Expansions to the California Family Rights Act
Effective January 1, 2022, Assembly Bill 1033 (AB 1033) adds “parent-in-law” to the list of persons that an employee may take time off to care for, pursuant to the California Family Rights Act (CFRA).
AB 1033 also recasts the notice provisions of the small employer family leave mediation pilot program to:
- Require the Department of Fair Employment and Housing (DFEH) to notify an employee of the requirement for mediation prior to filing a civil action, when an employee requests an immediate right to sue alleging a violation of the CFRA
- Require the employee to contact the DFEH’s dispute resolution division prior to filing a civil action
The small employer family leave mediation pilot program affects employers that employ five to 19 employees.
What this means for employers: Employers should review family leave policies to ensure they are compliant with AB 1033. Although the law adds a new category of person an employee may take time off to care for, it does not expand the total amount of leave an employee is entitled to take per 12 month period. For employers with five to 19 employees, AB 1033 provides a tool to delay (and potentially avoid) civil litigation by requesting mediation through the DFEH. Small employers should be aware of their ability to request mediation, and should consult with labor and employment counsel immediately upon receiving notice by a plaintiff or the DFEH that a plaintiff is seeking a civil lawsuit—the deadline to request a mediation is only 30 days from receipt of notice.
Changes to the Fair Employment and Housing Act
Effective January 1, 2022, Senate Bill 807 (SB 807) amends various statutes concerning the Department of Fair Employment and Housing (DFEH) procedures when enforcing California’s civil rights law—notably, the Fair Employment and Housing Act (FEHA).
SB 807 includes the following changes:
- Tolls the deadline for the DFEH to file a civil action pursuant to the FEHA while a mandatory or voluntary dispute resolution is pending.
- Increases the length of time that employers must retain specified employment-related records and files to four years, from two years. The records include applications, personnel records, membership records, and employment referral records and files, as well as personnel files of applicants or terminated employees who were denied employment or terminated, respectively.
- Authorizes the DFEH to appeal court decisions to an appropriate court of appeal, instead of being forced to petition for a writ of mandamus.
What this means for employers: SB 807’s changes provide greater flexibility to the DFEH and add a longer record retention period for employers. Most notably for employers, the additional recordkeeping will require additional cost and oversight. Employers should review their current record retention policies and amend them as necessary. This also provides an opportunity to ensure that employers are retaining all the necessary records so that they do not face unnecessary penalties or subject themselves to avoidable liability. SB 807’s tolling of the statute of limitations deadline provides additional leeway to employees who are seeking redress, and the authorization for the DFEH to appeal decisions grants it additional flexibility when pursing actions against employers.
COVID-19 Rehiring and Retention Requirements for Employers
Effective April 16, 2021, Senate Bill 93 (SB 93) requires employers in certain industries, including hotels with 50 or more guest rooms, to notify former employees laid off due to COVID-19 about job openings for which the former employees are eligible within five days of establishing the open position; they must offer the open position to laid-off employees based on a preference system (for example, seniority while employed). SB 93 also requires that if an employer declines to recall a laid-off employee based on lack of qualifications and hires someone else, that employer must provide the laid-off employee written notice within 30 days detailing the specific reasons for the employer’s decision. These provisions are set to expire on December 31, 2024.
Under SB 93, employers are required to retain certain records regarding laid-off employees, including records of communications regarding offers of employment, for at least three years. The bill authorizes employees to file a complaint with the Division of Labor Standards Enforcement against the employer, and grants the Division the power to force an employer to hire/reinstate the employee, award back pay, and confer civil penalties on the employer.
The bill also contains a collective bargaining agreement waiver provision, providing that the waiver of recall rights must be expressly stated in the collective bargaining agreement.
SB 93 does not create a private right of action; the Division of Labor Standards Enforcement has sole jurisdiction to enforce its provisions. However, employers remain susceptible to liability for violations and the punitive enforcement provisions included in the law.
What this means for employers: Employers subject to SB 93 must create processes and procedures for complying with the new law. Employers with collective bargaining agreements should review the agreements and, if they desire at the next opportunity, negotiate an express waiver of the recall rights set out in SB 93.
Equal Employment Opportunity Commission Determines That COVID-19 Can be a Disability
On December 14, 2021, the Equal Employment Opportunity Commission (EEOC) updated its guidance regarding COVID-19. The EEOC found that COVID-19 can be—but is not always— considered a “disability” under Title I of the Americans with Disabilities Act (ADA).
The EEOC analyzed whether COVID-19 constituted a disability under the ADA in the same manner as it analyzes whether any other medical condition is a disability. As a reminder, persons may be considered disabled under the ADA if they have: an “actual” disability, a “record of” a disability, or are “regarded as” having a disability.
