Alerts

A to Z of What California Employers Need to Know for 2022

Alerts / December 29, 2021

With the new year will come new laws that affect California employers. The following are the “A to Z” of changes in the laws that may affect your business in 2022.

Adjustment to Time Frame for Reporting Workplace COVID-19 Outbreaks (AB 654)

Under existing law, if a COVID-19 outbreak occurs at a workplace, California law requires reporting to local public health agencies within 48 hours. AB 654 adjusts the timeline to 48 hours or one business day, whichever is later. Employers will also have to provide information on COVID-19 employee-related benefits to employees who were on the same premises as the potentially exposed individual within the infectious period.

Bigger Stick for Cal/OSHA (SB 606)

The California Division of Occupational Safety and Health (Cal/OSHA) has new enforcement powers. SB 606 grants Cal/OSHA authority to issue subpoenas if an employer fails to promptly provide information requested in an investigation and expands the agency’s ability to seek an injunction restraining certain uses or operations of employment. And with that bigger stick comes new targets. Effective Jan. 1, 2022, SB 606 establishes a new category of “egregious violations,” which occur under certain circumstances, including when an employer intentionally made no reasonable effort to eliminate a known violation or an employer has an extensive history of prior violations. Each instance of an employee being exposed to an egregious violation is treated as a separate violation when it comes to issuing fines and penalties. In addition, the new law creates a rebuttable presumption that a violation by an employer with multiple worksites is enterprisewide if the employer has a written policy or procedure that violates the relevant health and safety regulation, or if there is evidence of a pattern or practice of the same violation or violations committed by that employer involving more than one of the employer’s worksites. Enterprisewide citations receive the same penalties as willful or repeated Cal/OSHA citations.

City of West Hollywood Passes Country’s Highest Minimum Wage Along with Paid Leave Ordinance

Effective Jan. 1, the ordinance creates a minimum wage of $17.64 per hour for hotel workers and a phased approach for minimum wage increases for non-hotel large businesses ($15.50 per hour for employers with 50 or more employees) and small businesses ($15.00 for employers with 49 or fewer employees), with adjustments every six months until July 1, 2023, when the citywide minimum wage for all businesses will be the same. Each year thereafter, the citywide minimum wage for all businesses will increase on July 1 by the annual Consumer Price Index adjustment. Beginning Jan. 1, the ordinance also requires employers to provide full-time hotel workers with at least 96 compensated hours and 80 uncompensated hours per year for sick leave, vacation or personal necessity. Part-time hotel workers are to be provided compensated and uncompensated hours in increments proportional to that accrued by someone who works 40 hours in a week. Beginning July 1, 2022, full-time employees of all businesses are to be provided at least 96 compensated hours and 80 uncompensated hours per year for sick leave, vacation or personal necessity. Part-time employees are to be provided compensated and uncompensated hours in increments proportional to that accrued by someone who works 40 hours in a week. The ordinance also requires employers to post official notices for hotels and all businesses in the city.

Don’t Commit Grand Theft! (AB 1003)

In the new year, intentional theft of wages, including tips, in an amount greater than $950.00 from a single employee or $2,350 from two or more employees during any consecutive 12-month period is punishable as grand theft. Independent contractors are included in the definition of “employees” who are protected by the law, and hiring entities that hire independent contractors are “employers” who can be charged with theft of wages.

Employees at Warehouse Distribution Centers, and Production Quotas (AB 701)

