California Employers Face New Laws in 2022

California employers are now subject to several new laws. Unless otherwise noted, these laws are effective January 1, 2022:

New COVID-19 Notices Available from Public Health Officials

Effective immediately, California’s Department of Public Health and local health officers must post Covid-19 related orders and their effective dates on their respective websites. Businesses and individuals may now also sign up for email notifications from these officials of changing public health orders.

Employers May Now Send Required Postings by Email

Newly added Labor Code section 1207 provides that in any instance where an employer must physically post information, the employer may also distribute the information by email with the document(s) attached. The new law, however, does not alter the employer’s responsibility to physically display the required postings.

Amendments to the California Family Rights Act

A qualifying reason for eligible employees to take leave under the California Family Rights Act (CFRA) includes leave to care for a parent. A recent amendment to this law clarified eligible employees may also take protected time off under CFRA to care for the serious health condition of a “parent-in-law.” Employers should update their CFRA leave policy to reflect this new amendment.

Government Code section 12945.21 was also amended to expand the CFRA small employer mediation program, which applies to employers with five to nineteen employees. Initially, the state intended this alternate dispute resolution program to protect small business from costly litigation while also protecting employee rights. Employers, however, are often unaware of the possibility of mediation since they frequently do not know when employees file complaints with the Department of Fair Employment and Housing (DFEH). The new law addresses these issues by: (i) making participation in the mediation program a prerequisite to filing a civil action; (ii) requiring the DFEH to inform employees of this requirement on all right-to-sue notices; and (iii) permitting small employers to stay civil actions or arbitration to pursue mediation.

Intentional Wage Theft is Now Subject to Criminal Liability

An employer’s intentional theft of wages, payments, or gratuities over $950.00 from one employee, or $2,350 from two or more employees within a twelve-month period is now punishable as grand theft. The intentional misconduct is punishable either as a misdemeanor subject to imprisonment in a county jail for up to one year, or as a felony carrying a sentence of up to three years.

For this law, independent contractors are included within the meaning of “employee,” and hiring entities of independent contractors are included within the meaning of “employer.”

The Labor Commissioner May Impose Real Property Liens

The Labor Commissioner hears employee complaints regarding the payment of wages and employment-related issues and may impose civil penalties for violations of state law. Existing law permits the Labor Commissioner to create a lien on real property to recover amounts due under a final order of the Labor Commissioner, for the benefit of an employee named in the order.

The new law expands the authority of the Labor Commissioner and permits the Labor Commissioner to create a lien on real property to secure the amount due to the Labor Commissioner under any citation, findings, or decision that is final and may be entered as a judgment.

Newly added Labor Code section 90.8 explains the Labor Commissioner may create the lien on real property by recording a certificate of lien with the county where the relevant party’s real property is located. The Labor Commissioner cannot release the lien until the amount due, including any penalties and interest, is paid.

California Expands Scope of Cal/OSHA’s Enforcement Power

Effective January 1, 2022, Cal/OSHA may issue citations for “enterprise-wide” and “egregious” violations.

Labor Code section 6317 was amended to add a rebuttable presumption that a Cal/OSHA violation is enterprise-wide, if the employer has multiple worksites and either of the following is true: (a) the employer has a written policy or procedure that violates Health and Safety Code section 25910, or any Cal/OSHA standard, rule, order or regulation; or (b) Cal/OSHA has evidence of a pattern or practice of the same violation(s) committed by the employer involving more than one of the employer’s worksites. However, written policies or procedures based on an emergency regulation adopted or amended within the last thirty days cannot support an enterprise-wide citation.

Enterprise-wide citations carry a minimum civil penalty of eight thousand nine hundred eight dollars ($8,908), up to a maximum penalty of one hundred thirty-four thousand three hundred thirty-four dollars ($134,334) per violation.

In addition, the new law gives Cal/OSHA the authority to issue citations for “egregious” violations. Under Labor Code section 6317.8, a violation is egregious if any of the following is true: (1) the employer makes no reasonable effort to eliminate a known violation; (2) the violation results in worker fatalities, a worksite catastrophe, or many illnesses or injuries; (3) the violations result in persistently high rates of worker injuries or illnesses; (4) the employer has an extensive history of prior violations; (5) the employer intentionally disregards health and safety responsibility; (6) the employer’s conduct amounts to clear bad faith; or (7) the employer committed many violations to undermine the effectiveness of any safety and health program that may be in place.

The conduct underlying a determination that the violation is egregious must have occurred within the last five years. And, once a violation is determined to be egregious, the determination remains in effect for five years. Each instance the employer exposes an employee to an egregious violation is a separate violation for purposes of issuing fines and penalties.

