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Law360 (January 7, 2021, 4:05 PM EST) --
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| Mellissa Schafer |
It was not the year anyone expected and was more challenging, extremely demanding and difficult. California employers needed to adapt to new ways of working, managing technology and so much more.
Most of us were ready to say hello to 2021.
But a new year brings additional challenges with new employment laws. On top of continuing to deal with handling a pandemic, California employers must also address a variety of new COVID-19 laws in addition to other workplace protection laws. While a vaccine is on the horizon, California employers need to stay on their toes now, more than ever.
Although the 2020 legislative session certainly centered around COVID-19, new laws involving leaves, worker classification, and wage and hour were also addressed.
California Expansion of Paid Sick Leave and Family Leave
Sick and paid family leave have consistently been part of our annual year in review. When the pandemic hit in March 2020, the Families First Coronavirus Response Act was enacted to provide federal paid sick leave and expanded family leave due to the pandemic.
However, the FFCRA only applied to employers with less than 500 employees. In response, California enacted a supplemental COVID-19 paid sick leave law with A.B. 1867. This bill essentially closes the loophole of the FFCRA.
A.B. 1867 applies to businesses with 500 or more employees nationally. It only applies to employees who are unable to work from home and must work at the employer premises, wherever that might be.
These employees are able to receive supplemental paid sick leave if they are unable to work due to a federal, state or local quarantine related to COVID-19, are advised by a health care provider to self-quarantine or self-isolate due to concerns related to COVID-19 or are prohibited from working by the employer due to health concerns related to the potential transmission of COVID-19.
Supplemental paid sick leave is based upon an employee's regular schedule. A full-time worker may receive up to 80 hours of sick leave.
Employers must be particularly diligent, as for employees who work less than full time, the bill provides various calculations that must be computed to determine how many hours of sick leave an employee would be entitled to for COVID-19 related issues.
Employers need to utilize best practices by training their human resources staff on how to and when to provide COVID-19 sick leave.
They should also be aware of how the amount of COVID-19 sick leave differs between an employee who works full time and a worker who isn't full time.
Proper record-keeping is essential as well. This will assist with both contract tracing as well as to monitor how sick leave must be compensated.
Gov. Gavin Newsom also signed A.B 2992 expanding the prohibition on discrimination or retaliation against employees for taking time off who are victims of domestic violence, sexual assault or stalking to include any violent crime as well as to immediate family members of homicide victims.
Employees who are victims of domestic violence or sexual assault may now use time off to seek medical attention or counseling for injuries or to participate in safety planning to avoid future crimes or abuse. These employees need to give as much notice as is practicable to their employer.
A handbook update is likely needed to include the additional category of violent crime as well as to delineate the additional reasons leave may be taken. As domestic violence and violent crimes is a sensitive area, it is generally recommended that employers evaluate each request on a case-by-case basis with thoughtfulness and a broad spectrum to fully evaluate if a situation does fall under this specific leave law.
Expansion of California Family Rights Act
One of the biggest changes to California leave laws includes S.B. 1383, which went into effect Jan. 1. This bill significantly expands the California Family Rights Act.
Previously, CFRA only applied to employers with 50 or more employees within a 75-mile radius. Now, it applies to any employer with five or more employees.
This is likely to be challenging for smaller employers as CFRA mandates that covered employers provide 12 weeks of unpaid protected leave during a 12-month period if the employee worked 1,250 hours or more during the prior year. S.B. 1383 also expanded the reasons for the unpaid protected leave.
It now includes leave for a qualifying exigency related to the covered active duty or call to covered active duty of an employee's spouse, domestic partner, child, or parent in the service.
In addition, the unpaid protected leave can now be taken to care for grandparents, grandchildren, siblings and domestic partners with a serious health condition.
S.B. 1383 also provides that if an employer employs both parents of a child, each parent is entitled to 12 weeks of paid protected leave assuming they meet the eligibility requirements. For a small employer who employs family members, this could provide additional challenges.
As there are now more ways in which to utilize the CFRA, employers must update handbooks accordingly. It is also of the utmost importance that employers with five to 49 employees begin to include this provision in their handbooks and learn and train staff on how to accurately compute a CFRA leave.
Smaller employers should also revisit job duties of their employees to ensure there is more than one person that knows how to do each job duty in case someone does go out on leave.
Reporting Requirements
Due to the seriousness of COVID-19 and the pandemic, numerous laws were enacted addressing reporting requirements of employers in order to stop or minimize the spread of COVID-19. S.B. 1159 went into effect on Sept. 17, 2020, and sunsets on Jan. 1, 2023.
