Employment Update: New Laws for 2020

It is that time of year when we look to see what will change for California employers.  We have summarized some important changes to California employment law that may have an effect on your business as we enter the New Year.  There may also be local laws that are not reflected below. If you have any questions about your specific situation, please feel free to reach out to us for a more in depth discussion.

 Minimum Wage

Effective January 1, the state minimum wage has increased for both hourly and salary employees.  The chart below shows the new minimum wage for both, by employer size:

25 or Fewer Employees 26 or More Employees
Minimum Hourly Wage $12.00/hour $13.00/hour
Minimum Exempt Salary $49,920/year $ 54,080/year

Additionally, if you have employees working in any of the cities below in Sonoma County, you need to comply with the local minimum wage ordinances:

City 25 or Fewer Employees 26 or More Employees
Sonoma (City) $12.50/hour $13.50/hour
Santa Rosa* $14.00/hour $15.00/hour
Petaluma $14.00/hour $15.00/hour

*Santa Rosa’s minimum wage increase does not take effect until July 1, 2020.

 Independent Contactors – AB-5

Determining independent contractor status can be challenging.  California has “simplified” the standard to the “ABC” test.  When determining independent contractor status, employers look at three factors – all three of which must be met in order to qualify as an independent contractor:

  1. The worker is free from the control and direction of the hirer 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 worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

The “ABC” test effectively expands the definition of employee.  AB 5 provides an extensive list of jobs that are excluded from the new “ABC” test and will still be analyzed under the former balancing test known as the Borello factors.  If your business uses independent contractors, this is a good time to re-examine their classification and ensure they are appropriately classified under the new standard, and whether they fall under an exception to the new test and should still be analyzed under the old standard.

 Sexual Harassment

The #metoo movement continued this year and there is a continued growing awareness of sexual harassment and gender equity issues.  Here are a few reminders of the new requirements for employers:

 Training: All employers with 5 or more employees are required to provide sexual harassment training for both supervisory employees (two hours every two years) and regular employees (one hour every two years). All employees must receive the training by the end of 2020, and new employees should receive training within six months of hire. Interactive training videos will be available for use on the DFEH website.

Seasonal/Temporary Employees: For employees hired for less than 6 months, the training must be completed within 30 calendar days or 100 hours worked. If the employees are hired through a temp agency, the agency provides the training and not the hiring client.

Retaliation Against Victim of Sexual Harassment Unlawful: AB 171 creates a rebuttable presumption of unlawful retaliation if an employer discharges, threatens to discharge, demotes, suspends, or takes any other adverse action against the employee (victim) within 90 days following the victim giving notice to the employer or actual knowledge by employer of sexual harassment.

 Additional things to consider:  Harassment laws are broadening and creating new challenges for employers.  The courts are discouraging settlement through summary judgment, which means that harassment claims will be time consuming and expensive to resolve.  As an employer, it’s important to stop harassment before it begins through training, policy and consistent practices.

Lactation Accommodation – SB 142 (Labor Code Sections 1030-1034)

The existing lactation accommodation law has been updated to specify that a location other than a bathroom must be provided for lactation purposes, and the room must include certain features.  The location should be permanent, but temporary locations are acceptable under certain circumstances. Additionally, employers with fewer than 50 employees can seek an exemption if an undue hardship is shown. The new law also requires employers to develop and implement a policy regarding lactation accommodation, which means your employee handbook should be updated to add this policy if it is not already included.

Changes in Arbitrations

Arbitration Agreements – AB 51: Employers are now prohibited from requiring that employees enter into arbitration agreement as a condition of employment where the agreements cover California Labor Code or FEHA claims. This applies to all contracts entered into, extended or modified after January 1, 2020. However, the prohibition does not apply to post-dispute settlement agreements or negotiated severance agreements. Employers can still have optional arbitration agreements in their employment contracts as long as entering into the agreement is not a condition of employment. Additionally, this law is likely to be challenged as preempted under federal law.  We expect a great deal of uncertainty about this next year.  Please contact us to discuss if you have questions about your agreement or intention to implement an agreement.

Arbitration Fee Timeline– SB 707: If the party who drafted the arbitration agreement (which is typically the employer) fails to pay the fees and costs required to initiate the arbitration, or any fees or costs required to continue the arbitration, within 30 days after the due date, it will be considered a material breach of the arbitration agreement and the drafting party will be in default under the agreement. Courts are also authorized, and required, to impose monetary sanctions against the drafting party if costs or fees are incurred as a result of such a breach.

Limits on Settlement Agreements – AB 749

Any settlement agreement entered into on or after January 1, 2020 will be void if it contains a provision that prohibits, prevents, or otherwise restricts an “aggrieved person” from working for the employer in the future. However, employers can still agree with the aggrieved person to end a current employment relationship or to prohibit the aggrieved person from obtaining future employment with the employer if the employer has made a good faith determination that the person engaged in sexual harassment or sexual assault.

Protective Hairstyles “Crown Act” – SB 188

The Crown Act, “Creating a Respectful and Open Workplace for Natural Hair,” prohibits discrimination based on natural hair and any hairstyles associated with race, including protective hairstyles like braids, locks, and twists. You should review all dress code and grooming policies to ensure compliance with this provision.

 Overtime for Agricultural Workers – AB 60

California agricultural employers with 26 or more employees need to adjust their overtime calculations this year. Overtime calculations will remain unchanged for agricultural employers with 25 or fewer employees.  The chart below shows how overtime should be calculated based on the hours worked and employer size:

25 or Fewer Employees 26 or More Employees
Daily OT (1.5 X Regular Rate) > 10 hours > 9 hours
Weekly OT (1.5 X Regular Rate) > 60 hours > 50 hours

California Consumer Privacy Act (“CCPA”)

The CCPA of 2018 goes into effect January 1, 2020. The CCPA applies to any business that: has an annual gross revenue in excess of $25 million; derives 50% or more of its annual revenue from selling consumers’ personal information; or alone or in combination annually buys, receives, sells or shares for a commercial purpose the personal information of 50,000 or more California consumers, households or devices.  If you have questions about whether the law will apply to you, please contact us to discuss. As of January 1, 2020, businesses subject to the CCPA will need to comply with the requirements of the statute.  The CCPA is generally not applicable to employee data until January 1, 2021, however, employee data is still subject to the notice of collection requirement and employees have a private right of action against an employer in the event of a data breach.  Additionally, the employee data exemption only applies to data that is collected in an employment or HR context – thus, if an employee is also a consumer outside of the employment context that data remains fully covered by the CCPA. If the CCPA will apply to you, please contact us and we will send you further information about how best to comply.

For more information about any of these updates please contact Jennifer Douglas or Marissa Buck.