New Legislation Affecting California Employers – Part 1

attorney Sue m. Bendavid

Sue M. Bendavid | Shareholder

October 4, 2022

Tal Burnovski Yeyni | Associate

October 4, 2022

For the California Legislature, the summer recess is over, which means a host of new state Assembly and Senate bills for 2023.

Below is a short summary of several prominent bills all California employers should be aware of (we’ll post more in the next week or two):

AB 152: SPSL Continued Through End of 2022 (Effective Now)

In February 2022 Governor Gavin Newsom signed SB 114 into law, which revived the state’s COVID-19 Supplemental Paid Sick Leave (SPSL) requirement for businesses employing 26 or more employees. We previously wrote about SPSL here.

SB 114 expired on September 30, 2022. However, on September 29th, Governor Newsom signed AB 152, which immediately extended SPSL through December 31, 2022. To clarify, AB 152 does not require employers to provide additional leave or add another leave “bank.” Instead, it pushes the end of SPSL to December 31, 2022.

In addition to extending SPSL, AB 152 (1) permits employers to require employees to submit to a second diagnostic test and (2) creates a relief program for smaller employers who incurred SPSL costs.

Diagnostic Testing as Proof of Infection

Generally, as a condition of additional SPSL, employers may require employees to provide proof of infection. Employers may also require employees to submit to a diagnostic test on or after the fifth day after testing positive for COVID-19, at no cost to employees.

If that first diagnostic test is positive, AB 152 now authorizes employers to require employees to submit to a second diagnostic test (at no cost to employees) within no less than 24 hours. AB 152 clarifies that an employer has no obligation to provide SPSL to employees who refuse to provide documentation of results, or to submit to the additional two diagnostics tests.  

California Small Business and Nonprofit COVID-19 Supplemental Paid Sick Leave Relief Grant Program

Under the new relief program, qualified employers may be entitled to financial relief for SPSL paid between January 1, 2022, and December 31, 2022 – currently up to a maximum amount of $50,000 (per employer). The program will remain in effect until January 1, 2024.

A qualified employer is considered “a business or nonprofit that meets all of the following criteria”:

(1) Either:

(i) A “C” corporation, “S” corporation, cooperative, limited liability company, partnership, or limited partnership, or

(ii) A registered 501(c)(3), 501(c)(6), or 501(c)(19).

(2) Began operating before June 1, 2021.

(3) Is currently active and operating.

(4) Has 26 to 49 employees* and provides payroll data and an affidavit, signed under penalty of perjury, attesting to that fact.

*For construction employers and others covered under Wage Order 16, the number of employees is determined by the number of full-time employees that have worked for the employer, without any break in employment, for the past 24 months.

(5) Has provided SPSL (pursuant to the requirements of Labor Code Sections 248.6-7).

(6) Provides organizing documents.

AB 152 states that the Office of Small Business Advocate may contract with an agent capable of online and mobile application development to carry out the Program and will also market the Program to create awareness.

SB 1162: New Pay Disclosure Requirements (As of January 1, 2023)

Expanding on two previous bills (SB 973 and AB 168), SB 1162 creates new pay disclosure requirements.

Disclosure of Pay Scales

In 2017 the Legislature enacted Labor Code Section 432.3 (we previously wrote about AB 168 here), which prohibits all employers from inquiring into and relying on the salary history of an applicant.

Section 432.3 also requires employers, upon reasonable request, to provide the pay scale for a position to an applicant applying for employment.