The EEOC provides that whether an employee’s COVID-19 symptoms constitute an “actual” disability is a fact-intensive question that can only be determined on a case-by-case basis. The question that must be answered is: are the employee’s COVID-19 symptoms a “physical or mental” impairment that “substantially limits one or more major life activities”?
The EEOC determined that symptomatic COVID-19 is a physical or mental impairment, and thus, employers must determine whether a particular employee’s COVID-19 symptoms substantially limits major life activities. To aide employers, the EEOC provides a few examples:
- “An individual diagnosed with COVID-19 who experiences ongoing but intermittent multiple-day headaches, dizziness, brain fog, and difficulty remembering or concentrating, which the employee’s doctor attributes to the virus, is substantially limited in neurological and brain function, concentrating, and/or thinking, among other major life activities”
- “An individual diagnosed with COVID-19 who initially receives supplemental oxygen for breathing difficulties and has shortness of breath, associated fatigue, and other virus-related effects that last, or are expected to last, for several months, is substantially limited in respiratory function, and possibly major life activities involving exertion, such as walking.”
- “An individual who has been diagnosed with COVID-19 experiences heart palpitations, chest pain, shortness of breath, and related effects due to the virus that last, or are expected to last, for several months. The individual is substantially limited in cardiovascular function and circulatory function, among others.”
Compare the above an examples with an individual’s COVID-19 symptoms that do not substantially limit a major life activity:
- “An individual who is diagnosed with COVID-19 who experiences congestion, sore throat, fever, headaches, and/or gastrointestinal discomfort, which resolve within several weeks, but experiences no further symptoms or effects, is not substantially limited in a major bodily function or other major life activity, and therefore does not have an actual disability under the ADA. This is so even though this person is subject to CDC guidance for isolation during the period of infectiousness.”
The EEOC made explicitly clear that COVID-19 is not always an actual disability under the ADA. However, there remains significant gray area in which it is not clear whether an employee’s COVID-19 symptoms constitute a disability under the ADA. Based on the examples provided, symptoms that are synonymous with a cold or flu will not be considered a disability, while symptoms beyond that are more likely to be considered a disability.
Whether or not an employer regards an employee as having a COVID-19 disability is also viewed under the broader context of the ADA. Therefore, if the employer subjects an employee to an adverse employment action because the person has COVID-19, or the employer mistakenly believes the employee has COVID-19, the employer will have regarded the employee as disabled unless the COVID-19 symptoms are both transitory and minor.
What this means for employers: The updated guidelines highlight the importance for employers to have COVID-19 protocols in place. Those protocols, in addition to helping foster a safe working environment, will help ensure that employers do not create unnecessary liability for themselves. Employers must also be mindful of taking adverse employment actions against employees who have COVID-19 and are experiencing symptoms. Employers should consult with labor and employment lawyers experienced in handling ADA claims prior to taking such adverse employment actions. Here is a link to the EEOC’s guidance on the topic.
Employers Must Brace Themselves for the NLRB’s Shift Back to a Pro-Union Agenda
Major changes are on the horizon for both union and non-union private sector employers alike as the new Democratic majority under the Biden administration settles in at the National Labor Relations Board (NLRB). On August 12, 2021, the newly-confirmed NLRB General Counsel, Jennifer Abruzzo, nominated by President Biden, released a General Counsel Memorandum providing a detailed roadmap for the Board’s return to a pro-union, more worker-friendly agenda. While the Board is prone to change every four to eight years as political control shifts in the White House, this memo truly highlights how volatile Board law can be for employers.
The NLRB is the independent federal agency responsible for enforcing federal labor laws. The NLRB is divided into two primary parts: the five-member Board charged with hearing disputes and resolving them through quasi-judicial proceedings; and the Office of the General Counsel, responsible for investigating and prosecuting complaints.
In effect, the General Counsel takes positions in administrative suits against employers or unions, and the five-member Board decides whether to adopt those positions as Board precedent. Through the release of the Memorandum, Abruzzo has been uniquely transparent about where the Board plans to go in its efforts to restore Obama-era precedent undone by former Trump appointees and to blaze new trails in areas the Board has not previously covered.
Abruzzo’s memo lists a number of key areas that she plans to explore for doctrinal shifts away from previous precedent and other initiatives and areas that Abruzzo would like to carefully examine, and concludes with a list of case-handling matters that are traditionally submitted to Advice. Particularly noteworthy is Abruzzo’s focus on reexamining the Board’s precedent concerning employee handbook rules and confidentiality rules and provisions, which will likely require employers to reassess their policies and rules surrounding confidentiality, non-disparagement, social media, media communications, civility, respect and professionalism, offensive language, and workplace surveillance. Employers should be prepared to review and modify their separation agreements and other agreements containing confidentiality provisions and evaluate best practices for the same.
