Legislative Roundup – New Laws Will Affect California Employers In 2022

California Governor Gavin Newsom signed a number of new laws that will affect California employers beginning in 2022.  A summary of the significant legislative changes is set forth below. 

SB 331 – Restrictions On Confidentiality In Settlement Agreements

SB 331 – dubbed the “Silenced No More Act” – prohibits provisions in settlement agreements that prevent individuals from disclosing factual information of claims related to all forms of harassment, discrimination, and retaliation for reporting or opposing harassment or discrimination.  This significantly expands upon the STAND Act which, in 2019, prohibited preventing individuals from disclosing factual information relating to claims of sexual assault, sexual harassment, or harassment or discrimination based on sex, filed in a civil or administrative action.  The STAND Act (an acronym for “Stand Together Against Non-Disclosure”) emerged in the wake of the “Me Too” movement and the backlash against confidentiality provisions in settlement agreements regarding alleged sexually inappropriate behavior.  

Effective January 1, 2022, SB 331 expands the prohibition against confidentiality in settlement agreements to include acts of discrimination and workplace harassment not based on sex.  For example, if an employee alleges discrimination or harassment on the basis of race, age, religion, disability, or any other category protected by California’s Fair Employment and Housing Act (“FEHA”) in a civil action or administrative action, any settlement agreement cannot bar that employee from disclosing factual information related to the claim.  The employee may request, however, that his or her identity be shielded from disclosure.  Employers may still require that the amount paid in the settlement of any claim described herein remain confidential.  

SB 331 – NDAs & Separation Agreements

SB 331 also makes it unlawful for an employer to include in a separation agreement or non-disclosure agreement (“NDA”) any provision that prohibits the disclosure of information about unlawful acts in the workplace.  While employers are not prohibited from protecting their trade secrets, proprietary and confidential information, effective January 1, 2022, NDAs and separation agreements must carve out an employee’s ability to discuss conduct that the employee has reason to believe is unlawful.  The bill provides that such agreements should include, in substantial form, the following language: “Nothing in this agreement prevents you from discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that you have reason to believe is unlawful.”  

Lastly, SB 331 requires that employers offering severance agreements must notify employees that they have the right to consult with an attorney.  Additionally, the employer must provide the employee with a reasonable time period of not less than five business days to consult with an attorney.  An employee may sign the severance agreement prior to the end of the reasonable time period as long as the employee’s decision to accept such shortening of time is knowing and voluntary and is not induced by the employer through fraud, misrepresentation, or a threat to withdraw or alter the offer prior to the expiration of the reasonable time period, or by providing different terms to employees who sign such an agreement prior to the expiration of such time period.

As a result of SB 331, non-disclosure agreements, employment agreements containing non-disclosure provisions, settlement agreements, and separation agreements should be reviewed carefully for consistency under the enhanced restrictions of the new law. 

AB 1003 – Wage Theft As Grand Theft 

AB 1003 provides that an employer’s intentional theft of wages – including gratuities – in an amount greater than $950 from any one employee or $2,350 from two or more employees in any consecutive 12-month period constitutes “grand theft” and subjects an employer to criminal prosecution.  Importantly, this bill specifically includes independent contractors within the definition of “employee” and includes the hiring entity of an independent contractor within the definition of “employer.”  Moreover, this bill authorizes the recovery of wages, gratuities, benefits, and other compensation as restitution.  Overall, this law expands the definition of grand theft and makes it easier for employers who are found to have intentionally deprived their employees – including independent contractors – of wages to be criminally prosecuted.

AB 1033 – CFRA Expansion To Include Parents-In-Law

After expanding the scope of the California Family Rights Act (“CFRA”) last year to cover employers with five or more employees, AB 1033 makes minor changes to the CFRA.  By way of background, the CFRA makes it unlawful for certain employers to refuse to grant a qualified employee up to 12 workweeks of unpaid, job-protected leave during a 12-month period for medical leave or to care for a  family member.  AB 1033 adds leave to care for a parent-in-law (defined as the parent of a spouse or domestic partner) as an acceptable leave under the CFRA.  

Additionally, the new law creates a mediation pilot program for small employers with between 5 and 19 employees.  This pilot program requires that, if an employee requests an immediate right to sue letter, all parties are obligated to attend mediation prior to the filing of a civil suit if either the employee or employer requests mediation.  All statutes of limitations are tolled during the mediation process.  This is an important amendment for small employers who might prefer to mediate prior to the filing of a civil lawsuit.

