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California’s 2018 Legislative Sessions Added to Employer Burdens

State takes the lead on issues likely to resurface in other parts of the country.

If you want a glimpse at what your future may hold, take a quick gander at the mass of new California employment laws going into effect in 2019.

These laws not only will impact in-state employers and those out-of-state employers who do business in California, but they frequently are the first harbinger of trends that result in similar laws eventually being adopted across the country, especially when it comes to other Blue States.

Among the new laws adopted by the California Legislature in 2018 are a long list growing out of the #MeToo movement, including one requiring California-based firms to add women to their boards of directors. As had been his wont in previous years, outgoing Governor Jerry Brown chose to veto only a handful of the most radical bills throughout the year.

For many employers the most significant piece of legislation was one that didn’t pass. Business groups had united behind a bill that would have fixed the California Supreme Court’s decision earlier in 2018 that virtually wiped out the legal use of independent contractors, especially in the trucking industry.

The ruling held that no worker could be considered a contractor if they were under contract to a company in the same line of endeavor. Thus, an independent owner-operator truck driver working for a trucking company cannot be considered a contractor, but a plumber doing repair work at a supermarket could.

Since the state Supreme Court decision, the California Court of Appeal further refined the High Court ruling by saying the new standard applies only to wage issues and that non-wage issues, such as reimbursement for expenses and workers’ comp, still come under the previous, more expansive definition of who is a contractor.

To add injury to injury, another state court ruled in a case involving exotic dancers that the Supreme Court decision can be applied retroactively. Under this decision, employers are liable for years of possible wage and hour violations and are not protected by having adhered to the previously legal standard when it was in force.

Legislation proposed to undo all of this had stalled in the legislature, but it is expected to be re-introduced in 2019. To learn what the state legislators believed was more important to spend their time passing than was this relief, read on.

Meal Breaks Struck Down

Another important development that didn’t directly involve the legislature was a federal decree striking down the state’s long-standing employee meal and rest break requirements. U.S. Secretary of Transportation Elaine Chow granted an American Trucking Associations petition overturning the requirements for being in violation of federal law.

Chao agreed with ATA’s position that the Federal Aviation Administration Authorization Act pre-empts these state rules, meaning they cannot apply to truck drivers who are involved in interstate commerce. Trucking employers had challenged the requirements in court and sought relief from Congress for years without success.

Their unhappiness stemmed from the fact that the rules attracted a horde of tort lawyers who exploited them to target trucking companies both large and small, seeking enormous financial settlements. In the name of retrieving compensation for drivers who had not received the state-mandated rest breaks, the attorneys sometimes sought judgments of hundreds of thousands of dollars for fleets with as few as 15 trucks.

One new piece of legislation in California directly impacts the supply chain as well. It supports the decades-long campaign by the Teamsters union to organize California port drayage drivers who traditionally were independent contractors. Since the 1990s, this campaign was aided at different times by port agencies, local governments, state governmental agencies and the legislature.

The new law creates joint and several liability for certain clients of port drayage carriers by requiring them to share legal liability with the carriers for violations of the state Labor Code. This apparently applies to shippers and receivers and Non-Vessel Operating Common Carriers (NVOCCs), but not other third-party intermediaries such as ocean freight forwarders, over-the-road property brokers and Customs brokers. Areas of liability include unpaid wages, failure to maintain workers’ compensation insurance and misclassification of independent contractors, among others.

Shared liability applies if the drayage carrier on the state Department of Labor Standards Enforcement’s (DLSE) list of carriers with unpaid judgments, tax assessments or tax liens, which will be published regularly on the DLSE’s website. DLSE must notify the carrier that it will be added to the website, and the carrier is responsible for notifying its clients of any outstanding judgments.

Another law makes a direct contractor liable for wages that are unpaid by subcontractors. This action repeals previous provisions in state law that had relieved direct contractors from liability for anything other than unpaid wages and fringe or other benefit payments or contributions, including interest owed.

#MeToo Agenda Expands

More new laws inspired by the #MeToo movement follow those enacted in 2017 in response to heightened public awareness of sexual harassment in the workplace. One new law goes beyond directly attacking sexual harassment by making California the first state to require public companies to have female representation on their boards.

