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The “Not So New” Legal Trends for California Business Owners – Are You In Compliance?

More than halfway through the present year we’re revisiting those legal restrictions and employment regulations implemented by California lawmakers at the beginning of the year.  Included in the new mandates are workplace investigations, safety and how employers deal with separation agreements. 

“Several factors will affect legal restrictions and employment rules in 2022,” says William R. Simon Jr., employer and asset protection attorney at Sollertis, “companies must address and understand the rising issue of vaccine mandates, reasonable accommodations, and remote work issues arising from the global pandemic.”

Employers must continue to navigate the new normal of a hybrid workforce, additional considerations on policies for vaccinations, booster shots, OSHA guidelines and leave policies.  Below we summarize the biggest changes put in place as we head towards the final quarter for 2022.

California’s Minimum Wage Increase—SB 3

Because of inflation, Governor Newsom announced on May 12, 2022, that the minimum wage would increase to $15.50 per hour on January 1, 2023. But many California employers have experienced minimum wage increases since July 1, 2022 – as many local jurisdictions across the state are raising their rates.  

The minimum wage rate in the City of San Diego increases every year on January 1. Since January 1, 2022, the minimum wage in San Diego has been $15.00 per hour. You can find more information about San Diego’s minimum wage here. This is only a summary of increases in Southern California. Employers throughout the state are encouraged to review their local requirements.

A few things employers were to consider before the July 1 deadline:

  1. The company must pay the minimum wage in all locations.
  2. Work with other states and cities to ensure employees are paid the minimum wage in those areas.
  3. In addition to the increased minimum wage, ensure pay stubs reflect the additional requirements.
  4. Provide updated wage rate notices to employees.
  5. Ensure that posters at work are compliant.

Under Labor Code section 2810.5, all nonexempt employees must receive a Notice to Employee upon beginning work. As of July 1, 2022, minimum wages for minimum wage workers will be higher. In light of the higher minimum wage requirements, the overtime rates of pay section of the notice also need to be updated.

Additionally, West Hollywood has increased the paid leave employees are required to receive. The City’s website explains, “Compensated hours for full-time employees will increase to 96 from July 1, 2022, while uncompensated hours will increase to 80 for vacation, sick leave, and other personal needs. 

An employee who works part-time should receive compensation and uncompensated time proportional to what an employee who works 40 hours a week gets.” The City’s website details West Hollywood’s minimum wage and paid leave.

Warehouse Distribution Employees—AB 701

To comply with the new law, employers with large warehouse distribution centers (100 or more employees at a single facility or 1,000 or more employees at multiple facilities) must provide employees with:

  • A written description of each quota an employee handles.
  • The number of tasks performed or materials produced during a defined period.
  • Clearly defined potential adverse consequences related to not meeting the quota. Under the legislation, employers may not take negative actions against employees who don’t meet undisclosed quotas and cannot meet quotas that do not afford workers compliant meal periods, rest periods, or protections under occupational health and safety laws.

Maintain Records for Four Years—Bill 807

Employers are now required to maintain personnel records for four years instead of two after creation and four years following termination or non-hire of an employee. SB 807 also adds many new requirements to the Fair Employment and Housing Act (FEHA) regarding the procedure and timeframe for filing complaints and litigating claims under the FEHA. An employer who receives notice of a verified complaint under the FEHA must preserve all documents and files until they can confirm or resolve the complaint.

Extension of CFRA’s “Parent” Mediation Program and the DFEH Mediation Program—AB 1033

The California Family Rights Act (CFRA) allows eligible employees to take 12 weeks of leave annually to care for family members (such as their parents) with severe medical conditions. According to CFRA, AB 1033 includes parents-in-law in the definition of a parent as of January 1, 2022. The bill also revises certain procedural aspects of the Fair Employment and Housing Department’s (DFEH) pilot mediation program. 

It resolves family leave disputes between small employers (5-19 employees) and their employees, including making participation in the mediation program a prerequisite to filing a civil complaint if either party requests one. Small employers should prepare for increased mediation requests from the DFEH, and employers should update their policies to reflect the CFRA’s additional protections for employees caring for parents-in-law.

The Disability Minimum Wage Act—SB 639

SB 639 updates an outdated federal policy from 1938 that allows employers to pay people with disabilities less than the minimum wage if they secure a 14(c) certificate. Despite declining California employers seeking these certificates, the practice remains legal, affecting the estimated 12,000 Californians with disabilities.

