2021 Employment Law Update – Top 10 Changes

Action: Review your payroll to ensure all employees are being paid the new minimum wage, send written notice of the wage change to affected hourly employees, and be sure your salaried exempt employees are earning at least 2x California minimum wage ($58,240 for large employers and $54,080 for small employers). Please note that many other cities and counties in California have passed higher minimum wage requirements, including Belmont, Berkeley, Cupertino, El Cerrito, Emeryville, Los Altos, Los Angeles City and County, Malibu, Mountain View, Novato, Oakland, Palo Alto, Pasadena, Redwood City, Richmond, San Diego, San Francisco, San Jose, San Leandro, San Mateo, Santa Clara, Santa Monica, South San Francisco, and Sunnyvale.

2. COVID-19 Related Changes – Most of 2020 was spent scrambling to implement laws, regulations, and best practices concerning COVID-19 as announced at the federal, state, and local levels of government. Just within the past month, a new “stay-at-home” order was issued by the Governor and a new stimulus package was passed by Congress. As of this writing, there are several COVID-19 related changes to be aware of:
   • Assembly Bill 685 – new notice and recordkeeping requirements with respect to COVID-19 cases in the workplace, effective January 1, 2021.
   • Senate Bill 1159 – creates a presumption that employees’ COVID-19-related illness or deaths are covered injuries for purposes of workers’ compensation, subject to specified circumstances. This was effective September 17, 2020.
   • Cal/OSHA Emergency Regulations – creates rules applicable to nearly all California employers concerning prevention, testing, and responding to exposure and outbreaks in the workplace. With some exceptions, all employers and places of employment are now required to establish and implement an effective written COVID-19 Prevention Program (CPP) pursuant to an Emergency Temporary Standard in place for COVID-19 (California Code of Regulations (CCR), Title 8, section 3205(c)). These regulations took effect November 30, 2020.
   • FFCRA Leave (Emergency Paid Sick Leave/ Emergency Paid Family & Medical Leave) – The mandatory leave provided by the federal Family First Coronavirus Response Act (“FFRCA”) expired on December 31, 2020. It was not extended by the pandemic relief package signed by the President on December 27, 2020. Nevertheless, the ability of employers to claim the FFRCA credit was extended through March 31, 2021. This means that eligible employers may voluntarily offer the leave previously mandated by the FFCRA and continue to claim the corresponding credit, provided all other eligibility, payment, and documentation requirements are met.
   • Assembly Bill 1867 – California’s COVID-19 leave law – an expansion of those employees eligible for paid-COVID-19-related-leave beyond those eligible under the FFCRA – was tied to the expiration date of the FFCRA. Since the mandatory leave provisions of the FFCRA expired on December 31, it appears that the state’s law has also expired. The California law does allow an employee already on paid leave with eligible paid leave remaining as of the date the law expires to complete and exhaust their paid leave, even if this extends the leave period past the law’s expiration date.
   Action: Prepare written policies to comply with these new laws, including updating the company’s Injury and Illness Prevention Program (IIPP) or developing a separate COVID-19 Prevention Program (see Cal/OSHA COVID-19 Guidance, here, and a model CPP, here), and ensure all changes and new workplace processes are communicated to employees in writing.

3. Expansion of the California Family Rights Act – Under pre-existing law, employers were not required to provide family care and medical leave under the California Family Rights Act (CFRA), if the employee seeking leave worked at a worksite with fewer than 50 employees within a 75-mile radius. Similarly, employers were not required to provide baby-bonding leave under the New Parent Leave Act (NPLA) if the employee seeking leave worked at a worksite with fewer than 20 employees within a 75-mile radius. Senate Bill 1383 (“SB 1383”) expands those obligations to provide mandatory leave to small employers. The new law requires employers with at least five employees to provide an otherwise eligible employee with up to 12 workweeks of unpaid job-protected leave during any 12-month period for certain covered reasons. The employer must maintain and pay for the employee’s coverage under a group health plan for the duration of the leave at the level and under the same conditions coverage would have been provided if the employee was working. SB 1383 also expands the covered family members and potential reasons for which an eligible employee can take leave. Under the prior CFRA statute, leave for purposes of caring for a family member was available only if the family member was the employee’s child, parent, spouse or domestic partner. Under SB 1383, eligible employees may take leave to bond with a new child of the employee or to care for themselves or a child, parent, grandparent, grandchild, sibling, spouse or domestic partner. This new law takes effect January 1, 2021.
   Action: Update your Employee Handbook to ensure that it is compliant with the new law. Also provide notice to all employees of the change and obtain an acknowledgement of receipt of the revised Employee Handbook or notice of the change from all employees.