Another glaring area of concern for private sector union employers is Abruzzo’s focus on cases for reconsideration which relate to bargaining obligations. The changes she seeks to explore could significantly limit an employer’s ability to make changes in the workplace that are not clearly permitted by contract language in a collective bargaining agreement without first bargaining with the employees’ labor representative.
What this means for employers: Abruzzo’s memo foreshadows significant changes on the horizon and broad implications for employers across all industries. Given the changing tide, many practices which employers currently take for granted, including those required by law, will likely warrant revision or require bargaining with the union. Employers, both union and non-union, should brace themselves for the changes to come and consult with employment counsel early on in order to make appropriate updates to their policies and practices and to ensure they remain compliant with applicable law.
Joint Employment Pendulum Swings Left Again
Policymakers and courts continue to expand the application of labor and employment laws to independent contractors and employees of franchisees, declaring them “joint employers” of each other’s workers.
At the Federal level, the U.S. Department of Labor (DOL) has already rolled back the Trump Administration’s joint employer rule that required a business to actually exercise control over workers to be deemed their employer. The Biden DOL has returned to the “economic reality” test, which focuses on the nature of the worker’s control over the work and the worker’s opportunity for profit or loss.
The National Labor Relations Board (NLRB) now has the opportunity to roll back a similar Trump Administration joint employer rule in the context of employees’ rights to collectively bargain. Under the Trump “Final Rule,” a business could only be deemed the employer of another business’ employees if it exercised “substantial direct and immediate control” over the essential terms and conditions of another company’s employees. The Service Employees International Union (SEIU) has challenged the rule in court on the grounds that the Final Rule limits the factors the NLRB may consider in making a determination of joint employer status.
The five-member NLRB – which is now controlled by three members appointed by Presidents Obama and Biden (two of whom previously worked for the SEIU or for SEIU-backed entities) – has the authority to direct the NLRB’s general counsel during its defense of the lawsuit, and may have the authority to settle the case by agreeing to modify or stop enforcing the Final Rule.
In California, businesses continue to struggle with the breadth and implications of its sweeping “gig worker” law, Assembly Bill 5 (AB 5), and the California Supreme Court’s decision in Dynamex Operations West, Inc. v. Superior Court. In Dynamex, the Court created a new standard for determining whether a worker is an employee or independent contractor, the so-called “ABC” test. Under the ABC test, a worker will be designated an employee unless the hiring entity proves that the worker (A) is free from its control and direction; (B) performs work that is outside the usual course of its business; and (C) is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed. AB 5 codified the ABC test as law for most businesses.
Challenges to the scope and application of the ABC test to California businesses have largely failed, putting industries that rely upon independent contractors at great risk. Given that the application of the ABC test is perceived by many industries as an existential threat, many continue to challenge the application of the law. For example, the California Trucking Association is currently challenging the constitutionality of the ABC test codified in AB 5 as it applies to motor carriers who use independent owner-operators to provide trucking services in California. California Trucking Association, Inc. v. Bonta, 996 F.3d 644 (9th Cir. 2021), cert. pending, No. 21-194.
When the U.S. Supreme Court finally decides whether AB 5 is federally preempted, we will have more insight into the overall impact of AB 5 on the interstate trucking industry.
What this means for employers: Businesses should bear in mind the current trend toward classifying all workers as employees of the entity to whom they provide service, regardless of the true nature of the relationship, and take steps to mitigate the downside risk of judicial reclassification, such as contracting only with entities, rather than people, for services and having written indemnity agreements with those entities.
California Further Limits Employer’s Ability to Negotiate Employee Silence in Settlements
Effective January 1, 2022, Senate Bill 331 (SB 331) – the Silenced No More Act – prevents employers from prohibiting employees and former employees from disclosing alleged facts related to prohibited harassment, discrimination and other specified unlawful conduct. Further, the law requires additional protections for employees entering into separation agreements.
Existing law prohibits an employment settlement agreement from preventing the disclosure of factual information regarding claims of:
- Sexual assault
- Sexual harassment
- Workplace harassment or discrimination based on sex
- Failure to prevent such an act
- Retaliation against a person for reporting such act
SB 331 prohibits an employment settlement agreement from preventing the disclosure of information regarding claims of workplace harassment, discrimination, failure to prevent workplace harassment or discrimination, or retaliation for claims, including those based on race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation or veteran or military status.