New Law Imposes Severe Restrictions on Use of Non-Disclosure and Non-Disparagement Clauses in Settlement and Severance Agreements

Currently, employers may not use a non-disclosure provision to prevent settling employees from disclosing facts regarding their claims of sexual assault, sexual harassment, harassment or discrimination based on sex, failure to prevent sexual harassment, or retaliation for reporting sexual harassment.

For settlement agreements entered on or after January 1, 2022, this prohibition expands to all claims of harassment or discrimination based on any protected characteristic under the Fair Employment and Housing Act, not just claims based on sex. This includes allegations of harassment and discrimination based on race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, and veteran or military status.

The new law further prohibits employers from using non-disparagement clauses as a condition of employment, continued employment, or in a separation agreement. Even though employees can disclose information about unlawful acts in the workplace, employers may still use clauses preventing disclosure of the amount paid in settlement or severance, and they may require confidentiality provisions to protect their confidential, proprietary or trade secret information.

Independent Contractors – Additional Exemptions to “ABC Test”

The California legislature previously codified the “ABC Test” for determining whether a worker is an employee or independent contractor and carved out certain industry exceptions to that test. Effective January 1, 2022, the list of industry exceptions expands to include newspaper carrier, licensed manicurists, and construction trucking contractors. Where industry exceptions exist, employers must use the common law, multi-factor Borello test to determine whether a worker is an employee or independent contractor.

Right of Recall Available to Workers in Certain Service Industries

Labor Code section 2810.8 now provides certain recall rights to employees working in hotels, clubs, event centers, airport hospitality operations, and building services (including janitorial, maintenance, and security services) who were laid off due to COVID-19. Under this new law, if a covered employer plans to hire a new employee, it must first offer the position to a laid off employee qualified for the position. Employers who refuse to recall an employee based on lack of employee qualification, must provide written notice to the employee stating the reasons for not rehiring them. Employers must keep records regarding their communications of job offers for three years. This law remains in effect until December 31, 2024.

PAGA Exception for Janitorial Workers Subject to a Collective Bargaining Agreement

The Private Attorneys General Act of 2004 (PAGA) authorizes aggrieved employees to bring civil actions to recover certain penalties for violations of the Labor Code. Newly added Labor Code section 2699.8 provides an exception to PAGA for janitorial employees performing work under a valid collective bargaining agreement in effect any time before July 1, 2028.

Procedural Modifications for Enforcement Actions Brought by the Department of Fair Employment and Housing (DFEH)

When a complaint is filed with DFEH for an alleged violation of the Fair Employment and Housing Act (FEHA), the time for complainants to file their own civil actions under the FEHA is now tolled until either the DFEH files a civil action or one year after the DFEH issues written notice to the complainant it closed its investigation without electing to file a civil action. The tolling is retroactive; however, it does not revive lapsed claims.

The new law also expands the venue provisions for class or group allegations of FEHA violations to any county in the state. For class or group complaints, the DFEH must issue a right to sue notice upon completion of its investigation and within two years after the filing of the initial complaint.

Finally, this new law expands current record retention requirements by increasing personnel record retention requirements under Government Code section 12946 to four years from the date the employer created the records, or the date the employer took the employment action.

Implicit Bias Training Requirements for Hospitals and Nursing Education Programs

Business and Professions Code section 2786 now mandates one hour of direct-participation implicit bias training as a graduation requirement from nursing programs and nursing schools. The training must include:  

• Identification of previous or current unconscious biases and misinformation.
• Identification of personal, interpersonal, institutional, structural, and cultural barriers to inclusion.
• Corrective measures to decrease implicit bias at the interpersonal and institutional levels, including ongoing policies and practices for that purpose.
• Information on the effects, including, but not limited to, ongoing personal effects, of historical and contemporary exclusion and oppression of minority communities.
• Information about cultural identity across racial or ethnic groups.
• Information about communicating more effectively across identities, including racial, ethnic, religious, and gender identities.
• Discussion on power dynamics and organizational decision making.
• Discussion on health inequities within the perinatal care field, including information on how implicit bias impacts maternal and infant health outcomes.
• Perspectives of diverse, local constituency groups and experts on racial, identity, cultural, and provider-community relations issues in the community.
• Information on reproductive justice.

Effective January 1, 2023, within the first two years of receiving their license, licensees must complete one hour of direct participation training in implicit bias through a continuing education provider approved by the Board of Registered Nursing.

Large Pharmacy Chains Can No Longer Use Quotas to Evaluate Productivity of Their Pharmacy Staff

Performance quotas for pharmacists and pharmacy technicians create a public health risk, particularly when demands on these professionals are high. Two newly added Business and Professions Code sections (Bus. & Prof. Code §§ 4113.7 and 4317) prohibit chain community pharmacies from establishing, utilizing, or communicating a quota to their pharmacy staff.

