What are the Changes to California Employment Laws in 2022?

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California has a number of important new laws that become effective on January 1, 2022. Let’s look at the significant new laws of which California employers should be aware in January 2022.

An Expanded Exceptions to the Independent Contractor “ABC Test”

Assembly Bill 1561 broadens a number of exemptions to the independent contractor law called the “AB5” or the “ABC test.” These exceptions include the following:

  • Licensed manicurists and subcontractors exemptions have been extended to 2025;
  • Data aggregators and research subjects must no longer need to be compensated to be considered exempt; and
  • Certain claims adjusters and third-party administrators in the insurance and financial services industries have been placed on the exempt list.

Plus, the exemption for manufactured housing salespersons has been given more detail. Existing law also exempts a manufactured housing salesperson—subject to certain legal obligations and regulations pertaining to manufactured housing salespersons.

Non-Disclosure and Non-Disparagement Terms in Settlement, Separation, and Asset Protection Agreements

A law was approved by the governor in 2019 that restricts the use of “no-rehire” provisions in employment settlement agreements. Specifically, prohibits:

an agreement to settle an employment dispute from containing a provision that prohibits, prevents, or otherwise restricts a settling party that is an aggrieved person, as defined, from working for the employer against which the aggrieved person has filed a claim or any parent company, subsidiary, division, affiliate, or contractor of the employer.

Plus, the bill says that a term in an agreement entered into on or after January 1, 2020 that violates this prohibition is void as a matter of law and against public policy.

Now, SB 331 goes one step further and more broadly restricts the use of non-disclosure provisions in various types of employment agreements—such as settlement and separation agreements. Restrictions in settlement agreements now apply to any form of prohibited workplace harassment, discrimination, or retaliation for reporting or opposing harassment or discrimination. This new law says that confidentiality and non-disparagement provisions in separation agreements and asset protection/trade secret agreements can’t have a clause that limits the discussion or disclosure of information about harassment, discrimination, or other perceived forms of unlawful conduct in the workplace. These agreements must also include specific wording to that effect. Also, forcing an employee to prospectively release a claim or right under the Fair Employment and Housing Act is prohibited under the new law.

Additional Coverage and Mediation Requirements in the State Family Rights Act

The California Family Rights Act (CFRA) mandates that California employers with five or more employees to give up to 12 weeks of leave in a 12-month period to workers who’ve worked for at least a year. This leave can be used for caring for family members with serious health conditions. The new law, AB 1033,  added “parent-in-law” to those who qualify as family members.

AB 1033 also specifies in greater detail the requirements for the pilot program that allows for mediation of disputed CFRA claims involving small employers (companies with five to 19 employees). If an employee of a small employer files a CFRA claim with the California Department of Fair Employment and Housing (DFEH) and requests a right to sue, the Department will notify the employee of the mediation requirement if requested by any party before the filing of a lawsuit. The employee must then contact the DFEH’s dispute resolution division, which will inform the employer of the right to request mediation before a lawsuit is filed. If the employer doesn’t get the required notification because he or she didn’t contact the dispute resolution division before suing, the employer can receive a stay of the lawsuit until the mediation is finished or deemed unsuccessful. The statute of limitations is paused during the mediation.

Wage Theft Can be Charged as a Felony

A new law makes it a felony for an employer to intentionally and wrongfully fail to pay wages, including tips, in an amount greater than $950 from one employee or $2,350 in the aggregate from two or more employees within a 12-month period.

AB 1003 provides that an employer acts “intentionally” when it knows that what it’s doing is wrong and acts with the intent of committing the wrong.

“Theft of wages” is the intentional deprivation of wages, as defined in Section 200 of the Labor Code, gratuities, as defined in Section 350 of the Labor Code, benefits, or other compensation, by unlawful means, with the knowledge that the wages, gratuities, benefits, or other compensation is due to the employee under the law.”

For the purposes of this law, independent contractors are considered employees, and entities that hire contractors are considered employers.

Electronic Transmission of Workplace Notices Now Permitted

SB 657 states that any notice that must be posted in the California workplace can now also be sent to employees as an email attachment. Nonetheless, employers are still required to physically post notices in the workplace.

Employers Now Must Cooperate With Civil Rights Investigations

SB 807 provides the California Department of Fair Employment and Housing (DFEH) with greater authority to force employers to cooperate with discrimination complaint investigations.

A lower court’s decision will be subject to immediate, mandatory review by a California appellate court. In addition, SB 807 also authorizes courts to award attorney’s fees to a prevailing party for frivolous or unreasonable petitions or appeals.

The new law now permits the Department to file a civil action in:

  • Any county where it has an office;
  • The county where relevant records are kept;
  • The county where the unlawful practice is said to have happened;
  • Any county where the complainant would’ve worked or would’ve had access to public accommodation;
  • The county of the defendant’s residence or principal place of business; or
  • Any county in California if the civil action includes class or group allegations.

The law also pauses the statute of limitations for employees to bring a lawsuit while the agency is conducting investigations or attempting mediation. When an employee files a complaint with the DFEH, the deadline to sue will be tolled until either (i) the DFEH files a lawsuit; or (ii) a year after the DFEH closes its investigation without filing a lawsuit.

SB 807 also requires employers to keep employment records for four years after an employee leaves, rather than two.

Employers With Multiple Worksites Must Provide More Safety

SB 606 says that any employer with multiple worksites that’s found by the state Division of Occupational Safety and Health (Cal/OSHA) to have a “pattern or practice” of a safety violation at more than one worksite, this creates a rebuttable presumption that the same violation is occurring throughout the employer’s enterprise. Likewise, a rebuttable presumption will be created if the employer has a written policy or procedure that violates a Cal/OSHA safety regulation.

If the employer fails to rebut this presumption, Cal/OSHA can issue an enterprise-wide citation requiring enterprise-wide abatement.

Employers Must Notify Public Health Agencies of COVID-19 Violations

AB 654 requires employers to notify the local public health agencies of a COVID-19 outbreak. This is defined in a non-healthcare workplace as three or more COVID-19 cases in the staff at the same worksite within a 14-day period, within 48 hours, or one business day, whichever is later.

Food Delivery Tips and Fees

AB 286 now requires food-delivery platforms like Uber Eats and DoorDash to pay to the delivery person the whole tip on an order. The employer also can’t charge higher prices than posted on the service’s website.

Large Warehouses Production Quota

Another new law, AB 701, requires companies that operate large warehouses, such as Walmart and Amazon that have warehouse distribution centers in the state, to tell workers of any production quotas.

The new legislation states:

[U]pon hire, or within 30 days of the effective date of these provisions, with a written description of each quota to which the employee is subject, including the quantified number of tasks to be performed, or materials to be produced or handled, within the defined time period, and any potential adverse employment action that could result from failure to meet the quota.

The new legislation also prohibits employers from disciplining workers for failing to make a quota because of health- or safety-related breaks.

Contact Eanet Law

That’s a lot of changes!

Contact us today to learn more about the changes to the state’s employment laws that go into effect on January 1st and the impact they may have on your California business. Our law firm provides guidance on how to incorporate the new laws into employee handbooks, updating leave procedures, and creating customized employment policies.

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