As the 2019 legislative year comes to a close, there are a number of critical labor and employment proposals still making their way to Gov. Newsom's desk. With just a few short weeks remaining for the Legislature to pass bills, there will be a flurry of activity as everyone watches to see which bills cross the finish line on or before the Sept. 13 deadline.

As California employers are used to by now, the Legislature continues to push the envelope when it comes to labor and employment proposals. and many of these bills, if signed into law, will greatly impact the employer community. This is also Gov. Newsom's first year in office, so there is an element of high drama as nobody really knows what action he might take on these legislative proposals.

But we will all find out shortly, as the Governor has until Oct. 13 to sign or veto measures. In the meantime, California employers should closely monitor the following bills:

By far the most significant issue facing the California Legislature this year, AB 5 is a labor-sponsored measure to codify the "ABC test" for determining whether an individual is an employer or an independent contractor that was adopted last year by the California Supreme Court in the Dynamex case.

Several industries and professions—including doctors, dentists, lawyers, insurance agents, direct sellers, real estate agents, and others—have been exempted from the Dynamex test. But many others have been left out and continue to advocate that they should be excluded. Also still unresolved is the question of retroactivity; will the Dynamex decision be applied retroactively, or only prospectively on a go-forward basis?

And then there's that little issue of the gig economy. Several big gig economy players continue to push for a compromise that will maintain independent contractor status but provide portable benefits and a mechanism for workers to dialogue with gig platforms on work issues.

It is anticipated that there will be significant further activity on AB 5 before the dust settles, so this will be one to watch closely!

Enacted in 2018, the California Consumer Privacy Act (CCPA) will provide sweeping privacy protections for California residents when it goes into effect on January 1, 2020. Troubling for California employers, the CCPA makes no distinction between employees and consumers, potentially covering information that employers collect, maintain, or share about employees or applicants.

AB 25 was introduced by the same legislator who authored the CCPA and sought to clarify the scope of the CCPA and exempt most employment data. However, relatively late in the process, organized labor and their supporters opposed the bill and stated that they were very concerned about "workplace privacy." This opposition threatened to derail AB 25, which would have been a terrible outcome for all California employers.

Fortunately, a compromise deal was reached to allow labor to remove their opposition to AB 25. This deal exempts employment information from the CCPA, but only for one year, unless extended. This reflects a commitment by the business community to work with organized labor on legislation related to labor's concerns regarding workplace privacy over the next year, in exchange for extending or eliminating the sunset date on the employment data exemption to the CCPA.

However, this compromise will still require employers covered under the CCPA to disclose to employees and job applicants the categories of personal information collected and the purposes for which the information will be used. Covered employers must comply with this disclosure requirement no later than Jan. 1, 2020.

In what has become almost an annual tradition, labor and plaintiff attorneys have again advanced legislation that would prohibit mandatory arbitration agreements for nearly all types of employment law claims in California.

While AB 51 is pitched as a "sexual harassment" bill, it is actually much broader and would cover much more than just sexual harassment.

The bill would prohibit employers from requiring an applicant or employee from entering into any contractual agreement as a condition of employment to "waive any right, forum, or procedure" for alleged violations of the entire Fair Employment and Housing Act (FEHA) and the entire Labor Code. In sum, AB 51 would prohibit mandatory arbitration agreements for any discrimination claims covered under FEHA—not just sexual harassment—and for any claims under the Labor Code, including wage and hour and other protections.

Gov. Brown vetoed almost-identical legislation last year (AB 3080), noting that it would be preempted by the Federal Arbitration Act (FAA) and "plainly violates federal law." In addition, a federal court in New York recently held that legislation passed in that state last year prohibiting mandatory arbitration of sexual harassment claims was preempted by the FAA.

However, AB 51 may obtain a more favorable outcome under Gov. Newsom, setting up years of litigation over whether such a state law is preempted by the FAA.

