Seyfarth Synopsis: Headlining the number of employment-related bills California legislators introduced by the February 19th deadline are those that would extend COVID-19 Supplemental Paid Sick Leave and provide other leaves and accommodations.

After last year’s pandemic-caused truncation of the 2020 legislative session—in which the governor signed only 372 new laws, the fewest since 1967—many expected the introduction of a large number of bills. Yet “only” 1,560 bills were introduced in the Assembly this year, the lowest number in six years—though there is no shortage of labor and employment-related bills.

Below, we summarize the most significant labor and employment bills introduced, which help mark the legislative playing field for California employers this year. The bills will now make their way through the committee process. Many of these measures will undergo significant amendment.  Some will make it through the legislative process and some will not. Stay tuned for more in-depth analyses of the proposed bills as the session continues.

Top COVID-19-Related Bills

Headlining our bill count this year are two bills designed to accomplish something employers have anxiously wondered about since the prior COVID-19 Supplemental Paid Sick Leave law (AB 1867 in 2020, which we summarized here) expired at the end of 2020.

COVID-19 Supplemental Paid Sick Leave: AB 84 & SB 95 are parallel budget trailer bills that would, effective immediately upon the Governor’s signature, extend the expiration date for COVID-19 supplemental paid sick leave (SPSL) for food sector workers (EO N-51-20), and other covered workers, to September 30, 2021, or any expiration of any federal extension of the EPSLA, and make the provisions retroactive to January 1, 2021. The bills would provide an annual allotment of up to 80 hours of available SPSL until the eventual expiration date. The bills would expand SPSL beyond people who leave their home to perform work to also include persons who telework.  The bills would also extend SPSL entitlements to reasons related to vaccinations, and similar to the now-expired FFCRA, it would expand coverage to those seeking medical diagnosis for COVID-19 symptoms, and caring for individuals who are quarantining or seeking medical diagnosis or whose school or place of care is closed due to COVID-19. The bill would also remove the 500-employee qualification for an entity to be subject to the law, add public employers generally to its application, and make other changes.

Rehiring and Retention of Displaced Workers: AB 1074, bringing back AB 3216 (2020) (which Governor Newsom vetoed), would require certain employers to offer preferential recall to employees who were laid off because of the pandemic. If an employer hires someone other than a laid-off employee, it must notify the employee within 30 days, providing specified reasons for the decision and information on those hired. The bill would additionally expand 2020’s Displaced Janitor Opportunity Act to hotel services employers, requiring successor contractors or subcontractors to retain employees for 60 days after transition, and continued employment for satisfactory performance.

COVID-19 Contact Tracing and Safety Policies: SB 46 would require employers to develop and implement contact tracing and safety policies for their employees, including requiring notice to the employer when an employee receives a positive COVID-19 test.

Pandemics Priority for Medical Treatment: AB 93 would prioritize workers in the food supply industry, such as field workers and grocery workers, for rapid testing and vaccination programs in response to pandemics, including COVID-19.

COVID-19 Rent Relief: AB 255 is earmarked to provide commercial rent relief protections for small businesses affected by the COVID-19 pandemic.

Spot Bills: Bills introduced without substance but to hold a “spot” into which amendments will later be made include AB 257, which creates a FAST Recovery Act to address the COVID-19 pandemic’s effect on the fast food industry. AB 757 would authorize a private employer to request prescribed documentation of a positive COVID-19 test or diagnosis if (1) an employee reports that the employee is unable to work due to a positive for COVID-19 test result and (2) the employer determines that an employee may be subject to a 14-day exclusion from the workplace as required under certain law or regulations. Employers must continue to comply with existing privacy protections when requesting documentation.

Discrimination and Retaliation Prevention

Political Affiliation Protection: SB 238 would add political affiliation as a protected characteristic under the FEHA.

Employment Discrimination: AB 1119 would expand FEHA-protected characteristics to include “family responsibilities,” defined as the obligations of an employee to provide direct and ongoing care for a minor child or a care recipient, and add it as a basis for which employers must engage in the interactive process and provide reasonable accommodation to an applicant or employee.

Cannabis Screening: Answering that question, “When will California ever get around to protecting marijuana users from employment discrimination?,” AB 1256 would prohibit employers from discriminating against a person in hiring, termination, or any term or condition of employment because a drug screening test has found the person to have tetrahydrocannabinol (THC) in their urine. (This bill would exempt employers required to drug test based on federal law or regulations, those that would lose monetary or licensing benefits for failing to drug test, and building and construction employers.)

Required Disclosures to Temporary Agricultural Workers: AB 857 would prohibit employers from retaliating against an H-2A employee for raising questions that relate to employment, housing, or working conditions. and would require an employer to provide an H-2A employee on the day the employee begins work in the state a written notice in Spanish and, if requested by the employee, in English, containing specified information relative to an H-2A employee’s rights pursuant to federal and state law. It would also require an employer to provide compensation for travel time at their regular rate of pay to or from employer provided housing to the worksite, as well as other requirements (with certain exemptions for employees covered by CBAs).

More Spot Bills: AB 1122 would encourage employers to develop and implement personnel policies that incorporate workforce diversity. AB 316  is aimed to achieve pay equity in state employment across gender, racial, ethnic, and under-represented groups.

Leaves

Bereavement Leave Act of 2021: AB 95 would require employers with 25 or more employees to grant employees unpaid bereavement leaves of up to ten business days, and would require employers with fewer than 25 employees to grant unpaid bereavement leaves of up to three business days. Leave entitlement would be triggered by the death of a spouse, child, parent, sibling, grandparent, grandchild, or domestic partner.

Employer Provided Backup Childcare Benefit: AB 1179 would require employers of 1,000 or more employees to provide employees, on or after January 1, 2022, with up to 60 hours of paid backup childcare benefits, to be accrued and used as provided. Accrued paid childcare shall carry over to the following year of employment. But, employers could limit use of the accrued paid backup childcare benefits to 60 hours during each year of employment.

Paid Sick Leave Accrual and Use: AB 995 would modify the employer’s alternate sick leave accrual method to require that an employee have no less than 40 hours of accrued sick leave or paid time off by the 200th calendar day of employment or each calendar year, or in each 12-month period. The bill would raise the employer’s authorized limitation on the employee’s use of carryover sick leave to 40 hours or 5 days.

Family Member Definition Expansion: AB 1041 would expand the definition of the term “family member” under the Healthy Workplaces, Healthy Families Act of 2014 (CA PSL) to include individuals related by blood or whose close association with the employee is the equivalent of a family relationship. The bill, in its current form, does not define how “close” an association must be to be considered the “equivalent of a family relationship.” The bill would also expand the universe of employees eligible to take CFRA leave, or Paid Family Leave (PFL) to care for to individual to include such a “close association.”

