California Employment Law Update

California Employment Laws Passed and Pending

It just wouldn’t be Fall without the passage of a flurry of new laws, shaking up the employment landscape in California.  As of the close of the legislative session on August 31, several “job killer” bills (so called by the California Chamber of Commerce as reported here and here) passed the state legislature and are awaiting action by Governor Gavin Newsom.

While Governor Newsom lost no time signing some of these bills, including AB 257 (Holden; D-Pasadena) regulating non-unionized fast food workers’ wages and working conditions (as discussed here), and AB 2188 (Quirk; D-Hayward), prohibiting employer “discrimination” against off-the-job use of cannabis, other “job killer” bills still await the Governor’s approval or veto, including:

Data Reporting and Publication

  • SB 1162 Publication of Pay Data (Limón; D-Goleta) expands upon the legislation enacted two years ago requiring employers with 100 or more employees to report specific pay data annually. This bill imposes civil penalties on employers that fail to report required pay data.  SB 1162 also would require covered employers to provide pay scale information to job applicants.  The initial bill was amended to eliminate the requirement to publish individual pay data reports online.  While CalChambers still opposes the bill, it removed the “job killer” tag after this amendment.

Labor Relations

  • AB 2183 Agricultural Labor Relations (Stone; D-Scotts Valley) changes union election procedures for agricultural employees by essentially eliminating a secret ballot election and replacing it with the submission of representation cards signed by over 50% of the employees. AB 2183 also limits employers’ ability to challenge the submitted ballot cards, forcing employers to post a bond, and includes a presumption of retaliation if an employer disciplines, suspends, demotes, lays off, terminates, or otherwise takes adverse action against a worker during a labor organization’s representation ballot card campaign.  The Chamber continues to oppose this bill and it has maintained its “job killer” tag.

State of Emergency

  • SB 1044 State of Emergency (Durazo; D-Los Angeles) allows employees to leave work or refuse to show up if they feel “unsafe.” It prohibits employers from taking any adverse action against employees who decide to leave the premises or not arrive at work during a state of emergency or emergency condition.  Initially, the bill did not define the term “unsafe.”  The bill was amended to define “a reasonable belief that the workplace or worksite is unsafe” to mean a reasonable person, under the circumstances known to the employee at the time, would conclude there is a real danger of death or serious injury if that person enters or remains on the premises.  The existence of any health and safety regulations specific to the emergency condition and an employer’s compliance or noncompliance with those regulations will be a relevant factor if this information is known to the employee at the time of the emergency condition.  Notably, the term “emergency” does not include a health pandemic.  After the amendments, the Chamber removed its “job killer” designation from the bill and has taken a neutral stance.

Other significant bills passed by the Legislature this session and on the Governor’s desk include several related to job protected leaves:

  • AB 152 COVID-19 Relief: Supplemental Paid Sick Leave (Committee on Budget) would extend the current iteration of the Supplemental Paid Sick Leave (“SPSL”) requirement for COVID-19-related leave from September 30, 2022 through the end of the year. Importantly, it will not entitle employees to a new bank of SPSL.  SB 152 also establishes a new grant program for specified small business to provide up to $50,000 in grants to cover some of the costs of SPSL provided in 2022.
  • AB 1949 Bereavement Leave (Low; D-Palo Alto) would make it unlawful to refuse to grant eligible employees up to 5 days of bereavement leave upon the death of a family member (as defined under the California Family Rights Act, including spouse, child, parent, sibling, grandparent, grandchild, domestic partner, or parent-in-law). The bill will require the leave to be completed within 3 months of the date of death.  In the absence of existing policy, the leave may be unpaid, but an employee can use other available paid time such as vacation, personal, or sick leave.  The leave will only be available to employees who have worked for the employer for at least 30 days prior to the commencement of the leave.
  • AB 1041 Family Leave for “Designated Persons” (Wicks; D-Oakland) would expand CFRA to permit an employee to take job-protected leave to care for a “designated person.” The bill defines “designated person” as any individual related by blood or whose relationship with the employee is the “equivalent of a family relationship.”  The bill provides that the employee may designate a “designated person” in advance and that an employer may limit an employee to one designated person per 12-month period.