Legislation passed last year at the height of the #MeToo movement amended California law to provide that sexual harassment prevention training must be provided by employers with five or more employees and extended the law to require employers to provide one hour of training to non-supervisory employees (in addition to two hours for supervisors). These changes were enacted by SB 1343 (Mitchell) and were set to go into effect on Jan. 1, 2020.

However, at the prompting of the business community, the Legislature passed SB 778 a year later to make some needed clarifications to the law. Primarily, SB 778 would delay the changes made by SB 1343 until Jan. 1, 2021, so employers would have additional time to comply with the training requirements.

In addition, SB 778 clarifies that employers are required to provide training to nonsupervisory employees within six months of hire and to new supervisory employees within six months of the assumption of a supervisory position. Finally, the bill permits employers who have provided training to an employee in 2019 to provide "refresher" training to that employee two years thereafter (rather than the Jan. 2021 deadline). This will avoid forcing employers who have already provided compliant training from having to do so twice in a two-year period.

SB 778 has already passed the Legislature and is on Gov. Newsom's desk. The bill contains an "urgency clause," meaning it will go into effect immediately if signed into law. If enacted, it will provide much needed clarity to the business community, so let's keep our fingers crossed on this one.

If AB 9 sounds familiar to California employers, it should. It is identical to legislation (AB 1870) that was vetoed by Gov. Brown last year. But it's a new day and a new Governor, so this bill is back in 2019.

Under current law, employees have one year to file an administrative claim for employment discrimination (including sexual harassment) with the Department of Fair Employment and Housing (DFEH) as a precursor to filing a civil lawsuit. This bill would extend that period to three years. Proponents argue that victims of sexual harassment sometimes are reluctant to come forward and need additional time to process and be ready to publicly make a complaint.

However, AB 9 is not limited to sexual harassment and would extend the statute of limitations to three years for all forms of employment and housing discrimination. Employers have expressed concern that extending the statute of limitations makes responding to and litigating claims more difficult, as evidence gets "stale" and witness' memories fade over time.

Employers have asked (1) that this bill be limited to sexual harassment claims, and (2) that the bill clarify it only applies prospectively to claims on a going-forward basis. Thus far, the author has refused to adopt those suggested amendments. Therefore, employers will just have to wait and see whether this bill has a different result under Gov. Newsom than it did under his predecessor.

Another familiar topic (and another one that was vetoed last year) involves an employer's obligation to accommodate employees who need to express breast milk during work.

Largely based on the San Francisco ordinance, SB 142 by Sen. Scott Weiner would require employers to provide a lactation room, other than a bathroom, that shall be "in close proximity to the employee's work area, shielded from view, and free from intrusion." SB 142 specifies that the lactation room must (1) be safe, clean, and free of toxic or hazardous materials; (2) contain a surface to place a breast pump and personal items; (3) contain a place to sit; (4) have access to electricity; and (5) have access to a sink with running water and a refrigerator in close proximity to the employee's workplace. SB 142 also provides that denial of reasonable break time or adequate space to express milk shall be deemed a failure to provide a rest period under current law.

SB 142 also requires employers to develop and implement a lactation accommodation policy, which must be included in employee handbooks and policies and provided to new employees or when an employee makes and inquiry about or requests parental leave. SB 142 also imposes new building standards by requiring the California Building Standards Commission to adopt new rules that require the installation of lactation spaces.

Gov. Brown vetoed almost-identical legislation (SB 937) last year. However, the building standards provisions were deleted from that bill before it was sent down to the Governor. Therefore, SB 142 is actually broader than the proposal that was vetoed in 2018.

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Conclusion

Things can move quickly during the last few weeks of the legislative session, and many of these bills may be significantly amended before they cross the finish line. The foregoing six bills are only a handful of the key employment bills working through the Capitol this session, but employers should refresh themselves with these bills and their requirements in the event they are passed and signed into law.

Benjamin M. Ebbink is of counsel with the national labor and employment law firm Fisher Phillips in Sacramento. He may be reached at [email protected].