New California Labor and Employment Laws for 2021

This Holland & Knight alert highlights selected and significant new California labor and employment laws, regulations governing COVID-19 issues at the workplace by the California Division of Occupational Safety and Health (Cal/OSHA), and the state's increased minimum wage and overtime exempt salary thresholds. Unless otherwise noted in this alert, each of the laws listed below is effective on Jan. 1, 2021.

• AB 685 – COVID-19 Workplace Exposure, Notice to Employees and Serious Violations
• Cal/OSHA's Emergency Regulations for COVID-19 Prevention and Testing
• SB 1159 – COVID-19 Workers' Compensation Presumption
• Executive Order Suspending Cal-WARN's 60-Day Notice Requirement Prior to Mass Layoff, Relocation or Termination
• AB 2257 – Modifications and Additional Carve-Outs to AB 5 to Protect Independent Contractor Relationships
• AB 2143 – Loosened Restrictions on "No Re-Hire" Provisions in Employment Settlement Agreements
• SB 973 – New Pay Data Reporting Obligations for Employers with 100 or More Employees
• SB 1383 – California Family Rights Act Significantly Expanded to Cover Businesses with Five or More Employees
• AB 1867 – Supplemental COVID-19 Paid Sick Leave Expires Dec. 31, 2020 / Small Employer Family Leave Mediation Pilot Program
• AB 2017 – Employees Authorized to Designate Paid Sick Leave Taken for Kin Care
• AB 2399 – Expansion of California State Paid Family Leave Benefits
• AB 2992 – Expanded Protections for Employee Victims of Crime or Abuse
• AB 1947 – Time for Filing Complaints with California Division of Labor Standards Enforcement (DLSE) Extended to One Year, and Prevailing Plaintiffs in Whistleblower Retaliation Claims Can Recover Reasonable Attorneys' Fees
• AB 3075 – Expansion of Successor Liability for Labor Code Judgments
• California's Minimum Wage and Overtime Exempt Salary Thresholds Increase in 2021

AB 685 – COVID-19 Workplace Exposure, Notice to Employees, and Serious Violations

AB 685 requires that employers take prompt action in response to COVID-19 incidents. Employers must provide written notice to all employees who "may have been exposed" at a worksite. The required notice must be provided within one business day of the employer receiving notice that an individual who either tested positive for COVID-19 or is subject to a specific isolation order was in the workplace. The notice must state that the employee "may have been exposed to COVID-19"; provide information about benefits which the individual may be entitled to under federal, state or local law, including workers' compensation, paid sick leave, and anti-retaliation and anti-discrimination protections; and provide information about the disinfection and safety plans that the employer plans to implement and complete per U.S. Centers for Disease Control and Prevention (CDC) guidelines. The notice must be distributed in a manner normally used to communicate employment-related information to employees and shall be in English and the language understood by the majority of employees. The names or other identifying information of potentially infected individuals should not be included in the notice or otherwise disclosed to employees. The notice must be retained for three years for recordkeeping purposes. Finally, if the employees entitled to notice are represented by an exclusive representative such as a union, the employer must provide notice containing the information required in a Cal/OSHA Form 300 to the employee representative.

AB 685 also requires that employers provide notice to their local health department in situations of an "outbreak" or "major outbreak." Within 48 hours of learning that 1) three or more COVID-19 cases have occurred within a 14-day period at the workplace (an outbreak) or 2) 20 or more COVID-19 cases have occurred in a 30-day period at the workplace (a major outbreak), the employer must notify the local health department of such occurrences. Notice to the local health department must include the names, number, occupation and worksite of those impacted by the outbreak, including the business address and North American Industry Classification System (NAICS) code of the worksite. Once an outbreak occurs, the local health department must be notified of all subsequent confirmed cases of COVID-19 at the worksite.

Significantly, Cal/OSHA is now permitted to issue Orders Prohibiting Use (OPU) related to COVID-19. From Jan. 1, 2021, through Jan. 1, 2023, Cal/OSHA may shut down entire worksites or specific worksite areas that expose employees to imminent hazards related to COVID-19 infections. OPUs can prohibit entry into a particular place of employment or use of particular equipment or processes and now may be more quickly issued under AB 685 – no pre-citation notice of a potential "serious violation" is required before issuing a citation.

