Many of the bills Gov. Gavin Newsom signed into law will soon be taking effect in 2020, several of which are expected to impact California employers.
While a few themes run through these new laws, particularly in terms of addressing arbitration and sexual harassment, many are expected to impact businesses and their employees over the next year.
“As you follow the progress of California employment law, it becomes more and more onerous on businesses,” said Gary Collis, assistant professor of business with a focus in business law at College of the Canyons. “Many rules and regulations are highly detailed and difficult for some businesses to understand let alone follow.”
Assembly Bill 5
Of all of the bills Gov. Newsom signed this year, AB 5 was the one many are focusing on, as it’s expected to have the most dramatic effect on both employers and employees.
“AB 5 is the most significant change in California law this year, but exactly how much impact it has remains to be seen,” Collis said. “More and more businesses have been classifying workers as contractors, and it has drawn the attention of the state government as it impacts state revenue.”
The 2018 Dynamex decision began to allow for changes in the classification of independent contractors, and AB 5 is set to add even more benefits for workers, including workers’ compensation and paid family leave, as well as both health and unemployment insurance.
“From an employer’s standpoint, Dynamex is a difficult standard for most employers to comply with,” said Brian Koegle, a partner in the employment and labor law department at Poole & Shaffery, in a prior Signal interview, adding that he views AB 5 as a step in the right direction.
“This is now a step back, a pullback on what Dynamex did,” he added. “This is a good sign that legislation is applying common sense to what’s happening on the mainstream that affects small and mid-size businesses.”
Among those directly affected would be delivery drivers along with Uber or Lyft drivers, who have complained about similar issues, yet it is not all upside for these workers.
“The drawback is with employment comes greater control,” Collis said, adding that many drivers have the freedom to set their own schedule. “Most drivers will be subject to having a schedule set by their employer.”
Koegle agreed, adding that in the immediate future, the impact on those businesses is going to be substantial though many of those same businesses are lobbying for exemptions to the regulation.
“The business community is rightfully concerned about the effects of AB 5, but it’ll be interesting to see how many carve-outs we’re going to see,” Collis added.
Before it passed, the Santa Clarita Valley Chamber of Commerce monitored and worked to have AB 5 properly amended, according to board member John Musella.
“Unfortunately, it did not take care of clarifying enough independent contractor categories and will likely hurt the gig economy as a result,” he added. “We need to protect working class Californians’ ability to have jobs that allow them flexible work schedules and to protect businesses who rely on independent contracts to run their businesses successfully in today’s modern, changing economy.”
Assembly Bill 9
This bill further protects workers under the California Fair Employment and Housing Act.
Under the existing law, an employee who claims discrimination, harassment, or retaliation under FEHA must file a verified complaint with the Department of Fair Employment and Housing within one year from the date the incident occurred. AB 9 extends that one-year period to three years starting in 2020.
“Employees often keep quiet when faced with harassment and discrimination because they need their jobs, so they need time to file complaints,” said Rita Lewis, a business lawyer. “This law allows them time to remove themselves from the situation and ensure speaking out won’t risk their employment. Employers may now find themselves having to defend these lawsuits years after the alleged occurrence, which although good for employees, makes things a lot harder for their employers.”
“My biggest concern with the extension of a statue of limitation to three years is that time wears down memory, recollection and accuracy,” Koegle said. “This change is going to put a significant burden upon employers to do a better job documenting any claims that come forward.”
Assembly Bill 51
“The other interesting thing that jumps out is that over the years, California has been arguably the most hostile state to the concept of arbitration, and that continues in this legislative cycle,” Collis said.
AB 51, another law protecting workers under FEHA, prohibits arbitration with respect to workers, ensuring that new or current employees aren’t required to sign mandatory arbitration agreements that cover any claims under FEHA.
“The concern is that when you require employees to arbitrate rather than litigate, somehow that is less public, particularly when an employment agreement is coupled with some sort of confidentiality agreement,” Collis added.
The new law is also expected to prohibit employers from retaliating against employees who choose not to enter arbitration agreements, making it so they can only be done voluntarily.
“With every passing year, businesses have been adopting arbitration agreements to limit the growing cost of employment-related lawsuits,” Collis said. “AB 51 would force them back into court with all associated costs and time.”
Musella agreed, adding, “By removing arbitration agreements, it will likely only delay the resolution of claims.”
In an attempt to address federal issues, AB 51 specifically states that it does intend to invalidate arbitration agreements enforceable under the Federal Arbitration Act, yet Collis believes it will be immediately challenged.
“I think AB 51’s impact will be seriously limited by federal preemption, and in the long run, it may have very little impact as federal courts are going to restrict California’s ability to limit arbitration,” he said.
Assembly Bill 749
It’s common practice for employers to add a “no-hire” clause into settlement agreements that prohibit employees from ever applying for a job at that company again, but this practice will soon be illegal.
By limiting a contractual term that’s very common and frequently used, AB 749 exposes companies to future, potential liabilities, Koegle added.
“When first hearing about this bill, I was a bit worried,” said Oliver Mendel, supervising manager, adding, “I saw this as posing a problem for many employers who have dealt with particularly bad apples, but AB 749 seems to have addressed this, and upon learning more, I’m a bit more optimistic.”
Under AB 749, unless the employee has engaged in sexual harassment or sexual assault, employers cannot include such provisions.
“Like AB 9, this law is preventing harassment victims from being dissuaded from speaking out,” Lewis said. “‘No hire’ clauses can almost punish a victim for reporting a problem, risking their employment. Now, this does not mean employers will need to rehire fired employees, nor does it mean that they cannot terminate a current employee based on unrelated, legitimate reasons.”
Senate Bill 778
“You can see a lot of emphasis on expanding the rights of workers, particularly those who are alleging some sort of harassment,” Collis said. “But more importantly, making sure that the workforce is trained to recognize and respond to sexual harassment in particular.”
Since 2005, employers with 50 or more employees have been required to provide two hours of sexual harassment training to supervisory employees minimum every two years, and last year, SB 1343 reduced the threshold to employees with just five or more employees, including temporary or seasonal employees, and additionally required one hour of training to non-supervisory employees.
“This was a big change last year that not many were ready to make so quickly,” Lewis added.
This training was to be completed by Jan. 1, 2020, but SB 778 extended the deadline to Jan. 1, 2021, which according to Koegle was done by necessity as they hadn’t been given proper time to create such training programs so quickly.
“The policy behind it is really good,” Koegle added. “I do think that it needed some more thought as it should have laid out what a training component looks like. Instead, it left it up for interpretation, which creates new openings for mistakes. This is going to give the state enough time to get it right.”
“I have nothing but praise for this bundle of legislation,” Mendel added. “Over the years, the lines have often been blurred, and our workforce should be taught what is considered sexual harassment. This type of change should be a benefit to every party involved.”
In addition, SB 778 clarifies that new employees should receive training within six months of hire while newly appointed supervisory employees should receive training within six months of taking on the new position.
Those interested in learning more about the new laws affecting California businesses in 2020 can attend “Be Afraid, Be VERY Afraid!” Employment Law Update with Poole Shaffery & Koegle, LLP. The forum is scheduled 7:30-10:30 a.m. on Tuesday, Feb. 4, at the Hyatt Regency, located at 24500 Town Center Drive in Valencia. For more information, visit scvchamber.com/events/employment-law-update.