State flag of California

As 2019 winds down, employers operating in California will not want to forget that January 1, 2020, rings in several new California laws affecting the workplace. Here’s a New Year’s Eve countdown of 10 important new California employment laws taking effect in 2020 and actions employers can take before the ball falls in Times Square.

10. AB 1223—Organ Donor Leave: Assembly Bill (AB) 1223 amends California Labor Code Section 1510 to require that employers grant an employee an additional leave of absence, not exceeding 30 business days in a one-year period, for the purpose of organ donation. Currently, employers are required to provide 30 days of paid leave for organ donation. This amendment adds 30 days of unpaid time off for a total of 60 days of protected leave for organ donation. Employers are not required to maintain the employee’s health insurance coverage during the additional 30-day leave period.

What to Do Now: Employers may want to review and update their organ donor policies and leave of absence request forms.

9. AB 673—Penalties for Unpaid Wages: AB 673 amends Labor Code Section 210 to allow employees to recover penalties for equal pay violations (Labor Code Section 1197.5) and failure to timely pay wages (Labor Code Sections 201.3, 204, 204b, 204.1, 204.2, 204.11, 205, and 205.5) or to recover civil penalties under the Private Attorneys General Act (PAGA)—but not both for the same violation.

What to Do Now: Consider conducting spot audits of payroll practices to ensure that employees are receiving their pay in a timely manner. Also consider conducting an equal pay audit to identify whether certain job categories are vulnerable to equal pay claims.

8. AB 25—California Consumer Privacy Act of 2018 (CCPA): AB 25 amends Civil Code provisions of the CCPA to exempt, until January 1, 2021, employers from all provisions of the CCPA, except for the provisions regarding private civil actions (Civil Code Section 1798.150) and the obligation to inform the consumer as to the categories of personal information to be collected from job applicants and employees (Civil Code Section 1798.100(b)).

What to Do Now: Consider having privacy notices updated to comply with the CCPA by January 1, 2020. Most importantly, companies covered by the CCPA can implement CCPA-compliant programs to protect personal data, including employment-related data, by January 1, 2020, because the right to file civil actions for data breach is effective on that date.

7. AB 749—No-Rehire Provisions: AB 749 adds Section 1002.5 to the Code of Civil Procedure. It prohibits provisions in settlement agreements that prohibit, prevent, or otherwise restrict a settling party from working for the employer or any parent company, subsidiary, division, affiliate, or contractor of the employer against which the settling party filed a lawsuit or a claim with an administrative agency, in an alternative dispute resolution forum, or through the employer’s internal complaint process. The new law does not apply to separation agreements that are negotiated prior to filing any lawsuit, claim, or internal complaint.

What to Do Now: When settling employment discrimination, retaliation, and harassment claims, employers can carefully review the settlement agreement to ensure that it does not run afoul of this provision and, where applicable, consider including exclusionary or disclaimer language in the agreement to minimize the risk that the settlement agreement will be invalidated.

6. AB 5—Independent Contractors: AB 5 amends Labor Code Section 3351 and adds Section 2750.3 to codify the ABC test for determining independent contractor status. Workers are presumed to be employees under the new law. In order to maintain independent contractor status the hiring entity must prove:

  1. the worker 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”;
  2. the worker “performs work that is outside the usual course of the hiring entity’s business”; and
  3. 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 law contains several exemptions for certain professions, industries, and business relationships. It is important to note that even where the new ABC test is not applicable, the old multi-factor Borello test for independent contractor status must be satisfied to avoid liability for independent contractor misclassification. The Supreme Court of California is currently reviewing whether the ABC test should be applied retroactively to contractor relationships that existed prior to April 30, 2018. On December 29, 2019, two companies and two individual drivers filed a lawsuit in the U.S. District Court in Los Angeles challenging AB 5 on the grounds that the statute is unconstitutional.

What to Do Now: Companies using independent contractors (especially where the contractor is a single individual) may want to audit their written independent contractor agreements to ensure that the independent contractor relationship is clearly defined. Companies can also examine the realities of the relationship; i.e., the level of control that is or can be exerted over the contractors, the services provided by the contractors, and whether the contractors have taken the appropriate steps to establish an independent business.

5. AB 51—Arbitration Agreements: AB 51 adds Section 432.6 to the Labor Code, thereby prohibiting employers from requiring that new and existing employees agree to arbitrate any claim under the California Fair Employment and Housing Act (FEHA) or the Labor Code as a condition of employment. The new law does not affect arbitration agreements that were executed prior to January 1, 2020. The law prohibits employers from threatening, retaliating or discriminating against, or discharging an individual for refusing to consent to the waiver of “any right, forum, or procedure” for a violation of the FEHA or the Labor Code.

