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2021 Employment Law Update

Article by The Maloney Firm, APC

In this condensed version of the Maloney Firm’s annual update, find a summary of the most notable employment-related laws Governor Newsom passed in 2020. All bills took effect on January 1, 2021, unless otherwise noted; as emergency legislation, many pandemic-response bills went into effect immediately.

Access the Maloney Firm’s 2021 Employment Law Update here to read more about employment-related legislation and California case law updates.

New Employment Laws

Assembly Bill 979 requires any publicly held foreign or domestic corporation whose principal executive office is headquartered in California to comply with the following requirements:

  1. No later than the close of the 2021 calendar year, the corporation must have a minimum of one director from an underrepresented community; and
  2. No later than the close of the 2022 calendar year, corporations with nine or more directors must have a minimum of three directors from underrepresented communities, corporations with more than four but fewer than nine directors must have a minimum of two directors from underrepresented communities, and corporations with four or fewer directors must have a minimum of one director from an underrepresented community.

California Labor Code Section 98.7 allows individuals who believe that they have been discharged or otherwise discriminated against in violation of any law under the Labor Commissioner’s jurisdiction to file a complaint with the California Division of Labor Standards Enforcement (DLSE). Assembly Bill 1947 extends the statute of limitations for these complaints to one year after the occurrence of the violation. The bill also authorizes courts to award reasonable attorney’s fees to a plaintiff who brings a successful action for a violation of Section 1102.5 of the Labor Code, which prohibits employers from retaliating against employees for reporting employer violations or noncompliance with local, state, or federal statutes and regulations.

Assembly Bill 5 created the ABC Test for determining if a worker is an employee or an independent contractor under California law. Assembly Bill 2257 creates additional exemptions for certain occupations and contractual relationships from the restrictions that AB5 posed on many employers and workers. AB 2257 upholds the ABC Test for classifying independent contractors, with additional exemptions. Businesses exempted from using the ABC Test are required to use the Borello test, which is significantly less rigorous than the ABC Test, to classify their workers as independent contractors. The bill’s provisions went into effect immediately as of September 4, 2020. Find out more about how AB 2257 affects California businesses and workers here.

Paid Sick Leave Designation

Under Section 233 of the Labor Code, employees are permitted to use at least half of their annual employer-provided sick leave to care for their family. Assembly Bill 2017 gives employees the sole discretion to designate paid sick leave to care for their family.

No Rehire Provisions in Settlement Agreements

Last year, Assembly Bill 749 prohibited the inclusion of “no-rehire" provisions in settlement agreements, except in the case that the employer made a good faith determination that the aggrieved person engaged in sexual harassment or sexual assault. Assembly Bill 2143 expands the statute’s sexual harassment/sexual assault exception to allow the inclusion of no re-hire provisions if the employee engaged in “any criminal conduct." AB 2143 requires employers to document the good faith determination of sexual harassment, sexual assault, or other criminal conduct before the aggrieved person files a claim or civil action against the employer. The aggrieved person must also file their claim in good faith for the prohibition to apply.

Protections for Victims of Crime

Assembly Bill 2992 revises Labor Code Sections 230 and 230.1, which prohibit discrimination or retaliation against an employee that takes time off to seek psychological counseling, medical attention, or related services after an incident of domestic violence, sexual assault, and/or stalking. The bill expands these protections to include employees who are:

  • A victim of stalking, domestic violence, or sexual assault;
  • A victim of a crime that caused physical injury, or that caused mental injury and a threat of physical injury; or,
  • A person whose immediate family member is deceased as the direct result of a crime.

The bill defines “crime” as “a crime or public offense as set forth in Section 13951 of the Government Code, and regardless of whether any person is arrested for, prosecuted for, or convicted of, committing the crime.”

Assembly Bill 3075 establishes criteria for successorship and imposes liability on a successor to any judgement debtor for any unpaid wages, damages, and penalties owed to the judgement debtor’s former workforce. The bill also requires corporations to document whether any officer, director, or in the case of a limited liability company, a member or manager, has an outstanding final judgment issued by the DLSE or a court of law for a violation of any wage order or provision of the Labor Code. This information should be included

within a corporation’s statement of information filed with the Secretary of State starting on the earlier of either the date of certification by the Secretary of State that California Business Connect is implemented or January 1, 2022. AB 3075 also amends Section 1205 of the Labor Code to authorize local jurisdictions to enforce state labor standards requirements with respect to imposing minimum penalties for noncompliance with wage-related statutes.

Annual Pay Data Reports

Senate Bill 973 requires private employers with 100 or more employees that are required to file an annual Employer Information Report under federal law to also submit a pay data report to the California Department of Fair Employment and Housing (DFEH). This report should be submitted on or before March 31, 2021, and each year after, and should include the number of employees by race, ethnicity, and sex in the following categories, which correspond to the federal EEO-1 categories: Executive or Senior Level Officials and Managers; First or Mid-Level Officials and Managers; Professionals; Technicians; Sales Workers; Administrative Support Workers; Craft Workers; Operatives; Laborers and Helpers; and Service Workers.

Employers must include previous year W-2 earnings and hours worked for all employees, based on an employee workforce “snapshot” taken from a single pay period of the employer’s choice between October 1 and December 31 of the “Reporting Year.” The report must account for and include all employees who were active as of that snapshot pay period, regardless of whether or not an employee worked for the full calendar year.

CalSavers, a state-sponsored retirement savings program for private sector workers, extended its first implementation deadline, which applies to businesses with 100 or more employees, to September 30, 2020. All businesses with 5 or more employees are required by California law to offer a retirement plan or register for and facilitate the implementation of CalSavers by the appropriate deadlines, which are staggered by business size over three years. The deadlines are as follows:

  • Businesses with 100 or more employees: September 30, 2020
  • Businesses with 50 or more employees: June 30, 2021
  • Businesses with 5 or more employees: June 30, 2022.

