As 2021 comes to a close, we hope you all are looking forward to a prosperous and healthy new year. In an effort to help you maintain the best policies and practices, we would like to provide you with this summary of new employment laws and revisions to existing laws.
This post contains what we believe to be the most relevant updates for our clients; however, we have not included every change to workplace laws that occurred this year. We are always available to provide additional guidance for issues specific to your business.
The laws below become effective January 1, 2022, unless otherwise noted.
WAGE AND HOUR ISSUES
Minimum Wage Increase
California hourly minimum wage increases to $15.00 for employers with 26 or more employees and $14.00 for employers with 25 or less. These increases are part of the mandatory minimum wage yearly increase through 2023 and apply statewide. Local ordinances may provide for higher minimum wages.
Exempt Employees: Minimum Salary Threshold Increase
For employers with 26 or more employees, the minimum exempt salary is $62,400. For employers with 25 or fewer employees, the minimum exempt salary is $58,240. These thresholds have increased because exempt employees must be paid at least twice the state minimum wage and may be higher where an applicable local ordinance minimum wage is higher.
For computer software professionals, the minimum monthly and annual salary exemptions increased to $8,679.16 and $104,149.81, respectively. Additional exemptions for other classes of employees can be found through the California Department of Industrial Relations: www.dir.ca.gov.
Minimum Wage for Employees with Disabilities
Per the passage of SB 639, an employee with a disability must be paid the state legal minimum wage or any applicable local minimum wage, whichever is higher. Previously, employers could apply to the California Industrial Welfare Commission for a special license to hire a disabled employee for less than the minimum wage. This is no longer the case and no new special licenses will be issued after January 1, 2022.
Intentional Wage Theft May Result in Grand Theft Charges for California Employers
AB 1003 adds intentional wage theft to the Penal Code, meaning intentional wage theft is now a crime. The intentional theft of wages in an amount above $950 from any single employee, or $2,350 in the aggregate from two or more employees, by an employer in any 12-month consecutive period may be punished as grand theft under state law. Theft of wages is defined as, “intentional deprivation of wages, gratuities, benefits or other compensation by unlawful means and with the knowledge that the wages, gratuities, benefits, or other compensation is due to the employee.” Violations are punishable either as a misdemeanor by imprisonment in a county jail for up to one year or as a felony by imprisonment in county jail for 16 months or longer. This law is another reminder for employers to ensure that their time-keeping and payroll practices are legally compliant.
Warehouse Distribution Centers
Commonly referred to as the “Amazon Bill,” AB 701 targets quota systems used by warehouse distribution centers. The new law applies to employers with 100 or more employees at a single warehouse distribution center or 1,000 or more employees at one or more warehouse distribution centers in California. For these entities, a written description of quotas applicable to hourly workers must be provided. The description must include the number of tasks to be performed or materials produced within the defined time period as well as identify any adverse action that could result from failure to meet the quota. The employer’s policy language must make clear that no quota will be applied to prevent an employee from taking a meal or rest break, or using the bathroom, or function to interfere with OSHA safety requirements. Employers are required to provide the written description to each employee within 30 days of this law taking effect or upon hire of new employees.
COVID-19
Employee Recall Rights for Certain Industries
SB 93 provides employees with certain re-hiring rights if they were laid off due to COVID-19. The law does not apply to all California employers. Rather, it applies generally to hotels, private clubs, event centers, airport hospitality operations, airport service providers, and those who provide janitorial, building maintenance and security services to commercial and retail buildings.
Laid-off employees are defined as individuals who were employed for more than six months in the 12 months prior to January 1, 2020 and whose separation from employment was due to the pandemic. A pandemic-related reason includes a public health directive, lack of business, or reduction in force. If the employer decides to hire, it must first offer the position to the laid-off employees who are qualified for the position and allow them at least five business days to decline the offer.
Employers also must keep records of communications made under this law for three years from the date the employee was laid off.
This bill took effect immediately, so qualifying employers should take note of their current hiring practices.
Written Notice of COVID Exposure
AB 654 requires employers on notice of potential employee exposure to COVID to provide written notice to all employees who were on the premises with the potentially infected individual within the infectious period. Written notice should include information regarding any COVID-related benefits to which they might be entitled as well as the employer’s plan to clean and disinfect the premises. If the number of COVID cases meets the definition of “outbreak” as provided by the Department of Public Health, the employer is required to notify its local public health agency within 48 hours or one business day. AB 654 does not apply to certain employers including: health facilities, community clinics, dialysis clinics, adult day health centers, home health agencies, pediatric health facilities, hospice centers, residential care facilities for the elderly and child daycare centers. The requirements of AB 654 are in effect until January 1, 2023.
HEALTH CARE AND LEAVE
Public Employer Striking Employees
Public employers cannot stop making employer contributions for health care or other medical coverage for employees who are on strike, even if the employee’s working hours fall below the minimum requirements necessary to qualify for employee health coverage.
CFRA Inclusion of Parents-in-Law
The California Family Rights Act (CFRA) provides eligible employees up to 12 workweeks of unpaid, job-protected leave during any 12-month period to bond with a new child or to care for themselves or a family member. AB 1033 added parent-in-law to the definition of family member. This means that CFRA now defines family member to include: child, parent, parent-in-law, grandparent, grandchild, sibling, spouse and domestic partner. Employers should be sure to update their employee handbook and CFRA notice postings to include parent-in-law. As a general reminder, employers are obligated to physically post information informing employees of their potential eligibility for CFRA leave. If you are not already in possession of a compliant posting, the Department of Employment and Fair Housing (DFEH) provides free posters on their website for this purpose: www.dfeh.ca.gov.
