California Employment Law Update

Spring Showers Bring Job Killer Bills to California

Pablo Neruda once said “you can cut all the flowers but you cannot keep spring from coming.”  Likewise, California businesses’ protests against oppressive employment legislation don’t seem to stem the tide of the Legislature’s latest batch of anti-employer bills.

The California Chamber of Commerce has just identified a host of recently introduced “Job Killer” Bills pending before the California Legislature.  This year’s list includes bills that would, among other things, inflate employer data reporting requirements and further expand the scope of the Fair Employment and Housing Act (“FEHA”).  Here are a few from the list:

Data Reporting and Publication

  • AB 2095 (Kalra; D-San Jose) Employment Information & Worker Metrics.  Would require employers with 1,000 or more employees in California to annually submit wage and hour and employee benefits data regarding employers’ entire United States workforce.  The Labor and Workforce Development Agency would then publish employers’ scores and rankings based on the collected statistics.  This bill is similar to AB 1192 proposed last year by the same author, which was placed in the Assembly Inactive File at the author’s request in June 2021.
  • SB 1162 (Limón; D-Goleta) Publication of Pay Data.  Expands upon the legislation enacted two years ago requiring employers with 100 or more employees to report specific pay data annually.  SB 1162 would require the pay data reports to be published on a public website and impose civil penalties against employers who fail to report required pay data.  SB 1162 also would require covered employers to provide pay scale information to job applicants.

Expansion of the FEHA

  • AB 2182 (Wicks; D-Oakland) Expansion of Duty to Accommodate Employees for Family Responsibilities.  Would amend the FEHA to add “familial responsibilities” as a protected classification.  The bill defines “familial responsibilities” as obligations of an employee or applicant to provide care for a minor child or family member who relies on the employee or applicant for medical care or assistance with activities of daily living.  Not only does AB 2182 prohibit discrimination based on “familial responsibilities,” it also imposes an obligation on employers to provide reasonable accommodations for employees with such responsibilities, and prohibits retaliation for requests for accommodations.  A similar bill (AB 1119) introduced by the same author last year failed to advance beyond the Assembly last year.
  • AB 2188 (Quirk; D-Hayward) Cannabis Use & Employment Discrimination.  Would make it unlawful to discriminate against employees for the use of cannabis off the job and away from the workplace.  While the bill would not bar an employer from taking adverse action against an employee who is impaired while at the worksite or on duty, it would prohibit use of traditional marijuana tests, such as urine and hair testing, and compel employers to utilize saliva-based testing.  Notably, the bill would not apply to employees in building or construction, and would not preempt state and federal laws related to drug testing for controlled substances, including federal funding or federal licensing-related benefits.

Labor Relations

  • AB 2183 (Stone; D-Scotts Valley) Agricultural Labor Relations.  Would change union election procedures, in part by permitting agricultural employees to vote for union election through a representation ballot card election signed by a majority of employees who were employed at any time during the employer’s last payroll period before the filing of the petition for representation ballot card election rather than independent and secret ballots.  AB 2183 also would limit employers’ ability to challenge the ballot cards submitted by forcing employers to post a bond.

Privacy Rights

  • SB 1189 (Wieckowski; D-Fremont) New Private Right of Action for Biometric Information.  Would prohibit private entities from collecting or receiving biometric information unless they provide notice and receive consent from the individual, similar to Illinois’ Biometric Privacy Act, which has spawned an avalanche of class action lawsuits.  SB 1189 would provide a private right of action and allow for recovery of statutory or actual damages, punitive damages, attorneys’ fees and costs, and any other relief the court determines appropriate.

States of Emergency

  • SB 1044 (Durazo; D-Los Angeles) State of Emergency.  As we reported last month here, this bill would permit employees, without notice, to leave their workplace – or not show up at all – if they “feel unsafe.”  SB 1044 would prohibit 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 when the employees “feel unsafe.”  SB 1044 also would prohibit employers from limiting employees’ use of mobile phones or other communication devices in such an event, if the employee wishes to communicate about their safety, seek emergency assistance, or assess the situation.

Wage and Hour Changes

  • AB 2932 (Low; D-Campbell) Workweek and Overtime Requirements.  As we reported here, AB 2932 would require that companies with 500 or more employees pay weekly overtime for work in excess of 32 hours in a workweek.

