We started Part 1 of this article by stating: “For most small and mid-sized California business owners, 2020 will be a year that they will be happy to soon forget.” The same holds true for this, the second part, of the article. In an economic climate decimated by a worldwide pandemic, and a long path to recovery ahead of us, the California legislature continues to implement onerous requirements and legislative burdens on business owners throughout the state. Here are a few of the new legislative changes that California employers will have to navigate in 2021, as they struggle to recover from the pandemic:
Mandatory Wage Order Violation Reporting (AB 3075)
Effective January 1, 2021, as part of the annual “Statement of Information” filing requirements for every California corporation and limited liability company, businesses must now advise the California Secretary of State whether any officer or any director or, in the case of a limited liability company, a member or manager, has any outstanding final judgment/award issued by the California Labor Commissioner’s Office [Division of Labor Standards Enforcement (“DLSE”)] or civil court for any violation of a wage order or labor code violation. This self-reporting of “violator status” will become part of the public record. The bill also requires that any successor to the judgment debtor will be responsible for any wages, damages, and penalties owed to a judgment debtor’s workforce pursuant to a final judgment.
This “public shaming” is intended to force businesses to pay any DLSE award or order promptly, in order to avoid embarrassment. Further, the successor liability addition to the law should be closely monitored whenever acquiring a new business . . . even if you think you are only acquiring assets!
Extended Statute of Limitations for Claims of Discrimination of Retaliation (AB 1947)
Existing law prescribes a statute of limitations of six months for an employee to file a claim of wrongful termination, retaliation and or discrimination arising from their status as a whistleblower under California law. This administrative “pre-requisite” to filing a civil lawsuit, is handled through the California Labor Commissioner’s Office. However, effective January 1, that deadline to file an administrative claim is extended, so that the claimant has one full year to “exhaust administrative remedies” on a claim of whistleblower retaliation/discrimination.
Please note that this the one-year statute of limitations only applies to the administrative remedy. For other claims – such as a claim for unpaid wages, including overtime or meal and rest period violations – the statute of limitations remains three (3) years from the last “bad act.”
Labor Commissioner Permitted to Advocate for Employees in Arbitration Proceedings (SB 1384)
A further extension of the Labor Commissioner’s authority occurred when the Governor signed Senate Bill 1384, which: (1) expands the California Labor Commissioner’s representation to arbitrations for claimants who cannot afford counsel, (2) requires employers to serve petitions to compel arbitration on the Labor Commissioner’s office, and (3) allows the Labor Commissioner to represent claimants in proceedings to determine whether arbitration agreements are enforceable.
Previously, the Labor Commissioner’s office had no authority to participate in an arbitration proceeding, if the employer was successful in forcing a dispute into arbitration, using a valid employment-related arbitration agreement. This is one more consideration an employer must evaluate when determining whether an arbitration agreement is in its best interests moving forward.
Expansion of Kin Care (AB 2017)
California amended its existing “kin care law” (Labor Code §233) in 2015, to allow any employee who is provided sick leave to take up to half of his/her accrued sick leave to care for a covered relation. However, up until now, the same medical documentation was required for the care of a “covered relation” as it would have been for the employee himself or herself. The latest revision created by the legislature modifies this requirement: “The designation of sick leave taken for these reasons shall be made at the sole discretion of the employee.” Therefore, it is the employee’s prerogative – in their sole and exclusive discretion – whether paid sick time will qualify as “Kin Care.” An employer may not deny the “reasonable request” of the employee to use the qualifying sick time as kin care.
Expanded Workplace Protections for Crime Victims (AB 2992)
An expansion of existing law, AB 2992 prohibits employers from taking any adverse employment actions (e.g. termination, demotion, loss of benefits) against an employee for taking time off from work as part of jury duty, complying with a lawful subpoena or other court order, or “to obtain or attempt to obtain any relief.” Relief includes a restraining order, or other injunctive relief, including an attempt to protect the health, safety, or welfare of the victim or their child.
The newest addition to this law creates the possibility that an employee will be entitled to job-protected leave without any advanced notice if the need to be away from work was “exigent”. Further, the employee’s own attestation that they needed the leave for purposes under AB 2992 automatically triggers the employer’s obligation to provide the job-protected leave AND to enter into the interactive process to determine if any further “reasonable accommodation” must be provided to the employee.
A part of AB 2992 also amends the existing law included in California Labor Code §230.1, which applies to employers with 25+ employees, dictating that the business cannot “discharge, or in any manner discriminate or retaliate against, an employee who is a victim, for taking time off from work for any of the following purposes:
(1) To seek medical attention for injuries caused by crime or abuse;
(2) To obtain services from a domestic violence shelter, program, rape crisis center, or victim services organization or agency as a result of the crime or abuse;
(3) To obtain psychological counseling or mental health services related to an experience of crime or abuse; and,
(4) To participate in safety planning and take other actions to increase safety from future crime or abuse, including temporary or permanent relocation.”
The new law also mandates a notice be provided to all new hires and provided to existing employees upon request. The form has not yet been created by the California Labor Commissioner, but it will be mandatory at the point of hire beginning on January 1, 2021. This policy should also be added to your employee handbook or policy manual in advance of the new year!
EXTRA CREDIT! Reminder of Minimum Wage AND Minimum Salary Requirements
Although not a new piece of legislation, it is important to remember that January 1, 2021 brings another major change on the wage and hour front. The state minimum wage will increase to $14.00 for employers with 26+ employees, and $13.00 for employers with 25 employees or fewer. This does not take into account the local/municipal minimum wage increases that will be taking place in several California cities, which have set their own local minimum wage schedules. And while business owners should take this opportunity to make sure that all hourly, non-exempt workers are being paid according to the state minimums, another lesser thought about change takes place for those EXEMPT employees within your business in January. California ties most of the so-called “white collar exemptions” to a minimum salary threshold equal to two-times the state minimum wage.
Specifically, exempt employees who fall within the executive, administrative and/or professional exemptions must now receive a minimum annual salary of $58,240 for employers with 26+ employees, and $54,080 for employers with 25 employees or fewer. This base salary must be recurring and fixed for each pay period – and does NOT take into consideration additional income through commissions, bonuses or incentive pay. If an employer pays less than the minimum salary, even if the lower sum is paid in good faith, these “white collar” exemptions are lost, and the employee will revert back to an hourly, non-exempt worker. If the employer fails to re-classify the worker as non-exempt, statutory violations and penalties will accrue. Now is the time to review all employees who have been designated exempt to ensure: (1) their salary meets the 2021 requirement; and, (2) their duties and responsibilities continue to meet the requirements of one of the white-collar exemptions.
As a reminder, employers who employ “computer software employees” must ensure that they meet the increased salary requirement of $98,907.70, beginning on January 1.
2020 proved to be one of the most challenging years in our history. With dozens of new legislative and administrative regulations becoming effective on January 1, the new year of 2021 isn’t looking to be any easier, at least not for California employers! The new laws addressed above, and in part 1 of our article, are just a sample of the latest requirements on businesses throughout the state. Now, more than ever, it is imperative for employers to have competent legal counsel in their corners, as they attempt to navigate the ever-changing landscape of California employment law. Updating your written policies, strategizing on the best way to roll out large scale changes, and messaging the “new normal” to your employees will be a large part of administrative teams across the state!
The attorneys of Poole Shaffery & Koegle, LLP are here to help! Please call today to schedule an initial complimentary consultation with one of our employment law team members – (661) 290-2991.