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New California Employment Laws in 2021

The new year is right around the corner, so we thought it might be a good time to dive into some of the new labor laws on California’s docket for 2021. There’s a hefty amount this year – covering a wide range of topics such as sick leave, worker classification, corporate diversity, and the coronavirus pandemic – so here’s a quick look.

Discrimination & Harassment

AB 979 - Diversity Among Corporate Boards of Directors

AB 979 is modeled after SB 826, which was passed in 2018 and added Section 301.3 to the California Corporations Code, requiring publicly traded companies with principal executive offices in California to place at least one female director on their board by December 31, 2019. According to SB 826, that number must increase in proportion to the corporation’s total number of seats by December 31, 2021. So, for example, if a corporation has six or more directors on its board, there must be at least three female directors among them by the end of 2021. If there are five seats, there must be at least two female directors, and if there are four or fewer seats, there must be at least one female director. 

AB 979 which was signed earlier this year – functions similarly in that it will require California-based corporations to have a minimum of one director from an underrepresented community on their board no later than December 31, 2021. Also, by the end of calendar year 2022, that number must increase to a minimum of:

  • Three directors from underrepresented communities if the corporation has nine or more seats;
  • Two directors from underrepresented communities if the corporation has between four and nine seats;
  • One director from an underrepresented community if the corporation has four or fewer seats;

The bill defines “director from an underrepresented community” as “an individual who self-identifies as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaska Native, or who self-identifies as gay, lesbian, bisexual, or transgender.”

SB 973 - Pay Data Collection and Reporting

SB 973 will require California private employers with 100 or more employees to submit a pay data report to the Department of Fair Employment and Housing (DFEH) on or before March 31, 2021, and every year thereafter. The report must include information regarding the number of employees within the company (classified by race, ethnicity, and gender across various job categories) and the total hours worked by each employee within a each pay band during the reporting year.

This is essentially a state level version of the federal Employer Information Report (EEO-1) and will serve to authorize the DEFH to oversee pay data and monitor any instances of alleged pay discrimination within California-based companies.

SB 493 - Protections for Students Against Sexual Harassment and Assault

California’s SB 493 provides additional protection to students facing sexual harassment in institutions of higher education receiving state financial assistance. No later than January 1, 2022, these institutions will need to comply with certain requirements designed to make it easier for students to report sexual harassment and assault, including providing students with notice of their rights and information on how to report incidents and ensuring adequate training for school officials involved.

Leave of Absence 

SB 1383 - Expansion of California’s Family Rights Act

SB 1383 – which takes effect January 1, 2021 – will significantly expand the coverage and scope of the California Family Rights Act (“CFRA”), which currently requires employers with 50 or more employees to provide 12 workweeks of unpaid, job-protected family or medical leave to its workers. 

Under SB 1383, CRFA coverage will now include all employers with five or more employees. The new coverage will also provide much more inclusive family and medical leave rights by expanding the definition of “family members” to include domestic partners, grandparents, grandchildren, adult children, and siblings. Under the new CRFA, employees are eligible for up to 12 workweeks of unpaid protected leave during any 12-month period to:

  • Care for themselves or a family member, which is now defined as a child, parent, grandparent, grandchild, sibling, spouse, or domestic partner.
  • Bond with a newborn child or newly adopted or placed foster child. Important side note: SB 1383 will lift the limitation of a combined total of 12 weeks for co-worker spouses/domestic partners to bond with a newborn – meaning that, under the new law, co-worker spouses/domestic partners may take up to 24 weeks of combined family care leave for bonding with a newborn. 
  • Be with a spouse, domestic partner, child, or parent in the Armed Forces of the United States due to a qualifying exigency related to covered active duty or call to covered active duty.

This is a notable development in that small businesses will now need to get up to speed on all these new CRFA requirements come January 1st. Moreover, since the new definition of “family members” expands beyond what is covered under the federal Family and Medical Leave Act (FMLA), some businesses may have to administer CFRA and FMLA separately, meaning that certain employees may be entitled to take up to 24 weeks (i.e. 12 weeks to care for a grandchild under CRFA and 12 weeks to cover an illness under FMLA).

AB 2017 - Sole Discretion to Use Kin Care Leave 

Under current law, employees may use up to half of their accrued sick leave to care for a family member, which is known as California’s “Kin Care” law (Labor Code section 233). AB 2017 amends this law by giving the employee the right to designate the reason for which they use their available sick leave “at their sole discretion.”

AB 2992 - Expanded Protections for Crime or Abuse Victims

Existing law prohibits an employer from discharging, discriminating against, or retaliating against victims of domestic violence, sexual assault, or stalking for taking a leave of absence. AB 2992 extends those protections to victims of crime or abuse, and to immediate family members of homicide victims. Under the new law, victims of crime and abuse will be entitled to take time off from work to obtain related relief to help ensure health, safety, or welfare “regardless of whether any person is arrested for, prosecuted for, or convicted of, committing the crime.”

The bill also expands the nature of relief obtained during a leave of absence to include seeking medical attention for injuries caused by crime or abuse, obtaining psychological counseling, attending judicial proceedings, or to participating in safety planning.

