In the past year, the California Legislature passed multiple bills in the area of labor and employment. This article provides an overview of key new bills that have been signed into law by Gov. Gavin Newsom, which will directly affect California employers and employees and will take effect Jan. 1, 2022, unless otherwise noted. They broaden the scope of legal protections for workers, addressing several topics, including worker classification, wages, and safety regulation.
Laws Regulating the Payment of Wages and Worker Classification
AB 1003: Wage Theft Is Grand Theft
Existing law, as set forth in the Labor Code, makes the violation of specific wage and gratuity provisions a misdemeanor in addition to providing for civil penalties and remedies.
Assembly Bill 1003 amends the definition of "grand theft" in the Penal Code to include intentional wage theft, punishable either as a misdemeanor or a felony. Specifically, the new law provides that grand theft includes the intentional theft of wages in an amount greater than $950 from any one employee, or $2,350 in the aggregate from two or more employees, by an employer in any consecutive 12-month period. For purposes of the new law, independent contractors are considered employees.
SB 62: Prohibition Against Garment Manufacturers Paying Employees by the Piece Rate
Senate Bill 62 amends the Labor Code to prohibit, with certain delineated exceptions, employers from paying employees engaged in the performance of garment manufacturing by the piece or unit, or by the piece rate.
This bill also amends the Labor Code to clarify that anyone who contracts for the manufacture of garments is a guarantor for the unpaid wages and overtime of the workers making their garments, regardless of how many layers of contracting the person may use. This prevents someone from escaping liability by contracting with someone who in turn hires a subcontractor to perform manufacturing operations. It also expands required time period for maintaining certain manufacturing-related documents, including invoices, purchase orders, work orders, style or cut sheets, from three to four years.
AB 701: Restrictions on Employee Production Quotas in Warehouse Distribution Centers
AB 701 amends the Labor Code to require warehouse and distribution centers to provide employees with written information regarding productivity quotas. It further provides that an employee cannot be required to meet a quota that prevents compliance with meal and rest periods, use of restroom facilities, or compliance with occupational health and safety laws. This law was meant to address the Legislature's concerns that same and next-day consumer package delivery, as well as advances in technology used for tracking employee productivity, have led to work quotas for warehouse and distribution center employees that allegedly do not allow workers to comply with safety guidelines and result in them not receiving the full benefit of wage and hour laws.
SB 639: Phase Out of Program Allowing Disabled Employees to Receive Less Than Minimum Wage
SB 639 prohibits the issuance of new licenses to employees who are mentally or physically disabled that authorize the employment of the licensee at less than minimum wage. The new law permits a license to be renewed for existing license-holders who meet requisite benchmarks until Jan. 1, 2025.
AB 1561: Modification of Multiple Exemptions from Application of the ABC Test
Existing law requires a three-part test, commonly known as the "ABC" test, to determine if workers are employees or independent contractors for purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission. Existing law exempts specified occupations and business relationships from application of the ABC test. Existing law, instead, provides that these exempt relationships are governed by the multifactor test previously adopted in the case of S. G. Borello & Sons, Inc. v. Department of Industrial Relations, 48 Cal. 3d 341 (1989).
This bill modifies some of the existing exemptions from the ABC test, as follows: licensed manicurists (extending the operative date of the exemption to Jan. 1, 2025); subcontractors in the construction industry (extending applicable timeframe to work performed before Jan. 1, 2025); data aggregators (revising the exemption to apply to the relationship between a data aggregator and a "research subject," and removing condition that consideration paid be minimum wage or the equivalent); person licensed by the Department of Insurance or a person who provides underwriting inspections, premium audits, risk management, or loss control work for the insurance and financial service industries (expanding this to include a person who provides claims adjusting or third-party administration); and manufactured housing dealers (specifying that the statutorily imposed duties are not to be considered under the Borello test).
AB 1506: Modification of Exemption from ABC Test for Newspaper Carriers
AB 1506 extends the operative date of the exemption from the ABC test for newspaper distributors working under contract with a newspaper publisher or newspaper carrier from Jan. 1, 2022 to Jan. 1, 2025. It also requires publishers and distributors to report certain information to the Labor and Workforce Development Agency.
Other Generally Applicable Laws
SB 331: New Restrictions on Settlement and Nondisparagement Agreements
Existing law prohibits a settlement agreement from preventing the disclosure of factual information related to a claim filed in a civil action or administrative action regarding sexual assault, sexual harassment, and discrimination based on sex. This prohibition is set forth in California Code of Civil Procedure section 1001, previously enacted by SB 820, passed in 2018 in response to the #MeToo movement.
