California Employment Legislative Update: Pay Transparency Headlines 2022 Session

California Employment Legislative Update: Pay Transparency Headlines 2022 Session

Seyfarth Synopsis: Taking it down to the wire, Governor Newsom approved the vast majority of labor and employment bills that ran the legislative gauntlet, including bills that will expand pay data reporting and pay scale disclosure requirements, extend COVID-19 Supplemental Paid Sick Leave, create mandatory wages and working conditions for fast food workers, and more.

California Employment Legislative Update: Pay Transparency Headlines 2022 Session

On the night before his September 30, 2022, deadline to sign or veto bills, Governor Newsom finished his review of all labor and employment bills the Legislature had passed to him for approval. While this year saw fewer labor and employment bills than usual, the measures that passed carry hefty obligations. Overall, Governor Newsom signed 997 of the 1,166 bills sent to his desk, and he vetoed 169 bills (almost twice the veto rate from last year), according to a prominent Capitol lobbyist.

Top of employers’ minds are bills that will expand pay data reporting and pay scale disclosure requirements, extend COVID-19 Supplemental Paid Sick Leave (again), and create a mandatory wages and working conditions program for fast food workers. Below is our summary of those bills the Governor signed into law, and two notable bills that did not make the cut. All new laws are effective January 1, 2023, unless otherwise stated.

Bills That Got The Governor’s Nod

SB 1162: Pay Data Reporting and Pay Scale Disclosures

As we previously reported, SB 1162 expands existing requirements that employers with 100 or more employees provide the California Civil Rights Department (CRD, f/k/a the DFEH) with specified EEO-1 pay data. Effective January 1, 2023, employers must include in their 2023 pay data reports (with a new annual due date of the second Wednesday in May) mean and median hourly rates by each combination of race, ethnicity, and sex, and submit a separate second report if they have 100 or more employees hired through labor contractors (provided at least 1 employee is in CA).

The new law will also require that all employers provide a pay scale to current employees upon request, and that employers with more than 15 employees provide a pay scale in all job postings, including those posted by third parties. The new law further imposes a new record retention requirement—starting January 1, 2023, employers must maintain records of job titles and wage rate histories for the duration of an employee’s employment and three years after termination of employment.

We’re watching for administrative agency guidance and FAQs, and will update you as soon as any issue.

Amends Section 12999 of the Government Code and Section 432.3 of the Labor Code.

AB 2188: Off-the-Job Cannabis Use Protection

As we previously discussed in detail, starting January 1, 2024, AB 2188 will prohibit employers from discriminating against a person based upon their off-the-job use of cannabis. The new law permits employers to take action against a person for failing a valid pre-employment drug test that does “not screen for nonpsychoactive cannabis metabolites.” The new law also allows an employer to administer a performance-based impairment test, and to terminate the employment of an employee who is determined to be impaired by cannabison the property or premises of the place of employment. These provisions do not apply to employees in building or construction trades, and do not preempt state or federal laws requiring employees to be tested for controlled substances.

Adds Section 12954 to the Government Code.

AB 152: COVID-19 Supplemental Paid Sick Leave (Again)

The 2022 COVID-19 SPSL law was set to sunset on September 30, 2022—because of this bill, it did not. This bill was a last minute gut and amend to AB 152 and received the Governor’s approval on September 29, extending employee’s ability to use their remaining SPSL balance to December 31, 2022.

This new law, which took effect immediately upon the Governor’s signing, only extends the time during which workers can elect to use the leave—it is not a newly-banked tranche of leave. The qualifying reasons for leave remain the same, as we previously summarized.

In a slight change to the existing law, where an employer requires an employee to test on or after day 5 from their first positive test to potentially return to work, if the employee still tests positive, employers are now permitted to require an employee to submit to a second diagnostic test within no less than 24 hours. The employer may decline to continue to provide SPSL where the employee refuses a second test.

Amends Sections 248.6 and 248.7 of the Labor Code.

AB 2693: COVID-19 Exposure Notifications and Cal/OSHA Rights

In the only other COVID-related employment bill to make the cut, AB 2693 extends for a year, until January 1, 2024, the previous COVID-19 exposure-related bill passed in 2020—AB 685—which we blogged about in detail.

As you may recall, this bill gives Cal/OSHA the ability to shut down a worksite, when, in Cal/OSHA’s opinion, it exposes workers to an imminent hazard of a risk of COVID-19 infection. The law also allows Cal/OSHA to require a notice of prohibition be posted in a conspicuous place at the place of employment.