4. Expansion of Labor Commissioner Capabilities – Several laws were passed to increase the ability of the Labor Commissioner to field discrimination, harassment, and retaliation complaints. The statute of limitations for filing such claims was extended, and the ability for the Labor Commissioner to intervene on behalf of employees and participate in court or arbitration was expanded. Specifically, employees who feel they were “discharged or otherwise discriminated against in violation of any law under the jurisdiction of the Labor Commissioner,” previously had six (6) months to file a complaint with the Division of Labor Standards and Enforcement (DLSE), of the Department of Industrial Relations, for the State of California. Assembly Bill 1947 (“AB 1947”) extends the time to file a complaint to one (1) year, and Senate Bill 1384 allows the Labor Commissioner’s office to represent employees who are unable to afford representation in arbitration proceedings and/or in opposing a petition to compel arbitration. AB 1947 also amends Labor Code section 1102.5, to provide prevailing plaintiffs in litigation the ability to be awarded attorney’s fees if they prevail on a claim of retaliation brought under that section. These changes are effective January 1, 2021.
   Action: Employers need to be even more diligent about properly conducting and documenting investigations into workplace complaints and need to retain records for at least four (4) years. Likewise, employers need to properly train all supervisors and managers to ensure that they know how to field complaints and that retaliatory conduct is prohibited.
5. Continued Evolution of Independent Contractors – More workers were exempted from the ABC Test as announced in the 2018 California Supreme Court case, Dynamex v. Superior Court (Dynamex), and codified in Assembly Bill 5, which first went into effect one year ago. Over 100 exemptions were added by way of Assembly Bills 2257 and 323, including the entertainment industry, freelance photography and writing, professional services, newspapers, coaching, event planning, and consulting, among others. It also clarified that exempted workers are still subject to passing the multi-factor test as first described in the 1989 California Supreme Court case, S.G. Borello & Sons, Inc. v. Dept. of Industrial Relations (Borello). Also, California Proposition 22 passed in the November 2020 election, and it redefines app-based transportation and delivery drivers as independent contractors. Some of the exemptions were implemented immediately, some were to be applied retroactively, and some will first go into effect January 1, 2021.
   Action: Audit your independent contractor agreements to make certain that existing independent contractor relationships (1) meet one of the dozens of exemptions to the ABC test, and (2) meet the multi-factor test under Borello. Depending upon your business’s industry, you may wish to re-write your own service agreements for your customers to ensure that you are not subjecting them to misclassification liability and/or improve your marketability within your industry. You may also revisit some previous relationships that you changed from independent contractor to employee in order to determine whether changing back is permitted and makes sense for both parties.
6. Pay Data Reporting Requirements – California implemented pay data reporting requirements for employers who employ at least 100 employees. Effective March 31, 2021, and each year thereafter, eligible employers must submit a pay data report to the Department of Fair Employment and Housing (DFEH) containing data concerning the race, ethnicity, and sex of employees based upon their membership in particular job categories, compensation categories (as established by the U.S. Bureau of Labor Statistics in the Occupational Employment Statistics survey), and total hours of work. For employers with multiple establishments, the employer must submit a report for each establishment plus a consolidated report. The submissions will resemble EEO-1 reports, required by the U.S. Equal Employment Opportunity Commission. This had been implemented by the Obama Administration but then suspended by the Trump Administration, only to be compelled by court order as a result of litigation by employee and minority rights advocates in 2017 and 2018. In fact, the federal EEO-1 report is permitted as a compliant form of reporting under the new California law. The DFEH is authorized by Senate Bill 973 to implement and promulgate rules and regulations to carry out the pay data reporting, including express authority to enforce its requirements on employers. These changes in law are effective January 1, 2021, but reporting requirements first commence on March 31, 2021.
   Action: Begin to compile the data that must be incorporated into this report. This may be changing your new hire forms to include this data and/or asking your IT Department to provide a user-friendly system for compiling the information for Human Resources personnel. Also, ensure that you are monitoring press releases from the DFEH and its website for updates on the system it is developing, which should include an online portal for submitting the data.
7. Employers are Now Mandated Reporters – Assembly Bill 1963 was passed expanding the list of mandated reporters and requiring training of those reporters under the Child Abuse and Neglect Reporting Act (Penal Code, section 11165.7). The law applies to employers of five or more who employ minors and identifies human resources personnel and the supervisors of minors as mandatory reporters. The training must include training in child abuse and neglect identification and training in child abuse and neglect reporting and may be met by completing the general online training for mandated reporters offered by the Office of Child Abuse Prevention in the State Department of Social Services, found here. This change in law is effective January 1, 2021. The law is silent as to by when the training must be completed and thus would appear to be an immediate requirement.
   Action: Eligible employers should identify all affected supervisors and HR personnel, communicate this requirement to the effected employees, and arrange training for the new mandatory reporters. Moreover, employers should work with counsel to develop appropriate internal procedures for reporting and documenting the reports to ensure that the reporters can easily meet their reporting obligations. Finally, work with counsel to develop appropriate recordkeeping and maintenance to ensure that the reports are kept confidential.
8. Expansion of Leave Rights for Victims of Crime – Employers are now prohibited from discharging, discriminating or retaliating against, an employee for taking time off from work to obtain or attempt to obtain relief as a victim of a crime “that caused physical injury or that caused mental injury and a threat of physical injury.” Assembly Bill 2992 amends Labor Code sections 230 and 230.1, which previously limited the leave to victims of domestic violence, sexual assault, or stalking. AB 2992 also extends protected leave for an employee whose immediate family member died as a direct result of a crime and expanded the types of documentation to establish leave eligibility. This change in law is effective January 1, 2021.
   Action: Review leave policies and forms to ensure that the description of leave and requested documentation mirrors that of the amended law.
9. Kin Care Designation – Assembly Bill 2017 amends Labor Code section 233, to prevent employers from erroneously designating sick days as kin care. Under current law, employees are permitted to use half of their paid sick leave entitlement to attend to the illness of a family member. The amendment limits who can designate the leave taken as kin care to solely the employee. This change in law is effective January 1, 2021.
   Action: Review leave policies and forms to ensure that employees can designate the leave being requested. Train human resources and payroll personnel to ensure that they do not erroneously designate the leave as anything other than paid sick leave unless requested by the employee.
10. Racial and Ethnic Diversity of Corporate Boards – In 2018, in the wake of the #MeToo movement, SB 826 was passed into law requiring any publicly held corporation with its principal office located in California, to include at least one female director on the corporation’s Board of Directors by the end of 2019 and increasing with up to three female directors by the end of 2021. This year, in the wake of the #BlackLivesMatter movement, AB 979 was passed into law requiring any publicly held corporation with its principal office located in California, to include at least one director from an underrepresented community by the end of 2021 and increasing to three by the end of 2022. An underrepresented community is defined to include an individual self-identifying racially or ethnically as African American, Alaskan Native, Asian, Black, Hawaiian Native, Hispanic, Latinx, Pacific Islander, or an individual self-identifying as bisexual, gay, lesbian, or transgender. Failure to abide by the law will result in a fine of $100,000 for the first violation, $300,000 for a subsequent violation.
    Action: Poll existing directors to see if they identify as being a member of an underrepresented community. Review and revise bylaws to incorporate the requirements of SB 826 and AB 979 into the requirements of filling the Board of Directors and increasing its size to accommodate the positions and investigate enacting term limits to encourage subsequent turnover.

