The 2019 Proposed CA Employment Bills Are . . .

The time to propose new bills in the California Legislature is now closed for 2019, and the nearly 2,600 bills are being circulated through various legislative committees. Here are ones to watch, and voice your opinions on to your state representatives:

• AB 5: Codify the “ABC” test from Dynamex Operations West Inc. v. Superior Court and clarify its application.
• AB 9: Increase time to file complaint with DFEH from one year to three years.
• AB 51: Prohibit employers from prohibiting disclosure of sexual harassment; prohibit requiring arbitration agreements for FEHA claims as a condition of employment.
• AB 71: Overturn Dynamex and use a multi-factor test to determine independent contractor status.
• AB 160: Permit preferential treatment for veterans without running afoul of FEHA.
• AB 170: Client employer to share responsibility and liability for harassment of workers provided by a labor contractor.
• AB 171: Prohibit discrimination and retaliation against a victim of sexual harassment; rebuttable presumption of retaliation if adverse employment action occurs within 90 days of reporting (or employer knowing of) being a victim of domestic violence, sexual assault, sexual harassment or stalking.
• AB 177: Make Election Day a holiday.
• AB 241, 242 & 243: Address implicit bias in the healing arts profession, judicial branch and law enforcement.
• AB 249: Prohibit public employers from discouraging employees from opting out or becoming union members.
• AB 333: Extend whistleblowing protections to independent contractors who contract with state and local government.
• AB 372: Permit state agencies to adopt an “Infant at Work” program to allow new parents or caregivers to bring an infant up to 6 months in age into the workplace.
• AB 403: Increase time to file retaliation claim with DLSE from 6 months to 3 years and provide attorneys’ fees to plaintiffs who prevail on Labor Code 1102.5 claim.
• AB 418: Create a privilege for communications between union agents and represented employees.
• AB 443: Extend time to provide employee requested pay records from 21 to 28 days.
• AB 628: Protect taking time off from work to help a family member who is a victim of sexual harassment, and maintain confidentiality of such requests.
• AB 673: Permit employee to file lawsuit to recover civil penalties in the same amount recovered by the DLSE for a Labor Code violation.
• AB 749: Prohibit settlement agreements from containing no re-hire clauses.
• AB 882: Prohibit employers from discharging employees for testing positive for a drug being used as a medical-assisted treatment.
• AB 1224: Eliminate the 1,250-hour requirement to be eligible for CFRA leave and reduces the number of employees from 50 to 20.
• AB 1478: Allow employees to sue under PAGA for violations of Labor Code section 230.
• AB 1554: Require employers to notify employees participating in a dependent care assistance program of any deadline to withdraw funds by the end of the plan year.
• SB 41: Prohibit calculation of damages based on or considering race, ethnicity, gender, religion or sexual orientation.
• SB 142: Further increase requirements for lactation rooms.
• SB 171: Require employers with 100+ employees to submit pay data to DFEH.
• SB 188: Expand definition of race in FEHA to include traits historically associated with race, including hair texture and protective hairstyles.
• SB 778: Fix last year’s law on sex harassment training to state anyone trained on or after January 1, 2018 does not have to be trained again until after December 31, 2020.

Other Updates:

New FLSA Salary Threshold is On Its Way

The Department of Labor is proposing a new rule to raise the minimum salary threshold for exempt employees from $23,660 to $35,308. California’s salary requirements are higher.

Joint Employer Test for Title VII Claims

In EEOC v. Global Horizons, Inc., the Ninth Circuit addressed what test is used to determine whether an entity is a “joint employer” for purposes of claims under the Civil Rights Act of 1964 (“Title VII”). The court held that the common-law test applies, meaning that the “principal guidepost” is the extent of control the entity has over the details of the worker’s work. The court rejected the economic-reality test (i.e., whether the worker is economically dependent on the entity) used for the Fair Labor Standards Act. Under the common law test, both a labor contractor, Global Horizons, and the fruit growers that contracted with Global Horizons for laborers and directed their daily work, were considered joint employers.

Employees Cannot Sue an Employer’s Payroll Service Provider for Wage Violations

In Goonewardene v. ADP, LLC, the court of appeal initially held that although a payroll service provider is not considered a “joint employer” for purposes of paying wages, an employee could sue the payroll company as a third-party beneficiary of the contract between the employer and the payroll company, and under negligence theories. The California Supreme Court disagreed. Analyzing third-party beneficiary contract law, the Court held the motivating purpose behind an employer contracting with a payroll company is to provide a benefit to the employer, not to the employees. Moreover, to allow every employee to add a payroll company as a defendant in a wage and hour lawsuit would impose considerable litigation defense costs on the payroll company – costs that undoubtedly would be passed on to the employer through the contract, which is not consistent with the objectives of the contract. The Court further found it is not necessary, and does not carry out the public policies, to impose tort liability on a payroll company for an employer’s wage and hour obligations.

PAGA Waivers in Arbitration Agreements are Still Not Enforceable

In 2016, in Iskanian v. CLS Transportation Los Angeles, LLC, the California Supreme Court held that employees could not waive the right to pursue representative PAGA claims in an arbitration agreement because the state government is not a party to the agreement. In 2018, in Epic Systems Corp. v. Lewis, the United States Supreme Court held that class action waivers in arbitration agreements were enforceable even for employment wage and hour claims. Thereafter, some have questioned whether the ruling in Iskanian prohibiting representative PAGA action waivers survives after Epic Systems. One California Court of Appeal has weighed in on the issue. In Correia v. NB Baker Electric, Inc., the Fourth Appellate District held that it remained bound by Iskanian, as Epic Systems did not address claims for civil penalties being brought on behalf of a state government, and further held not only a complete waiver, but also a pre-dispute agreement requiring arbitration of a PAGA claim is unenforceable.

State Public Employers are Required to Comply with California Minimum Wage Requirements

Municipalities are exempt from many of California’s wage and hour laws, under the “home rule doctrine,” in which municipalities oversee their own municipal affairs, including determining employee compensation. However, minimum wage is not one of them. In Marquez v. City of Long Beach, the plaintiffs alleged the City of Long Beach failed to pay certain workers at least the state’s minimum wage requirements. After analyzing the relevant provisions of the California Constitution, Labor Code and IWC Wage Order, the court concluded that paying employees a minimum set wage is a matter of statewide concern to protect the health and welfare of workers by ensuring they can afford the necessities of life for themselves and their families.

PAGA Penalties Are Distributed to All Affected Aggrieved Employees

When civil penalties are assessed under the Labor Code Private Attorneys General Act, the statute mandates 75% of the penalty is given to the state and 25% of the penalty is paid to the “aggrieved employees.” In Moorer v. Noble L.A. Events, Inc., the plaintiff wanted the trial court to enter a default judgment against his employer, keeping the entire 25% for himself. The trial court refused to award the entire portion to the plaintiff, and ultimately dismissed the plaintiff’s case. Second Appellate District upheld the trial court’s ruling, affirming that 25% of the civil penalty is to be distributed to all affected aggrieved employees, not just the person who filed the lawsuit.

Until next time, remember this is all just informational and does not constitute legal advice or create an attorney-client relationship.