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New Laws for California Businesses for 2020

It’s a new year and that means that California’s full-time legislature has been hard at work adding additional rules and regulations for California’s already over-regulated business community. Businesses hoping to have a reduction in the number of rules, regulations and taxes have not found allies with any power in Sacramento, and as such, with the start of a new decade, there are a host of new laws which you should be familiar with.

Assembly Bill 5 – Independent Contractors or Employees?

Perhaps the most important new law in California, effective January 1, 2020, is Assembly Bill (“AB”) 5. The bill adopts as state law the ruling from the California Supreme Court Ruling in the case Dynamex Operations West, Inc. v. Superior Court of Los Angeles, where the Court introduced the “ABC Test” to determine whether a worker was an independent contractor or an employee.

Further, the ABC test presumptively considers all workers to be employees and forces a hiring business to bear the burden of proving each of the following three conditions for the worker to be properly classified as an independent contractor. The “ABC Test” is used to determine whether the person is an employee or an independent contractor, as follows:

  1. The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under contract for the performance of the work and in fact;
  2. The worker performs work outside the usual course of the hiring entity’s business; and
  3. The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

Under the new law, California now presumes that all workers are employees, and places the burden on the business to prove that a person is an independent contractor. So the business owner must prove each of the above-referenced conditions in order for the person to be classified as an independent contractor. While there are certain exceptions to the rules (dealing with specific industries), it is a massive change in the law and you should be well-acquainted with the law if you regularly use independent contractors in your business.

Assembly Bill 375 – The California Consumer Privacy Act (CCPA)

Going into effect on January 1, 2020, the CCPA is California’s version of the European Union’s consumer privacy law and is designed to protect people’s private information. The law allows consumers to demand to see all of the information a company has saved on them and a list of the companies which may have been provided access to that information. The CCPA applies to companies that (a) have at least $25 million in annual revenue and/or (b) any company that maintains information on at least 50,000 people or collect more than ½ of their annual revenue from the sale of personal data. Moving out of California won’t afford a company any protection: It applies to the foregoing companies whether or not they are located in the state… or even in the USA! Insurance companies, however, are exempt from the law.

Penalties for non-compliance are steep: Up to $7,500 per record, and it allows consumers to sue the companies for the breach either individually or as part of a class action. You can, therefore, expect attorneys to start fishing for clients and filing lawsuits as soon as the law goes into effect. Thankfully, the law does include a 30-day “window” in which a company can get into compliance after written notice. It is important that if the CCPA applies to your business, that you take action immediately to put the proper safeguards in place to protect your customers’ data and to ensure that your business is in compliance.

Assembly Bills 9 and 51 – Employment Discrimination

AB 9 extends the deadline that an employee has to file a complaint alleging employment discrimination. Prior to 2020, an employee had to file an employment discrimination action within one (1) year from the date of the alleged occurrence. From January 1, 2020 forward, California extended this deadline to three (3) years, increasing your business’ potential exposure to discrimination lawsuits.

AB 51 bans arbitration agreements for employees and prohibits employers from requiring an employee to waive any rights as a condition of employment. This means that if you sue an employee (or vice- versa), the employee has a right to a jury trial, which is potentially more expensive to litigate, may take longer to complete, and includes more risks and uncertainty of outcome for a business owner.

Assembly Bill 673 – Increase in Failure to Pay Wages Penalties

This bill increases the penalties that an employee may recover for an employer’s failure to timely pay wages.

Senate Bill 83 – Paid Family Leave

SB 83 increases the wage replacement benefits under California Paid Family Leave from 6 weeks to 8 weeks. (Effective July 1, 2020)

Senate Bill 142 – Breast Feeding Accommodation

California already required employers to make “reasonable efforts” to provide employees with a room or other location (not a bathroom) to express milk for a child and to provide for the time to do so. However, the new law requires employers to provide this time each and every time the employee needs to do so, and requires that the employee provide, among other things, a refrigerator suitable for storing the milk… or other “cooling device” suitable therefor.

Senate Bill 188 – No Discrimination for Hairstyles

An employer can no longer discriminate based on the hairstyle if it is one which is historically associated with race.

There are additional new laws which may affect your business that you need to comply with in 2020. It is important that you become familiar with them and update your internal policies and procedures to ensure compliance. Contact the attorneys at VRS to be sure your business is obeying the law and doesn’t run afoul of the highly-regulated California labor market.