Cal/OSHA's Emergency Regulations for COVID-19 Prevention and Testing

Effective Nov. 30, 2020, and continuing while permanent regulations are drafted, Cal/OSHA requires almost every employer in California to implement a site-specific written COVID-19 prevention plan. Cal/OSHA's emergency regulations (See previous Holland & Knight alert, "Cal/OSHA Issues Immediate COVID-19 Prevention Requirements for Nearly All California Employers," Dec. 7, 2020) require that employers implement training and notice requirements for employees.

Many of the notice requirements in the Cal/OSHA emergency regulations mirror the requirements implemented by AB 685, including requiring that information regarding available leave and benefits be provided. While AB 685 is aimed primarily at post-COVID-19-exposure requirements, the Cal/OSHA regulations direct employers to act proactively pre-COVID-19 exposure to prevent exposure, including through mandatory assessments of prevention systems and plans.

Significantly, the Cal/OSHA regulations require that employers offer free COVID-19 testing during work hours. Employers must offer employees who have been potentially exposed to COVID-19 in the workplace COVID-19 testing at no cost and during working hours. If an outbreak occurs, the employer must provide testing to all employees at the workplace, except to those not present during the 14-day outbreak period. These same employees must be tested one week after the first test and retested weekly until the outbreak has ended. If a major outbreak occurs, twice-weekly testing (unless the local health department recommends more frequent testing) must be offered to all employees who remain at the worksite during the 30-day period.

SB 1159 – COVID-19 Workers' Compensation Presumption

SB 1159 expands compensable workplace injuries to include COVID-19 illness, likely resulting in an increased number of claims filed by employees under California's no-fault Workers' Compensation system. Under SB 1159, if an employee 1) tested positive for or was diagnosed with COVID-19 within 14 days of being at work, and 2) the employee was at work between March 19, 2020, and July 5, 2020, or the employee was at work during a period of "outbreak" (as defined by Labor Code section 3212.88(m)(4)) after July 6, 2020, the COVID-19 illness is presumed to be an injury arising out of and in the course of employment, therefore qualifying the employee for Workers' Compensation benefits. The presumption of workplace injury is rebuttable with evidence; if no evidence is offered the presumption is binding. While employers and carriers typically have up to 90 days to determine whether to accept or reject a workers' compensation claim, if a COVID-19-related illness claim is not rejected within 30 days of filing the claim, the illness is presumed to be compensable.

Employees who test positive for or are diagnosed with COVID-19 shall be certified for temporary disability within 15 days after diagnosis and shall be recertified every 15 days for the first 45 days following diagnosis. Notably, temporary disability benefits are not payable until the employee exhausts paid sick leave benefits specifically available for COVID-19.

If the employer knows or reasonably should know that an employee has tested positive for COVID-19, the employer shall report to the administrator for Workers' Compensation claims, within three business days, that 1) an employee has tested positive, 2) the date of the positive test, with the date being the date the specimen was collected for testing, 3) the address of the employee's place of employment for the 14 days preceding the positive test, and 4) the highest number of employees who reported to work at that particular place of employment in the 45 days preceding the last date the positive employee worked at the particular place of employment. The employer must not reveal the employee's name or other identifying information unless the employee has already initiated a Workers' Compensation claim. Intentional submission of false or misleading information, or failing to submit information, subjects the employer or submitter to a civil penalty of up to $10,000.

Executive Order Suspending Cal-WARN's 60-Day Notice Requirement Prior to Mass Layoff, Relocation or Termination

Gov. Gavin Newsom issued an Executive Order on March 17, 2020, suspending California's Worker Adjustment and Retraining Notification Act's (Cal-WARN) 60-day notice obligation retroactive to March 4, 2020, subject to certain conditions. (See previous Holland & Knight alert, "California Announces Emergency Suspension of Certain Cal-WARN Act Provisions," March 19, 2020). The suspension of Cal-WARN's 60-day notice requirement remains in place until the end of the state of emergency previously declared by Gov. Newsom on March 4, 2020.

