Small Business Employers Prevention Strategies to Minimize Lawsuits
If you are like many small business employers, you can barely keep up with running the business. We often hear small business employers exclaim, “I don’t have the resources to comply with all these new laws. My employees love me. They wouldn’t sue me.”
Small business employers may have been lucky in the past and this strategy has worked for them. While this may be true, those who want to sleep at night may want to rethink this strategy. Failure to do so can be very costly. Litigation is costly, and disruptive to the operation of the business and employee relations. As the “Great Resignation” has taught us, employees are the life blood of your business.
Is There a Reason Small Business Employers Should Pay Attention This Year?
Definitely yes. Some of the 2022 California Employment Laws raised the stakes for employers. They did the following:
- Expanded the powers of the Labor Commissioner
- Increased the time frames for filing claims
- Raised the penalties for non-compliance.
Small business employer should remind themselves of the mission of the Labor Commissioner and take heed:
- To ensure a just day’s pay in every workplace in the state.
- To promote economic justice through robust enforcement of labor laws.
- By combating wage theft, protecting workers from retaliation, and educating the public, we put earned wages into worker’s pockets.
- We help level the play field for law-abiding employers.
We Make It Easier for Small Business Employers to Understand and Comply with 2022 Employment Laws
As you scroll down the Blog you will find:
- A list of 2022 California Employment laws applicable to small business employers. Each law includes a clickable link to the actual text of the law.
- A summary of important provisions of each new law, organized by categories (e.g., safety, wage and hour, etc.)
- Prevention strategies to proactively come into compliance and reduce the legal risks of claims and lawsuits.
- Brief summaries of industry-specific new laws.
Summary List of 2022 California Employment Laws for Small Business Employers
We have only included employment laws specifically focused on privately owned, non-unionized, small business employers (with1 to 49 employees).
In most cases, employment laws in California are applicable to the small business employer based on employee headcount. Thus, to determine employee headcount you will want to include all employees who are on the payroll. This means you would count temporary, full time or part time, active or inactive employees (such as leave of absence). Some laws even include independent contractors and unpaid interns in the headcount. So, pay attention to the issue of applicability of the specific law.
As you review the list of twenty-four 2022 California employment laws, please pay attention to the headcount and industry requirements.
Laws become effective on January 1, 2022, unless stated otherwise below.
Leaves of Absence/Discrimination
- California Family Rights Act (AB 1033)
- Fair Chance Act (FCA) Violations: Job Advertisements
- Non-Disclosure: Settlement and Non-Disparagement Agreements (SB 331)
Independent Contractors and Worker Classification
- Worker Classification: Extends exception from AB 5 for newspaper carriers (AB 1506)
- Worker Classification: Extends exception from AB 5 for licensed manicurists and construction trucking industry contractors/subcontractors (AB 1561). Also amends and clarifies definitions for data aggregators. Adds insurance claims adjustors and insurance third-party administrators to the list of occupations subject to the Borello test.
Arbitration
Records and Notifications
- Employment: Electronic Documents for Telecommuting Employees (SB 657)
- Employer Record Retention Requirement Expanded and as well as DFEH authority (SB 807)
Safety and COVID-19
- Cal-OSHA Safety: Expands Violations: Enterprise-wide Violations and Egregious Violations. (SB 606).
- COVID-19: Exposure: Notification of COVID-19 Exposure (AB 654)
- COVID-19-Related Public Health Orders or Mandatory Guidance (SB 336)- Effective October 4, 2021.
- COVID-19 Emergency Temporary Standards (Updated 1/28/22)
- CDPH Guidance for Use of Face Coverings (Updated 12/13/21)
Also check with National Centers for Disease Control (CDC) and local public health department orders and guidelines.
Wage Enforcements and Penalties
- Minimum Wage Increases
- Overtime Exemption for Licensed Physicians and Surgeons
- Overtime Exemption for Computer Software Employees
- Grand Theft (AB 1003)
- Labor Commissioner Enforcement: Lien on Real Property (SB 572)
Industry Specific Laws
- Agriculture: Health Emergencies: Employment Safety: Wildfire Smoke (AB 73)
- Construction Industry: Joint Liability for Penalties/Liquidated Damages (SB 727)
- Hospitality/Building Services: Employment: Rehiring and Retention; Displaced Workers: Covid-19 (SB 93)
- Janitorial Services: Creates Exception to PAGA for Janitorial Employees (SB 646)
- Retail and Garment Industry: Joint Liability for “Brand Guarantors” (SB 62)
- Warehouse Distribution Centers: Employee Production Quotas (AB 701)
LAW SUMMARIES AND EMPLOYER PREVENTION STRATEGIES TO MINIMIZE RISKS OF LAWSUITS
Leaves of Absence/Discrimination Laws
California Family Rights Act (CFRA) [AB 1033].
