Seyfarth Synopsis: As California’s legislative session comes to an end, a wave of new COVID-19 related laws that impact employers are being signed into law. On September 17, 2020, Governor Newsom signed AB 685, which will require employers to provide specific notices to employees exposed to COVID-19 within one business day of becoming aware of the exposure, and impacts COVID-19 related alleged Cal/OSHA violations.

When we last we blogged about Assembly Bill 685, it was awaiting Governor Newsom’s approval, but it was signed into law on September 17, 2020. Under the new law, which will be in effect from January 1, 2021, until January 1, 2023, employers must comply with specific notification requirements any time there has been a potential COVID-19 exposure in the workplace. AB 685 also enhances Cal/OSHA’s enforcement abilities in the COVID-19 realm.

COVID-19 Exposure Notification Requirements

  • Who Do I Need To Notify?

Any time an employer is put on notice that a “qualifying individual” (someone who tested positive for COVID-19 or is subjected to an isolation order) was in the workplace while they were considered potentially infectious, written notice must be provided to individuals who “may have been exposed” in the workplace, including employees, subcontractors, and union representatives.  This notice must be provided within one business day of when the employer is put on notice.

Employers with multiple buildings or floors do not necessarily need to provide notice throughout the entire company— the notice requirement is limited to the specific “worksite” the qualifying individual entered, such as “Building A” or “Field 1,” and not the entire company or facility site.

Employers are also required to notify the local public health department within 48 hours of becoming aware of a COVID-19 workplace “outbreak” (as defined by the State Department of Public Health). This notification requirement encompasses the number of COVID-19 cases at the worksite, as well as names, occupations and worksites of qualifying individuals. (The definition of “qualifying individuals” and the definition of an “outbreak” are currently inconsistent between the CDPH and the new Labor Code). Employers required to report an outbreak must also notify the local health department of any subsequent laboratory-confirmed cases of COVID-19 at the worksite.

Note that the California Department of Public Health currently defines an outbreak as three or more laboratory-confirmed cases of COVID-19 within a two-week period among employees who live in different households. (However, as with all things COVID-19 related, definitions and guidance may be subject to change, so employers should continue to regularly check on the most up to date information.)

  • What Information Does The Notification Need To Include?

The notice must inform individuals who were at the workplace during the qualifying individual’s infectious period that they “may have been exposed to COVID-19.”

The notice also needs to provide information to all employees “who may have been exposed” about benefits to which employees may be entitled under federal, state, or local law, including workers’ compensation, paid sick leave, negotiated leave, and anti-retaliation and anti-discrimination protections.

Individuals entitled to the notice must also be notified about the disinfection and safety plans that the employer plans to implement and complete per CDC guidelines.

  • How Do I Need To Distribute The Notice?

The written notification must be sent in a manner normally used by the employer to communicate employment-related information (including personal service, email, or text), must be in both English and the language understood by the majority of the employees, and must protect employee privacy (i.e., not disclose the names of infected individuals). Non-employee covered individuals may be notified in a similar manner.

Also note employers are required to maintain records of the written notification for at least three years.

Cal/OSHA Enforcement

Cal/OSHA has long had the authority to shut down a worksite if it determines the worksite presents an “imminent hazard.” However, AB 685 adds Section 6325(b) to the Labor Code, which reiterates that the Division of Occupational Safety and Health can close down a business if it deems there is an “imminent hazard” related to potential COVID-19 transmission.

AB 685 also exempts the Division from sending notices of intent to issue serious citations (as is normally required) when the alleged hazard is COVID-19 related. Normally, if Cal/OSHA plans to issue a serious citation, it first sends a notice of intent, and employers have the option of responding with evidence. But now, if Cal/OSHA intends to issue a serious citation for an alleged COVID-19 hazard, it need not issue a notice of intent or consider the employer’s evidence.

Workplace Solutions

Navigating ever-changing COVID-19 related laws remains a significant challenge, particularly in California. Seyfarth continues to keep employers updated in its COVID-19 Resource Center. If you have questions or concerns regarding which types of regulations may apply to your workforce, and how to implement them, reach out to your favorite Seyfarth attorney.

Edited by Coby Turner

Seyfarth Synopsis: On September 9, 2020, Governor Newsom signed Assembly Bill 1867, which requires private employers with 500 or more employees nationwide to provide COVID-19-related supplemental paid sick leave to their California employees. Impacted employers must begin providing this leave no later than September 19, 2020.

On September 9, 2020, California Governor Gavin Newsom signed AB 1867 into law, creating two new Labor Code sections: 248 (food service workers) and 248.1(covered workers), and also amending Labor Code § 248.5 (enforcement procedures). Governor Newsom’s office touted this bill as “eliminat[ing] coverage gaps to ensure every employee has access to paid sick days if they are exposed or test positive to COVID-19 for 2020” and delivering on his “commitment to work with the Legislature to expand paid sick days.”

As a budget trailer bill, the provisions are effective immediately, and require private businesses with 500 or more employees nationwide (as well as certain health care providers and emergency responders) to provide their California employees with COVID-19 related supplemental paid sick leave no later than September 19, 2020.

The bill was intended to close the gaps between federally mandated paid COVID-19 related sick days and the Governor’s previous Executive Order that only provided paid sick leave for food sector workers. The new law implicates all private employers with over 500 employees, as well as public and private employers of first responders and health care employees who opted not to provide leave under the federal law.

When Do I Have To Give Employees Leave Under The New Law?

Under this new California law, employees who must leave their home to perform work are entitled to COVID-19 supplemental paid sick leave if they are unable to work when they are:

  1. Subject to a federal, state, or local quarantine or isolation order related to COVID-19;
  2. Advised by a health care provider to self-quarantine or self-isolate due to concerns related to COVID-19; or
  3. Prohibited from working by the employer due to health concerns related to the potential transmission of COVID-19.

How Do I Have To Pay For The New COVID-19 Leave?

Employees are entitled to COVID-19 supplemental sick pay based on their regular schedules as follows:

  1. For employees who work “full time” and were scheduled to work or did work on average at least 40 hours per week in the two weeks preceding the date of taking this leave, 80 hours (with exceptions for certain firefighters);
  2. For employees with a normal weekly schedule, the total number of hours the employee is normally scheduled to work over two weeks;
  3. For employees who work a variable number of hours, 14 times the average number of hours the employee worked each day in the six months preceding the date the employee took COVID-19 supplemental paid sick leave (or, if the employee has worked less than six months but more than 14 days, the average hours worked over the entire employment period);
  4. For employees who work a variable number of hours and have worked for a period of 14 or fewer days, the total number of hours the employee has worked for that employer.

The law authorizes the employee to determine how many hours of COVID-19 supplemental paid sick leave to use, and requires the employer to make COVID-19 supplemental paid sick leave available for immediate use upon the employee’s oral or written request.

The COVID-19 supplemental sick pay must be paid at an hourly rate of the highest of: (1) the employee’s regular rate of pay for the last pay period (including amounts subject to any applicable collective bargaining agreement); (2) state minimum wage; or (3) local minimum wage. However, like the federal law, employers are not required to pay any more than $511 per day and $5,110 total to an employee for COVID-19 supplemental sick pay.

The law prohibits employers from requiring an employee to use any other paid or unpaid leave, paid time off, or vacation time before COVID-19 supplemental paid sick leave or in lieu of COVID-19 supplemental paid sick leave, and expressly provides additional leave on top of any paid sick leave that may already be available to employees under Labor Code Section 246. The supplemental sick leave requirement runs concurrently with other types of leave other than regular paid sick leave.

But What If I Already Provided COVID-19 Paid Sick Leave?

There is some good news for employers who have already provided COVID-19 related paid sick leave, even where they were not required to do so.

Where an employer provided leave, but did not pay it at the rates required under the new law, the law expressly authorizes an employer to retroactively provide supplemental pay to that covered worker in an amount equal to or greater than that required under the law, rather than providing additional leave time.

