It’s never a dull moment in California. If you have gone astray with tackling your list of 2023 priorities, we will help you get back on track.  Below are some key (but certainly not all!) compliance areas that employers with California employees should be sure to keep in mind this year.

NEW PAY SCALE TRANSPARENCY AND REPORTING REQUIREMENTS. Gov. Gavin Newsom (D) signed a bill that requires employers to provide pay scales (ranges) for any job posting or on demand to employees. The law applies to employers with at least 15 employees. In addition, employers with more than 100 employees anywhere with at least one in California are required to submit pay data reports to the state showing gender, race, and ethnicity for each job category. More requirements took effect this year, such as requiring employers with more than 100 employees hired through labor contractors to submit a separate pay data report for those employees. The new deadline for reporting is May 10.

What to do?  Review your existing salary reporting and advertising/job postings for California positions, and if you are subject to the pay data reporting for employees or labor contractors, don’t delay! You should start gathering and evaluating your data now. The month of May will be here before you know it.

ARBITRATION AGREEMENTS AND CLASS/PAGA WAIVERS. Last summer, the U.S. Supreme Court gave us the long-awaited ruling in Moriana v. Viking River.  At a very high level, the SCOTUS held that an employer can avoid wage-hour class actions with a good arbitration agreement with a class, collective, and representative waiver. Arguably, this would also apply to claims under the California Private Attorneys General Act. If you don’t currently have an arbitration program but want to adopt one, now is a good time to do it. If you have arbitration agreements already, take a look to make sure the agreements’ language allows you to take advantage of Viking River. Many current agreements do not. If you put into place a new agreement or update an existing agreement, please get some help. We expect rulings in other pending cases will continue to alter this landscape, such as the Adolph v Uber case now pending with the California Supreme Court.

Speaking of arbitration, the U.S. Court of Appeals for the Ninth Circuit has given employers a late holiday gift in Chamber of Commerce v. Bonta, in which the court essentially held that the Federal Arbitration Act preempts California’s notorious anti-arbitration statute, AB 51.

We also are seeing plaintiffs attacking “contract formation” and challenging English translation processes (for non-English-speaking employees) and electronic signatures/audit trails, claiming they are incomplete or invalid. Some judges are buying it, despite fairly clear law, because the signatures are often not recognizable or not traceable electronically.

What to do?  Review your arbitration agreement and make sure it takes current advantage of the Viking River holding. If not, consider revising now.

NEW OBLIGATIONS UNDER THE CALIFORNIA PRIVACY RIGHTS ACT: The California Privacy Rights Act amends the California Consumer Privacy Act to expand upon obligations relating to the collection, use, and disclosure of personal information collected from California residents. The CCPA exempted employee data, but this exemption expired on December 31. Businesses with California “employees” (broadly defined to include California-resident employees, applicants, emergency contacts, beneficiaries, independent contractors, and members of boards of directors) must update their privacy policies and disclosures, honor requests from employees and other consumers to exercise CPRA rights, and confirm that contracts with service providers include required terms. The law also makes a distinction between personal information and “sensitive personal information,” and requires businesses to conduct cyber audits and data protection assessments for activities that involve significant risk.

What to do?  Review your policy and protocols and develop notices with outside counsel. Constangy’s new Cybersecurity & Data Privacy practice group is available to assist.

SEPARATION AGREEMENTS FOR NON-SUPERVISORY EMPLOYEES.  This one is not limited to California. The National Labor Relations Board invalidated a separation agreement that contained non-disparagement and confidentiality provisions. The decision is not limited to agreements with employees who are represented by a union but also applies to agreements with anyone who is an “employee” within the meaning of the National Labor Relations Act.

What to do?  Employers nationwide will need to review – and probably amend – their existing separation agreements used with non-supervisory employees to avoid being in violation of the NLRA. Even if the courts get involved, the outcome is not guaranteed.

UNIONS. We have seen a rise in union organizing. The NLRB under the Biden Administration has a different take on the law. The new NLRB General Counsel, Jennifer Abruzzo, is a tenacious leader backing union positions that are “stretches,” to say the least – for example, with card-check recognition under the current law. We believe that aggressive union campaigns are coming, even in historically non-union Southern California. For agricultural employers, there is a new state law that makes it very easy for a union to get recognition.

The NLRB is also going to revisit the Boeing decision, which laid out a framework for evaluating basic employer policies – even for non-union employers. GC Abruzzo is advocating for a stricter standard, which could jeopardize the acceptability of many typical employer policies.

What to do?  If it’s been a while, it might be a good time for some supervisory training on “positive employee relations,” so folks can tell whether there is organizing activity and understand what they can do to respond. Stay tuned for further potential revisions to handbooks and policies.

REGULAR RATE” LAWSUITS. More and more class actions and PAGA cases are coming up with niche theories to sue employers who have already been sued under the PAGA. The most popular of these seems to be “failure to pay sick pay at the regular rate of pay”— in other words, not adding bonuses, etc., when computing the rate for sick pay.

What to do?  Review sick pay, bonuses, and any other non-hourly compensation for non-exempt employees regarding calculation of overtime, sick pay benefits, or meal/rest penalties.

REIMBURSEMENT FOR HOME OFFICE EXPENSE. Many lawsuits assert various expense theories for everything from imputed rent, to internet and cell phone, to office supply expenses. This is not a big surprise, considering the shift to remote working during COVID-19. Don’t forget that in California (and a handful of other states), employers must reimburse for “reasonable” business expenses.

What to do?  Evaluate your policies and practices! Consider paying employees a set stipend for all these expenses and implementing a written policy that requires employees to submit expense reports with supporting documentation if they think the expense is higher.

THE U.S. SUPREME COURT DOBBS DECISION. Companies with employees in some states outside California have choices to make. There are some pitfalls involved in adopting policies to address Dobbs, and it is best to review benefits issues, wage-hour issues, and employee relations issues depending on where your employees work and live.

What to do? Determine your company’s position and its tolerance for risk, and consult with counsel.

OTHER NEW LAWS IN CALIFORNIA. California has several new laws allowing employees to go home if they feel unsafe during an “emergency condition”; prohibiting discrimination based on off-duty use of cannabis (effective January 1, 2024); requiring employers to offer five days of bereavement leave; expanding sick pay and California Family Rights Act leave to employees to care for a “designated person”; requiring advance notice of schedules in the retail space; and, because of indexing the minimum wage, raising the minimum salary for exempt status to $64,480.

What to do?   Revise your handbooks and procedures to account for these changes and make sure your team is aware!

*Lara de Leon also works in Constangy’s Austin and San Antonio, Texas, offices.

For a printer-friendly copy, click here.

Back to Page