Last year small business employers with 5 or more employees, became subject to CFRA. This was a big leap for small business employers at the time. Prior to 2021, CFRA was only required for employers with 50 or more employees. Small business employers must now provide up to 12 weeks of protected time off in a 12-month period for family care and medical leave.
Because small business employers have fewer employees and thus less coverage when employees are absent, some are finding it difficult to accommodate these time off requests. Additionally, small employers typically don’t have trained HR managers to manage and administer these complex leaves. Small business employers are thus exposed to at least eight typical causes of action for litigation:
- CFRA interference
- CFRA retaliation
- Harassment
- Discrimination
- Related FEHA discrimination claims
- Retaliation
- Failure to prevent discrimination/harassment, and
- Wrongful termination in violation of public policy.
Small Employer Family Leave Mediation Pilot Program to the Rescue
Luckily, legislators considered this issue last year and created a small employer family leave mediation pilot program for employers with 5 to 19 employees. The idea was that a mandatory mediation program would give small employers the chance to resolve disputes over family leave before employees took steps of filing a lawsuit in court. Last year’s bill included provisions that when an employee requests an immediate right to sue alleging a violation of CFRA, the DFEH shall notify the employee in writing of the requirement for mediation prior to filing a civil action if mediation is requested by the employer or employee. The employee was required to contact the department’s dispute resolution division prior to filing a civil action.
Unfortunately, this has not worked out as planned. The Senate Judiciary Committee’s Analysis states:
“…employers do not always receive a copy of the right-to-sue letter in a matter before a lawsuit is filed, and the right-to-sue letter itself does not necessarily inform the employer that they have a right to demand that everyone participate in the mediation before a lawsuit can be filed.” As a result, small business employers often forgo their option because they are not aware that forcing the employee into mediation is a possibility.
As a result, AB 1033 provides further procedural details for the implementation of the small employer mediation program. Specifically, when an employee files a right-to-sue letter with the California Department of Fair Employment and Housing (DFEH) alleging a violation of CFRA, the DFEH must provide notice of the mediation pilot program and the mediation requirement prior to filing civil litigation if mediation is requested by the employer or the employee. Other specific provisions are included in the text of this bill.
AB 1033 also clarifies the definition of “parent” under CFRA to now include parent-in-law. This definition was left unclear in last’s year CFRA bill.
Prevention Strategies to Minimize Legal Risks of CFRA Violations
- Update your employee handbook and leave of absence forms to revise the definition of parent which now includes parent-in-law. Last year’s CFRA revisions leave this definition unclear.
- Post the updated CFRA poster once it is updated by DFEH.
- Owners, HR and your supervisors and managers must understand CFRA provisions and the right to mediate if a claim is filed with DFEH.
Fair Chance Act (FCA) Violations: Job Advertisements
The DFEH is serious about compliance with California’s ban-the-box law (Fair Chance Act) which prohibits employers, including small business employers with 5 or more employees from asking job applicants about their conviction history before making them a job offer.
In October of 2021, the DFEH sent out a press release letting the public (employers, employees, job applicants) know that it had implemented an online technology program that is now able to identify words and phrases in job advertisements that violate the FCA.
Of particular importance to employers, DFEH’s strategy is to proactively find violations of California anti-discrimination laws. As of this date, it has sent out hundreds of violation notices to employers since it began this program.
In addition, to help employers, the DFEH has also created an Employers Resources Toolkit to help employers comply with this law. It includes sample forms, the law and even an “Employer Compliance Statement” that small business employers can place on their job advertisements.
Prevention Strategies to Minimize Legal Risks of Receiving Violation Notice from DFEH
- Learn the Fair Chance Act requirements. You will find complete DFEH toolkit here.
- Review job advertisements and Employment Application forms to ensure that do not require criminal record checks before an offer of employment is made.
- Consider adding the “Employer Compliance Statement” to your job advertisements and Employment Applications.
- Take advantage of the DFEH’s toolkit to comply with each step of the compliance process which includes (1) conditional job offer; 2) individual assessment form; 3) preliminary notice to revoke job offer; 4) individual reassessment form; and 4) final notice to revoke.
- Review any background check disclosure and authorization forms to ensure that they comply with this law;
- Check to see if any local ban-the-box notice requirements are required for your employees.
