2022 Employment Law Update

2022 Employment Law Update

Authors: Employment Law Team

This year has been another challenging one for many California employers.  Employers continue to act as an important line of defense in protecting the health and safety of their employees.

The California Legislature again passed a number of new laws that will significantly affect California employers.  Solomon Ward remains committed to assisting employers with complying with all existing and new legal requirements.

This summary highlights some of the more significant new laws.  This is not an exhaustive list. We encourage you to ask specific questions about laws that may apply to your company. Our team is prepared to help. 

1.  Changes Affecting Substantially All Employers

2022 Minimum Wage Increases and Its Effect on Exemptions

Each year, local and California minimum wage(s) are adjusted. This is a chart of the current minimum wage in California and several major cities:

Because of these increases, starting on January 1, 2022, the annual salary requirement for exempt employees will be $62,400 for employers with 26 or more employees; and $58,240 for employers with 25 employees or fewer.

Updated COVID-19 Reporting Protocols – AB 654

Under existing law, in response to a COVID case in the workplace, an employer is required to take specified actions within one business day, including providing written notice to all employees at the same worksite.  Moreover, if an employer is notified of a COVID-19 outbreak (3 cases within a 14-day period) the employer, with the exception of a health facility, is required to notify the local public health agency within 48 hours of determining its facility was experiencing a COVID-19 outbreak.

This new law extends the COVID-19 outbreak notification period to one business day or 48 hours, whichever is later.  It also provides that employers do not need to provide notice on weekends or holidays.  AB 654 additionally expands the types of employers that are exempt from the COVID-19 outbreak reporting requirement to various licensed entities, including, but not limited to, community clinics, adult day health centers, community care facilities, and child daycare facilities.

AB 654 also simplifies who must be notified of COVID-related benefits following a positive COVID-case.  Under the new law, notification is required to all employees who were on the premises at the same worksite as the qualifying individual within the infectious period.  The new law also changes who must be notified of cleaning and disinfection plans.  Under the old law, all employees and the employers of subcontracted employees had to be notified of disinfection and safety plans. The new law narrows the notification requirements to employees, employers of subcontracted employees, and exclusive employee representatives who were on the premises at the same worksite as the qualifying individual within the infectious period (48 hours before the individual developed symptoms).

New Limitations Imposed Upon Settlement Agreements – The Silenced No More Act

California law already prohibits including non-disclosure provisions in certain settlement agreements related to claims of sexual harassment.  Effective for agreements entered on or after January 1, 2022, SB 331 expands that prohibition and will nullify any non-disclosure provision in a settlement agreement that restricts an employee from disclosing factual information related to workplace harassment or discrimination based on any protected status under the Fair Employment and Housing Act (FEHA).  SB 331 also limits the use of non-disparagement or other contractual provisions in employment agreements, including but not limited to separation agreements, even if no civil action or complaint is filed.  Any non-disparagement agreement, separation agreement, or other contractual provision that restricts an employee’s ability to disclose information related to workplace conditions must include a specific disclosure informing the employee of their right to disclose information related to certain allegedly unlawful acts in the workplace. Separation agreements including a non-disclosure provision must also notify employees that they have at least five business days to consider the agreement and that they have a right to consult an attorney regarding the agreement.

Additional Exemptions to California “ABC Test” for Independent Contractors

Under California’s existing “ABC Test,” a person is presumed to be an employee, not an independent contractor, unless the employer can demonstrate that: (A) the person is free from the control and direction of the hiring entity in connection with the performance of the work; (B) the person performs work that is outside the usual course of the hiring entity’s business; and (C) the person is customarily engaged in an independently established trade, occupation, or business.  That said, existing law exempts certain occupations and business relationships from the ABC Test. Under this new law, AB 1561, that list of exemptions has been expanded to include licensed manicurists, subcontractors, data aggregators, underwriters, and manufactured housing dealers.

Continued Expansion of the California Family Rights Act (“CFRA”) & Mediation Pilot Program – AB 1033

AB 1033 is yet another expansion of the CFRA, which applies to any employer in California that employs 5 or more employees (unlike the federal Family and Medical Leave Act, or FMLA, which only applies to an employer with 50 or more employees).  Under the new law, the protections afforded under CFRA now apply to employees caring for a parent-in-law.  Taking into consideration this new law, CFRA will now apply to employees taking “family care and medical leave” which includes any of the following:

Finally, the new law also creates a mediation pilot program for small employers (between 5 and 19 employees) to resolve family leave disputes. Under the pilot program, when an employee requests a right-to-sue from the DFEH (an administrative perquisite to file a discrimination lawsuit), they will be informed by the DFEH that they must also attempt to resolve the dispute with the assistance of a mediator prior to filing a lawsuit.

Employer Record Retention Requirement Expanded – SB 807

Effective January 1, 2022, SB 807 will expand the period for certain record retention requirements, and modify how the Department of Fair Employment and Housing (DFEH) enforces California’s civil rights laws.  Employers must now retain personnel records for applicants and employees for 4 years from the date the records were created or the date the employment action was taken.  The prior regulations required the retention of these records for only 2 years. 

SB 807 also extends the period in which an individual can file a civil action for violations of certain statutes, by tolling that period while the DFEH investigates and/or takes action on a complaint.  Finally, the DFEH now has two years to complete its investigation and issue a right-to-sue notice for employment discrimination complaints treated by the DFEH as a class or group complaint. Other changes regarding when and how the DFEH can appeal adverse superior court decisions are included.