Paid Family Leave Weekly Benefit Increase: AB 123 would revise the formula for determining benefits available pursuant to the family temporary disability insurance program, for periods of disability commencing after January 1, 2022, by redefining the weekly benefit amount to be equal to 90% of the wages paid to an individual for employment by employers during the quarter of the individual’s disability base period in which these wages were highest, divided by 13, but not exceeding the maximum workers’ compensation temporary disability indemnity weekly benefit amount established by the Department of Industrial Relations.

Paid Family Leave Expansion Where Child Deceased In Childbirth: AB 867 would expand eligibility for benefits under the Paid Family Leave program by to include leave for a parent who was pregnant with a child, if the child dies unexpectedly during childbirth at 37 weeks or more of pregnancy.

Small Employer Family Leave Mediation Pilot Program: AB 1033 is a re-run bill that would attempt again to establish pilot program for a small employer family leave mediation. The measure would also expand CFRA to include leave to care for a parent-in-law within the definition of family care and medical leave and make numerous other changes.

Wage and Hour

Telecommuting Employees: AB 513 is a welcome bill to employers that would authorize employees working from home to receive legally required notices and postings electronically and sign certain documents electronically, and would deem that the final wages due to an employee working from home are  paid on the date that the paycheck is mailed to the employee.

Telework Flexibility Act: AB 1028 would authorize telecommuting employees to waive overtime up to 10 hours of work per day, and waive split shift premiums if the employee requests an employee-selected remote work flexible schedule, and it would permit an employee to choose when to take any meal or rest period during the workday. Similarly, watch for when substance is amended into spot bill AB 55 toward its stated purpose of affording certain rights and benefits to telecommuting employees.

Workplace Flexibility Act of 2021: AB 230, would permit an individual nonexempt employee to request an employee-selected flexible work schedule, allowing for workdays of up to 10 hours per day within a 40-hour workweek, where the employee would not be entitled to overtime compensation for those additional daily hours.

Wage Records Inspection: AB 436 would amend Labor Code § 226(b) to harmonize the time frame to respond to requests pursuant to Labor Code § 226(b) with requests for personnel records pursuant to Labor Code § 1198.5 by allowing the former records to be produced within the same time frame as the latter (i.e., 30 days).

Wage Theft: AB 1003 would amend the Penal Code to make punishable as grand theft an employer’s intentional theft of wages in an amount greater than $950, in aggregate (involving one or more employees).

Wage Withholdings: SB 505 would provide that, prior to garnishing wages when the employer is required or empowered to do so by state or federal law, employers must make a good faith effort to consult with an employee to obtain a written authorization to resolve a monetary obligations before employing third-party collection services or commencing a civil action. Where a written authorization provides for a withholding or diversion of an employee’s wages, the amount withheld or diverted shall not exceed 5% of the employee’s monthly gross wages.

Expansion of Garment Manufacturing Definition: SB 62 would potentially expose 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 any unpaid wages, any other compensation, damages, liquidated damages, attorney’s fees, civil penalties, and any other penalties to any and all employees who performed garment manufacturing operations for any violation. The measure would also eliminate piece rate compensation in the garment industry. This measure almost precisely replicates SB 1399, which did not quite make it to the Governor’s desk in 2020, likely simply a result of timing and other priorities in 2020.

Warehouse Distribution Centers Quota Disclosures: AB 701 would require that employers provide nonexempt employees who work at a warehouse distribution center a written description of each quota the employee must meet, including the quantified number of tasks to be performed, or materials to be produced or handled, within the defined time period, as well as notice that failure to meet the quota could result in adverse employment action, and would prohibit an adverse action against an employee for failure to meet any quota that has not been disclosed.

Limitations to PAGA: AB 385 aims to ease the litigation risk of the pandemic on employers by prohibiting employees from maintaining an action under PAGA for violations of the Labor Code arising between March 4, 2020, and the state of emergency termination date. AB 530 would require the “aggrieved employee” to inform the employer which specific violations of the Labor Code are being alleged under each subdivision of PAGA and to inform the employer if statutory right-to-cure provisions apply.

Independent Contractors: Three bills have been introduced thus far in the continued attempt to reform AB 5, including AB 231, which would make permanent the exemption from the ABC test for licensed manicurists, by providing that they be indefinitely governed by the multifactor Borello test instead of the ABC Test. AB 612 would create a new exemption from the ABC test for a bona fide business-to-business arrangement that involves a voluntary deposit, to be made available to entities that utilize their own employees to produce, locate, or procure tangible personal property, which it owns, leases, or otherwise has the lawful right to possess. And, least likely to gain traction, AB 25 would replace the ABC test with the multifactor Borello test.

Settlement Agreements

Another year, another potential restriction on settlement agreements. SB 331, the “Silenced No More Act,” would amend Section 12964.5 of the Government Code (enacted by SB 1300 of 2018) to prohibit employers from including in separation agreements any provision that might deny the employee the right to disclose information about unlawful acts in the workplace. The bill would also amend Section 1001 of the Code of Civil Procedure (enacted by SB 820 of 2018) to extend the prohibition on confidentiality provisions in settlement agreements to all forms of workplace discrimination—not just discrimination based on sex. This bill would build upon CCP Section 1002.5 (enacted by AB 749 of 2019 and amended by AB 2143 in 2020).

Cal/OSHA

Safety Citations and Retaliation Prohibitions: SB 606 would require that Cal/OSHA issue a citation to an egregious employer (defined as an employer that intentionally made no reasonable effort to eliminate a known violation) for each willful violation, and each employee exposed to that violation would be considered a separate violation for purposes of the issuance of fines and penalties. It also establishes a rebuttable presumption of retaliation if an employer takes adverse action against an employee within 90 days of the employee doing certain things, such as disclosing a positive test or diagnosis of a communicable disease, requesting testing as a result of exposure, or reporting a possible violation of an OSHA standard.

COVID-19 Income Tax Credits: AB 62 would allow a credit against corporate taxes beginning January 1, 2021, in an amount equal to the total amount paid or incurred to comply with the regulations adopted by the Cal OSH Standards Board on November 19, 2020, relating to COVID-19 prevention.

Employee Benefits

Large Group Health Insurance: SB 255 would authorize an association of employers to offer a large group health care service plan contract or large group health insurance policy consistent with ERISA if certain requirements are met, including that the large group health care service plan contract or large group health insurance policy has been in continuous existence since January 1, 2014.

Workers’ Compensation & Unemployment

Also borne out of the pandemic was a clear need to update California Workers’ Compensation and Unemployment Insurance rules, leading to a number of new bill proposals.

Hospital Employee Injuries: SB 213 would define “injury” for a hospital employee to include infectious diseases, cancer, musculoskeletal injuries, post-traumatic stress disorder, and respiratory diseases. The bill would, for purposes of workers’ compensation, create rebuttable presumptions that these injuries that develop or manifest in a hospital employee who provides direct patient care in an acute care hospital arose out of and in the course of the employment.

Civil Litigation

Streamlining Discovery: SB 241 is a spot bill aimed to enact legislation that would streamline discovery processes to reduce costs to the courts and litigants. A welcome change to litigators and businesses alike.

