Everything you need to know
about the new employment laws of 2020, which focus on independent contractors, discrimination and harassment,
and family accommodation.
This year, California enacted several bills that affect the employer-employee relationship, including some that Governor Jerry Brown had vetoed in years past and some that the California Chamber of Commerce had labelled as “job killers.” Even small employers should examine their employment relationships, update employee handbooks, verify that they are providing all required notices, and implement new practices to comply with these changes.
Independent Contractor Relationships Limited
The “ABC Test” must now be used to determine whether a worker is an employee or an independent contractor. Under this test, a worker is presumed to be an employee rather than an independent contractor. For most purposes, a worker will be an employee unless the hiring entity can establish that all the following conditions are satisfied:
- The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for
- the performance of the work and in fact.
- The person performs work that is outside the usual course of the hiring entity’s business.
- The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
The new law specifically exempts licensed real estate salespersons who have entered a written independent contractor agreement with the real estate broker under whom they are licensed. Although courts have not determined whether the exemption is limited to activities requiring a real estate license, the safest course is to classify any worker who performs both real estate sales and other types of work as an employee.
Businesses that do not appropriately classify workers face a barrage of enforcement mechanisms and potentially significant consequences. In addition to claims from workers, brought as individuals or on behalf of others under the California Private Attorneys General Act (PAGA), employers may have to defend claims by the State Attorney General, city attorneys, and district attorneys, any of whom may now seek injunctive relief on behalf of workers.
Consumer Privacy Protections
The California Consumer Privacy Act (CCPA) is a sweeping law applicable to any business that collects personal information from consumers in the course of its business operations. Although regulations that will provide guidance on compliance have not yet been adopted, the law, which creates new consumer rights relating to the access to, deletion of, and sharing of personal information that is collected by businesses, goes into effect on January 1.
Personal information collected from a job applicant, employee, owner, director, officer, medical staff member, or contractor will be governed by the CCPA. Because many employers did not recognize that the CCPA would apply to information regarding applicants and employees, many CCPA provisions applicable to employers will not be implemented for one year and will not be effective until January 1, 2021.
Beginning in January 2020, however, employers are required to provide employees with notices about the business’s practices for collecting personal information and the employees’ eligibility to pursue claims for data breaches.
Changes in Discrimination and Harassment Laws
Protection for Natural Hairstyles
The CROWN Act (Create a Respectful and Open Workplace for Natural Hair), amends the Fair Employment and Housing Act to include traits historically associated with race, such as hair texture and protective hairstyles. “Protective hairstyles” include “braids, locks, and twists.” Employers should review any workplace dress code and grooming policies and eliminate any provisions that prevent employees from wearing natural hair, afros, braids, twists, or locks.
Extended Time to Bring Claims
Employees will now have 3 years to file employment-based claims with the Department of Fair Employment and Housing (DFEH). The prior deadline was one year from the date of the wrong. An employee must file a DFEH claim and obtain a right to sue letter before pursuing a lawsuit for violation of the Fair Employment and Housing Act. Once the DFEH issues a right to sue letter, the employee will have an additional year to file the lawsuit. As a result of this change, employers are advised to retain employee records, including electronic records reflecting an employee’s job performance, for at least 5 years after the end of the employment relationship.
Extended Time to Conduct Harassment Prevention Training
Employers were granted a one-year extension of time to conduct harassment prevention training. All employers with 5 or more employees must now provide one hour of training to all employees and two hours of training to any supervisor. The training must be provided at least every 2 years. Employers who completed the training in 2019 need not repeat it until 2021.
Arbitration Prohibited as Term of Employment
Employers may no longer require job applicants or employees to arbitrate claims for violation of the California Fair Employment and Housing Act or Labor Code. Employers may offer arbitration either at the outset of employment or as a condition of employment or continued employment, but may not refuse to hire, terminate employment, threat, retaliate against, or discriminate against any applicant or employee because she or he declined to agree to arbitration.
Although the new law specifically states that it is “not intended to invalidate a written arbitration agreement that is otherwise enforceable under the Federal Arbitration Act,” there will be years of litigation to determine the full impact of this law.
