California employers are ringing in the new year with a host of new workplace laws. Here is an overview of new employment-related laws, along with recommendations for compliance. All of the laws, unless otherwise specified, went into effect on January 1, 2020.

Arbitration

Prohibition on Waiver of Rights (AB 51). This new law makes it unlawful to require a job applicant or employee as a condition of new or ongoing employment or receiving any employment-related benefit to waive any FEHA or Labor Code-based right, forum or procedure. The law also bars employers from threatening, retaliating, discriminating against, or terminating any applicant or employee because they refuse to consent to waiver of any FEHA or Labor Code-based rights. On December 30, 2019, a federal district court granted a temporary restraining order based on arguments that the new law is preempted by the Federal Arbitration Act; thus, the new law’s January 1, 2020 effective date has been halted, at least temporarily. We will keep you posted on further developments.

Employer Payment of Fees (SB 707). In an employment arbitration pursuant to a pre-dispute arbitration agreement, if an employer fails to pay required arbitration fees within 30 days after the due date the employer will now be in material breach of the arbitration agreement, in default of the arbitration, and waive its right to compel arbitration. Furthermore, the employee-claimant would have the unilateral option of moving the case to court or compelling arbitration and requiring the employer to pay reasonable attorney’s fees and costs in the arbitration. This new law also applies in the consumer arbitration context. Businesses that use arbitration agreements should ensure that processes are in place for timely payment of all arbitration fees.

Discrimination, Harassment, and Accommodations

Hairstyle Discrimination Prohibition (SB 188). California is the first state to ban discrimination based on natural hair and protective hairstyles. The new law amends the California Fair Employment and Housing Act (FEHA), specifying that “hair discrimination targeting hairstyles associated with race is racial discrimination.” Employers should proactively review their grooming and appearance policies, even those that appear facially neutral, to ensure that they comply with the new prohibitions, are inclusive of all cultures and legally protected categories, and backed by legitimate, objective business needs. Employers should also take measures to ensure that such policies are applied in a nondiscriminatory manner, including providing training to managers and others involved in the hiring process regarding the new law. For more on this law, see our prior blog post.

Sexual Harassment Training Deadline (SB 778, SB 530). This measure pushed out the deadline for employers to comply with expanded sexual harassment training requirements that went into effect last year. Employers with five or more employees now have until January 1, 2021 (instead of January 1, 2020) to provide at least two hours of training to supervisory employees and at least one hour to all nonsupervisory employees. The training must occur within six months of an employee’s hire or assumption of a supervisory position, and employees must be retrained every two years. Employers that provided compliant training in 2019 are not required to retrain in 2020 (except for new hires, etc.). A related bill similarly delayed the harassment training requirement for seasonal, temporary or other employees hired to work for fewer than six months.

Deadline to File FEHA Claims (AB 9). The statute of limitations for claims of discrimination, harassment, or retaliation filed with the California Department of Fair Employment and Housing has been expanded to three years (previously one year) from the date of the alleged violation. Employers should review record-keeping procedures to ensure that relevant records are retained for a minimum of three years and until the disposition of any claim or litigation.

Lactation Accommodation (SB 142). Employers have expanded obligations to provide lactation accommodations, including that lactation spaces must be private, safe, clean, free of hazardous materials, contain a place to sit and a surface to place a breast pump and personal items, and have access to electricity or alternative devices needed to operate a breast pump. Employers also must provide access to a sink and refrigerator, in close proximity to the employee’s workspace. Employers with fewer than 50 employees may qualify for exemption from a lactation space requirement based on undue hardship. All employers must implement a written lactation policy that addresses an employee’s right to request lactation accommodation, the process for requesting accommodation and the employer’s obligation to respond, and the right to file a Labor Commissioner complaint for violations; the policy must be in the employee handbook and distributed to new hires and to an employee who inquires about or requests parental leave. The law also makes denial of reasonable break time or adequate lactation space a failure to provide a rest period under the Labor Code. Employers should update lactation policies with the new requirements, and ensure that they are prepared to provide compliant lactation accommodations upon request.

