The New Year brings with it some noteworthy new laws for 2020. The following are reminders on several new laws that all California employers should be aware of.
AB 5: Employees and Independent Contractors.
Effective January 1, 2020, Assembly Bill 5 codified the Dynamex decision regarding whether an individual is an employee or an independent contractor. Under the so-called “ABC Test,” workers in California are considered employees, rather than independent contractors, unless a business can show that the worker is (a) free from its supervision, (b) performs work that is outside the usual course or place of business, and (c) works in an independently established trade, occupation, or business of the same nature.
The new law significantly limits employers’ use of independent contractors. However, the law sets out specific exemptions for certain business relationships in certain industries, for a number of specific occupations, and for some situations where a contract for “professional services” exists. Each exemption is specifically described and is only applicable if various criteria are satisfied. Accordingly, just because a relationship appears to fit one of the exemptions, the relationship may not meet all of the criteria required by AB 5.
Most recently, a federal judge in California issued a temporary restraining order on December 31, 2019, against the application of AB 5 to independent truck drivers. This is an ongoing lawsuit; check back here for further updates as the case develops. In the meantime, all employers should consult with experienced counsel before treating workers as independent contractors. See our full article on AB 5 here.
AB 749: Settlement/Severance Agreements - Restraints in Trade.
Effective January 1, 2020, settlement agreements or severance agreements that contain a provision preventing or restricting an employee from obtaining future employment with the same employer or any parent companies, subsidiaries, divisions, affiliates or contractors, will be void. Appellate court decisions and EEOC decisions were already trending in that direction, but the California Legislature has now prohibited such provisions in settlement or severance agreements as a matter of law.
SB 688: Failure to Pay Contractual Wages.
Effective January 1, 2020, the Labor Commissioner is empowered to cite an employer who pays a wage that is less than the amount set by contract, even if that amount is higher than the legal minimum wage, and to recover the underpaid amount owed to the employee.
SB 83: Expansion of Paid Family Leave Benefits.
Paid Family Leave (PFL) benefits are extended from six weeks to eight weeks for claims that start on or after July 1, 2020. PFL benefits are part of a state disability insurance program that provides wage replacement benefits to employees who take time off to care for a seriously ill child, spouse, parent, grandparent, grandchild, sibling, domestic partner, or for baby bonding leave. Additionally, the new law creates a task force to develop a PFL program that extends benefits to six (6) months by 2022.
SB 188: CROWN Act – Racial Discrimination Based on Certain Hairstyles.
Effective January 1, 2020, the Fair Employment and Housing Act’s definition of race is expanded to include traits historically associated with race, such as hair texture and protective hairstyles. The new law defines “protective hairstyles” as “braids, locks, and twits.” The law prohibits workplace dress code and grooming policies that prohibit natural hair, including afros, braids, twists and locks. It applies to public schools, private employers with five or more employees, and public employers, but excludes religious and nonprofit organizations.
AB 9: Extended Time for Employees to File Claims with the Department of Fair Employment and Housing.
The time period that employees have to file claims for statutory harassment, discrimination and retaliation with the Department of Fair Employment and Housing (DFEH) is increased from 1 year to 3 years after the date of an alleged unlawful act. Before employees can file civil lawsuits for such claims, they must first file a claim with the DFEH and receive a “right to sue” letter. Employees then have up to 1 year from the date of the “right to sue” letter to file a lawsuit.
As a result of this new law, employers can now be forced to defend against civil claims for harassment, discrimination and retaliation that are filed 4 (or sometimes more) years after the alleged unlawful activity took place. Accordingly, employers need to be even more diligent about properly conducting and documenting investigations into complaints of harassment, discrimination and retaliation, and need to ensure that they retain records of such investigations for at least 4 years. See our full article on AB 9 here.
Wage Order 14 Overtime Thresholds Decrease.
In 2016, AB 1066 set in motion the gradual lowering of the daily and weekly hours of work thresholds for paying overtime to agricultural employees classified under Wage Order 14. Effective January 1, 2020, the new overtime threshold for employers with 26 or more employees will be 9 hours per day or 50 hours per week. For employers with 25 or fewer employees, the overtime threshold is still 10 hours per day. Overtime is still required for the first 8 hours, and double time for hours worked over 8, on the seventh day of work in a workweek.
Minimum Wage Increase.
Effective January 1, 2020, California’s minimum wage increases to $13.00 per hour for employers with 26 or more employees and $12.00 per hour for employers with 25 or fewer employees.
COUNSEL TO MANAGEMENT:
There are many changes in the legal landscape for employers in 2020. For more information on the new laws mentioned above, or any other employment law questions you may have, contact the experts at the Saqui Law Group, a division of Dowling Aaron Incorporated.