Non-Disclosure in Settlement and Non-Disparagement Agreements (SB 331)
Entitled the “Silenced No More Act”, this new law expands upon 2018 Laws (SB 820 and SB 3100) regarding non-disclosure and non-disparagement provisions and legislates various changes to severance and separation agreements.
Non-Disclosure Agreements (NDAs)
Perhaps as a result of the racial inequities witnessed over the past year, legislators took action to extend silencing provisions to include race, as well as all protected classes. Protected classes under FEHA include:
- Race, including, but not limited to, hair texture and protective hairstyles, such as braids, locks, and twists
- Religious creed (includes religious dress practices and religious grooming practices.
- Color
- National origin (including language use restrictions and possession of a driver’s license issued under Vehicle Code Section 12801.9
- Ancestry
- Citizenship
- Physical Disability
- Mental Disability
- Age (40 or older)
- Sex (which includes gender, pregnancy, childbirth, breastfeeding and related medical conditions, gender identity and gender expression, sex stereotypes, transgender)
- Sexual Orientation
- Marital Status
- Registered Domestic Partner Status
- Military or Veteran’s Status
- Medical Condition (including cancer, genetic characteristics, AIDS/HIV status and genetic information)
- Protected Medical Leaves
- Domestic Violence Victim Status
SB 331 expands the prohibition on settlement agreement provisions restricting the disclosure of factual information to include all types of workplace harassment, discrimination or retaliation precluded by the Fair Employment and Housing Act (FEHA), not just those based on sex. Moreover, these expansions apply to settlement agreements in civil actions or for administrative charges entered into after January 1, 2022.
However, SB 331 also affirmatively states what it does not restrict. Specifically, it does not restrict a provision that shields the identity of the claimant and all facts that could lead to the discovery of the claimant’s identity. You may shield the identity of the claimant at the claimant’s request. This new law does not restrict the enforcement of a provision in any agreement that precludes the disclosure of the amount paid in a settlement claim.
Non-Disparagement Agreements
In 2018 the legislators also restricted the use of non-disparagement provisions that would preclude employees- in exchange for a raise or bonus, or as a condition of employment- from disclosing information about unlawful acts in the workplace. Concerned that non-disparagement provisions regarding workplace conditions may dissuade employees from reporting unlawful conduct, SB 331 (which amended Government Code 12964.5) requires employers who use non-disparagement provisions restricting the disclosure of workplace conditions to include specific language and notice requirements.
These provisions include:
- Language in the agreement that states: “Nothing in this agreement restricts you from discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that you believe is unlawful.”
- Any employer offering an employee or former employee an agreement related to that employee’s separation from employment shall notify the employee that the employee has the right to consult an attorney regarding the agreement and shall provide the employee with a reasonable tine period of not less than five business days in which to do so.
In sum, any agreement or document in violation of Government Code 12964.5 is contrary to public policy and shall be unenforceable.
SB 331 Does Not Apply to Negotiated Settlement Agreements
Nevertheless, Government Code 12964.5 does not apply to a negotiated settlement agreement to resolve an underlying claim that has been filed by an employee in court, before an administrative agency, or in an alternative dispute forum, or through the employer’s internal complaint process. “Negotiated” means that the agreement is voluntary, deliberate, and informed, and provides consideration of value to the employee, and that the employee is given 5 days’ notice and an opportunity to retain an attorney or is represented by an attorney.
Of course, small business employers should keep in mind that many of these terms are not particularly clear and will probably be resolved through the courts. Thus, erring on the side of caution is probably a good idea.
Prevention Strategies to Minimize Legal Risks of Expensive Litigation and Unenforceable Agreements
- Small business employers should update their settlement and separation agreements and limit the scope of any confidentiality and non-disparagement provisions. Familiarize yourself with amended Code of Civil Procedure 1001 and Government Code 12964.5.
- Small business employers should provide employees with at least 5 days to consider separation agreements and remind employee to consult with an attorney. Presently, the Older Workers Benefits Protection Act (OWBPA), already requires employers to give written notice to employees who are 40 years or older to consult with an attorney and be given up to 21 days to consider the agreement.
- Good news for employers: This law does not prohibit the employer from including a provision that precludes the disclosure of the amount paid in a severance agreement, or any provision that protects the employer’s trade secrets, proprietary information or confidential information that does not involve unlawful acts in the workplace. It does also not prohibit the inclusion of a general release or wavier of all claims in an agreement related to an employee’s separation from employment, provided that the release or waiver is otherwise lawful and valid.
- Bottom Line: Retain a California employment lawyer to ensure legal and enforceable separation, settlement and severance agreements.