SB 62 – Wage-And-Hour Liability In Garment Manufacturing 

SB 62 prohibits employers from paying an employee engaged in garment manufacturing by the piece or unit, or by piece rate, unless the employee is covered by a collective bargaining agreement.  The bill requires that employees engaged in garment manufacturing be paid at least minimum wage on an hourly basis.  For each pay period in which an employee is paid by the piece rate, SB 62 bill creates a $200 fine per employee, payable to the employee, against the garment manufacturer or contractor.  

The law also expands liability for unpaid wages to “brand guarantors,” which could include fashion houses (“brands”) and retailers.  Under SB 62, a garment manufacturer, contractor or brand guarantor who contracts with another person for the performance of garment manufacturing operations will be jointly and severally liable (i.e., equally responsible) with any manufacturer and contractor for the full amount of unpaid wages and any other compensation, penalties, and attorney’s fees due to a garment manufacturing employee.  

SB 62 also requires every employer engaged in the business of garment manufacturing and brand guarantors to keep all contracts, invoices, purchase orders, work orders, style or cut sheets, and any other documentation pursuant to which garment manufacturing work was performed, or is being performed, for 4 years.

This new law is intended to eliminate loopholes employed by garment manufacturers to avoid wage-and-hour liability by using subcontractors for garment manufacturing operations.  SB 62 makes clear now that a person contracting to have garments made is liable for the full amount of any unpaid wages and reimbursement of expenses to the workers who manufacture the garments regardless of how many layers of contracting the person may use.

AB 701 – Disclosure Of Quotas To Warehouse Employees 

AB 701 requires specified “warehouse distribution centers” to provide every employee with a written description regarding each quota to which the employee is subject.  The written description must include the quantified number of tasks to be performed or materials to be produced or handled, within the defined time period, and any potential adverse employment action that could result from the employee’s failure to meet the quota.  Covered businesses must provide this information upon an employee’s hire or within 30 days of the bill’s January 1, 2022, effective date.  

The law applies to all businesses that employ 100 or more employees at a single distribution center or 1,000 or more total warehouse employees in California.  The term “warehouse distribution center” is defined according to the North American Industry Classification System (NAICS) and includes General Warehousing and Storage, Merchant Wholesalers (Durable and Non-Durable Goods), and Electronic Shopping and Mail-Order Houses.  The bill specifically excludes warehouses for farm products.  

AB 701 provides that an employee shall not be required to meet a quota that prevents compliance with meal or rest periods, use of bathroom facilities, or occupational health and safety laws.  The bill prohibits covered employers from taking adverse employment actions against any employee for failing to meet such an unlawful quota.  

If a current or former employee believes that meeting a quota caused a violation of their right to a meal or rest period, or required them to violate any occupational health and safety law or standard, the employee has the right to request a written description of each quota to which the employee is subject and a copy of the most recent 90 days of the employee’s own personal “work speed data.”  Covered employers must respond within 21 days of any such request.  Former employees are limited to only one request.  

The bill also authorizes current and former employees to bring an action for injunctive relief to obtain compliance with specified requirements, and may, upon prevailing in the action, recover costs and reasonable attorney’s fees in the action.  Employers may also face civil penalties in actions brought pursuant to the Private Attorneys General Act.  However, the new law provides employers with an opportunity to cure alleged violations under Labor Code Section 2699.3.

SB 657 – Emailing Required Notices To Employees 

In the post-pandemic world of remote work, SB 657 provides that, in any instance in which an employer is required to physically post information in its workplace, the employer may also distribute that information to employees by email with the document attached.  Employers must still continue to physically display all required postings.  

SB 807 – Employer Record Retention Requirements

Effective January 1, 2022, SB 807 expands the time that employers are required to retain personnel records for applicants and employees from two years to four years from either the date the records were created or the date the employment action was taken.  

This time is further extended if an employer has been notified that a complaint has been filed with the California Department of Fair Employment and Housing (“DFEH”).

SB 606 – Expansion of Cal/OSHA’s Enforcement Authority 

SB 606 greatly expands the enforcement authority of Cal/OSHA by creating two new categories of violations: (1) “enterprise-wide” violations; and (2) “egregious” violations.  

