New California Employment Laws and What You Can Do to Comply

Employment laws in California can be a moving target. If you’re an employer in the Golden State, here’s a recap of key changes you should know, plus practical actions you can take to get ahead of compliance.

Workplace Violence Prevention

Who – Most California employers

What – Senate Bill 553 Cal/OSHA Workplace Violence Prevention for General Industry (Non-Healthcare Settings) requires most California employers to have a comprehensive Workplace Violence Prevention Policy (WVPP) as part of their Cal/OSHA Injury and Illness Prevention Plan (IIPP). Employers must implement an effective WVPP and complete employee training by July 1, 2024.

The WVPP can be a standalone plan or it can expand an already required IIPP to include measures for identifying, evaluating, addressing and correcting workplace violence hazards. Employers must establish, implement and maintain a written WVPP, provide regular staff training on workplace violence hazards, and keep detailed documentation records of workplace violence incidents, evaluations and corrective actions for a minimum of five years.

Exemptions from SB 553

SB 553 applies to all California employers and employers based in other states with employees working in California, with these exceptions:

• Healthcare employers (are already covered under the 2017 Cal/OSHA Healthcare industry standards)
• Law enforcement agencies
• Employers with fewer than 10 workers present at any given time on a worksite that is not open to the public
• Employers with employees working from a worksite of their choice, not under the employer's control (i.e., home, coffee shop, etc.)
• Employers who operate in completely remote work environment.

Definition of workplace violence

Workplace violence is defined as any act of violence or threat of violence that occurs in a place of employment. It can include the threat or use of physical force against an employee that results in or is likely to result in injury, psychological trauma or stress. An employee’s injury is not required to be considered workplace violence.

Cal/OSHA Labor Code 6401.9 also defines workplace violence as an incident that involves a threat or use of a firearm or other dangerous weapon and includes the use of a common object as a weapon. Even if an employee is not injured in this case, this is a reportable incident. Workplace violence does not include lawful acts of self-defense or defense of others.

WVPP employee training requirements

SB 553 requires regular employee training so that staff know the procedure to follow if they experience a violent incident in the workplace. The training must cover all required components of the plan itself. It must also be conducted by someone familiar with the WVPP who can answer questions during the interactive training session. Training must be done every time a new workplace hazard is identified or an incident occurs.

Injury and Illness Prevention Plan (IIPP) requirements

Like the WVPP, the IIPP is a formal federal OSHA and California employer program intended to identify workplace hazards and provide employees with the procedures to follow should an injury or illness occur. Every U.S. employer needs a safety plan per federal OSHA standards. However, California requires employers with more than 10 employees to have a written plan to give to employees upon written request. IIPP training is required each time a new employee is hired, any time a procedure or workplace change occurs, any time a new hazard is identified and on a routine basis.

Cannabis Use

Who – All California employers

What – Effective January 1, 2024, employers are prohibited from discriminating against an employee or job applicant based on the person’s use of cannabis off the job and away from the workplace.

Employers may still conduct preemployment drug testing and refuse to hire someone based on a valid preemployment drug screening that doesn’t screen for non-psychoactive cannabis metabolites.

The new law also doesn’t permit an employee to possess, be impaired by or use cannabis on the job, or affect the rights or obligations of an employer to maintain a drug- and alcohol-free workplace.

What you should do

• Ensure your company handbook policies are updated to include this new provision.
• Notify your drug testing vendor to eliminate testing for non-psychoactive cannabis metabolites.

Bereavement

Who – All California employers with five or more employees

What – Effective January 1, 2023, Assembly Bill 1949 requires employers to grant employees five days of unpaid bereavement leave (that need not be taken consecutively) for the death of a family member, including a spouse, child, parent, sibling, grandparent, grandchild, domestic partner or parent-in-law.

Bereavement leave can be unpaid, but employees can use any existing PTO, vacation or sick time while on bereavement leave and employers can request documentation of the death of the family member.

What you should do

• Ensure your company handbook includes five days for bereavement leave.
• Send all employees a memo communicating your updated policy and obtain employee signatures confirming receipt of the new policy.
• Inform all managers that employees can use their available PTO, vacation or sick time during bereavement leave.