Governor Newsom has until Friday, September 30 to sign or veto the bills passed by the Legislature.  We will continue to track the final outcome of these bills.

In This Tight Labor Market, Interest in Funeral Services Work is Growing

As in other sectors of the economy, there is a labor shortage in the funeral industry.  However, unlike other fields in which the demand for workers is outpacing supply, the interest in joining the ranks of the funeral services business is booming.  The American Board of Funeral Service Education (“ABFSE”), the national academic accreditation agency for college and university programs in Funeral Service and Mortuary Science Education, reported that in 2021 there was a 24% increase in total enrollment as compared to 2020.  The majority of new students in mortuary science programs are now women.  Today’s graduates are 72% female based on ABFSE’s numbers.  This stands in contrast to the nearly 2 million women who left the job market during the COVID-19 pandemic.  According to California’s Employment Development Department, the number of Morticians, Undertakers, and Funeral Directors is expected to grow much faster than the average growth rate for all occupations.  Perhaps this increased interest in the funeral services profession can help fill the job vacancies for at least one critical (and possibly recession-proof) industry.

California Creates Unelected Council to Set Minimum Wages/Working Conditions of 500,000 Fast Food Workers

On September 5, 2022, Governor Gavin Newsom signed the Fast Food Accountability and Standards Recovery Act or FAST Recovery Act (AB-257).  In a breathtaking move, the state government, which is dominated at all levels by union-friendly politicians, will appoint a 10-member Council composed of employees, employers and “union activists” to set the minimum wages and working conditions of fast food workers in the state – however, the new Council will only have jurisdiction over non-unionized fast food restaurants.

Since unionized restaurants will be exempted from the law, they will be free to pay their employees lower wages and benefits than those set by the Council.  In short, the law is nothing but a blunt instrument designed to punish non-unionized workplaces.

The new legislation applies to “fast food chains” with 100 or more restaurants nationwide.  It defines a “fast food restaurant” as establishments that provide food for “immediate consumption either on or off the premises” for customers who select and pay for items before eating, and where the restaurant prepares items in advance.  The law does not apply to restaurants with table service.  In addition, certain bakeries and grocery establishments are exempted from the FAST Recovery Act.

The 10-member Council will be empowered “to establish sectorwide minimum standards on wages, working hours, and other working conditions adequate to ensure and maintain the health, safety, and welfare of, and to supply the necessary cost of proper living to, fast food restaurant workers and to ensure and effect interagency coordination and prompt agency responses regarding issues affecting the health, safety, and employment of fast food restaurant workers.”

California’s minimum wage (already the highest in the nation) is currently $15/hour.  The newly constituted Council has authority to raise the minimum wage of fast food workers by 47% next year to $22/hour.  Starting in 2024, the Council can increase the minimum wage by up to the lesser of 3.5% or the adjusted Consumer Price Index for Urban Wage earners.  Further, the FAST Recovery Act creates a cause of action for discrimination or retaliation against any fast food worker and establishes the right to reinstatement.

It’s worth noting that the FAST Recovery Act was originally authored by the once and future AFL-CIO labor leader Lorena Gonzalez who briefly served in the California legislature long enough to sponsor the deeply unpopular AB 5 on behalf of the unions, which essentially eliminated independent contractors in the state; she also sent out a controversial “F*ck Elon Musk” tweet not long before Musk moved Tesla’s headquarters from California to Texas.  The FAST Recovery Act was heavily supported by the Service Employees International Union (the SEIU) and is obviously designed to induce fast food establishments to unionize or pay the price.  The bill exempts fast food establishments where the workers are covered by a valid collective bargaining agreement and the regular hourly rate of pay is not less than “30 percent more than the state minimum” for such workers.

Restaurant owners have already mobilized in opposition to the FAST Recovery Act and, on September 6, 2022, filed a “Request for Title and Summary for Proposed Referendum” with the California Attorney General.  Once a request for title and summary has been submitted, the Attorney General’s Office will facilitate a 30-day public review process and then prepare a circulating title and summary.  When the official circulating title and summary is complete, the Senate and Assembly may conduct public hearings on the proposed initiative measure but cannot amend it or prevent it from appearing on the ballot. The next step will be preparing the petition then, finally, circulating the petition and gathering signatures.  If enough signatures are obtained, the FAST Recovery Act will be stayed until it is decided by California voters either this November or in the 2024 election. The total number of signatures required to qualify a referendum is 623,212.

