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  • Writer's picturePamela Tahim Thakur

Riding the Wave: California’s New Employment Laws for 2020

For California employers, January 2020 brings a veritable tidal wave of sweeping new employment laws, many of which curb longtime employment practices. Conscientious employers must ensure their awareness of the changes and their compliance with the new laws. This presents a daunting task for even the most experienced and well-counseled employers, leading us to recommend full audits of employment policies, as well as employee handbooks and policy manuals.

These are a few of the major changes affecting California workplaces in 2020:

Minimum Wages

On January 1, 2020, the statewide minimum wage steps up to $13.00 an hour for employers with more than 26 employees, and to $12.00 an hour for those with 26 or fewer employees. The increases are mandated by a 2016 law that gradually raises the floor to $15.00 an hour for nearly all workers by 2023.

Several local jurisdictions have higher minimums including the city and county of Los Angeles, Santa Monica, Malibu, and Pasadena, all of which will raise them on July 1, 2020, to $14.25 an hour for small employers and $15.00 an hour for large employers.

Some 2.6 million Californians will be due for a raise under the statewide floor, according to a UC Berkeley study. California will have the nation’s second-highest minimum next year after Washington state’s $13.50.

Extension of FEHA Statute of Limitations

AB 9, known as the Stop Harassment and Reporting Extension ("SHARE") Act, extends the deadline to file an allegation of unlawful workplace harassment, discrimination, or civil rights-related retaliation under the Fair Employment and Housing Act ("FEHA") from one year, to three years. In so doing, AB 9 will impose a statute of limitations period that is six-times the length of the federal standard and three-times the length of the current state standard. The Act does not apply retroactively to revive already-lapsed claims.

Independent Contractors

In April 2018, the California Supreme Court issued its decision in the Dynamex case, impacting companies that have built their businesses on independent contractors. To classify workers as contractors, rather than employees subject to minimum wage and overtime laws, companies would have to satisfy a strict three-pronged test.

Under the “ABC test,” a business may only contract with independent contractors who satisfy all three of these conditions:

a) they are free from control and direction of the hiring entity;

b) they perform work outside the usual course of the hiring entity’s business; and

c) they are customarily engaged in an independently established business of the same nature as that of the work involved.

Even under a previous, looser standard, state officials estimated misclassification was costing California some $7 billion a year in payroll taxes. Companies also avoid paying federal Social Security and Medicare taxes for contractors.

Prohibition of Arbitration Agreements

AB 51 prohibits employers from requiring employees or applicants to waive any right, forum, or procedure for a violation of FEHA or the Labor Code as a condition of employment. It also prohibits employers from threatening, retaliating or discriminating against, or terminating employees or applicants because they refused to waive any such right, forum, or procedure. In addition to outlawing mandatory arbitration agreements, AB 51 also prohibits arbitration agreements that require employees to opt out of a waiver "or take any affirmative action in order to preserve their rights." Notably, the express language of AB 51 provides that the law does not invalidate any agreement governed by the Federal Arbitration Act (FAA) and, therefore, it will not have any impact on the majority of arbitration agreements.

To the extent an arbitration agreement, or class action, or jury trial waiver is not governed by the FAA, effective January 1, 2020, an employer may only enter into such an agreement, or class action, or jury trial waiver with a California employee if that employee voluntarily and affirmatively chooses to enter into such an agreement or waiver.

Settlement Agreements

AB 749 voids "no rehire" provisions in settlement agreements entered into on or after January 1, 2020. The law does include several notable exceptions, including an exception where the employer has made a good faith determination that the individual engaged in sexual harassment or assault. Further, the law does not require an employer to rehire an individual "if there is a legitimate non-discriminatory or non-retaliatory reason for terminating the employment relationship or refusing to rehire the person."

Expansion of Lactation Accommodation Requirements

SB 142 expands existing law relating to lactation accommodation to add a number of new requirements for the lactation space itself, including access to running water and a refrigerator for storing milk, as well as employer policy requirements and document retention obligations. The bill also subjects employers to Labor Code penalties for violations.

Unpaid Wages

SB 688 amends Labor Code Section 1197.1, which currently permits the Labor Commissioner to issue a citation where an employer has failed to pay at least the minimum wage. The law expands the power to issue a citation to instances where the employer has contractually promised to pay more than minimum wage, but has failed to pay the promised wage.

The employment law attorneys at Thakur Law Firm, APC are knowledgeable in the latest employment law compliance issues, and they can assist your business in ensuring you do not run afoul of the ever-changing contours of California employment law.

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