MISCELLANEOUS
Required Posters May Be Sent Electronically to Employees
In any instance where an employee is required to physically post information, the employer may also distribute that information to employees electronically. Sending documents electronically does not alter the employer’s obligation to physically display the posting in the workplace. The DFEH provides the required posters on its website. Required posters include explanation of employee protections related to: discrimination and harassment, family care and medical leave, sexual harassment, transgender rights, and pregnancy rights.
Record Retention
SB 807 requires employers to retain personnel records for applicants and employees under Government Code section 12946 for four years from the date the records were created. This is an increase from the previous requirement to retain records for two years.
Additionally, SB 807 extends the period in which an individual can file a civil action for violations of certain statutes, by “tolling” that period while the DFEH investigates or takes action. For example, if an employee has three years to sue an employer for a work-related claim, the timer on those three years does not start until the DFEH has completed its investigation and issued a “right to sue notice.”
“Silenced No More Act”
Existing law prohibits settlement agreements that prevent employees from disclosing factual information in sex assault, harassment and discrimination cases, and cases involving the failure to prevent such an act or retaliation for reporting such an act.SB 331 expands this prohibition to include acts of workplace harassment or discrimination not based on sex. Accordingly, in drafting settlement or severance agreements, employers cannot limit an employee’s right to disclose information about unlawful acts in the workplace. The only information that may be kept confidential is the settlement amount and the claimant’s identity at their request.
Existing law also makes it unlawful for an employer to require an employee sign a non-disparagement agreement that denies the employee the right to disclose information about unlawful acts in the workplace in exchange for a raise or bonus, or as a condition of employment or continued employment.
Further, SB 331 provides specific language that must be included with the use of any non-disparagement provisions in employment contracts, so that it is clear that employees are not prevented from discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct they believe is unlawful.
SB 331 provides that any document in violation of these requirements will be found to be against public policy and unenforceable, regardless of the rest of the agreement. This means that the use of prohibited language could render an otherwise permissible agreement unenforceable.
CASE LAW
“Regular Rate of Pay” for Premium Payments
Labor Code Section 226.7 requires payment of one additional hour of pay at the employee’s regular rate of compensation if a meal or rest break is not provided as required by law. In Ferra v. Loews Hollywood Hotel, LLC, the California Supreme Court held that an employee’s “regular rate of compensation” encompasses all non-discretionary payments, not just hourly wages, for purposes of calculating overtime and break premiums. This means that employers need to consider payments employees receive beyond their hourly wage when calculating the regular rate of pay. This could include nondiscretionary bonuses, incentive payments, shift deferential pay, commission earnings or piecework earnings. These additional forms of earnings must be included when employers calculate the individual’s regular rate of pay in order to provide accurate premium payments.
Rounding of Time Punches No Longer Allowed
In another blow to employers, in Donohue v. AMN Services, LLC, the California Supreme Court held that employers cannot round meal period time punches. Prior to this ruling, many employers rounded time punches to the nearest 30-minute mark. For example, lunch punches of 12:02 to 12:27 could be rounded to 12:00 to 12:30, thereby creating a compliant 30-minute meal period. Following Donohue, this practice is no longer acceptable given concerns that rounding may conceal short, non-compliant breaks.
Additionally, the Court in Donohue held that time records showing noncompliant meal periods raise a rebuttable presumption of meal period violations. In other words, if the time record shows that an employee received a 29-minute meal break, the employer has the burden of proving that the time record is incorrect and the employee actually received a compliant 30-minute break. The Court’s findings reiterate the importance of maintaining accurate time records in order to limit employer liability for wage and hour violations. Employers should review their time-keeping system to ensure that employee time is being accurately recorded and punch-ins are not being rounded.
Subsequent Penalties Under PAGA
As many employers are aware, the Private Attorneys General Act (“PAGA”), provides for penalties for Labor Code violations. Under PAGA, the penalty for an “initial” violation is $100 per person, per pay period and $200 per person, per pay period for “subsequent” violations. Many plaintiffs had previously argued that employers should be liable for “subsequent” violations after there has been any violation during the limitations period or the employer received a PAGA notice letter. However, the Court in Bernstein v. Virgin America held that employers are not subject to “subsequent” penalties until they have been notified by the Labor Commissioner or a court that it is violating the Labor Code. Accordingly, until an employer has been notified that it is violating the Labor Code by a court or the Labor Commissioner, it is only liable for the “initial,” $100 penalties. Although initial penalties can still add up quickly, this case is a win for employers in limiting their ever-expanding liability under PAGA. The Bernstein decision was a federal court decision interpreting California law.
CONCLUSION
We hope this information is beneficial to you. We understand how overwhelming and confusing the everchanging landscape of employment law can be and how important it is for employers to take a pro-active approach to limit their liability. Please contact us if you would like to discuss any of the contents of this letter in more detail.
Additionally, feel free to contact us to schedule an employment law best practices audit, in which we efficiently analyze your current practices to identify and address common areas of litigation risk. Our audits can include assessment of: employment applications and background checks; new hire checklists and required documentation; timekeeping; meal and rest breaks; pay stubs; employee classification; records retention; employee handbooks; arbitration agreements; managing employee performance, including performance reviews and employee discipline; interactive process for disability accommodations; employee leaves of absence; harassment, discrimination, and retaliation prevention; complaint and investigation procedures; sexual harassment training; employee termination procedures, including severance agreements; and more.