Employers who prefer arbitration should assure that (1) arbitration agreements specify that they are governed by the Federal Arbitration Act; (2) arbitration agreements specify that they are not a condition of employment; and (3) any applicant or employee who declines to agree to arbitration is treated no differently than any other employee.
Employer Must Pay Arbitrator’s Fees Promptly
When an arbitration agreement is enforceable, the employer must pay the arbitrator’s fees and most costs of arbitration. The legislature perceived abuses by employers who have the ability to force employees into arbitration, but could then delay the arbitration by failing to pay the fees. In order to control this perceived abuse, a new law provides that employers who do not pay the fees within 30 days after they are due will be in breach of the arbitration agreement and waive the right to compel arbitration, giving the employee the ability to purse all claims in court.
Enhanced Enforcement for Wage Claims
California employers who fail to pay wages have long faced a variety of statutory penalties. The penalties may be assessed against the employer and those who control payment of wages. Two new penalties will be available under the new laws. Wage claims have long been difficult to defend, and dangerous because they often apply to a large group of employees. The new penalties increase the employees’ ability to recover amounts significantly greater than the unpaid wages.
First, employees who are not paid the agreed upon wage may recover penalties in addition to the unpaid wages. The penalties are $100.00 per employee per pay period for the first violation. If the employer has subsequent violations, the penalties increase to $250.00 per employee per pay period, even if the failure to pay is not intentional. When the employer has not paid minimum wages, in addition to penalties, the employee can recover the wages, and equal amount as liquidated damages, interest, penalties, and attorneys’ fees.
In another enforcement mechanism, employees who are paid less based on sex, may now pursue penalties that were previously recoverable only by the State. The penalties are $100.00 per employee per pay period for the first violation. If the employer has subsequent violations, or the violation is intentional, the penalties increase to $250.00 per employee per failure to pay, plus 25 percent of the unpaid amount.
Expanded Requirements for Lactation Accommodation
Nursing mothers must have a private location, other than a bathroom, to express milk. The employee’s normal workstation can be used, if it fulfills all the new requirements. Under the new statute, the space must:
- Be near the employee’s work area, shielded from view, and free from intrusion while the employee is expressing milk;
- Be safe, clean, and free of hazardous materials;
- Contain a surface to place a breast pump and personal items;
- Contain a place to sit;
- Have access to electricity, extension cords, or charging stations needed to operate an electric or battery-powered breast pump; and
- Have access to a sink with running water and a refrigerator or other cooling device suitable for storing milk near the employee’s workspace.
- A multipurpose room may be used for lactation, but lactation must take precedence over the other uses, when it is needed for lactation and related activities.
In a multi-tenant building or multi-employer work site, businesses may designate a shared space for lactation if the employer cannot provide a lactation location within its own premises. Employers or general contractors coordinating a multiemployer worksite are required to provide lactation accommodations within two business days after any subcontractor or employer sharing the space provides a written request on behalf of an employee.
Paid Family Leave Benefits
As of July 1, 2020, California’s Paid Family Leave benefits will increase from 6 to 8 weeks. These payments are made by the state, so will not directly affect the employer’s obligations. Employers should, however, be prepared for employees to take more time off as the result of the additional benefits. Employers should also review any policies or notices regarding Paid Family Leave to be sure that they accurately describe the leave.
Many employers who settle employment claims routinely include provisions that the employee may not apply to or work for the employer or a related entity. These no re-hire provisions will be unlawful unless the employee was found to have engaged in sexual harassment or sexual assault. In addition, an employer is not required to continue to employ or to rehire a person if there is a legitimate nondiscriminatory or nonretaliatory reason for terminating or refusing to rehire the person. In the future, employers should not include no re-hire provisions. More importantly, any time a person who has made a claim applies for work, and is rejected, the employer should have documented, objective reasons for declining to re-hire the employee.
Maggie Grover has worked with California employers, helping them to understand the complex state and federal laws governing the employment relationship, for more than 30 years. She also conducts neutral investigations and mediates employment-related claims. She can be reached at email@example.com or 415.596.9433.