Employers who directly or indirectly employ or exercise control over the wages, hours or working conditions of 100 or more employees at a single “warehouse distribution center” or 1,000 or more employees at one or more warehouse distribution centers in California must start providing, upon hire or by Jan. 31, 2022, nonexempt employees with a written description of each quota to which the employee is subject, including the quantified number of tasks to be performed or materials to be produced or handled within the applicable defined time period, and of any potential adverse employment actions the employee could experience as a result of failing to meet the quota. The law further provides that nonexempt employees at warehouse distribution centers cannot be required to meet a quota that interferes with meal or rest breaks or time taken to reach, use and return from bathrooms, or violates occupational health and safety laws. Employers of such employees are also prohibited from taking an adverse employment action against an employee for failing to meet a quota that has not been disclosed or that does not allow a worker to comply with meal or rest periods or occupational health and safety laws. Further, any action taken by an employee to comply with occupational health and safety laws or standards must be considered time on task and productive time for the purposes of any quotas or monitoring system. Among other enforcement tools provided by the new law is that if a current or former employee believes that meeting a quota caused a violation of their right to a meal or a rest period or required them to violate any occupational health and safety law or standard, they have the right to request, and the employer is required to provide, a written description of each quota to which the employee is subject and a copy of the most recent 90 days of the employee’s own personal work speed data. The current or former employee could seek an injunction to obtain compliance and may recover costs and reasonable attorneys fees. There is also a rebuttable presumption of unlawful retaliation if an employer discriminates, retaliates or takes any other adverse action against any employee within 90 days of the employee initiating their first request in a calendar year for information about a quota or personal work speed data or making a complaint related to a quota violating this law.

Fees for Arbitration Providers Must Be Paid Without Delay (SB 762)

Existing law provides that if an employment or consumer arbitration requires the party which drafted the arbitration agreement to pay fees and costs before arbitration can proceed or during the pendency of an arbitration, the drafting party is in breach of the agreement and in default of arbitration and waives its right to compel arbitration if it does not pay the fees within 30 days after the date they are due. Effective Jan. 1, the new law requires arbitration providers to “immediately” provide to all parties to the arbitration, on the same day and in the same manner, invoices for any arbitration fees and costs, in their entirety, that are due before the arbitration can proceed. To avoid delay, the invoices must be issued as due upon receipt unless the arbitration agreement expressly provides a different time for payment. For fees and costs due during the pendency of the arbitration, any extension of time for the due date must be agreed upon by all parties to the arbitration.

Garment Manufacturers’ Employees Must Be Paid Hourly . . . and Manufacturers Must Stitch Together Further Protections (SB 62)

Garment workers now must be paid on an hourly basis rather than a per-unit basis unless a garment worker is covered by a valid collective bargaining agreement. SB 62 also expands the meaning of “garment manufacturing” to include dyeing, altering a garment’s design and affixing a label to a garment, and it expands “garment manufacturers” – the group of entities the law regulates – to include “brand guarantors” who contract with another person to perform garment manufacturing. From that expansion of scope, followed an expansion of liability: brand guarantors are jointly and severally liable with any manufacturer and contractor for unpaid wages, overtime and premium wages, and reimbursement of expenses. The law also requires every employer engaged in the business of garment manufacturing and brand guarantors to keep for four years all contracts, invoices, purchase orders, work orders, style or cut sheets, and any other documentation pursuant to which garment manufacturing work was or is being performed.

Hold the Exemption – The Sunset Date for Exemptions from Dynamex Is Extended for Certain Industries, While Other Industries’ Exemptions Are Expanded (AB 1561)

AB 1561 extends the sunset date on the exemption from AB5 and the “ABC Test,” articulated by the California Supreme Court in Dynamex Operations W. v. Superior Court (2018), 4 Cal.5th 903, for licensed manicurists and subcontractors in the construction industry. AB 1561 also expands the Department of Insurance licensee exemption to include individuals who provide claims adjusting and third-party administration work for insurance and financial service industries. The new law also amends the exemption applicable to the relationship between data aggregators and an “individual providing feedback to the data aggregator” by changing the latter to “a research subject” and eliminating the requirement that “any consideration paid for the feedback provided, if prorated to an hourly basis, is an amount equivalent to or greater than the minimum wage.” Finally, as to the existing exemption for manufactured housing dealers, AB 1561 provides that the statutorily imposed duties of a manufactured housing dealer are not factors to be considered under the worker classification test.

