Governor Newsom signed a stack of new employment laws that will impact California employers. All of these laws are in effect as of January 1, 2022. We recommend that California employers revise and add policies and practices as needed to comply with these new laws.

WAGE & HOUR LEGISLATION

Minimum Wage: $15 per hour for employers with 26 or more employees and $14 per hour for employers with 25 or fewer employees. By this time next year, all employers will have to pay $15 per hour minimum wage. The Industrial Welfare Commission amended sections 4(A) and 10(C) in Order Numbers 1-15 and sections 4(A) and 9(C) in Order Number 16 (all relating to increased minimum wage).

Minimum Salary Basis Test Salary Rate: The minimum annual salary for exempt employees is $62,400 per year for employers with 26 or more employees and $58,240 per year for employers with 25 or fewer employees.

Minimum salary for computer software professionals to be exempt from overtime: $50/hour ($8,679.16/mo; $104,149.81/yr). See the California Department of Industrial Relations press release for more details.

Subminimum Wage Phase Out: SB 639 gradually phases out subminimum wage allowed to be paid to employees with physical or mental disabilities and allows no new permits, as of January 1, 2022. Amends Labor Code § 1191.

Expanded Wage Lien for Labor Commissioner: SB 572 permits the Labor Commissioner to create a wage lien on real property to secure amounts owed to the Labor Commissioner (such liens already allowed to secure amounts owed to the employee). Adds Labor Code § 90.8.

Intentional wage theft is now grand theft: One of the big headline grabbers of 2021 was AB 1003, which creates new Penal Code § 487m, making intentional wage theft of more than $950 from 1 worker or $2,350 from 2 or more workers, within a 12-month period, punishable by up to 3 years in county jail.

“Wage theft” is defined as the failure to pay employee or independent contractor their full wages, whether salary, commissions, tips, benefits, or other forms of compensation. “Intentional” means with knowledge that the wages, benefits or compensation is due to the worker.

Reminder of 2022 deadlines from previously passed legislation: The Cal Savers Retirement Savings Program which is a retirement savings program for private sector workers whose employers do not offer a retirement plan. If you do not sponsor a retirement plan and you have 5-49 California employees, your Registration Deadline is June 30, 2022. If you have more than 50 employees, then your deadline has passed, and you’ll want to register immediately, as the state has begun to issue citations, which starts at $250 per employee, and can increase to $500 per employee.

• Register at employer.calsavers.com.
• Add and maintain employee roster and submit contributions by payroll deduction.
• There are no employer fees or employer contributions for Cal Savers.

HUMAN RESOURCES LEGISLATION

Workplace Posters: SB 657 permits workplace postings by email with documents attached for telecommuting workers. Must still post in physical workplace. Adds Labor Code § 1207.

Employment Record Retention: SB 807 requires California employers to keep applicant and personnel records for 4 years from creation or date of employment action. This new law also extends the time the DFEH has to investigate employee complaints and issue a right to sue letter to 2 years and pauses the statute of limitations for DFEH and employees to file a civil action while the DFEH investigates or during any referral to DFEH’s mediation program.

Arbitration Agreements: Not only has the latest anti employment arbitration law been resurrected by the Ninth Circuit, the result of SB 762 is that an employer’s failure to pay arbitration fees in a timely manner will now result in the loss of their right to arbitrate. Because the new law requires everyone to consent to an extension of time to pay, Plaintiffs have the power to prevent an extension. Civil Code § 1657.1; CCP §§ 1281.97 & 1281.98.

CFRA Leave to Care for Parents-in-Law: Those administering leaves of absences will want to know that the California Family Rights Act definition of “parent” now includes parents-in-law. AB 1033 also revises the DFEH mediation pilot program to help small employers by requiring DFEH to provide prior notice of the program and the option of mediation before an employee can file claim of a CFRA violation against an employer with 5-19 employees. Government Code § 12945.1 and 12945.21.

