2020 is underway, and with a host of new employment laws in California. The most prominent, AB5, narrows the rules for classifying workers as independent contractors and has had broad impact for companies doing business in the state across numerous industries.
Other new laws have more limited impact, but still require affirmative action on the part of companies to ensure they’re up-to-date on the new rules. Here’s a brief overview of the key employment law changes for 2020.
The ABC Test & Independent Contractors
The new legislation—aimed squarely at the gig economy—adopts the California Supreme Court’s opinion in Dynamex Operations West, Inc. v. Superior Court, a 2018 case that began this shift in worker classification. The Court’s “ABC test” requires that an employer establish three factors to justify an independent contractor classification:
the worker is free from control and direction over the performance of the work, both under the contract and in fact;
the work provided is outside the usual course of the business for which the work is performed; and
the worker is customarily engaged in an independently established trade, occupation or business (hence the ABC standard).
You can read our full summary of the new AB5 framework here.
Prohibition Against Arbitration Agreements On Hold - For Now
Under AB51, employers can no longer require arbitration as a condition of employment (new or continued) in Fair Employment and Housing Act and labor code claims in their agreements with job applicants, employees, and independent contractors. This applies to requirements for arbitration related to employment benefits as well.
But the validity of AB51 is still unclear. On February 7, 2020, Chief U.S. District Judge Kimberly Mueller of the Eastern District of California granted a preliminary injunction enjoining enforcement of the new measure. Judge Mueller wrote that the plaintiffs challenging the new law satisfied their burden of showing that AB51 was likely preempted by the Federal Arbitration Act and they were likely to succeed on the merits of their claim. Mueller also wrote that AB51 interfered with the FAA given the civil and criminal sanctions imposed on employers for violating the law.
The State will likely appeal the ruling, taking the case to the Ninth Circuit.
“No Rehire” Provisions in Settlement Agreements
AB 749 prohibits “No Rehire” provisions in settlement agreements. These were common clauses that would prohibit a former employee from applying for a job with that company again, anywhere in the country.
Under the new law, settlement agreements cannot include any provision that prohibits, prevents, or otherwise restricts an employee from working with that employer (or any of its affiliated entities) again in the future.
New Labor Provisions for Nursing Mothers
SB142 includes new provisions regarding required lactation accommodations for employees. Employers must:
Provide a lactation room or location that includes access to a sink and refrigerator in close proximity to the employee’s workspace
Provide employees with reasonable break times or adequate space to express milk
Refrain from discharging, or in any other manner discriminating or retaliating against, an employee for exercising or attempting to exercise rights under SB142
Companies with fewer than 50 employees may seek an exemption from the requirements if they can demonstrates that the requirement poses an undue hardship. But exempt employers must still make a reasonable effort to provide a place for an employee to express milk in private.
Protected Hairstyles under the Fair Employment and Housing Act
SB188 updates the definition of “race” under the California FEHA to include “traits historically associated with race, including, but not limited to, hair texture and protective hairstyles.” Under the updated definition, protected hairstyles include “braids, locks, and twists.”
This update comes as black hair came under the Oscar spotlight. Former NFL receiver and current film director and producer Matthew Cherry won an Oscar for Best Animated Short for Hair Love, a story about a black father who learns to do his daughter’s hair. He said that "Hair Love was born out of wanting to see more representation in animation but also wanting to normalize black hair."
Disclaimer
Please note the foregoing is not intended to be an exhaustive summary of new employment laws and changes in California or the steps to be taken to become compliant and is not intended as legal advice. For customized recommendations and guidance concerning your independent contractor relationships, please contact us directly.