Los Angeles, Calif. (February 1, 2023) - The California legislature had another busy year passing employment regulations ranging from protecting employee leaves of absence to extending statutes of limitations. Judicial decisions also played a major role in shaping the employment world moving into 2023. This alert provides summaries of the most significant employment-related laws passed or altered in 2022 - all of which are effective as of January 1, 2023, unless otherwise indicated - and caselaw updates that will impact employers and employees in the Golden State going forward.
Minimum Wage Increase
On January 1, 2023, California's minimum wage increased to $15.50 per hour for all businesses, regardless of the number of workers. This increase stems from Senate Bill 3, passed in 2016, which sought to gradually increase the minimum wage. Still, some cities and counties may enact or maintain ordinances offering a higher minimum wage than the state's minimum requirement. Importantly, the minimum wage is an obligation of employers that cannot be waived by any agreement, including collective bargaining agreements.
Pay Transparency and Reporting
On September 27, 2022, Governor Newsom signed Senate Bill 1162, which provides an update to the previous pay data reporting bill, Senate Bill 973. Similar to the efforts in several other states, this bill represents a major attempt to encourage pay transparency and fight workplace discrimination. This bill imposes two general obligations upon California employers.
First, it requires all private employers with at least 15 employees, that are either based or hiring in California, to include a job position's pay scale or salary range in any corresponding job posting or advertisement. This includes job postings or advertisements through third parties, like general job posting websites. "Pay scale" is defined by the statute as the salary or hourly wage range that the employer reasonably expects to pay for the position.
Second, Senate Bill 1162 requires all California-based private employers of at least 100 employees to publish annual pay data reports. These pay data reports must contain three component sub-reporting requirements. For more information on these sub-reporting requirements, reach out to a Lewis Brisbois employment law attorney. Employers operating multiple establishments must submit a separate pay data report for each of its establishments as the bill expressly prohibits such employers from submitting consolidated reporting. An employer that initially fails to timely submit a compliant pay data report to the California Civil Rights Department is subject to a civil penalty of up to $100 per employee. Any subsequent failure may expose an employer to a civil penalty of up to $200 per employee. The due date for the pay data report is also altered under this bill, making the new due date the second Wednesday of May of each year.
IMPORTANT CASE LAW DECISIONS
On June 30, 2022, the U.S. Supreme Court declined to review the Ninth Circuit's holding inCalifornia Trucking Association, Inc. v. Bonta,regarding whether California's worker classification law runs afoul of the Federal Aviation Administration Authorization Act of 1994 (FAAAA) as applied to truck drivers.
For decades, classification of California workers as independent contractors or employees had been governed by the multi-factor test described inS.G. Borello & Sons, Inc. v. Department of Industrial Relations, 769 P.2d 399 (Cal. 1989). Prior to 2018, motor carriers treated owner-operators as independent contractors, a move beneficial to all. In 2018, the California Supreme Court held that a new test for independent contractor status, the so-called "ABC" test, would apply to claims under state wage orders.SeeDynamex Operations W., Inc. v. Superior Ct., 416 P.3d 1 (Cal. 2018). Thereafter, California's legislature passed AB5, which went into effect in 2020, and codified the ABC test. In effect, under California's AB5, any motor carrier engaging a driver must create an employer-employee relationship and bear all additional costs and burdens of that relationship.
Since its passage, the FAAAA has expressly preempted state laws "related to a price, route, or service, of any motor carrier." 49 U.S.C. § 14501(c)(1). The Ninth Circuit previously upheld California's worker classification statute as it applies to motor carriers. In contrast, the First Circuit and the Massachusetts Supreme Judicial Court have both held an identical Massachusetts statute was preempted by the FAAAA. Despite the circuit split, the U.S. Supreme Court declined to review. Unfortunately, the Court's decision to deny certiorari fails to harmonize conflicting circuit decisions and will undoubtedly increase transportation costs in an industry already plagued by supply chain issues.
