Each new year, rings in many new beginnings and changes; employment law in 2021 is no different. Many of these changes require the concurrent navigation of federal and state laws, as well as an understanding of the contractual requirements and implications imposed on companies and their employees. Failure to adjust to and comply with these new requirements can result in costly consequences to employers, so it is critical to understand all of the new changes and ensure compliance.
This month’s Legal Risk Management Tip for Jacko Law Group P.C. focuses on summarizing some of the key revisions to current laws and/or additions to new employment laws. Such summary provides guidance for both California and Arizona and to enable you to incorporate these changes moving forward for the new year.[1]
Updates to California Labor and Employment Laws
Key updates or additions to the California labor and employment laws that take effect in 2021 include:
A. Increased Minimum Wage
The minimum wage in California was $13 per hour, but effective January 1, 2021, it increased to $14 per hour for companies with more than 26 employees. If you are an employer with less than 26 employees, the minimum wage is rising from $12 per hour to $13 per hour.[2] Additionally, effective January 1, 2021, minimum salary requirements have increased: for employers with 26 or more employees, the minimum salary threshold increased to $1,120 per week or $58,240 per year, for employers with 25 or less employees, the minimum salary threshold increased to $1,040 per week or $54,080 per year.
B. AB 979 (Diversity of Board Membership)
In 2018, California passed a new law that required publicly traded corporations with principal executive offices in California to appoint at least one (1) female to their Board of Directors by the end of 2019 and to increase the number of female board members to two (2) or three (3) by the end of 2021 (depending on size of the board). AB 979 expands on the diversification requirements by now requiring these corporations to have at least one (1) board member from an underrepresented community by the end of 2021. That minority representation must increase to two (2) diverse members by the end of 2022 for corporations that have between five – eight total directors, and three (3) diverse members by the end of 2022 for corporations with more than nine directors.
C. SB 1384 (Wage Claims/Arbitration)
Effective January 1, 2021, SB 1384 amends Labor Code Section 98.4 allowing the Labor Commissioner to provide representation to a claimant in connection with opposing an employer’s petition to compel arbitration of the claim, and/or in any arbitration hearing ordered for resolution of the claim. Labor Commissioner representation will be provided where (i) the claimant requests it, (ii) the claimant is financially unable to afford representation, and (iii) the Labor Commissioner determines the claim has merit based on an initial investigation.
D. SB 973 (Pay Data Reporting)
On September 30, 2020, California Governor Gavin Newsom signed into effect, SB 973, which went into effect immediately and required private employers with 100 or more employees to submit a pay data report to California’s Department of Fair Employment and Housing (“DFEH”) by March 31, 2021, and annually thereafter. The report shall include amongst other information, information regarding the numbers of employees, by race, ethnicity and gender, who are employed in specified job categories[3]. The report also must provide pay-data for these workers. The purpose of the report is to assist the DFEH with identifying potential discriminatory pay practices throughout California.
E. AB 1281 (CCPA)
This bill extends the employer exemption from certain provisions of the California Consumer Privacy Act (“CCPA”) to January 1, 2022. Employers are reminded that if they are covered by the notice provision of the CCPA, the CCPA requires them to provide notice to applicants/employees regarding the collection of personal information and the purposes for which it is used[4].
F. AB 3075 (Corporate Statement of Information)
Existing law requires business entities to file a Statement of Information containing specified information with the Secretary of State. AB 3075 imposes a new requirement that the Statement of Information indicate whether any officer or director has an outstanding final judgment issued by the Division of Labor Standards Enforcement (“DLSE”) or a court of competent jurisdiction (from which no appeal is pending) for a violation of a wage order or the Labor Code. This new requirement, effective January 1, 2022 (or once the California Secretary of State certifies that its new platform, California Business Connect[5], has been implemented), whichever is earlier. AB 3075 also provides that a successor to any judgment debtor may be deemed liable for any wages, damages, and penalties owed to the predecessor’s former workforce pursuant to that judgment.
G. AB 1947 (Extension of Time to File Labor Commissioner Complaints)
Effective, January 1, 2021, AB 1947 amends Labor Code section 98.7 to expand the time for employees to file complaints with the Labor Commissioner for claims based upon discriminatory conduct or that the employee was discharged in violation of Labor Code provisions enforced by the Labor Commissioner. An employee now has one year (from the occurrence of the alleged violations), instead of six months, to file such a claim with the Labor Commissioner. AB 1947 also amends Labor Code section 1102.5 to allow an employee who prevails on a claim for certain types of retaliation to recover his or her attorneys’ fees.
H. AB 2017 (Kin Care Leave)
Existing law, Labor Code section 233, provides that employees must be permitted to use at least half of their annual accrual of employer-provided sick leave for “kin care” (family) reasons. Effective, January 1, 2021, this bill amends existing law and provides that it is now up to the employee’s “sole discretion” to designate days taken as paid sick leave under Labor Code section 233.
I. AB 685 (COVID-19 Reporting)
This new law, effective January 1, 2021, requires employers who receive notice of potential COVID-19 exposure to their workforce to provide specified disclosures to employees within one (1) business day.
J. SB 1159 (COVID-19 Workers’ Comp Coverage)
This new law, which was approved in September 2020 and went into effect immediately in the form of urgency legislation, extended the presumption of workers’ compensation coverage for COVID-19 illnesses contracted by certain employees who work outside the home. This new law also provided new COVID-19 reporting obligations for employers.