Workers’ Compensation

  • SB 213 (Cortese; D-San Jose) Workers’ Compensation Expansion of Presumption of Injury.  A carryover bill from 2021, SB 213 would create a rebuttable presumption that infectious diseases, cancer, musculoskeletal injuries, post-traumatic stress disorder, and respiratory diseases arose out of work for any hospital direct patient care worker for purpose of claiming workers’ compensation benefits.  The bill also would extend these presumptions for specified time periods after the hospital employee’s termination of employment.

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

Gone Surfing: Could California Be the First State to Adopt a Four-Day Workweek?

In recent years, countries such as Iceland and Belgium and some domestic companies have experimented with the concept of four-day workweeks.  Now, a new bill proposed by California Assemblymembers Cristina Garcia (D-Bell Gardens) and Evan Low (D-San Jose), Assembly Bill 2932 (“AB 2932”), proposes to make a four-day workweek the new normal in California for non-exempt employees.

Under existing law, both California’s Labor Code and its Industrial Welfare Commission Wage Orders set the threshold for weekly overtime at 40 hours per week.  In its current form, AB 2932 would redefine the standard workweek for non-exempt employees who work for employers with more than 500 employees to 32 hours.  Any work beyond 32 hours would trigger overtime.

In an attempt to mitigate the potential wage loss to employees from a reduced workweek, AB 2932 confusingly provides that “[t]he compensation rate of pay at 32 hours shall reflect the previous compensation rate of pay at 40 hours.”  It is unclear whether this would mean that employers covered by AB 2932 would be prohibited from reducing salaried non-exempt employees’ salaries based on their shorter workweeks, or whether it would require that employers actually increase the hourly rate of pay for hourly-paid non-exempt employees so that, on balance, they end up earning the same amount of pay for 32 hours as they did for 40.   Interestingly, AB 2932 does nothing to relieve overworked exempt employees.

If signed into law, AB 2932’s redefined standard non-exempt workweek could have ripple effects beyond just the increase in free time it may provide to some California workers.  Compensating hourly employees for overtime at the lower threshold could be exceedingly expensive, especially given California’s high state and local minimum wage rates.  Further, the limited workweek could negatively impact client service, heighten employees’ stress to complete the same amount of work in fewer weekly working hours, and negatively impact employees’ sick leave and other paid time off accrual.

It is still unclear whether AB 2932 has any chance of being passed.  However, if enacted, the law would mark the first change to the definition of the standard 40-hour workweek in the United States since 1926.  The Legislature has until August 31st to pass measures, and Governor Newsom has until September 30th to sign or veto bills.  We will continue to monitor and report on developments.

Court Declares California Law Requiring Diverse Corporate Boards Unconstitutional

As discussed in our previous blog, on April 1, 2022, Los Angeles Superior Court Judge, Terry Green, granted summary judgment in favor of individuals represented by D.C.-based nonprofit Judicial Watch, declaring Assembly Bill 979 (“AB 979”) to be unconstitutional and granting an “injunction preventing the expenditure of taxpayer funds on the implementation of the measure.”

AB 979 required publicly held corporations with a principal executive office in California to have at least one member from an “underrepresented community” on their board of directors by December 31, 2021.  A director from an underrepresented community included “an individual who self-identifie[d] as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaska Native, or who self-identifie[d] as gay, lesbian, bisexual, or transgender.  Companies in violation of AB 979 faced fines of $100,000 for first violations and $300,000 for repeated violations.

In its lawsuit challenging the law, Judicial Watch claimed AB 979 violated the Equal Protection Clause of the California Constitution by using taxpayer funds to enforce a quota based on race, ethnicity, sexual preference, and transgender status.  California disagreed, arguing that AB 979 was necessary to reverse a culture of discrimination, and pointing out that no companies had been fined and no tax dollars had been used to enforce the measure.