California Family Rights Act and Paid Sick Leave

Who – All California employers with five or more employees

What – Effective January 1, 2023, Assembly Bill 1041 expands employee California Family Rights Act (CFRA) and paid sick leave rights to allow an employee to take such leave to care for a "designated person," in addition to other family members previously specified by law. “Designated person” means any individual related by blood or whose association with the employee is the equivalent of a family relationship. The designated person may be identified by the employee at the time the employee requests the leave. An employer may limit an employee to one designated person per 12-month period for family care and medical leave.

What you should do

• Update your paid sick leave and CFRA policy to include that employees can take leave to care for a designated person.
• Send all employees a memo communicating your updated policy and obtain employee signatures confirming receipt of the new policy.

Wages and Hours

Who – All California employers

What – Minimum wage increase and exempt salary increase, effective January 1, 2023

Statewide Minimum Wage

California’s minimum wage for all employers regardless of size increased to $15.50 per hour.

Exempt Employee Minimum Salaries

The minimum salary threshold for exempt employees increased to $1,240 per week ($64,480 per year) for employers regardless of their employee count.

The minimum hourly rate for exempt computer software employees will increase to $53.80 per hour (or an annual salary of $112,065.20).

Local Minimum Wages

The hourly minimum wage also increased within individual cities in California — for example, West Hollywood has three minimum wage requirements:

• West Hollywood (hotels): $18.35 (no change)
• West Hollywood (49 or fewer employees): $17.00
• West Hollywood (50 or more employees): $17.50

What you should do

• Audit your current hourly and salary employees to ensure they meet or exceed the minimum wage requirements.
• Complete a Personnel Action Notice (PAN) form for any employees who receive a change in pay rate due to the California minimum wage increase.

COVID-19

Who – All California employers

What – There are several bills enacted:

• Effective January 1, 2023, Assembly Bill 2693 updated the state’s COVID-19 notice requirements:
  
  Under existing law, if an employer receives a notice of potential exposure to COVID-19, they are required to take action within one business day of the notice, including providing written notice to all employees on the premises at the same worksite where they may have been exposed to COVID-19. This requirement is extended until January 1, 2024.
  However, this bill provides an employer an additional method to satisfy the notification requirements by prominently displaying a notice for 15 days. The notice must include the dates on which an employee with a confirmed case of COVID-19 was on the worksite within the infectious period and the location of the exposure.
  AB 2693 also removes the requirement that employers report cases to their local health departments.
• AB 1751 extends the employer requirement to report COVID-19 cases to their workers’ compensation carriers, for workers that contact COVID-19 during an outbreak, until January 1, 2024.

What you should do

• Continue to provide written notice within one business day of your knowledge of a positive COVID-19 case to people at the worksite that may have been exposed to COVID-19, either individually or by displaying a notice.
• Notify your workers’ compensation carrier in the event of a COVID-19 workplace outbreak.

Retaliation for Refusing to Work in Emergency Conditions

Who – All California employers

What – Effective January 1, 2023, Senate Bill 1044 protects employees from retaliation for refusing to work in "emergency conditions." Employees will be entitled to leave work or not come in during emergency conditions if they have a reasonable belief that the workplace is unsafe. You can require employees to provide notice in advance when feasible or, if advance notice isn’t feasible, as soon as possible. This new law specifically entitles employees to use their cell phones or other devices to get emergency assistance, communicate with someone to make sure they’re safe, or assess the safety of a situation during an emergency condition.

An emergency condition means either:

• A condition of disaster or extreme peril to people or property at work caused by natural forces or a criminal act
• An order to evacuate from work, the employee’s home or the employee’s child’s school because of a natural disaster or a criminal act

A health pandemic does not qualify as an emergency condition.

What you should do

• Review your attendance policy and, if it requires advance notice for absences, include an exception when advance notice isn’t feasible because of emergency conditions.

Reproductive Health

Who – All California employers

What – Effective January 1, 2023, Assembly Bill 523 makes it unlawful to discriminate against an employee or job applicant based on their “reproductive health decision-making.”

Reproductive health decision-making includes, but is not limited to, a decision to use or access a particular drug, device, product or medical service for reproductive health.

What you should do

• Update your company handbook (EEO and harassment) policies to include this new legislation.
• Send all employees a memo communicating your updated policy and obtain employee signatures confirming receipt of the new policy.

Email of Workplace Postings

Who – All California employers

What – Effective January 1, 2022, Senate Bill 657 provides that in any instance in which an employer is required to physically post information, the employer may also distribute that information to employees by email with the document or documents attached.