The law creates a rebuttable presumption that a violation committed by an employer with multiple worksites is “enterprise-wide” if either: 

  • The employer has a written policy or procedure that violates Cal/OSHA requirements; or
  • There is evidence of a pattern or practice of the same violation committed by that employer involving more than one of the employer’s worksites.

SB 606 authorizes Cal/OSHA to issue an enterprise-wide citation requiring enterprise-wide abatement if the employer fails to rebut such a presumption.  Enterprise-wide citations will carry the same penalties as willful or repeated citations (up to $134,334 per violation).

The bill also authorizes Cal/OSHA to issue citations for egregious violations if one or more of the following is true about the employer or the willful violations committed by the employer:  

  1. The employer, intentionally, through conscious, voluntary action or inaction, made no reasonable effort to eliminate the known violation.
  2. The violations resulted in worker fatalities, a worksite catastrophe, or a large number of injuries or illnesses. 
  3. The violation resulted in persistently high rates of worker injuries or illnesses.
  4. The employer has an extensive history of prior violations of this part.
  5. The employer has intentionally disregarded their health and safety responsibilities.
  6. The employer’s conduct, taken as a whole, amounts to clear bad faith in the performance of their duties under this part.
  7. The employer has committed a large number of violations so as to undermine significantly the effectiveness of any safety and health program that may be in place.

Each instance of an employee exposed to an egregious violation will be considered a separate violation for purposes of the issuance of fines and penalties, meaning that Cal/OSHA can seek penalties calculated on the number of employees allegedly exposed.  This could lead to substantial penalties.  

The bill also expands Cal/OSHA’s authority to seek injunctions.  At present, Cal/OSHA may only seek an injunction if “the condition of any employment or place of employment or the operation of any machine, device, apparatus, or equipment constitutes a serious menace to the lives or safety of persons about it.”  SB 606 authorizes Cal/OSHA to seek an injunction restraining certain uses or operations of employment if it has grounds to issue a citation. 

Finally, the bill authorizes Cal/OSHA to issue a subpoena during inspection “if the employer or the related employer entity fails to promptly provide the requested information, and may enforce the subpoena if the employer or the related employer entity fails to provide the requested information within a reasonable period of time.”  The bill does not define “reasonable period of time.”  

SB 646 – Limited Exemption From PAGA For Certain Janitorial Employees 

SB 646 exempts specified “janitorial employees” represented by a labor organization from the provisions of the California Labor Code Private Attorneys General Act (“PAGA”) (meaning such employees would not be able to pursue civil penalties under PAGA) when the following conditions are met:

  • The labor organization has represented janitors prior to January 1, 2021; 
  • The employee has been employed by a janitorial contractor who registered with the Labor Commissioner as a “property service employer” in the calendar year 2020; and
  • The employee performs work under a valid collective bargaining agreement (“CBA”) in effect any time prior to July 1, 2028, that, among other things, provides specific wages (not less than 30 percent more than the state minimum wage rate) and contains a grievance and arbitration procedure.

The PAGA exemption in this bill does not apply to the following workers:

  • Workers who specialize in window washing; 
  • Housekeeping staff who make beds and change linens as a primary responsibility; 
  • Workers working at airport facilities or cabin cleaning; 
  • Workers at hotels, card clubs, restaurants, or other food service operations; and
  • Grocery store employees and drug retail employees.

This exemption expires on the date the CBA expires or July 1, 2028, whichever is earlier.  SB 646 becomes effective January 1, 2022, and does not preclude a janitorial employee from pursuing any other civil action against their employer.

* * *

Employers are encouraged to review their policies, procedures, practices, and employment-related agreements in light of these legislative changes.  Please contact your SFSS&W attorney if you have any questions regarding these or other labor and employment law matter

Millicent N. Sanchez ext. 8203 msanchez@swerdlowlaw.com
Janet I. Swerdlow ext. 8202 jswerdlow@swerdlowlaw.com
David A. Wimmer ext. 8201 dwimmer@swerdlowlaw.com
Emily G. Camastra ext. 8213 ecamastra@swerdlowlaw.com
Meghan E. O’Kane ext. 8204 mokane@swerdlowlaw.com
Lori M. Yankelevits ext. 8205 lyankelevits@swerdlowlaw.com
Karen E. Rhodes ext. 8206 krhodes@swerdlowlaw.com
Allison Musante ext. 8207 amusante@swerdlowlaw.com

Comments are closed.