Independent Contractors and Worker Classifications
Employees and Independent Contractors
Extends exception from AB 5 for newspaper carriers (AB 1506)
For the purposes of the California Labor Code, the Unemployment Insurance Code and the Wage Orders of the Industrial Welfare Commission, this law extends the exemption from Dynamex (“ABC”) test for newspaper distributors working under contract with a newspaper publisher and newspaper carriers from January 1, 2022, to January 1, 2025.
Extends, clarifies and expands exception from AB 5 for certain industry specific worker classifications (AB 1561)
AB 1561 extends the exemption under the “ABC” test for these workers until January 1, 2025:
- Licensed manicurists
- Licensed construction subcontractors and for construction trucking services
Clarifications are also provided by this bill as follows:
- The exemption between data aggregators and their “research subjects” stands without the need to be compensated at minimum wage if certain statutory conditions are satisfied.
- A “data aggregator” is a business, research institution, or organization that requests and gathers feedback on user interface, products, services, people, concepts, ideas, offerings, or experiences from research subjects willing to provide it.
- A manufactured housing dealer does not have to consider the statutorily imposed duties under Section 18060.5 of the Health and Safety Code as factors to be considered under the Borello test.
- Expands an exemption under the “ABC” test for exception to claims adjusters (as defined in Corporations Code 25009) and third-party administrators (as defined under CCR 10112.1 (cc) in the insurance and financial service industries.
Arbitration
In truth, many employers in California utilize Arbitration Agreements as part of their dispute resolution process to resolve work-related disputes. In order for an Arbitration Agreement to be enforceable in California, the employer may not require an employee to pay either unreasonable costs or any arbitrators’ fees or expenses as any form of condition for access to the arbitration process. Thus, it is common practice in California for employers to pay for the arbitration fees.
Under current law, delayed payment of arbitration fees waives the right to compel arbitration. The employer must pay the arbitration fees within 30 days of the due date.
In short, SB 762 would require the arbitration provider to provide invoices for the fees and costs described above, in their entirety, to all parties to the arbitration on the same day and by the same means. The arbitration provider must issue invoices as due upon receipt unless the arbitration agreement expressly provides a different time for payment. All parties to the arbitration shall agree upon any extension of time for fees and costs during the pendency of the arbitration.
The bill would also make technical and conforming changes.
Prevention Strategies to Minimize Legal Risks of Unenforceable Arbitration Agreements
- Ensure timely payment of arbitration fees and costs.
- Consider revising Arbitration Agreements to provide for specific due dates for payments of arbitration fees and cost.
Records and Notifications
Electronic Documents for Telecommuting Employees (SB 657)
Luckily, there is now an easier way to comply with poster requirements for teleworkers. Employers may now distribute legally required posters to remote/telecommuting workers by email with the document or documents attached. However, such email distribution shall not alter the employer’s obligation to physically display the required postings in the workplace. Keep in mind that new law only covers certain California poster requirements. It does not meet federal poster requirements. Penalties for non-compliance depend on the specific poster requirement.
Prevention Strategies to Minimize Legal Risks of Non-Compliance
- Ensure that employees who work from home are provided with all legally required posters. Make a PDF of the email that contains the required posters and place in employee’s personnel file.
- Some HR software companies allow employees to access required posters on the HR software website. Check with your provider.
- Purchase a Federal-California All-in-One poster from the California Chamber and mail it to each telecommuting employee on an annual basis.
- Ensure that your California workplace posters are current. You can find a list of required California posters here.
Employer Record Retention Requirement and Department of Fair Employment and Housing (DFEH) Authority Expanded (SB 807)
First, this law amends several provisions related to FEHA (Fair Employment and Housing Act) and DFEH’s enforcement provisions. Employers must retain employment records for a period of four years after the records are created or received, or after an employment action is taken. upon notice that a verified complaint against it has been filed,
Second, the employer shall maintain and preserve any and all records and files when notice of a verified complaint against them has been filed. These records must be maintained and preserved until the later of the following: (1) The first date after the period of time for filing a civil action has expired. (2) The first date after the complaint has been fully and finally disposed of and all administrative proceedings, civil actions, appeals, or related proceedings have terminated.
In addition, it also makes various changes to DFEH’s processes for investigating discrimination or class action claims it handles.
Prevention Strategies to Minimize Legal Risks of DFEH Violations, Claims or Civil Suits
- Advise those in charge of employment records and/or receiving workplace harassment, discrimination and retaliation claim to preserve records as outlined above. Consider developing policy for administration and preservation of records.
- Change record retention charts to retain records for minimum of four years.
- Remind managers and HR that employees may, as of 2020 (amended Government Codes 12960 and 12965), file a FEHA claim three years from the date of the discrimination, retaliation, or harassment.