What you should do

• Provide the most current physical postings of required information on display in a common area of the workplace.
• Provide digital postings of required information in an email during the onboarding process.

Independent Contractor Rules

Who – California employers, with numerous exceptions

What – Effective September 4, 2020, AB 2257 is a clean-up measure for AB 5 that maintains its essential framework for classifying workers (the ABC test) but also revises and clarifies the legislation and expands the list of exempt occupations:

• Business-to-business exemption: It maintains exemption for "bona fide business-to-business contracting relationships" where a contractor "acting as a sole proprietor, or a business entity formed as a partnership, limited liability company, limited liability partnership or corporation contracts to provide services to another such business."
• "Single-engagement" business-to-business exemption: This creates an exemption from the ABC test for individual businesspersons who contract with one another "for purposes of providing services at the location of a single-engagement event." Providing certain criteria are met, the ABC test will not apply where one individual contracts with another to perform services at "a stand-alone non-recurring event in a single location, or a series of events in the same location no more than once a week."
• Music industry and performer exemptions: Several exemptions were created in the music industry. Again, specific criteria regarding ownership of the creative product, whether a recording is made, and how large audiences are will be factors. It's important to note that this is still not an exemption for many recording, television or film artists' work.
• Professional services exemption: This is now a long list of covered professions that can satisfy an IRS common law test, rather than the ABC test, and be qualified as independent.
• Referral agency exemption: Referral agencies and those who provide services via a referral agency may also be exempt from the ABC test but must also meet certain professional criteria.

There are now more than 50 businesses and exceptions that have exemptions (providing criteria are met). Some make sense, and others do not. Know your industry and refer to the text of the law when making an interpretation. Even when a business may qualify for an exemption, the worker must clearly exhibit independence and expertise.

ABC test

AB 5, which took effect on January 1, 2020, created the ABC test for determining whether a worker is an employee or an independent contractor. To qualify as an independent contractor, a worker must meet all three criteria.:

• (A) Is free from the control and direction of the company in performing work, both practically and in the contractual agreement between the parties
• (B) Performs work that is outside the usual course of the company's business
• (C) Is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the company

What you should do

Basically, everyone should be considered an employee unless you can rebut this premise using all three factors in the ABC test. Follow this decision tree:

1. Does the worker own and independently operate a trade/business of their own? If so, they should prove it by providing a federal ID number, or failing that, some sort of professional license number. This is actually factor C of the ABC test, but we put it first. If this test can't be easily satisfied, put this worker on payroll, temporarily at least. Our practical advice:
   • Ask your vendors to display their business licensing on their invoices for easy reference in the event of a CA EDD audit of your vendor payments or 1099s.
   • If someone gives you a Social Security number as their tax ID, even if they tell you they prefer to be a "freelancer," it 's not up to them. Put them on payroll or get professional advice before you skirt this rule. If they tell you they don't want taxes withheld, that’s another red flag.
   • You can't coach a worker and tell them to get an FEIN or a business license. They may not understand the obligations they assume as a business owner in terms of the ongoing business tax filing.
2. The work being performed should be outside the normal course of business and service provided by the hiring entity.
   This is Factor B. The practical application:
   • This means that if you augment your staff during a busy season with other professionals, even if they are licensed, they probably need to go on payroll.
   • If they use a title that matches other titles given to your employees, or they have a company email or business card, they probably belong on payroll.
3. Is the worker told where, when or how to do the work? This is the trickiest issue and most likely to result in a discussion and weighted factors. Our advice:
   • Every situation has to be measured on its own. Don 't make rules or assume this is easy.
   • Coaching a worker to get a business license amounts to controlling them, so don 't do it.
   • If a worker is remote, you can't assume that means they are independent.
   • If the person is economically dependent on the work, or if this is their one big gig, they probably belong on payroll.
   • Don’t use terminology commonly used in employment. If the person is a contractor, they should not get reviewed or fired, or participate in your benefit or retirement plans.

What CA Employment Laws Should Be on Your Radar?

California’s employer law changes never end, so compliance is always a shifting target. This can make it a real challenge to stay up to date on your own. Find out how offloading that burden to our Human Resources Outsourcing experts can help you avoid unnecessary stress and penalties and be ready for what’s next.