Workplace Solutions

While there are some small glimmers of hope, many introduced bills are worrisome for the business community. While employers should prepare for the passage of SPSL retroactive to January 1, 2021, it is not yet time to fret about the rest—the legislative session is in its infancy, and each measure—apart from, perhaps, SB 62—will almost certainly be amended. We’ll keep you updated here at Cal Peculiarities, and you can also check out our Policy Matters podcast and newsletter for regular check-ins on California (and national) policy and legislative updates as well.

Edited by Coby Turner

 

 

 

Seyfarth Synopsis: In 2020, California enacted SB 1383 which, as of January 1, 2021, amended Government Code section 12945.2 to expand the California Family Rights Act (“CFRA”). These changes will require employers who have been subject to the CFRA to ensure their policies are up to date, as well as bringing new employers into the family of businesses who must comply with the CFRA’s requirements.

Will my company now be subject to the CFRA?

The biggest change is the expansion of the CFRA’s coverage to a new class of employers. Before, the CFRA applied only to companies with 50 or more employees (20 for bonding leave only) within 75 miles of a California worksite. Now, as of 2021, the mileage threshold is gone, and any company with five employees anywhere in the U.S. (even if just one person in California) must provide 12 weeks of family leave to California employees. So Pritchett’s Closets & Blinds now (maybe for the first time) will need a written CFRA policy, and will need to provide CFRA leave to qualifying employees.

When do I need to provide CFRA leave?

First, for those of you who, like Jay Pritchett, may be new to the CFRA family—or may just need a reminder—the CFRA requires covered employers to provide 12 weeks of unpaid protected leave to employees who have at least 1250 hours of service in the 12 months prior to the leave.

This eligibility requirement didn’t change for 2021, but the qualifying reasons that open the door to CFRA leave have expanded. Employees now will be eligible to take a leave of absence to care for grandparents, grandchildren, siblings, and domestic partners with a serious health condition (in addition to existing leave to care for a parent or spouse). And while employees once could take leave to care for children only if they were disabled and/or under age 18, there is no longer an age limit or a disability requirement. One likely consequence of this expansion will be employees taking leave to care for adult children who have given birth—which would have meant Claire could have taken protected time off to help Haley recover from having the twins!

And the expansion does not stop there. Qualifying employees now can also take leave due to 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, for things such as a need to secure alternative childcare, attend military ceremonies, or meet with family support programs.

These expansions create an ever larger potential for employees to stack CFRA leave with FMLA leave where the leave is for different uncovered reasons. For instance, now, if Luke had taken time off of work to care for his ailing Grandpa Frank under CFRA, he would potentially still be eligible for FMLA leave later in the year if he personally had a serious health condition.

What about those exceptions to CFRA coverage?

As of January 1st, two exceptions to CFRA leave have been eliminated. First, where both parents of a new child work for the same company, employers can no longer limit the amount of leave taken by both parents to a combined total of 12 weeks—employers now must separately provide 12 weeks to each employee.

Second, employers no longer can refuse to grant CFRA leave under the “key employee” exception, which allowed employers to opt out of providing the leave to salaried employees who are among the highest paid 10 percent of the company’s employees. So, Jay and Claire now would both be eligible for leave from Pritchett’s!

Workplace Solutions

The expansion of the California Family Rights Act brings the vast majority of businesses with California operations into the modern CFRA family. And this expansion will require those who have been complying with CFRA to make sure they stay up to date with the new reasons for leave. But remember, CFRA has a mandatory written policy requirement, so all covered employers need to ensure they have an up-to-date CFRA policy in the employee handbook. If you need assistance, reach out to your favorite Seyfarthian.

Edited by Coby Turner

By Annette Tyman, Michael Childers, and Shardé Skahan

Seyfarth Synopsis: On February 1, 2021, California’s Department of Fair Employment and Housing released key information regarding the recently enacted Pay Data Reporting Law.  Materials include a template of the pay report, along with user guidance.

With the first filing of the California Pay Report just around the corner on March 31st, employers have been anxiously awaiting additional guidance from the California Department of Fair Employment and Housing (DFEH) regarding the reporting template and implementation requirements of California’s recently enacted Pay Data Reporting Law (SB 973), codified at Government Code section 12999. On February 1, 2021, the DFEH released a portal User Guide, Excel Template and an example of a data submission.

Of note, the template and user guides break down the structure of the pay data reports and provide reporting examples to assist employers with the piecemeal clarifications released thus far. While the portal itself will not be available until February 16, 2021, the user guide also provides screen shots and detailed instructions about functionality and use of the portal.

As Seyfarth reported, the DFEH previously released rounds of FAQs addressing threshold issues regarding who must file pay data reports, which employees the reports must include, and, more recently, how the DFEH will define hours worked and methodologies for determining an employee’s pay, among other questions.  The FAQs highlight a number of departures from the previous EEO-1 Component 2 reporting requirements. Some notable differences include:

  • Who is Included: The applicability of these reports is far-reaching and there is no exemption for small establishments. Employers have the option of reporting on all employees, however, the reports must include, at a minimum, all employees who:
    • Work in California;
    • Live in California; or
    • Report to a Location in California
  • Definition of Pay: The DFEH advised that employers must calculate total earnings using W-2 Box 5 wages (versus the Box 1 wages used in Component 2 ).
  • Definition of Hours Worked: Unlike EEO-1 Component 2, which used the FLSA definition of hours worked, the DFEH is requiring employers to include time for which the employee was paid regardless of whether that time was spent working or was paid time off. Paid time off could include paid vacation, paid sick time, or paid holidays.

Workplace Solutions

As the pay reporting requirements develop, we will continue to provide updates.  Seyfarth’s Pay Equity Group will further discuss the nuances of California pay reporting in a webinar on February 4, 2021, at 10:00 a.m. PT/12:00 p.m. CT/1:00 p.m. ET, and registration is available here.

For more information or for assistance with preparing for reporting, please feel free to reach out to Annette Tyman (atyman@seyfarth.com), Mike Childers (mchilders@seyfarth.com), Shardé Skahan (sskahan@seyfarth.com), or your Seyfarth attorney.

Edited by Elizabeth Levy

Seyfarth SynopsisOn January 26, 2021, the County of Los Angeles passed an ordinance requiring both large and small employers in unincorporated parts of the County to provide supplemental COVID-19 related paid sick leave.

In the wake of the expiration of Families First Coronavirus Response Act (“FFCRA”)’s paid sick leave, and California’s state-wide COVID-19 supplemental paid sick leave, many locales (such as the Cities of Sacramento, Oakland, San Jose, and Sacramento and San Mateo Counties) have extended their COVID-19 paid sick leave ordinances.  On January 26, 2021, Los Angeles County followed suit with an ordinance that became effective immediately, and retroactively applies as of January 1, 2021.