Significantly, arguably the biggest headache of AB 685 for employers—the individual notification requirements—has changed. The new law revises the current requirement that an employer must provide individual written notices to employees within 1 business day of exposure to instead allow this notification requirement be satisfied by, in each worksite, prominently displaying a notice of exposure in all places where notices to employees concerning workplace rules or regulations are customarily posted.

The notice must still be posted within 1 business day from when the employer receives a notice of potential exposure, and it must remain posted for no less than 15 calendar days, stating the dates on which an employee, or employee of a subcontracted employer, with a confirmed case of COVID-19 was on the worksite premises within the infectious period, the location of the exposure(s), and more. If an employer chooses this notification option, it is required to keep a log of all the dates the notice was posted at each worksite, and to allow the Labor Commissioner to access these records.

The law alternatively allows the employer to continue provide individual written notice to all employees as it has been doing under AB 685. The law also allows notice be provided to employers of subcontracted employees who were on the premises at the same worksite as the confirmed case of COVID-19 within the infectious period that they may have been exposed to COVID-19 in a manner the employer normally uses to communicate employment-related information.

IMPORTANT NOTE: Currently, this new law is at odds with the requirements of the Cal/OSHA Emergency Temporary Standard (“ETS”) on COVID-19, which requires individual written notice. The ETS is currently set to expire at the end of 2022, but the agency released a proposed “permanent” rule on June 18, 2022 that proposes to impose COVID-19 requirements on workplaces through 2024—this will be considered at OSHSB’s December 15, 2022, meeting. The new proposed rule (if passed) does not explicitly state whether posting a notice would be sufficient, so please stay tuned for updates.

Amend Sections 6325 and 6409.6 of the Labor Code.

AB 1041: Leave and Sick Time – Designated Person

AB 1041 amends the California Family Rights Act (“CFRA”) and the California Paid Sick Leave Law (“PSL”) to include a “designated person” for whom an employee may take leave, in addition to the family members presently covered within their scope.

A designated person under the CFRA is defined as “any individual related by blood or whose association with the employee is the equivalent of a family relationship,” and includes domestic partners. To keep things complicated, a designated person under the new PSL provisions is different and broader—it can be any person identified by the employee. An employee can identify their designated person at the time they request leave or request to use PSL. 

Under both the CFRA and PSL revisions, an employer may limit an employee to naming one designated person per 12-month period. And, under the CFRA, an employer may require the employee substitute any of the employee’s accrued vacation leave or other accrued time off during a leave period, or any other paid or unpaid time off negotiated with the employer.

Amends Section 12945.2 of the Government Code and Section 245.5 of the Labor Code.

AB 1949: Protections for Bereavement Leave

AB 1949 also amends the CFRA to prohibit an employer from denying a request to take up to 5 days of bereavement leave upon the death of a family member, provided the employee has at least 30 days of active service. Family member is defined as spouse or a child, parent, sibling, grandparent, grandchild, domestic partner, or parent-in-law, as defined in Gov’t Code 12945.2.

While the days of bereavement leave need not be taken consecutively, the allotted leave must be completed within three months of the death of the family member. If the employer does not have a paid bereavement policy, the leave may be unpaid, except that an employee may use vacation, personal leave, accrued and available sick leave, or compensatory time off that is otherwise available to the employee.

The new law allows the employer to require documentation of the death of the family member, which can be a death certificate or a published obituary (among other broad types of verification). The new law also prohibits retaliation for requesting bereavement leave.

Amends Sections 12945.21 and 19859.3 of, and adds Section 12945.7 to, the Government Code.

SB 951: Family Temporary Disability Insurance Payments: Benefit Formula Changes

SB 951 extends wage replacement rates for State Disability Insurance and Paid Family Leave (PFL) that were set to sunset at the end of 2023, and revises the formulas for the weekly benefit amounts under the family temporary disability insurance (PFL) program to increase wage replacement rates.

The Governor touted SB 951 as “build[ing] on the Governor’s action since taking office to bolster access to workplace leave, including legislation to expand job-protected family leave to millions more Californians, extend paid family leave benefits for a newborn child from 6 to 8 weeks and expand paid sick leave in response to COVID-19.”

Amends Sections 2655 and 3301 of, and amends and repeals Section 985 of, the Unemployment Insurance Code.

AB 257: Fast Food Accountability and Standards Recovery Act (FAST Recovery Act)

As we wrote when the Governor ceremoniously approved this bill on Labor Day, AB 257 establishes a Fast Food Sector Council charged with creating a fast food workers’ bill of rights “to establish sectorwide minimum standards on wages, working hours, and other working conditions adequate to ensure and maintain the health, safety, and welfare of, and to supply the necessary cost of proper living to, fast food restaurant workers.”