SB 331 also prohibits any non-disparagement clause or other language that denies employees “the right to disclose information about unlawful acts in the workplace” in separation agreements, employment agreements entered into in exchange for a raise or bonus, or agreements made as a condition of employment or continued employment. Per statute, non-disparagement or other clauses may be included with the following disclaimer: “Nothing in this agreement prevents you from discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that you have reason to believe is unlawful.”
Other provisions sometimes included in employment settlement agreements remain permissible. For example, the amount of any settlement may be kept confidential. Additionally, a claimant may request a settlement provision that shields their identity and all facts that could lead to the discovery their identity.
Additionally, California employers offering separation agreements must inform employees of their right to consult with an attorney regarding any separation agreement, and provide at least five business days to review and consider the separation agreement. Employees may knowingly and voluntarily choose to sign the separation agreement sooner, provided that the employee’s decision is not induced through improper tactics such as fraud, misrepresentation or other prohibited tactics. Negotiated settlement agreements that resolve a claim filed by an employee in court, before an administrative agency, in an alternate dispute resolution forum, or through an employer’s internal complaint process are exempted.
What this means for employers: Employers are advised to review and revise any form offer letters, employment agreements, severance agreements and settlement agreements to conform to SB 331’s changes. Any provisions contrary to the law will be void as a matter of law and public policy.
Employers Cannot Make Employees Sign Arbitration Agreements as a Condition of Employment . . . or Can They?
As of September 16, 2021, employers are once again prohibited from requiring an employee or prospective employee to sign an arbitration agreement for certain California employment-related claims as a condition of employment or continued employment.
In 2019, California passed Assembly Bill 51 (AB 51), making it unlawful for employers to require employees and prospective employees to agree to arbitrate claims arising under the Fair Employment and Housing Act (FEHA) and/or the California Labor Code as a condition of employment or continued employment, and authorizing civil and criminal penalties for such conduct. Before AB 51 could take effect, however, the Chamber of Commerce successfully sought a temporary restraining order halting its enforcement. Shortly thereafter, the same District Court issued a preliminary injunction against enforcement of AB 51.
This year’s development is the result of the Ninth Circuit’s September 15, 2021 decision in Chamber of Commerce v. Bonta lifting, in part, the District Court’s order enjoining enforcement of AB 51. Specifically, the Court held that the prohibition on mandatory arbitration agreements regulates “pre-agreement” conduct, and is therefore not preempted by the Federal Arbitration Act. The Court upheld the injunction as to AB 51’s enforcement mechanisms, which would impose civil and criminal penalties for violations.
As noted in the dissent, however, this holding has the bizarre effect of rendering unlawful an employer’s attempt to make employment contingent on certain arbitration agreements – but if the employee signs the “mandatory” arbitration agreement, the agreement is enforceable, as are agreements executed prior to September 16, 2021.
It is expected that the Ninth Circuit’s ruling will be challenged, and AB 51 may again be enjoined in its entirety pending further legal proceedings.
What this means for employers: Employers should consult with legal counsel to explore how best to modify standard arbitration agreements for new hires and ensure compliance; based on careful crafting by counsel, there are various ways an employer may lawfully obtain enforceable agreements. Despite the changing legal landscape in California, arbitration agreements are still recommended as an effective tool to avoid public and lengthy litigation of certain claims and guard against unreasonable jury verdicts.
More Than a Late Payment Penalty – Failure to Promptly Pay Arbitration Invoices Results in Waiver of Right to Compel Arbitration
Effective January 1, 2022, California now requires that upon initiation of arbitration, an arbitration provider must immediately issue to the employer an invoice “for any fees and costs required before the arbitration can proceed,” due upon receipt (unless the arbitration agreement expressly sets forth a reasonable number of days for payment).
Similarly, if the arbitration agreement does not specify timing of payments while the arbitration is pending, invoices “for any fees and costs required for the arbitration proceeding to continue” must also be issued as due upon receipt.
The statute provides for a grace period of 30 days. If the employer fails to remit payment within 30 days, the employer waives its right to compel arbitration. The employee may choose to proceed with arbitration, however; if he or she does, the arbitrator “shall” award monetary, issue, evidence, or terminating sanctions. Alternatively, the employee may elect to initiate a court action and seek recovery of all attorneys’ fees and costs associated with the abandoned arbitration proceeding.
What this means for employers: Employers should be very careful to pay all arbitration invoices immediately to avoid significant negative consequences. Employers should also consult with counsel to evaluate what revisions might be made to existing arbitration agreements to moderate these risks.
Are You Personally Liable for Your Employer’s Wage and Hour Violations?
