California Employment Law Update

Big Brother Comes to Santa Clara County with Latest COVID-19 Order

On May 18, 2021, Santa Clara County issued a new Order of the Health Officer (the “Order”) that took effect on May 19th.  Of particular note, the Order imposes two new obligations:  First, it mandates that employers require all personnel to immediately alert their employer if they test positive for COVID-19 and were present in the workplace either (1) within the 48 hours prior to onset of symptoms or within 10 days after onset of symptoms if they were symptomatic; or (2) within 48 hours prior to the date on which they were tested or within 10 days after the date on which they were tested if they were asymptomatic.  Businesses are required to report any confirmed COVID-19 cases reported to them to the County within 24 hours.

Second, the Order requires that employers ascertain the vaccination status of all personnel within 14 days of the effective date of the Order.  Until an employee’s vaccination status has been ascertained, the Order requires that such employees be treated as though they are unvaccinated for purposes of any reopening protocols.  Further, any employees who decline to provide an employer with information regarding their vaccination status also must be treated as though they are unvaccinated.  Employers are required to obtain updated vaccination status information for all personnel who were not fully vaccinated every 14 days.

Although California’s current state masking guidance continues to require employees to wear masks indoors in virtually all settings—even when vaccinated—the state has indicated that will change by June 15, 2021.  When that happens, it is likely that rules will differ for vaccinated and unvaccinated employees.

California Mulls More Job Killer Bills, Major Tax Hikes

Last week, New York announced new tax increases that will subject certain of its residents to higher personal income tax rates than even Californians pay.  Before the pages on that bill had cooled, the California legislature was well on its way to showing it would not relinquish its top-of-the-heap status without a fight by proposing a new “wealth tax” on California residents.

In response, the California Chamber of Commerce added the following four bills to its annual list of Job Killer bills.

Here are the fresh additions:

ACA-8 (Lee; D-San Jose) New Wealth Tax – Would amend the California Constitution to allow a tax on “extreme wealth” granting the Legislature authority to tax all forms of personal property or wealth.  The measure would require the Legislature to create a task force to determine “adequate funding and staffing for the administration of the wealth tax.”  Though the measure does not explicitly define which individuals would be subject to this unprecedented new tax, it does predict that adequate funding will result in an audit rate of 100% for billionaires and 25% for hundred-millionaires.  The list of under-funded “needs” the measure is ostensibly intended to address includes long-term issues like “education, healthcare, infrastructure” and new needs like “pandemic recovery and climate change resilience.”

AB-310 (Lee; D-San Jose) New Wealth Tax – Would impose an annual tax of 1% of a resident’s worldwide net worth in excess of $50 million or $25 million for a married tax payer filing separately.  The bill would impose an additional 0.5% tax for payers with a net worth in excess of $1 billion, or $500 million if married and filling separately.  The term “worldwide net worth” would not apply to real property or tangible personal property outside the state held directly by the taxpayer, but would apply to such property held through a business or other legal entity.

AB-1253 (Santiago; D-Los Angeles) Personal Income Tax Increase – Would impose a tax of 1% on that portion of an individual’s taxable income over “the adjusted” $1 million, 3% on the same portion over $2 million, and 3.5% on that portion over $5 million.    The “adjusted” amount represents the taxable amount as recomputed by the Franchise Tax Board, and generally indicates the tax will effectively be levied on income that is slightly higher than the stated amount – i.e., “adjusted $1 million” equals $1,181,484.

AB-1192 (Kalra; D-San Jose) – Would establish a program requiring employers with more than 1,000 employees to submit various wage and hour statistics, as well as certain workplace safety and benefits information to the Labor and Workforce Development Agency, which the Agency could later make public.

Mentioned nowhere in this flurry of new tax increases is California’s $26 billion surplus and an additional infusion of $26 billion in unanticipated funds from the federal government—suggesting these measures are more about wealth redistribution than a legitimate desire to raise revenue.

We will continue to track the progress of these bills as they move through the legislature.

Opening Up To the New Normal

With COVID-19 cases falling and vaccination rates increasing, the County of Los Angeles is updating guidance for reopening the economy. Effective Monday, April 5, 2021, Los Angeles County non-essential office-based businesses can now reopen indoors, at 50% capacity, per the new County of Los Angeles Department of Public Health Order of the Health Officer. This revised order was updated as a result of Los Angeles County’s move into the “Orange Tier,” which reflects a moderate risk of COVID-19 transmission. In addition to allowing offices to reopen at a limited capacity, the order increases capacity limits for restaurants, breweries, wineries, cardrooms, places of worship, family entertainment centers, shopping malls, retail, fitness center, personal care establishments, movie theaters, museums, and institutes of higher education. Social distancing and masking requirements still apply. As of April 12, 2021, however, “location and capacity limits on places of worship are not mandatory but are strongly recommended.” This is in response to recent United States Supreme Court rulings, which lifted California’s ban on indoor religious services during the pandemic.