PAGA Arbitrability Addressed inViking River Cruises Inc. v. Moriana
The United States Supreme Court held inViking River Cruises, Inc. v. Morianathat individual claims under California's Private Attorneys General Act (PAGA) may be separated from the PAGA action and forced into arbitration, which then causes the individual plaintiff to lose standing to act as a group-wide PAGA representative.
Prior to theViking Riverdecision, the California Supreme Court inIskanian v. CLS Transp. Los Angeles, LLC(2014) 59 Cal.4th 348, characterized PAGA claims as representative claims in which every employee has standing, as an agent or proxy of the state, to assert in a judicial or arbitral forum. The holding inViking Riveropens a path for employers around the holding inIskanian v. CLS Transp. Los Angeles, LLC, which precluded the division of PAGA actions into individual and representative claims through an agreement to arbitrate.
The Court delineated a distinction between "representative" / "non-individual" and "individual" PAGA claims. It explained that although every PAGA action is a representative action asserted by an employee acting as a proxy of the state, the cause of action is "representative" / "non-individual" in nature when it is predicated on violations sustained by other employees, but not the plaintiff. It is individual in nature when the PAGA claim arises from violations sustained directly by the plaintiff.
For now, the U.S. Supreme Court has provided a path for employers to compel individual PAGA claims to arbitration, thereby destroying standing for the employee to continue to serve as an "aggrieved employee" representing the state on behalf of other employees in a "representative" PAGA action. In a concurring opinion, Justice Sotomayor offered a way out for employees and the plaintiffs' bar, stating that the California legislature and California appellate courts would have the final say in the further development and interpretation of PAGA.
The PAGA landscape is ever changing and California employers await the next decision. Notably, the California Supreme Court has granted review inAdolph v. Uber Technologieswhere the Court is set to address the issue of standing, a state law concern, raised inViking River.
California Superior Court Judge Maureen Duffy-Lewis struck down California's "Women on Boards" law as a violation of the California Constitution's equal protection clause. The law, passed in 2018, required that California-based, publicly-held corporations seat women on their boards of directors. The court reasoned that gender-based quotas are only legal when the state can show a "narrowly-tailored, compelling government interest," and the state had failed to meet its legal burden to survive judicial scrutiny.
While this means that the law will no longerrequireCalifornia-based, publicly-held corporations to diversify their boards, companies may continue to voluntarily diversify their boards if their company shares the stated goals of the "Women on Boards" law. Additionally, the law only makes unlawful state-mandated quotas. Such companies may maintain internal policies to meet self-determined diversity targets. Each individual company's approach to the composition of their board of directors should be informed by the company's mission statement, the sentiments of their shareholders, and the requirements of their internal governance documents, such as company bylaws.
Retaliation UnderLawson v. PPG Architectural Finishes, Inc.
On January 27, 2022, the California Supreme Court unanimously decided theLawsonmatter, which clarified the burden for employers defending whistleblower retaliation claims brought by employees under Labor Code section 1102.5. TheLawsoncourt held that Labor Code section 1102.6 is the governing standard for 1102.5 retaliation claims. Per the holding, the more employee-friendly standard must be applied when: (1) the employee demonstrates "by a preponderance of the evidence" that the employee's protected whistleblowing was a "contributing factor" to an adverse employment action; and (2) the burden of proof shifts to the employer to demonstrate "by clear and convincing evidence" that it would have taken the same action "for legitimate, independent reasons" even if the employee had not engaged in the protected action.
Booting Up Computers is Compensable Time UnderCadena, et al. v. Customer Connexx LLC, et al.
On October 24, 2022, the Ninth Circuit Court of Appeals issued an opinion in a Nevada class and collective action titledCariene Cadena, et al. v. Customer Connexx LLC, et al.finding that call center employees' time spent booting up their computers is compensable under the Portal-to-Portal Act. The Portal-to-Portal Act provides that employers are not required to pay for the time employees spend on certain activities they perform prior to or after their principal activities for which they are employed (e.g., traveling to or from work). In 1956, the Supreme Court held that activities performed before or after the regular work shift are compensable if those activities are an "integral" and "indispensable" part an employee's principal activities (i.e., the activities an employee is employed to perform).