Also, if an employer already provides or provided employees with a supplemental benefit, such as supplemental paid leave, that is payable for the COVID-19 reasons identified in the statute, then the employer may count the hours of that other paid benefit or leave toward the total number of hours of COVID-19 supplemental paid sick leave that it is required to provide under this law.

These provisions are effective until the latter of December 31, 2020, or expiration of any federal extension of the Families First Coronavirus Response Act (which Seyfarth has discussed at length here and here.)

But Wait — There’s More!

Food sector employees. Specific to employees in the food sector, the law requires employees working in any food facility (as defined by the Health & Safety Code) be permitted to wash their hands every 30 minutes and additionally as needed and, retroactive to April 16, 2020, mandates supplemental paid sick leave for food sector workers if they are unable to work due to any of the specified reasons relating to COVID-19 (codifying Executive Order N-51-20).

Update Wage Statements/Written Notice. Employers outside of the food sector must update their wage statements (or separate writing) to provide notice of the amount of supplemental paid sick leave available each pay period under this new law, and could be subject to liability for failure to do so starting with the next full pay period following the bill’s September 9, 2020, enactment. We recommend doing so as a separate line item for tracking purposes (such as CA Supp. Sick Leave or COVID Leave). Employers should be sure to apply any applicable offsets for supplemental COVID paid time already granted to an employee for a reason covered by the new law. Note: Food sector employers are not subject to the every pay period notice requirement of Labor Code § 246(i) for the new leave available under new Labor Code § 248.

Enforcement. The law authorizes the Labor Commissioner to cite employers for a lack of paid sick days, which the Governor states is “a critical enforcement tool that will promote safety for employees and customers alike.” The Labor Commissioner issued a model notice for posting in the workplace which you can access here, as well as FAQ’s on the program here.

The bill will also create a DFEH small employer family leave mediation pilot program—but only if SB 1383 is approved by the Governor.

Workplace Solutions

Navigating federal, state and local COVID-19 related laws and ordinances remain a significant challenge, particularly in California. If you have questions or concerns regarding which types of regulations may apply to your workforce, and how to implement them, reach out to your favorite Seyfarth attorney.

Edited by Coby Turner

Seyfarth Synopsis: Businesses operating in California have had all of eight months to adapt since Assembly Bill 5, a landmark piece of legislation governing their relationships with independent contractors, took effect on January 1, 2020. Now, with the passage, executive signature, and immediate enactment of Assembly Bill 2257, businesses must once again adapt to another drastic shift in the employee classification calculus.

On September 4, 2020, AB 2257, which substantially revises and clarifies California’s independent contractor laws, went into effect immediately upon receiving California Governor Gavin Newsom’s signature.

AB 5, as businesses are all too aware, installed the “ABC Test” as the default standard to determine whether independent contractors should be treated as employees of a hiring entity, and also set forth a labyrinthine list of exemptions from its purview. From its inception, AB 5 has stirred an inordinate amount of controversy—not only have we written extensively on the measure, we also have our own tag dedicated exclusively to the issue. Our prior analysis of AB 5 can be accessed here. AB 2257, which preserves the ABC Test for independent contractor classification, now expands the universe of available exemptions from this test. The new law will no doubt delight some businesses, frustrate others, and confound anyone responsible for keeping track of the exemptions.

Background On AB 5

AB 5, as of January 1, 2020, codified the ABC Test for employee status adopted in the California Supreme Court’s 2018 decision in Dynamex Operations West, Inc. v. Superior Court. Dynamex held that in order to defeat claims arising under California’s Wage Orders premised on independent contractor misclassification, a defendant must prove that (A) the worker is free from control and direction of the hiring entity in connection with performing the work, both under contract and in fact, (B) the worker performs work outside the usual course of the hiring entity’s business, and (C) the worker customarily engages in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

AB 5 expanded the reach of Dynamex by making the ABC Test the default test for all Labor Code, Unemployment Insurance Code, and Wage Order claims. As a result, the ABC Test extended to a host of additional causes of action not previously covered, such as, for instance, claims for failure to reimburse necessary business expenses and for failure to provide accurate wage statements.

In addition to expanding the applicability of the ABC Test, AB 5 also provided for broad governmental enforcement powers. It enabled the Attorney General and certain city attorneys to pursue injunctions against businesses suspected of misclassifying independent contractors.

AB 5 also contained numerous statutory exemptions from the ABC Test. Provided certain criteria were met, the employment status of independent contractors in an occupation covered by one of these exemptions was determined by the common law test for employment (commonly known as the Borello test), a considerably more flexible standard than the ABC Test. The fact that some industries were expressly exempted while others were not, led to controversy, confusion, and requests from hiring entities and workers in dozens of industries for additional and clarifying legislation. As of February of this year, the Legislature introduced 34 stand-alone bills exempting certain industries. As those measures wound through the legislative process, they were, for the most part, distilled into AB 2257.

What’s New In AB 2257?

AB 2257 maintains the essential framework of AB 5. The ABC Test remains the default standard for independent contractor misclassification. However, swift and concerted lobbying efforts have prompted a plethora of new statutory exemptions from the ABC Test, which apply retroactively where applicable. In addition, some existing exemptions have been altered in potentially significant ways.

  • Business-To-Business Exemption: AB 2257 maintains the 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.” The exemption now also applies where a “public agency or quasi-public corporation” has retained a contractor. Further, while broadening the availability of the exemption, AB 2257 might also affect how the ABC Test applies to individual workers retained by a contractor, with respect to their relationship with both the contractor and the hiring entity. For example, the ABC Test might determine whether an individual worker retained by a contractor as an independent contractor, and not directly by the hiring entity, is an employee of both the contractor and the hiring entity. While case law holds that the ABC Test does not apply where a worker has been classified as an employee, the unclear phrasing of the new business-to-business exemption could lead to litigation on this subject.
  • “Single-Engagement” Business-To-Business Exemption: AB 2257 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.” Provided certain criteria are met (including a lack of control over the work, a written contract specifying payment amounts, and each individual’s maintenance of his or her own business location), 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.”
  • Referral Agency Exemption: AB 2257 also includes clarifications of the referral agency exemption, which may exempt from the ABC Test the relationship between an individual operating as a sole proprietor or a business entity and a business that refers that individual’s services to clients. For starters, AB 2257 expands the referral agency exemption significantly, expressly applying the exemption to a non-exclusive list of additional services, including consulting, youth sports coaching, caddying, wedding or event planning, services provided by wedding and event vendors, and interpreting services. Indeed, according to the Senate Committee on Labor and Employment analysis, the referral agency expansion was one of the most significant changes in AB 2257. In addition to expanding the scope of the exemption, AB 2257 expressly provides that the ABC Test governs “the determination of whether an individual worker is an employee” of the contractor referred to provide services, or an employee of the client to which the contractor was referred. As with the analogous clarification of the business-to-business exemption, this is a potentially significant addition in that it may lead to litigation over whether the ABC Test applies to workers who have been classified as employees.
  • Professional Services Exemption: AB 2257 expands the already lengthy list of occupations that may qualify for an exemption from the ABC Test under the professional services exemption. The following occupations, in addition to those originally identified in AB 5, may be subject to the common law test for employment as a result of AB 2257: content contributors, advisors, producers, narrators or cartographers for certain publications (provided they do not displace existing employees); specialized performers hired to teach a class for no more than a week; appraisers; registered professional foresters; and home inspectors. AB 2257 also eliminates restrictions in AB 5 that threatened to upend the journalism industry. Whereas AB 5 limited the number of “submissions” that independent contractors of various types (including still photographers and photojournalists, videographers, photo editors, freelance writers, translators, editors/copy editors and illustrators/newspaper cartoonists) could publish in a single forum without sacrificing their contractor status, AB 2257 removes the submission cap and instead requires that businesses refrain from displacing existing employees in order to utilize one of these types of contractors.
  • Music Industry & Performer Exemptions: AB 2257 creates several exemptions for the entertainment industry, primarily in the music industry. First, the following occupations involved in creating, marketing, promoting or distributing sound recordings or musical compositions are exempt from the ABC Test: recording artists, songwriters, lyricists, composers, proofers, managers of recording artists, record producers and directors, musical engineers and mixers, musicians, vocalists, photographers, independent radio promoters and certain types of publicists. Notably, however, musicians and vocalists who do not receive royalties from a sound recording or musical composition must be paid the applicable minimum and overtime wages, as though they were employees. Second, musicians and musical groups engaged for a single-engagement live performance event (i.e., a concert) are exempt from the ABC Test unless they (a) perform as a symphony orchestra, or in a musical theater production, or at a theme park or amusement park, (b) are an event headliner in a venue with more than 1,500 attendees, or (c) perform at a festival that sells more than 18,000 tickets per day. Finally, individual performance artists including comedians, improvisers, magicians and illusionists, mimes, spoken word performers, storytellers, and puppeteers who perform original work they created will qualify for an exemption so long as they are free from the hirer’s control, retain the intellectual property rights related to their performance, set their terms of work and negotiate their rates.
  • Miscellaneous Exemptions: Subject to certain requirements, AB 2257 adds exemptions for the following occupations: manufactured housing salespersons; certain individuals engaged by international exchange visitor programs; and competition judges (including amateur umpires and referees).
  • Broader Governmental Enforcement Powers: AB 2257 provides district attorneys the ability to file an injunctive relief action against businesses suspected of misclassifying independent contractors. Previously, only the Attorney General and certain city attorneys possessed this power.