Beginning in 2016, California law has created individual personal liability for wage and hour violations for an “owner, director, officer, or managing agent” of an employer in which the individual had personal involvement and can be said to have been “acting on behalf of an employer.” A recent case clarifies that an owner has no personal liability in such lawsuits, if they have limited involvement in the day-to-day operations of the company.
In Atempa v. Pedrazzani, 27 Cal. App. 5th 809 (2018) two former employees successfully sued their former employer, Via Italia Trattoria, and the owner, Mr. Pedrazzani, alleging that the defendants failed to pay overtime wages, failed to pay minimum and regular wages, and failed to furnish accurate wage statements in a timely manner, among other claims. Although the restaurant was not solvent to pay the damage award, the court concluded that the law clearly holds “owners, directors, officers, and managing agents” personally liable for violations of certain wage and hour laws. Mr. Pedrazzani, the owner, president, secretary, and director, was held personally liable for over $30,000 in civil penalties, and an additional $300,000 in attorneys’ fees, because he either violated, or caused to be violated, the overtime pay and minimum wage laws.
Until the May 28, 2021 Usher v. White case, there was scant authority interpreting this liability other than Atempa. In Usher, a wage and hour class action alleging that plaintiffs were misclassified as independent contractors, the complaint was amended to add business owners Shirley White and her son Jeff White as individual defendants in the case.
The trial court granted Shirley White’s summary judgment motion on the ground that she had not participated in the decision to classify plaintiffs as independent contractors and thus was not liable. The Court of Appeal affirmed, holding that in the absence of “personal involvement” in violating the statute or in causing such violations, an owner has no personal liability. Here, Shirley White’s involvement in the operation and management of the employer was “extremely limited,” and she did not participate in the day-to-day operational/management decisions of the company.
What this means for employers: While a hands-on owner or other managing agent who participates in the day-to-day operations or wage and hour policy decisions affecting aggrieved employees may face personal liability, those who do not have such close involvement or decisional authority are now more likely to avoid personal liability under the holding of Usher. All business owners, directors, officers, and managing agents should determine with counsel whether or not their conduct exposes them to personal liability for wage and hour violations in light of the Pedrazzani and Usher decisions.
New Criminal Penalties for Wage Theft
California has passed Assembly Bill 1003 (AB 1003), creating a new offense for the intentional theft of wages by an employer. The offense may be punished as a misdemeanor or a felony, and the offense specifically authorizes restitution of wages, gratuities, benefits or other compensation that is the subject of prosecution.
In the event that the intentional theft is in an amount greater than $950 from any one employee, or greater than $2,350 in the aggregate from two or more employees in any consecutive 12 month period, AB 1003 makes the intentional theft punishable as grand theft. Within the bill, the definition of employee also includes independent contractors.
The bill’s focus is on “intentional” wage theft, but employers should avoid relying on that qualification. The definition of “intentional” will be subject to interpretation in the context of this new law, thus it is not clear where the boundary lies between intentional and unintentional. For example, failing to pay minimum or overtime wages, failing to provide meal periods or to authorize and permit rest periods, failing to reimburse employees for reasonable business expenses, or failing to pay an employee’s final paycheck in a timely manner are some of the more common ways that employers can engage in wage theft.
What this means for employers: Employers should review their policies and pay practices to ensure that they comply with relevant California Labor Code sections. One step employers can take is to obtain employees’ signatures on acknowledgment forms to provide evidence of the employees’ receipt of a specific policy and understanding of the substance of the policy. Employers can also implement regular auditing of policies and pay practices. If you have any doubt about a certain practice, you should contact qualified labor and employment counsel for advice.
How Soon is Now? It’s Time to Review the Independent Contractor/Employee Status of Your Workers
It’s time to review all of your independent contractor arrangements. Assembly Bill 5 (AB 5), California’s statute governing the classification of independent contractors, underwent fundamental changes when Assembly Bill 2257 (AB 2257) became law. These exemptions and revisions apply to business-to-business relationships, referral agencies, professional services, performance artists, and other classifications.
AB 5 codified the rigid, court-drawn “ABC” test for determining whether a worker is properly classified as an independent contractor. If the ABC test fails, the worker must be classified as an employee and provided the full complement of legal protection which employee status affords.
To pass the “ABC” test, all three factors must be present:
- “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 … and in fact”;
- “The worker performs work that is outside the usual course of the hiring entity’s business”; and
- “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.
If a company is unable to demonstrate any of these three factors, then the worker is an employee (subject to a list of exceptions). Misclassification of that employee creates a whole host of liability not only for the employer, but possibly for individual owners and managing agents (see article “Are You Personally Liable for your Employer’s Wage and Hour Violations?” in this alert).