Key Cases From 2020 – As usual, there were dozens of employment law cases decided this year that impacted employers. Of those cases, we would like to call three to your attention, two from California Courts and one from the 9th Circuit Court of Appeals.

Ridgeway v. Wal-Mart, Inc. (9th Cir. 2020) 946 F.3d 1066 – this case dealt with long-haul truckers who claimed, among many things, that because of Wal-Mart’s layover policies, they were sufficiently under the control of their employer during state and federally-mandated layover periods and were therefore entitled to be paid minimum wage during the layover periods. The Court held that Wal-Mart’s policy, as written, imposed constraints on the drivers’ freedom of movement and meant they could not avail themselves of the full privileges of a break.

Frlekin v. Apple, Inc. (2020) 8 Cal.5th 1038 – this case dealt with exit searches by the employer of employees’ confidential and proprietary tangible and intangible property. Apple would search its employees’ bags and personal Apple-devices when brought onto the work premises. The court rejected the employer’s arguments that the employee elected to make them subject to search by bringing the bag or personal device onto the work premises. And because the exit search effectively controlled the employees’ movement, the time spent waiting and being searched was compensable.
Action: Both of these cases dealt with off-duty control. Any level of control or influence over the employee while they are off-the-clock can render the time compensable. Review all policies concerning breaks and other non-compensable time to ensure that the employee is completely relieved of company control or influence if they are not being paid. Limit employees from remaining on the premises before or after work hours.

Brown v. TGS Management Co. (2020) 57 Cal.App.5th 303 – this case dealt with an overly-broad definition of “confidential information,” contained in a proprietary, confidential, and trade secret clause of an employment contract. If applied as written by the employer, it would effectively have prevented the employee from practicing his profession for the rest of his life. The arbitrator hearing the matter ruled in favor of the employer, which was upheld by the trial court through confirmation. It was only on appeal that the California Court of Appeal ruled in favor of the employee, determining that the arbitrator had exceeded his authority by attempting to enforce an illegal restriction on the Plaintiff’s right to engage in his profession. Such an overly broad definition of confidential information violated the prohibition against non-compete agreements in California under Business & Professions Code, section 16600.
Action: Review all confidentiality provisions in employment agreements, employment handbooks, and independent contractor agreements. Ensure those agreements and provisions are not overly broad to constitute a non-compete provision.

Have a great 2021, and please contact Dawn Ross, Samantha Pungprakearti or Justin Hein for help with your labor and employment law needs: 707-526-4200.