Which Industries Were Excluded From AB 2257?

AB 2257 does not include exemptions for a number of industries that have engaged in extensive lobbying efforts that pre-date even the passage of AB 5. Such industries include, among others, gig economy companies, franchising, trucking and the motion picture and television industries. The 2021-22 legislative session will undoubtedly see these, and other, industries lobbying for additional exemptions; the most immediate task for many in the business community, however, is understanding how AB 2257’s amendments affect their business relationships.

What Will Happen Next?

AB 2257 took effect immediately upon its passage, and is, accordingly, the law of the State of California. It is a given that some industries that did not secure an exemption may continue lobbying legislators. Others may choose to follow the lead of transportation platform companies, which are funding a ballot initiative (Proposition 22) to create a new class of workers applicable to drivers, if their efforts prove successful. Lawsuits currently pending and yet to be filed, including one previously filed by a trucking industry interest group, may yet affect the scope of AB 2257’s application. Finally, it remains to be seen whether governmental officials will avail themselves of the enforcement powers bestowed upon them, as the flood of such lawsuits predicted by many following the passage of AB 5 has not occurred.

Workplace Solutions

As usual, navigating the constantly changing legal landscape for independent contractor status can be very complicated. If your business uses, or is thinking of using, independent contractors to assist with any business functions, make sure you contact your favorite Seyfarth attorney, or reach out to any members of our Independent Worker Strategies Team, to make sure you are staying compliant with the latest legal developments.

Edited by Coby Turner

Seyfarth Synopsis: The California Legislature has passed a series of employment-related bills for Governor Newsom to consider. He has until September 30 to approve or veto these bills, most of which relate to leaves of absence and COVID relief.

Monday, August 31st (or, really, the wee hours of September 1) marked the Legislature’s last day to pass bills to Governor Newsom’s desk for approval during the second year of the 2019-2020 Legislative Session. COVID-19 affected the focus of the Legislative session and limited its calendar: the Senate sent only 10 employment-related bills to the Assembly this year. Below are the most significant bills that the Governor has already approved or that await his action by the September 30 deadline. Most bills awaiting gubernatorial review are related to leaves of absence and COVID-19 relief. All approved bills will be effective January 1, 2021, unless otherwise noted.

APPROVED

FEHA: Veteran or Military Status. AB 3364, a Judiciary omnibus bill, clarifies in sections 31-33 that the Fair Employment and Housing Act (FEHA) protects military or veteran status (as opposed to veteran and military status). Approved by the Governor August 31, 2020.

AWAITING THE GOVERNOR’S APPROVAL

Paid Sick Leave Designation. AB 2017 would provide employees sole discretion to designate days taken as paid sick leave under Section 233 of the Labor Code.

Paid Family Leave: Military Members & Care Recipients. AB 2399 would, in Sections 3302 and 3307 of the Unemployment Insurance Code, define “military member” for—and revise definitions of “care recipient,” “care provider,” and “family care leave” in—the family temporary disability insurance program (paid family leave). These definitions would apply for purposes of the employee’s “qualifying exigency” to covered active duty or call to covered active duty for members of the military.

CFRA Expansion. SB 1383 would expand CFRA to require businesses with as few as five employees to provide 12 weeks of mandatory family leave per year. SB 1383 would also expand family care and medical leave to include leave (1) to care for grandparents, grandchildren, siblings, domestic partners with a serious health condition (in addition to existing leave to care for a parent or spouse), and (2) because of a qualifying exigency related to covered active duty or call to covered active duty of an employee’s spouse, domestic partner, child, or parent in the US Armed forces. SB 1383 would also expand the definition of child to include child of a domestic partner.

Victims Protected Time Off. AB 2992 would amend Labor Code sections 230 and 230.1 to expand the prohibition on discrimination or retaliation against employees for taking time off who are victims of domestic violence, sexual assault, or stalking to include “or other crime or abuse” “that caused physical injury or that caused mental injury and a threat of physical injury” and “a person whose immediate family member is deceased as the direct result of the crime.” AB 2992 would define “crime” as “a crime or public offense as set forth in Section 13951 of the Government Code, and regardless of whether any person is arrested for, prosecuted for, or convicted of, committing the crime.”

Supplemental Paid Sick Leave & Small Employer Family Leave Mediation. AB 1867 would codify Executive Order N-51-20 related to sick leave for food sector workers, requiring a hiring entity to provide a number of hours of COVID-19 supplemental paid sick leave to each food sector worker who is unable to work due to specified reasons relating to COVID-19. AB 1867 would also establish COVID-19 supplemental paid sick leave for certain workers employed by private businesses of 500 or more employees, or persons employed as certain types of health care providers or emergency responders by public or private entities. The rate of compensation would be the highest of the worker’s regular rate of pay in the last pay period, the state minimum wage, or an applicable local minimum wage, up to daily and aggregate total maximum payments. AB 1867 would require the Labor Commissioner to make publicly available a model posting relating to COVID-19 supplemental paid sick leave for covered workers, and would allow this notice to be provided by electronic means in lieu of posting if the hiring entity’s covered workers do not frequent a workplace. These provisions would expire on December 31, 2020, or upon the expiration of any federal extension of the Emergency Paid Sick Leave Act established by the federal Families First Coronavirus Response Act, whichever is later.

AB 1867 would also, under certain circumstances, require the DFEH to create a small employer family leave mediation pilot program, which would authorize a small employer or the employee to request all parties to participate in mediation through the DFEH’s dispute resolution division within a specified timeframe. Under the program, an employer or employee may require that the parties participate in DFEH mediation if: (1) the DFEH issues a right-to-sue notice to an based on a DFEH complaint that is related to family leave and ( 2) the named employer has between 5-19 employees. AB 1867 would prohibit an employee from pursuing civil action until the mediation is complete, and would toll the statute of limitations for the employee, including for additional related claims, from receipt of a request to participate in the program until the mediation is complete. These provisions would be repealed on January 1, 2024.

AB 1867 is an urgency statute, which would go into effect immediately upon the Governor’s approval. The sick leave provision of the measure, however, would not be effective until 10 days after the Governor signs the measure. A similar budget trailer bill, SB 822, did not make the cut.

Unemployment: State of Emergency Rehire of Laid Off Employees. AB 3216 would require certain employers to offer employees who were laid off due to a state of emergency job positions that become available and for which the laid-off employees are qualified, based upon a preference system, and in accordance with certain timelines and procedures. According to Cal Chamber, AB 3216 would impose an onerous and stringent process for specific employers to return employees to the workforce, which would delay rehiring and subject employers to litigation for any alleged mistakes. An 11th-hour amendment removed a private right of action, leaving enforcement of AB 3216 exclusively a matter for the DLSE. AB 3216 establishes a new section of the Labor Code such that any violation could subject a business to liability under PAGA.

