JASON RESNICK | WG VICE PRESIDENT AND GENERAL COUNSEL AGRICULTURE & THE LAW
New California Employment Laws for 2020 It’s that time once again for the annual summary of new California employment laws. The California Legislature was active as ever in 2019. 2,576 bills were introduced of which 1,042 bills made it to Governor Newsom’s desk. Of those, the Governor signed 870 bills and vetoed 172.
C. The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity. AB 5 carves out exceptions for a number of occupations and industries including doctors, lawyers and insurance agents. If an exception applies, the independent contractor analysis converts to the more flexible Borello test, which focuses on the entity’s control over the worker. Moreover, the ABC test does not apply to bona fide business-to-business contracting relationships, provided they meet several criteria, including but not limited to, ensuring the service provider is free from the direction and control of the hiring entity, the service provider provides services directly to the hiring entity rather than the entity’s customers, and the service provider has a business license, a separate business location and is customarily engaged in an independent business. Companies that misclassify employees as independent contractors may be subject to private lawsuits, Private Attorney General Act (PAGA) claims, and government enforcement actions. AB 51 – Ban on Arbitration Agreements AB 51 effectively bans mandatory pre-dispute arbitration agreements between employers and employees. Specifically, the bill prohibits an employer from requiring a job applicant or employee to waive any rights, forum or procedure to address employer violations of the Fair Employment and Housing Act (FEHA) or the Labor Code. Any person violating this prohibition is subject to a misdemeanor. The bill also prohibits retaliation and discrimination against an employee who refuses to sign such an agreement. The new law also prohibits employers from requiring employees to opt out of the agreement to preserve their rights. While it does not prohibit truly voluntary agreements, employers will have the burden of proving that the agreement was truly voluntary and not signed under duress. If employers elect to proceed with voluntary arbitration
Notably, Governor Newsom signed a number of bills that were previously vetoed by Governor Brown. It is also noteworthy that the Legislature, unlike in the recent past, focused less on wage and hour matters and more on terms and conditions of employment, such as arbitration; discrimination, harassment and retaliation protections; and recruiting and hiring. Many of these laws will have a significant impact on California employers and companies with operations or employees in the state, while other changes are less dramatic but nonetheless important. Prompt action will be required to ensure compliance, including revising employment policies and practices and revising employee handbooks and notices. Below is a summary of many of the laws that affect employers in the state. All are effective January 1, 2020 unless otherwise noted. Legislature in 2019 was AB 5, which codifies and expands the “ABC test” that is used to distinguish employees from independent contractors. The ABC test was established by the California Supreme Court in the Dynamex Operations West, Inc. v. Superior Court decision which limited its application to the Industrial Welfare Commission (IWC) Wage Orders. AB 5 not only codifies the ABC test for purposes of the IWC Wage Orders, it also immediately extends it to the Labor Code and the Unemployment Code, and will apply to workers compensation effective July 1, 2020. Under the ABC test, a worker is presumed to be an employee unless the hiring entity can establish all of the following criteria are met: A. The worker is free from the control and direction of the hiring entity, both under the contract for the performance of the work and in fact; and B. The worker performs work that is outside the usual course of the hiring entity’s business; and AB 5 – New “ABC Test” for Independent Contractors Arguably the most significant bill advanced by the
34 Western Grower & Shipper | www.wga.com JANUARY | FEBRUARY 2020
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