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CALIFORNIA EMPLOYERS MUST PREPARE FOR NEW LAWS

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At the end of this year’s legislative session 870 bills were signed into law by Governor Gavin Newsom, many of which will have significant impact upon California employers including the widely publicized law regarding independent contractor classifications.

Below is a brief summary of some of the more significant new laws, which will become effective Jan. 1, 2020, unless otherwise specified.

Independent Contractors: “ABC” Test Becomes Law:  AB 5 codifies the “ABC” test that the California Supreme Court announced in the Dynamex case in April 2018, which is used to determine the proper classification between employees and independent contractors under the Industrial Welfare Commission (IWC) Wage Orders. Under AB 5, it will be extremely difficult for workers to be properly classified as an independent contractor and would require the person performing the services be classified as “employees”.  AB 5 and extends the application of the “ABC” test to the Labor Code and Unemployment Insurance Code.

Mandatory Arbitration Prohibited:  This legislation is likely to face considerable legal challenges as the law now prohibits employers from requiring an applicant for employment or current employee to agree to mandatory arbitration for a violation of the California Fair Employment and Housing Act or the Labor Code as a condition of employment.  This law purports to make illegal workplace arbitration agreements that are entered into, modified, or extended on or after January 1, 2020.   (AB 51)

Arbitration Fees to Be Paid by Employer: The “Forced Arbitration Accountability Act” requires an employer to pay arbitration initiation fees within 30 days after the due date. If the employer does not pay the fees in a timely manner, the employer will be in material breach of the arbitration agreement and, in default of the arbitration, and this will result in the employer being deemed to have waived its right to compel arbitration. If the employer breaches, the employee can then proceed in a court of appropriate jurisdiction. (SB 707)

Statute of Limitations Expanded to Three Years:    In another very significant change in the law, AB 9 extends the statute of limitations period for employees to file claims of discrimination, harassment and/or retaliation with the California Department of Fair Employment and Housing (“DFEH”). Currently, employees must file their administrative complaint with the DFEH within one year from the date of the alleged violation.  This law extends the time limit to file to three years.  Employees would then have one more year (after their receipt of a right-to-sue letter from the DFEH) to file a civil action in court.  This will result in claims for harassment, discrimination and retaliation being filed up to 4 years after the alleged wrongful conduct, which could make the defense of these claims more difficult due to change in personnel and fading memories. (AB 9)

Governor Brown vetoed a similar bill stating that the one year filing deadline “not only encourages prompt resolution while memories and evidence are fresh, but also ensures that unwelcome behavior is promptly reported and halted.”

Use of No Re-Hire Provisions Restricted:  Many settlement agreements contain a “no re-hire provision.  The law now prohibits and invalidates all provisions in settlement agreements that prevent workers from obtaining future employment with the settling employer or its affiliated companies. Such provisions in agreements entered into on or after January 1, 2020 are void as a matter of law and against public policy.

The prohibition only applies to “aggrieved persons,” which is defined as a person who has filed a claim against the person’s employer in court, before an administrative agency, in an alternative dispute resolution forum, or through the employer’s internal complaint process.  Employers may still include no re-hire provisions in severance or settlement agreements that are negotiated in response to demand letters or prior to a claim being filed.  (AB 749)

Organ & Bone Marrow Donation Leave of Absence:   Existing law requires a private employer with 15 or more employees to provide employees with a paid leave of absence not exceeding 30 business days in a one-year period, for the purpose of organ donation.  The Code is amended to provide that an employee who is an organ donor, may now request an additional unpaid leave of absence, not exceeding 30 business days in a one-year period, for the purpose of donating the employee’s organ to another person.  (AB 1223)

Paid Family Leave Expansion:  The Unemployment Insurance Code is amended (effective July 1, 2020) to extend partial wage replacement benefit from six to eight weeks.   Employees may file a claim for PFL to receive benefits if the employee must be absent from work to care for a serious ill family member or to bond with a minor child within one year of birth or placement of the child via foster care or adoption.


Reminder of New Laws Previously Passed

As has been discussed in prior newsletters, the following new laws were signed by Governor Newsom:

CROWN ACT – Hair Discrimination:  The Fair Employment and Housing Act provides that it is an unlawful employment practice to discriminate against an employee or applicant on the basis of race.   Now, it is unlawful to discriminate against employees and students based on their “natural hair styles”. The definition of “race” is amended to include “traits historically associated with race, including, but not limited to, hair texture and protective hairstyles,” such as “braids, locks, and twists.” (SB 188)

Harassment Prevention Training Deadline Extended:  Employers with five or more employees must provide one hour of sexual harassment prevention training to nonsupervisory employees and two hours of such training to supervisors by January 1, 2021. (SB 778)

If training was provided to employees in 2019, additional training is not required for two years from the time the employee was trained.  Employers who conducted training in 2018 must provide training in 2020 to maintain the two-year cycle and comply with the new deadline.

 

This Newsletter is intended as a brief summary of employment law.  While every effort has been made to ensure the accuracy of the information contained herein, it is not intended to serve as “legal advice,” or to establish an attorney-client relationship.  If additional information is needed on any of the topics contained herein, please contact our office. All rights reserved.  ©2019