Workers’ Compensation: COVID-19. SB 1159 would create a rebuttable presumption that an employee contracted COVID-19 in the workplace if certain circumstances are met for purposes of workers’ compensation.

Employers: Annual Report: Pay Data. SB 973 would provide that private employers with 100 or more employees required to file the federal annual Employer Information Report (EEO-1) must also—on or before March 31, 2021, and each year after—submit a pay data report to the DFEH that states the number of employees by race, ethnicity, and sex in the following categories: all levels of officials and managers, professionals, technicians, sales workers, administrative support workers, craft workers, operatives, laborers and helpers, and service workers. SB 973 would require the DFEH to make the reports available to the DLSE upon request and to maintain the pay data reports for at least 10 years, and would authorize the DFEH to seek an order requiring non-reporting employers to comply. SB 973 would prohibit any officer or employee of the DFEH or DLSE from making public any individually identifiable information obtained from the report prior to the institution of certain investigation or enforcement proceedings, and would require the EDD to provide the DFEH with the names and addresses of all businesses with 100 or more employees. SB 973 is a repeat of SB 171 (2019, held in committee), SB 1284 (2018, held in committee) and AB 2019 (2017, vetoed). Critics say that SB 973 would require California companies to report potentially incomplete or misleading pay data that the companies’ adversaries could use to falsely claim wage disparities.

Entertainment Industry: Age-eligible Minors Sexual Harassment Training. AB 3175 would amend Section 1700.52 of the Labor Code to require that a parent or legal guardian accompany age-eligible minors during employer-provided sexual harassment training made available online by the DFEH, and certify to the Labor Commissioner that the training has been completed. AB 3175 is an urgency statute, which would go into effect immediately upon the Governor’s approval.

Settlement Agreements: No-hire Provisions. Existing law, Section 1002.5 of the Code of Civil Procedure, prohibits no-hire provisions in settlement agreements unless the employer has determined in good faith that the aggrieved person engaged in sexual harassment or sexual assault. AB 2143 would revise that law to require that the employee filed the claim in good faith for the prohibition to apply, and that the employer document the determination of sexual assault or sexual harassment before the aggrieved person filed the claim. AB 2143 would also expand the exceptions to the no-hire provision prohibition to include a determination that the aggrieved person engaged in any criminal conduct, in addition to the existing sexual harassment and sexual assault exceptions.

DLSE Complaints Statute of Limitations. AB 1947 would amend Section 98.7 of the Labor Code to extend the deadline for filing Labor Commissioner complaints from six months to one year after a violation and to amend Section 1102.5 of the Labor Code to authorize courts to award reasonable attorney’s fees to plaintiffs who bring a successful Section 1102.5 whistleblower action. Critics say AB 1947 would undermine administrative resolution of whistleblower cases by authorizing attorney’s fees for retaliation claims, thereby incentivizing litigation over resolution. Governor Newsom vetoed similar legislation last year, which we blogged on previously.

OSHA: COVID-19 Awareness. AB 2043 would require Cal-OSHA to disseminate information on best practices for COVID-19 infection prevention in English and Spanish, together with other awareness and prevention measures, targeted at and to be easily understood by agricultural employees from a variety of ethnic and cultural backgrounds. AB 2043 provisions would expire when the state of emergency has been terminated by the Governor or Legislature. Adds and repeals Labor Code Section 6725. AB 2043 is an urgency statute, which would go into effect immediately upon the Governor’s signing.

Labor Commissioner: Required Disclosures. SB 1102 would amend Section 2810.5 of the Labor Code to provide that the notice employers are to provide at the start of employment must contain information regarding the existence of either a federal or state emergency or disaster declaration issued within 30 days prior to the employee’s first day of employment that may affect health and safety during the employee’s employment. SB 1102 would also add Sections 2810.6 and 2810.65 to the Labor Code, aimed at foreign agricultural workers, which are patterned after existing California law that requires employers to provide basic wage and hour information to all employees at the time of hire, and which add new disclosure requirements with respect to H-2A farmworkers who are brought into California for work in agriculture on a temporary basis.

Mandated Reporters: Human Resource Employees. AB 1963 would amend Section 11165.7 of the Penal Code to expand the list of mandated reporters to include human resource employees of a business of five or more employees that employs minors, as well as adults whose duties require direct contact with and supervision of minors in the performance of the minors’ duties in the workplace. AB 1963 would require those employers to provide mandated reporters with training on identification and reporting of child abuse and neglect.

Direct Patient Care Employees: Educational Programs and Training Costs. AB 2855 would require employers to reimburse employees providing direct patient care or an applicant for direct patient care employment for the costs of any employer-provided or employer-required educational program or training.

Worker Classification: Employees and Independent Contractors. AB 2257 would recast and revise the provisions added by AB 5, to exempt bona fide business-to-business contracting relationships from the law’s application, as well as to add industry-specific exemptions (including proofers and record directors, persons who provide underwriting inspection, home inspectors, and individuals who contract for the purpose of providing services at a single-engagement event), and to clarify existing industry-specific exemptions.

New Mandated COVID-19 Reporting. AB 685 would require employers, within one business day of receiving notice of potential exposure to COVID-19 by an employee, to: (1) provide written notice to all employees and the employers of subcontracted employees who were on the premises at the same worksite, (2) provide all employees who may have been exposed and their exclusive representative with information regarding COVID-19-related benefits, including, but not limited to, workers’ compensation, COVID-19-related leave, company sick leave, state-mandated leave, or supplemental sick leave, and (3) notify all employees, the employers of subcontracted employees, and the exclusive representative on the disinfection and safety plan the employer intends to implement.

FAILED TO MAKE THE CUT

Workers’ Compensation. AB 196 would have created a presumption that contraction of COVID-19 by all essential workers is a workplace injury for purposes of workers’ compensation. Died on Senate floor.

Telecommuting Act. AB 1492 would have prohibited an employer from retaliating against an employee who seeks reimbursement or indemnification for the allowable expenses. August 2020 committee hearing canceled at request of author.

Bereavement Act of 2020. AB 2999 would have required employers with 25 or more employees to grant employees up to 10 business days, and those with fewer than 25 employees up to 3 business days, of unpaid bereavement leave upon the death of a spouse, child, parent, sibling, grandparent, grandchild, or domestic partner. It also would have prohibited an employer from interfering with an employee exercising his/her right to take this leave, and authorized filing of a complaint with the DLSE or a civil action for reinstatement, specified damages, attorneys’ fees. It would have contained a CBA exemption. Held in committee in July 2020.

Paid Sick Leave: Behavioral Health Conditions. AB 1844 would have specified that “existing health condition” also includes “existing behavioral health condition” purposes for paid sick leave. Held in committee in May 2020.

AB 5 Independent Contractors. AB 1850 was originally drafted to remove the submission cap previously required for the AB 5 exemption for photographers, photojournalists, freelance writers, editors, and newspaper cartoonists. As amended, the bill would have expanded exemptions for certain industries and revived the business-to-business exemption so that it can apply to an individual worker, revised referral agency exemption, and add other industry-specific exemptions. Held in committee in July 2020.

Predictive Scheduling. SB 850 would have required a grocery store, restaurant, or retail employer to provide work schedules at least seven calendar days prior to the first shift on that schedule; pay employees modification pay for each previously scheduled shift that the employer cancels and each unscheduled shift that the employer requires an employee to work, or for each on-call shift for which an employee is required to be available but is not called in to work that shift; and post a poster regarding an employee’s right to receive modification pay, which the Labor Commissioner would have been required to create and make available. May 2020 committee referral rescinded due to shortened legislative calendar.

Wage Statements: Notice & Cure. SB 1129 would have required an employee alleging a violation of the itemized wage statement provision of Section 226 of the Labor Code to provide written notice employer, including the facts and theories to support the alleged violation, and would have allowed the employer 65 calendar days to cure the violation. The bill would have limited the amount of penalties that could be recovered to $5,000 if the aggrieved employee did not suffer actual economic or physical harm. May 2020 committee referral rescinded due to shortened legislative calendar.

