Contributors

Christian Scali

Founder and Managing Shareholder

2020 was a relatively quiet year for California employment law. However, the legislature adopted important changes to California independent contractor law and expanded the reach of the various leave laws. All businesses should evaluate their employee policies and make appropriate changes.

AB 2257 – Independent Contractors

What the law currently requires

Last year, AB 5 codified the “ABC Test” to determine whether a worker qualifies as an independent contractor. Under this test a worker is presumed to be an employee unless the employer can show that:

• the worker is free from the direction and control of the hiring entity,
• the worker performs work that is outside the hiring entity’s main business; and
• the worker normally performs work in an independent business or occupation that is in the same area as the work that the worker is performing for the hiring entity.

AB 5 carved out some exceptions to application of the stringent ABC Test that applied under the previous (and more lenient) test under the Borello case.

How this bill changes the law

AB 2257 expands and clarifies AB 5’s previous exemptions from the ABC Test. First, it creates exemptions for contractors in these areas:

• content contributors, advisors, producers, narrators or cartographers for certain publications (provided they do not displace existing employees)
• specialized performers hired to teach a class for no more than a week
• appraisers
• registered professional foresters
• home inspectors.

In addition, the law expands exempt positions under the “business to business” exception to apply to situations where the contracting service provider is free to provide services to other clients, rather than actually providing services to other clients. It also expands the exemption for a service provider that is providing the service directly to customers of a contracting business as long as its employees are providing services under the name of the business service provider and the business service provider regularly contracts with other businesses.

The bill also expands AB 5’s referral agency exception from the ABC Test, and now the following service providers are covered under this exception: graphic design, web design, photography, tutoring, consulting, youth sports coaching, caddying, wedding or event planning, services provided by wedding and event vendors, minor home repair, moving, errands, furniture assembly, animal services, dog walking, dog grooming, picture hanging, pool cleaning, yard cleanup, and interpreting services. The service provider must be free to contract with other clients, but need not show that they are actually doing so.

Finally, the bill exempts businesses that contract with each other where the services are being contracted for a “stand-alone non-recurring event in a single location, or a series of events in the same location no more than once a week” as long as certain requirements are met, such as: lack of control over the work, a written contract specifying payment amounts, and each individual’s maintenance of his or her own business location. The written agreement between the parties must include the payment amount, including any applicable rate of pay, for services to be performed, as well as the due date of payment for such services.

AB 1731 – Worksharing Programs

What the law currently requires

Existing law provides for the payment of unemployment compensation benefits to eligible persons who are unemployed through no fault of their own. An employee is deemed unemployed in any week if the employee works less than their usual weekly hours of work for the employee’s regular employer as the result of the employer’s participation in a work sharing plan that meets specified requirements and has been approved by the Director of Employment Development, pursuant to which the employer, in lieu of layoff, reduces employment and stabilizes the workforce. Existing law requires an employer who wishes to participate in the work sharing program to submit to the director a signed, written work sharing plan application form that meets specified requirements.

How this bill changes the law

This bill, until January 1, 2024, would create an alternative process for the submission and approval of employer work sharing plan applications. It would allow employers to more easily cut hours while letting the worker access unemployment benefits to backfill lost wages. The bill also allows employees to more easily maintain their health and retirement benefits. Each approved workshare plan will be deemed approved for one year.

SB 1383 – CFRA Expansion

What the law currently requires

Under prior law, the California Family Rights Act (CFRA) and Family Medical Leave Act (FMLA) applied to employers with 50 or more employees within a 75 mile radius. It allows an employee, who has at least 1,250 hours of service with the employer during the previous 12-month period, to take up to 12 workweeks of unpaid protected leave during any 12-month period to bond with a new child of the employee or to care for themselves, a child, a parent, or a spouse, as specified.

How this bill changes the law

Under SB 1383, the CFRA now covers employers with five or more employees. The effect of this law is to also repeal the New Parent Leave Act (NPLA) which covered medium size employers, because the expanded CFRA provides all the benefits of the NPLA and more.

The law also expands the definition of “family members” to a child, parent, grandparent, grandchild, sibling, spouse, or domestic partner. It also requires an employer that employs both parents of a child to grant up to 12 weeks of leave to each employee for baby bonding, whereas previously, the employer only had to grant both employees a combined total of 12 weeks of leave.

AB 2017 – Sick Leave Designation of Kin Care

What the law currently requires

Currently, employees may use up to half of their accrued paid sick leave to care for a family member, also known as “kin care.”

How this bill changes the law

Effect: This bill provides that the employee has the right to designate sick leave as kin care leave, so that the leave time can be properly tracked as such for purposes of determining the availability of kin care leave and leave for other covered purposes under California’s sick leave law.

AB 2992 – Victims of Crime or Abuse

What the law currently requires

Existing law prohibits an employer from discharging, discriminating against or retaliating against, an employee who is a victim of domestic violence, sexual assault, or stalking, for taking time off from work to obtain or attempt to obtain relief to help ensure the health, safety, or welfare of the victim or victim’s child.

How this bill changes the law

This legislation prevents employers from discharging, discriminating, or retaliating against an employee who is a victim of a crime, which caused a physical or mental injury, or a threat of physical injury, regardless of whether any person is arrested for, prosecuted for, or convicted of, committing the crime.

Employers are also required to allow such employees to take time off work to:

• seek medical attention for injuries caused by crime or abuse,
• obtain services from prescribed entities as a result of crime or abuse,
• obtain psychological counseling or mental health services related to an experience of crime or abuse,
• participate in safety planning,
• take other actions to increase safety from future crimes or abuse.

The employee within a reasonable time may be required to provide one of the following as certification for the absence:

• A police report,
• A court order protecting or separating the employee from the perpetrator,
• Documentation from a licensed medical professional or similar,
• Any other form of documentation that reasonably verifies the crime or abuse occurred.

SB 1384 – Representation in Arbitration by Labor Commissioner

What the law currently requires

Labor Code section 98.4 provided that the Labor Commissioner could represent indigent claimants in de novo appeals of Labor Commissioner decisions.

How this bill changes the law

This law expands that to allow the Labor Commissioner to represent claimants who cannot afford counsel in arbitration proceedings and requires employers to serve petitions to compel arbitration on the Labor Commissioner in Labor Commissioner proceedings. It also allows the Labor Commissioner to represent claimants in proceedings to determine whether arbitration agreements are enforceable.

AB 3075 – Secretary of State Reporting and Successor Liability

What the law currently requires

Business entities are required to periodically file a statement of information with the Secretary of State.

How this bill changes the law

The statement of information must disclose whether any officer or director, or, in the case of a limited liability company, any member or manager, has an outstanding final judgment for the violation of a wage order or the Labor Code. It also requires that a successor to any judgment debtor shall be liable for any wages, damages, and penalties owed to any of the judgment debtor’s former workforce pursuant to a final judgment. Finally, this law expressly authorizes local jurisdictions to enforce more stringent local standards relating to the payment of wages.

SB 973 – Reporting Pay Data

This bill creates a new requirement that private employers with 100 or more employees submit a pay data report to the California Department of Fair Employment and Housing (DFEH) that includes the number of employees by race, ethnicity, and sex.

• This report will include the previous year’s W-2 earnings and hours worked for each employee and must be submitted in a searchable and sortable format.
• This information is based on the information that applies at the end of any pay period between October 1st and December 31st. The submission must account for and include all employees who were active as of that pay period.
• The first report must be submitted on or before March 31, 2021, and each year thereafter.