Safety and Covid-19
COVID-19: Expands Violations: Enterprise-wide Violations and Egregious Violations.
Cal/OSHA is getting serious about workplace safety violations. SB 606 authorizes Cal/OSHA to issue two new types of violations: 1) Enterprise-wide violations; and 2) Egregious violation.
Enterprise-Wide Violations
- SB 606 creates a rebuttable presumption that a violation committed by an employer that has multiple worksites is enterprise-wide if the employer has a written policy or procedure that violates these provisions, or the division has evidence of a pattern or practice of the same violation committed by that employer involving more than one of the employer’s worksites.
- In addition, this bill would authorize the division to issue an enterprise-wide citation requiring enterprise-wide abatement if the employer fails to rebut such a presumption.
- Of great significance to employers, this bill would subject an enterprise-wide violation to the same penalty provision as willful or repeated violations.
Egregious Violations
Cal/OSHA shall issue a citation to an employer if it believes that an employer has willfully and egregiously violated an occupational safety or health standard, order, special order, or regulation. For purposes of the issuance of fines and penalties, each egregious violation, and each instance of an employee exposed to that violation shall be considered a separate violation.
A violation is an “egregious violation” if one or more of the following is true about that employer or the willful violations committed by it:
- The employer, intentionally, through conscious, voluntary action or inaction, made no reasonable effort to eliminate the known violation.
- The violations resulted in worker fatalities, a worksite catastrophe, or a large number of injuries or illnesses. “Catastrophe” means the inpatient hospitalization, regardless of duration, of three or more employees resulting from an injury, illness, or exposure caused by a workplace hazard or condition.
- The violations resulted in persistently high rates of worker injuries or illnesses.
- The employer has an extensive history of prior violations.
- The employer has intentionally disregarded their health and safety responsibilities.
- The employer’s conduct, taken as a whole, amounts to clear bad faith in the performance of their duties under this part.
- The employer has committed a large number of violations so as to undermine significantly the effectiveness of any safety and health program that may be in place.
Penalties
Any employer who willfully or repeatedly violates any occupational safety or health standard, order, or special order, or Section 25910 of the Health and Safety Code, or any employer who commits an enterprise-wide violation be assessed a civil penalty of not more than one hundred twenty-four thousand seven hundred nine dollars ($124,709) for each violation, but in no case less than eight thousand nine hundred eight dollars ($8,908) for each willful violation.
Prevention Strategies to Minimize Risks of Enterprise-Wide or Egregious Violations and Penalties
- Review and update all Cal/OSHA required written safety programs (Injury and Illness Prevention Plan, Hazard Communication Program, Fire Prevention Plan, Emergency Action Plan, Covid-19 Prevention Plan, and other applicable plans).
- Audit safety training records, notice requirements, codes of safe practice, safety data sheets, hazard safety inspections, etc. to ensure they accurate and current, particularly across worksites. Differentiate policies based on location when appropriate.
- Train managers on what to do if a Cal/OSHA inspector shows up.
- Respond promptly to any requests from Cal/OSHA.
COVID-19: Notification of COVID-19 Related Exposure (AB 654)
Notification Requirements When Employer Receives Notice of Potential Exposure to COVID-19
AB 654 is an emergency statute and thus is effective immediately on 10/1/21 and expires on 1/1/23. It amends Labor Code 6409.6 as follows:
If an employer or representative for the employer receives a notice of potential exposure to COVID-19, the employer shall take all of the following actions within one business day of the notice of potential exposure:
- Provide a written notice to all employees, and the employers of subcontracted employees, who were on the premises at the same worksite as the qualifying individual within the infectious period that they may have been exposed to COVID-19.
- Written notice may include personal service, email, or text message if it can reasonably be anticipated to be received by the employee within one business day of sending. The notice shall be in both English and the language understood by the majority of the employees.
- Provide a written notice to the exclusive representative, if any, of qualifying individuals and employees who had close contact with the qualifying individuals.
This statute defines terms such as “close contact, high-risk exposure period, infectious period, qualifying individual, and worksite. Employers must also check for changing definitions with more recent updates from Cal-OSHA Emergency Temporary Standards, California Department of Public Health, local public health department and CDC.
Information Required for Employees and Employees of Subcontracted Employees
- Benefits: Employers must notify all employees who were on the premises at the same worksite as the qualifying individual within the infectious period and the exclusive representative, if any, with information regarding COVID-19-related benefits to which the employee may be entitled under applicable federal, state, or local laws, including, but not limited to, workers’ compensation, and options for exposed employees, including COVID-19-related leave, company sick leave, state-mandated leave, supplemental sick leave, or negotiated leave provisions, as well as antiretaliation and antidiscrimination protections of the employee.