While the newly amended Los Angeles ordinance largely tracks the County’s previous ordinance, which expired December 31, 2020, notable differences are outlined below.

Covered Employers. Unlike the original ordinance, which covered employers with 500 or more employees nationwide, the amended ordinance requires both large and small private employers in unincorporated parts of Los Angeles County to provide Supplemental Paid Sick Leave (“SPSL”).  There is no longer a threshold based on the number of employees.

Covered Employees. The ordinance covers persons who perform any work within the unincorporated parts of the County.  As was the case with the original ordinance, employers may still exclude Emergency Responders and Health Care Providers.

Amount of SPSL Required and Offset Against FFCRA Leave. Employees classified as full-time or who work at least 40 hours per week receive a maximum of 80 hours of SPSL under either the federal FFCRA or the ordinance.  If an employee exhausted available FFCRA leave for a covered reason, or already exhausted leave available under the original County ordinance, the employee is not entitled to additional County leave.

Employees who are not classified as full-time, or work less than 40 hours per week, still receive SPSL in an amount not greater than their average two-week pay.

The SPSL is calculated based on the employee’s highest average two-week pay between January 1, 2020 and the effective date of the ordinance.

The maximum amount of SPSL remains $511 per day or $5,110 in total.

Covered Reasons. As was the case with the original ordinance, SPSL is available upon written request (including text or email) when the employee cannot work or telework because (1) a public health official or healthcare provider requires or recommends that the employee self-isolate or quarantine to prevent the spread of COVID-19; (2) the employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19 (e.g., is at least 65-years-old or has a health condition such as “heart disease, asthma, lung disease, diabetes, kidney disease, or weakened immune system”); (3) the employee is caring for a family member who is subject to a federal, state, or local quarantine or isolation order related to COVID-19, or has been advised by a health care provider to isolate or self-quarantine; or (4) the employee needs time off to care for a family member whose senior care provider, school, or child care provider has ceased operations in response to a public official’s recommendation.

The ordinance permits employers to require documentation for employees to use SPSL.

Immediate Effect of Ordinance.  The ordinance takes immediate effect and applies retroactively as of January 1, 2021.

Expiration of Ordinance.  The ordinance’s lifespan is currently indefinite.  Like the City of Los Angeles COVID-19 paid sick leave ordinance, the Los Angeles County ordinance will remain in effect until two calendar weeks after the expiration of the COVID-19 local emergency as declared by the County.

Workplace Solutions. Navigating a patchwork of COVID-19 laws continues to be a challenge. For more information on COVID-19 related issues, please contact the authors or your Seyfarth attorney.

Seyfarth Synopsis: In a unanimous decision, the California Supreme Court held that the worker friendly “ABC” test set forth by the Court in its 2018 landmark ruling, Dynamex Operations West, Inc. v. Superior Court, applies retroactively. The ABC test thus applies to all pending cases governed by the California Wage Orders in determining whether a worker is an independent contractor or an employee.

Let Me Tell You What It’s All About

Jan-Pro Franchising, International, Inc. is a franchisor whose franchisees offer cleaning and janitorial services. In Vazquez v. Jan- Pro (“Vazquez”), in May 2017, the Northern District of California granted Jan-Pro summary judgment in a case brought by independent contractor franchisees claiming they should have been treated as Jan-Pro employees. The plaintiffs then appealed the ruling to the U.S. Court of Appeals for the Ninth Circuit.

While the appeal was pending, the California Supreme Court issued its decision in Dynamex (which we previously posted about here). In Dynamex, the court held that, for purposes of claims arising from the Wage Orders, the “ABC” test governs whether workers are properly classified as independent contractors rather than employees.

To satisfy the ABC test, a hiring entity must prove:

  1. that the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact;
  2. that the worker performs work that is outside the usual course of the hiring entity’s business; and
  3. that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

Dynamex represented a major shift in the law in the eyes of many businesses, practitioners, and courts, who presumed (incorrectly, as explained below) that the multi-factor common law test for employment articulated in a 1989 California Supreme Court case, S.G. Borello & Sons, Inc. v. Department of Industrial Relations, governed the classification question where the Wage Orders were at issue.

In the Vazquez matter, on May 2, 2019, the Ninth Circuit vacated the summary judgment ruling for Jan-Pro entered prior to Dynamex, holding that Dynamex applied retroactively, and remanded the case for further proceedings. Then, on September 24, 2019, the Ninth Circuit asked the California Supreme Court to determine whether Dynamex applied retroactively.

Sit Yourself Down, Take a Seat—California Supreme Court’s Decision Is In

On January 14, 2021, the Supreme Court held that the Dynamex decision applies retroactively to its April 30, 2018, publication in all cases currently pending. The Supreme Court based its Vazquez decision on two grounds.

First, the Supreme Court emphasized that the misclassification test applicable to Wage Order claims was a question of first impression, rather than a settled rule. The Wage Orders define the term “employ,” in part, to mean “suffer or permit to work.” But the Wage Orders do not define the term “independent contractor,” nor do they address the distinction between workers entitled to the protections of the Wage Orders and independent contractors who are not. Dynamex represented the first time the Supreme Court explicitly ruled on the meaning of the “suffer or permit to work” language in the Wage Orders in the context of independent contractors. Because Dynamex did not overrule a prior Supreme Court decision nor disapprove any prior Court of Appeal decision, the Supreme Court held that Dynamex applied retroactively.

Second, the Supreme Court found no reason to depart from the general rule that judicial decisions apply retroactively. Jan-Pro, backed by numerous business groups, argued that in classifying workers as independent contractors it reasonably relied on the multi-factor common law test set forth in Borello, and businesses could not reasonably have anticipated that the ABC test would apply. The Supreme Court was not persuaded. The Supreme Court noted that Borello was not a Wage Order case, and that the Supreme Court in two cases had expressly declined to rule on whether Borello applied to Wage Order claims.

The Supreme Court also rejected the contention that litigants must have foresight of the exact rule that a court ultimately adopts in order for the rule to have retroactive effect. The Supreme Court then went on to state that because the ABC test drew on the factors set forth in Borello, its retroactive application was within the scope of what businesses reasonably could have expected. The Supreme Court also claimed that fairness and policy considerations justified retroactive application of Dynamex, as some workers would be denied the protections of the Wage Orders if Dynamex applied only prospectively.

Now I’m Gonna Teach You What Vazquez Means For Businesses

Dynamex was characterized as a sea change in the law by its proponents and its detractors alike. Vazquez, however, insists that it was not, as the Supreme Court suggests that businesses reasonably could have foreseen that the ABC test applied to Wage Order claims all along. While reasonable minds will disagree with that suggestion, what is clear is that businesses must comply with an increasingly complex web of statutory and case law governing independent contractor relationships in California.

