This year, California employers were faced with new legal obligations from numerous governing bodies, including the California legislature, Cal/OSHA, and local city and county governments. As we prepare for 2022, below is an overview of some of the latest legal developments and key new laws going into effect next year.
COVID-Related Cal/OSHA + Federal OSHA Developments
- As we previously shared, Cal/OSHA issued new COVID rules in June 2021 that are applicable to most businesses and most employees in the state. Those rules remain in effect and are set to expire on January 14, 2022.
- However, as has been widely publicized, federal OSHA sought to impose numerous additional obligations on employers with 100 or more employees, including requiring those employers to ensure that employees who are not fully vaccinated are tested for COVID at least weekly. After those regulations were published, numerous legal actions were filed across the country challenging those rules, and a federal court of appeals has issued an order halting the implementation and enforcement of the rules pending further litigation. It is now not clear whether those rules will ever go into effect.
- Meanwhile, Cal/OSHA had planned to meet this month to discuss revisions to the COVID regulations currently in effect in California to bring them in line with the federal OSHA regulations. In light of the halting of the implementation of the federal OSHA regulations, Cal/OSHA has now tabled this meeting until the federal OSHA litigation shakes out. As a result, we remain in a wait-and-see situation, and the current Cal/OSHA regulations remain controlling.
California Family Rights Act Expansion
As we explained in last year’s legal update, effective January 1, 2021, the California legislature broadened the California Family Rights Act (CFRA), a law entitling eligible employees to take up to 12 weeks of job-protected, unpaid time off work for the following reasons: (1) to care for their own serious health condition, (2) to care for the serious health condition of a family member, (3) to bond with a newborn baby or a child newly placed with the employee for adoption or foster care, and (4) for certain military purposes. Previously, this law applied to only employers with 50 or more employees, but effective January 1, 2021, it was expanded to apply to employers with just 5 or more employees. Last year’s update also increased the scope of family members for whom CFRA leave can be taken to include grandparents, grandchildren, and siblings. This year, the legislature again expanded the definition of family member to now also include parents-in-law, and this change will go into effect on January 1, 2022. We have been updating employee handbooks to reflect this change.
Updates Needed to NDAs, Severance and Settlement Agreements
Effective January 1, 2022, the “Silenced No More Act” will require significant changes to certain severance, settlement, and confidentiality agreements as well as other agreements containing non-disparagement provisions, including:
- Settlement agreements regarding claims of workplace harassment, discrimination, retaliation, or sexual assault may no longer “silence” the employee by prohibiting the employee from disclosing factual information related to the underlying claim. Although employers may still require confidentiality of the settlement terms, employers may not prohibit the employee from speaking about the underlying facts giving rise to the claim.
- Employers may not require, either as a condition of employment or continued employment, or in exchange for a raise or bonus, or as part of a severance/separation agreement, an employee to sign a non-disparagement agreement that denies the employee the right to disclose information about unlawful acts in the workplace. The law requires specified language to be included in all such agreements informing employees of their right to discuss/disclose such information.
- Employers offering a severance/separation agreement to employees must notify the employee of their right to consult an attorney regarding the agreement and must provide the employee no less than 5 business days within which to do so. This is a significant new obligation that previously was not required when presenting employees with severance agreements.
We have updated our severance, settlement, and confidentiality agreement/NDA templates to reflect these changes, and we have also made updates to confidentiality language in employee handbooks to reflect these changes.
Wage and Hour Updates and Reminders
Effective January 1, the state minimum wage for businesses with 26 or more employees will be $15 per hour ($14 per hour for smaller employers). For employees in LA and Santa Monica, the minimum wage increased to $15 per hour as of July 1, 2021. A number of other cities likewise have local minimum wages that are higher than the state minimum wage.
Increases in the state minimum wage impact those employees you have classified as exempt salaried workers because exempt salaried workers must be paid a base salary that is at least twice the state minimum wage for full-time employment (40 hours per week). Therefore, as of January 1, exempt salaried workers must be paid no less than $58,240 to retain exempt status ($62,400 for employers with 26 or more employees). Employees who have been misclassified as exempt can seek damages and penalties for unpaid overtime, missed meal and rest breaks, interest, and attorney’s fees.
Mandatory Retirement Plan
Employers with five or more employees who do not offer their employees a retirement plan must register with CalSavers, a state-run retirement program, by June 30, 2022.
New Limitations on Arbitration Agreements
Arbitration agreements have long been used by contracting parties to provide that in the event of a dispute between the parties, such dispute will be heard by a neutral arbitrator rather than a court/jury. Federal law broadly authorizes arbitration agreements, including in the employment context, and has authorized employers to require employees to sign arbitration agreements as a condition of employment.
However, a few years ago, the CA legislature passed a law, AB 51, which among other things made it illegal for employers to require employees to sign mandatory arbitration agreements – i.e., agreements requiring the employee to sign them in order to obtain/retain new or continued employment. The law was to go into effect on January 1, 2020, but a federal district court enjoined the enforcement of the statute, holding that it was preempted by federal law (which essentially prevented the law from going into effect). After this happened, many employers continued to operate business as usual with respect to arbitration agreements.
Recently, the federal Ninth Circuit Court of Appeals considered whether the district court correctly determined that AB 51 was preempted by federal arbitration law. In a 2-1 decision, the Ninth Circuit ruled that the statute is not preempted by federal law, and that employers cannot require employees to sign mandatory arbitration agreements. There is a dissenting opinion, and the ruling will very likely be reviewed by the full Ninth Circuit Court of Appeals and potentially the U.S. Supreme Court. Even if the decision is ultimately reversed, it does immediately call into question the validity of mandatory arbitration agreements of employment claims.
Because of these developments, we have made a number of updates to our arbitration agreement templates. If you would like to discuss this further, please reach out.
In light of these changes, all California employers should update their handbooks and personnel policies to bring them into compliance for 2022. If you have any questions about these new laws or would like us to review or revise your handbooks, NDAs/Confidentiality Agreements, or other employment-related documentation to bring it up to date in light of the new legislation, please contact us. The new year is a good time to roll-out handbook updates and other new employment policies.
The above summary has been prepared for general informational purposes only and is not intended as legal advice.
Bernstein & Friedland, P.C. is a boutique employment law firm in Los Angeles specializing in wrongful termination, discrimination, harassment, retaliation, and unpaid wage and overtime matters. Please visit our website at www.laemploymentcounsel.com to learn more about us.