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New Year, New Updates
The start of the New Year brought with it a new wave of labor and employment legislation that employers should note, including changes to many existing laws. In this blog we’ve summarized a few key new changes that went into effect on January 1, 2022.
1. SB 3: Minimum Wage Increase
The final step increase of SB 3 went into effect on January 1, 2022, bringing California’s minimum wage to $15/hour for employers with greater than 26 employees. As a reminder, recent case law established that the state minimum wage laws apply to both general law and charter cities and counties.
2. AB 1033: Expanded Family Leave
AB 1033 expands the definition of “parent” under the California Family Rights Act to include a “parent-in-law.” Accordingly, employees are eligible to take CFRA leave to care for parent-in-laws. The bill also makes procedural changes to the small employer mediation program that is in place for employers with 5 to 19 employees. The bill requires that when an employee requests an immediate right to sue letter for a CFRA claim, the Department of Fair Employment and Housing (“DFEH”) must notify the employee in writing that if either party requests mediation, mediation must be completed prior to filing suit.
3. SB 807: Retention of Personnel Records
SB 807 changed the requirements regarding an employer’s duty to maintain and preserve personnel records. Previously, employers only had to maintain such records for two years. Under the new law, however, such records must be kept for at least four years, and possibly longer if a Department of Fair Employment and Housing complaint has been filed. The four-year timer starts from the date the personnel file was created, though the timer “restarts” from the date of termination or “non-hire” of an applicant.
4. SB 657- Workplace Postings
SB 657 states that employers may provide any required workplace postings by email and include any accompanying posters or flyers as attachments. However, the bill explicitly states this does not alter any requirements to physically display the required postings.
5. AB 1561- Extended Exemptions for Determining Independent Contractor Status
AB 1561 amends new legislation from 2019 determining when a worker is an employee or independent contractor (a distinction that can have consequences in many areas of employment law). As described below, AB 1561’s changes relate to narrow types of workers, including those not involved in the public sector. But we thought the independent contractor law is important enough that its amendment deserves mention here, along with a quick refresher on the law.
To understand AB 1561, it is first necessary to discuss the background of AB 5. Passed in 2019, AB 5 codified what is known as the “ABC” test to determine if workers are employees or independent contractors. The test was established by the California Supreme Court case of Dynamex Operations West, Inc. v. Superior Court (S222732) to streamline how to determine whether a worker should be classified as an employee or independent contractor. Under the “ABC” test, a worker is considered an independent contractor only if the employer establishes:
a) that the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact;
b) that the worker performs work that is outside the usual course of the hiring entity’s business; and
c) that 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 contained several exemptions, however, which allowed the previous “Borello” test to be used instead of the “ABC” test to determine a worker’s classification.
AB 1561 clarifies the scope of the exemption granted to certain narrow classes of employees. For example, the law updates the exemption for a data aggregator and a research subject who willingly engages with a data aggregator to provide individualized feedback, by formally defining the term “research subject”. The bill also removes the condition that any consideration paid for the feedback provided, if prorated to an hourly basis, is an amount equivalent to or greater than the minimum wage.
While these changes may not affect public agencies given the extensions only apply to a few narrow classifications of workers, LCW will be watching for any further changes to this independent contractor law.
We will continue to provide developments on important new legislation affecting California workers.