Though the 60-day notice requirement is suspended, employers must still provide employees "as much notice as practicable" of the impending layoff, termination or relocation. The notice to employees must include specific statements regarding availability of unemployment insurance in addition to other required Cal-WARN notice language.  The California Labor and Workforce Development Agency (LWDA) has published guidance to employers regarding these notice requirements.

AB 2257 – Modifications and Additional Carve-Outs to AB 5 to Protect Independent Contractor Relationships

Undoubtedly one of the most significant sea changes in recent California labor and employment law history is AB 5 and the adoption of the "ABC" test to determine in most cases whether an independent contractor is, in fact, a contactor or an employee. (See previous Holland & Knight alert, "New California Law Codifies – and Expands – Strict ABC Test for Independent Contractor Status," Sept. 25, 2019). AB 2257 primarily adds exemptions for certain industries to the ABC test and modifies other exemptions.

AB 2257 is intended to address what critics perceived as overbreadth of AB 5 by exempting more industries from the ABC test, expanding existing exemptions and creating new exemptions. (See previous Holland & Knight alert, "New California Law Excludes Some Industries from "ABC" Test for Independent Contractors," Sept. 9, 2020).

The legislation adds exemptions for, among others, fine artists, freelance writers, translators, editors, advisors, producers, copy editors, illustrators, insurance underwriters, real estate appraisers, home inspectors, those providing professional consulting services, as well as certain occupations involved with creating, marketing, promoting or distributing sound recordings or musical compositions and musicians for the purpose of a single-engagement live performance event and other performance artists. AB 2257 also modifies the exemption for photographers, photojournalists, videographers and photo editors.

Significantly, AB 2257 expanded the narrowly crafted business-to-business exemption in a manner allowing two sole proprietors to enter into a contractor relationship. While AB 2257 is an improvement over AB 5, it still does not address the Swiss-cheese nature of what industries are exempted from AB 5. AB 2257, for example, notably does not make any accommodations for transportation and technology companies serving as platforms to connect passengers or freight to available contractors.

AB 2143 – Loosened Restrictions on "No Re-Hire" Provisions in Employment Settlement Agreements

Currently, California Code of Civil Procedure section 1002.5, which went into effect on Jan. 1, 2020, prohibits "no-rehire" provisions in settlement agreements. These "no-rehire" provisions prevent, prohibit or otherwise restrict employees from obtaining future employment with the employer or a related entity. These provisions are prohibited from settlement agreements when an employee has filed a claim against an employer in either court or an administrative agency, or made a complaint through some form of alternative dispute resolution (ADR) or employer internal complaint process. This prohibition against "no-rehire" provisions does not apply to severance agreements. There is also an exception to this prohibition when an employer has made a "good faith determination" that the former employee engaged in sexual harassment or sexual assault.

AB 2143 slightly modifies California Code of Civil Procedure section 1002.5. Specifically, it requires that the aggrieved former employee must have filed the claim in good faith in order for the prohibition against "no-rehire" provisions to apply.

It also expands this "no-rehire" exception to allow no-rehire provisions when the former employee engaged in any criminal conduct, rather than limiting the exception to sexual harassment or sexual assault.

Finally, AB 2143 clarifies that, in order to qualify for the "good faith determination" exception, an employer's determination must have been made and documented before the aggrieved person filed the claim or complaint. 

SB 973 – New Pay Data Reporting Obligations for Employers with 100 or More Employees

In an effort to address pay inequities, SB 973 requires employers with 100 or more employees and who are required under federal law to file an annual federal Employer Information Report (EEO-1) to submit an annual pay data report to the California Department of Fair Employment and Housing (DFEH). The report must include the number of employees and the hours they worked by race, ethnicity and gender in 10 federal identified job categories and whose annual earnings fall within the pay bands used by the U.S. Bureau of Labor Statistics in the Occupational Employment Statistics survey.

