The start of a new year is almost upon us. For employers, 2022 will bring several new employment laws and changes to existing laws. We have summarized below several of the key changes to California’s labor and employment laws taking effect next year.
California Minimum Wage Increase
Effective January 1, 2022, California’s minimum wage threshold increases to $14.00 per hour for employers with 25 or fewer employees and $15.00 per hour for employers with 26 or more employees. Of course, some cities minimum wage may be higher as long as it does not fall beneath the State’s threshold. Exempt employees must be paid a salary of no less than two times the California minimum wage for full-time work (based on a 40-hour workweek). See Labor Code Section 515.
Assembly Bill (“AB”) 1003 amends the definition of “grand theft” in the Penal Code to include intentional wage theft. This new law will make it a crime, punishable as a misdemeanor or felony, for any intentional theft of wages in an amount greater than $950 from one employee or $2,350 in the aggregate from two or more employees by an employer in any consecutive 12-month period. Independent contractors are considered employees for purposes of this new law.
AB 701 amends the Labor Code to require warehouse and distribution centers to provide employees with written information regarding productivity quotas. This bill also provides that an employee cannot be required to meet a quota that prevents compliance with meal and rest period requirements, use of restroom facilities, or compliance with occupational health and safety laws.
Further Discussion on AB 5. This Bill codified and expanded upon the ABC Test adopted by the California Supreme Court in Dynamex Operations West, Inc., v. Superior Court (2018) 4 Cal.5th 903, for classification of workers as employees or independent contractors. Earlier this year, in Vasquez v. Janpro Franchising International, Inc. (2021) 10 Cal. 5th 944, the California Supreme Court ruled that the “ABC test” established by Dynamex applied retroactively to claims rooted in wage orders. On September 20, 2021, a unanimous three-judge panel of the 9th U.S. Circuit Court of Appeals in Lawson v. Grubhub (2021) DJDAR 9791, ruled that Prop. 22 (state law that lets companies classify rideshare and delivery drivers as independent contractors while providing them with certain benefits if they meet work-hours criteria) was not retroactive, but that AB 5 and Dynamex were not in any way abated or otherwise rendered ineffective by its passage. Additionally, AB 5 applies to a lot of industries. A few months ago, the 9th Circuit ruled against trucking companies who protested AB 5’s mandate they classify drivers as employees. In a split decision in California Trucking Association v. Bonta (2021) DJDAR 3937, the court ruled that AB 5 is a generally applicable law that applies to all employers and does not single out motor carriers.
AB 1561 modifies some of the existing exemptions from the ABC test, as follows: licensed manicurists (extending the operative date of the exemption to January 1, 2025); subcontractors in the construction industry (extending applicable timeframe to work performed before January 1, 2025); data aggregators; person licensed by the Department of Insurance or a person who provides underwriting inspections, premium audits, risk management, or loss control work for the insurance and financial service industries; and manufactured housing dealers (specifying that the statutorily imposed duties are not to be considered under the common law Borello test).
AB 1033 amends the California Family Rights Act (“CFRA”) – which requires employers to grant eligible employees up to 12 workweeks of unpaid protected leave for family care and medical leave – to cover employees caring for a parent-in-law.
AB 654 amends existing law requiring employers to provide notification to employees who may have been in close contact at work with a person infected with COVID-19, expanding the type of employers exempt from the requirement. This law took immediate effect when approved on October 5, 2021.
AB 1023 revised the requirement that contractors or subcontractors working on public works provide certain payroll records to the labor commissioner, so that the contractors are required to furnish records, in electronic format, every 30 days while work is being performed on the project and within 30 days after the final day of work. A failure to provide the records results in a penalty of $100 per day, up to $5,000 per project.
Senate Bill (“SB”) 62 amends the Labor Code to prohibit, with some exceptions, employers from paying employees engaged in the performance of garment manufacturing by the piece or unit. This bill also amends the Labor Code to clarify that anyone who contracts for manufacture of garments is a guarantor for the unpaid wages and overtime of the workers making their garments regardless of how many layers of contracting the person may use.
SB 606 expands Cal/OSHA’s enforcement authority by creating two new violation categories, (1) enterprise-wide violations and, (2) egregious violations. It also establishes a rebuttal presumption that a violation committed by an employer that has multiple worksites is enterprise-wide if the employer has a written policy or procedure that violates OSHA’s provisions.
SB 727 amends the Labor Code to extend a direct contractor’s liability for any debt owed to a wage claimant by a subcontractor to include penalties, liquidated damages and interest.
SB 807 extends the file-retention requirement from two years to four years for specified employment-related records, including applications and personnel files. Separate retention requirements apply when a complaint has been filed with the Department of Fair Employment and Housing (“DFEH”). The Bill also tolls the deadline for the DFEH to file a civil action while a mandatory or voluntary dispute resolution is pending.
SB 331 expands the existing prohibition against confidentiality provisions in employment-related settlement agreements to those that restrict disclosure of facts relating to all forms of workplace discrimination, harassment, and retaliation based on any characteristic protected under the Fair Employment and Housing Act, not just those based on sex. This Bill further requires notification to employees in separation agreements of the right to consult with an attorney and provide at least five days within which to do so.
SB 762 requires all arbitration fees to be paid upon receipt of invoice unless the arbitration agreement expressly establishes a payment schedule. This Bill is meant to prevent employers from causing delay in arbitration proceedings by failing to timely pay fees or asking for extensions, unless all parties agree.
California employment law is complex and constantly evolving. The new laws listed above are only a small portion of laws effecting California employers and employees. For a complete explanation of these new laws and to ensure that your business policies and practices are complaint, contact Kring & Chung to speak with an experienced employment attorney.
Kyle D. Kring is a Managing Partner of Kring & Chung, LLP. He can be reached at (949) 261-7000.