As a result of Vazquez, the ABC test applies to all independent contractor misclassification-related claims arising from the Wage Orders arising prior to 2020, while the Borello test applies to non-Wage Order misclassification-related claims arising during the same time period. And, as of January 1, 2020, when California’s infamous Assembly Bill No. 5 (“AB 5”) took effect, the ABC test applies to all independent contractor misclassification-related claims arising from the California Labor Code, as well as Wage Order claims—that is, unless a business can find comfort in one of the myriad occupation-based exemptions from the ABC test set forth in Assembly Bill No. 2257 (which recently repealed and replaced AB 5, and which we blogged about here) applies. App-based transportation and delivery drivers may also be exempted from the ABC test with the passage of Proposition 22 in November 2020. You can read more on Prop 22 here.

Workplace Solutions

To put it mildly, the landscape for independent contractors in California is hardly as simple as Do Re Mi. If you have questions regarding the Vazquez decision, how to analyze the employee v. independent contractor status of individuals or entities your company may work with, or would like further information, please contact your authors Eric Lloyd or Pamela Vartabedian, or your favorite Seyfarth counsel.

Edited by Coby Turner

Seyfarth Synopsis: The California Department of Industrial Relations’ Office of Administrative Law (OAL) approved an Emergency Temporary Standard regarding COVID-19, effective November 30, 2020. After holding a stakeholders meeting in December, the Division released its second iteration of frequently asked questions, which included nearly 40 new FAQs.

As we reported, on November 30, 2020, the California Office of Administrative Law (OAL) approved Cal/OSHA’s COVID-19 Emergency Temporary Standard (ETS). Soon after, Cal/OSHA published its first set of FAQs, which left many crucial questions unanswered, leaving employers struggling to understand a complex new set of safety standards (some of which contradicted the California Department of Health), COVID-19 testing, reporting, and employee pay continuation requirements.

In the wake of a mid-December stakeholders meeting designed to address questions surrounding the new ETS, Cal/OSHA promised to update the FAQs. Governor Newsom also stepped in and issued an Executive Order on December 14, 2020, requiring Cal/OSHA to follow the state Department of Health guidance and to date any updates to the ETS or FAQs, so that employers would understand when, and what, the Division was changing. Weeks after the regulated community had been anticipating the update, Cal/OSHA finally posted additional FAQs on January 8, 2021. The newest slew of FAQs provide a number of clarifications and updates. We highlight some of the notable issues below.

What’s New?

  • Earnings Continuation For “Able and Available” Employees. The FAQs confirm that the earnings continuation obligation is designed for “available and able” employees who have been removed from the workplace due to transmission related concerns (as opposed to those who are sick, who are not eligible). Along these lines, the FAQs explain that if someone cannot return after the normal quarantine period has run, the person is likely not available and able to work due to illness (which would render them ineligible for the earnings continuation).
  • Workers’ Compensation Eliminates Earnings Continuation. Employees who are receiving temporary disability benefits under workers’ compensation are not entitled to also receive earnings continuation, because Cal/OSHA deems those eligible for disability as not “able and available” to work.
  • Other Earnings Continuation Exceptions. The FAQs explain that the same framework an employer would use to rebut the presumption an employee contracted COVID in the workplace under SB 1159 would apply to determine if the “exposure” was work related, such that an employee would be eligible for earnings continuation. Under this framework, for employers to demonstrate exposure is not work related, they should conduct “comparable investigations” to show it is more likely than not that the exposure didn’t occur in the workplace.
  • ATD Standard. As we previously blogged, the ETS does not apply to (1) employees who are already covered under the Cal/OSHA Aerosol Transmissible Diseases (“ATD”) standard, (2) employees who are working from home, and (3) single-employee employers who do not have contact with others. Importantly for the healthcare industry and other employers covered by the ATD standard, the FAQs clarify that an employee in a single-person workplace cannot be subject to both the ETS and the ATD standard. This means, for example, that an employee covered by her employer’s ATD plan due to occupational exposure to aerosol transmissible diseases (including but not limited to COVID-19) is still covered by the ATD plan even if she’s in an area of the hospital that serves a purely administrative function.
  • Barriers. Many employers may already be familiar with the ETS provision that requires solid partitions (e.g. Plexiglas) to be installed at fixed work locations where it is not possible to keep six feet of separation. Cal/OSHA’s guidance now clarifies that unless they are complete barriers (presumably meaning floor to ceiling), employers need to consider workers within six feet of each other as close contacts for purposes of contact tracing, testing, and quarantine.
  • Location and Testing Requirements. Cal/OSHA clarifies that when testing must be provided, it does not need to be provided at the employee’s work location. Companies can refer employees to a free testing site, clinic, or their own physician, so long as the employees incur no cost for the testing, including reimbursement for any testing-related costs such as mileage or parking fees. Cal/OSHA also clarified that employers do not have to mandate or require that employees be tested in an outbreak setting—they are only required to offer testing.
  • Length of Quarantine. Although a 14-day quarantine period is recommended, “an exposed employee who does not develop symptoms of COVID-19 may return to work after 10 days have passed since the date of last known exposure.” Health care, emergency response, and social services workers may return to work after 7 days with a negative PCR test result collected after day 5 when there is a critical staffing shortage. (This update was mandated by the Governor’s Executive Order that Cal/OSHA align with the California Department of Public Health’s updated quarantine guidance.)
  • Potential Waivers For Staffing Shortages. As many employers may already know, the ETS permits companies to seek a waiver from Cal/OSHA’s return to work criteria for employees who have COVID-19 or who have been exposed to COVID-19, but the details of the waiver process have been unclear. While the waiver submission process remains unclear, Cal/OSHA clarified that “an operation must provide goods or services, the interruption of which would cause an undue risk to a community’s health and safety in order to qualify.” Cal/OSHA noted that this is intended to be narrower than the definition of “critical infrastructure” industries, and to receive such an exemption, an employer must provide specific information, including describing their operations and the effect of the quarantine on such operations.
  • How To Calculate An Outbreak. The FAQs address a number of questions related to outbreak testing. A common question from employers has been how to measure the 14-day period to determine if an outbreak under the ETS has occurred. Cal/OSHA now confirms that employers “should look to the testing date of the cases and review any cases for which the tests occurred within a 14-day period to evaluate whether the other criteria for an outbreak have been met.”
  • Considering Shifts in Determining Outbreaks. Employers were also uncertain about whether or how to consider shifts when evaluating whether there have been three or more COVID-19 cases in a single exposed workplace. For example, if an employer had three COVID-19 positive employees in the breakroom on Monday, but each one of them was on a different shift and they didn’t cross paths, would that trigger outbreak testing? Cal/OSHA now says no, employers can consider each shift as a separate “exposed workplace” if the facility is well ventilated and the cleaning and disinfection requirements of the ETS are met between or before shift changes.

Will There Be More Guidance?

The FAQs state that they will be updated on an ongoing basis to help stakeholders understand the ETS.  In addition, the Consultation Branch will be available to answer employer questions.

What Happens If Our Company Has Issues Complying With the ETS?