AB 5 also significantly reduced the number of California workers subject to the ABC test by exempting a long list of occupations and types of service providers where a more flexible test applies—and that test focuses principally on the first prong of the ABC test: whether a company has the “right to control” workers when determining if they are independent contractors or employees.
Thankfully, by enacting AB 2257, many more California workers are exempted from the ABC test—in all, 109 categories of workers are exempted.
Although AB 5 remains fundamentally unchanged by AB 2257 and the ABC test still applies in many circumstances, AB 2257 establishes more flexible standards in the following areas: business-to-business relationships; referral agencies, and professional services. Moreover, it exempts additional occupations and certain business relationships, discussed in greater detail below.
Item 1: Business-to-Business Relationship Exemptions. AB 5 provided an exemption for California businesses contracting with other businesses, which is one of the narrowest in the statute and has 12 conditions to apply. AB 2257 clarifies the exemption by specifying the terms required in a written contract, providing that a business service provider’s residence is a permissible place of business, and limiting the type of work materials that must be provided by the business service provider. AB 2257 also extends the business-to-business exemption to include a “public agency or quasi-public corporation” that has retained an independent contractor.
AB 2257 also creates a “single-engagement” exemption from the ABC test for “a stand-alone non-recurring event in a single location, or a series of events in the same location no more than once a week.” Under the bill, certain requirements must be satisfied for the new exemption to apply, including “control and direction” over the work (both by contract and in fact), mutual freedom to negotiate rate of pay, and a written contract that specifies the pay rate and the tools and materials to be provided by the worker. Both the hiring and performing entities must maintain separate business locations.
Item 2: Entertainment/Music Industry Exemptions. AB 2257 creates several new entertainment industry exemptions from the ABC test, largely focused on the California music industry. Some positions are generally exempt from the ABC test, including, but not limited to: recording artists; songwriters, lyricists, composers, and proofers; managers of recording artists; record producers and directors; musical engineers, mixers, and musicians engaged in the creation of sound recordings; vocalists; and independent radio promoters.
Where musicians or performers are engaged in a one-time live performance, they are generally exempt from application of the ABC test with certain exceptions, including if they are performing as a symphony orchestra, at a theme park or amusement park, in a musical theater production, as a headliner for a venue with more than 1,500 attendees, or at a festival selling more than 18,000 tickets per day. These exceptions are “inclusive of rehearsals related to the single-engagement live performance event.”
Item 3: The Referral Agency Exemption. AB 5 created an exemption for businesses referring customers to providers in certain services. AB 2257 clarifies how a service provider certifies proper licensure, the freedom of a service provider to maintain its own clientele, and the ability of a service provider to set or negotiate its terms with clients as well as establishing its rates without deduction by a referral agency.
For example, AB 2257 expands the type of qualifying services for the exemption, including but not limited to “graphic design, web design, photography, tutoring, consulting, youth sports coaching, caddying, wedding or event planning, services provided by wedding and event vendors, … yard cleanup, and interpreting services”; excludes services provided in an industry designated by Cal/OSHA as a high hazard industry, or for referrals for businesses that provide, among other things, janitorial, delivery, transportation, trucking, and in-home care services; and defines “client” as “(A) a person who utilizes a referral agency to contract for services from a service provider, or (B) a business that utilizes a referral agency to contract for services from a service provider that are otherwise not provided on a regular basis by employees at the client’s business location, or to contract for services that are outside of the client’s usual course of business.”
Item 4: Professional Services Exemptions. AB 5 exempted a number of professionals from application of the ABC test, including lawyers, doctors, securities broker-dealers, and certain commercial fishermen. AB 2257 adds a category of professional services to be exempted that is related to an individual’s work as a content contributor, advisor, producer, narrator, or cartographer for specified publications. AB 2257 also exempts “licensed landscape architects, specialized performers teaching master classes, registered professional foresters, real estate appraisers and home inspectors, and feedback aggregators.” AB 2257 also adds the occupations of translator and copy editor to the freelancer exemption.
Item 5: Other Exemptions. AB 2257 provides several other exemptions and clarifications, including but not limited to persons who provide “underwriting inspections, premium audits, risk management, or loss control work for the insurance and financial services industries”; home inspectors, a category added to the exemption for specified occupations governed by the Business and Professions Code; individual performance artists, manufactured housing salespersons, competition judges, and individuals engaged in international exchange visitor programs; and data aggregators and the individuals providing feedback to the data aggregators, subject to specified conditions.