Judge Green has since issued an order agreeing with Judicial Watch that AB 979 violates the Equal Protection Clause of the California Constitution on its face because:

  1. AB 979 “treats similarly-situated individuals – qualified potential corporate board members – differently based on their membership (or lack thereof) in certain listed racial, sexual orientation, and gender identity groups. It requires that a certain specific number of board seats be reserved for members of the groups on the list – and necessarily excludes members of other groups from those seats.”
  2. The use of suspect categories is not justified by any compelling interest. “The broader public benefits produced by well-run businesses do not fit that bill. On the other hand, while remediation of discrimination can be a compelling interest, the state must define a specific arena in which the discrimination has occurred…[c]orporate boards are not such an arena… The Legislature did not even attempt to limit its investigation or its findings to California corporations, though jurisdictional restrictions ensured that only California corporations would be covered by the law.  And even supposing that corporate boards were a sufficiently specific arena, neither the Legislature nor the Secretary [of State] has produced the combination of (a) valid statistical comparisons and (b) anecdotal testimony which could serve as “convincing evidence” of discrimination in that arena.”
  3. The statute is not narrowly tailored to serve the compelling interests offered. “The Legislature made no attempt to conduct a demographic survey of the qualified talent pool of potential board members…[and]…made no attempt to obtain disclosure from California corporations regarding the current demographics of their boards….The Legislature and the Secretary [of State] blame a “secretive, insular” selection process for the problem with current board compositions. Yet there has been no attempt to improve that process, nor has any good explanation been offered for that lack of effort.”

This decision may impact another lawsuit Judicial Watch filed against the State challenging a 2018 law (Senate Bill 826) requiring a minimum of one female director on corporate boards. This decision may also impact the Securities and Exchange Commission approval of a rule proposed by Nasdaq, set to go in effect this year, that will require companies listed on its exchange to have “at least one director who self-identifies as a female,” and to have “at least one director who self-identifies as Black or African American, Hispanic or Latinx, Asian, Native American or Alaska Native, Native Hawaiian or Pacific Islander, two or more races or ethnicities, or as LGBTQ+,” or explain why they do not.

The current California Secretary of State, Dr. Shirley Weber, has yet to comment on whether or not she will appeal this decision.  Nevertheless, proponents of AB 979 are hopeful that the law has already created expectations of increased diversity on corporate boards moving forward.

We will continue to monitor this decision and provide any relevant updates.

Real WFH Stories: Employer Not Responsible for Ensuring Safety of Employees’ Homes, Appeals Court Holds

California law requires employers to furnish a “safe and healthful” workplace to employees. Now that the line between “workplace” and “home” has been blurred for so many workers in the wake of the COVID-19 pandemic, the law has been unclear as to whether that obligation extends to an employee whose “workplace” happens to be their residence. In Colonial Van & Storage, Inc. v. Superior Court, a California appeals court answered at least one iteration of that question: An employer’s duty to ensure workplace safety does not extend to ensuring that an “off-site meeting place,” including an employee’s home, is safe from “third party criminal harm.”

The facts of the case are tragic and unusual—an employee of the defendant, Colonial Van & Storage, who occasionally worked from home invited her coworkers over for dinner. The employee’s son, who lived with her and was a veteran suffering from post-traumatic stress disorder, used a handgun stored in the house to attack the party, wounding each attendee and killing one.

The appeals court found that Colonial could not be held liable for the coworkers’ injuries. Because Colonial did not “control” the employee’s home, either legally or through acts showing ownership, Colonial had no duty to ensure that it was safe. The fact that Colonial derived some commercial benefit from the home—in that the employee performed some work there—was not enough to create that duty.

The court also noted that accepting respondents’ arguments would have sweeping consequences for the employer-employee relationship. Holding “every employer . . . absolutely liable for any injury suffered at home by working-at-home employees” would not only be extremely onerous for employers—who would have to expend significant effort and money to secure and insure every employee’s home—but also for employees, who would essentially cede any right to privacy in their own home to their employer’s legal obligation to inspect, modify, and surveil their private residences.

An employer could avoid these costs by simply not allowing any employees to work from home, but the court did not find this a fair or realistic option, considering how many employees need to work from home for personal reasons (such as caring for a child or an elder relative) as well as legal obligations (such as abiding by a mandatory quarantine order).

Supreme Court Hears Oral Argument in Advance of Major Ruling on the Arbitrability of PAGA Claims

Last week, the United States Supreme Court heard oral argument in Viking River Cruises, Inc. v. Moriana, Case No. 20-1573,_ U.S. _ (2022). The case addresses whether the Federal Arbitration Act (“FAA”) requires the enforcement of bilateral arbitration agreements that preclude an employee from bringing claims under the Private Attorneys General Act (“PAGA”) on a representative basis. The plaintiff, Moriana, sued Viking, alleging a number of claims, including failure to pay wages. The parties’ arbitration agreement precludes class and collective claims but Moriana proceeded under PAGA, which allows workers to sue their employers on the State’s behalf for alleged violations of California labor law. In 2014, the California Supreme Court held that because PAGA actions are brought on behalf of the state, employees cannot individually waive their right to bring these claims. Often, this means limited and even minor Labor Code violations become grounds for costly litigation that encompasses all of an employer’s non-exempt California workforce.

