Client Alert

New Employment Laws and Requirements for 2020

By: Dwayne McKenzie and Cathy Moses

The California Legislature passed a number of important new laws in 2019 that will affect many California employers.  The new laws relate to a wide range of issues that California employers regularly face, regardless of the size of their workforce, including worker classification, mandatory arbitration agreements, and settlement agreements. The following is a list of the key laws passed this year that may have an impact on many employers’ operations, and may require review of employer policies and procedures.

AB 5:  AB 5 is a significant legal change that deals with the classification of workers. AB 5 codifies the California Supreme Court’s decision last year in Dynamex Operations West, Inc. v. Superior Court, 4 Cal. 5th 903 (2018).  In Dynamex, the California Supreme Court established a new three-factor “ABC test” for determining whether a worker qualified as an employee or an independent contractor.  Under AB 5, which is effective January 1, 2020, the ABC test now governs the determination of a worker’s status as an employee or independent contractor for most purposes, including qualifying for unemployment insurance coverage, workers’ compensation benefits and employee rights under the California Labor Code.

The ABC test presumes that workers are covered employees unless an employer can establish that a worker is an independent contractor by satisfying all of the following ABC factors: (A) 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 for the performance of the work and in fact; (B) the worker performs work that is outside the usual course of the hiring entity’s business; and (C) the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

AB 5 includes a long list of exempt professions that are not subject to the ABC test, applying instead a more flexible “Borello” standard, established under prior case law.  Exempted professions include licensed professions such as lawyers, architects, engineers, private investigators, and accountants; physicians; direct sales salespersons; and real estate licensees.  AB 5 also contains a broad exemption for business-to-business contracting relationships.   

AB 51:  Assembly Bill 51 is another important new law with a potentially broad reach.  It prohibits employers from requiring as a condition of employment, continued employment, or the receipt of any employment-related benefit, that an employee or applicant for employment waive any right, forum, or procedure for a violation of the California Fair Employment and Housing Act (FEHA) or the Labor Code.  On its face, the law appears to prohibit mandatory arbitration agreements. The law also prohibits employers from threatening, retaliating against, or terminating any employee or job applicant based on a refusal to consent to any such waiver. AB 51 applies to contracts for employment entered into, modified, or extended on or after January 1, 2020.

This law may be subject to challenge in the courts because of its apparent conflict with the Federal Arbitration Act (FAA), which broadly favors the use of arbitration as a means of dispute resolution. However, the Legislature included within AB 51 a “savings clause.” The law states that it does not intend to invalidate written arbitration agreements that are otherwise enforceable under the FAA and that if any provision of the law is held invalid, the other portions should not be affected. It is not clear whether this savings clause will allow the law to withstand the likely judicial challenges asserting that AB 51 is preempted by federal law.   

AB 9:  The #MeToo movement continues to fuel legislative changes designed to protect employees against unlawful discrimination and harassment. AB 9 substantially increases the time in which an employee can bring a claim under the FEHA.  Previously, a person claiming violation of the FEHA, including claims for workplace discrimination or harassment, was required to file a complaint with the Department of Fair Employment and Housing (DFEH) within one year of the date upon which the unlawful practice occurred. AB 9 extends the period of time that a person can file such a complaint, from one year to three years. Although AB 9 states that it should not be read to revive already lapsed claims, employers should expect a potential increase in such claims, particularly by former employees. 

AB 749:  Settlement and separation agreements between employers and employees often contain a provision that limits an employee’s ability to be reemployed by the employer, otherwise known as a “no hire” provision. AB 749 takes aim at these provisions, stating that an agreement to settle an employment dispute must not contain a provision that would prohibit the aggrieved person from obtaining future employment with the employer.  An aggrieved person is defined as one who has filed a claim against one’s employer in court, before an administrative agency, in an alternative dispute resolution forum, or through the employer’s internal complaint process.

AB 749 specifically states that a provision in any agreement that is entered into on or after January 1, 2020, that violates this new law is void and against public policy.  However, the law does not prevent the settling parties from agreeing to end their current employment agreement, and it does not prohibit the employer from refusing to later employ the employee so long as the employer has made a “good faith determination” that the person engaged in sexual harassment or sexual assault. The law also does not require any employer to continue to employ a person if there is a legitimate non-discriminatory or non-retaliatory reason for terminating the employment relationship.

SB 778:  In 2018, the Legislature passed Senate Bill 1343, which required California employers with five or more employees to provide at least two hours of sexual harassment training to all supervisory employees, and one hour of sexual harassment training to nonsupervisory employees. The law required that employers provide these trainings by January 1, 2020, and once every two years thereafter.  SB 778 provides employers some relief from these deadlines by extending the period of time for employers to comply. SB 778 gives California employers with five or more employees an additional year, until January 1, 2021, to provide employees with the required sexual harassment training. SB 778 also requires that new nonsupervisory employees be provided training within six months of their hire and that new supervisory employees must receive training within six months of assuming their supervisory positions.  

SB 188:  Earlier this year, the Legislature passed the Creating a Respectful and Open Workplace for Natural Hair (CROWN) Act, which is intended to combat discrimination against persons based on natural hairstyles. Under the FEHA, employers are prohibited from engaging in discriminatory practices based on certain protected characteristics, including based on race. SB 188 amends both the FEHA and the Education Code to expand the definition of race to include traits that are historically associated with race, including hair texture and protective hairstyles such as braids, locks, and twists. In explaining the basis for the bill, its sponsors stated, “[D]iversity and inclusion are key in American classrooms and across all industries and sectors, and this legislation will help to drive justice, fairness, education equity, and business success.”

SB 142:  SB 142 requires employers to provide, among other things, a lactation room or location for employees that includes prescribed features and to provide access to a sink and refrigerator in close proximity to the employee’s workspace.  Also, if an employer does not provide an employee with reasonable break time or adequate space to express milk, that is considered a failure to provide a rest period, thereby exposing employers to additional liability for premium wages owed to employees who do not receive required breaks. Although lactation accommodation requirements have existed previously, SB 142 requires employers to institute a written policy and to make it available to employees, including in an employee handbook. Employers with fewer than 50 employees can seek an exemption from these requirements but only if they are able to demonstrate undue hardship.

AB 1768:  Existing laws require prevailing wages to be paid to workers on most “public works” projects.  AB 1768 expands the definition of public works projects to include work conducted during site assessment or feasibility studies. The law also states that preconstruction work, including design, site assessment, feasibility studies, and land surveying, is part of a public work, even if further construction work is not completed. 

SB 530:  As previously noted, California law requires employers to provide sexual harassment training and education to their employees.  SB 530 authorizes a building and construction trades apprenticeship program to provide prevention of harassment training programs for journey-level workers. Such programs would be required to maintain certain records relating to training and issue a certificate of completion to the apprentice or journey-level worker.  SB 530 also allows employers who employ workers pursuant to a multiemployer collective bargaining agreement in the construction industry to satisfy the training requirements by showing that a worker has received the training in one of several specified ways within the past two years. 

If you have any questions regarding any of the foregoing new laws or need assistance with any labor or employee relations matter, please contact:

Dwayne McKenzie at 310.284.2279 or dmckenzie@coxcastle.com

Cathy Moses at 949.260.4629 or cmoses@coxcastle.com

Cox, Castle & Nicholson LLP is a full service law firm offering comprehensive legal services to the business community and specialized services for the real estate and construction industries.  Reproduction is prohibited without written permission from the publisher.  The publisher is not engaged in rendering legal, investment, business or insurance counseling through this publication.  No statement is to be construed as legal, investment, business or insurance advice.

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