In true California fashion, the legislature had a busy session that resulted in a number of new employment-related statutes and amendments being passed just in time for the holidays and will go into effect as of January 1, 2022 (unless otherwise noted below). While there were a few welcome “stocking stuffers” for California employers, the majority of the bills passed will present new compliance challenges for employers at the start of the new year. Following is a summary of some of the changes:

Wage Theft is Grand Theft (AB 1003)

The intentional deprivation of wages, including gratuities, in an amount greater than $950 from any one employee, or $2,350 in the aggregate from two or more employees, by an employer in any consecutive 12-month period is punishable as grand theft. Independent contractors and hiring entities of independent contractors are included within the definitions of “employee” and “employer”.

Grand theft is generally punishable either as a misdemeanor by imprisonment in a county jail for up to one year or as a felony by imprisonment for up to three years. Now, wages, gratuities, benefits, or other compensation that are the subject of a prosecution under this law may also be recovered as restitution.

Prohibition on Secret Settlements Expanded (SB 331)

The new law prohibits confidentiality in settlement agreements with respect to factual information related to claims involving acts of workplace harassment or discrimination based on any Fair Employment and Housing Act (FEHA)-protected characteristic or retaliation for reporting same. While employees cannot be prohibited from discussing the underlying facts of the case, employers may still use clauses that prevent the disclosure of the amount paid to settle the claim. The law also now requires any contractual provision that restricts an employee’s right to disclose information (such as a non-disparagement provision) to include a statement related to the employee’s right to disclose factual information about unlawful acts in the workplace. The statement must set out in substantial form: “Nothing in this agreement prevents you from discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that you have reason to believe is unlawful.”

Finally, for employers entering into separation or severance agreements with employees, the employer must now notify the employee that the employee has a right to consult an attorney regarding the agreement and must provide the employee with a reasonable time period of at least five business days to do so.

Warehouse Worker Quotas (AB 701)

Large employers must provide non-exempt employees who work at covered warehouse distribution centers with a written description of any quotas the employee will be required to meet (including the quantified number of tasks to be performed or materials to be produced or handled, within a defined period, and if applicable, any potential adverse employment actions that could result from failure to meet the quota) at the time of hire (or within 30 days of the law’s effective date of Jan. 1, 2022). Employees cannot be required to meet, or be disciplined for failing to meet, a quota that inhibits the use of bathroom facilities or compliance with meal or rest period entitlements or occupational safety and health laws. The time spent on actions taken to comply with health and safety laws must be treated as time-on-task or productive time for purposes of quota tracking or a monitoring system.

Employers cannot take adverse action against an employee who fails to meet a quota that has not been previously disclosed. Moreover, in addition to the disclosure requirements at time of hire, the employer must provide, within 21 calendar days, a written description of each quota the employee is subject to and a copy of their most recent 90 days of personal “work speed data” collected, stored, analyzed, or interpreted relating to an individual employee’s performance of a quota upon request by a current or former employee who believes that meeting a quota caused a violation of their right to a meal or rest period or required them to violate any occupational health and safety laws.

Covered warehouse distribution centers include establishments classified under the applicable North American Industry Classification System (NAICS) Codes for General Warehousing and Storage (493110), Merchant Wholesalers, Durable Goods (423), Merchant Wholesalers, Nondurable Goods (424), and Electronic Shopping and Mail-Order Houses (454110).

Chain Community Pharmacist Quotas (SB 362)

Chain community pharmacies with 75 or more stores in California under the same ownership are now prohibited from establishing quotas related to the duties for which a pharmacist or pharmacy technician license is required, such as quotas related to prescriptions filled, services rendered to patients, programs offered, or revenue obtained. This prohibition extends to communicating quotas to employees, contractors, or other third parties.

Restrictions on Piece Rate Pay for Garment Manufacturers (SB 62)

Employers are prohibited from compensating employees engaged in the performance of garment manufacturing by the piece or unit, or by the piece rate, except as to workplaces covered by a bona fide collective bargaining agreement that contains certain required provisions. Additionally, the law expands the recordkeeping requirements for every employer engaged in the business of garment manufacturing as well as brand guarantors (i.e., any person contracting for the performance of garment manufacturing for the apparel industry).

Food Delivery Platforms and Gratuities (AB 286)

Food deliver platforms are prohibited from retaining any portion of amounts that are designated as a tip or gratuity. All such amounts paid by a customer for a delivery order must be paid in full to the person making the delivery.

Independent Contractor Exemption Extensions (AB 1506 and 1561)

The exemptions created by last year’s AB 2257 for licensed manicurists and for newspaper distributors working under contract with a newspaper publisher and newspaper carriers has been extended from Jan. 1, 2022, to Jan. 1, 2025.

