In 2021, the California legislature adopted a number of new laws affecting employers and employee rights, including laws related to the COVID-19 pandemic, settlement/severance agreements, and independent contractor classifications. If you have questions regarding whether any new laws apply to you or your business, please give us a call.
COVID-19 Exposure Notice (AB 654)
Effective: Immediately
Current law requires employers to give written notice of a COVID-19 exposure. This law clarifies that the written notice must be given to all employees who were on the premises at the same worksite as the infected individual within forty-eight (48) hours or one (1) business day, whichever is later. The COVID-19 exposure requirement will terminate on January 1, 2023. Employers must also give notice of a COVID-19 outbreak at their worksite to the local public health agency within forty-eight (48) hours.
Wage Theft (AB 1003)
Effective: January 1, 2022
This law applies to employers and will punish as grand theft any intentional theft of wages in excess of $950.00 from a single employee, or $2,350.00 from two (2) or more employees, by an employer in any twelve (12) month period. Intentional theft of wages is defined as knowingly depriving employees of wages, gratuities, benefits, or compensation by unlawful means.
California Family Rights Act (AB 1033)
Effective: January 1, 2022
The California Family Rights Act currently allows qualifying employees to take unpaid protected leave of up to twelve (12) workweeks to care for family members, including parents. This law expands the family members for which an employee may take leave to provide care to include a parent-in-law.
Wage Judgments (AB 3075)
Effective: January 1, 2022
This bill, signed in 2020, amends the California Labor Code to permit employees to collect unpaid wage and hour judgments against a successor to their employer. Additionally, California corporations and limited liability companies will now have to disclose on their Statements of Information whether owners or managers of the business have judgements against them for the violation of any wage order.
Diversity on Boards of Directors (AB 979)
Effective: Immediately
Publicly held corporations headquartered in California must have at least one (1) director on their board who identifies as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, Alaska Native, gay, lesbian, bisexual, or transgender by December 31, 2021. By December 31, 2022, corporations with four (4) to eight (8) directors must have a minimum of two (2) directors from underrepresented communities, and corporations with nine (9) directors must have a minimum of three (3) directors from underrepresented communities.
Warehouse Quotas (AB 701)
Effective: January 1, 2022
Warehouse distribution centers located in California that require employees to fulfill certain quotas must provide to employees upon hiring or within thirty (30) days of the law’s effective date, a written description of each quota the employee is expected fulfill.
Workplace Safety (SB 606)
Effective: January 1, 2022
This law will significantly expand Cal/OSHA’s power over California employers. The law creates a new category of violations – egregious violations – which include, but are not limited to, violations that result in worker fatalities or large number of injuries, intentional disregard of health and safety, and bad faith conduct. Penalties will be assessed for each instance an employee is exposed to the violation.
The law also creates a rebuttable presumption that health and safety violations by an employer with multiple worksites are present at all locations if the employer’s written policy violates Cal/OSHA regulations, or the employer has a practice of committing the same violation at one (1) or more of its worksites.
Settlement and Non-Disparagement (SB 331)
Effective: January 1, 2022
Currently, employers are prohibited from using confidentiality provisions in settlement agreements where the claims are based on sexual assault, sexual harassment, or workplace discrimination based on sex. This law expands the prohibition on confidentiality provisions in workplace settlement agreements to include any claims involving harassment or discrimination, not just those related to sex. However, the amount paid in settlement may remain confidential.
Additionally, employer separation or severance agreements cannot prohibit employees from disclosing unlawful acts in the workplace. Separation and severance agreements must notify the employee of his or her right to consult with an attorney and must provide the employee with at least five (5) days to consult with an attorney.
Arbitration Invoicing (SB 762)
Effective: Immediately
In pre-dispute arbitration agreements (such as those typically found in employment agreements or website Terms of Use), the company drafting the agreement generally offers to pay the majority of the arbitration fees. California law requires that party pay the arbitration fees within thirty (30) days; otherwise it waives the obligation to settle the matter through arbitration and the other party can file a lawsuit. This law requires arbitration providers to issue invoices to all parties stating all fees and costs of the arbitration. This law assumes that any arbitration invoices that do not establish a due date are due upon receipt, commencing the thirty (30) day time period in which the fees must be paid.
