Recommendations for employers before new law goes into effect on January 1, 2020
The New Year will bring with it many new legal requirements for California employers. Although much of the focus has been on the passage of AB 5 and its new, onerous standards for independent contractor classification, there are numerous other laws that employers must be aware of and take measures to comply with in advance of their January 1, 2020 effective date.
A summary of some of the most salient new laws follows:
AB 51 (Prohibition on Certain Mandatory Arbitration Agreements)
What it says: AB 51 prohibits employers from requiring employees or applicants, as a condition or precondition of employment, to waive their right to pursue court claims under the Fair Employment and Housing Act (FEHA) or Labor Code by signing mandatory arbitration agreements.
What it means for employers: This law does not have any impact on arbitration agreements that existed prior to January 1, 2020, so long as the terms of such agreements remain unchanged. However, for any individual hired on or after January 1, 2020, employers will risk misdemeanor liability by requiring an employee to agree to arbitration as a condition of employment.
It is anticipated that this statute will be subject to a variety of legal challenges, some centering on the argument that AB 51 is preempted by the Federal Arbitration Act (FAA). The FAA sets forth a strong policy in favor of enforcing valid arbitration agreements as written, and multiple recent court cases uphold the FAA’s applicability to workplace arbitration agreements. Indeed, prior anti-arbitration bills have been vetoed due to the potential conflict with the FAA. This bill, however, contains a savings clause that has not appeared in prior, similar bills, stating that the provision does not invalidate an agreement that is otherwise enforceable under the FAA.
Employers who do not currently utilize arbitration agreements for current employees, including but not limited to agreements with class action waivers, should determine now whether they would like to do so and immediately implement that plan. The law does not affect agreements entered into prior to January 1, 2020, and those agreements should be enforceable. Employers should consult with legal counsel prior to implementing any new arbitration agreements in 2020, and before modifying any existing agreements after that date. Employers should continue to pay attention to additional developments and the status of legal challenges to the new statute.
AB 749 (Ban on No-Rehire Provisions)
What it says: With the passage of AB 749, employers may no longer include no-rehire language in settlement agreements, except for cases in which the employer has made a good faith determination that the employee with whom the settlement agreement is being made engaged in sexual harassment or sexual assault.
What it means for employers: Template settlement agreements should be revised so as not to include no-rehire language as a matter of course. HR and other employees responsible for overseeing settlement negotiations should be apprised of appropriate circumstances for such language to be included.
SB 707 (Timely Payment of Arbitration Fees)
What it says: SB 707 imposes strict penalties on employers who fail to follow the terms and requirements of their arbitration agreements, specifically with regard to payment of fees and costs. Failure to timely pay arbitration fees waives the employer’s right to arbitration and allows the employee to move the matter to court.
What it means for employers: Employers must ensure that they timely pay all fees and costs associated with arbitration and abide by all other requirements of their arbitration agreements and any other agency rules or requirements once an arbitration is initiated.
SB 142 (Lactation Spaces)
What it says: Modeled after San Francisco’s existing lactation accommodation ordinance, SB 142 requires employers to provide a private, safe location for nursing employees to express breast milk. The lactation room must contain a seat, electricity, and a surface to place a breast pump and personal items. The room cannot be a bathroom and must be in proximity to the employee’s workstation. This statute also requires employers to provide access to a sink with running water and a refrigerator in close proximity to the employee’s workspace. The statute provides employers with fewer than 50 employees to request a hardship exemption; however, such employers are still required to make reasonable efforts to provide such a space.
What it means for employers: Existing California law already required employers to make reasonable efforts to provide nursing employees with the use of a room, other than a bathroom, to express break time. SB 142 now requires employers to provide such a space. For many employers who have already designated a properly equipped lactation room, no changes will need to occur to comply with this new statute. However, all employers should ensure that their designated lactation areas meet the requirements of this new statute.
SB 688 (Contract Wages)
What it says: SB 688 would increase the Labor Commissioner’s authority to cite employers for failure to pay “contract wages,” which is defined as wages based on an agreement in excess of the applicable minimum wage.
What it means for employers: Employers can now be held liable for failing to pay an employee at a wage rate set by contract, even if all hours paid were compensated at or above the applicable minimum wage. This effectively empowers the labor commissioner to enforce a breach of contract claim for wages against an employer. To avoid liability, employers should ensure that they clearly communicate with employees regarding the applicable rate of pay for their work and then ensure that employees are accurately paid for all time worked.
AB 673 (No Double Recovery)
What it says: In the current legal landscape that is largely pro-employee, there is at least one bill taking effect that is a positive change for employers. AB 673 limits an employee from being able to pursue both statutory penalties and civil penalties for the same underlying wage violation. Instead, an employee now is entitled to recover either the statutory penalty or the civil penalty, but not both, for the same violation.
What it means for employers: This statutory change should decrease employer liability and also decrease settlement value in wage and hour class action and PAGA cases.