- Cleaning and Disinfection Plan. Employers must notify all employees who were on the premises at the same worksite as the qualifying individual within the infectious period, and the employers of subcontracted employees who were on the premises at the same worksite as the qualifying individual within the infectious period and the exclusive representative, if any, of the cleaning and disinfection plan that the employer is implementing per the guidelines of the federal Centers for Disease Control and Prevention and the COVID-19 prevention program per the Cal-OSHA COVID-19 Emergency Temporary Standards.
Timing and Information Required for Local Public Health Department
When an employer or representative of the employer is notified of the number of cases that meet the definition of a COVID-19 outbreak (currently 3 or more), the employer shall notify the local public health agency in the jurisdiction of the worksite within 48 hours or one business day, whichever is later, of the names, number, occupation, and worksite of employees who meet the definition of a qualifying individual.
Additionally, an employer shall:
- Report the business address and NAICS code of the worksite where the qualifying individuals work.
- Continue to give notice to the local health department of any subsequent laboratory-confirmed cases of COVID-19 at the worksite.
To further clarify, this bill expands the employers exempt from the COVID-19 outbreak reporting requirement to various licensed entities, including, but not limited to, community clinics, home health agencies, adult day health centers, community care facilities, and child day care facilities.
Imminent Hazard-Prohibition of Use and Posting of Notice
The Division of Occupational Safety and Health will prohibit entry into the business or the performance of any operation or process operation if it determines that a place of employment, operation, or process exposes workers to the risk of infection with COVID-19 and constitutes an imminent hazard to employees.
In such case, a notice shall be provided to the employer and posted in a conspicuous place at the place of employment. Such prohibition of use shall be limited to the immediate area in which the imminent hazard exists, and the division shall not prohibit the performance of any operation or process, entry into or use of a place of employment, or any part thereof, which is not exposing employees to, or is outside such area of imminent hazard.
In addition, this prohibition shall be issued in a manner so as not to materially interrupt the performance of critical governmental functions essential to ensuring public health and safety functions or the delivery of electrical power, renewable natural gas, or water.
COVID-19: Emergency Temporary Standards (Effective on 1/14/22)
The COVID-19 Prevention Emergency Temporary Standards are still in effect. The workplace standards were updated in December 2021 to include minor revisions related to returning to work after close contact. The revisions are effective starting on January 14, 2022. In addition to these requirements, employers must follow public health orders on COVID-19. The latest order from the California Department of Public Health on January 5, 2022 requires the use of face coverings by all employees when indoors. More information on the COVID-19 Prevention Emergency Temporary Standards is available in Cal/OSHA’s Frequently Asked Questions.
California Department of Public Health (CDPH) Guidance for Use of Face Coverings (Updated 1/5/22)
Masks are required for all individuals in all indoor public settings, regardless of vaccination status from December 15, 2021 through February 15, 2022 [surgical masks or higher-level respirators (e.g., N95s, KN95s, KF94s) with good fit are recommended]. Certain exceptions apply. No person can be prevented from wearing a mask as a condition of participation in an activity or entry into a business.
Also check with National Center for Disease Control (CDC-1/5/22 update) and your local public health department.
Prevention Strategies to Minimize Legal Risks of Violations and Spread of COVID-19
- HR and Safety officers of employer to thoroughly review, know and enforce AB 654. Provide notices as required. Incorporate these notice requirements in the employer’s COVID-19 Prevention Plan.
- Implement and enforce Cal/OSHA’s Emergency Temporary Standards, which include a written COVID-19 Prevention Plan. Check website often to learn updated requirements and interplay of CDPH, Cal-OSHA, and local public health departments.
Wage Enforcement and Penalties
Minimum Wage Increases
California’s minimum wage is $15 per hour for employers with 26 or more employees and $14 per hour for employers with 25 or fewer employees.
The California minimum wage is set by law for automatic increases each year until it hits $15 per hour. The schedule of increases depends on the size of your business. Large businesses with 26 or more employees reached $15 per hour in 2022. Small businesses with 25 or fewer employees have until 2023 to reach the $15 per hour rate. Once the minimum wage reaches $15 per hour for all businesses, wages could then be increased each year up to 3.5 percent (rounded to the nearest 10 cents) for inflation as measured by the National Consumer Price Index. Please see the Labor Commissioner’s FAQs page to learn more the minimum wage.
