For most small and mid-sized California business owners, 2020 will be a year that they will be happy to soon forget. The challenges associated with operating in and through a global pandemic, proved daunting for most, and overwhelming for others. With few exceptions, COVID-19 forced business leaders to make difficult decisions regarding short-term and long-term survival. One might think that in such a challenging time, the California legislature would make every effort to ease burdens on businesses, in order to stimulate growth, encourage business investment and ensure creation of new jobs so that the droves of unemployed Californians can get back to work. Unfortunately, the California legislature missed the memo on this, and instead created dozens of new regulatory, administrative and legislative hurdles – which will most certainly result in a new wave of litigation. In part one of this two-part series, we will review some of the new changes that will impact how business does business for years to come.

Mandatory Pay Data Reporting (SB 973)

On or before March 31, 2021, and on or before March 31 each year thereafter, every private employer with 100 or more employees must submit an updated pay data report to the state of California. The report prepared and submitted by every employer will then be presented to the California Department of Industrial Relations for review.

Among the information that employers must disclose to the government:

• The number of employees by race, ethnicity, and sex in ten (10) different job categories;
• The number of employees by race, ethnicity, and sex, whose annual earnings fall within each of the pay bands used by the United States Bureau of Labor Statistics;
• The number of hours worked by each employee counted in each pay band during the “Reporting Year”; and
• For employers with multiple establishments or locations, a separate report for each establishment and a consolidated report that includes all employees.

There are substantial penalties for employers who fail to file a timely report. Additionally, there is no specific assurance in the bill that the information disclosed to the government will be held in confidence – meaning that your reported data may be used later in a claim by the Labor Commissioner and/or in a civil court. Now, more than ever, it is imperative to review every employee’s job description and pay structure to ensure compliance with the Fair Pay Act.

HR Professionals Now Deemed “Mandated Reporters” of Child Abuse/Neglect – (AB 1963)

Effective January 1, every human resource employee responsible for receiving and/or investigating claims of workplace discrimination, harassment, or retaliation will now be required to report suspected child abuse or neglect to authorities under the existing Child Abuse and Neglect Reporting Act. If an HR professional obtains evidence of a child which s/he knows or reasonably suspects has been the victim of child abuse or neglect, a report to local law enforcement is mandatory. Failing to report when required to do so is a criminal violation and subjects the HR professional to prosecution by state and/or local authorities.

The new bill also requires employers to provide mandated reporters “training in child abuse and neglect identification and training in child abuse and neglect reporting. The training requirement may be met by completing the general online training for mandated reporters offered by the Office of Child Abuse Prevention in the State Department of Social Services.”

Small Employers Required to Provide Protected Family and Baby Bonding Leave (SB 1383)

This new law, which becomes effective on January 1, provides protected leave to care for employees or family members (including grandparents, grandchildren, siblings and in-laws). Additionally, parents employed by small businesses (5+ employees) are now permitted to take 12 weeks of protected leave for baby bonding following the birth, adoption of placement of a foster child. This leave is in addition to protected leave made available for an employee’s pregnancy disability leave . . . with possible maximum leave of 28 weeks!

Under this new provision, failure to reinstate employees using this leave, will result in significant liability. As is the case for larger employers (50+ employees), small employers must provide incremental leave, rather than requiring an employee to use the benefit in one finite period.

To qualify for the new leave program, an employee must have worked for the company for 12 months or provided 1,250 hours of service.

SB 1383 also creates a private, civil right of action, where employees can sue for any failure in providing, administering or reinstating employment following leave.

Presumption that COVID-19 Diagnosis is a Workers Compensation Claim (SB 1159)

Following Governor Newsom’s executive order issued in May, the Legislature codified a “rebuttable presumption” that any employee, who is required to report to work as an “essential worker” and is later diagnosed with COVID-19, is entitled to benefits under the California Workers’ Compensation Act. In other words, if an active employee becomes ill with the virus, it becomes the burden of the employer to produce evidence that the employee contracted the illness somewhere other than the workplace. Obviously, “proving” where an employee contracted the virus will be extraordinarily difficult – especially in those industries where employees interact with the public or third parties. With that said, if/when an “essential employee” provides notification of a positive COVID-19 test, it is now the obligation of the employer to provide a Form DWC-1 – new claim for workers compensation benefits – and submit the same to their own insurer to open a claim. Failure to provide that form to an employee within 24 hours of receiving notice of an injury or illness, will subject the employer to significant penalties and potential liability.

Some Good News!! (AB 1281)

With a crushing deadline quickly approaching, the Legislature extended the compliance requirement on the employment provisions of the California Consumer Privacy Act until January 1, 2022. Under the CCPA, employers are required to create and maintain a policy to ensure the security of employee personal private information (e.g. social security numbers, other identifying information). Despite the extension of the deadline, it remains a “best practice” for employers to take all necessary steps to protect any and all confidential information, including that belonging to its employees.

STAY TUNED . . .

As always, the information above is for information purposes only, and should not replace the advice of competent legal counsel. It should be part of every business’ year-end planning to sit down with counsel to review all employment policies and procedures to ensure compliance with each of the new obligations discussed above. Stay tuned next month for a review of even more fun changes from our legislature.

Brian E. Koegle

Email: bkoegle@pooleshaffery.com

Santa Clarita: 661-290-2991

Los Angeles: 213-439-5390