SB 331 expands existing law, amending the Civil Code to provide that the prohibition extends to settlement agreements that restrict the disclosure of information related to claims of workplace harassment or discrimination based on other protected characteristics, not just sex. The bill is known as the "Silenced No More Act."
The bill also amends the Government Code (California's Fair Employment and Housing Act) to clarify that it is an unlawful employment practice for an employer, in exchange for a raise or bonus, or as a condition of employment or continued employment, to require an employee to sign a nondisparagement agreement or other document that purports to deny the employee the right to disclose information about unlawful acts in the workplace (including all forms of harassment or discrimination, not just that related to sex). It further provides that it is unlawful to include a provision in any agreement related to an employee's separation from employment (for example, a severance agreement) that prohibits the disclosure of information about unlawful acts in the workplace.
AB 1033: Expansion of the CFRA to Cover a Parent-in-Law
Existing law makes it an unlawful employment practice for an employer to refuse to grant a request by an eligible employee to take up to 12 workweeks of unpaid protected leave during any 12-month period for family care and medical leave. Existing law defines family care and medical leave to include, among other things, leave to care for a parent. AB 1033 amends the California Family Rights Act to include protection for employees caring for a parent-in-law.
SB 606: Expansion of OSHA's Enforcement Powers
SB 606 expands OSHA's enforcement authority by creating new violation categories -- enterprise-wide violations and egregious violations. It also establishes a rebuttable presumption that a violation committed by an employer that has multiple worksites is enterprise-wide if the employer has a written policy or procedure that violates OSHA's provisions.
AB 654: Notification of COVID-19 Exposure
AB 654 amends existing law requiring employers to provide notification to employees who may have been in close contact at work with a person infected with COVID-19, expanding the type of employers exempt from the requirement. This law took immediate effect when approved on Oct. 5, 2021.
SB 807: Extension of Employer Record Retention Requirement to Four Years
SB 807 makes certain procedural changes to the Department of Fair Employment and Housing's enforcement procedures. Notably, for employers, it also extends the file-retention requirement from two years to four years for specified employment-related records, including applications and personnel files. Separate retention requirements apply when a complaint has been filed with the DFEH. It also tolls the deadline for the DFEH to file a civil action pursuant to the FEHA while a mandatory or voluntary dispute resolution is pending.
AB 1407: Implicit Bias Program Mandated for Nursing Program Graduates
This bill amends existing law to add requirements for nursing schools and continuing education for nurses. Relevant to employers, it also requires hospitals to implement an evidence-based implicit bias program as part of its training of new nursing graduates.
SB 362: Restrictions on Use of Quotas for Pharmacy Employees
SB 362 provides restrictions on chain community pharmacies using quotas for employees.
SB 727: Expanded Penalties for Contractors in Construction Industry
SB 727 amends the Labor Code to extend a direct contractor's liability for any debt owed to a wage claimant by a subcontractor to include penalties, liquidated damages and interest.
AB 1023: Modification of Requirement for Public Works Contractors to Furnish Pay Records and Penalties for Failure
This bill revises the requirement that contractors or subcontractors working on public works contracts provide certain payroll records to the labor commissioner, so that contractors are required to furnish records, in electronic format, every 30 days while work is being performed on the project and within 30 days after the final day of work. A failure to provide the records results in a penalty of $100 per day, not to exceed $5,000 per project.
SB 270: Expanded Power for Public Sector Employee Unions
Currently, public sector employers are required to provide labor unions with employee contact information. SB 270 amends existing law to authorize the unions to file a charge alleging violations of the existing requirements after providing notice and an opportunity to cure the defect. It also provides for a penalty, not to exceed $10,000, for a violation, as well as attorneys' fees to the prevailing party.
SB 321: Creation of Advisory Committee for Health and Safety of Household Domestic Employees
SB 321 creates an advisory committee to make recommendations to the Legislature on policies that the State may adopt to protect the health and safety of household domestic service employees. The committee also shall develop health and safety guidance to educate domestic employees and employers.
SB 646: Exemption for Certain Janitorial Employees from PAGA
SB 646 adds an exemption from the Private Attorneys General Act for janitorial employees represented by a labor organization with respect to work performed under a valid collective bargaining agreement that contains certain provisions.