We previously covered some of the penalties that could result from non-compliance with the new ETS. Cal/OSHA states that it will consider employer good-faith efforts to comply with the ETS before issuing citations. Additionally, the FAQs state that Cal/OSHA will not assess monetary penalties for any alleged violations until February 1, 2021, if those alleged violations would not have been considered a violation of a pre-existing Cal/OSHA standard such as the respiratory protection standard, or the “IIPP standard.”

So, employers have been given a bit of good news that the new provisions under the ETS won’t result in monetary penalties from Cal/OSHA for a few more weeks.

How Do Our Company’s Obligations Change Once Our Employees Are Vaccinated?

In short, they don’t. Cal/OSHA’s guidance clarifies that once an employee is vaccinated, all prevention measures must continue to be implemented. Cal/OSHA says that the impact of vaccines will likely be addressed in a future revision to the ETS.

What Else Is Cal/OSHA Going To Do?

Cal/OSHA’s statement that the impact of vaccines will probably be addressed in a future revision to the current ETS indicates that Cal/OSHA plans to release a new version of the ETS in the near future. As always, we closely track Cal/OSHA’s news releases and pending legal challenges to the ETS.

Workplace Solutions

For more information on this or any related topic, please contact the authors, your Seyfarth attorney, or any member of the Workplace Safety and Health (OSHA/MSHA) or COVID-19 Task Force Team.

Seyfarth Synopsis: As previously discussed here, on September 29, 2020, Governor Newsom signed AB 1963, an amendment to the Child Abuse and Neglect Reporting Act, which will become effective January 1, 2021. The revised Act imposes reporting and training requirements on new categories of employees. These changes may have a significant impact on industries like entertainment and fast food.

More Employees Deemed Mandatory Reporters

Through the Child Abuse and Neglect Report Act, California has long protected children in workplaces—with at least five employees—by requiring certain adults (i.e., “mandated reporters”) with whom those children interact to report abuse or suspected abuse. The Act now adds “human resource employees” as mandatory reporters of all types of suspected abuse, and any “adult person whose duties require direct contact with and supervision of minors in the performance of the minors’ duties” as mandated reporters of suspected sexual abuse.

The Act has a broad view of what it means to be a “human resource employee.” Accordingly, anyone designated to receive complaints within the organization—even if those lacking a title reflecting a “human resource” position—as well as those people having supervisory responsibility for any minors employed, now have responsibilities to report known or suspected abuse.

Expansion of Employee Training Requirements

Additionally, the Act now requires that employers of newly mandated reporters provide them with training in child abuse and neglect identification, and training in child abuse and neglect reporting. Employers can comply with these training requirements by having the mandated reporters complete the general online training offered by the Office of Child Abuse Prevention in the State Department of Social Services. That training can be found free of charge here, and covers topics such as the reason for reporting, what constitutes child abuse, what needs to be reported, when you need to report, and where you need to report.

While the law does not set forth a particular time frame within which employees must complete the training, employers should keep in mind that these training videos are quite lengthy. Thus, starting employees on the trainings right away (especially if you need to stagger your supervisory employees taking the trainings) will allow your company to come into compliance promptly.

What Happens If a Mandated Reporter Doesn’t Report Known or Suspected Abuse?

If a mandated reporter fails to report known or reasonably suspected child abuse or neglect, then the individual is guilty of a misdemeanor punishable by up to six months in jail or a $1,000 fine, or both. Mandated reporters can also be sued for damages, especially if the minor-victim or another minor is further victimized because of the failure to report.

The Impact of AB 1963

There can be little doubt that the impact of AB 1963 will be much more significant for some industries than others. This is unsurprising as some industries regularly employ minors (e.g., fast food), whereas others (e.g., law) almost never employ minors. For human resources professionals in those industries with high concentrations of minor employees, the additional training requirement imposed by the law will likely not seem all that onerous—human resources employees are accustomed to spending lots of time in training and being trained on personnel issues. But AB 1963’s reporting and training requirements are likely to have much more significant impacts for those non-human resource professionals who are now “mandated reporters.”

Consider the entertainment industry, which is massive within California. That industry hires a disproportionate number of minors relative to other industries (particularly when considering minors under sixteen-years-old). Because the concept of “mandated reporter” now extends to every adult person whose duties require direct contact with and supervision of minors, the category of mandated reporter may now include directors, producers, hair/makeup professionals, and wardrobe professionals within any organization employing more than five people, and those people may now be subject to the training requirements of the law, as well as the penalties for failure to meet its requirements.

It may well be that many sets, recording studios, and live theaters are populated by different entities for any one production, such that none of the involved organizations technically meets the five-employee threshold under the law. But, in light of the severity of the penalties for failure to comply with the law, organizations that employ minors within the entertainment industry would be well-advised to carefully examine both their headcount and the duties of their adult employees, so as to make a considered determination whether AB 1963 applies to their employees.

Similarly, the fast food industry also employs large numbers of minors. Restaurant locations generally have multiple levels of supervisors in each location, including shift supervisors, leads, and assistant managers, who may also be individuals whom employees are authorized to come to with complaints. These individuals now also have the potential to be “mandated reporters” subject to the training requirements and the ramifications of a failure to report. Employers within the fast food industry will also therefore need to look carefully at employee duties to determine who may reasonably fall under the mandated reporter definitions, and ensure that those employees are trained.

Workplace Solutions

For many employees in industries that employ minors, both identifying and reporting known or suspected abuse will be a completely new concept. Companies that employ minors will need to ensure these employees get up-to-date training on how to satisfy their mandatory reporting obligations. As always, please contact your Seyfarth counsel if you have any questions about how the new Act may apply to your employees and workplace.

Edited by Coby Turner

Seyfarth Synopsis. On December 18, 2020, San Francisco imposed a 10-day mandatory quarantine on most people traveling or returning to the city for more than 24 hours. The order does not apply to travel within the larger Bay Area, or to certain visitors, including those not staying more than 24 hours, those seeking medical treatment, and those coming to the city to perform essential services. While the order does not require employers to monitor their employees’ personal travel, the order requires employers to prohibit employees from returning to the workplace if they become aware of the travel. Any time off of work due to this travel quarantine is controlled by the employers’ existing time off policies. The order is effective through at least January 4, 2021. Fortunately the order likely won’t affect one famous traveler on December 24, unless his sleigh breaks down and he must stay in the city for more than 24 hours.

In response to COVID-19-related holiday travel concerns, San Francisco issued a mandatory quarantine order for many people traveling to or from the city. The order runs from December 18, 2020 through January 4, 2021, and requires most individuals traveling to the city for more than 24 hours, or returning home after travel to quarantine for 10 days. While impacted individuals may leave their homes to get tested for COVID-19, a negative test does not shorten the 10-day quarantine period.

Exceptions.