Investigation Does Not Run the Clock on FEHA Claims (SB 807)

SB 807 stops the clock on deadlines for employees to sue while the Department of Fair Employment and Housing (DFEH) investigates complaints of discrimination. Under the new law, individuals’ time to file a civil action is tolled until either the DFEH files a civil suit or one year after the DFEH notifies the complainant that it has closed its investigation and has chosen not to pursue a civil action against the employer. While tolling applies retroactively, the bill specifies that it does not revive claims that have already lapsed. SB 807 also tolls the deadline for the DFEH to file a civil action while a mandatory or voluntary resolution is pending.

For complaints of employment discrimination that are treated as representative complaints, SB 807 clarifies that the DFEH’s time to finish its investigation and issue a right-to-sue notice is limited to two years.

In addition, any civil enforcement action that includes class or group allegations may now be brought in any county of the state.

The law also extends Fair Employment and Housing Act (FEHA) records retention rules to require employers, labor organizations and employment agencies to retain personnel records for four rather than two years. Upon receipt of a verified complaint filed under SB 807, records must be preserved until after the later of the complaint’s resolution or the statute of limitation’s lapse.

Janitorial Employees Represented by Labor Organizations Face Restrictions Under PAGA (SB 646)

Pursuant to SB 646, a janitorial employee who is represented by a labor organization that has represented janitors before Jan. 1, 2021, and is employed by a janitorial contractor who registered as a property service employer in calendar year 2020 cannot sue under the California Private Attorneys General Act of 2004 (PAGA) with respect to work performed under a valid collective bargaining agreement in effect any time before July 1, 2028, that expressly provides, among other things, for the wages, hours of work and working conditions of employees; provides premium wage rates for all overtime hours worked; and provides grievance and binding arbitration procedures.

Know Your Limits Regarding Confidentiality Provisions in Settlement Agreements and Nondisparagement Agreements with Employees (SB 331)

Expanding limitations that arose from the “Me too” movement in 2019, SB 331 prohibits settlement agreements that prevent disclosure of factual information relating to any form of unlawful assault or workplace harassment, discrimination or retaliation – whether or not based on sex. Employers can still prevent disclosure of an amount of money paid to settle a claim, and claimants can still prevent disclosure of their identity (unless a government agency or a public official is a party to the settlement agreement).

SB 331 also prohibits employers from requiring an employee to sign a nondisparagement agreement or other document that denies the employee the right to disclose information about unlawful acts in the workplace. Employers who include a nondisparagement or other contractual provision that restricts an employee’s ability to disclose information related to conditions in the workplace must provide a disclaimer advising the employee that nothing in the agreement prevents the employee from discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that the employee has reason to believe is unlawful.

An employer offering an employee or a former employee a separation agreement must also notify them that they have the right to consult with an attorney regarding the agreement and must provide not less than five business days to do so.

Liens on Real Property for Any Final Citation, Findings or Decision (SB572)

In the past, California’s labor commissioner could obtain a judgment lien or a lien on real property for amounts due under final orders in favor of an employee named in the order. SB 572 allows the labor commissioner to create, as an alternative to judgment liens, liens on real property for any amount due to the labor commissioner under any final citation, finding or decision.

Minimum Wage for Persons with Disabilities (SB 639)

Existing law authorizes California’s Industrial Welfare Commission to issue special licenses permitting the employment of individuals who are mentally or physically disabled for a period of no more than one year at a wage less than the prevailing minimum wage rate. Beginning on Jan. 1, the new law prohibits new special licenses from being issued. Although existing licenses may be renewed, come Jan. 1, 2025, SB 639 prohibits an employee with a disability from being paid less than the applicable minimum wage.

New COVID-19 Rules Are Always on the Horizon

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Option to Email (SB 657)

Whenever an employer is required to physically post information, SB 657 allows employers to also provide the covered information to employees via email, with the required document(s) attached. However, providing information via email does not replace the physical posting requirement.