At oral argument, the questions focused on state sovereignty, preemption, the compatibility of large PAGA-like claims in the intentionally streamlined context of arbitration, claim preclusion, and whether PAGA provides substantive versus merely procedural rights. Justices Kagan and Sotomayor focused their questioning on areas that would keep PAGA claims in court. For example, Justice Sotomayor questioned the notion that PAGA is an “intentional evasion” of the holdings in prior Supreme Court cases that approved class action waivers in the consumer and employment contexts. Justice Kagan challenged whether it is appropriate to override a state’s decision to enforce its labor laws when “that’s the way the state has decided best serves its sovereign interests.”

Some of the more conservative Justices’ questions, on the other hand, appeared focused on reconciling PAGA with the Court’s prior pro-arbitration rulings. For example, Justice Barrett questioned whether California could create other legislative bypasses to the FAA by characterizing rights as substantive, as opposed to procedural. Similarly, Justice Alito questioned whether it would be appropriate to view a PAGA claim as “a set of claims integrated into a single action by an implicit rule of claim joinder,” drawing a comparison to class claims.

Viking River Cruises’ counsel repeatedly emphasized the important point that an arbitrator easily could deal with an individual’s claims for lost wages, but when the issue becomes resolving several different violations on behalf of the entire salesforce and employer-wide discovery, then arbitration as an efficient dispute resolution mechanism would be gutted in practice. He noted, as California employers are well aware, that dozens of PAGA claims are being filed each day and they look just like class actions (e.g., the ones the parties agreed would be brought on an individual basis in arbitration).

The Supreme Court likely will issue an opinion in Viking River Cruises in June or July of this year. We will provide any updates as soon as they become available.

California Continues to Go to the Dogs

On March 17, Rover—a digital application connecting pet owners with daily pet-care providers—argued to the Ninth Circuit that it should uphold a California federal judge’s finding that a dog-sitter was properly classified as an independent contractor.

While maintaining that it passes the strict three-pronged “ABC test”—which we have reported on here, here, and here—Rover also asserted that it is a “referral agency” under the California Labor Code and is, therefore, subject to the 11-factor Borello test, which is less stringent than the ABC test and focuses on whether the hiring entity has the right to control the worker in both the work completed and in the manner and means in which the work is performed.

Rover asserted that the individual pet-care provider’s control over their rates; cancellations; services provided – including when, where, how, and for whom those services are provided; and that Rover requires no exclusivity from pet-care providers indicate that the providers are independent contractors.  Additionally, Rover argued that facilitating a direct connection between clients and pet-care providers is different from “directly and continuously providing those services.”  Moreover, Rover urged that since the dog walker uses her own tools for her work—in an industry where she works separately from Rover and has only used Rover sporadically—she is primarily engaged in her own independent business endeavor.

The appellant pet-care provider, however, claimed that Rover “exerts pressure” on providers to perform certain tasks while pet sitting, such as sharing photos with owners while providing services.  Further, the pet-care provider contends that Rover’s 20% service fee gives the company effective control over the provider’s rates.

We will continue to monitor this case as well as any others with potentially far-reaching consequences for California hirers – and dogs alike!

New “Job-Killer” Bill Would Allow Employees to Just Walk Off the Job!

The California Senate Labor, Public Employment and Retirement Committee recently passed Senate Bill 1044, moving the legislation one step closer to a vote by the full state senate. SB 1044 would permit employees, without notice, to leave their workplace—or not show up to work at all—if they “feel unsafe.”

SB 1044 would prohibit 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 when the employees “feel unsafe.” It would also prohibit employers from limiting employees’ use of mobile phones or other communications devices in such an event, if the employee wishes to communicate about their safety, seek emergency assistance, or assess the situation. The requirement that the employee must “feel unsafe” to be protected by SB 1044 is subjective, meaning that an employee would be protected under this bill even if their feeling about being unsafe is completely irrational.

In addition to national, state, and local states of emergencies, SB 1044 would extend this allowance to “emergency conditions,” defined as an “event that poses serious danger to the structure of a workplace or to a worker’s immediate health and safety” or an “order to evacuate a workplace, a worker’s home, or the school of a worker’s child.”