Increased Penalties for Wage Theft – AB 1003

As of January 1, 2022, the intentional theft of wages, including gratuities, in an amount greater than $950 from any one employee, or $2,350 in the aggregate from 2 or more employees, by an employer in any consecutive 12-month period will be punishable as “grand theft.”  The bill specifically authorizes wages, gratuities, benefits, or other compensation that are the subject of a prosecution under these provisions to be recovered as restitution. Further, independent contractors are included in this new law.

Expanded Enforcement Power for Cal/OSHA – SB 606

This new law creates a rebuttable presumption that a workplace safety violation committed by an employer that has multiple worksites is companywide if the employer has a written policy or procedure that violates certain health and safety regulations, or the Division has evidence of a pattern or practice of the same violation committed by that employer involving more than one of the employer’s worksites. 

In addition, each instance of an employee exposed to an “egregious violation” will be considered a separate violation for purposes of the issuance of fines and penalties (a violation is an “egregious violation” if one or more factors are present as outlined in the statute).  The bill also expands  Cal-OSHA’s enforcement power in a variety of respects.  The Division may now issue and enforce a subpoena if an employer fails to promptly provide requested information, and may seek an injunction restraining certain uses or operations of employment if it has grounds to issue a citation.

Phase Out of Program Allowing Disabled Employees to Receive Less Than Minimum Wage – SB 639

Currently, some employers qualify for “14(c) certificates,” allowing them to pay thousands of employees with disabilities sub-minimum wages.  SB 629 prohibits the issuance of new licenses to disabled employees allowing them to earn less than the minimum wage. Existing licensees can renew their licenses until January 1, 2025.

2.  Changes Affecting Specified Employers

Certain Janitorial Employees Exempted from PAGA – SB 646

SB 646 creates an exemption from the Private Attorneys General Act (PAGA) for janitorial employees covered by a collective bargaining agreement that meets specified criteria. This is similar to recent legislation creating a similar PAGA exemption for unionized employers in the construction industry.  This exception is authorized until the collective bargaining agreement expires or on July 1, 2028, whichever is earlier.

New Restrictions for Garment Manufacturers – SB 62

As of January 1, 2022, employers will be prohibited from paying any employee “engaged in the performance of garment manufacturing” by piece rate. Garment manufacturing is defined as “sewing, cutting, making, processing, repairing, finishing, assembling, dyeing, altering a garment’s design, causing another person to alter a garment’s design, affixing a label to a garment, or otherwise preparing any garment or any article of wearing apparel or accessories designed or intended to be worn by any individual.” 

Moreover, any entity that contracts with a garment manufacturer will be jointly and severally liable for any unpaid wages. Employees can also recover attorneys’ fees and $200 per pay period in which the employee was paid by the piece rate.

Finally, garment manufacturers, contractors, and brand guarantors (a person contracting for the performance of garment manufacturing) must maintain copies of contracts, invoices, purchase orders, work orders, style or cut sheets, and any other documentation related to garment manufacturing performance for four years.

Labor-Related Liabilities (Direct Contractors) – SB 727

SB 727 expands existing direct contractors’ liability to include any wage penalties, liquidated damages, and/or interest debt owed to a wage claimant by a subcontractor. A direct contractor as defined under the Labor Code “means a contractor that has a direct contractual relationship with an owner.”

Previously a direct contractor’s wage liability extended only to unpaid wage, benefits, and interest, but did not extend to penalties or liquidated damages.

Direct contractors can take steps to protect themselves and withhold certain “disputed” payments to a subcontractor if the subcontractor does not timely provide certain required payroll information. Direct contractors should consult their counsel and update their contracts with their subcontractors.

New Productivity Quota Disclosure Requirements for Warehouse and Distribution Center Employees

This new regulation, AB 701, was drafted to address the use of quotas within warehouse distribution centers. AB 701 only applies to employers with 100 or more employees at a single warehouse distribution center or 1,000+ employees at one or more centers in California. 

If applicable to your business, AB 701, will require you to provide employees at the time of hiring or within 30-days of January 1, 2022, a written description of each quota to which the employee will be subject.

3.  Recent Cases Affecting California Employers

Chamber of Commerce v. Bonta (Employment Arbitration Agreements)

Assembly Bill 51 (AB 51) was signed into law in 2019.  AB 51 prohibits employers from retaliating against workers and applicants who refuse to sign arbitration agreements as a condition of employment.

In February 2020, a U.S. District Judge granted a preliminary injunction and found that AB 51 stood as an obstacle to the purposes of the Federal Arbitration Act (FAA) and was thus preempted by the FAA.

However, in September 2021, a Ninth Circuit panel lifted that injunction. As a result, it is currently unlawful under California law for employers to require employment arbitration agreements.

It is expected that this case will find itself before the U.S. Supreme Court. As of December 22, 2021, the Chamber of Commerce has requested that this case be heard by the entire Ninth Circuit.

Santiago Medina vs Equilon Enterprises, LLC (Joint Employer Liability)

In this case, the Court ruled that Shell Oil Company is the joint employer of an employee of a subsidiary of Shell that operated Shell gas stations.

This case potentially expands joint employer liability by looking at whether an entity indirectly controls a worker’s wages and working conditions. It also highlights how judges can disagree with each other and how companies can “unknowingly” fall into a “joint employer” status. Two prior cases, Curry v. Equilon Enterprises, LLC and Henderson v. Equilon Enterprise, LLC, addressed a similar issue at Shell stations. In these two prior cases, the judges found that Shell was not a joint employer. 

Prudent employers who may be affected by this ruling should consult their employment counsel in order to come up with ways to reduce the Company’s potential exposure.

Conclusion  

We stand ready to assist your company with advice and practical solutions regarding your employment practices.   

***The information provided in this article is for informational purposes only and not to provide legal advice. Contact your attorney to obtain advice regarding any particular issue or problem.***