In recent months, Governor Gavin Newsom has signed into law several pieces of legislation that could have a bearing on your employment practices in 2022. Few are entirely new; in fact, most of the items we'll highlight here expand upon legislation enacted within the past five years, providing a novel spin for the new year.
Since most employment disputes stem from issues related to wage and hour laws, we'll start there.
Minimum wage boost. Enacted in 2017, Senate Bill 3 stipulated incremental increases to California minimum wage each year. January 1, 2022 ushers in the latest of these increases, bringing the minimum wage to $15 per hour for employers with 26 or more employees and $14 per hour for employers with 25 or fewer employees.
On the horizon:
- California might see a further push for minimum wage increases to $18 per hour if a recent ballot initiative gains steam. With the working title “The Living Wage Act of 2022,” the initiative proposes annual minimum wage hikes to $18 per hour by Jan. 1, 2025.
Intentional wage theft. California raisesthe criminal stakes for employers in 2022 with Assembly Bill 1003, which makes an employer's intentional theft of wages or tips punishable as grand theft. Offending employers would be charged as felons who could face 16 months to 3 years in prison rather than the previously typical civil penalties that the bill's author, Assemblywoman Lorena Gonzalez, called “a slap on the wrist.”
What kind of numbers constitute this particular variety of felony? In any 12 consecutive months, an employer's intentional theft of more than $950 (for one employee) or $2,350 (for two or more employees) in wages or gratuities is punishable as grand theft.
AB 1003 defines intentional wage theft as the intentional deprivation of wages, gratuities, benefits, or other compensation legally due to the employee, with the term “employee” extending to include independent contractors. The smart follow-on question attempts to clarify what's meant by “intentional.” The implication is that the employer carries out deliberate, unlawful deprivation with the knowledge that the employee is due the compensation. Certainly, wage and hour compliance can be tricky for employers, but it seems unlikely that honest mistakes or occasional errors would be construed as “intentional” or impart criminal liability.
Other wage-and-hour issues. Proper records and consistent, informed policies are crucial to help employers avoid disputes involving improper timekeeping, unpaid overtime, and unreimbursed business expenses. Especially with COVID restrictions making hybrid or remote work models so prevalent, employers may face an increase in disputes related to California Labor Code Section 2802. Under Section 2802, employers must reimburse employees for necessary expenses incurred when working. Although not a new law, Section 2802 in an increasingly home-based work milieu may open employers up to the greater risk of wage-and-hour suits. It's worthwhile to review practices and button-up policies now to mitigate that risk.
Separation and nondisparagement agreements. New legislation (SB 331) restson the shoulders of 2018's STAND Act (SB 820), an outgrowth of the #MeToo movement. Under the STAND Act, an employer can no longer compel a victim of sexual harassment to maintain confidentiality regarding the underlying facts of the claim. SB 331 similarly prohibits broad confidentiality provisions in cases unrelated to sexual harassment. As of January 1, 2022, an employee may disclose underlying facts related to an act of harassment, retaliation, or discrimination (based on disability, race, religion, age, or other protected status) but can still be prohibited from disclosing the amount of settlement.
SB 331 tacitly prompts employers and their attorneys to review any litigation settlement agreements that include language prohibiting disclosure of unlawful acts in the workplace. Separation and nondisparagement agreements are obvious places to start, but confidentiality agreements might also need a rework. SB 331's authors drafted wording to be included in such agreements.
Notes on the Not-So-New
Harassment training. For businesses with five or more employees, it may be time to run all workers through training to prevent sexual harassment and abusive conduct in the workplace. Senate Bill 1343 first mandated this training to be provided by January 1, 2020 (later amended to January 1, 2021) and repeated every two years. So employers of a minimalist mindset (i.e., those who complied by that earlier date and haven't revisited since) should ensure they've got that training in the lineup immediately.
Private Attorneys General Act. Stretching back to 2004 but still creating a stir, this California statute essentially deputizes employees to act as private attorneys general, able to pursue civil penalties against employers who've committed labor violations. Pair an employee's PAGA power with any Section 2802 vulnerabilities you may have as an employer (see above), and 2022 could soon become a challenging year.
An Ongoing Saga
In the wait-and-see category, we haveAssembly Bill 51, which we recently covered here. This measure to eliminate mandatory arbitration was on the brink of taking effect when a U.S. District Court injunction stopped it in its tracks in January 2020. The issue remains in a state of flux, volleyed back and forth between California courts and federal law. Until it attains some degree of finality, California employers might consider whether it's in their interest to remove language from their employment agreements compelling workers to agree to mandatory arbitration as a condition of hire. Your attorney can advise you of the approach that best suits your circumstance.
A new year always presents employers with a timely opportunity to review standard agreement templates, compensation policies, and best practices in light of recently enacted measures. It's wise to put enforceable terms in place now and to implement any newly required programs or policies to position your business well for the coming year.