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What the New 2020 California Laws Mean for Employers

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What the New 2020 California Laws Mean for Employers

The New Year brings a number of new, significant employment laws for California businesses. These rules range in topic from worker classification to privacy. Employers need to consider these developments, understand how the laws affect operations, and adjust their policies and practices to ensure compliance.

Worker Classification
One of the biggest, most attention-grabbing changes coming to the workplace in 2020 is AB 5, the new law that clarifies the test used to determine whether a worker is an independent contractor or a normal W2 employee. AB 5 incorporates the “Dynamex ABC Test” into various parts of California’s labor statutes. From a 2018 California Supreme Court Ruling (Dynamex Operations West, Inc. v. Superior Court of Los Angeles), this test states that a worker can be considered an independent contractor only if the worker satisfies all three of the following criteria:

  • The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both in the contract for and in the practical reality of the arrangement;
  • The worker performs work that is outside the usual course of the hiring entity’s business;
  • The worker is engaged in a customarily independent trade, occupation, or business of the same nature involved in the work performed.

AB 5 will have a significant impact on California businesses that rely on contract, freelance, and contingent workers, as many workers that have been historically treated as independent contractors may need to instead be classified as employees. Unlike independent contractors, employees are entitled to things like minimum wage, overtime, meal and rest periods, workers’ compensation benefits, unemployment insurance, and paid sick and family leave.

This bill does exempt workers in about 50 industry-specific job categories, including doctors, dentists, accountants, real estate agents, hairdressers, lawyers, engineers, and architects. The determination of whether an individual in one of these occupations is an employee or independent contractor will be governed by the less strict “Borello test,” which gets its name from the 1989 California Supreme Court decision in S.G. Borello & Sons, Inc. v. Department of Industrial Relations. Many employers may already be familiar with the Borello test, as this was the test used by courts to determine employment status prior to the Dynamex decision.

Wage and Hour
2020 also continues the annual minimum wage increases introduced by SB 3. In 2020, this new California minimum wage increases to $13 per hour for large companies (26 people or more) and $12 per hour for small businesses (25 or fewer employees). Keep in mind that various city-level and other local jurisdictions, such as the City of Los Angeles, have a higher minimum wage than this state minimum. Employers should make sure they are complying with their local ordinances, and not simply with the state minimum.

This statewide minimum wage increase also affects the salaried worker classification. Because the minimum annual income required to properly classify an individual as a salaried employee is calculated based on the state minimum wage, this amount has also increased in 2020. The new minimum salary required to properly classify an employee as an exempt, salaried employee is $49,920 for small businesses and $54,080 for larger businesses.

Discrimination, Harassment, and Retaliation

  • The period which an individual may file a discrimination complaint with the Fair Employment and Housing Act (FEHA) increases from one to three years under AB 9.
  • Hairstyle Discrimination Prohibition (SB 188): SB 188 expands the FEHA’s definition of race to include traits historically associated with race, including, but not limited to, “hair texture and protective hairstyles.” Protective hairstyles include, but are not limited to, braids, locks, and twists. Employers should review workplace dress codes and grooming policies to ensure that none of the protected hairstyles are prohibited or discouraged.

Leaves of Absence and Workplace Accommodation

  • Paid Family Leave Expansion (SB 83) increases the maximum wage replacement benefits under California’s Paid Family Leave (PFL) program from six to eight weeks, beginning July 1, 2020. This leave is paid for through the State Disability Insurance Fund.
  • Organ Donation Leave of Absence (AB 1223) requires employers with 15 or more employees to grant employees an unpaid leave of absence, not to exceed 30 days in a one-year period, for the purpose of organ donation. This benefit is in addition to the existing 30 business days of paid leave for an employee who is an organ donor. In other words, with some caveats and exceptions, employees are now entitled to 60 days per year of leave for organ donation: 30 paid days and 30 unpaid days.
  • Lactation Accommodation (SB 142) requires employers to provide a reasonable amount of break time sufficient for an employee to express breast milk, as well as provide the employee with a location to express milk in private.This lactation location must:
    • not be a restroom;
    • be in close proximity to the employee’s work area;
    • allow for privacy, including being shielded from view and free from intrusion of others while expressing milk;
    • be safe, clean, and free of hazardous materials;
    • provide for a surface to place a breast pump and personal items;
    • contain a place to sit;
    • have access to electricity.
      In addition, the employer must provide access to a sink and refrigerator (or cooling device) for stored breast milk.

SB 142 further requires employers to create and implement a lactation accommodation policy, including publishing the policy in the employee handbook and providing the policy when an employee asks about or requests parental leave.

Consult for Compliance
Other new measures in 2020 impact workplace training and safety requirements, flexible spending accounts, and employee arbitration agreements, many of which could have substantial ramifications for businesses in the state.

Contact Chase Law Group, PC, for an in-depth analysis of how each law might affect your business. Our experienced team can help you work through these rules and regulations. Give us a call at (310) 545-7700 or contact us here and set up a consultation today.