Connexx operates a call center in Las Vegas, Nevada that provides customer service and scheduling for an appliance recycling business. Connexx's employees clock in and out using a computer-based timekeeping program, which employees access after turning on or awakening their computers, logging in using a user name and password, and opening the timekeeping system. According to Connexx, it could take anywhere between one minute and twenty minutes for the computer to boot up, depending on the age of the computer and whether the computer had been off or in sleep mode. Some employees filed suit alleging that they were not paid for the time spent booting up their computers prior to clocking in to the electronic timekeeping system or shutting down their computers after clocking out of the timekeeping program. The district court granted summary judgment to the defendants, holding that booting up and shutting down computers, and clocking in and out of a timekeeping system, are not principal activities because Connexx did not hire employees for that purpose.
The Ninth Circuit found that the district court correctly identified the workers' principal duties as answering customer phone calls and scheduling appliance pickups. However, the panel indicated that the correct inquiry is whether engaging the computer, which contains the phone program, scripts, customer information, and email programs, is integral to the employees' duties. The panel held that because the workers' duties could not be performed without turning on and booting up their computers, having a functioning computer was essential before the workers could begin receiving calls and scheduling appointments. Thus, turning on computers was integral and indispensable to the workers' duties, a principal activity under the FLSA, and was compensable.
Importantly, in a footnote of the opinion, the Ninth Circuit noted that this holding is limited to the facts of the present case, and that it was not asked to consider - and offer no opinions on - whether the same time would be compensable under the FLSA if the subject employees worked remotely or used their personal computers to perform these duties. While the Ninth Circuit limited its analysis to employees using employer-provided computers at an in-person worksite, employers should consider whether having a functioning computer is essential for its employees to be able to perform their job duties. If an employer determines such a functioning computer is necessary, the employer should either make sure that its non-exempt employees have the ability to clock in prior to booting up their computers or adjust employee time records to compensate employees for their time spent booting up their computers. Lewis Brisbois' labor & employment attorneys are available to assist with analyzing employer policies and practices regarding timekeeping.
LEAVE RELATED LAWS
Bereavement Expansion Under Assembly Bill 1949
Signed into law on September 29, 2022, Assembly Bill 1949 creates protected bereavement leave of up to five days upon the death of a family member. A "family member" includes a spouse or a child, parent, sibling, grandparent, grandchild, domestic partner, or parent-in-law. The leave must be completed within three months of the family member's death, but it need not be taken on consecutive days. Importantly, the leave shall be taken pursuant to any existing bereavement leave policy of the employer. If no policy exists, the leave may be unpaid. However, the employee may use vacation, personal leave, accrued and available sick leave, or compensatory time off that is otherwise available to them.
There does not appear to be a limit on how many times an employee can be eligible for leave under this bill. However, the employer may request documentation of the death of the family member. Such documentation can include a death certificate, published obituary, or written verification of death, burial, or memorial services from a mortuary, funeral home, burial society, crematorium, religious institution, or governmental agency.
Bereavement leave under this bill applies to all employers with five or more employees. These five days are in addition to, and not to be included in, the up to 12 weeks of unpaid protected leave for family care and medical leave under the California Family Rights Act. Additionally, the bill makes it unlawful for an employer to discriminate or retaliate against an employee for exercising the right to bereavement leave.
Paid Sick Leave Under CFRA
Taking effect January 1, 2023, Assembly Bill 1041 expands state family and paid sick leave by allowing an employee to take protected time off to care for a "designated person." A designated person means any individual related by blood or whose association with the employee is the equivalent of a family relationship. The designated person may be identified by the employee at the time the leave is requested. The employee may take up to 12 workweeks during any 12 month period. However, an employer may limit an employee to one designated person per 12 month period. To qualify for this leave, an employee must have more than 12 months service with the employer and have worked at least 1,250 hours in the previous 12 month period.