This law codified Newsom's previously issued Executive Order N-62-20, which provided a rebuttable presumption for employees who work at a job site outside their home at the direction of their employer and who test positive for COVID-19.
In order to qualify for the presumption, an employee must have worked at the direction of the employer, on-site at the employer's premises, have a positive COVID-19 test during an outbreak and performed this work after July 6, 2020.
An outbreak has different criteria depending on the number of employees an employer has at their workplace.
If an employer has 100 or less employees, there must be four employees who test positive for COVID-19 to be considered an outbreak. For employers with more than 100 employees at a specific place of employment, there needs to be 4% of the workforce who test positive for COVID-19. An outbreak would also include when an employer is closed or shut down due to COVID-19.
With regard to reporting requirements, S.B. 1159 mandates that an employer who knows or reasonably should know that an employee has tested positive for COVID-19 report the positive case to their claims administrator in writing, via email or fax, within three business days.
They must report that an employee tested positive without providing any identifiable information, the date of the positive test, the address where the employee worked and the highest number of employees who reported to work at that specific location in the 45 days preceding the last day the COVID-19 positive employee worked at that particular location or locations.
California also enacted A.B. 685 which contains additional reporting requirements and guidelines. A.B. 685 became effective Jan. 1. It requires employers to provide written notice within one business day to all employees, employers of subcontractor employees and employee representatives when an employer has notice of a potential COVID-19 exposure in the workplace.
The employer must also notify public health officials within 48 hours if the number of cases meets the definition of an outbreak. A.B. 685 also provides the State of California's Division of Occupational Safety and Health increased enforcement powers including the ability to close a business experiencing COVID-19 outbreaks.
Many employers have started a COVID-19 response team or return to work team. This is an option for a larger employer in order to have specific persons expertly trained on COVID-19 reporting and notice requirements. If an employer is able to assemble such a team, it is a solid option to handle the pandemic situation. If a specific team is not possible, employers need to have an up-to-date human resource team who understand their obligations.
When there is a positive COVID-19 case, an employer should immediately investigate whether it has industrial causation to know if S.B. 1159 applies. With a shorter denial period, an employer must act swiftly in their investigation in order to procure the necessary evidence to dispute the claim, if possible.
An employer also must report the case to its insurance carrier or third-party administrator within three business days. It is highly recommended that employers maintain detailed documentation of all positive cases and evaluate potential exposure to other employees as well. An employer must monitor the number of cases it has to determine if they reach the level of an "outbreak."
Regardless of industrial causation, if there is a positive case or the possibility of exposure at the workplace, the employer must follow certain steps. Employers need to provide written notification within one business day to any employee who may have been exposed to COVID-19.
They need to detail what their safety and sanitization plan is for return to work as well. And, if the employer's numbers meet the definition of an "outbreak" the employer must notify public health officials.
Independent Contractors
One of the most discussed and heavily litigated issues this year involved A.B. 5, which discusses a worker's classification namely as it relates to independent contractors. With the passage of A.B. 5, the ABC test now applies to all provisions and claims based upon the California Labor Code and Unemployment Insurance Code as well as the Workers' Compensation Code.
Under the ABC test, an individual is presumed to be an employee and not an independent contractor, unless the hiring entity satisfies all three conditions under the ABC test.
When initially enacted, A.B. 5 included seven groupings of exemptions covering approximately 50 industry-specific professions such as dentists, doctors, insurance agents, and architects to name a few. Throughout 2020 numerous industries, such as trucking and gig economy, sought additional exemptions as well.
A.B. 2257 provides additional exemptions to A.B. 5 including bona fide business-to-business contracting relationships, professional services, construction subcontractor relationships, sound recording and musical composition, real estate appraisers and home inspectors, insurance underwriters, and exemptions for fine artists, freelance writers, translators, editors, advisors, producers, copy editors and illustrators.
Gig economy workers were not provided an exemption in A.B. 2257.
During the year, Uber and Lyft requested an exemption and in response, the attorney general for the state of California brought an action on behalf of the people seeking a preliminary injunction against Uber Technologies Inc. and Lyft Inc. that would restrain them from classifying drivers as independent contractors.
This was granted on Aug. 10, 2020, and Uber and Lyft appealed.
On Oct. 22, 2020, the California Court of Appeals upheld the preliminary injunction.
Proposition 22 was placed as a ballot initiative for the November election. Prop. 22 passed and as of now, app-based drivers are defined as workers who (a) provide delivery services on an on-demand basis through a business' online-enabled application or platform or (b) use a personal vehicle to provide prearranged transportation services for compensation via a business' online-enabled application or platform.