PAGA Reform. AB 2530 would have required employees asserting PAGA claims to identify which provisions of the Labor Code are allegedly violated and inform the employer if there is a statutory right to cure. Stalled in committee in March 2020.

Medical Cannabis: Discrimination and Accommodation. AB 2355 would have made it an unlawful for employers to discriminate against employees who are qualified patients for purposes of medical cannabis and would have required employers to grant employees who use medical cannabis the reasonable accommodation rights held by workers who are prescribed other legal drugs. Hearing postponed by committee in March 2020.

FEHA Standard of Proof. AB 2947 would have provided that an intentional violation of FEHA regarding employment occurs when a person intends to discriminate using any of the protected characteristics of any person as a motivating factor in the employment action or decision even though other factors may have also motivated the action or decision, as proven by direct or circumstantial evidence. AB 2947 also would have also required an employer to maintain records of employee complaints for at least five years. Held in committee March 2020.

Settlement Agreement Confidentiality Revision. SB 1135 would have provided that, in sex harassment cases, a court may no longer consider “other findings of the court,” and may only rely only on the record itself, in determining the factual foundation for civil damages for violation of the law prohibiting confidentiality clauses in sexual harassment settlement agreements. Held in committee in March 2020.

Employment Tests and Selection Procedures. SB 1241 would have created a presumption that an employer’s decision relating to hiring or promotion based on a test or other selection procedure is not discriminatory if the test resulted in an increase in the hiring or promotion of a protected class compared to prior workforce composition. Stalled in committee in March 2020.

Garment Manufacturing. SB 1399 would have potentially exposed persons or entities contracting for the performance of garment manufacturing to joint and several liability with any manufacturer and contractor for the full amount of unpaid wages, any other compensation, damages, and penalties to any and all employees who performed garment manufacturing operations for any violation, liquidated damages, attorney’s fees, and civil penalties. The measure would have also eliminated piece rate compensation in the garment industry. Held in committee in August 2020.

Website Accessibility. AB 2123 would have authorized recovery of statutory damages based upon the inaccessibility of an internet website only if the business establishment fails to provide equally effective communication or to facilitate full and equal enjoyment of the entity’s goods and services to the public and if the plaintiff personally encountered a barrier to accessing the website or have been deterred from accessing all or part of the website of a place of public accommodation. Hearing cancelled at request of author May 2020.

Labor Disputes. AB 3240 would have prohibited an employer of 100 or more employees from terminating, reducing, or modifying the employer’s contribution to an employee’s health care coverage while the employee is engaged in a lawful strike. Hearing canceled in May 2020 at request of author.

Gender neutral retail departments. AB 2826 would have required a retail department store with 500 or more employees to maintain undivided areas of its sales floor where, if it sells childcare articles, children’s clothing, or toys, all childcare items, all clothing for children, or all toys, regardless of whether a particular item has traditionally been marketed for either girls or for boys, are displayed. Failure to adhere after receiving written notice from the Attorney General would have resulted in a civil penalty of $1,000. Never made it to first committee in February 2020.

Pink Tax Bill. SB 873 would have prohibited a business establishment from discriminating against a person because of gender with respect to the price charged for any two consumer products from the same manufacturer that are substantially similar if those products are priced differently based on the gender of the individuals for whose use the products are intended or marketed, as specified. Referral to committee rescinded due to shortened 2020 Legislative Calendar.

Meal and Rest Breaks for Remote Work. SB 729 as originally drafted would have codified Executive Order N-51-20 related to COVID paid sick leave. At the 11th hour of session, it was “gutted and amended” to instead prohibit an employee from recovering civil penalties under Labor Code Section 2699 for meal and rest break violations, if the employee is engaged in remote work during the COVID-19 pandemic. Held in committee in August 2020.

Independent Contractor Status. SB 806 would have added flexibility to the ABC test so that individuals who choose to be independent contractors can continue to work and earn income and SB 900, the Senate’s version of AB 2257, would have provided similar exemptions. Held in committee May 2020.

Workplace Solutions

These bills are affecting businesses across the spectrum, and Seyfarth is following their passage (and potential passage) closely. We will continue to keep you informed of new developments as they arise, and please do not hesitate to reach out to your favorite Seyfarth counselors to discuss how to approach these new developments for your company.

Edited by Coby Turner

 

Seyfarth Synopsis: As several counties struggled to get, and remain, off of the California County Data Monitoring List, Governor Newsom unveiled a new framework with revised criteria for loosening and tightening COVID-19 restrictions that replaces the monitoring list altogether. This shift brings with it the reopening of some non-essential indoor activities and the re-closure of others.

On the afternoon of Friday, August 28, 2020, Governor Newsom announced California’s Blueprint for a Safer Economy, replacing the California County Data Monitoring List that previously dictated what businesses and activities were allowed to operate. The State’s new COVID-19 guidance imposes risk-based criteria on loosening (and tightening) restrictions on permitted activities. The Blueprint also expands the length of time between restriction modifications to allow the State time to assess how any modification impacts the trajectory of the disease. Under the Blueprint framework, effective Monday, August 31, 2020, some non-essential indoor business operations were given the green light to reopen and others were forced to close.

Phoenix Tears Won’t Help Shed These Tiers

The State Public Health Officer issued a new order on August 28, superseding the previous July 13 order and further explaining how the Blueprint will be implemented. Built on a 4-tier system, the Blueprint contains four colors, ranging from Purple Tier 1 where the risk of community disease transmission is highest (or “widespread”) to Yellow Tier 4 where the risk of community disease transmission is lowest (or “minimal”):

Available at Blueprint, Tier Framework (Last visited September 1, 2020).

Not The Marauder’s Map You’re Used To

With the new framework comes a simpler means of keeping Californians informed as to where their county falls and what activities are allowed in each county. The State’s county tracking webpage offers up-to-date information on different counties’ tier statuses. Users can search by county and activity to see whether a particular business or activity is currently permitted. The page also offers a color-coded map and includes statewide metrics.

Hand Me My Time-Turner

The State will conduct weekly assessments of indicator data beginning on September 8, 2020, and will release updated tier statuses every Tuesday. The key indicator data is case and positivity rates, but the framework also takes into account equity metrics assessing data collection, testing access, and contact tracing for California communities most impacted by the virus. Unless the Public Health Officer specifies otherwise, there is a mandatory 21-day waiting period before a county can move between tiers, and counties may only progress one tier at a time, even if their metrics qualify for a more advanced tier. If a county’s metrics fall into two different tiers, the county will be assigned to the more restrictive tier. If a county’s indicators dip to a more restrictive tier’s metrics for two consecutive weeks, the county tier status will be demoted and, within 3 days, the county must implement the enhanced restrictions.

Additionally, local health jurisdictions may continue to implement or maintain more restrictive public health measures if their Local Health Officer determines that health conditions in that jurisdiction warrant such measures.

Workplace Solutions

Navigating the constant COVID-19 policy changes in California can be more complicated than traversing the travails of the Triwizard Tournament. But luckily, Seyfarth continues to closely monitor California COVID-19 developments for you. Please be sure to visit our COVID-19 Resource Center, or contact your favorite Seyfarth attorney directly if you have any questions.

 

Edited by Coby Turner

Seyfarth Synopsis: As employers expected, the pandemic has brought new challenges to managing a workforce, and of course, new litigation. Here we address hotspots of COVID-19 litigation in California to help employers know where they should be taking special care.

Participants on either side of recent employment litigation in California can often point to the same scapegoat: “COVID made me do it.” Most recent pandemic-related claims fall into one of two categories: (1) Employees were forced to resign, forced to take a leave, or terminated for voicing concerns about the lack of health and safety protocols; and (2) employees were laid off ostensibly because of COVID-necessitated business changes, but actually because of something more nefarious.

Workplace Safety and Whistleblower Retaliation: The New Fall Guy

In the first category of claims, employees present themselves as “whistleblowers” who reported the lack of workplace protocols or the employer’s outright refusal to follow CDC and state guidelines or orders. These employees contend that they lost their jobs as a result, either through dismissal or because of a work environment so hostile that they had to resign. Some employees also claim they were terminated for taking a leave that was necessitated by their employer’s failure to provide COVID-19 precautions.