COVID-19 RELATED LAWS
Extension of COVID-19-Related Supplemental Paid Leave and Modification of COVID-19 Exposure Notification Requirements
On September 29, 2022, Governor Gavin Newsom signed two new Assembly Bills (AB) into law; AB 152 and AB 2693. AB 152 extends COVID-19 supplemental paid sick leave (SPSL) through the end of 2022 and establishes a grant program for qualified small businesses to receive up to $50,000 to cover costs incurred. AB 2693 amends California Labor Code 6409.6 by changing and extending COVID-19 notification requirements through January 1, 2024.
Since January 1, 2022, full-time employees have been entitled to up to 40 hours of paid leave if forced to miss work to care for a family member diagnosed with COVID-19 or if diagnosed with COVID-19 themselves. Existing law provides that the total number of hours of COVID-19 SPSL is in addition to any paid sick leave available under the Healthy Workplaces, Healthy Families Act of 2014. As initially passed, the law provides an additional 40 hours of SPSL to employees if they test positive for COVID-19 and cannot work remotely.
Importantly, AB 152, which is effective immediately, now authorizes employers to require a third COVID-19 test within 24 hours of a second positive test. Additionally, if an employee refuses to submit to testing, AB 152 permits employers deny additional COVID-19 SPSL. Employers are responsible for providing the COVID-19 tests at no cost to employees. AB 152 also extends the SPSL from September 20, 2022 to December 31, 2022.
AB 152 also establishes the California Small Business and Nonprofit COVID-19 Relief Grant Program within the Governor's Office of Business and Economic Development (GO-BIZ). This program will assist qualified small businesses or nonprofits with costs incurred due to providing SPSL, not to exceed $50,000. To qualify, the business must be either a "C" corporation, "S" corporation, cooperative, LLC, partnership, limited partnership, registered 501(c)(3), 501(C)(6), or 501(c)(19). Additionally, the business must meet the following criteria: (1) have begun operating before June 1, 2021; (2) is currently active and operating; (3) has 26 to 49 employees and provides payroll data and an affidavit attesting to that fact; (4) has provided SPSL as required by law; and (5) provides organizing documents, including a 2020 or 2021 tax return or Form 990 and a copy of the official filing with the Secretary of State or local municipality.
Notably, businesses primarily engaged in government or lobbying activities, banks, and businesses that restrict patronage for any reason other than capacity are not eligible for the grant program.
AB 2693 amends California Labor Code section 6409.6 notification requirements for employees and to the health department.
First, employers will no longer be required to report COVID-19 cases to the health department or local public health agency. Additionally, the California Department of Public Health will no longer be required to post online workplace industry information regarding COVID-19 case numbers, including outbreaks, from local health departments.
More importantly, under AB 2693, employers will be able to provide notice of potential COVID-19 exposure to employees not only by written notice, but now by worksite posting. If electing to notify by a posted notice, it must be prominently displayed in all places where notices to employees concerning workplace rules/regulations are customarily posted, including employee portals,within one business day of the notice of potential exposure, statingallof the following:
- Dates on which the confirmed case/potential exposure was last on the worksite;
- Location limited to department/floor/building, or other area to identify location but not so specific to cause individual employees be identified;
- Contact information for employees to receive information regarding COVID-19-related benefits to which the employee may be entitled under applicable federal, state, or local laws, including but not limited to worker's compensation, COVID-19 related leave, company sick leave, state-mandated leave, supplemental sick leave, or negotiated leave provisions as well as anti-retaliation and anti-discrimination protections;
- Contact information for employees to receive the cleaning and disinfection plan that the employer is implementing per the guidelines of the CDC and Cal-OSHA COVID-19 Emergency Temporary Standards.
The notice must be posted forno fewer than15 calendar days. It must be in English and any language understood by the majority of employees. Employers must keep a log of all of the dates the notice was posted at each location/worksite and must allow the Labor Commissioner to access those records.