The new law forbids the Council from promulgating regulations requiring predictable scheduling, amending current statutes, or creating new paid time off benefits, and regulates the amount the Council may establish for purposes of minimum wage. The Council will be subject to legislative oversight, and is required to “provide information as requested by the appropriate committees of the Legislature.”

The new law also establishes a rebuttable presumption of unlawful discrimination or retaliation if an adverse action is taken against an employee within 90 days following the employer learning that the employee filed a complaint, or refused to work based on a reasonable belief that the condition of the restaurant would violate worker health and safety laws.

Amends Section 96 of, and adds Part 4.5.5 (commencing with Section 1470) to Division 2 of, the Labor Code.

AB 676: Franchisor Discrimination

AB 676 prohibits a franchisor from failing or refusing to grant a franchise or financial assistance to a current franchisee or prospective franchisee based solely on any characteristic protected by the Unruh Civil Rights Act of the prospective franchisee, or of the geographic area where the franchise is located, if any characteristic of the composition of the neighborhood or geographic area where it is to be located is protected by the Unruh Act.

The Unruh Act confers protected status based on sex, race, color, religion, ancestry, national origin, disability, medical condition, genetic information, marital status, sexual orientation, citizenship, primary language, or immigration status.

Amends multiple Business and Professions Code and Corporations Code provisions.

SB 1044Emergency Conditions – Prohibition on Adverse Employment Actions and Certain Cell Phone Restrictions

SB 1044 prohibits employers, in the event of an emergency condition, from: (1) taking or threatening adverse action against an employee for refusing to report to or leaving a workplace because they feel unsafe; or (2) preventing an employee from accessing their mobile device for use for emergency purposes. The bill defines “emergency condition” as either: (1) conditions of disaster or extreme peril to the safety of persons or property at the workplace caused by natural forces or a criminal act; or (2) an order to evacuate a workplace, a worker’s home, or the school of a worker’s child due to natural disaster or a criminal act. A health pandemic is not considered an emergency condition, and the measure is inapplicable to emergency conditions that have ceased.

The employee, where feasible, will be required to notify the employer of the emergency condition before benefiting from the law’s provisions. The new law does not apply to first responders, disaster service workers, employees on military bases, and employees of residential care facilities, among others.

While a violation of these provisions could subject an employer to a private lawsuit and penalties under the Private Attorneys General Act (PAGA), the new law allows a right to cure alleged violations following Labor Code section 2688.3.

Adds Chapter 11 (commencing with Section 1139) to Part 3 of Division 2 of the Labor Code.

SB 1334: Public Sector Healthcare Employees Meal and Rest Periods

SB 1334’s stated intent is to ensure “equity in working conditions and patient care standards for hospital, clinic, or public health employees who provide direct patient care or support direct patient care” to provide them with the same rights to meal and rest breaks as private sector workers.

Accordingly, SB 1334 entitles employees who provide direct patient care or support direct patient care in a general acute care hospital, clinic, or public health setting, and are directly employed by the state and its subdivisions, counties, municipalities, and the Regents of the University of California, to one unpaid 30-minute meal period on shifts over 5 hours and a second unpaid 30-minute meal period on shifts over 10 hours, as provided by Section 512. It also entitles these workers to a net 10-minute rest period for every 4 hours or major fraction thereof, as provided by Wage Order Number 4 and Wage Order Number 5 of the Industrial Welfare Commission.

As private industry employers know well, the law requires an hour of premium pay at the regular rate for each missed meal or rest break, but allows on-duty meal periods in accordance with Wage Orders 4 and 5, and contains a CBA carve-out.

Adds Section 512.1 to the Labor Code.

AB 2183: Agricultural Labor Relations—Expanding Unionization Options

As an alternative procedure to the polling place election process set forth in Section 1156.3 of the Labor Code, this new law will permit a labor organization to be certified through either a labor peace election or a non-labor peace election as the exclusive bargaining representative of a bargaining unit, through a representation ballot card election or by mail, thereby permitting a bargaining unit to summarily select a labor organization as its representative for collective bargaining purposes without holding a polling place election.

This bill’s approval was a bit of a last minute surprise, as last year, Governor Newsom vetoed a similar measure. But, this year the scales appear to have been tipped when President Biden, who has pledged to be the most union-friendly President in history, encouraged Governor Newsom to sign the measure.

