rest Periods for Petroleum Facilities Employees in Safety-sensitive Positions

AB 2479 extends current exemptions from rest period requirements through January 1, 2026, for those employees who occupy safety-sensitive positions at petroleum facilities and are required to respond to emergency situations. Employees experiencing interrupted rest breaks must be provided a subsequent rest period within a reasonable time period. If the employer cannot provide the subsequent rest period it must pay the employee a rest period premium (e.g., one hour of pay at the employee’s regular rate of pay for the missed rest period). The total amount of premium pay must be included on the employee’s wage statement for the pay period in which the rest period was missed.

AB 3075: Successor Liability Wage Enforcement

AB 3075 creates successor liability for unpaid judgment debts of prior owners. This means that business owners will have successor liability for any unpaid wage and hour judgment debts where the newly acquired business: “[U]ses substantially the same facilities or substantially the same workforce to offer substantially the same services as the judgment debtor” (i.e., prior business owner(s)); “Employs as a managing agent any person who directly controlled the wages, hours, or working conditions of the affected workforce of the judgment debtor;” or operates “in the same industry [and employs] an owner, partner, officer, or director who is an immediate family member of any owner, partner, officer, or director of the judgment debtor.”

AB 3075 will require business entities who file Statement of Information documents with the CA Secretary of State, to attest that no directors, managers or members “has an outstanding final judgment issued by the California Division of Labor Standards Enforcement or a court of law…for the violation of any wage order or provision of the Labor Code.”

AB 2399: Paid Family Leave and Qualifying Exigency

In a continuing effort to provide members of our Armed Forces and their families with adequate leave to participate in qualifying exigencies relating to active duty or a call to active duty, California has enacted AB 2399.

Paid Family Leave through the Employment Development Department (EDD) provides wage replacement benefits to employees who take time off to care for seriously ill family members or to bond with a new child within the first year of birth or placement. AB 2399 expands this existing benefit to include time off for members of our Armed Forces and their family members who are impacted by exigencies relating to active duty or a call to active duty.

The statute also clarifies the definition of “military member” to mean, a child, spouse, domestic partner, or parent of the employee, where the military member is on covered active duty or call to active duty in the Armed Forces of the United States.

AB 1731: Unemployment Work Sharing Plans

AB 1731 streamlines existing work sharing program participation through California’s Employment Development Department (EDD). A work sharing plan means a plan submitted by an employer for approval by the EDD, under which an employer requests the payment of work sharing compensation for its employees as a means of avoiding potential layoffs. A work share program can apply to an employer’s business overall and/or more specifically to individual departments or specific shifts.

AB 1731 requires EDD to create and implement, alternate submission processes and approvals for plan applications; online submission for applications to participate or renew participation; automatic approval (unless an exception applies) for one year of participation; and online claim forms.

To facilitate faster approval and response times, AB 1731 places the burden of assuring the completeness and integrity of all work sharing certification forms on the employer. If your business is considering workforce layoffs you might want to visit the Work Sharing Program website found at https://www.edd.ca.gov/unemployment/Work_Sharing_Program.htm before making any final decisions.

SB 1383: California Family Rights Act

SB 1383 makes significant changes to the California Family Rights Act (CFRA) by expanding the Act to require employers with five or more employees to provide eligible employees to take up to 12 work weeks of job-protected leave over a 12-month period.

Other changes to the CFRA include expansions of the definitions of: “child” to remove prior age limits and disability requirements and include the child of a domestic partner; “family care and medical leave” to include leave to care for grandparent, grandchildren, sibling and qualify exigencies relating to covered active duty or call to covered active duty of an employee’s spouse, domestic partner, child or parent who is a member of the Armed Forces.

The statute also removes the mileage requirement for employees located “within 75 miles of the worksite where that employee is employed” and the previous exception for highly paid “key employees.”

AB 2143: Settlement Agreement No-hire Provisions

Existing law prevents an employer from including a “no-hire” provision in settlement agreements except where the employer has made a good faith determination that the aggrieved person engaged in sexual harassment or sexual assault. A no-hire provision is a contractual clause prohibiting the aggrieved person from obtaining future employment with the settling employer.

AB 2143 revises the existing no-hire standard by expanding the provisions exceptions to include a determination that the aggrieved individual engaged in any criminal conduct.

The statute also includes a requirement that in order for the no-hire provision to apply, the employee must have filed their claim of sexual harassment or assault in good faith and the employer has documented its determination of sexual harassment or assault before the aggrieved individual filed their claim.

State Minimum Wage Increase

Beginning January 1, 2021, the state minimum wage increases to $14.00 per hour for employers with 26 or more employees. The rate is $13.00 for employers with 25 employees or fewer. The minimum salary under the white-collar overtime exemption test is two times the state minimum wage or $58,240 for large employers and $54,080 for smaller employers. Also, more than two dozen cities and counties have their own minimum wage that exceeds the state wage, and many of those will also increase on January 1 or summer of 2021. Some cities apply their elevated wage rate to employees that don’t even live or work fulltime in the city. The City of Los Angeles, for example, defines “employee” to mean any individual who in any particular week performs at least two hours of work within the geographic boundaries of the City of Los Angeles for any employer.

The Adverse Effect Wage Rate (AEWR), payable to H-2A workers and others in “corresponding employment” remains $14.77 in California for 2021, thanks to the U.S. Department of Labor’s final rule updating the methodology for determining the annual AEWRs. Under the new rule, the AEWR would not have changed until 2023, creating a wage freeze for 2021 and 2022 for a vast majority of agricultural jobs. However, a lawsuit filed by the UFW challenging the final rule has resulted in a court issuing a preliminary injunction and an order requiring the DOL and UFW to work together on establishing new AEWRs for 2021 based on the Farm Labor Survey.

Ag Overtime

Reminder that beginning January 1, 2021, for employers with 26 or more employees, the threshold for paying overtime for agricultural employees under IWC Wage Order 14 is after 8.5 hours per day or 45 hours per week. This change could also affect the minimum amount of paid sick leave employees must be granted. For employers that provide a front-loaded annual grant of paid sick leave, the amount front-loaded must generally be 24 hours or 3 days of paid leave at the beginning of each year or 12-month period. However, for employees who regularly work more than 8 hours a day, they must receive 3 times their regular number of daily work hours at the beginning of the year. Therefore, employers must grant ag employees who work 8.5-hour shifts with 25.5 hours of paid sick leave.

Western Growers members are encouraged to review their existing employment practices and employee handbooks, and to make all necessary updates to ensure compliance with the new laws.