By: Ellen D. Gregory and Martin R. Sances

Last year, the California legislature passed 1,016 pieces of legislation that went on to be signed into law.  In this article, we’ll summarize a few of these laws that may impact your business.  We’ll also provide a brief overview of a couple of court cases that you should know about if you hire, or are contemplating hiring, independent contractors.

Sexual Harassment Training

Senate Bill 1343 requires employers to provide additional sexual harassment and abusive conduct prevention training.  Prior to this year, employers who employed 50 or more employees were required to provide such training only to supervisory employees.  Under the new law, employers with 5 or more employees must now provide at least 2 hours of training to supervisory employees and at least one hour of such training to nonsupervisory employees. The training must be repeated at least once every 2 years thereafter.  All initial training required by the law must be completed by January 1, 2020.  To help employers comply, the law requires the Department of Fair Employment and Housing to develop and post online training courses on its website and to update the poster and fact sheets that employers are required to provide to their employees.  The online courses will be available on the Department’s website later in 2019.  For now, the website provides an online toolkit which includes sample training in PowerPoint format, the required printed poster, printed brochures, and a Workplace Harassment Prevention Guide, and a Sexual Harassment and Abusive Conduct Prevention Training Completion Certificate.  These materials can be downloaded at https://www.dfeh.ca.gov/resources-for-employers/.

Non-Disclosure Agreements Regarding Sexual Harassment and Discrimination Claims

The California legislature has determined that non-disclosures are against public policy because they prevent victims from telling their stories and “outing” the offenders, if that is their choice.  Senate Bill 820 adds §1001 to the Code of Civil Procedure and prohibits non-disclosure provisions in settlement agreements that prevent the disclosure of factual information related to certain claims of sexual harassment and discrimination based on sex when those claims are filed in a civil action or an administrative action.  However, such a non-disclosure provision is allowed if it shields the identity of a sexual harassment or discrimination claimant, if the provision is included at the request of the claimant.

Expressing Breastmilk at Work

California law already required employers to provide lactating employees with places to either breastfeed or express breastmilk for their babies.  The new law requires every employer to make reasonable efforts to provide a room or location, other than a bathroom, in close proximity to the employee’s work area, for lactation purposes.  Temporary locations are acceptable as long as that location is used only for lactation purposes while the employee expresses milk.  Agricultural employers may comply by providing a lactation location that is a private, enclosed, and shaded space.  Finally, if an employer can demonstrate undue hardship, it must make reasonable efforts to provide a room or location for expressing milk that is not a toilet stall.

Prohibitions Against Requesting Job Applicants’ Salary History

In 2017, the legislature passed a law prohibiting inquiries into an applicant’s salary history.  The rationale was that this practice perpetuated existing pay disparities based on race, sex, criminal history, or other factors.  The new law (Assembly Bill 2282) clarifies certain definitions such as what constitutes a “reasonable request” for pay scale information. A “reasonable request” is defined as a request made after the applicant has completed the initial interview. Additionally, although employers may not ask for the applicant’s salary history information, employers may ask about an applicant’s salary expectations for the position. AB 2282 also permits compensation decisions based on a current employee’s existing salary, so long as any wage differential resulting from that compensation decision is justified by one or more of the factors listed in the law. Those factors are (1) a seniority system, (2) a merit system, (3) a system that measures earnings by quantity or quality of production; and (4) a bona fide factor other than race or ethnicity, such as education, training, or experience.

Release of Claims—Required Language

In California a “Section 1542 Waiver” is required in all settlement agreements and releases.  Merely reciting that Civil Code section 1542 is waived, or that the parties intend to waive unknown claims, is not sufficient.  The new statutory language (showing the language changes from the previous version) is as follows:  “A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release, and that if known by him or her, would have materially affected his or her settlement with the debtor or released party.”  This new language must be used in all settlement agreements and any other document that includes a Section 1542 waiver, such as contractual amendments, severance agreements, and transactional documents.

Independent Contractor or Employee?

If you hire independent contractors or are thinking of it, you should be aware of some new caselaw interpreting the distinction between employees and independent contractors.  In April, the California Supreme Court decided a case involving package delivery drivers who had been treated as independent contractors by their employer, Dynamex Operations West, Inc.  The class of drivers argued that, although the drivers were hired pursuant to independent contractor agreements, Dynamex controlled and directed the performance of their work to such an extent that their wage order claims should be treated as though they were employees.  The Court applied the ABC test from previous caselaw which holds that a worker is presumed to be an employee, unless the hiring entity establishes each of the following:

(A)  that the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;

(B)  that the worker performs work that is outside the usual course of the hiring entity’s business; and

(C)  that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

The Court held that the drivers were controlled enough by Dynamex that they should be treated as employees for purposes of their wage order claims.

However, a later appellate court case that did not involve wage order claims seems to limit the applicability of the Dynamex holding.  In that case, Garcia v. Border Transportation Group, LLC (decided in October), the court distinguished the Dynamex case and held that the Dynamex holding applied only to wage order claims. Many are hoping this is a sign that courts will back away from Dynamex, but until that happens, if you utilize independent contractors in your business, you will need to perform a careful analysis of the ABC test to make sure you are not inadvertently misclassifying “employees” and violating labor laws.

Non-Solicitation Clauses

In AMN Healthcare Inc. v AYA Healthcare Services, Inc., the California Court of Appeal refused to enforce a non-solicitation provision relating to employees that continued for one year after termination. The Court found it was too broadly drafted and thus violated the non-compete provisions of Cal. Bus. & Prof. Code § 16600 and the employer could not require employees “not [to] directly or indirectly solicit or induce, or cause others to solicit or induce,” any employee of the company” for one year after termination.  It appears that employee non-solicits will have to be very narrowly drafted to remain enforceable, if they are enforceable at all.

Summary

It should not be a surprise given the “me-too” movement and overall political climate in California that businesses need to be mindful of the ever-changing laws relating to employees in the Golden State. If you want to set up some time to discuss the laws that may be specific to your business, please let us know.

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