New laws
Key takeaways for employers


The 2019 California legislative year has officially come to a close. Unsurprisingly, there are dozens of new employment laws hitting the books on 1 January 2020. This article highlights 10 of these new laws and provides key takeaways for covered employers.

New laws

Ban on arbitration
Assembly Bill 51 will preclude employers from requiring job applicants, current employees or independent contractors from agreeing to waive any right, forum or procedure under the Fair Employment and Housing Act (FEHA) and the Labour Code as a condition of employment, continued employment or the receipt of any employment-related benefit.

The law will apply to any contracts entered into, modified or extended on or after 1 January 2020, and does not apply to post-dispute settlement agreements or negotiated severance agreements. Violations carry the risk of injunctive relief and attorneys' fees. While challenges to Assembly Bill 51 based on federal law are anticipated, the law is nonetheless now on the books.

Extending FEHA statute of limitations
Current law requires employees to file an administrative charge with the Department of Fair Employment and Housing within one year from the date on which an unlawful employment practice under FEHA occurs. Assembly Bill 9 extends this deadline from one to three years but retains the one-year statute of limitations for Unruh Act-related claims.

Protecting hairstyles
Senate Bill 188 amends the definition of 'race' under FEHA to include "traits historically associated with race, including, but not limited to, hair texture and protective hairstyles". Protective hairstyles are defined as including "such hairstyles as braids, locks, and twists".

New York recently adopted a similar protection.

Delay and clarification for sex harassment training
In 2018 Senate Bill 1343 extended sexual harassment training to employers with fewer than 50 employees and required employers to train both supervisors and non-supervisory employees on or before 1 January 2020. Senate Bill 778 extends the deadline to 1 January 2021 and provides clarification as to non-supervisor training.

No rehire provision
Assembly Bill 749 prohibits any settlement agreement relating to an employment dispute from preventing or restricting the employee from obtaining future employment with the employer against whom the claim was filed.

This applies to any agreement entered into on or after 1 January 2020.

ABC test
Assembly Bill 5 codifies the California Supreme Court's 2018 decision in Dynamex Operations West, Inc v Superior Court (4 Cal 5th 903 (2018)) and applies the so-called 'ABC' test to many types of independent contractor test under California law. For example, Assembly Bill 5 applies the ABC test to claims made under the Labour Code, the Unemployment Insurance Code and Industrial Welfare Commission (IWC) wage orders, subject to certain exceptions. The law applies retroactively to claims made under IWC wage orders and Labour Code claims to enforce the IWC wage orders (consistent with Dynamex) and prospectively (1 January 2020 and later) to other claims under the Labour Code and the Unemployment Insurance Code.

Penalties for breach of arbitration agreement
Senate Bill 707 implements new penalties if an employer fails to pay arbitration-related fees.

Minimum wage increase
In line with Senate Bill 3, on 1 January 2020 the minimum wage for employers with 26 or more employees will increase to $13 per hour, meaning that the salary threshold for exemption will be $54,080 annually. The minimum wage for employers with 25 or fewer employees will increase to $12 per hour, with the salary for exemption being $49,920 annually. In addition, many cities will increase their minimum wage beyond the state minimum in 2020.

Lactation accommodation
Among other things, Senate Bill 142 requires employers to provide a reasonable amount of break time each time that an employee needs to express milk. It also requires employers to provide a location (not just make reasonable efforts) and enumerates many physical requirements for the location.

Data privacy
The California Consumer Privacy Act 2018 (CCPA) will take effect on 1 January 2020. Assembly Bill 25 largely excludes from coverage the personal information of job applicants, employees and independent contractors. However, it requires that those individuals receive notice "at or before the point of collection" of the categories of personal information collected about them and the purposes for its use. They are also entitled to data security standards relating to their data and will have standing to bring a private right of action under the law.

Key takeaways for employers

Audit your independent contractor relationships now
Assembly Bill 5 applies retroactively to certain claims. It is critical for employers to audit existing independent contractor arrangements to determine whether any exception may also be applied retroactively. Misclassification carries significant penalties and consequences.

Prepare job applicant, employee and independent contractor notices
If covered under the CCPA, employers will need to ensure that they have adequate notices provided to job applicants, employees and independent contractors. This may include notices on job posting websites (eg, LinkedIn and Indeed), within employee databases (eg, Dayforce) or within independent contractor agreements.

Audit severance and employment agreements
Employers should ensure that:

  • their standard severance agreements do not include a 'no rehire' provision; and
  • their employment agreements do not include a FEHA or Labour Code arbitration provision.

Audit harassment training
Employers should ensure that they are providing the legally mandated anti-harassment and discrimination training by the new deadline. Employers should also ensure that their training is expanded to include the new hairstyle protections and lactation accommodations.

Audit pay practices
With the minimum wage increasing, and Assembly Bill 5 making many former independent contractors employees, now is a good time to audit pay practices to ensure that:

  • classifications are up-to-date;
  • meal and rest periods are being paid properly;
  • wage statements are accurate and include all requirement substantive elements; and
  • exempt employees will be paid the salary minimum in the applicable jurisdiction effective 2020.

For further information on this topic please contact Peter Stockburger at Dentons US LLP's San Diego office by telephone (+1 619 236 1414) or email ([email protected]). Alternatively, contact Cynthia Jackson at Dentons US LLP's Silicon Valley office by telephone (+1 650 798 0300) or email ([email protected]). The Dentons website can be accessed at www.dentons.com.