We will continue to monitor the FAST Recovery Act and provide updates.

EMPLOYMENT ARBITRATION AGREEMENTS REMAIN LEGAL IN CALIFORNIA – AT LEAST FOR NOW!

As we previously reported here, in Chamber of Commerce of the U.S.A. v. Bonta, 13 F.4th 766 (9th Cir. 2021), a three member panel of the Ninth Circuit Court of Appeals resurrected California Labor Code Section 432.6, which prohibited employers from requiring California employees to agree to arbitrate their employment-related disputes.

In a new twist, however, the same Ninth Circuit panel that upheld the law has now withdrawn and decided to reconsider that ruling.  While the panel reconsiders its ruling, California employers are free to require employees and applicants to sign arbitration agreements since a lower court previously struck down the anti-arbitration statute (signed by Gov. Gavin Newson in 2019) on the utterly predictable ground that it is preempted by the Federal Arbitration Act.

One unusual aspect of the panel’s decision to reconsider the Bonta decision is that no new decision has been issued to replace it.  Although a date has not been announced for a further hearing, the panel is expected to eventually issue a revised opinion.

Reading tea leaves, it would appear that Judge William A. Fletcher (who joined the original opinion written by Tenth Circuit Judge Carlos F. Lucero (sitting by designation)) may have changed his mind about the statute’s viability because, in this latest order, Judge Fletcher joined Judge Sandra S. Ikuta in deciding to withdraw the opinion so that it could be reconsidered.  Judge Ikuta wrote a fiery dissent to the original opinion that would have affirmed the lower court’s order striking down the statute.

A revised opinion could again alter the arbitration landscape in California, with a determination that employers must follow Section 432.6 (prohibiting arbitration agreements) or, alternatively, ruling that Section 432.6 is preempted by the Federal Arbitration Act and, therefore, unenforceable – or, maybe something in between those two possibilities!

Stay tuned…  We will continue to monitor developments regarding this issue.

California Court of Appeal Holds Online-Only Business Websites Are Not “Public Accommodations”

On August 1, 2022, the California Court of Appeal joined longstanding Ninth Circuit precedent in determining that online-only businesses are not “public accommodations” covered under Title III of the Americans with Disabilities Act (“ADA”) in  Martinez v. Cot’n Wash, Inc., 2022 WL 3025828 (Cal. Ct. App. 2022).  This may signal a change of tides of sorts for employers and other companies who have found themselves prey to this particular brand of ADA litigation.

Title III of the ADA prohibits “public accommodations” from discriminating on the basis of disability and requires that businesses make their facilities accessible.  Historically, this meant designing or altering physical facilities to be accessible (e.g., by adding ramps, enlarging door frames, etc.).  However, in recent years, companies also have faced a slew of ADA access lawsuits based on allegations that websites are not accessible to individuals with visual impairments.  In California, home to more ADA accessibility suits than any other state, many of these claims are filed under both the ADA and California’s Unruh Civil Rights Act (the “Unruh Act”).

Martinez involved an ADA and Unruh Act public accommodation claim by a blind plaintiff, who claimed that he was unable to use screen reading software to navigate a website for an online-only cleaning-supply company, Dropps.com.

Looking to the statutory text of the ADA and its implementing regulations, the court noted the definition of “public accommodation” always includes terms like “places,” “establishments,” or “facilit[ies],” words whose dictionary definitions involve a physical location.  The court also considered the history of the ADA and noted that both Congress and the Department of Justice (the agency charged with Title III enforcement) have been divided—or plainly inactive—for well over a decade despite “known confusion” on the issue.  Accordingly, the court declined to “adopt an interpretation of the statute that is not dictated by its language,” and held that Dropps.com was not a “place of public accommodation” under the ADA because it had no physical presence.

While Martinez’s holding was limited to online-only businesses, it has potentially broad implications for companies that do not operate physical facilities that are open to the public.  These businesses can breathe a sigh of relief, at least for now.