A business should evaluate each potential independent contractor relationship carefully, as there are a multitude of questions that need to be answered in order to determine if one can legally be an independent contractor.
For any employee that has been misclassified, an employer needs to immediately update the worker's status and ensure compliance with all wage and hour laws. The law on independent contractor classification in California continues to evolve. It is critical for employers to remain diligent, conduct audits, and consult counsel to ensure compliance with California law and avoid any consequences of misclassification.
Wage and Hour Litigation
Wage and hour litigation in California remains prevalent. But, the 2020 legislative session did not include much in reference to wage and hour. A.B. 2479 extends the exemption provided in Section 226.76 of Labor Code which notes that employees must be relieved of all duties during rest periods for union-represented employees who hold a safety-sensitive position at a petroleum facility and who must be available to respond immediately to emergencies.
This exemption was set to expire on Jan. 1, and is now extended to Jan. 1, 2026. This provision was likely already included in the applicable employers' handbooks. A simple update of the expiration date is needed.
In addition, A.B. 1512 addressed on-duty rest periods for union-represented security guards. A.B. 1512 applies to employees who are registered as security officers pursuant to the Private Security Services Act and are employed by a private patrol operator registered pursuant to that act.
A.B. 1512 can require these qualifying security guards to remain on the premises and on-call during rest periods, which may also include carrying and monitoring communication devices.
If a security guard's rest period is interrupted, they are entitled to restart their rest period as soon as practicable. If they are unable to do so, they would be entitled to receive a premium of one hour of pay at their regular hourly rate of pay.
Applicable employers should update their handbooks of this rest period change. It is also recommended that any qualified employee be specifically advised of this change and sign acknowledgement of it.
The deadline to file a complaint with the Division of Labor Standards Enforcement has also been extended.
A.B. 1947 holds that an employee who believes their employment was terminated or that they suffered an adverse employment action in violation of any provision of the Labor Code now has one year rather than six months to file a complaint.
As always, it is recommended that employers contact their employment counsel if a Division of Labor Standards Enforcement complaint is received to ensure its validity and timeliness.
To assist in bridging the gender pay gap, S.B. 973 was enacted requiring private employers with 100 or more employees to submit an annual pay data report to the California Department of Fair Employment and Housing.
Employers with multiple establishments in California are required to file report from each establishment, as well as a consolidated report. The first annual report is due on or before March 31, 2021, and subsequent annual reports would be due on or before March 31 each year thereafter. The report will include the number of employees, by race, ethnicity and gender, who are employed in specified job categories in addition to pay band data for these workers.
This is a rather new employer obligation that is still evolving. Department of Fair Employment and Housing recently issued and posted a Frequently Asked Questions page. It is highly recommended that employers become familiar with this page.
There still remains five categories that have not been updated yet including pay, hours worked, multi-establishment employers, acquisitions and mergers and spin-offs. For now, employers should begin collecting the data necessary for reporting as March 31, 2021 will be here sooner than we know.
Board of Directors
Current law provides that any publicly held corporation with its principal office located in California must include at least one woman director on the corporation's board of directors.
By the end of 2021, corporations with five or more directors must include at least two female board members and corporations with six or more directors must include at least three female board members.
A.B. 979 focuses on racial and ethnic diversity. It requires any publicly held corporation with its principal office located in California to include a minimum of one director from an underrepresented community by the end of 2021.
Further, by the close of 2022, corporations with more than four directors, but fewer than nine, must have a minimum of two directors from underrepresented communities, and a corporation with nine or more directors shall have a minimum of three 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 an Alaskan native as well as one who self identifies as gay, lesbian, bisexual or transgender. A racially diverse female would qualify for both categories.
With so many corporations in need of compliance with this law, these corporations need to plan for these changes sooner rather than later. Policies need to be updated and applicable corporations need to determine what changes, if any, they need to make.
It may include decreasing or increasing the number of directors. It may include adding or deleting policies.
Do they have term limits? Do they need term limits? How will they locate the talent needed in order to be in compliance prior to the deadline?
An individual or individuals should be tapped with analyzing where a corporation currently stands and what is needed prior to the deadline so they can assemble tasks needed to be completed with deadlines to ensure they meet the deadline.
With these new laws, California employers as well as out of state employers with California employees need to update their handbooks — a seemingly annual tradition.
They will also need to provide additional training if needed, adhere to new reporting guidelines and update any necessary procedures.
A simple, unintentional mistake can be costly in California. Here's hoping for an end to the pandemic.
Mellissa Schaferis is a partner at Hinshaw & Culbertson LLP.
The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
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