Independent Contractors

Independent Contractor Test (AB 5). The new law imposes a strict “ABC” test that appears to put a thumb on the scale of classifying workers as employees rather than independent contractors, although the law also includes numerous exemptions for certain occupations and professions. The ABC test was adopted last year by the California Supreme Court in its Dynamex decision to determine classification of workers for purposes of the state’s Industrial Welfare Commission Wage Orders. AB 5 now makes the ABC test the default standard for determining worker classification—not just under the Wage Orders, but also for California Labor Code, unemployment insurance, and workers’ compensation claims. All businesses that hire consultants or contractors based in California will need to take a hard look at those relationships and determine whether they should reclassify any such individuals as employees. For more information, see our recent blog post.

Leaves of Absence

Paid Family Leave Benefits (SB 83). Partial wage-replacement benefits under the California Paid Family Leave (PFL) program will increase on July 1, 2020 to eight weeks (previously six) for employees who take time off to bond with a new child or care for a seriously ill family member. Employers should review parental and family leave policies to reflect the increase in benefits. More information is available from the Employment Development Department.

Organ Donation Leave (AB 1223). Employees who take leave for organ donation are currently entitled to 30 days of paid leave in a one-year period. The new law provides that employees are now entitled to additional unpaid leave of up to 30 business days. The law applies to employers with 15 or more employees. Employers should update leave policies to reflect the additional time off (and remember that, as in the past, an employees may separately be entitled to time off under the Family and Medical Leave Act or California Family Rights Act).

Privacy

California Consumer Privacy Act Exclusion (AB 25). The California Consumer Privacy Act (CCPA) took effect as scheduled on January 1, 2020, but AB 25 operates to temporarily exclude employee personal information from most of CCPA’s requirements until January 1, 2021. Businesses should take note, however, that this exemption does not relieve them of the CCPA obligation to issue a privacy notice to employees (as well as to job applicants, or an owner, director, officer, medical staff member, or contractor of the business), and that such individuals have a private right of action if personal information (as described in a subsection of California’s data security law) is affected by a data breach caused by the employer’s failure to maintain reasonable safeguards. For more on CCPA, see our Inside Privacy blog. Businesses that have not already done so should promptly issue CCPA privacy notices to employees, applicants, contractors, and others as required.

Settlement Agreements

Restrictions on No-Rehire Clauses (AB 749). Settlement agreements entered into on or after January 1, 2020 with employees who have filed a claim against the employer can no longer include a provision prohibiting future employment (often called “no-rehire” provisions). The law creates an exception, however, where the employer has made a good-faith determination that the employee engaged in sexual harassment or sexual assault. Additionally, the law makes clear that it does not require an employer to continue employing or to rehire any worker if there is a legitimate non-discriminatory or non-retaliatory reason for terminating or refusing to hire the person. Employers should carefully review settlement agreement templates to ensure that no-rehire provisions are not inadvertently included except in the circumstances authorized by the new law.

Wage and Hour

Wage Penalty Recovery (AB 673). Employees now have expanded rights to recover penalties for late payment of wages through a complaint filed with the Labor Commissioner or in a suit under the Labor Code Private Attorneys General Act (PAGA). Previously, penalties were recoverable directly by the Labor Commissioner or through a PAGA action but with strict limits on how much an employee could keep (25 percent) and how much had to be paid over to the Labor and Workforce Development Agency (75 percent). The law also removes the Labor Commissioner’s authority to collect the penalties in an independent action and allows the employee to recover 100 percent of the penalty.

Labor Commissioner Citations (SB 688). The Labor Commissioner’s authority to issue citations for failure to pay wages has been expanded to include instances where the employer has failed to pay the wages promised by a contract. Previously, the Labor Commissioner could issue citations only where an employer failed to pay minimum wage.