Employment Law in the Golden State: 2023 Updates

California Legislative Update Overview

CPRA and CCPA
The California Privacy Right Act (CPRA) was passed in 2020 to amend the employer exemptions created by the California Consumer Privacy Act (CCPA), but those exemptions expired at the end of 2022. Consequently, covered employers now have new privacy-related obligations for their employees, including provision of notices as to what data is collected, how data can be corrected or deleted, and opt-out rights.

SB 1162
California enacted pay transparency rights for new applicants and existing employees. SB 1160 also requires companies with more than 100 employees to submit annual pay data reports to the California Civil Rights Department (CRD, formerly known as the Department of Fair Employment and Housing, DFEH) by May 10, 2023.

Effective January 1, 2023, employers with 15 or more employees must include a reasonable “pay scale” for all job postings on all third-party websites. The statute defines “pay scale” as the base wage range the employer expects to pay for the option position; it does not include benefits, equity or bonuses. All employers are required to provide the pay scale for the current position of an employee upon request.

AB 1949
California employers with five or more employees must now offer unpaid bereavement leave of at least five days upon the death of a family member. The leave can be taken intermittently and must be taken within three months of the death.

AB 1041
For purposes of the California Family Rights Act (CFRA) and California Paid Sick Leave, the definition of “family member” was expanded to include a “designated person,” which the employee may identify.

SB 523
Under the Contraceptive Equity Act of 2022, “reproductive health decision-making” is now a protected category under the Fair Employment and Housing Act, which requires that health benefits cover contraceptives and vasectomies as of January 2024.

California Case Law Update

Arbitration
One of the biggest game changers for employers concerns the matter of arbitration. In 2021, the Ninth Circuit Court of Appeals in U.S. Chamber of Commerce v. Bonta found that the Federal Arbitration Act (FAA) did not supersede California law and, as such, agreements to arbitrate had to be voluntary. In June 2022, however, the U.S. Supreme Court, in Viking River Cruises, Inc. v. Moriana, held that California law, which prohibited arbitration for Private Attorney General (PAGA) claims since 2014, is superseded by federal law. This means that an employee can bring individual claims through PAGA in arbitration and once those individual claims are sent to arbitration, there is no standing to bring representative claims for violations of the California Labor Code on behalf of other aggrieved employees. Following this SCOTUS ruling and a subsequent petition from the U.S. Chamber of Commerce for an en banc rehearing, the Ninth Circuit withdrew its prior opinion in Bonta and granted a panel rehearing.

Discrimination, Harassment and Retaliation
Following the #MeToo movement, a number of cases involving gender discrimination have moved through California courts. In Allen v. Staples, a female employee claimed her employer had paid her less than her male coworker for performing the same job. In this case, the court ruled that she had met the burden of proof by establishing there was a pay differential with regard to a single employee of the opposite gender. Employers should be aware that if there is a disparity in pay, they must be able to explain the difference. The state’s new pay transparency law, SB 1162, should help ameliorate this issue.

Wage-and-Hour Update

Notable PAGA Cases
In addition to the Viking River Cruises case, implications for employers have arisen from two other notable PAGA cases. In the case of Adolph v. Uber Technologies Inc., plaintiffs specifically requested that the California Supreme Court address the U.S. Supreme Court’s interpretation of state law and whether a plaintiff who brings a PAGA claim loses standing when the individual claim is submitted to arbitration. And the California Court of Appeals created a further split in authority in its ruling that trial courts do not have inherent authority to strike PAGA claims based on “manageability” in the Estrada v. Royalty Carpet Mills Inc. case.

Compensable & De Minimis Time
Employers should also take note of the California Court of Appeals decision in Camp v. Home Depot, which found the employer’s 15-minute rounding policy unlawful. Also, in Cadena v. Customer Connexx, LLC, the Ninth Circuit held that an employee’s time spent turning on and off their computer was integral and indispensable to their principal work activities and thus compensable.

Practice Pointers: Remote Work

While there is some debate about whether the COVID-19 pandemic is officially over, many health-related questions that affect employment law linger. The relaxation of rules under Americans with Disabilities Act (ADA) which allowed for temperature and symptoms checking, and ultimately vaccine mandates, occurred only because of the designation of COVID-19 as a pandemic. As the pandemic wanes, employers should increase their sensitivities about medical inquiries and requirements to the pre-pandemic level. One question surrounds whether an employer must grant reasonable accommodation requests for remote work, to which there is no straightforward answer. Currently, if the employee has no disability-related limitation that requires remote work, the employer is not obliged to provide it. Also, the ADA does not require an employer to eliminate an essential job function as a disability accommodation, but it must evaluate all requests under the ADA and engage in the interactive process.

Remote work raises other practical considerations. It is advisable to utilize telework agreements for all remote workers, specifying work location, work expectations and how expenses and time reporting will be handled. The location of the remote worker is extremely important, and there is a question of which state laws will govern their employment. Given the complexity of California’s employment laws, it is often better for California employers to explain to employees that their employment will be governed by the laws in the state in which they work and to then prepare state-specific addendums for their employee handbook. Engaging non-U.S. workers raises a host of compliance and tax issues, and it is essential to obtain legal advice prior to such engagement.

Federal Updates

In the “post”-COVID era, many employers have multijurisdictional workforces and must pay close attention to federal legislation.

Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021
Signed into law by President Biden on March 3rd, 2022, this Act prohibits employers from forcing individuals to bring sexual assault or sexual harassment claims through arbitration. The prohibition applies regardless of whether the individual has signed an otherwise valid and enforceable arbitration agreement as part of their employment, though victims can agree to arbitration voluntarily.

Biden Administration Executive Orders
The Biden administration has continued to entertain discussions regarding raising the federal minimum wage. As it currently stands, the minimum wage is $7.25 per hour, which is less than half of the California minimum wage. Employers do need to follow whatever the highest threshold is in that regard, and those with multijurisdictional workforces should also pay careful attention to any increases that may go into effect in states other than California. President Biden also has signed executive orders establishing a pro-union organizing and collective bargaining workforce and new DOL regulations regarding independent contractor standards.

Restrictions on Restrictive Covenants
On January 5, 2023, the FTC published a proposed rule for a nationwide ban on non-compete agreements with workers, including non-employees who perform work for employers. While California law already has a general prohibition on non-competes, the proposed rule has a narrower exception for selling shareholders, so could affect otherwise permissible non-competes in California. Legal challenges are anticipated, including on constitutional grounds.

Anticipated Rise in Religious Accommodation Cases
Many companies who elected to enact vaccine mandates were perplexed with how to handle a wave of religious accommodation requests. Recently, in Groff v. Dejoy, the U.S. Supreme Court agreed to hear the claim of a Christian postal carrier who requested a religious accommodation to not work on Sunday. His accommodation request was denied. It is expected that the Supreme Court will use this case to refine the framework for workplace religious accommodation and issue an employee-friendly guidance for employers to determine whether employee’s religious beliefs are sincerely held.

^{1.  This is not a complete listing of all recent employment legislation in California, many of which are industry specific or only apply to a relatively small number of employers. Please consult with legal counsel to determine which new laws are applicable to your business.}