What this means for employers: AB 2257 provides additional carve-outs of the rigid ABC test but does not necessarily provide safe harbors for businesses seeking to use independent contractors instead of employees for specified roles and aspects of their business. Companies are encouraged to contact qualified labor and employment counsel when bringing on new workers, especially those who are residents of or who will be working in the State of California, as either independent contractors or employees.
Biden’s Vaccine Mandate for Large Employers Faces an Uncertain Future – Large Employers Should Prepare for Compliance by January 10
On November 5, 2021, Federal Occupational Safety and Health Administration (OSHA) published new Emergency Temporary Standards (ETS) which implemented a nationwide COVID-19 vaccine mandate for private employers with 100 or more employees. The ETS required that by December 5, 2021, covered employers must implement a written plan that either requires all employees to get vaccinated by January 4, 2022, or offers employees a choice to get vaccinated or get tested on a weekly basis starting on the same date.
Within 24 hours of publishing, dozens of lawsuits were filed in an attempt to block the ETS from taking effect, challenging it on a number of constitutional and procedural grounds. On November 6, 2021, the Fifth Circuit Court of Appeals issued a stay, putting the implementation of the vaccine mandate on hold. However, on December 17, 2021, the Sixth Circuit Court of Appeals lifted the stay and revived the ETS.
OSHA has issued an update which indicates that it “will not issue citations for noncompliance with any requirements of the ETS before January 10 and will not issue citations for noncompliance with the standard’s testing requirements before February 9, so long as an employer is exercising reasonable, good faith efforts to come into compliance with the standard. OSHA will work closely with the regulated community to provide compliance assistance.”
Advocacy groups immediately filed petitions to the U.S. Supreme Court to attempt to stay the ETS once again. It is currently unclear whether the U.S. Supreme Court will consider the appeal and how this may impact the enforceability of the ETS or the timing of the requirements.
States with an occupational safety and health plan like California are required to either adopt the Federal OSHA ETS, or implement their own standards, which must be at least as effective as the Federal ETS. On November 18, Cal/OSHA announced that, rather than adopt or implement a vaccine mandate for private employers at this time, Cal/OSHA would wait for the outcome of the federal litigation before determining next steps. Cal/OSHA has not yet made any further announcement.
Given the uncertainty surrounding the Federal OSHA vaccine-or-test mandate, California employers should keep the following in mind:
- The new enforceable deadlines under the Federal OSHA ETS (January 10 and February 9) are fast approaching.
- California employers should still plan for potential compliance with a vaccine-or-test rule. Even if the ETS is struck down or stayed by the U.S. Supreme Court, Cal/OSHA appears likely to issue a version of this mandate at some point. Covered employers may prepare by establishing policies and procedures for determining vaccination status, obtaining and maintaining proof of vaccination, and tracking weekly test results. Employers should seek legal counsel to ensure that these interim steps and policies are carefully crafted in order to ensure compliance with the complicated and lengthy legal requirements.
- The vaccine mandates and related COVID-19 orders issued by California state and local governments are currently unaffected and continue to apply, including vaccine mandates for health care workers, adult care facilities, and state employees.
A high-level, bullet-point summary of the key sections of the Federal OSHA ETS may be found here.
The full text of the Federal OSHA ETS can be found here.
What this means for employers: Until Cal/OSHA issues new guidance, (despite this state of limbo) the Federal OSHA ETS is currently legally required. As such, California employers who would be covered by this vaccine mandate should prepare to implement new policies and procedures by January 10, 2022. Given the complexities inherent in the 490 pages of the federal mandate, employers are highly encouraged to consult with legal counsel in order to ensure these preparation steps are properly handled.
Work Quota Requirements for Warehouse and Distribution Centers
Beginning January 1, 2022, Assembly Bill 701 (AB 701) creates new requirements for warehouse distribution centers who employ or exercise control over 100+ employees at a single warehouse distribution center, or over 1,000+ employees at one or more warehouse distribution centers in California.
There is no clear definition of “warehouse distribution center.” Instead, AB 701 relies on federal classifications set by the North American Industry Classification System (NAICS) Codes, including General Warehousing and Storage, Merchant Wholesalers, Durable Goods, Merchant Wholesalers, Nondurable Goods, and Electronic Shopping and Mail-Order Houses.
AB 701 requires that warehouse distribution centers must provide each employee, upon hire or within 30 days of AB 701’s effective date, with a written description of each quota which the employee subject to. The written description must include the number of tasks to be performed or the material to be produced/handled within the defined time period, as well as any potential adverse employment action that could result from failure to meet the quota.
AB 701 also prohibits the establishment of quotas that would prevent compliance with meal or rest periods and use of bathrooms, among other health a safety laws. AB 701 prevents employers from taking any adverse action against an employee who fails to meet a quota that is not disclosed, or that would prevent compliance with health and safety laws.