If an employer elects to continue to use a written notice option, it must be provided to all employees and employers of subcontracted employees at the same worksite premises as the confirmed COVID-19 case during the infectious period stating they may have been exposed to COVID-19 and must be provided in a manner the employer normally uses to communicate employment-related information. Written notice may include but is not limited to personal service, email, and/or text if it can be reasonably anticipated to be received by the employee within one business day of sending and shall be in both English and a language understood by the majority of the employees.
While AB 2693 does not require the same detailed information in a written notice as in a posted notice, it would be prudent to include the same information in the written notice as in the posting option.
Retaliation for Off-Duty Marijuana Use Under Assembly Bill 2188
On September 18, 2022, Governor Newsom approved Assembly Bill 2188, thereby prohibiting California employers from discriminating against employees for cannabis use away from the workplace.
AB 2188 amends the California Fair Employment and Housing Act (FEHA), making it unlawful for an employer to discriminate against a person in hiring, termination, or any other term or condition of employment, or otherwise penalizing that person, for his or her use of cannabis off the job and away from the workplace. The bill also prohibits discrimination if the employer's required drug screening test finds that person to have "nonpsychoactive cannabis metabolites" in their hair, blood, urine, or other bodily fluids.
AB 2188 does not permit employees to possess, be impaired by, or use cannabis on the job. Accordingly, employers who conduct drug screenings to detect cannabis use will need to use tests that can differentiate between an employee currently under the influence of marijuana verses one that previously used marijuana.
This bill does not apply to employees in the building and construction trades. It also does not apply to employees hired for positions that require a federal government background investigation or security clearance. Nor does it preempt state or federal laws that require employees to be tested for controlled substances as a condition of employment when receiving federal funding or entering into a federal contract.
AB 2188 becomes operative as California Government Code section 12954 on January 1, 2024.
Emergency Condition Retaliation
Senate Bill 1044 prohibits an employer, in the event of an emergency condition, from taking or threatening adverse action against an employee for refusing to report to, or leaving, a workplace or worksite within the affected area because the employee has a reasonable belief that the workplace or worksite is unsafe. Additionally, the employer may not prevent any employee from accessing the employee's mobile device or other communications device for seeking emergency assistance, assessing the safety of the situation, or communicating with a person to verify their safety.
An emergency condition is defined as "disaster or extreme peril to the safety of persons or property at the workplace or worksite caused by natural forces or a criminal act," or "an order to evacuate a workplace, a worksite, a worker's home, or the school of a worker's child due to natural disaster or a criminal act." Notably, a health pandemic is specifically excluded from the definition of emergency condition. The standard used to evaluate the employee's belief is an objective one: whether a reasonable person, under the circumstances known to the person at the time, would conclude there is a real danger of death or serious injury if that person enters or remains on the premises. There are a number of employees excluded from the protections of this bill, including first responders and disaster service workers, among others.
Expanded Statute of Limitations on Sexual Assault Claims
The Sexual Abuse and Cover Up Accountability Act, signed by Governor Newsom on September 19, 2022, became effective on January 1, 2023. The bill revives any claims commenced on or after January 1, 2019, for acts of sexual assault that occurred on or after January 1, 2009, if those claims were barred solely because of the expiration of the statute of limitations. A plaintiff has until December 31, 2026, or three years from the bill's effective date, to bring such a claim.
In addition, this bill creates a one-year revival period for a plaintiff to bring a claim that would otherwise be barred because the statute of limitations expired if the plaintiff alleges the following: (1) the plaintiff was sexually assaulted; (2) one or more entities are legally responsible for damages arising out of the sexual assault (which can be established through, inter alia, negligence, intentional torts, and vicarious liability); and (3) the entities, including their officers, directors, representatives, employees, or agents, engaged in a cover up or attempted cover up of a previous instance or allegation of sexual assault by an alleged perpetrator of such abuse. A plaintiff has until December 31, 2023, to bring such a claim. Under the statute, a cover up means "a concerted effort to hide evidence relating to a sexual assault that incentivizes individuals to remain silent or prevents information relating to a sexual assault from becoming public or being disclosed to the plaintiff, including, but not limited to, the use of nondisclosure agreements or confidentiality agreements." Significantly, the bill explicitly revives related claims for wrongful termination and sexual harassment where sexual assault formed the basis of those claims.