Local Minimum Wages: Small business employers may be required to pay higher local minimum wages when their employees work in certain counties or cities for a specific period of time. Some cities and counties in California have adopted their own local minimum wage rates that are separate from the state rate. Eligibility rules may vary from city to city. The local minimum wage rate will apply if it provides a higher rate than the California rate.
You will find links to the websites of specific cities and counties to determine eligibility and local minimum wage here.
Overtime Exemption for Licenses Physicians and Surgeons
A licensed physician or surgeon becomes exempt from overtime if he/she is paid at least the minimum hourly rate set annually by the state. This exemption only applies if the person is primarily engaged in performing duties for which licensure is required. The Director’s Office of Policy, Research and Legislation (OPRL) is responsible for adjusting the rate every year, based on the percentage increase in the California Consumer Price Index (CCPI) for Urban Wage Earners and Clerical Workers.
- The minimum hourly rate of pay for 2022 increased to $91.07, effective January 1, 2022. The 2022 rate changes reflect the 5.3 percent increase in the CCPI.
The exemption for physicians paid on an hourly basis does not apply to employees in medical internships or resident programs, physician employees covered by collective bargaining agreements or veterinarians.
Overtime Exemption for Computer Software Employees
In accordance with Labor Code Section 515.5(a)(4), the department has adjusted the computer software employee’s minimum hourly rate of pay exemption from $47.48 to $50.00, the minimum monthly salary exemption from $8,242.32 to $8,679.16, and the minimum annual salary exemption from $98,907.70 to $104,149.81 effective January 1, 2022, reflecting the 5.3% increase in the California Consumer Price Index for Urban Wage Earners and Clerical Workers.
Grand Theft (AB 1003)
AB 1003 discourages employers from intentionally “stealing” from employees by not paying wages that are due them. Beginning January 1, 2022, the intentional theft of wages, benefits or compensation in the amount greater than $950 for one employee or more than $2,350 for two or more employees in a consecutive 12-month period is punishable as grand theft under the California Penal Code, which prosecutors may charge as a misdemeanor or felony (Penal Code 487m).
AB 1003 defines “employee” to include an independent contractor.
Prevention Strategies to Minimize Legal Risks of a Grand Theft Claim
- Ensure you have legally compliant policies on overtime, meal and rest breaks, time keeping requirements, final pay, travel policies, payroll errors, expense reimbursements, etc. and that HR and your managers and supervisors are enforcing the policies fairly and consistently.
- Audit payroll records, including itemized wage statements and time records to ensure that employees are recording timely meal periods, rounding practices are neutral, meal periods are not rounded off and employees are receiving required notices and wage statements.
- Require employees to verify or attest to the accuracy of their time records.
- Make sure all wages, including tips, bonuses and commissions, are paid in a timely fashion, including overtime at the correct regular rate of pay.
- Examine independent contractor agreements and/or invoices.
Labor Commissioner: Lien on Real Property
SB 572 authorizes the Labor Commissioner to create a lien on real property to recover any amounts owned under any final citation, findings, or decision as an alternative to a judgment lien. The Labor Commissioner may record a certificate of lien on real property, for amounts due from the cited parties named in the final citation, findings, or decision, with the county recorder of any county in which the parties’ real property may be located. The lien attaches to all interests in real property of those parties located in the county where the lien is created to which a judgment lien may attach with the same priority as a judgment lien. Scary stuff for those employers who fail to pay attention to wage and hour laws.
Industry Specific Laws
Agriculture: Health Emergencies: Employment Safety: Wildfire Smoke (AB 73
Current law requires the State Department of Public Health (CDPH) and Office of Emergency Services to establish a personal protective equipment stockpile for all health care workers and essential workers during a 90-day pandemic or other health emergency. This bill adds Labor Code 9110, which expands these same protections to agricultural workers and specifically includes wildfire smoke events as health emergencies.
Construction Industry: Joint Liability for Penalties/Liquidated Damages (SB 727)
This bill adds Section 218.8 to the Labor Code to read: “For contracts entered into on or after January 1, 2022, a direct contractor making or taking a contract in California for the erection, construction, alteration, or repair of a building, structure, or other private work, shall assume, and is liable for, any debt owed to a wage claimant or third party on the wage claimant’s behalf, incurred by a subcontractor at any tier acting under, by, or for the direct contractor for the wage claimant’s performance of labor included in the subject of the contract between the direct contractor and the owner.”
SB also extends direct contractor liability to include penalties and liquidated damages for unpaid wages, including fringe benefits or contributions to labor trust funds.