The order classifies the following as “Lower-Risk Businesses:” (1) retailers (“Lower-Risk Retail Businesses”); (2) manufacturing and logistics sector businesses that supply Lower-Risk Retail Businesses; (3) non-essential office-based businesses (although telework is strongly encouraged); and (4) indoor malls and shopping centers. Unless the staff of an office-based business is fully vaccinated, telework is encouraged and indoor occupancy is limited to 50% of capacity. Essential office-based businesses (not including healthcare operations, essential infrastructure, and essential government functions) that cannot perform essential operations remotely must limit indoor capacity to 75%.

Office-based businesses reopening at 50% occupancy should review the sector-specific protocol found in Appendix D. This reopening protocol includes guidelines regarding entry screenings, physical distancing, infection control measures, and signage.

Additional recent industry-specific updates include the Outdoor Seated Live Events and Performances protocol, which was revised on April 6, 2021, and the Music, Television and Film Production protocol, which was revised on April 4, 2021. Outdoor venues may increase attendance capacity to 67%, if all guests show a negative test result within the 72 hours prior to attendance or show the operator proof of full vaccination. The revised Music, Television and Film Production protocol focuses on employee screenings, takes into account whether or not the employee is fully vaccinated, and mandates that dining occur only in designated dining areas and be outdoors if feasible. The guidelines for various sectors of the economy likely will continue to be revised as more of the population is fully vaccinated.

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Proskauer’s cross-disciplinary, cross-jurisdictional Coronavirus Response Team is focused on supporting and addressing client concerns. Visit our Coronavirus Resource Center for guidance on risk management measures, practical steps businesses can take and resources to help manage ongoing operations.

PAGA Has Failed Californians – Unless You’re A Plaintiff’s Lawyer That is

We have long reported about that modern marvel of well-intentioned legislation gone awry known as the Private Attorneys General Act (“PAGA”) – and we also have noted that in practice, PAGA stands for Pretty-much All Goes to the Attorneys.  A recently published report (the “Report”) from some of the former leaders of the California Department of Industrial Relations and Cal/OSHA suggests we were right.

Originally enacted in 2004 to remedy an ostensible “strain on government resources,” PAGA enables an “aggrieved employee” to file representative actions on behalf of fellow employees to recover civil penalties from an employer for alleged Labor Code violations.  Three-quarters of the recovery is supposed to go to the State of California—not the “aggrieved employees.”  However, certain “bounty hunter” plaintiffs’ lawyers routinely use PAGA to obtain astronomical settlements for Labor Code violations that caused little (and often no) actual injury to any current or former employees but that cost hundreds of thousands of dollars or more to defend.

The Report analyzes the findings of several public records requests and indicates a few of PAGA’s uncomfortable realities.  First, although an employer’s average settlement payout in cases that are pending before the state Labor and Workforce Development Agency (“LWDA”) is less than half (41%) the amount paid to settle a lawyer-litigated PAGA case, employees receive nearly twice as much money in the former as compared to the latter cases because lawyers collect at least a third of the overall payout.  Litigated PAGA actions also drag on more than seven months longer than those filed with the LWDA – subjecting employees and employers alike to lengthy litigation-induced limbo.

Also, according to the Report, the State of California—which, again, collects 75% of any recovery—receives an average of $27,000 less from PAGA actions prosecuted by lawyers in court than those pending before the LWDA.  And employers, for their part, pay an average of $44,000 more in litigation fees and fees paid to settlement administrators in court actions.

The Report also compares the “settlement data” from cases pending before the LWDA with data from those cases that were litigated in court by lawyers.

 

Cases Pending Before
the LWDA

Cases Filed in Court
by Attorneys

Average Overall Cost to Employer (including settlement, attorney’s fees and costs)

$503,799

$1,231,620

Average Award Paid by Employer

$430,992

$732,635

Average Penalty Paid to State

$72,974

$45,888

Average Award Received per Employee

$4,701

$2,078

Average Case Duration

485 days

707 days

 

In short, PAGA actions filed in court result in far less favorable outcomes for employees, employers, and the state – so, exactly who does benefit from the current system?  The Report notes that plaintiff-side “[a]ttorneys who file PAGA cases with a court are compensated with fees that represent 33% or more of the workers’ total recovery, averaging to a total of more than $405,000 per case.”  Case closed.