Employers can help protect themselves from these claims by being cognizant of the ever changing safety guidelines and orders, and ensuring they have an appropriate plan for return to work. Seyfarth has developed Return to Work Guidelines to assist with this process, and it has a dedicated team of attorneys on its COVID-19 Task Force who monitor legal and safety developments so that employers can ensure appropriate protocols are instituted, and the workplace is as safe as it can be in these trying times.

Excuses, Excuses: COVID-19 as a Pretext for Termination

In the second category of claims, employees contend that they were discriminated, harassed, or retaliated against because they belong to a protected class, even though the company has explained their job loss in terms of COVID-19’s impact on the business. These employees claim, in other words, that employers have used COVID-19 as an excuse to get rid of unwanted employees.

While it’s difficult to prevent these types of claims, employers can prepare to defend them by taking appropriate steps up front, and following best practices (some of which we have addressed here). Most importantly, employers should ensure that any layoffs stemming from COVID-19 are determined through non-discriminatory methods that do not unintentionally affect one group of people more than another. The same careful preparation is helpful when employers need to reduce salaries or change compensation plans.

Don’t Be Duped: Accommodation Requests in COVID Times

As the pandemic drags on and schools go back in session, accommodation requests will be the new trend of the day. Employees will want time off, modified schedules, or work-at-home arrangements in order to care for someone who is ill, to care for children whose schools have gone remote, or to protect themselves because they consider themselves at risk and are anxious about returning to the workplace.

Employers must carefully navigate these requests in light of the Families First Coronavirus Response Act, as well as other state, county, and local sick leave or safety ordinances (a few of which we have blogged about here). Employers will also face increased pressure to determine which job duties are absolutely essential, as some high-risk employees may contend they are unable to participate in face-to-face meetings, or require modified hours because of childcare needs or other hardships. Employers must strike the careful balances needed to accommodate employees while meeting business needs. Although these types of claims make up a small portion of current litigation, we anticipate they will increase as more companies return employees to the workplace.

Workplace Solutions

COVID-19 has already re-shaped the landscape of employment litigation and workplace policies. It will only continue to do so as state and local regulations evolve and as employers and employees alike find new ways to meet business needs. We will continue to monitor the shifting litigation landscape, both in California and nationally, to provide guidance for clients preparing for further success in the COVID-19 setting. If you have any questions, be sure to visit Seyfarth’s Beyond COVID-19 Resource Center, and please do not hesitate to reach out to your Seyfarth counsel.

Seyfarth Synopsis: As the number of class actions alleging FCRA violations continues to skyrocket, it is critical for California employers to understand the basics of all laws affecting employment screening programs. This blog examines those laws and provides practical considerations for employers looking to hire or rehire employees during a shutdown affecting critical sources of information needed for background checks.

While Covid-19 has inspired shutdowns of many businesses, “essential businesses” in the retail and healthcare industries and elsewhere need to hire employees as fast as ever. These companies face a problem: the shutdowns have limited public access to the most common sources of information for background checks. What are California employers to do when needing to onboard employees pending completion of a background check in the face of a pandemic?

California is notoriously rife with regulation as to how employers may obtain and consider background check information for hiring and personnel decisions. (California also regulates employer use of credit reports for employment purposes. For more on Lab. Code § 1024. 5, see our blog California Employers: Beware The Background Check Bugaboos.) Given the risk of litigation in an environment where such claims have skyrocketed, we begin by reviewing the technical requirements employers must follow when ordering background checks and making decisions based on the information they contain, and we then address practical steps to take.

The FCRA Applies—Even During a Pandemic

Don’t ignore federal and state background check laws while waiting for the dust to settle on this pandemic! Here is what employers need to know about these requirements.

Generally speaking, before an employer may obtain a background check (also called a “consumer report”) from a third-party background check provider (also called a “consumer reporting agency”), the employer must make a clear and conspicuous written disclosure to the individual that a background check may be done. In fact, the document must consist “solely” of the disclosure. California’s fair credit reporting statute also requires a separate, stand-alone disclosure, which cannot be combined even with the federal FCRA disclosure. The candidate or employee must also provide written consent for the employer to obtain a background check report. Different requirements exist for “investigative consumer reports” (those based on interviews of the individual’s friends, neighbors and associates), and for employers regulated by the Department of Transportation (depending on their hiring practices). Be sure to know what requirements affect you!

What if the background check raises a concern? Before taking any “adverse action” (such as rescinding a conditional job offer or discharging an employee), the employer must provide the individual with a “pre-adverse action” notice and a copy of the report and the Consumer Financial Protection Bureau’s Summary of Rights. This notice gives the individual an opportunity to discuss the report with the employer before the employer takes an adverse action. Once the employer is prepared to take the adverse action, it must then give the individual an “adverse action” notice, containing certain FCRA-mandated text.

What if an employer orders a background check on a current employee and discovers a disqualifying conviction? The employer cannot immediately dismiss the employee. Even in those circumstances, the employer still must provide the employee with a pre-adverse action notice. But the employer must also decide whether to allow the employee to continue to work or place the employee on an administrative leave pending the waiting period. Both options pose risks, and employers faced with this scenario should work with experienced counsel before proceeding.

California employers that utilize criminal history information for employment purposes must also consider state and local laws that impose additional compliance obligations, regardless of whether the information comes through a consumer reporting agency.

California’s Ban-the-Box Law Restricts Uses of “Criminal History”

California’s statewide ban-the-box law (Gov’t Code § 12952) requires employers with five or more employees (subject to few exceptions) to follow certain procedures when requesting and using criminal history information for pre-hire purposes. Specifically, regardless of the source of the criminal history information, employers must:

  • Wait until after a conditional offer of employment to inquire about criminal history. This requirement applies to asking candidates directly whether they have been convicted of a crime, to ordering a criminal history background check, and to making any other inquiry about a candidate’s criminal history.
  • Conduct an individualized assessment of a candidate’s conviction to determine whether the conviction has a “direct and adverse relationship with the specific duties of the job that justify denying the applicant the position. ” California law does not require employers to provide the candidate with their assessment.
  • Notify the applicant of any potential adverse action based on the conviction history. The notice must identify the conviction, include a copy of any conviction history report (regardless of the source), and state the deadline for the candidate to provide additional information, such as evidence of inaccuracy, rehabilitation, or other mitigating circumstances.
  • After waiting the requisite time period, notify the candidate of any final adverse action, of any existing procedure the candidate has to challenge the decision or request reconsideration, and of the candidate’s right to file a complaint with the Department of Fair Employment and Housing.

Note: the California notices are required even if the employer doesn’t order criminal background check reports from a consumer reporting agency, but instead learns of the criminal history from a different source (such as a candidate self-disclosure). This California peculiarity differs from the FCRA pre-adverse and adverse action notices, which are required only if the adverse decision is based on information obtained from a background check report from a consumer reporting agency.

Substantively, a wide range of criminal records are off-limits to California employers (unless the employer qualifies for very narrow exceptions identified in the Labor Code). Records that cannot be used are:

  • arrests that did not lead to a conviction,
  • non-felony marijuana convictions that are older than two years,
  • juvenile records, and
  • diversions and deferrals.

As if California laws weren’t challenging enough, employers hiring in Los Angeles and San Francisco must also look to the ban-the-box ordinances of these jurisdictions, which contain even more requirements. Our previous blog on the specific requirements in Los Angeles and San Francisco can be found here.

COVID and Background Checks

How does COVID factor into all of this? Unfortunately, the sources of information that typically appear in background checks are now quite hard to access. Many courts, businesses, and schools are either closed or limiting access to information, thereby challenging background check providers that want to check public records and verify educational credentials and prior employment. As a result, reports may show search categories as “pending,” leaving the employer in the dark about a candidate’s background.