K. SB 1383 (Expansion of CFRA Leave)
Effective, January 1, 2021, this new law amends the prior California’s Family Rights Act requiring employers with five or more employees to provide 12 weeks of leave (within a 12-month period) to eligible employees. Under the amended California Family Rights Act, the eligibility requirements have been expanded to allow for leave under the following categories (which are further defined by the amended California Family Rights Act): (1) employee’s own health; (2) employee’s family member’s health; (3) bonding with employee’s child; (4) military exigency; (5) military caregiver leave; and (6) relationship to pregnancy leave.
L. AB 2143 (No Rehire Provisions/Settlement Agreements)
Last year, California enacted a new law (Code of Civil Procedure 1002.5) prohibiting the inclusion of a no rehire provision in settlement agreements of employment disputes. Effective, January 1, 2021, AB 2143 makes a few modest, but significant changes to this law. For example, the changes include creating an exception for employees found to have engaged in criminal conduct.
M. AB 2257 (More Dynamex Exemptions)
Signed by California Governor Gavin Newsom in September 2020 and went into effect immediately, this bill expanded the categories of exemptions for the “Dynamex” independent contractor classification test. For example, the expansion maintains a “Business-To-Business” exemption for bona fide business-to-business relationships and where the independent contractor is a sole proprietor, partnership, LLC, LLP, or corporation providing a service to another business. Moreover, this bill expanded the “Professional Services” exemption to cover still photographers, photojournalists, videographers, or photo editors that work under a written contract.
N. AB 2992 (Expanded Protections/Domestic Violence, Sexual Assault)
Existing law (Labor Code section 230-230.1) provides employment protections and certain obligations on the part of an employer to provide time off from work for employees who are victims of domestic violence, sexual assault, and/or stalking. Effective, January 1, 2021, AB 2992 expands these laws to cover employees who are victims of “crime” or “abuse”, which triggers an employer’s obligation to provide time off for such matters. Moreover, as part of the expanded AB 2992, certain terms are more broadly defined than the original language. For example, as part of the expanded AB 2992, the term “crime” is defined as any “crime or felony committed by an adult”.
O. Mandatory COVID-19 Vaccine Policies
In December 2020, the Equal Employment Opportunity Commission offered guidance regarding potential employer-mandated vaccine policies[6]. Such guidance suggests that in certain instances, an employer may implement COVID-19 vaccine policies that require certain employees to be vaccinated as a condition of their continued employment. It should be noted that this guidance comes with potential future scrutiny regarding ADA and other established accommodations.
Updates to Arizona Labor and Employment Laws
Employers with employees in Arizona should also be aware of the following:
A. Fair Wages and Healthy Families Act
Effective January 1, 2021, Arizona’s minimum wage will be increased from $12.00 per hour to $12.15 per hour and all Arizona employers are required to post a corresponding minimum wage poster in a conspicuous place within the workplace[7]. Due to a number of employers and employees working remotely, all applicable Arizona employers should also include a link to this poster along with the employee’s paycheck (or be readily available on the employee intranet or payment portal).
B. Department of Labor Overtime Rule
Effective January 1, 2020, the Department of Labor has modified the overtime rule when applied to certain exempt employees (executive, administrative, and professional employees). This modification will be increasing the “standard salary level” from $455 per week to $684 per week for a minimum “standard salary level” of $35,568 per year. Additionally, when applied to qualifying “highly compensated employees”, the modified overtime rule will permit employers to apply non-discretionary bonuses and other incentive payments to satisfy up to 10% of the “standard salary level”, provided that such non-discretionary and other incentive payments are paid at least annually.
Conclusion
Employers are required to adhere to these new changes to the ever-evolving labor and employment laws. In order to do so, coordination with legal counsel and your Human Resources Department is paramount so that your business can identify and address potential issues relating to these important updates.
To provide further guidance, JLG assists a number of firms and individuals through the nuanced considerations relating to California and Arizona Employment Laws. For more information on this topic, please contact us at (619) 298-2880 or at info@jackolg.com.
JLG works extensively with investment advisers, broker-dealers, investment companies, private equity and hedge funds, banks and corporate clients on securities and corporate counsel matters. For more information, please visit https://www.jackolg.com/.
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[1] It should be noted that this article does not include all of the revisions and/or additions to California and Arizona labor and employment laws for 2021. Rather, it highlights certain items that are likely to have the most direct impact on a broad group of employers, including JLG clients.
[2] Note that many California municipalities have their own minimum wage thresholds, which can be higher than the stated minimum. Those local rules are outside the scope of this Risk Management Tip, and employers should be sure to review any local or civic standards that may apply.
[3] Additional clarification has been provided by the DFEH and can be viewed at: https://www.dfeh.ca.gov/paydatareporting/
[4] JLG would like to note that there are certain requirements pursuant to the CCPA regarding the collection of employee’s personal information, including the collection of certain “biometric information”. Based on the current language of the CCPA, such “biometric information” may consist of an employee’s health or exercise data. It remains unclear whether COVID-19 temperature checks and/or details concerning an employee’s close contact with COVID-19 consists of “biometric data” under the CCPA.
[5] California Business Connect is a new platform being implemented by the California Secretary of State that automates paper-based processing and allows businesses to file and request copies of records online 24 hours a day, 7 days a week.
[6] See: https://www.eeoc.gov/wysk/what-you-should-know-about-covid-19-and-ada-rehabilitation-act-and-other-eeo-laws
[7] See: https://www.azica.gov/sites/default/files/media/2020%20Minimum%20Wage%20Poster%20English.pdf