SB 1162 added the following requirements:

  • Provide pay scales to employees: On request, employers are required to provide an employee the pay scale for the position in which the employee is currently employed.
  • Post pay scales on job ads: Employers with 15 or more employees are required to include the pay scale for a position in any job posting (including through third party postings).
  • Different definition for “pay scale”: Previously, “pay scale” was defined as “a salary or hourly wage range.” SB 1162 changed this to “the salary or hourly wage range that the employer reasonably expects to pay for the position.”
  • Requirement to maintain pay records: Employers are required to maintain records of a job title and wage rate history for each employee for the duration of employment and three years after separation, for Labor Commissioner inspections. Failure to maintain records will create a rebuttable presumption in favor of an “employee’s claim.”
  • An aggrieved person’s claim: A person who claims to be aggrieved of a violation of Labor Code Section 432.3, may file a complaint with the Labor Commissioner within one year after the violation became known, and may also bring a civil action for injunctive relief.
  • Penalties: If the Labor Commissioner finds a violation occurred, it may order the employer to pay a civil penalty of $100 – $10,000 per violation. However, for a first violation re job ads, no penalty will be assessed if the Labor Commissioner finds that all job postings for an open position have been updated to include the pay scale as required.

Pay Reporting Obligations for Larger Employers

In 2020 the Legislature enacted SB 973 which required employers with 100 or more employees to submit a yearly pay data report to the California’s Civil Rights Department (CRD), in addition to the EEO-1 reporting required by the U.S. Equal Employment Opportunity Commission. The CRD report must include the number of employees categorized by race, ethnicity, and sex, along with their respective wages. The purpose of SB 973 was to detect and address, pay discrimination.

SB 1162 adds to the reporting obligations a requirement to disclose the median and mean hourly rate within each job category, for each combination of race, ethnicity, and sex.

Additionally, SB 1162 creates a new reporting requirement with respect to labor contractor employees and requires employers that have 100 or more employees hired through labor contractors within the prior calendar year, to submit to the CRD a separate pay data report covering these employees and the names of all labor contractors.

A labor contractor is defined as “an individual or entity that supplies, either with or without contract, a client employer with workers to perform labor within the client employer’s usual course of business.”

The purpose of this reporting is to collect data for employees whose information is not generally collected. Per the Legislature, “this additional data could be important for antidiscrimination enforcement and targeted state programs to help specific type of workers.”

AB 2188: Prohibits Discrimination Against a Person’s Off-Duty Use of Cannabis (As of January 1, 2023)

Per AB 2188, there is a problem with employment-related drug tests. The bill explains the science behind the tests in the declaration:

(a) Tetrahydrocannabinol (THC) is the chemical compound in cannabis that can indicate impairment and cause psychoactive effects. After tetrahydrocannabinol is metabolized, it is stored in the body as a nonpsychoactive cannabis metabolite. These metabolites do not indicate impairment, only that an individual has consumed cannabis in the last few weeks.

(b) The intent of drug tests is to identify employees who may be impaired. While there is consensus that an employee should not arrive at a worksite high or impaired, when most tests are conducted for cannabis, the results only show the presence of the nonpsychoactive cannabis metabolite and have no correlation to impairment on the job.

(c) As science has improved, employers now have access to multiple types of tests that do not rely on the presence of nonpsychoactive cannabis metabolites. These alternative tests include impairment tests, which measure an individual employee against their own baseline performance and tests that identify the presence of THC in an individual’s bodily fluids.

Accordingly, AB 2188 seeks to limit employers’ reliance on tests that detect the presence of nonpsychoactive cannabis metabolites (NCMs). Excluded from AB 2188 are employees in the building and construction trades, and applicants and employees hired for positions that require a federal government background investigation or security clearance.

Under AB 2188 employers may not discriminate against a person in hiring, termination, or any other term or condition of employment, or otherwise penalize a person based on:

  1. The person’s use of cannabis off the job and away from the workplace.
  2. An employer required drug test that has found the person to have NCMs in their hair, blood, urine, or other bodily fluid.

AB 2188 permits employers to refuse to hire a person or penalize a person if the decision is made based on a “scientifically valid preemployment drug screening” test that does not screen for NCMs.

Employers with any questions about these and other new California employment laws, should contact employment counsel for clarification. In some jurisdictions overlapping laws of cities, counties or metropolitan areas may contradict state law. In these situations, employers should adhere to the law or regulation most beneficial to the employee.

This blog is part of a series, proceed to: Part 2 of New Legislation Affecting California Employers.

Sue M. Bendavid and Tal Burnovski Yeyni are employment defense attorneys.

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