California Court Confirms Kevin Spacey Must Pay $31 Million to House of Cards Producers

The Los Angeles County Superior Court has confirmed an arbitrator’s October 2021 award of $31 million to be paid by actor Kevin Spacey to producers of the Netflix show House of Cards for Spacey’s alleged breach of contract.  As we previously reported, the producers alleged that Spacey was responsible for millions of dollars in costs and lost revenue the show incurred when allegations of Spacey’s sexual harassment and sexual assault against House of Cards crew members surfaced in 2017, leading the producers to halt production and eventually rewrite the show to remove Spacey, who starred in the first five seasons.

In confirming the arbitration award, the court rejected Spacey’s argument that the arbitrator exceeded his authority by considering evidence “extrinsic” to Spacey’s alleged breach of contract.  The court interpreted this to mean “circumstantial” evidence and noted that there is no reason an arbitrator cannot consider circumstantial evidence when determining an award.

The court also noted that vacating an arbitration award is a high bar even in close cases and that Spacey “fail[ed] to demonstrate that this is even a close case.”  The arbitration award was within the arbitrator’s authority because it bore a rational relationship to the breach of contract, i.e., it was aimed at compensating the show’s producers for the effects of the breach, namely the costs and lost revenue, which are “fairly typical compensatory damages” in breach of contract cases.

This is a cautionary tale for those in positions of power who might be charged with illegally harassing their co-workers:  The employer may not only fire such individuals, it also may seek affirmative relief against them in the form of monetary damages incurred by the employer as a result of their untoward actions.

California Voters to Decide Future of PAGA in November 2024

The California Secretary of State announced on July 22, 2022 that a measure to replace the California Labor Code Private Attorneys General Act of 2004 (“PAGA”) qualified as an eligible statewide ballot measure for the November 2024 General Election ballot.  PAGA allows “aggrieved” employees to file a representative action on behalf of themselves and other “aggrieved” employees and the state of California for certain alleged California Labor Code violations.  As previously covered here, here, here, and here, PAGA has benefited attorneys, not workers.

The California Fair Pay and Employer Accountability Act (“FPEAA”), if passed by the voters, will put workers’ labor claims back in the hands of the independent regulator by empowering the Labor Commissioner to enforce labor laws and impose penalties.  Workers under this system would be able to get their claims handled without having to hire a private attorney to engage in a lengthy and costly lawsuit.  The proposed law would eliminate the Labor Commissioner’s authority to contract with private organizations or attorneys to assist with enforcement, require the Legislature to provide funding for Labor Commissioner enforcement, require the Labor Commissioner to provide pre-enforcement advice, allow employers to correct identified labor-law violations without penalties, award all penalties to the “aggrieved” employee, and authorize increased penalties for willful violations.  Proponents of the FPEAA claim this Act that eliminates employees’ ability to file lawsuits for monetary penalties for state labor-law violations will both protect businesses from shakedown lawsuits that line the pockets of plaintiffs’ lawyers and protect workers’ rights.

This latest initiative to repeal and reform PAGA follows the United States Supreme Court’s recent holding that PAGA representative action waivers in arbitration agreements are enforceable.  We will continue to monitor developments on the fate of PAGA.

Hollywood Updates Its COVID-19 Protocols As Los Angeles Covid Rates Surge

Amid a recent surge in COVID-19 cases and hospitalization rates in Los Angeles, the Alliance of Motion Picture and Television Producers (“AMPTP”) announced an extension of and modifications to the existing Return-to-Work Agreement between the Directors Guild of America, the AMPTP, IATSE, SAG-AFTRA, and other industry stakeholders.  The prior iteration of the Agreement had been set to expire on July 15, 2022.

Initially implemented in September 2020, the Agreement sets forth the rules regarding COVID-19 safety on guild productions.  It has undergone several extensions and modifications over the last two years, including in July 2021, February 2022, and May 2022.  The September 2020 Agreement was, in large part, an outgrowth of the initial Industry-Wide Labor-Management Safety Committee Task Force’s White Paper, about which we previously reported here.

The latest Agreement keeps in place the COVID-19 hospitalization rates’ driven trigger for the more stringent protocol that was set forth in the May 2022 version of the Agreement.  Specifically, the more rigorous safety measures are triggered for productions in metropolitan areas, counties, or provinces in the U.S. or Canada where 8 or more new weekly COVID hospitalization admissions are reported per 100,000 people over a 7-day period on covidactnow.org.