Further, an employee is allowed to request—and the employer is required to respond to—a written description of the employee’s quotas as well as a copy of the most recent 90 days of the employee’s personalized work speed data. This means that warehouse distribution centers must maintain work speed data for each employee operating under a quota. AB 701 does not place a limit on how many times a current employee may request a copy of their work speed data; however, former employee are limited to a single request.
The bill was passed to protect warehouse and distribution center workers from the quotas that prevent adherence to California’s Labor Code and health and safety regulations. Some uncertainty remains as to which employers qualify as “warehouse distribution centers,” and as to how large quotas can be without running afoul of the new law. Notwithstanding, this new law will add liability for warehouse and distribution centers, particularly ones with stringent quotas. Further, the requirement the employers create descriptions of every quota in effect, and the requirement that employers maintain accurate, up to date personal work rate data for each employee working with a quota, will raise costs for warehouse distribution centers.
What this means for employers: Employers who believe that they may be considered a “warehouse distribution center” should immediately consult with qualified labor and employment counsel for advice. Employers should evaluate their current quotas and create a written description of each quota in existence. Employers should ensure that the applicable quotas enable employees to use the restroom and take meal and rest periods. Employers must also create a system for tracking individual employees personal work rate data, as well as a system for responding to requests for information from employees.
New Implicit Bias Course Requirement for Nurses
Effective on January 1, 2023, Assembly Bill 1407 (AB 1407) requires approved schools of nursing or approved nursing programs to include direct participation in one hour of implicit bias training in their curriculum.
AB 1407 also requires “hospitals” (as defined) to implement an evidence-based implicit bias program as part of its new graduate program. Additionally, AB 1407 requires nurses who obtained their license within the last two years to undergo one hour implicit bias training.
Hospitals are defined in the Health and Safety Code. The evidence-based implicit biased course must include a number of different topics, that can also be found in the Health and Safety Code.
What this means for employers: If hospitals determine that they are governed by the new law, they should begin plans to implement the required evidence-based implicit bias programs sooner, rather than later. While hospitals have until January 1, 2023 to implement the programs, creating such a course will not occur overnight and falling behind is preventable, given the timeline set forth.
Additional Power Granted to the Labor Commissioner
Effective January 1, 2021, Senate Bill 572 (SB 572) authorizes the Labor Commissioner, as an alternative to a judgment lien, to create a lien on real property to secure amounts due under any final citation, findings, or decision. The requirements to do so are laid out, as well as the process for releasing the lien once amounts owed are paid.
What this means for employers: SB 572’s impact is straightforward, enabling the Labor Commissioner an alternative means of collecting on amounts owed. The practical effects of having judgment lien or a real property lien recording against an employer are limited, but it is important to be aware of the various tools the Labor Commissioner may implement.
Additional Powers Granted to the Division of Occupational Safety and Health
Effective January 1, 2022, Senate Bill 606 (SB 606) creates a rebuttable presumption that Occupational Safety and Health Administration (OSHA) violations committed by an employer with multiple worksites are enterprise-wide if the employer has a written policy or procedure that violates the California Labor Code, or if the Division of Occupational Safety and Health has evidence of a pattern or practice of the same violation at more than one worksite. The Division is authorized to issue an enterprise-wide citation if the employer fails to rebut the presumption.
SB 606 also enables the Division to issue an “egregious violation” citation under numerous circumstances. Examples of egregious violations include: if the employer’s intentional action or inaction made no reasonable effort to eliminate a known violation; if the employer’s violations resulted in worker fatalities, a worksite “catastrophe,” or a large number of injuries or illnesses; and if the employer has a history of violations.
What this means for Employers: SB 606 has the potential to greatly expand liability for certain employers with multiple worksites in California. Typically employers use a single employee handbook (or identical workplace policies) for employees within a single state. Thus, even if an unlawful practice is limited to a single worksite, SB 606 may result in liability extending to all of its California’s worksites. Employers must continue to ensure that they are not subjecting their employees to unsafe work environments—a single bad apple is now more costly than ever.
JMBM’s Labor and Employment attorneys counsel businesses and management on workplace issues, helping to establish policies that address problems and reduce job-related lawsuits. We act quickly to resolve claims and aggressively defend our clients in all federal and state courts, before the Department of Labor, the NLRB, and other federal, state and local agencies, as well as in private arbitration forums. We represent employers in collective bargaining negotiations and arbitration.
This update is provided to our clients, business associates and friends for informational purposes only. Legal advice should be based on your specific situation and provided by a qualified attorney.