Employers must submit their pay data reports to the DFEH by March 31, 2021, and annually thereafter. The DFEH has begun publishing guidance for employers, including clarification that in determining whether the 100-employee threshold has been met, employers must count all employees, including part-time employees, those on leave and those outside of California. The DFEH also has confirmed that data reports submitted by employers must include employees who are working in California and/or assigned to a California establishment, including those teleworking outside of California. The DFEH intends to create an employer submission portal on its website where employers can submit the required report. The DFEH also intends to publish standard forms for employers to use in submitting the required data, although it has confirmed that an employer may submit a federal EEO-1 Report to the DFEH in order to fulfill its reporting obligation, as long as it contains the same or substantially similar pay data information required pursuant to SB 973. DFEH is continuing to publish guidance to employers on a rolling basis.

SB 1383 – California Family Rights Act Significantly Expanded to Cover Businesses with Five or More Employees

The California Family Rights Act (CFRA) currently requires employers of 50 or more employees to provide an eligible California employee up to 12 workweeks of protected family and medical leave. California employees are eligible for CFRA leave if they 1) have completed at least 12 months of employment with the employer, 2) have worked for the employer for at least 1,250 hours in the past 12 months and 3) are employed at a worksite that has 50 or more employees within 75 miles of that worksite.

Employees may currently take protected leave under the CFRA for the following: 1) birth of a child, adoption of a child or placement of a foster child, 2) care of a spouse, parent or child with a serious health condition, or 3) recovery from an employee's own serious health conditions.

The CFRA and its regulations provide complex requirements for CFRA leave administration, benefit continuation, employee notices, medical certifications and interaction with other protected leaves.

Beginning on Jan. 1, 2021, the CFRA's family and medical leave requirements will extend to small businesses with five or more employees, regardless of the size of any employer worksites. (See previous Holland & Knight alert, "Small Businesses Must Give Family and Medical Leave to Eligible California Employees in 2021," Sept. 28, 2020).

However, to be eligible for CFRA leave, a California employee must still 1) have completed at least 12 months of employment with the employer, and 2) have worked for the employer for at least 1,250 hours in the past 12 months.

Additionally, SB 1383 expands leave rights by allowing CFRA leave for the care of a grandparent, grandchild or domestic partner who has a serious medical condition. The definition of "child" is modified to remove the requirement that the child be younger than 18 years old or an adult dependent child. Further, a "child" will include the child of an employee's domestic partner.

SB 1383 brings the CFRA into closer alignment with the federal Family Medical Leave Act (FMLA) by allowing CFRA leave because of a "qualifying exigency" related to the covered active duty or call to covered active duty of an employee's spouse, domestic partner, child or parent in the U.S. armed forces.

Prior to Jan. 1, 2021, if both parents entitled to CFRA leave are employed by the same employer, the employer is not required to provide more than a total of 12 workweeks of CFRA leave for both parents in connection with the birth, adoption or foster care of a child. SB 1383 removes this exemption, and employers will be required to provide up to 12 workweeks of CFRA leave to each parent.

Before SB 1383, an employer could refuse to reinstate an employee returning from leave to the same or comparable position if, among other things, the employee is salaried and among the highest paid 10 percent of the employees employed within 75 miles of the employee's worksite. This is commonly known as the "key employee" exemption. SB 1383 removes this exemption.

Finally, SB 1383 repeals the California New Parent Leave Act (NPLA), which currently provides for protected baby bonding leave to eligible employees of California employers with 20 to 49 employees. The NPLA will become unnecessary once CFRA's leave rights, which already include baby bonding leave, are extended to small employers.