Wage & Hour

AB 3075 — Successor Liability for Unpaid Wages

Effective January 1st, 2021, this bill expands the information business entities must include in their statement filed with the California Secretary of State. Specifically, the information will now have to include whether "any officer or any director, or, in the case of a limited liability company, any member or any manager" has an outstanding final judgment that was issued by the Division of Labor Standards Enforcement or a court of law for the violation of any wage order.

This new law is designed to discourage employers from attempting to avoid liability for unpaid wages by creating multiple subsidiaries or dissolving and reincorporating their companies. Upon the creation of a new corporation, each party must attest under penalty of perjury that they have no outstanding final judgments issued to them. Under AB 3075, a “successor employer” will be liable for any wages, damages, and penalties owed by the predecessor employer if the successor employer meets any of the following criteria:

  1. Uses substantially the same facilities or substantially the same workforce to offer substantially the same services as the judgment debtor. This factor does not apply to employers who maintain the same workforce pursuant to Chapter 4.5 (commencing with Section 1060) of Part 3.
  2. Has substantially the same owners or managers that control the labor relations as the judgment debtor.
  3. Employs as a managing agent, any person who directly controlled the wages, hours, or working conditions of the affected workforce of the judgment debtor. The term "managing agent" has the same meaning as in subdivision (b) of Section 3294 of the Civil Code.
  4. Operates a business in the same industry, and the business has an owner, partner, officer, or director who is an immediate family member of any owner, partner, officer, or director of the judgment debtor.

AB 1947 - Extended Time for Filing DLSE Complaints

Under Labor Code section 98.7, employees who allege they have been discharged or discriminated against in violation of any Labor Code provisions enforced by the Labor Commissioner currently have six months to file a complaint with the Division of Labor Standards Enforcement (DLSE). Beginning January 1, 2021, AB 1947 extends that time to one year. 

It also amends Labor Code Section 1102.5 by allowing plaintiffs who successfully bring a whistleblower retaliation claim pursuant to the code to recover reasonable attorney’s fees.

AB 1512 - On-Duty Rest Breaks for Unionized Security Officers 

AB 1512 allows security guards to remain on-call and on the premises during their rest breaks. It also allows the officer to restart their rest period as soon as practicable if it was interrupted by work.

AB 2479 - Rest Breaks in Petroleum Facilities

Section 226.75 of the Labor Code currently exempts employees who hold safety-sensitive positions at petroleum facilities from being relieved of all duties during rest periods. Such employees must be available to respond immediately to emergencies by staying on the premises and carrying a communication device during rest periods. While this exemption was set to expire on January 1, 2021, AB 2479 will extend it to January 1, 2026.

AB 2257 - Classification of Independent Contractors (AB 5 Revision)

For those who need a refresher, AB 5 was signed into law by Governor Newsom in 2019, which adopted the so-called “ABC Test” in order to determine whether a worker could be properly classified as an independent contractor if they met the following criteria: 

  1. The worker must be free from the control and direction of the hirer in connection with the performance of the work.
  2. The worker must perform work outside the “usual course” of the hirer’s business.
  3. The worker must be customarily engaged in an independent established trade, occupation, or business of the same nature as the work performed.

Since its enactment, there have been over 30 proposed bills seeking to modify or repeal it. The only bill to make it through this year has been AB 2257, which, while retaining the “ABC Test,” introduces important modifications to some of the current exceptions to the test, including but not limited to:

  • Expanding the scope of exempt professions, such as recording artists, songwriters, lyricists, licensed landscape architects, real estate appraisers, still photographers, photojournalists, videographers, photo editors, fine artists, freelance translators, content contributors, advisors, narrators, cartographers, producers, copy editors, and illustrators.
  • Making important contractual changes to business-to-business exemptions.
  • Providing clarification on criteria that must be met by a worker who provides services through a referral agency.

COVID-19 Related Laws

SB 1159 - Workers’ Compensation Liability for COVID-19 Illness

SB 1159 establishes a rebuttable presumption (in other words, an assumption that is legally taken to be true unless someone comes forward to contest it and prove otherwise) that an employee contracted COVID-19 at work if the employee tests positive or is diagnosed with coronavirus 14 days after performing labor or services at the employee’s place of employment. Under this law, the illness is considered an occupational injury and is eligible for workers’ compensation benefits if the specified criteria are met. This bill went into effect on September 17, 2020 and will remain in effect until January 1, 2023.

AB 685 - Notice Obligations for COVID-19 Exposures in the Workplace

As we continue to weather the coronavirus pandemic, employers are still wondering what the proper protocol is when learning that one of their employees has been infected with COVID-19. AB 685 delineates an employer’s obligations by prescribing notice requirements in the event of a COVID-19 exposure in the workplace, requiring them to provide notice to employees and subcontractor employers within one business day of a potential COVID-19 exposure. It also requires them to notify their local public health department if an outbreak occurs at the worksite. 

The bill also expands the Division of Occupational Safety and Health of California’s (Cal/OSHA) authority to shut down operations at a worksite if – in the opinion of Cal/OSHA– the worksite or operations expose “workers to the risk of infection” of COVID-19 so as to constitute an imminent hazard.

AB 2537 - Personal Protective Equipment (PPE) for Health Care Employees

AB 2537 requires public and private employers to supply their hospital workers – specifically those who provide direct patient care or services that directly support personal care – with personal protective equipment. It also requires the employer to maintain a three-month supply of PPE (effective April 1, 2021) and provide an inventory report to Cal/OSHA upon request. 

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