On July 1, 2020, the minimum wage in both the City of Los Angeles and unincorporated areas in the County of Los Angeles increased:

  • For small businesses (25 or fewer employees) and non-profit corporations, the minimum wage increased to $14.25 per hour.
  • For all other employers (26 or more employees) the minimum wage increased to $15.00 per hour.

Santa Monica, Pasadena, and Malibu have similar city ordinances increasing the minimum wage to either $14.25 or $15.00 per hour depending on the number of employees, as of July 1, 2020. On July 1, 2021, all employers in the City and unincorporated areas in the County of LA will be required to pay a minimum wage of $15.00 per hour.

Pandemic Response Legislation

Assembly Bill 685 strengthens Cal/OSHA’s ability to issue Orders Prohibiting Use (OPU), also known as Stop Work Orders, to workplaces that pose a risk of a COVID-19-related “imminent hazard.” The bill also requires employers to take all of the following actions within one business day if the employer or representative of the employer receives a notice of potential exposure to COVID-19:

  1. Provide written notice to all employees, and the employers of subcontracted employees, who were on the premises at the same worksite as the qualifying individual within the infectious period that they may have been exposed to COVID-19 in a manner the employer normally uses to communicate employment-related information. Written notice may include, but is not limited to, personal service, email, or text message if it can reasonably be anticipated to be received by the employee within one business day of sending and shall be in both English and the language understood by the majority of the employees.
  2. Provide written notice to the exclusive representative, if any, of employees under paragraph (1).
  3. Provide all employees who may have been exposed and the exclusive representative, if any, with information regarding COVID-19-related benefits to which the employee may be entitled under applicable federal, state, or local laws, including, but not limited to, workers’ compensation, and options for exposed employees, including COVID-19-related leave, company sick leave, state-mandated leave, supplemental sick leave, or negotiated leave provisions, as well as anti-retaliation and anti-discrimination protections of the employee.
  4. Notify all employees, and the employers of subcontracted employees and the exclusive representative, if any, on the disinfection and safety plan that the employer plans to implement and complete per the guidelines of the federal Centers for Disease Control.

Employers are also required to report information regarding a COVID-19 outbreak, as defined by the State Department of Public Health, to the local public health department within 48 hours of learning of the outbreak. AB 685 will be in effect from January 1, 2021 until January 1, 2023.

AB 1867 codifies existing COVID-19-related supplemental paid sick leave requirements for food sector workers and extends mandatory sick leave protections to private employers with over 500 employees nationwide, as well as public and private employers of first responders and health care employees who opted not to provide paid sick leave under the federal FFCRA.

AB 1867 also strengthens the enforcement provisions in California’s preexisting paid sick leave law, codifies existing COVID-19-related hand washing standards, and requires the Department of Fair Employment and Housing (DFEH) to create a small employer family leave mediation pilot program. The bill went into effect on September 9, 2020 immediately upon Governor Newsom’s approval.

Senate Bill (SB) 1159 extends the rebuttable presumption created by Executive Order (EO) N-62-20 that employees who test positive for or are diagnosed with COVID-19 were exposed to the virus at the workplace. This presumption makes employees that are “injured” as a result of COVID-19 exposure in the workplace eligible for workplace compensation benefits. As an emergency bill, these provisions took effect immediately as of September 17, 2020

Job-Protected Family Leave

SB 1383 requires businesses with 5 or more employees to offer 12 weeks of job-protected unpaid family leave by January 1, 2021. Businesses with 5 or more employees will be required to grant requests by employees to take up to 12 weeks of unpaid protected leave during any 12-month period for any of the following reasons:

  1. to bond with a new child of the employee
  2. to care for themselves or a child, parent, grandparent, grandchild, sibling, spouse, or domestic partner, as specified
  3. due to 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 Armed Forces of the United States.

Although the bill does not require employers to offer paid leave, it requires that employers hold an employee’s job until he/she returns to work and maintain the employee’s employer-paid health benefits. The bill also requires small businesses to grant spouses who work for the same employer 12 weeks of family leave each. As the leave does not constitute a break in service, employers are required to maintain employees’ seniority status when they return to work for purposes of layoffs, promotions, and other seniority-related benefits. Workers who qualify for job-protected unpaid leave may apply for California’s Paid Family Leave Program, which provides employees with 8 weeks of partial pay that amounts to between 60-70% of their weekly salary.

Although the bill does not require employers to offer paid leave, it requires that employers hold an employee’s job until he/she returns to work and maintain the employee’s employer-paid health benefits. The bill also requires small businesses to grant spouses who work for the same employer 12 weeks of family leave each. As the leave does not constitute a break in service, employers are required to maintain employees’ seniority status when they return to work for purposes of layoffs, promotions, and other seniority-related benefits. Workers who qualify for job-protected unpaid leave may apply for California’s Paid Family Leave Program, which provides employees with 8 weeks of partial pay that amounts to between 60-70% of their weekly salary.

If you have questions regarding the application of California’s new employment legislation to your business, please contact one of the following attorneys in The Maloney Firm’s Employment Law Department: Patrick Maloney, Lisa Von Eschen, Samantha Botros, or Nicholas Grether.

The Maloney Firm, APC

The Maloney Firm represents clients in trials, arbitrations and appeals in state and federal courts, and also regularly counsels clients on a wide range of business matters delivering cost-effective solutions for their legal needs. Clients of The Maloney Firm receive expertise in and outside of court, even when up against larger, national firms. Always looking out for its clients’ best interests, The Maloney Firm provides significant expertise without significant cost.

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