Parents-in-Law Are Family Under California Employment Law (AB 1033)

Whether you like them or not, under the California Family Rights Act, in-laws are family. SB 1033 expands the definition of “parents” to include in-laws. As a result, it is now unlawful for an employer to refuse a qualifying employee’s request to take up to 12 workweeks of unpaid leave during any 12-month period to care for a parent-in-law with a serious medical condition.

Questions?

Call us with any! We’ll find the answers you need.

Regular Rate of Compensation for Meal and Rest Period Premiums Does Not Mean Base Rate (Ferra)

If you have not confirmed your company’s payroll formulas comply with the July 2021 California Supreme Court decision in Ferra v. Loews Hollywood Hotel, LLC (and made any necessary updates), make it a part of your New Year’s resolutions! In Ferra, the court held that employers must pay meal and rest break violation premiums at the same “regular rate of pay” they use for paying overtime wages. That means those premium payments are not paid at an employee’s base hourly rate. Instead, those premium payments must include in the pay rate calculation all wages and nondiscretionary earnings that are used to calculate the regular rate of pay for overtime purposes. Ferra applies retroactively.

Supplemental Sick Leave

While the state’s COVID-19 supplemental sick leave law expired on Sept. 30, 2021, remember that some counties and cities, including the city of Los Angeles, the city of Long Beach and the city of Oakland, enacted supplemental paid sick ordinances that have not yet expired.

Time Will Tell About Arbitration Agreements as Conditions of Employment (AB 51)

In Chamber of Commerce of the USA v. Bonta, a divided panel of Ninth Circuit justices upheld most of AB 51, which prohibits employers from imposing arbitration agreements as conditions of employment and establishes civil and criminal penalties for doing so. In October 2019, a district court judge enjoined enforcement of AB 51 on the grounds that it was preempted by the Federal Arbitration Act (FAA). The Ninth Circuit disagreed, concluding that the FAA was inapplicable to AB 51 because AB 51 governs pre-agreement behavior relevant to contract formation as distinguished from a defense to the enforcement of arbitration agreements, which is prohibited under the FAA. Yet, the majority also concluded that the civil and criminal penalties associated with AB 51 effectively punish employers for entering into arbitration agreements and were therefore preempted. Consequently, under the majority’s decision, AB 51 is preempted only to the extent it applies to executed arbitration agreements covered by the FAA. If, on the other hand, the employee did not sign the arbitration agreement, then the FAA would not apply to preempt the civil and criminal penalties. The lead plaintiff/appellee in the case against AB 51 is seeking further, en banc review – meaning by all justices of the Ninth Circuit rather than a panel of just three. If it is not overturned, the Ninth Circuit panel’s decision spells an uncertain future for mandatory arbitration agreements.

Updates to Minimum Wage Laws

For 2022, the California minimum wage is $14/hr. for employers with 25 or less employees and $15/hr. for employers with 26 or more employees. Remember that that this increase also affects minimum salary requirements for salaried exempt employees, which must be at least two times minimum wage for full time employment (e.g., the minimum salary for an exempt employee working for an employer with 26 or more employees is $62,400 annually).

Also, although many minimum wage laws look alike, there are subtleties to each local jurisdiction’s law and therefore differences in how to comply. Make sure to keep up with the latest minimum wage updates for your city and county.

Verification of Compliance?

Need verification of compliance with these and California’s many other employment laws? We can do an audit for you!

When do these laws take effect?

While most take effect on Jan. 1, 2022, some will not do so until later, as noted.

Xtra hours?

Be sure to review your overtime calculations to ensure you are paying employees correctly.

You should call us with any questions!

We’d be happy to answer any additional questions you may have about these new laws.

Zealous representation is what you can expect from BakerHostetler.

For further information about the information contained in this Alert, please contact the Los Angeles or San Francisco attorneys of BakerHostetler’s Labor and Employment Group.

Baker & Hostetler LLP publications are intended to inform our clients and other friends of the firm about current legal developments of general interest. They should not be construed as legal advice, and readers should not act upon the information contained in these publications without professional counsel. The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask us to send you written information about our qualifications and experience.

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