Additionally, the law now requires newspaper publishers and distributors that hire or directly contract with newspaper carriers to submit to the Labor and Workforce Development Agency by March 1, 2022, March 1, 2023, and March 1, 2024, information related to their workforce for the current year, including: (1) the number of carriers for which the publisher or distributor paid payroll taxes in the previous year and the number of carriers for which the publisher or distributor did not pay payroll taxes in the previous year; (2) the average wage rate paid to carriers classified as independent contractors and as employees; and (3) the number of carrier wage claims filed, if any, with the Labor Commissioner or in a court of law. For the 2022 reporting deadline, every newspaper publisher and distributor must also report the number of carrier wage claims filed in court or with the Labor Commissioner over the prior three years.

While this new law appears potentially to require reporting even by newspaper publishers and distributors that do not use independent contractors as of Dec. 31, 2021, this requirement remains unclear.

Temporary PAGA Exemption for Unionized Janitors (SB 646)

The law exempts from the California Private Attorneys General Act of 2004 (PAGA) certain types of unionized janitorial employees covered by a collective bargaining agreement in effect before July 1, 2028, that contains certain provisions, including but not limited to premium wage rates, a grievance and binding arbitration procedure to redress violations, and which expressly waives the PAGA requirements. Janitorial contractors who have entered into such a collective bargaining agreement must provide certain information about the agreement and number of covered employees to the Labor and Workforce Development Agency within 60 days of entering into the agreement.

The exemption is only in effect through July 1, 2028, and does not cover workers specializing in window washing, housekeeping staff who primarily make beds and change linens, or workers at airport facilities, cabin cleaning, hotels, card clubs, restaurants or other food service operations, grocery stores, or drug retailers.

California Family Rights Act Amendments (AB 1033)

The California Family Rights Act has been expanded to permit employees to take family and medical leave to care for a parent-in-law with a serious health condition or other “designated person” with a serious health condition and who has been identified by the employee at the time the employee requests family care and medical leave. The employee may designate a new person every 12 months.

Additionally, with respect to last year’s implementation of the smaller employer mediation program (which applies to businesses with 5-19 employees), this year’s amendments clarify that participation in the mediation program is prerequisite to filing a civil action if requested by either party. The onus is on the plaintiff-employee to contact the Department of Fair Employment and Housing to state whether or not they desire to mediate, which triggers the Department to notify and seek this information from the defendant-employer. A defendant-employer who does not receive the required notification of the mediation program is entitled to a stay of any pending action until the mediation is complete or deemed unsuccessful.

Workplace Postings Via Email (SB 657)

With respect to any situation in which an employer is required to physically post information at the worksite, an employer also may distribute that information to employees by email with the document or documents attached. Email distribution does not alter an employer’s obligation to also physically display the required posting. Accordingly, while the new law clarifies an appropriate mechanism for providing required notices, it does not change the law or an employer’s current posting obligations.

Personnel Record Retention Requirements (SB 807)

Currently, the minimum retention period under the FEHA for personnel records is two years. SB 807 extends the retention period to four years from when the records are created, or from the date on which an employment action was taken.

COVID-19 Notice Requirements (AB 654)

Revising last year’s AB 685 regarding an employer’s COVID-19 reporting obligations to employees and other third parties, the amendment now requires employers to give notice of a COVID-19 outbreak to the applicable local public health agency within the later of 48 hours or one business day, as well as other clarifying changes. The new law also expands the list of employers exempt from the COVID-19 outbreak reporting requirement to include, for example, community clinics, adult day health centers, community care facilities, and child day care facilities.

This law became effective as an urgency statute on October 5, 2021

Cal/OSHA’s Enforcement Authority Expanded (SB 606)

There is now a rebuttable presumption that a violation committed by an employer with multiple worksites is “enterprise-wide” (and at all worksites) if the employer has a written policy or procedure that violates occupational health and safety laws or there is evidence of a pattern or practice of the same violation committed by that employer at more than one of the worksites. The law also grants Cal/OSHA the power to issue a citation for an “egregious violation” if one of seven criteria are satisfied. Each instance of an employee being exposed to that violation is considered a separate violation for purposes of the issuance of fines and penalties.

PPE for Agricultural Workers Impacted by Wildfire Smoke Events (AB 73)

Agricultural employers must review and update the training provided to employees based on the updated wildfire smoke training prepared and posted by Cal/OSHA and train employees “in a language and manner readily understandable by employees, taking into account their ethnic and cultural backgrounds and education levels, including the use of pictograms, as necessary.”

This law became effective as an urgency statute on September 27, 2021.

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