The website is maintained by Act Now, a data assessment non-profit organization.  According to the website, Los Angeles County has a hospital admissions rate of 11 per 100,000 as of July 20, meeting the trigger threshold.

The most recent iteration of the Agreement, which went into effect on July 16, 2022, modifies the more stringent COVID-19 protocol, such that (1) self-serve food service that requires employees to share utensils is limited to fully vaccinated workers; and (2) while Producer-provided transportation may operate at full capacity, all cast and crew must wear face masks. Limited exceptions apply, e.g. where a cast member is in make-up, at which time passengers are required to observe physical distancing.

Other preexisting protocols, such as those pertaining to mandatory health screenings and periodic testing requirements set forth in the earlier versions of the Agreement remain in effect.

When hospitalization rates fall below the threshold, productions may adhere to the less stringent protocol enumerated in the Agreement.  When that will be the case for Los Angeles County remains to be seen, but this version of the Agreement is set to expire on September 30, 2022.  We will continue to monitor the Agreement and provide updates as they occur.

Mayor Garcetti Signs “Healthcare Workers Minimum Wage Ordinance” Increasing Minimum Wage to $25

On July 7, 2022, Mayor Eric Garcetti signed the “Healthcare Workers Minimum Wage Ordinance” (“Ordinance”) which, effective August 13, 2022, increases the minimum wage to $25 per hour for healthcare workers employed at privately-owned healthcare facilities within the City of Los Angeles.  Beginning January 1, 2024, the minimum wage will increase annually based on the cost of living.

The purpose of the bill was in part to “fairly compensate[] [healthcare workers] for keeping us safe [during the COVID-19 pandemic] while facing risks to themselves and their families” and to address “hospitals…facing staffing shortages that could jeopardize the availability of care in Los Angeles…” Other reasons in support of this bill included the increased cost of living on Los Angeles and increased profits in the healthcare industry.

Despite the seemingly good intentions of the Ordinance, it only applies to privately owned facilities within the boundaries of the City of Los Angeles including:

  1. A licensed general acute care hospital as defined in Section 1250(a) of the California Health and Safety Code.
  2. A clinic, as defined in Section 1206(d) of the California Health and Safety Code, that is conducted, operated, or maintained as an outpatient department of a general acute care hospital or acute psychiatric hospital.
  3. A licensed acute psychiatric hospital as defined in Section 1250(b) of the California Health and Safety Code, including an acute psychiatric hospital that is a distinct part of another health facility.
  4. A licensed skilled nursing facility, as defined in Section 1250(c) of the California Health and Safety Code, that is a distinct part of a general acute care hospital or acute psychiatric hospital.
  5. A licensed residential care facility for the elderly, as defined in Section 1569.2 of the California Health and Safety Code, that is located or licensed at the same address as an acute psychiatric hospital or is located on the same campus or parcel of real property as an acute psychiatric hospital.
  6. A licensed chronic dialysis clinic as described in Section 1204(b)(2) of the California Health and Safety Code.
  7. All facilities that are part of an Integrated Healthcare Delivery System.

Opponents of the Ordinance have formed a group called “No on the Los Angeles Unequal Pay Measure” and argue that it is an “inequitable ordinance that would set a new arbitrary pay requirement for some healthcare workers in some healthcare facilities in the city, while excluding thousands of health care workers doing the same jobs.”

Applicable private healthcare employers should immediately review their pay practices in anticipation of the effective date of the Ordinance (August 13, 2022).  However, the Ordinance does include a limited waiver, stating: “… a court may grant a one-year waiver from the Minimum Wage requirements of this article if an Employer can demonstrate by substantial evidence that compliance with this article would raise substantial doubt about the Employer’s ability to continue as a going concern under generally accepted accounting standards.”

For help navigating this Ordinance and any applicable waivers please reach out to us or any of our employment attorneys.  We will continue to monitor the Ordinance for any updates.

 

July 2022 California Employment Law Notes

We invite you to review our newly-posted July 2022 California Employment Law Notes, a comprehensive review of the latest and most significant developments in California employment law. The highlights include:

View PDF

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