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Now that 2020 is upon us, several new laws that have been passed by the legislature are set to take effect. Much of the new legislation involves the reclassification of those who were once considered independent contractors as employees. Indeed, several employment lawsuits involve misclassification. Employers are not required to pay independent contractors overtime, offer sick and vacation days. Independent contractors are not covered under workers’ compensation. Nor do companies have to pay them overtime.

 

That being said, there are some advantages to being classified as an independent contractor. You can set your own hours, don’t have to punch a clock, and have customers or clients instead of bosses. But the system is rife with abuse, so much so that the problem was undertaken by California’s legislature.

 

However, misclassification is not the only employment issue the legislature addressed. Below, we’ll survey the most important new laws that all employers and employees should be aware of heading into 2020.

Reclassification of Independent Contractors

The so-called “freelancer” law (AB-5) establishes a new set of parameters that restricts the classification of independent contractor. Essentially, the new law places a burden on every employer to “prove” that the individual that works for them is an independent contractor (and not an employee). 

 

For a worker to be labeled as an independent contractor, the employer must prove that three elements are true. Those are:

 

• The worker is free from the control or direction of the company in connection with the performance of their work.

 

• The worker must perform work that is outside of the hiring entity’s usual course of business.

 

• The worker must be customarily engaged in independent contractor work.

 

This legislation is set to affect a number of rideshare workers and lawsuits are currently working their way through the courts to block specific provisions of the legislation. Nonetheless, all companies should proceed as if the new law is the law.

 

The new law will apply to all workers excepting those in professional services such as doctors, consultants, truck drivers, architects and accountants. Media companies and rideshare companies will be impacted the most.

 

Preserving the Right to Legal Recourse

AB-51 prevents employers from placing arbitration clauses in employment contracts. Employees who sign such agreements waive their right to be heard in court in employment disputes. However, the provision has a temporary restraining order in place that will prevent it from going into effect until it can be determined whether the new provisions violate the Federal Arbitration Act.

 

The language of the bill doesn’t mention arbitration specifically but prevents any employer from demanding that an employee contractually waive any right or remedy available under California’s Fair Employment and Housing Act (FEHA). Much of FEHA is geared toward preventing discrimination in both the housing market and workplace.

 

Another key provision is that an aggrieved employee who has filed a lawsuit against an employer cannot be forced to quit as part of any settlement. So-called “no rehire” clauses are now unenforceable under California law. 

New Protected Characteristics for Discrimination Cases

Ever at the forefront of the civil rights movement, California has added hairstyle as a protected characteristic that cannot be used as a basis for terminating an employee or not hiring one. This notably includes dreadlocks which have been the subject of intense debate. Since dreadlocks are associated with a specific race, employers who deny employment or fire employees based on dreadlocks have enjoyed broadscale immunity. Most courts have determined that Title VII of the Civil Rights Act only applies to immutable characteristics, which hairstyle is not. The new California legislation will be the first to include a mutable characteristic.

Penalties for Late Payments

Employers who are late with payments can now face stiffer penalties. The penalty is $100 for the first violation. Further violations are $200 each added to 25% of the wages paid late. 

 

A second provision levies penalties for failing to pay minimum wage to employees. This includes employees who work for tips. Their established wage plus their tips must equal at least minimum wage. If there is a difference, the employer is expected to make up that difference.

Employment Discrimination Changes

The statute of limitations in employment discrimination complaints has been changed from one year to three. Companies with five or more employees are now required to provide two hours of sexual harassment training to anyone who manages other employees and one hour to non-supervisory employees by January 1st, 2021. The training must be given again once every two years. New hires must get sexual harassment training within six months of being hired. 

Other Notable Provisions of the New Laws

Other new laws set to take effect in 2020:

 

• Minimum wage changes. California minimum wage is now $13 per hour or $12 per hour for employers with fewer than 26 employees. 

 

 

• Salary threshold for overtime waiver is now $54,800 for companies with more than 25 employees and $49,920 for those with 25 or fewer employees.

 

 

 

• Organ donation. Employees are now entitled to 30 days of paid leave plus an additional 30 days of unpaid leave after donating an organ.

 

 

• Lactation rooms. Companies must now provide employees lactation rooms that are safe, clean, and free of hazardous materials. These rooms must contain a surface to place a pump. Companies with fewer than 50 employees may seek a hardship exemption.

Learn More About California Employment Law Changes for 2020

If you’re concerned about how California’s new employment laws will impact your business, contact the attorneys at Herbert Law Office today and we can discuss your option.