Employers confronted with this dilemma have a few issues to consider:

  • Should the employer change the types of information it orders from a background check provider? For example, employers may consider foregoing an educational and employment verification check, but continuing with a criminal history or motor vehicle records check. Likewise, employers that have created new driving positions to deliver their goods directly to consumers during the pandemic might consider adding a motor vehicle records check to their process.
  • If the “pending” item relates to criminal history, are there ways to expedite this search? If the only “pending” item in the background check relates to a criminal record search, one option is to also present candidates with a post-offer criminal history questionnaire, which asks the candidate to self-disclose their criminal history (e. g. , “have you been convicted of a crime?”). If an employer elects this option, it should ensure that the form instructs candidates of the types of information they need not disclose (e. g. , non-convictions, non-felony marijuana convictions older than two years, etc. ), and requires the candidate to verify the accuracy of the information reported in the event the completed background check reveals a conviction that should have been reported.
  • Will employers allow candidates to start work before completion of their background check? California law does not prohibit employers from onboarding candidates pending their background checks. But employers might be reluctant to do so because they know nothing about the candidates’ backgrounds, and cannot assess whether the candidates will pose a risk to property, employees, or customers. If an employer decides to onboard a candidate pending the background check, the employer should state in the offer letter that the background check might not be cleared before the applicant starts work and that employment remains contingent on the employer receiving satisfactory results, whenever that might be.
  • Can employers dismiss employees because of background checks? As explained above, the FCRA and California law require a two-step notice process before rejecting candidates or dismissing employees based in whole or in part on information revealed in the background check report. Accordingly, employers cannot summarily dismiss employees because of an unsatisfactory background check, even if the offer letter is clear that employment remains contingent on the background check results.
  • If an employee works for a while without incident, how should negative information ultimately revealed in the background check be evaluated? Whether employers are evaluating criminal records pre-hire or during employment, employers should always conduct individualized, job-related assessments before taking action against someone because of that record. An important consideration in that assessment is the individual’s employment history since the conviction. If an employer hires an employee with a pending criminal history background check but later discovers the employee has a conviction, the employer must consider the employee’s job performance during this waiting period as part of the job-related assessment.
  • If an employee returns from a leave of absence or a furlough, should the employer order a new background check? A lot has happened during the last several months, and it may well be that returning employees might have been convicted of a crime while on leave or furlough. California employers can rescreen returning workers. But employers should first consider reviewing their disclosure and authorization process to confirm that they still comply with the FCRA and California law. As we previously reported here, the Ninth Circuit continues to issue decisions against employers over hyper-technical defects in their disclosure forms.

California Workplace Solutions

Class actions against employers for failing to follow background check requirements have become notorious and we don’t see that trend changing even after the pandemic. Thus, California employers will want to conduct (privileged) assessments to strengthen their compliance with the myriad laws that regulate the use of an individual’s criminal history. Suggested next steps include:

  • Assess coverage under the California, Los Angeles, and San Francisco ban-the-box laws.
  • Review job advertisements and postings both for unlawful and mandatory language regarding criminal history.
  • Review job applications and related forms for unlawful inquiries regarding criminal history.
  • Train employees who conduct job interviews and make or influence hiring and personnel decisions, regarding inquiries into, and uses of, criminal history, including best practices for documentation and record retention.
  • Review the hiring process to ensure compliance, including the timing of criminal history background checks, the distribution of mandatory notices, and the application of necessary waiting periods.

More specific to the COVID pandemic, employers that onboard employees pending completion of their background check also should consider:

  • Modifying offer letters to explain to new employees that their continued employment remains contingent on successful completion of the background check, regardless of when the check clears.
  • Periodically checking with background check providers regarding the status of pending background checks.
  • Providing a new background check disclosure and obtaining another authorization from an employee if the delay might result in ordering a new check or if the employer is re-screening employees returning from a leave of absence or furlough.
  • Preparing for the possibility that action might need to be taken against a current employee because of information in a background check report.

If you have any questions about these issues or conducting a review of your current forms and practices, please do not hesitate to reach out to your Seyfarth counsel.

Edited by Elizabeth J. MacGregor

Seyfarth Synopsis: While employers usually don’t need to pay for travel time associated with an employee’s ordinary commute, federal and California law create exceptions that employers should know—particularly when company policy requires a certain type of transportation.

For many of us, automobile traffic—at least during the B.C. (before covid) era—has been as synonymous with California as its sunny weather and ocean beaches. Many businesses have adopted creative policies to help mitigate the stress that traveling employees face, but these policies sometimes create unintended costs by requiring businesses to pay for the travel time.

When Is Travel Time Compensable?

Generally, employees aren’t entitled to pay for their ordinary commute to and from work. There are, however, some notable exceptions under federal and state law.

Federal law, for instance, requires employers to pay for time spent on three types of travel: (1) to another city for a special one-day assignment, (2) to another job site during the workday, and (3) to receive instructions, perform work, or retrieve tools. But federal law doesn’t require employers to pay workers for their time spent commuting in an employer-provided bus or in a mandatory carpool.

On this point, California differs from federal law in an important way. Under the California Supreme Court’s decision in Morillion v. Royal Packing Co., employers must pay for “compulsory travel time”—time employees spend traveling on and waiting for transportation required by an employer. In Morillion, the employees were entitled to pay for travel time because their employer required them to take an employer-provided bus between a designated point and the work site and prohibited them from using their own transportation, even though they were free to pursue personal activities on the bus ride itself.

Also, in California, even if employees use personal vehicles for their commute, they may be entitled to pay for travel time if they are required to carry tools or employer equipment in their vehicles between home and job sites, if they are effectively prevented from using the commute for their own purposes.

These rules about compensable commute time in California have their limits, though. Employers need not pay for the time employees spend traveling on transportation that their employer merely provides but does not require them to use. Similarly, employees aren’t entitled to paid travel time simply because they travel in a company vehicle. However, California law does require employers to pay for travel time if use of a company vehicle is mandatory and is subject to rules that severely restrict the employee’s personal activities, such as prohibiting the employee from making stops or carrying passengers.

For example, a tech company offering an employee shuttle between San Francisco and Silicon Valley probably doesn’t need to pay employees for travel time, so long as the shuttle use is optional and the employees can pursue personal activities during the ride. Conversely, the outcome would likely differ if the employer required employees to meet at a designated spot and take a ride-share vehicle to the work site.

How Is Compensable Travel Time Calculated?

Usually, compensable travel time is calculated at the employee’s hourly rate (with a higher rate for overtime, if applicable). But employers and employees may agree to a separate rate for travel time if they agree before the travel and the separate rate is at least the minimum wage (with a higher rate for overtime, if applicable).

Is Travel Time Between Job Sites Compensable?

Travel time during the workday is usually compensable if the travel is required by the employer. For instance, employees are generally entitled to pay for travel time between different job locations.

But is the entire travel time compensable? Well, it depends. Because employers need only pay for time under their “control,” they need not pay for time associated with an employee’s purely personal pursuits.

Suppose an employee travels an hour and a half between job sites—spending 45 minutes driving and the other 45 minutes getting a haircut or viewing memes online (maybe, even both). The employer must pay only for the 45 minutes of driving time. In practice, however, identifying and segregating purely personal time can be a difficult task.

When Is Temporary Reassignment Compensable?

According to the DLSE, California law requires employers to pay travel time if they require an employee, on a short-time basis, to travel anything more than a minor distance to report to a worksite other than the employee’s usual workplace. This pay is calculated as the additional time (and not distance) normally required to travel between the employee’s home and the regular workplace, and the time between home and the temporary worksite.

But a long-term transfer to a different work site—even if distant—is treated differently. The DLSE has stated that absent any contractual term, employers need not pay for travel time to a new location so long as the transfer lasts more than one month (travel to the new location becomes the employee’s “ordinary commute” after one month).

Remember to Reimburse!

Employers should always remember to reimburse employees when appropriate. Under Labor Code § 2802, employers must reimburse employees for all necessary expenses incurred in connection with employer-required travel. A prime example is reimbursement for mileage for travel between different job locations in a single workday.

Workplace Solutions

Payment for travel time for employees can definitely cause some employers to hit bumps in the road. For more information on this or any related topic, please contact the authors or your Seyfarth attorney.