The order makes exceptions for some travelers. For example, it does not apply to:

  • Individuals who started their travel prior to December 18;
  • Individuals moving through San Francisco, but not staying for more than 24 hours; and
  • Other Bay Area residents (defined as individuals from Alameda, Contra Costa, Marin, Napa, Santa Clara, Santa Cruz, San Francisco, San Mateo, Solano, and Sonoma Counties).

The order, however, does encourage Bay Area residents and individuals who commenced travel before the order’s enactment to comply with the quarantine directive.

For parents and children concerned about the order’s impact on Santa, the 24 hour exception likely covers his work on December 24.

The order also excepts a number of essential workers, and others coming to the city for certain tasks, including:

  • Licensed healthcare professionals
  • Anyone coming to San Francisco to perform work at an acute care hospital
  • Individuals performing Essential Government Functions or working on Essential Infrastructure
  • Individuals providing care to minors, the elderly or persons with disabilities
  • Individuals obtaining healthcare
  • Individuals required by their employer to enter the city to work for an Essential Business in San Francisco due to a lack of staffing
  • Individuals traveling for law enforcement or a court order
  • Individuals who are members of professional or collegiate sports teams, traveling for a game
  • Individuals who are part of a film production, provided they meet certain requirements

Effect on Employers.

The city’s FAQs make clear that employers may have some responsibilities under the order. Businesses have no obligation to restrict their employees’ personal travel (and they cannot under existing California law), nor must businesses inquire where their employees have traveled to. However, if an employer learns that an employee has traveled outside of the Bay Area, then the employer must prohibit the employee from returning to the workplace during the quarantine period.

The order does not require businesses to approve paid time off for employee quarantines. Instead, it defers to an employer’s normal policies. If the employee is entitled to time off under those policies, then they should be given it. However, if the employee’s conduct or time off violates the employer’s normal policies, then the employee can be disciplined.

Notice.

The only businesses required to give notice of the order are transit facilities. They must provide notice to arriving travelers, either by giving travelers a copy of the notice attached to the order, or by posting the notice and making regular announcements.

Although hopefully a brief restriction, employers should brush up on San Francisco’s travel order, and be prepared should they learn of employees traveling outside of the Bay Area around the holidays.

Seyfarth’s Workplace Solutions is here to help with these and other COVID-19 related questions.

Seyfarth Synopsis: The California Department of Industrial Relations’ Office of Administrative Law has approved a California OSHA emergency temporary standard regarding COVID-19, effective November 30, 2020. The temporary standard brings with it new documentation, COVID-19 testing, earnings continuation, and reporting obligations affecting most companies.

As we have previously blogged, Cal/OSHA’s Emergency Temporary Standard (ETS) was adopted at the Standards Board’s November 19, 2020, meeting. The evening of November 30, 2020, the California Office of Administrative Law (OAL) approved the ETS. The ETS became effective immediately: all employers must comply with its requirements right away. Shortly after it became effective, Cal/OSHA, a.k.a. the Division issued Frequently Asked Questions and template documents.

What Are The Biggest Developments For Our Company?

As we previously blogged, the ETS does not apply to (1) employees who are already covered under the Cal/OSHA Aerosol Transmissible Diseases standard, (2) employees who are working from home, and (3) single-employee employers who do not have contact with others.

For employers who are covered, some ETS provisions already causing confusion are:

  • Whenever there has been a COVID-19 case at a workplace, employers must “offer COVID-19 testing at no cost to employees during their working hours to all employees who had potential COVID-19 exposure in the workplace.”
  • The ETS notification provisions that apply within one business day when a COVID-19 case has been identified in the workplace are not the same as what is required under AB 685 (which goes into effect January 1, 2021), addressed in our blog here. For example, AB 685 requires the notice to be written, and the ETS does not. AB 685 requires notification to “employers of subcontracted employees,” whereas the ETS requires notification to independent contractors who were present at the workplace. Other seemingly semantic inconsistencies exist. For example, AB 685 refers to a COVID-19 “infectious period” whereas the ETS refers to a “high-risk exposure period”; both terms apparently refer to the time period employers must use in evaluating who may have had a COVID-19 exposure. The underlying definitions of these periods are essentially the same under AB 685 and the ETS.
  • Employers now must track and record all COVID-19 cases with the employee name, contact information, occupation, location of work, the most recent date worked at the workplace, and the date of a positive COVID-19 test. The information must be made available to employees and authorized employee representatives (with personal identifying information removed).
  • Employers now must “evaluate the need for respiratory protection in accordance with [the Cal/OSHA Respiratory Protection Standard, 8 CCR § 5144,] when the physical distancing requirements … are not feasible or are not maintained.” Although there are exceptions for momentary or incidental exposures while employees are moving around and where employers can demonstrate that six feet of separation is not “possible,” the ETS has the potential to bring many employers under the Respiratory Protection Standard. Note that Cal/OSHA refers to “possible” separation instead of “feasible” separation.
  • In what has been criticized as a Cal/OSHA over-reach, the ETS mandates that when employees are excluded from work for certain COVID-19 related reasons (i.e., having, or having been exposed to COVID-19), but remain “otherwise able and available to work, employers shall continue and maintain an employee’s earnings, seniority, and all other employee rights and benefits, including the employee’s right to their former job status.” While some current paid sick leave laws, like the California Supplemental Paid Sick Leave law (which we blogged about here), provide that an employee may choose to use up to eighty hours of paid sick time to replace earnings while they are kept out of work due to concerns about spreading COVID-19, the new Cal/OSHA ETS mandates that employers pay for this time and it provides no cap on the amount of earnings that must be continued if employees are excluded from work. This eliminates the cap on paid time set forth in Labor Code section 248 and 248.1, as well as the 500-employee threshold imposed by the statewide law. The only bright spots for employers are that the ETS language about maintaining earnings (1) does not apply where the employer demonstrates the COVID-19 exposure is not work-related and (2) it allows benefit payments from public sources (e.g., unemployment benefits) to be considered in maintaining earnings.
  • Despite the existing requirements for employers when there are COVID-19 workplace “outbreaks,” the ETS includes additional, and quite burdensome, testing, investigation, correction, and notification requirements, and creates two categories for when these requirements attach: “Multiple COVID-19 Infections and COVID-19 Outbreaks” and “Major COVID-19 Outbreaks.” This requirement does not change based on the number of employees at a workplace: an employer with ten employees and an employer with 1,000 employees at a workplace both must test 100% of employees, with vastly different cost considerations. For larger employers, testing has the potential to be very costly.
  • For employers who provide housing and transportation to employees, there are special requirements such as ensuring housing units are cleaned at least once a day, providing six feet of distancing in dormitories, and providing private spaces for exposed employees to isolate.
  • The standard includes various other requirements, such as creating a written COVID-19 Prevention Program, which appears nearly duplicative of an Injury and Illness Prevention Program (IIPP).

What Happens If Our Company Doesn’t Comply With The ETS?