COVID-19 Rehiring and Retention (SB 93)
Effective: Immediately
Employers who laid-off employees for reasons related to the COVID-19 pandemic must offer positions to qualified laid-off employees and must provide those former employees with at least five (5) business days to respond. If more than one (1) former employee responds, the employer must award the job by seniority. This law will expire on December 31, 2024.
Automatic Renewal (AB 390)
Effective: July 1, 2022
Currently, providers of services that automatically renew (such as an ongoing subscription service) must present the terms of the automatic renewal or ongoing service and cancellation policy and obtain affirmative consent prior to signing up a California consumer for a subscription service.
This law requires businesses that sell automatic renewal plans or subscription services to California consumers with a free trial, gift, or initial discount period that lasts longer than thirty-one (31) days to provide written notice to consumers of the expiration of the trial or discounted period three (3) to twenty-one (21) days prior to the expiration.
Businesses that provide an automatic renewal or subscription service to California consumers with an initial term of at least one (1) year will have to provide written notice of the automatic renewal to consumers fifteen (15) to forty-five (45) days prior to the renewal date.
California consumer subscribers of an automatic renewal service must be provided the opportunity to cancel the automatic renewal features of the plan immediately by clicking a link or sending a pre-formatted termination email.
Personnel Records (SB 807)
Effective: January 1, 2022
California employers must now retain personnel records, including without limitation all applications, payroll, hiring, termination, and other personnel records for a minimum of four (4) years[1]. If an employer receives notice that a Fair Employment and Housing Act (FEHA) claim has been filed against it, it must retain records until (a) the filing period for the civil action has expired, or (b) after the complaint has been fully and finally resolved or dismissed.
Independent Contractors (AB 1561 and AB 1506)
Effective: Immediately
California’s independent contractor law, popularly known as the “gig worker law”, became effective in 2020. That law applies the ABC test to certain independent contractors to determine whether they should be classified as employees. Certain industries or workers are exempt from the ABC test, and instead the less-strict Borello test is used to determine classification.
Among other things, these laws:
- Exempts providers of professional services from the ABC test, if the contractor maintains a business location separate from the hiring entity, the contractor holds a business license, if applicable, the contractor sets his or her own rates and hours, the contractor is customarily engaged in the type of work performed, and the contractor regularly exercises discretion and independent judgment over the performance of services;
- Extends the exemption for licensed manicurists to January 1, 2025;
- Exempts the relationship between a contractor and a subcontractor in the construction industry from the ABC test;
- Exempts insurance claims adjusters and third-party administrators from the ABC test; and
- Exempts news carriers from the ABC test
Workplace Postings (SB 657)
Effective: January 1, 2022
Current law requires employers to physically post certain notices. However, with many companies shifting to remote working, employees may not see the notices posted onsite. This law allows the employer, at its discretion, to send those same notices to employees via email. However, employers are still required to physically post the notices at the workplace.
Minimum Wage
Effective: January 1, 2022
The minimum wage for the State of California will increase to $14.00/hour for employers with twenty-five (25) or fewer employees, and $15.00/hour for employers with twenty-six (26) or more employees. Please note that some California cities set a higher minimum wage[2].
California Industry-specific Laws
California also enacted a number of new laws that are applicable to employers in specific industries. If your business falls within any of the industries below, please contact us for more information about the corresponding law.
- Hospitality industry (SB 93)
- Garment manufacturing (SB 62)
- Construction (SB 727; public works contractors – AB 1023)
- Custodial (SB 646)
- Port drayage motor carriers (SB 338)
- Health care industry (AB 1407; SB 362)
- Public sector (SB 270)
- Household domestic services (SB 321)
- Agricultural (AB 73)
- Hotel workers; janitorial workers (AB 1074)
- Retailers of children’s clothing or toys (AB 1084)
[1] Please note that you may be required to retain records for longer for tax or other legal purposes. Consult with your tax advisor.
[2] Beginning January 1, 2022, the minimum wage for the City of San Diego is $15.00 for all employers, regardless of size. If you would like information about the minimum wage in another city, please contact us.
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