For more information on what steps employers can take to avoid revived claims from employees, see our earlier alert on this topic, "California Legislature Set to Revive Lapsed Sexual Assault Claims with Passage of Sexual Abuse and Cover Up Accountability Act."
FAST Recovery Act on Hold
Assembly Bill 257, or the Fast Food Accountability and Standards Recovery Act (FAST Recovery Act), establishes a Fast Food Council within the Department of Industrial Relations until January 1, 2029. The Council will establish sector-wide minimum standards on things like wages, working hours, and other health and safety related conditions. For the Council's standards to apply to an establishment, it must be part of a set of fast food restaurants consisting of 100 or more establishments nationally that share a common brand or standardized decor, marketing, packaging, products, and services. Moreover, the establishment must serve food or beverages in the following manner: 1) for immediate consumption either on or off the premises; 2) to customers who order select items and pay before eating; 3) with items prepared in advance, including items prepared in bulk and kept hot, or with items prepared or heated quickly; or 4) with limited or no table service (table service does not include orders placed by a customer on an electronic device).
The bill requires the Council to submit a report to the California legislature prior to enacting, amending, or repealing a standard. However, it appears the legislature's only real oversight is to enact a law invalidating the regulation after it is already implemented. The Council is also required to conduct a full review of the adequacy of the minimum health and safety standards at least once every three years. The FAST Recovery Act also creates local fast food councils that can recommend their own standards to the statewide council. Any county or city with 200,000 or more residents can form such a local council.
Significantly, this bill gives the Council the power to increase the minimum wage for fast food restaurant employees to $22 per hour starting January 1, 2023. And, on January 1, 2024 and each year thereafter, the rate may be increased by the lesser of 3.5% or the increase in the Consumer Price Index.
While the full ramifications of this bill on collective bargaining agreements remain unclear, the standards set by the Council shall not supersede a collective bargaining agreement so long as that agreement provides for wages, hours of work, and working conditions equivalent to standards set by the Council, and a regular hourly rate of pay not less than 30% more than the state minimum wage.
The bill will be enforced by the Labor Commissioner. However, employees also have a private right of action under the bill for any discrimination or retaliation they face after making a complaint, disclosing information, or refusing to perform work they believe would violate health and safety laws or the Council's standards. There is also a private right of action for instituting, testifying in, or otherwise participating in a proceeding relating to employee or public health or safety, or any Council or local fast food council proceeding. Employees asserting such violations may be entitled to reinstatement, treble damages, and attorneys' fees. The bill takes this one step further by establishing a rebuttable presumption that states that if a fast food operator discharges or takes other adverse action against an employee within 90 days following when the operator had knowledge of that employee's protected actions, it is presumed to be unlawful discrimination and retaliation.
After signing the bill in September 2022, a referendum effort was immediately launched to give California voters the ability to reject the measure. Supporters of the referendum needed to obtain 623,000 valid voter signatures by December 4, 2022 to qualify for the ballot in November 2024. While the Secretary of State counted signatures to determine if the referendum will be on the ballot, a coalition that opposes the bill filed a lawsuit seeking to enjoin enforcement of the FAST Recovery Act. A temporary restraining order was granted by the Sacramento Superior Court preventing the enforcement of the bill. A preliminary injunction was later granted on January 13, 2023. The preliminary injunction remains in effect until either: 1) county election officials and the Secretary of State determine that the referendum petition failed to qualify for the ballot; or 2) a majority of voters defeat the referendum and approve the FAST Recovery Act in the 2024 election.
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