New Settlement, Employment, or Separation Agreements. SB 331, known as the Silenced No More Act, drastically expands restrictions against confidential employment agreements. We already know that settlement agreement provisions that restrict the disclosure of facts related to a civil or administrative claim of sexual assault or sexual harassment are prohibited. As of January 1st, these agreements cannot restrict the disclosure of facts relating to any act of workplace harassment, discrimination, or retaliation.

This law will directly impact new non-disparagement clauses during employment, separation agreements, and settlement agreements. These agreements should now include “safe harbor” language, such as “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.”

Non-disparagement clauses in separation agreements must also give the individual a reasonable time (at least 5 days) to consider the agreement and consult an attorney, similar to ADEA waivers. Code of Civil Procedure § 1001 and Government Code § 12964.5.

Independent Contractors Update. No major changes for 2022. The sunset date for a few of the exemptions have been extended.

• AB 1506: Newspaper Distributors and Carriers. Extends to January 1, 2025, AB 5/Dynamex exemptions for newspaper distributors and carriers in exchange for their annually reporting certain workforce information by specified deadlines.
• AB 1561: Extends to January 1, 2025, sunset date for AB 5/Dynamex exemptions for licensed manicurists, insurance claims adjusters or third-party administrators, and construction trucking subcontractors.

HEALTH & SAFETY LEGISLATION

Expanded Cal/OSHA Enforcement Powers. Citing concerns that Cal/OSHA protections fell short during the COVID-19 pandemic, SB 606 expands Cal/OSHA’s enforcement power in ways likely to continue well beyond the pandemic. Cal/OSHA can now:

• Issue citations to an “egregious employer” for each willful violation. Each employee exposed to that violation is a separate violation for purposes of calculating fines and penalties = penalty stacking.
• Presume an “enterprise-wide” violation if the employer has a noncompliant written policy or procedure, or Cal/OSHA has evidence of a pattern or practice of the same violation(s) across more than one of the employer’s locations. Enterprise-wide violations are subject to the same penalty stacking mentioned above.
• Seek an injunction.
• Subpoena employer records. Labor Code §§6317, 6323, 6324.

Wildfire Smoke Protection for Agricultural Workers: AB 73 adds agricultural workers to the definition of “essential workers” to access state stockpile of PPE. This law also requires employers to provide wildfire smoke protection training to their agricultural employees in a “language and manner readily understandable” by those employees, considering their ethnic and cultural backgrounds and education levels, including using pictograms as needed. Health and Safety Code § 131021, Labor Code § 9110.

COVID-19 Outbreak Reporting Requirements (AB 654). Cleans up 2020’s AB 685:

• Workplace Outbreak = 3+ probable or confirmed COVID-19 cases within a 14-day period who are epidemiologically linked in the setting, are from different households, and are not identified as close contacts of each other in any other case investigation.
• Outbreak notices must be given to “employees who were on the premises at the same worksite as the qualifying individual within the infectious period.”
• Notice to employees’ representatives is only required for employees “who had close contact”.
• Clarifies that employers must give notice of an outbreak to local public health agency within 48 hours or one business day, whichever is later. Notice not required on weekend or holidays.
• Expands list of employers exempt from the outbreak reporting requirement to various licensed facilities, including community clinics, adult day health centers, community care facilities, and childcare facilities.
• “Worksite” does not include locations where employees “worked by themselves without exposure to other employees” or to workers’ “residence or alternative work location(s)” selected by workers when working remotely.

INDUSTRY-SPECIFIC LEGISLATION

Hospitality and Building Services: SB 93 provides rehire rights for employees laid off due to COVID-19. Not set to expire until December 31, 2024. Labor Code § 2810.8.

• “Hospitality”: Applies to hotels and private clubs with 50+ guest rooms, public and private event centers, airport hospitality operations and service providers.
• “Building Services”: Janitorial, building maintenance, and security services for commercial businesses must comply.
• When creating or filling prior positions, must offer it to laid off employees who would be qualified, and allow them 5 days to accept or reject the offer.

Food Delivery Platforms: AB 286 provides that food delivery platforms can’t keep any part of driver’s/eatery’s tip; limits price differences and requires a cost breakdown for each transaction. Bus. & Prof. Code § 22598.