Edited by Coby Turner

Seyfarth Synopsis: The controversy surrounding AB 5 unveiled a clear need for a new avenue of classifying so-called gig workers to combine the certainty of employee designations with the flexibility of gig jobs. What are the promises of and prospects for a hybrid classification that would provide workers with some employee benefits while also providing workers and companies some of the freedom and efficiencies observed in a gig economy? Can we see what the future will hold? This post explores some possibilities.

In the exceptionally popular Game of Thrones series, the third eye of the indispensable Three-Eyed Raven symbolizes perception beyond ordinary sight, or a third way. This need for future thinking and a third way has become increasingly more important in California when it comes to worker classifications.

By now, everyone knows all about AB 5: its legacy, its controversy, the numerous legislative exceptions it has inspired, the myriad court battles it has provoked, and the responsive initiative that has qualified for the November 2020 ballot. Indeed, not only have we written extensively on the measure, we also have our own tag dedicated exclusively to the issue. So what is the future of the gig economy in California? Is there a workable “third” way of classifying workers in the gig sector. While answering that question requires prescience beyond the mortal ken, we will put on our best “Three-Eyed Raven” hat to foresee some possible roads the future of the gig economy may take.

“I Have Been Many Things. Now, I Am What You See”—Piecemeal Legislative Changes

Many California gig businesses maintain they cannot survive if they must classify their drivers as employees under AB 5. The measure’s author, Lorena Gonzalez, insists the bill is not so bad for business. But if so why, then, are there a variety of stand-alone bills that would provide exemptions for at least 16 different industries?

Is a scattershot approach to legislation really the best solution? And must we choose between (a) dismantling the ABC test and AB 5 and (b) leaving AB 5 in place to require that all gig sector employees be classified as employees? Is there instead a third way—a hybrid classification that would provide the flexibility of the gig economy while ensuring that workers reap at least some benefits of employee status? This elusive third way has been discussed for years, but the controversies over AB 5 controversy may finally force the issue.

Meanwhile, the pandemic and the government’s response thereto—through the CARES Act and otherwise—may have played its own part in forcing the issue. The pandemic left gig workers particularly vulnerable, as independent contractors are normally ineligible for unemployment compensation. But the CARES Act gave them eligibility, limited by prior earnings.

“It Is Beautiful Beneath The Sea. But If You Stay Too Long, You’ll Drown”—Making A Dramatic Change

Drastic legislative changes to the employment marketplace have precedents. Industrial-era jobs were transformed during the Industrial Revolution when labor unions were empowered to negotiate for higher wages, shorter hours, and safer working conditions. Many believed these changes were too radical, but we’ve become accustomed to them. We may have seen a modern analog when the House passed the historic, $3 Trillion HEROES Act, which would make fundamental changes in the workplace.

“Look For Me…Beneath The Tree…North!”—Elusive “Third Way” Of Classifying Workers

So what would a “third classification” look like? One legislative option is SB 1039, authored by Senator Cathleen Galgiani. SB 1039 would “develop a modern policy framework that facilitates independent work for those who voluntarily choose it by creating a third classification of workers with basic rights and protections relative to work opportunities.” The stated rationale is that AB 5 has made it “increasingly obvious that a binary system for classifying workers as either independent contractors or employees is outdated and inapposite of the current reality of the labor market and work opportunities presented in the gig economy and the desire of workers seeking flexible working conditions.”

Despite SB 1039’s stated intentions, its substance has yet to take shape. Those crafting the measure might look to New York’s Freelance Isn’t Free Act, which took effect in May 2017. The Act requires an employment-type contract whenever a freelancer completes $800 worth of work, and provides freelancers with additional monetary remedies if a hiring party tries to avoid paying. The Act establishes a complaint procedure to be administered by the City and provides for a private right of action.

The Act does not, however, provide the employee benefits AB 5 does—such as a minimum wage, workers’ compensation, unemployment insurance, paid sick leave, and paid family leave. To address these concerns, SB 1039 could be amended to include such protections without going so far as pulling gig sector workers out of the IC designation and imposing on companies all the cascading Labor Code burdens that come along with an “employee” designation. For example, an amendment could tie benefits to hours worked, or to certain duties performed, or some combination of both.

“You Will Never Walk Again, But You Will Fly”—The Future Of Work

SB 1039 also refers to Governor Newsom’s Future of Work Commission, established via executive order. Although the pandemic has paused the Commission’s work, the Commission previously explored models to improve access to benefits tied to employment (e.g., paid time off, healthcare, training) for workers who have been excluded from certain benefits. Subjects that the Commission has investigated include portable benefits models and small groups that contribute to a centralized organization that provides access to benefits. Indeed, portable health benefits is one potential solution the Tech sector has suggested to ensure that gig workers have access to medical benefits. Once the Commission returns to work, its progress will be a good barometer for the future of the gig economy in California.

Undoubtedly, gig companies provide services that many consumers want, and many Californians want the flexibility these gig jobs offered prior to enactment of AB 5. In light of these realities, we hope to see the California Legislature find that sweet middle ground that promises some of the benefits of an employee classification while allowing for the flexibility typically associated with gig professions.

“The Time Has Come…Leave Me!”—Workplace Solutions

So what should employers consider, given the uncertain future of gig workers? Employers that use independent contractors must be sufficiently agile to adapt to a new classification—one that could cause additional administrative duties, but one that would also save resources and create efficiencies. With change likely to come, employers should be reviewing their practices regarding independent contractors to ensure they are in line with AB 5 now, and to prepare for legislative change. Just as the Three-Eyed Raven must move from mortal body to mortal body, employers must also be prepared to adapt to a potential third way of classifying workers.

Edited by Michael Wahlander

Seyfarth Synopsis: Effective July 13, 2020, California issued statewide restrictions on a number of business operations due to the resurgence of COVID-19. It ordered all bars to close for indoor and outdoor service, as well as indoor services for restaurants, wineries, and movie theaters. The State also closed fitness centers, non-essential offices, places of worship, hair salons, personal care services, and malls in at least 29 counties that have remained on the State’s watch list for at least 3 days.

On July 13, Governor Gavin Newsom announced the immediate closure of indoor operations of dine-in restaurants, wineries and tasting rooms, movie theaters, family entertainment centers, zoos and museums, and cardrooms statewide. Bars, brewpubs, breweries, and pubs statewide must close all operations—both indoor and outdoor—unless they offer outdoor sit-down, dine-in meals, and they may only sell alcohol with a meal. If operating outdoors, the State requires bars, pubs, brewpubs, and breweries to follow the dine-in restaurant guidance and encourages takeout and delivery services whenever possible.

The Governor further imposed restrictions on more businesses in counties that have remained on the state’s monitoring list for three consecutive days. Currently at least 29 counties are on the list, including some of the State’s most populous counties such as Los Angeles, San Diego, and Orange. For these counties, the Governor ordered the following businesses and activities to shut down, unless their operations can be modified to operate outdoors or to offer pick-up service:

  • Fitness Centers,
  • Worship Services,
  • Protests,
  • Offices for Non-Essential Sectors,
  • Personal Care Services (such as nail salons, body waxing and tattoo parlors),
  • Hair Salons and Barbershops, and
  • Malls.

Although the latest State directive has not expressly indicated which office workspaces fall under the category of “Offices in Non-Essential Sectors,” the California Department of Public Health’s concurrently issued Guidance directs businesses to refer to the State’s list of Essential Workforce, issued as part of the March 19 statewide shelter-in-place order.

California’s patchwork of county orders, frequently imposing stricter restrictions than the State, adds another layer of complicity to the analysis.  Non-essential businesses considering keeping their offices open in the identified counties should consult their local County and City Public Health Departments, as well as any local orders, to ensure compliance with the State’s order.

Workplace Solutions

For more information on best practices for reopening businesses, and to stay up-to-date on both state and local COVID-19 developments, be sure to visit Seyfarth’s COVID-19 Resource Center, or contact one of our experienced attorneys directly.

Edited by Coby Turner