Under SB 639, California will phase out subminimum wage over three years through an inclusive stakeholder-led process. Together with the State Council on Developmental Disabilities, stakeholders, including state agencies, service providers, universities, advocacy groups, and community members, will draft a plan to facilitate successful career transitions for workers with disabilities. 

By January 1, 2023, the Legislature will receive an updated status report and funding recommendations for the plan. The law states that it will be illegal to pay an employee with a physical or mental disability less than the minimum wage on January 1, 2025. 

“Silenced No More Act”—Non-Disclosure and Non-Aggression Provisions in Settlement Agreements and Separation Agreements

By amending the Code of Civil Procedure 1001, SB 331 prohibits non-disclosure provisions in settlement contracts involving prohibited workplace discrimination, harassment, or retaliation under the Fair Employment and Housing Act. 

The requirement adds to Section 1001’s existing ban on settlement agreements that prevent disclosing information on civil or administrative litigation involving sexual assault, harassment, or other sex-based workplace discrimination or retaliation.

In addition, the bill amends Government Code 12964.5 to restrict the use of nondiscrimination and other contractual provisions in employment contracts, including separation agreements, even when there is no civil action or complaint. Non-disparagement agreements or other contractual clauses that restrict an employee’s right to disclose information about workplace conditions must include:

“Nothing in this agreement prevents you from discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that you have reason to believe is unlawful.”

In addition, employers must provide written notification of an employee’s right to consult counsel, even if the employee is older than 40. Employers must give employees at least five business days to consider their options. SB 331 does not retroactively amend existing agreements. Instead, it applies to contracts signed after January 1, 2022.

The Electronic Posting Requirement—SB 657

With more employees working remotely, SB 657 offers employers alternative posting options. Employers may email specific workplace postings to employees under SB 657. However, employers must still post documents to comply with California posting requirements. A few examples of necessary postings are California wage orders, regular payroll schedules and payment notices, safety procedures, and whistleblower laws. It doesn’t change the minimum wage or the posting requirements under the Family Medical Leave Act (“FMLA”). 

The Wage Theft Act—AB 1003

According to AB 1003, this act became effective January 1, 2022, under Section 487m of the California Penal Code. As defined in Labor Code section 200, “theft of wages” is “intentional deprivation of wages.” They include independent contractors in the definition of employees. Under the bill, intentional theft of wages over $950 from a single employee, or $2,350 from two or more employees in 12 months, is punishable as grand theft.  

The maximum prison sentence is three years for the felony crime of grand theft. Wage theft is made more vulnerable under AB 1003, but the legal requirements for wages are not changed. It emphasizes the need for managerial staff to be trained and educated on wage practices.

COVID-19 Notification Act—AB 654 (Oct 5, 2021-Jan 1, 2023)

AB 654 became law immediately after its signing on October 5, 2021, and clarifies the employment obligations of employers when they receive notice that they are at risk of exposure to COVID-19. Employers who receive such notice must respond within one business day by: 

  1. Give written notice to all employees who were working at the same site as the 

the infected individual during the infectious period

  1. Notify the exclusive representatives of the qualifying individuals and the employees  

who had close contact with those individuals in writing

  1. Inform all employees at the same worksite as the infected person about any benefits they might be eligible for under applicable laws when they are on the premises during the infectious period.

Employers must provide a cleaning and disinfecting plan to all employees on the premises at the same worksite as the infected employee during the infectious period. Under the law, employers must notify the local public health agency within 48 hours or one business day if they suspect an outbreak of COVID-19. Health facilities, community clinics, community care facilities, and child daycare facilities are exempt from these reporting requirements.

Expansion of Cal/OSHA—SB 606 

Legislation SB 606 expands OSHA’s authority. It covers violations in the workplace and egregious violations. The bill further presumes employers with multiple worksites are violating Cal/OSHA enterprise-wide when their written policies violate Cal/OSHA or when Cal/OSHA has evidence that the same violation or violations by the employer involve more than one site. Fines and penalties are incident-by-incident for egregious violations instead of per-incident for minor offenses. 

More than ever, employers should familiarize themselves with the many new laws and amendments that may affect them. In highlighting the significant new laws this year with broad impact: it’s always a smart choice to consult with an attorney who knows how employment law can directly affect the business owner’s liability, and work with you to ensure compliance for your business.  Since many of these new laws expand employer risks and require changes to existing procedures and policies, what you don’t know could mean your business is at risk each an every day.

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