Last Week’s Breaking News for California Employers

The week of October 7 was a busy week for the California Legislature and California Court of Appeals. Although the California appellate court’s ruling in Ferra v. Loews Hollywood Hotel, LLC (Cal. App. 2019) B283218 brought a sigh of relief to California employers when determining which “regular rate” applies to meal and rest period premiums, California Gov. Gavin Newsom signed a slew of employment-related bills impacting California employers beginning January 1, 2020.

On October 7, 2019, the California appellate court held in the Ferra case that employers may pay meal and rest period premiums at the employee’s straight-time hourly rate. Generally, incentive payments, such as non-discretionary bonuses, must be recalculated back into the employee’s regular hourly rate for overtime purposes. The Ferra case clarifies that such recalculation is not required when calculating meal and rest period premiums. Although a favorable decision for California employers, the case is likely to be appealed to the California Supreme Court, which could reverse the decision. California employers should consult with an Employers Council attorney for more information.

Equally as important, Gov. Newsom was busy on Thursday, October 10, signing three employee-friendly bills into law that become effective January 1, 2020:

  • AB 9: This bill extends the statute of limitations period for employees to file discrimination and harassment claims against their employer with the California Department of Fair Employment and Housing (DFEH), from one year to three years. Moreover, employees have an additional one year to file a lawsuit in civil court after receiving a right-to-sue notice from DFEH. California employers could possibly be litigating discrimination and harassment claims up to four years after the alleged discriminatory act.
  • AB 51: This bill prohibits employers from requiring an applicant or employee, “as a condition of employment, continued employment, or the receipt of any employment-related benefit,” to waive their rights under the California Fair Employment and Housing Act (FEHA), including the right to file a civil lawsuit. In effect, this bill essentially makes it unlawful for an employer to require an employee to sign an arbitration agreement that is entered into, modified, or extended on or after January 1, 2020, as a condition of employment. Although this bill does not “intend to invalidate a written arbitration agreement that is otherwise enforceable under the Federal Arbitration Act,” this law will likely face legal challenges as the Federal Arbitration Act preempts state arbitration law. Please note this law does not apply to post-dispute settlement agreements or negotiated severance agreements.
  • SB 142: This bill expands California’s lactation accommodation requirements in the workplace. In addition to providing a room or other location, besides a bathroom, in close proximity to the employee’s work area to express breast milk, this bill will require employers to provide lactating employees access to a sink with running water and a refrigerator suitable for storing milk in close proximity to the employee’s work area. Moreover, the lactation room or location must:
    • “Be safe, clean, and free of hazardous materials”;
    • “Contain a surface to place a breast pump and personal items”;
    • “Contain a place to sit”; and
    • “Have access to electricity or alternative devices, including, but not limited to, extension cords or charging stations, needed to operate an electric or battery-powered breast pump.”

Employers with fewer than 50 employees may be exempted if the employer can demonstrate an undue hardship, but the employer must still make a reasonable effort to provide a place for an employee to express milk in private. The law also requires employers to develop and implement a lactation accommodation policy containing specific information. Please contact a member of the Employers Council’s California Committee (CAInfo@employerscouncil.org) for assistance with drafting and implementing a policy that complies with this new law.

Additionally, Gov. Newsom signed AB 25 on Friday, October 11, a bill that does not become effective until January 1, 2021. AB 25 exempts employers for one year from collecting certain information from applicants and employees under the 2018 California Consumer Privacy Act (CCPA), which takes effect January 1, 2020. Consumers under the CCPA have a right to know about the information businesses collect from them and also have a right to have this information deleted. Because “consumers” was so broadly defined, it includes job applicants and employees. To alleviate this concern, the Legislature introduced AB 25 to exempt employers from tracking, maintaining, and complying with requests for disclosure of certain information from job applicants, employees, business owners, directors, officers, medical staff, or contractors for purposes of employment until January 1, 2021. Importantly, this bill does not exempt businesses from the January 1, 2020, deadline from affirmatively disclosing certain information to employees.

Gov. Newsom signed various employment-related legislation throughout the 2019 legislative session that is not included in this article. Employers Council will be hosting a California Legislative Update webinar in December outlining all California legislation impacting California employers that will take effect in 2020. More information on date and cost will become available soon.