Hospitality/Building Services: Employment: Rehiring and Retention; Displaced Workers: Covid-19 (SB 93
SB 93 became immediately effective on April 16, 2021 and extends until December 31, 2024. Hospitality and Building Services employers are now required to offer its laid-off employees specified information about job positions that become available for which the laid-off employees are qualified, and to offer positions to those laid-off employees based on a preference system, in accordance with specified timelines and procedures.
Laid-off employee means any employee who was employed by the employer for 6 months or more in the 12 months preceding January 1, 2020, and whose most recent separation from active service was due to a reason related to the COVID-19 pandemic, including a public health directive, government shutdown order, lack of business, a reduction in force, or other economic, non-disciplinary reason related to the COVID-19 pandemic.
An employer that declines to recall a laid-off employee on the grounds of lack of qualifications and instead hires someone other than a laid-off employee is required to provide the laid-off employee a written notice within 30 days including specified reasons for the decision, and other information on those hired.
Janitorial Services: Creates Exception to PAGA for Janitorial Employees (SB 646)
This bill creates an exemption from the Private Attorney’s General Act (PAGA) for janitorial employees represented by a labor organization and employed by a janitorial contractor with respect to work performed under a valid collective bargaining agreement in effect before July 1, 2028 that expressly provides for the wages, hours of work, and working conditions of employees and provides premium wage rates for all hours worked and other requirements.
Retail and Garment Industry: Joint Liability for “Brand Guarantors” (SB 62)
This bill eliminates piece-rate wages in the garment industry. Employers must now pay garment workers at an hourly rate that is not less than the applicable minimum wage. SB 62 states that ““[t]o ensure that employees are paid for all hours worked, a garment manufacturer, contractor, or brand guarantor who contracts with another person for the performance of garment manufacturing operations shall be jointly and severally liable with any manufacturer and contractor who performs those operations for the garment manufacturer or brand guarantor.”
In sum, employers with garment workers based in California should carefully read this law and inquire about the policies and practices of their California contractors to ensure compliance.
Warehouse Distribution Centers: Employee Production Quotas (AB 701)
This bill declares that “the rapid growth in just-in-time logistics and same-and next-day consumer package delivery, and advances in technology used for tracking employee productivity, have led to a rise in the number of warehouse and distribution center workers who are subject to quantified work quotas.”
Unfortunately, data shows that these quotas generally do not allow workers to comply with safety guidelines or to recover from strenuous activity during productive work time, leaving warehouse and distribution center employees who work under them at a high risk of injury and illness.
According to the author of this bill, AB 701 “would strengthen warehouse workers’ rights against arbitrary and abusive work quota systems by requiring companies to disclose work quotas to employees
and state agencies and establish statewide standards to minimize on-the-job injuries for employees working under strict quotas.”
Employers with 100 or more employees at a single warehouse distribution center or 1000 or more employees at one or more warehouse distribution centers in California must provide employees with a “written description of each quota to which the employee is subject to, including quantified number of tasks to be performed or materials to be produced or handled, within a defined period of time, and any potential adverse employment action that may result from failure to meet the quota.”
Employers shall not require warehouse employees to meet a quota that prevents compliance with meal or rest periods, use of bathroom facilities, including reasonable travel time to and from bathroom facilities, or occupational health and safety laws.
Both covered employers and warehouse employees should become familiar with their rights and responsibilities set forth in this bill.
Congratulations On Making It This Far
Overall, it’s been another tough year for employers and employees alike. “Doing the right thing” isn’t always easy. We understand that laws are complicated and often difficult to understand, even for lawyers. Hopefully, this summary of 2022 Employment Laws and prevention strategies to reduce legal risks will make it a little easier for you. Save this page as a favorite so you can come back to it when issues or questions come up and you want to refer to direct source materials. You might also find our Self-Help Legal Resources useful which includes links to employment agencies.
Need More Help?
Feel free to contact the authors if you have any further questions about these new 2021 California Employment Laws, including applicability to your industry and how to implement them.
The Frog Knows, aka attorney Chuck Farrar, and Janice Knight, Senior HR Consultant
Contact Chuck (for legal advice) or Janice (for HR prevention strategies) with questions.
Feel free to call Chuck (530) 277-4862 or Janice (530 559-5947) with questions about this blog or to schedule an appointment for legal advice or assistance with compliance and prevention strategies. Tips for keeping costs down.
The Law Office of Chuck Farrar provides this Blog/Website post for educational purposes only, as well as to give you general information and a general understanding of the law in California. It is not intended to and does not provide specific legal advice. By using this Blog/Website you understand that there is no attorney client relationship between you and The Law Office of Chuck Farrar. Do not use this Blog/Website as a substitute for competent legal advice from a licensed professional attorney in your state.