The term “chain community pharmacies” refers to a “chain of seventy-five (75) or more stores in California under the same ownership.” Quota is defined as a “fixed number or formula related to the duties for which a pharmacist or pharmacy technician license is required, against which the chain community pharmacy or its agent measures or evaluates the number of times either an individual pharmacist or pharmacy technician performs task or provides services while on duty related to any of the following: (a) prescriptions filled; (b) services rendered to patients; (c) programs offered to patients; or (d) revenue obtained.”

The following activities are not considered “quotas” and are still permissible: (i) revenue measurements of the pharmacy not related to or not measured by the number of tasks performed or services provided by a pharmacists or pharmacy technician; (ii) evaluation of the pharmacy staff’s competence, performance, or quality of care; (iii) any performance metric required by state or federal regulations that does not use quotas; and (iv) policies or procedures that assess pharmacy staff competency and performance (provided no quotas are used).

New Protections for Warehouse Distribution Employees

Quotas requiring warehouse distribution employees to complete a quantified number of tasks within a specified period, may not allow sufficient time for rest breaks and may jeopardize workplace safety.

To avoid noncompliance with employee and workplace safety requirements, this new law prohibits any quota that prevents warehouse distribution employees from taking meal or rest breaks, using bathroom facilities, or that prevent employers from complying with occupational health and safety laws. Covered employers must provide written documentation of any applicable quota to each employee upon hire or within thirty days of the effective date of the new law, detailing the metrics required for the quota. Covered employers may not take adverse employment actions against employees for failing to meet any quota the employer did not properly disclose to the employee or that otherwise fails to meet the new requirements. The law requires that any action taken by an employee to comply with occupational health and safety laws, or division standards is “time on task” and productive time for any quotas or monitoring system.

If a current or former employee believes that meeting a quota violated their right to a meal or rest period, or required them to violate any occupational health and safety law or standard, they may request, and the employer must provide, a written description of each quota to which the employee is subject and a copy of the most recent ninety days of the employee’s own personal work speed data.

The new law further authorizes a current or former employee to sue for injunctive relief to obtain compliance with specified requirements, and may, upon prevailing, recover costs and reasonable attorney’s fees. An employee may bring a claim for civil penalties under the California Private Attorneys’ General Act (PAGA) for such violations, but the cure provision of PAGA applies to violations under this new law.

Piece Rate Pay is Now Prohibited for Most Garment Workers

Section 2673.2 was added to the Labor Code to prevent the payment of subminimum wages in the garment manufacturing industry. Besides any other damages or penalties provided by the Labor Code, garment manufacturing employers and contractors who pay their workers by the piece or unit are now subject to a two-hundred-dollar penalty ($200) per employee for each pay period the employer pays the employee by the piece rate. This new law also imposes a four-year record retention requirement.

Direct Contractor Liability for Unpaid Wages Expanded 

This new law expands direct contractor liability for private construction contracts entered on or after January 1, 2022, to include penalties and liquidated damages stemming from unpaid wages and benefits.

Under existing law, direct contractors may be liable for unpaid wages, benefits, and contributions owed by a subcontractor to its workers. Under Labor Code section 218.7, direct contractors may require subcontractors to provide certain payroll records so the direct contractor may evaluate the subcontractor’s compliance with wage and hour requirements and withhold payments if the subcontractor fails to provide the requested documents and information. This law applies to contracts entered between January 1, 2018 and December 31, 2021.

Private construction contracts entered on or after January 1, 2022 are subject to new Labor Code Section 218.8. Direct contractors continue to be liable for any debt owed to a wage claimant incurred by a subcontractor acting under the direct contractor, and their liability now also includes penalties and liquidated damages if the contractor knew of the subcontractor’s failure to pay wages or benefits for work performed on the project. To avoid penalties and liquidated damages, the direct contractor should monitor payment of subcontractor wages through periodic review of payroll records; take diligent corrective action to stop or rectify any failure to pay wages, including withholding of payment from the subcontractor; and before making final payment, the direct contractor should obtain an affidavit of proper payments made by the subcontractor. Subcontractors must make their payroll records available to the direct contractor for inspection upon request.

State and Local Minimum Wage Increases

State and local minimum wage rates increase on January 1, 2022. California’s minimum wage rate increases to $14.00/hour for employers with twenty-five (25) or fewer employees, and $15.00/hour for employers with twenty-six (26) or more employees.

Certain California cities have higher minimum wage rates, including Alameda, Belmont, Berkeley, Burlingame, Cupertino, Daly City, El Cerrito, Emeryville, Fremont, Half Moon Bay, Hayward, Long Beach, Los Altos, Los Angeles, Malibu, Menlo Park, Milpitas, Mountain View, Novato, Oakland, Palo Alto, East Palo Alto, Pasadena, Redwood City, San Carlos, San Diego, San Francisco, South San Francisco, San Jose, San Leandro, Santa Clara, Santa Monica, Santa Rosa, and Sunnyvale. Companies employing workers in these cities should review local ordinances for applicable minimum wage rates.