The Report’s recommendations to fix this obviously out-of-whack statute include using the existing PAGA fund to expand and streamline the Division of Labor Standards Enforcement’s ability to utilize its case resolution procedures.  Funding aside, the Report noted the State should utilize an “expedited administrative process” featuring less “unnecessary bureaucracy” to quickly deliver case results to parties – thus enabling the prompt resolution of non-compliant activity while also ensuring compliant employers aren’t forced to pay a king’s ransom to fend off thirsty fee-seeking plaintiffs’ lawyers.

The Biden Administration’s First 100 days: What California Employers and Employees Need to Know

On April 27, 2021 the Employment Round Table of Southern California is hosting a complimentary new webinar titled The Biden Administration’s First 100 days: What California Employers and Employees Need to Know.

Proskauer partner Tony Oncidi will be joined by Andrew H. Friedman, an employment law partner at Helmer Friedman LLP.  Tony and Andrew will discuss and analyze the Biden Administration’s proposed changes and initiatives and the impact they will likely have on employers and employees alike, in and outside of California.

For more information on the event, or if you would like to register to attend, please click here.

One More for Good Measure: Another Round of Mandatory Vaccination Guidelines

The California Department of Industrial Relations (DIR) recently updated its Guide to COVID-19 Related Frequently Asked Questions to include wage and hour issues related to employer-mandated COVID-19 tests or vaccinations.  According to this latest guidance, if an employer requires employees to obtain a COVID-19 test or vaccination, the employer must pay “for the time it takes for testing or vaccination because such time would constitute ‘hours worked.’”  The DIR noted that this time would constitute “hours worked” because “the employer exercised control over the worker by requiring the worker to perform [the] task” of being tested or vaccinated.  This guidance also explains that any time the employee spends waiting to take a COVID-19 test and/or receive the vaccine is compensable as hours worked, though there is no requirement to pay employees for time spent waiting for test results.

The FAQs also indicate that if an employer requires employees to obtain a COVID-19 test and/or vaccination, the employer must pay for the cost of the test and vaccination in accordance with California Labor Code Section 2802, which provides that employers must reimburse an employee for necessary business expenses.  The employer also may be required to reimburse the employee for travel expenses to and from the testing or vaccination location “[i]f the testing or vaccination is performed at a location other than the employee’s ordinary worksite.”  The DIR recommends that employees “ask which location(s) or vendor(s) are acceptable to the employer to avoid disputes over cost.”

Ah, It’s Bill Passing Season in California again – and No Employer is Safe!

It’s springtime in California!  And even as the swallows return to San Juan Capistrano, the California legislature is busy, busy, busy passing hundreds of new laws because, after all, you can never get too much of a good thing!

Yes, it’s Bill Passing Season in Sacramento, and the California legislature seems as determined as ever to defend the state’s vaunted position as one of the top “Judicial Hellholes” in the nation!

In that vein, The California Chamber of Commerce has just identified a host of recently introduced “Job Killer” Bills from the California Legislature.

This year’s list includes 18 bills that would expand Cal/OSHA authority and enforcement; create a new single-payer health care system; impose new mandatory leave requirements; and further increase taxes.  As is often the case, many of these measures seem to be “solutions in search of a problem,” according to Chamber of Commerce President and CEO Allan Zaremberg.

Here are a few:

  • AB-71 (Rivas, L.; D-Arleta) Corporate Tax Increase: Would increase tax rates for corporations and financial institutions with $5,000,000 or more in profits. This is one of several pending proposals to increase taxes in California—which already has the highest personal income taxes, excise and sales taxes, and gas taxes in the country—and comes despite a projected $26 billion surplus plus another $26 billion in unanticipated funds from the federal government under the recently-passed American Rescue Plan.
  • AB-95 (Low; D-Campbell) New Bereavement Leave Mandate: Would impose on all employers the obligation to provide employees bereavement leave upon the death of a spouse, child, parent, sibling, grandparent, grandchild, or domestic partner, regardless of how long the employee has worked for the employer.
  • AB-995 (Gonzalez; D-San Diego) Sick Leave Expansion: Would require all employers to provide five days of paid sick leave to employees. Employers would also be required to allow a total paid sick leave accrual of 80 hours.
  • AB-1003 (Gonzalez; D-San Diego) “Wage Theft” Punishable as Grand Theft: Would make “’the intentional theft of wages” (which is often attributable to a good faith mistake) punishable as “grand theft,” which can be punished as a misdemeanor, by fine, or through a civil action by the employee or labor commissioner to recover wages, benefits, and other compensation.
  • AB-1074 (Gonzalez; D-San Diego) Rehiring Displaced Workers: Would require employers to offer certain of its laid-off janitorial and hotel services employees specified information regarding job positions for which they are qualified that become available.  “Laid-off employees” are those who worked for the employer for six or more of the twelve months preceding January 1, 2020 and were laid-off for a COVID-19 related purpose.
  • AB-1119 (Wicks; D-Oakland) Expansion of FEHA Duty to Accommodate: Would add “family responsibilities” to the list of protected categories under the Fair Employment and Housing Act (FEHA) and would prohibit discrimination against employees based on those “family responsibilities.”  The bill would also require employers to reasonably accommodate employees who are providing ongoing care to a family member whose school or place of care is otherwise unavailable.
  • AB-1179 (Carrillo; D-Los Angeles) Employer Childcare Funding: Would require employers with 1,000 or more employees to provide up to 60 hours of paid backup childcare to employees once they been employed for at least 30 days. This law would apply to childcare obtained by the employee when the regular childcare provider is unavailable.
  • AB-1400 (Kalra; D-San Jose) Guaranteed Health Care for All: Would effectively eliminate private health insurance in favor of shifting the responsibility for financing and administering health coverage in California to the state government. While the measure does not even attempt to estimate the cost of such a bold initiative, a similar measure that failed in 2017 would have cost an estimated $400 billion per year.
  • SB-213 (Cortese; D-San Jose) Expands Presumption of Injury: Would create a presumption of work-related injury for health-facility employees who contract COVID-19. For hospital employees who provide direct patient care, the bill also would expand the presumption of work-related injury to include illness or death caused by: blood-borne infectious diseases; MERSA; Tuberculosis, Meningitis, and COVID-19.
  • SB-606 (Gonzalez; D-Long Beach) Expands Cal/OSHA Authority: Would require Cal/OSHA to cite those who violate certain provisions related to the spraying of asbestos. If an employer has multiple worksites and a written policy that violates this law, this bill would also create a rebuttable presumption that policy requires enterprise-wide abatement. Would also create a rebuttable presumption of retaliation for an employee discharged within 90 days of disclosing a COVID-19 diagnosis due to workplace exposure, or for requesting testing for COVID-19 as a result of such exposure.

We will continue to track the progress of these and any other “job killer” bills as they move through the Legislature.

Statewide Supplemental Paid COVID-19 Sick Leave Resuscitated, Expanded, and Retroactive Back to January 1, 2021

On Thursday, March 18, the California Legislature passed Senate Bill 95 (“SB 95”) which will provide statewide supplemental paid COVID-19 sick leave, retroactively to January 1, 2021. Governor Newsom signed SB 95 on Friday, March 19. California’s previous supplemental paid COVID-19 sick leave (covered here) expired on December 31, 2020. Since then, California employers have been navigating various evolving local ordinances (covered here) in the absence of a statewide emergency paid sick leave law.

Like last year’s state law, SB 95 requires 80 hours of paid leave to employees for qualifying reasons, but this year’s version expands paid COVID-19 leave to a greater number of employers and for a wider variety of reasons. Notably, the leave must be granted in addition to leave taken under state, local, or employer leave laws or policies. The bill does not provide a tax credit or other funding measure to offset the cost of the leave, as did the Families First Coronavirus Response Act (FFCRA).

Additional Employers Covered

Under the old state law, private employers with 500 or more employees in the United States were covered. The new law applies to an employer “that employs more than 25 employees.” However, SB 95 does not specify whether those employees must be in California or nationwide for an employer to be subject to the new supplemental paid COVID-19 sick leave requirement.

Additional Reasons Covered

SB 95 broadens the circumstances under which an employer is required to provide leave. The expired state law required covered employers to provide eligible workers with supplemental COVID-19 leave when they were unable to work due to any of the following reasons: 1) the employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19; 2) the employee is advised by a health care provider to self-quarantine or self-isolate due to concerns related to COVID-19; and/or 3) the employee is prohibited from working by the employer due to health concerns related to the potential transmission of COVID-19. The new law requires covered employers to provide supplemental paid COVID-19 sick leave to employees unable to work or telework due to any of the following reasons:

  1. The employee is subject to a quarantine or isolation period related to COVID-19 as defined by an order or guidelines of the State Department of Public Health, the federal Centers for Disease Control and Prevention, or a local health officer who has jurisdiction over the workplace;
  2. The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
  3. The employee is attending an appointment to receive a vaccine for protection against contracting COVID-19;
  4. The employee is experiencing symptoms related to a COVID-19 vaccine that prevent the employee from being able to work or telework;
  5. The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
  6. The employee is caring for a family member who is subject to a quarantine or isolation order or guidelines, or who has been advised by a health care provider to self-quarantine; and/or
  7. The employee is caring for a child whose school or place of care is closed or otherwise unavailable for reasons related to COVID-19 on the premises.