Construction Contractors/Sub-Contractors: For contracts entered on or after January 1, 2022, SB 727 expands a direct contractor’s liability for failure to pay wages to include penalties and liquidated damages, in additional to any unpaid wage, fringe or other benefit payment or contribution and interest owed by the subcontractor. Labor Code §§ 218.7-218.8.

Garment Manufacturing: SB 62 prohibits piece rate compensation unless cba; mandates joint liability between manufacturer, contractor, and brand guarantor (retailer); 4-year record keeping requirement. Labor Code §§ 1174.1, 2670, 2671, 2673, 2675. Labor Commissioner has published FAQs.

Janitorial: Janitorial employees covered by a collective bargaining agreement can no longer bring PAGA claim. (SB 646). Labor Code § 2699.8.

Warehouse Distribution Centers: AB 701 mandates new requirements restricting quotas or task monitoring systems in warehouse distribution centers that employ or exercise control over the wages, hours, or working conditions of 100 or more employees at a single warehouse distribution center, or of 1,000 or more employees at one or more such centers in California. Warehouse distribution centers must provide nonexempt employees, upon hire or within 30 days of the law’s enactment, a written description of each quota applicable to the employee and notice of any adverse employment action that could result from not meeting the quota.

• Employers must first determine if their establishment qualifies as a warehouse distribution center. If so, the employer must next determine if it meets the employee population threshold.
• “Warehouse Distribution Center” broadly applies to establishments that are primarily engaged in operating merchandise warehousing and storage facilities, that sell durable and/or nondurable goods to other businesses, or that are primarily engaged in selling merchandise using non-store means, such as through the Internet or catalogs. Rather than providing a definition, the new law cites four NAICS Codes to define a “warehouse distribution center”:
  • 493110 – General Warehousing and Storage
  • 423 – Merchant Wholesalers, Durable Goods
  • 424 – Merchant Wholesalers, Nondurable Goods; and
  • 454110 – Electronic Shopping and Mail-Order Houses.
  • The law specifically exempts establishments that apply as Farm Product Warehousing and Storage under NAICS Code 493130.
• Employee Population Threshold: AB 701 applies to employers that employ or exercise control over the wages, hours, or working conditions of 100 or more employees at a single warehouse distribution center, or of 1,000 or more employees at one or more such centers in California. Labor Code §§ 138.7, 2100-2112.

Health Care: SB 362 prohibits chain community pharmacies from establishing quotas for pharmacist and technician tasks. AB 1407 requires that hospitals and nursing training programs provide implicit bias training as part of training for new nurses. Bus. & Prof. Code §§ 4113.7, 4317.

LEGISLATION TO WATCH IN 2022

Reinstatement of COVID Paid Sick Leave: supplemental paid sick leave ended in September 2021, but Governor Newsom and lawmakers in Sacramento announced an agreement on January 25, 2022 for a framework to retroactively revive up to two weeks supplemental paid sick leave from January 1, 2022 through September 30, 2022. The proposal would also renew employer tax credits previously available in connection with supplemental paid sick leave. As proposed, California employers with 26 or more employees must pay up to 40 hours of paid sick leave to workers who catch COVID-19 or who take time off to care for a loved one who has COVID-19. The leave would not be available to get the vaccine or recover from vaccine side effects – workers still get 24 hours of paid sick leave in those instances.

Guaranteed Health Care for All: AB 1400, the controversial single payer universal health care bill, CalCare, that would eliminate private medical insurance in California, has advanced to the Assembly floor, for a vote in the coming weeks. The approval from the Assembly Appropriations Committee was “contingent on a statute to create revenue mechanisms to fund CalCare, a fiscal report on whether CalCare can be implemented, and further approval by the legislature”.

Domestic Workers: SB 321 directs Cal/OSHA to create an advisory committee to recommend state policies to protect domestic workers and provide health and safety guidance to domestic workers and employers. If you employ domestic workers, you will want to keep tabs on this committee.