AB 51 expressly exempts written arbitration agreements that are enforceable under the Federal Arbitration Act (FAA) regulating interstate commerce, settlement agreements, and negotiated severance agreements. Several business groups filed a lawsuit challenging the validity of AB 51 on the grounds that the state law is preempted by the FAA. On December 30, 2019, the U.S. District Court for the Eastern District of California granted a temporary restraining order prohibiting all enforcement of AB 51. The hearing on a motion for a preliminary injunction is scheduled for January 10, 2020.

What to Do Now: Companies that easily meet the interstate commerce test under the FAA can implement an arbitration program or maintain their current arbitration program. Companies may want to have their arbitration agreements reviewed and updated if necessary. Companies that may not meet the test may want to evaluate whether the risks of costly challenges to an arbitration program outweigh the benefits of arbitration, or wait until the legal challenges to AB 51 have run their course.

4. SB 188—Create a Respectful and Open Workplace for Natural Hair Act (Crown Act): Senate Bill (SB) 188 amends Section 12926 of the Government Code, relating to discrimination, by defining “race” to include “traits historically associated with race, including, but not limited to, hair texture and protective hairstyles.” The new law defines protective hairstyles to include braids, dreadlocks, twists, and other unspecified hairstyles associated with race.

What to Do Now: Consider reviewing and updating antidiscrimination and grooming/appearance policies in employee handbooks to ensure that they appropriately address hair textures and hairstyles associated with race. Also consider training supervisors to ensure that they do not impose improper restrictions on employee hairstyles.

3. SB 778—Harassment Training and SB 530—Construction/Temps Training: New legislation in 2018 mandated that all employers with at least five employees provide at least two hours of harassment training to all supervisors and at least one hour of harassment training to all nonsupervisory employees. The original law set a January 1, 2020, deadline for completion of the training. SB 778, which amends Section 12950.1 of the Government Code, extends the deadline to complete the training to January 1, 2021. Employers that completed the required training in 2019 do not have to retrain employees in 2020.

SB 530 requires that employers with seasonal/temporary workforces (those hired to work six months or fewer) provide harassment training to their workforce by January 1, 2021. SB 530 also imposes special harassment prevention training requirements on employers in the construction industry that employ workers pursuant to a multiemployer collective bargaining agreement.

What to Do Now: Employers may want to move quickly to develop and implement a training program for all employees to be completed before January 1, 2021. Note that section 12950.1 of the Government Code contains specific requirements for the form and content of the training, and the qualifications of the trainer. Finally, employers can implement a tickler system to ensure that supervisors and employees receive training every two years going forward.

2. AB 9—Statute of Limitations: AB 9 amends Sections 12960 and 12965 of the Government Code to increase the statute of limitations for filing discrimination, harassment, and retaliation claims under FEHA from one year to three years. The new law maintains the requirement that aggrieved employees file a complaint with the DFEH before they may file a claim in court but increases the time limit for filing a complaint to three years from the unlawful practice. The substantial increase in the length of time that employees can wait before filing a complaint may make it very difficult for employers to mount an effective defense because witnesses may no longer be available or have a clear memory of the events that form the basis for the complaint.

What to Do Now: Employers may want to review their record retention guidelines to ensure that relevant employment documents are kept for at least three years. In addition, the creation of contemporaneous documentation supporting adverse employment decisions can be critical to an employer’s ability to defend claims. Consider training supervisors and human resources professionals on best practices for documenting employment actions and decisions.

1. SB 142—Lactation Accommodation: SB 142 amends sections 1030, 1031, 1033, and 1034 of the Labor Code to require employers to provide a safe and clean lactation room and access to a sink and refrigerator in close proximity to the employee’s workspace. The new law applies to all employers; however, employers with fewer than 50 employees may seek an exemption from the requirements. Employers may not discharge, discriminate, or retaliate against an employee for exercising her rights under the law. The law deems denial of reasonable break time or adequate space to express milk a failure to provide a rest period in accordance with state law, which triggers a rest break penalty of an additional one hour of pay for each day there is a violation. Finally, employers must develop and distribute a policy about lactation accommodation that alerts employees to these rights.

What to Do Now: SB 142 imposes significant and costly obligations on employers of all sizes and in every industry, regardless of the male/female ratio of the workforce. Employers that currently have employees who are pregnant or lactating can take immediate action to comply with the new law.

Browse More Insights

Sign up to receive emails about new developments and upcoming programs.

Sign Up Now