Adds Sections 1160.10 and 1162 to the Labor Code.

AB 1601: Call Centers—Layoff Requirements

AB 1601 will prohibit a call center employer from ordering a relocation of its call center unless notice of the relocation is provided to the affected employees at least 60 days prior to the relocation. While this may look similar to the existing statutory requirements, AB 1601 amends California’s mini-WARN Act in a few key respects.

First, it gives the Labor Commissioner greater power to enforce the statute, including investigating an alleged violation and ordering appropriate temporary relief to mitigate the violation pending the completion of a full investigation or hearing, including by issuance of a citation against an employer who violates the statute.

Second, it changes the Cal-WARN trigger for relocations of call center employees to foreign countries. A call center employer now cannot move its call center, or one or more facilities or operating units within a call center comprising at least 30 percent of the call center’s or operating unit’s total volume when measured against the average call volume for the previous 12 months, outside of the United States without providing at least 60 days prior notice to the affected employees. This new provision eliminates the numeric, temporal, and geographical threshold applicable to other types of operations besides call centers (i.e. 50 or more employees within 30 days, or relocation of at least 100 miles). This means that moving a small, but high volume, operating unit of even 5-10 people across the border from San Diego to Mexico could theoretically trigger application of the statute.

The bill originally would have required an employer of employees in a call center that intends to relocate from California to notify the Labor Commissioner at least 120 days before the relocation. The bill underwent serious amendments in the legislative process, recasting its provisions to provide employment protections for employees in call centers subject to relocations that are more in line with California’s existing statutory WARN requirements.  

Amends Labor Code Sections 1400, 1406, and adds related Labor Code Articles.

AB 2777: Extending Sexual Assault Statute of Limitations

This new law amends the Code of Civil Procedure to permit a putative plaintiff, from January 1, 2023, to December 31, 2023, to pursue a cause of action in court based on sexual assault regardless of whether that claim would be barred by the applicable statute of limitations, so long as the alleged wrongful actions occurred on or after January 1, 2009. This is despite the fact that the Code of Civil Procedure already provides for a lengthy ten-year statute of limitations for claims relating to a sexual assault.

A plaintiff seeking to revive a claim under this new law must allege: (1) they were sexually assaulted; (2) one or more entities are legally responsible for damages arising out of the sexual assault; and (3) the entity or entities (including, but not limited to, their officers, directors, representatives, employees, or agents) engaged in a cover up or attempted a cover up of a previous instance or allegations of sexual assault by an alleged perpetrator of such abuse.

Also, before “reviving” a claim under this provision, the attorney bringing the claim must sign a declaration “stating that the attorney has reviewed the facts of the case and consulted with a mental health practitioner, and . . . that it is the attorney’s good faith belief that the claim value is more than two hundred fifty thousand dollars.”

Amends Section 340.16 of the Code of Civil Procedure.

AB 1775: Occupational Safety, Live Events

AB 1775 will require an entity that contracts with an entertainment events vendor to set up, operate, or tear down a live event at a public events venue to require the vendor to certify for its employees and employees of its subcontractors that those individuals have complied with specified training, certification, and workforce requirements, including the prescribed trainings of the US DOL’s OSH Administration.

As the reason for this bill, the Legislature stated that the workers who set up and tear down staging, including lighting systems, sound systems, video walls, and other scenic elements for live events at arenas, stadiums, fairgrounds, and outdoor venues, face serious workplace hazards that can risk the safety of the workers, performers, and the public, and noted there is a history of accidents, injuries, and fatalities of workers responsible for setting up and breaking down events.

Adds Part 14 (commencing with Section 9250) to Division 5 of the Labor Code.

AB 1788: Sex Trafficking: Hotels

AB 1788 will allow civil penalties to be imposed against a hotel if a supervisory employee of the hotel knew of or acted with reckless disregard of sex trafficking activity within the hotel, and failed to inform law enforcement, the National Human Trafficking Hotline, or another appropriate victim service organization. Penalties may also be imposed if any employee of that hotel was acting within the scope of employment and knowingly benefited from participating in a venture that the employee knew, or acted in reckless disregard of, sex trafficking activity within the hotel.

Hotel is defined as a motel, or any other operator or management company that offers and accepts payment for rooms, sleeping accommodations, or board and lodging and retains the right of access to, and control of, a dwelling unit that is required to provide training and education regarding human trafficking awareness pursuant to Section 12950.3 of the Government Code.