It’s worth noting that the State of California has been in a persistent “state of emergency” due to the COVID-19 pandemic since March 4, 2020.

An employer who disciplines an employee for leaving the premises or not showing up to work under this bill would be subject to a lawsuit under the Private Attorneys General Act, which permits employees to initiate a representative action lawsuit on behalf of themselves and other “aggrieved employees” based upon perceived violations of the law.

SB 1044 is strongly opposed by employer organizations and other business interests, including the California Chamber of Commerce, which has labeled the bill a “job killer.” Over 60 such organizations expressed their opposition to the Labor, Public Employment and Retirement Committee. Among the points raised in opposition was that SB 1044 would actually reduce public safety, by allowing emergency workers such as firefighters or healthcare workers to leave work or stay home even when their services are urgently needed. Despite this opposition from the employer community (or perhaps because of it!), the Committee passed SB 1044 along party lines. We will continue to monitor the bill’s progress.

March 2022 California Employment Law Notes

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

View PDF

California May Relax Background Check Process

Many employers undertake routine background checks as part of their hiring process.  To be effective, of course, the process has to be completed in a timely manner.  Yet, a recent court decision, All of Us or None v. Hamrick, 64 Cal. App. 5th 751 (2021), made that process appreciably more difficult by prohibiting searches of criminal court records with the use of a person’s birth date or driver’s license number.

Hamrick involved a challenge to Riverside County Superior Court’s Public Access system, which allowed users to filter and search criminal records based on dates of birth and/or driver’s license numbers.  The plaintiffs challenged the system on the grounds that it violated Rule 2.507 of the California Rules of Court, which provides that electronic indexes of criminal case records must exclude, among other things, social security numbers, birth dates, drivers’ license numbers, financial information, and ethnicity, age, and gender designations.

In the wake of Hamrick, once routine and speedy background checks became increasingly difficult, especially in the case of applicants or employees with common first and/or last names—imagine trying to find the right John Smith without the use of a birth date or driver’s license number.  According to the California Chamber of Commerce, some employers were reporting delays of multiple weeks in hiring as a result of the changes in the background check process.  But now, help may be on the way.

Last month, California State Senator Steven Bradford (Dem. – Los Angeles) introduced a bill that would reinstate more streamlined searches of court records.  If passed, Senate Bill 1262 would require that publicly accessible electronic indexes of court records in criminal cases be searchable by driver’s license, date of birth, or both.

As of March 2, 2022, the new bill has been referred to the Committee on Public Safety.

New Bill Seeks to Impose Statewide COVID-19 Vaccine Requirement for All Employees and Contractors

On February 10, 2022, Assemblymember Buffy Wicks introduced Assembly Bill 1993 (“AB 1993”), which would impose COVID-19 vaccination requirements on virtually all employees and independent contractors working in California, regardless of employer/company size.

AB 1993 would mandate that all employers require all of their employees and independent contractors to provide proof of vaccination against COVID-19. An individual would be considered “vaccinated against COVID-19” if they can show proof of either: (1) being “fully vaccinated” with a vaccine authorized by the Food and Drug Administration or the World Health Organization or (2) having received one dose of an approved two-dose vaccine, and receiving the second dose within 45 days of the first. AB 1993’s definition of “vaccinated against COVID-19” does not address booster shots or other additional doses.

Consistent with federal and state anti-discrimination statutes, AB 1993 establishes two narrow exceptions to the vaccination requirement for individuals who cannot be vaccinated due to (1) a medical condition or disability or (2) a sincerely held religious belief, “subject to verification thereof.” However, AB 1993 does not explain how an employer would go about verifying whether these exceptions apply—i.e., what sort of documentation would be required—but rather provides that the Department of Fair Employment and Housing shall consult with the State Department of Public Health and the Division of Occupational Safety and Health to provide guidance about what constitutes a medical condition, disability, or sincerely held religious belief for purposes of the carve-out.

If passed in its current form, AB 1993 would require that employers affirm compliance as to each employee on January 1, 2023. However, the bill also prohibits employers from retaining proof of employees’ vaccination status without the employees’ or contractors’ authorization. Thus, in the event that any employees or contractors refuse to provide such authorization, it is unclear how any employer could hope to comply. As of the date of this posting, AB 1993 is pending in committee. We will continue to monitor its progress.

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