AB 1867 – Supplemental COVID-19 Paid Sick Leave Expires Dec. 31, 2020 / Small Employer Family Leave Mediation Pilot Program

Effective Sept. 19, 2020, AB 1867 required private employers who employ 500 or more employees nationally to provide California employees with supplemental paid sick time for COVID-19-related absences, which included if the employee is: 1) subject to a federal, state or local quarantine COVID-19-related order; 2) advised by a healthcare professional to quarantine due to COVID-19-related concerns; or 3) prohibited from working by employer due to health concerns related to potential transmission of COVID-19. It also codified Executive Order N-51-20, which provided supplemental paid sick leave to food sector workers, and requires employees working in a food facility to be permitted to wash their hands every 30 minutes and as needed. AB 1867 also applied the benefits provided under the Families First Coronavirus Response Act (FFCRA) to any employer that employs healthcare providers or emergency responders. The FFCRA provides exemptions for those employers.

Pursuant to AB 1867, full-time employees, or those scheduled to work an average of at least 40 hours per week, and who leave their home or residence to perform work, are entitled to 80 hours of COVID-19 supplemental paid sick leave. Part-time employees are entitled to the equivalent of two weeks or 14 days of supplemental paid sick leave, although the actual amount will depend on the hours worked by the employee. This leave is in addition to other leave that the employee may otherwise be eligible to receive, with a few exceptions. It is the employee's choice regarding the number of COVID-19 supplemental paid sick leave hours to use, which are available to use before other forms of paid time off. An employer may not require that an employee use other paid time off, leave or vacation before or in lieu of this COVID-19 supplemental paid sick leave.

The COVID-19 supplemental paid sick leave shall be compensated at the highest of either 1) the employee's regular rate of pay for their last pay period; 2) the state minimum wage; or 3) the local minimum wage, although under any of these calculations the pay is capped at $511 per day and $5,110 total. Employers must display a poster, or otherwise disseminate a notice, explaining the nature of the COVID-19 supplemental paid sick leave. The California Labor Commissioner has published a model notice that employers may use for these purposes. Employers must also provide each employee with notice of the amount of COVID-19 supplemental paid sick leave available each pay period. The COVID-19 supplemental paid sick leave requirements under AB 1867 are set to expire on Dec. 31, 2020, or upon the expiration of any federal extension of FFCRA, whichever occurs later. If the law expires while an employee is taking COVID-19 supplemental paid sick leave, the employee is entitled to continue to take the full amount of COVID-19 supplemental paid sick leave that he or she would have been otherwise entitled to. As of the date of this alert, Congress has not yet extended FFCRA.

Lastly, and unrelated to the COVID-19 relief provided by the legislation, AB 1867 creates a DFEH small employer family leave mediation pilot program, which applies to employers that have between five and 19 employees. Under this new program, a qualifying small employer that receives a Right to Sue letter from the DFEH as a result of a claim filed under the Fair Employment and Housing Act (FEHA) can request mediation through the DFEH within 30 days of receipt. Upon the employer's mediation request, the employee is prohibited from filing a civil claim in court until after mediation is completed. There are no requirements that parties resolve the claim at mediation. The DFEH's mediation pilot program will remain in effect until Jan. 1, 2024.

AB 2017 – Employees Authorized to Designate Paid Sick Leave Taken for Kin Care

Currently, California law permits employees to use up to one-half of their accrued and available sick leave to attend to the illness or preventative care of a family member. Employers are prohibited from discriminating against employees because they used their sick leave for such purposes.

AB 2017 modifies California Labor Code section 233 to provide that an employee has sole discretion to designate sick leave taken for kin care, i.e., caring for a sick family member. Specifically, this law was designed to prevent an employer's designation of an employee's usage of sick days as kin care, which would intentionally or erroneously deplete the employee's available kin care leave. Accordingly, pursuant to AB 2017, employees are provided with the right to designate what type of sick days they wish to take. Violation of this law entitles an aggrieved employee to reinstatement and actual damages, or one day's pay, whichever is greater, and to appropriate equitable relief.

AB 2399 – Expansion of California State Paid Family Leave Benefits

California's Paid Family Leave program provides wage replacement benefits for workers to take time off to care for a seriously ill family member or for baby bonding. In 2018, the Paid Family Leave program was expanded to include covered time off for participation in a qualified exigency related to covered active duty or call to active duty of a spouse, domestic partner, parent or child in the U.S. Armed Forces. Although enacted in 2018, this Paid Family Leave expansion will take effect on Jan. 1, 2021. Related to this expansion of the Paid Family Leave program, AB 2399 modifies Unemployment Insurance Code sections 3302 and 3307 in order to make several clarifying changes and additions, including defined terms and confirmation of the documentation required for a qualifying exigency.