Retroactive Effect

The requirement to provide leave begins 10 days after the law is enacted and applies retroactively to January 1, 2021. Any retroactive payments need to be paid “on or before the payday for the next full pay period after the oral or written request of the covered employee.” The new law expires on September 30, 2021. In light of the retroactivity, California employers should begin preparing for leave and reimbursement requests and consult with employment counsel to ensure their COVID-19 leave policies are compliant with state and local laws.

Amount of Leave

Like the prior state law, the new law requires that employers provide eligible employees with up to 80 hours of supplemental paid COVID-19 sick leave. As in the previous state law, covered employees are entitled to the 80 hours of leave “if that employee either works full time or was scheduled to work, on average, at least 40 hours per week for the employer in the 2 weeks preceding the date the covered employee took COVID-19 supplemental paid sick leave.” Part-time employees with a normal weekly schedule are entitled to the total number of hours the covered employee is normally scheduled to work for the employer over 2 weeks. Part-time employees working a variable number of hours are entitled to 14 times the average number of hours they worked each day for the employer in the 6 months preceding the date the covered employee took supplemental paid COVID-19 sick leave, or over the entire period the covered employee has worked for the employer if the period is fewer than 6 months. Part-time employees working a variable number of hours for the employer over a period of 14 days or fewer are entitled to the total number of hours the covered employee has worked for that employer.

The new law tracks the FFCRA’s caps of $511 per day and $5,110 in the aggregate. If federal legislation increases these amounts, however, the new federal cap would apply. Within 7 days of the law’s enactment, the Labor Commissioner will publish a required notice to post or provide to employees electronically. Since SB 95 has become law, employers with 25 or more employees should update COVID-19-related leave policies, provide notice, and update their wage statements, as non-compliance comes with the potential for penalties.

March 2021 California Employment Law Notes

We invite you to review our newly-posted March 2021 California Employment Law Notes, a comprehensive review of the latest and most significant developments in California employment law. The highlights include:

View PDF 

You Get a Shot, and You Get a Shot! California Paves the Way for Mandatory Vaccination Policies

Weeks after the Equal Employment Opportunity Commission (“EEOC”) weighed in, the California Department of Fair Employment and Housing (“DFEH”) recently released updated COVID-19 employment FAQs addressing the permissibility of employer-mandated COVID-19 vaccination policies.

Taking a page from the EEOC’s January 2021 guidance, the DFEH indicated that employers may require employees to receive an FDA emergency use authorized COVID-19 vaccine so long as the employer does not discriminate against or harass employees or job applicants on the basis of a protected characteristic and provides reasonable accommodations related to disability and/or sincerely-held religious beliefs.

Per the DFEH’s guidance, if an employer mandates vaccinations in the workplace and an employee objects on the basis of a disability, the employer must engage in an interactive process with, and reasonably accommodate, the employee with a disability-related reason for not being vaccinated—unless the accommodation would pose an undue hardship to the employer, the employee cannot perform the essential job duties even with a reasonable accommodation, or the employee cannot perform the job duties without endangering the employee’s or others’ health and safety.  Similarly, employees who decline to obtain a vaccination on the basis of religious beliefs or practices must be provided with a reasonable accommodation, unless it would pose an undue hardship to the employer.

And, what about employees who merely don’t trust the vaccine?  The DFEH’s new guidance indicates there is no obligation to reasonably accommodate employees whose opposition to being vaccinated is not related to a disability or religious beliefs.

But, how can employers ensure that employees are, in fact, vaccinated?  The DFEH’s guidance indicates that employers may require employees to furnish “proof” that they have been vaccinated as part of the vaccine requirement—because this is not a disability- or religious creed-related inquiry or medical examination.  However, the DFEH’s FAQs caution employers to instruct employees to omit any protected medical information from their documentation prior to submission.  Further, once collected, the DFEH indicated that employers must maintain records of employee or applicant vaccination as confidential medical records.

As vaccines have become more accessible, much of the initial insecurity surrounding them has given way.  One indicator of this shift is the decrease in vaccines wasted over time.  In January, when the vaccine faced more skepticism, states rarely used over 60 percent of their available doses.  Now, states report using 80-90% of their daily vaccines and California is vaccinating over 350,000 people per day.  Employers looking to implement a mandatory vaccine policy may seek to capitalize on this positive momentum as we return to the workplace and even a semblance of normalcy.

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