Non-compliance with the new ETS can result in an OSHA citation and penalty in accordance with the Division’s penalty structure. Different penalties attach to the different classifications of citations, which are Regulatory, General, Serious, Repeat, and Willful. Regulatory penalties typically attach to posting and recordkeeping requirements, General penalties typically attach for violations having some non-serious relationship to safety and health, and Serious penalties may attach if there is a realistic possibility that death or serious physical harm could result from the actual hazard created by the violation.

Given the seriousness of COVID-19, many alleged violations in connection with COVID-19 could be classified as Serious. If any violation under any classification is found by Cal/OSHA to be substantially similar to a violation issued in the five years prior, then the violation can be classified as Repeat. And, a Willful citation may issue if Cal/OSHA determines the employer either knew what it was doing was a violation, or was aware of an unsafe condition, and made no reasonable effort to eliminate it.

Penalties run the gamut, with the maximum penalty for Regulatory or General being $13,277, the maximum for Serious being $25,000, and the maximum for Repeat or Willful being $132,765.

Is There Any Light At The End Of The Tunnel?

Cal/OSHA’s Chief told the Standards Board that “some employers are going to need more time. We intend to fully take that into account in determining how they’re implementing the rule.” He also noted the Division would consider “good faith” efforts on the part of employers. The Board also indicated it would convene a stakeholder committee to suggest updates to the ETS to address the top concerns from employers—information on this committee is still forthcoming.

Workplace Solutions

This is a rapidly developing area that we are closely tracking. We will update our readers as additional guidance or legal challenges develop with the new ETS. For more information on this or any related topic, please contact the authors, your Seyfarth attorney, or any member of the Workplace Safety and Health (OSHA/MSHA) or COVID-19 Task Force Team.

Seyfarth Synopsis: California’s Department of Fair Employment and Housing released 16 new FAQs regarding the recently enacted Pay Data Reporting Law, previously summarized here. The new FAQs address several key issues, including how to calculate the triggering 100-employee threshold and what the reporting requirements are for employees who work, live, or telecommute inside or outside of California.

Employers have anxiously awaited additional guidance from the California Department of Fair Employment and Housing (DFEH) regarding the implementation requirements of California’s recently enacted Pay Data Reporting Law (SB 973), codified at Government Code section 12999. The DFEH just released its newest FAQs, addressing threshold issues regarding who must file pay collection reports and which employees the reports must include.

The FAQs provide information needed to identify the employees covered by this new law. As described further below, a notable departure from the federal EEO-1 reporting requirements is that employers must consider not only where an employee “reports” but also where the employee lives.

Here, we dive into some of the key issues addressed in the new FAQs.

How Does My Company Calculate “100 Employees” To Know If We Must Report?

U.S. employees located inside and outside of California are counted when determining whether an employer has enough employees (100 or more) to trigger application of the Pay Data Reporting Law requirement. Thus, if an employer has at least one employee who lives or works in California, that employer must submit a report even if its 99 other employees work only elsewhere throughout the country.

The DFEH will determine an employer has the requisite 100 employees if either one of these two conditions appears:

(1) The employer employed 100 or more employees in the Snapshot Period chosen by the employer (i.e., the single pay period of the employer’s choice between October 1 and December 31 of the Reporting Year), or

(2) The employer regularly employed 100 or more employees on a “regular basis” during the Reporting Year.

(“Regular basis” refers to the “nature of the business that is recurring rather than constant.” For instance, in industries that have a “three month season during a calendar year,” a report would be required from those employers who regularly employed 100 employees or more during the season, so long as that employer is also required to file an EEO-1 report.)

Part-time employees count towards the 100-employee threshold. Temporary workers, including those from staffing agencies or independent contractors, do not count towards the threshold count unless the individual is on the employer’s payroll and the employer must withhold federal social security taxes from that individual’s wages.

Does The Report Include Only California Employees or All Employees?

Reports must include all employees who are assigned to California locations or who work or live in California. If an employee is assigned to a California location but works at a client site outside of California, then that employee should also be included in the report. The FAQs also consider that many employees telework, and sometimes in states other than their home state, as addressed below.

How Do I Comply If I Have Multiple Establishments Across Different States?

The reporting requirements affect employers that have multiple establishments across several states, so long as they have some establishments with employees in or assigned to California locations, or have employees living in California.

  • Required Reporting: Employers must include all employees who work at or are assigned to a California establishment, even if the employee resides outside of California. Employers must also include California employees who telework from California to a non-California location. This requirement means that California employers must track where an employee resides, in addition to where the employee works or reports.
  • Optional Reporting for Non-California Establishments: The FAQs provide that employers may also report on non-California establishments and employees.

For example, where an employer has a California location with 50 employees (with three employees telecommuting from Nevada to California), and a Nevada location with 50 employees (with three employees telecommuting from California to Nevada), the employer must submit three reports:

(1) an establishment report for the California location that covers all 50 employees, including the three employees teleworking from Nevada (i.e., “reporting to” a California location);

(2) an establishment report for the Nevada location that covers either only the three employees teleworking from California or all 50 employees assigned to the Nevada establishment; and

(3) a consolidated report that includes either all 53 employees who work in or are assigned to a California location or all 100 employees.

The reporting requirement raises significant data privacy concerns, given that there is no threshold establishment size for reporting. As set forth in the FAQs, the example provided means that employers will need to choose between providing the State of California with information concerning its non-California workers, or providing pay data and hours worked data for very small employee counts, which could provide insight into the pay of specific employees.

What If Some of My Employees Telework?

As noted above, in addition to reporting on all employees who physically work in California, reporting is also required for those out-of-state workers who telework to a California location. In addition, those employees who reside in California must also be included in the pay data report, even if they are assigned to or teleworking for an out-of-state location. Accordingly, employers will need to implement a strategy for capturing data for everyone who works at or telecommutes to a California location, as well as those who live in California but telework to a non-California location.

How Do Employers Report Race, Ethnicity, and Sex?

Race and ethnicity should be reported consistent with the EEO-1 Instruction Booklet.

Consistent with California’s Gender Recognition Act of 2017, “sex” should be reported as female, male, or nonbinary. Self-reporting is the preferred method for collecting sex information.

What’s Next?

The DFEH will be releasing further guidance on reporting requirements related to pay, hours worked, multi-establishment employers, and acquisitions, mergers, and spin-offs. Although no timetable has been provided, we anticipate receiving additional guidance before the end of the year. For the time being, employers should continue preparing for compliance by

  • determining the employees and establishments on which the company will be required to report,
  • deciding how non-California employees and establishments will be reported,
  • collecting data needed to categorize employees’ race, ethnicity, and sex, and identifying whether gathering additional information is necessary, and
  • engaging the internal resources that will be necessary for purposes of completing the required reports, including understanding the pay bands that will be used for reporting purposes, available here.

Workplace Solutions

As the pay reporting requirements develop, we will continue to provide updates. For more information or for assistance with preparing for reporting, please contact any member of our Pay Equity Group or your favorite Seyfarth attorney.

Edited by Coby Turner