A publicly-held corporation with executive offices in California must have a minimum of one female director on its board by December 1, 2019. By December 31, 2021, boards with five directors must have at least two women, and boards with six directors must have at least three. Corporations failing to comply are threatened with significant monetary penalties.

A state legislative package targeting sexual and other harassment termed the “#TakeTheLead” laws also has been called the “boldest” anti-sexual harassment legislation in the country.

One of these extends the statute of limitations for filing a civil action to collect sexual assault damages from two to 10 years after the alleged assault took place, or three years after discovery of an injury or illness resulting from an assault or attempted assault.

Another law makes it unlawful for an employer—in exchange for a raise or bonus, or as a condition of employment—to require the signing of a nondisclosure agreement or waiver of the right to file claims. It also expands legal protections to include nonemployees regarding any type of harassment banned by state law—not just sexual harassment.

Employer-required harassment training for employees also was expanded. Current law requires employers with 50 or more employees to provide supervisors with two hours of sexual harassment training every two years. Under the new law, by January 1, 2020, all employers with five or more employees must provide two hours of training to supervisors and one hour to non-supervisorial employees within six months of their hire or promotion, and every two years following that.

This extends to seasonal and temporary employees, or any employee who is hired to work for less than six months. They must receive training within 30 days of hire or within 100 hours worked, whichever comes first.

Another bill that passed with unanimous bipartisan support protects employers and sexual harassment victims from potential defamation suits. Under previous law, employers’ responses to reference checks from prospective employers regarding a former or current employee’s job performance or qualifications were protected from libel or slander claims as long as the communications were made without malice.

The new law extends the privilege to complaints of sexual harassment by an employee, without malice, to another employer. It also allows employers to inform prospective employers about investigations and findings during reference checks about an employee’s past harassing conduct.

Settlement agreements are no longer allowed if they prevent the disclosure of factual information related to civil or administrative complaints of sexual assault, sexual harassment or workplace harassment or discrimination based on sex. The new law does not prohibit a settlement agreement precluding disclosure of the amount paid and allows provisions that shield the claimant’s identity.

Matters Not Involving Sex

As a prime locus of “The Resistance!” to President Trump and Republican policies, California has taken legislative stands against everything from employers cooperating with federal immigration officials to air quality standards. In 2018 it stooped to attacking some of the most obscure and mundane federal actions, such as the Occupational Safety and Health (OSHA) proposal loosening of some employer injury and illness electronic reporting requirements.

One new state law requires Cal/OSHA to monitor the federal rulemaking and its implementation of the new rule. If Cal/OSHA determines that OSHA has “eliminated” or “substantially diminished” the requirements for employers to submit injury and illness data, the state agency will evaluate how to implement the changes necessary to protect those goals.

Another new law seeks to undo an OSHA policy by changing the statute of limitations for citations or violations regarding recordkeeping requirements from six months after the occurrence of the violation to either the date the violation is corrected or the date the injury is discovered.

Under California’s new paid family leave law, an employer may require an employee to take up to two weeks of earned but unused vacation as a condition of receiving disability benefits. Previously, one week of this vacation leave could be applied to the seven-day waiting period before the receipt of benefits.

Regarding criminal background checks, employers previously had been generally prohibited from seeking the particular conviction history of a job applicant. There were some limited exceptions. such as when an employer is required by law to find out if the applicant is prohibited from holding certain positions.

To avoid conflicts with existing federal law, California now allows employers to consider “particular convictions” that are prohibited by law for those holding specific jobs. An employer now may obtain additional information regarding such a conviction, regardless of whether it was expunged, ordered sealed, statutorily eradicated, or judicially dismissed.

When it comes to human trafficking, existing law requires specified establishments—including airports, intercity passenger rail or light rail stations, bus stations and truck stops—to post a notice that contains information relating to slavery and trafficking, including information about available services for victims.

A new law requires businesses operating an intercity passenger rail, light rail or bus station to provide training to employees on or before January 1, 2021. The training is aimed at employees who may come into contact with victims of human trafficking or who are likely to receive a report from another employee about suspected human trafficking.

In what be an exemplar of a legal requirement needed only in the state of California, the legislature amended the Military and Veterans Code to prohibit businesses from barring U.S. Armed Forces members because the member is wearing his or her military uniform.

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