AB 2992 – Expanded Protections for Employee Victims of Crime or Abuse

Current law prohibits employers from discharging, discriminating against or retaliating against employees who are victims of domestic violence, sexual assault or stalking for taking time off from work to obtain or attempt to obtain a temporary restraining order, restraining order or other injunctive relief or to help ensure the health, safety or welfare of the victim or the victim's child. Current law also prohibits employers with 25 or more employees from discharging, discriminating or retaliating against employees from taking time off for other specified reasons.

AB 2992 expands these protections by broadly defining "victim" as 1) a victim of stalking, domestic violence or sexual assault, 2) a victim of a crime that caused physical injury or that caused mental injury and a threat of physical injury, and 3) a person whose immediate family member, as defined, died as the direct result of a crime. AB 2992 defines "crime" as "a crime or public offense as set forth in Section 13951 of the Government Code, and regardless of whether any person is arrested for, prosecuted for, or convicted of, committing the crime."

Current law also provides that if an unscheduled absence occurs, an employer is prohibited from taking action against the employee if the employee, within a reasonable time after the absence, provides a certification, as specified, to the employer. AB 2992 allows such certifications to include documentation from a victim advocate as well as any form of documentation that reasonably verifies that the crime or abuse occurred such as a written statement signed by the employee or an individual acting on the employee's behalf.

AB 1947 – Time for Filing Complaints with California Division of Labor Standards Enforcement (DLSE) Extended to One Year, and Prevailing Plaintiffs in Whistleblower Retaliation Claims Can Recover Reasonable Attorneys' Fees

Currently, employees who believe they have been discriminated against in violation of any law enforced by the California Labor Commissioner may file a complaint with the California Division of Labor Standards Enforcement (DLSE) within six months after the alleged violation. AB 1947 expands this deadline to one year after the alleged violation.

AB 1947 also amends California's whistleblower retaliation statute, California Labor Code section 1102.5, which does not currently provide for the recovery of attorneys' fees. AB 1947 authorizes a court to award reasonable attorneys' fees to a plaintiff who brings a successful action under Section 1102.5.

AB 3075 – Expansion of Successor Liability for Labor Code Judgments

AB 3075 adds new Section 200.3 to the California Labor Code, which provides that "[a] successor to a judgment debtor shall be liable for any wages, damages, and penalties owed to any of the judgment debtor's former workforce pursuant to a final judgement, after the time to appeal therefrom has expired and for which no appeal therefrom is pending." A "successorship" is a company that 1) uses substantially the same facilities or substantially the same workforce to offer substantially the same services as the judgment debtor, 2) has substantially the same owners or managers that control the labor relations as the judgement debtor, 3) employs as a managing agent any person who directly controlled the wages, hour or working conditions or the affected workforce of the judgement debtor, and 4) operates a business in the same industry and the business has an owner, partner, officer or director with an immediate family member of any owner, partner, officer or director of the judgment .

AB 3075 also adds new obligations for a company when submitting its statement of information with the California Secretary of State, to state whether "any member or any manager has an outstanding final judgment issued by the Division of Labor Standards Enforcement or a court of law, for which no appeal therefrom is pending, for the violation of any wage order or provision of the Labor Code."

California's Minimum Wages and Overtime Exempt Salary Thresholds Increase in 2021

SB 3, enacted in the 2015-2016 legislative session, sets forth a schedule for minimum wage increases through 2023.

Beginning Jan. 1, 2021, for employers with 26 employees or more, the minimum wage will increase from $13 per hour to $14 per hour, and the exempt annual salary threshold will increase from $54,080 to $58,240.

For employers with 25 employees or less, the minimum wage will increase from $12 per hour to $13, and the exempt annual salary threshold will increase from $49,920 to $54,080.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.