The new law also authorizes a city, county, or city and county attorney to seek equitable relief against a hotel, and to seek a civil penalty of $1,000 for the first violation, $3,000 for a 2nd violation within the same calendar year, and $5,000 for a 3rd and any subsequent violation of sex trafficking within the same calendar year. The new law also authorizes a court to consider specified factors and exercise its discretion to increase the amount of the civil penalty, not to exceed $10,000, for any 4th or subsequent violation. The law requires that the action be commenced within 5 years of the violation, or within 5 years of the date the victim attains the age of majority.

Adds Section 52.65 to the Civil Code.

AB 1632: Restroom Access for Certain Medical Conditions to Employee Restrooms

AB 1632 will require a place of business that is open to the general public for the sale of goods and that has a toilet facility for its employees, to allow any individual who is lawfully on the premises of that place of business to use that toilet facility during normal business hours, even if the place of business does not normally make the employee toilet facility available to the general public, if:

  1. The individual has an eligible medical condition or uses an ostomy device;
  2. Three or more employees of the place of business are working onsite at the time that the individual requests use of the employee toilet facility;
  3. The employee toilet facility is not located in an employee changing area or an area where providing access would create an obvious health or safety risk to the requesting individual or would create an obvious security risk to the place of business;
  4. Use of the employee toilet facility would not create an obvious health or safety risk to the requesting individual; and
  5. A public restroom is not immediately accessible to the requesting individual.

If the place of business requires the requesting individual to present reasonable evidence that the individual has an eligible medical condition or uses an ostomy device, the individual may present a signed statement issued to the individual by a physician, nurse practitioner, or licensed physician assistant, on a form the Department of Public Health must develop containing specified information. Eligible medical conditions are Crohn’s disease, ulcerative colitis, other inflammatory bowel disease, irritable bowel syndrome, or another medical condition that requires immediate access to a toilet facility.

Failure to comply with these provisions subjects the place of business to civil penalties of $100 per violation for violation of these provisions only if the violation was willful or grossly negligent. There is no private right of action.

Adds Article 6 (commencing with Section 118700) is added to Chapter 2 of Part 15 of Division 104 of the Health and Safety Code.

Significant Bills That Did Not Make The Cut

SB 1262: Background Checks

SB 1262 was inspired by the California Court of Appeal’s decision in All of Us or None of Us. v. Hamrick, which held that an individual’s date of birth and driver’s license number could not be used as data identifying a criminal defendant in public records. This caused courts around the state to redact birth dates and driver’s license numbers from their indexes, making routine background checks much more difficult.

This law would have abrogated the Court’s decision, and required publicly accessible electronic indexes of defendants in criminal cases to permit searches and filtering of results based on a defendant’s driver’s license number or date of birth.

The Governor vetoed this bill on September 29, 2022, stating that he believes it would not protect an individual’s right to privacy, even if it would make background checks easier, since any member of the public could easily access individuals’ sensitive personal information online. It now sits in the Senate to consider whether to attempt to override the Governor’s veto.

AB 1102: Extending Employment Exemptions to the California Privacy Rights Act (CPRA)

Proposed but never adopted gut and amend amendments to AB 1102 (and related legislation) would have extended or made permanent exemptions under the California Consumer Privacy Act (CCPA) applicable to personal information collected in human resources (HR) and business-to-business (B2B) contexts. With the failure of these bills to pass through the legislature, these exemptions will expire when the CPRA amends the CCPA on January 1, 2023, leaving CCPA-regulated businesses four months to come into compliance with the CCPA’s requirements as applied to HR and B2B data.

This means covered employees will have increased rights with respect to their personal data collection, correction, deletion, portability, and disclosure, of which employers should make sure they are aware by reviewing our previous detailed blog on these new requirements.

To be clear, AB 1102 was approved by the Governor, containing its original subject matter—telephone medical advice services—not CPRA/CCPA-related content.

Workplace Solutions

We welcome you to attend our October 7, 2022, webinar regarding these new laws, and the new compliance obligations they create for employers. Among other things, we’ll discuss necessary adjustments to Supplemental Paid Sick Leave policies and practices to account for the slight changes made with the extension; the need to review pay reporting and pay scale disclosure obligations, policies, and processes, and recordkeeping practices to ensure compliance with SB 1162’s new pay transparency requirements; and the need to review drug testing policies, practices and procedures; and employee handbook and leave policies and practices for the CFRA changes. Please visit our website to register for the free webinar.

And, of course, stick with us here at California Peculiarities, and you can also check out our Policy Matters podcast and newsletter for regular check-ins on California (and national) policy and legislative updates as well.

Edited by Elizabeth Levy and Coby Turner

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