The legal landscape of employment law is frequently changing. New statutory developments are introduced each year, impacting everything from health care benefits to paid leave, and 2020 has been no exception. Several new laws affecting California’s employment benefits went into effect in 2020. California employers and employers with operations in California need to be familiar with these laws and regulations and adjust their policies and practices accordingly.
California Employment Law Changes for 2020
Many areas of California employment benefits laws were impacted by legislation signed to take effect in 2020. Topics covered include:
- Worker classification
- Leaves of absence
- Workplace accommodations
- Flexible spending accounts
- Minimum wages and salaries
- Civil penalties for unpaid wages
- Right to privacy
- Employment agreements and arbitration
New California legislation, specifically Assembly Bill (AB) 5, limits an employer’s use of independent contractors. As a result, employers need to evaluate their workforce to ensure that they are correctly classifying and differentiating between independent contractors and employees. Reclassification of workers can impact employee benefits eligibility. In addition, employers who do not appropriately classify their workers can face significant penalties from the enforcement entities and mechanisms introduced in the bill, including claims from individual workers, the state attorney general, California’s Private Attorneys General Act (PAGA), and specific district and city attorneys identified to seek injunctive relief for workers.
The primary factor determining a worker’s status under AB 5, which amends the California Labor Code and Unemployment Insurance Code, is the amount of control exercised by the employer over the contractor’s performance. Secondary factors include whether or not the contractors supply their own equipment, hire their own workers, set their own hours, and work for other companies. Under AB 5, a worker is labeled as an independent contractor if the individual:
- Conducts work that is different from the typical course of the hiring employer’s business
- Is generally doing work in an independently established business, occupation, or trade that is similar to the work performed
- Is not subject to the control or direction of the hiring employer, as far as work performance is concerned
Leaves of Absence
Various laws outline required California employment benefits. Laws governing paid family leave and leave for organ donation were impacted by 2020 legislation.
Paid Family Leave
Per Senate Bill (SB) 83, effective July 1, 2020, wage replacement benefits under California’s Paid Family Leave (PFL) program were expanded. Employers are now required to offer eight weeks of paid leave.
Leave for Organ Donation
Prior to 2020, California law required employers to grant 30 business days of paid leave to employees for donating an organ. Effective in 2020, AB 1223 requires employers with 15 or more employees to provide an additional unpaid leave of absence of up to 30 business days to employees who donate an organ.
AB 1976, which was passed in 2018, requires employers to provide a lactation room (a bathroom is not considered an appropriate room) that is close to an employee’s work area. SB 142 amends AB 1976, stating that the lactation room or location provided for the employee must not only be close to the employee’s work area but must also be out of view and private. The room must also have electricity, a space to sit, and a surface on which to place personal items. It must also be clean and free of hazardous materials. A refrigerator and running water must also be available close to the employee’s work area. Employers are also required to create a lactation accommodation policy and include it in the employee handbook. Reasonable accommodations for the employee to take breaks to express breast milk when needed are also required.
Employers who coinhabit a building with other tenants are permitted to create a lactation room for the use of all employers if it’s not possible to have one near the employee’s workspace. Employers with less than 50 employees can receive a hardship exception and resort to providing a bathroom for lactation. In such cases, the employer must prove that providing a lactation room would present an undue hardship for the business. Employers need to review their current accommodation policies and ensure that a lactation accommodation policy is included and that it abides by the requirements of AB 1976 and SB 142.
Flexible Spending Accounts (FSAs)
Flexible spending accounts (FSAs) are commonly issued in conjunction with health care benefits. FSAs allow employees to contribute pre-tax dollars up to a certain amount per year to pay for qualifying medical expenses. As of 2020, California law AB 1554 requires employers to notify employees who utilize FSAs of any deadlines to withdraw monies before the end of the plan year with two different types of communication. The two forms of communication can be in-person speaking, postal mail, a phone call, a text message, or an email message. California employers should work with their California employment benefits providers to ensure that this law is being upheld.
Minimum Wage and Salary
As of January 1, 2020, employers with 25 or fewer employees must provide a minimum wage of $12 per hour. Employers with 26 or more employees must provide a minimum wage of $13 per hour. For employers with 25 or fewer employees, the minimum salary also increased to $49,920 annually. For employers with 26 or more employees, the annual minimum salary increased to $54,080.
Some local ordinances require a minimum wage that is also higher than the state minimum wage, though they do not affect the minimum salary requirement set by the state. Employers should ensure that they are abiding by state and local minimum wage laws for nonexempt employees and minimum salary requirements for exempt employees to avoid penalties.
Civil Penalties for Unpaid Wages
California law AB 673 allows employees to recover civil penalties for wages not paid by their employer. Previously, such penalties were only available through a labor commissioner action. For each violation, employees can recover $100. For each subsequent violation, or any violation that’s deemed willful or intentional, the violation increases to $200 and 25% of the unpaid wages. Employees are permitted to seek civil penalties or statutory penalties for unpaid wages through the Private Attorneys General Act (PAGA), but not both. To abide by the law and avoid penalties, employers need to ensure that they pay all employee wages on time.
Prohibiting Discrimination Based on Hairstyles
California law SB 188, also called the CROWN Act, was expanded to prohibit racial discrimination based on a person’s natural hairstyle and hair texture, extending protection under the Fair Employment and Housing Act (FEHA) and the California Education Code. The legislature suggests that dress code policies that prohibit an individual’s natural hair, such as locks, braids, and afros, discriminate against black individuals. The policies are likely to deter black candidates from applying and place a unique burden on black employees. Employers should review their grooming and dress code policies to ensure that no protected hairstyle is discouraged or forbidden.
Right to Privacy
The California Consumer Privacy Act (CCPA) went into effect on January 1, 2020. The CCPA requires California employers to comply with certain rules regarding employee data and data generated by end-users on their websites. Various amendments were made to CCPA before it went into effect, including AB 25, which is specific to employee privacy. AB 25 protects all personal information of job applicants, employees, medical staff members, contractors, directors, owners, and officers collected by a business that operates in California.
However, such information is exempt from the definition of personal information, including information collected for benefits administration and emergency contact information, through January 1, 2021. Employers must still provide notices to individuals about collecting such data and access to the data breach provision’s private right of action. Employers should ensure that these notices are being sent and that they are ready to implement the AB 25 definition of personal information by January 1, 2021.
Employment Agreements and Arbitration
Effective January 1, 2020, California law AB 51 prohibits employers from issuing employment contracts that require employees and candidates to sign arbitration agreements as a condition of continued employment, hiring, or any employment-related benefit. California employers are also prohibited from retaliating against employees who refuse to sign an arbitration agreement. The U.S. Chamber of Commerce and other organizations, however, filed a suit against the State of California with the District Court for the Eastern District of California, requesting a preliminary injunction. The district court issued the injunction stating that AB 51 is pre-empted by the U.S. Arbitration Act (FAA). The court’s order was appealed in February. For now, employers can issue contracts to enter into arbitration with their employees; however, employers should be aware of the ruling and stay on top of any further developments in litigation surrounding AB 51.
KBI California Employment Benefits Experts Can Help
California employment laws are frequently reviewed and amended when new laws are being implemented. KBI is here to guide you and keep you informed of upcoming and new legislation pertaining to California employee benefits. With our support, you can trust that your organization is in compliance to avoid penalties and adverse consequences.
Contact us today by submitting our online contact form or calling us at 408.366.8880. We look forward to working with you!
By Chris Freitas