Five New Non-COVID-19 Laws Taking Effect in 2021 That California Employers Should Know About

By: George Theofanis

As 2021 fast approaches, it is important for California employers, and employers with California employees, to be aware of some of the latest labor and employment laws in The Golden State. While most of the discussion online and in the media has focused on the new and significant local, state, and federal legislation issued in response to the COVID-19 pandemic, this article instead focuses on five new laws that are not directly responsive to the pandemic, but are still important for California employers to know about. Each of the new laws discussed below is effective as of January 1, 2021, unless otherwise noted.

1. Minimum Wage Increase 

California presses forward with the new state minimum wage increases created by SB-3 in 2016 and continues down the path to a $15/hour minimum wage for all employees. Effective January 1, 2021, the minimum wage for employers with 25 employees or less will increase to $13/hour, and for employers with 26 or more employees, the minimum wage will increase to $14/hour. Employers should also be mindful of local rules, which may provide for additional requirements. 

This increase also impacts the minimum-salary requirements for exempt employees. To be exempt from the requirement of having to pay overtime to the employee, the employee must perform specified duties in a particular manner and be paid “a monthly salary equivalent to no less than two times the state minimum wage for full-time employment.” (Lab. Code, § 515, subd. (a).) Employers need to review the base salary for all exempt employees to ensure the employees meet the salary required to be exempt. For more information, see our previous post, “California Minimum Wage to Increase in 2021.”

2. Settlement Agreements and “No Rehire” Provisions 

Current law prohibits “no rehire” provisions in settlement agreements, unless "the employer has made a good faith determination that the aggrieved person engaged in sexual harassment or assault.” (Code Civ Proc., § 1002.5.) AB 2143 makes several amendments to the ban on "no rehire" provisions. First, for the ban to apply it requires that the claimant file the claim in good faith for the prohibition to apply. Second, for the good faith exception to apply, the employer must have determined sexual assault or sexual harassment before the grievant filed the claim. Finally, this new law expands the exception to include a good faith determination that the aggrieved person engaged in any criminal conduct. For more information, see our previous post, “California Adds Good Faith Exception to “No Rehire” Provisions in Employer-Employee Settlement Agreements.”

3. One-Year to File Labor Commissioner Complaints 

Existing law allows employees that have been discharged or otherwise discriminated against in violation of any law enforced by California’s Labor Commissioner to file a complaint with California’s Division of Labor Standards Enforcement (DLSE) within 6 months after the occurrence of the violation. AB 1947 amends the law to expand the amount of time for an employee has to file a claim, from six months to one year. The new law also amends California Labor Code section 1102.5 to allow for attorneys’ fees for employees who prevail on a whistleblower retaliation claim pursuant to the code. This change will likely lead to an increase in whistleblower litigation.

4. Private Employers Must Submit a Pay Data Report to the California Department of Fair Employment and Housing (DFEH) 

SB 973 requires, on or before March 31, 2021, and on or before March 31 each year thereafter, a private employer that has 100 or more employees, and that is required to file an annual Employer Information Report under federal law, to submit a pay data report to the DFEH that contains specified wage information. The report must include the number of employees by race, ethnicity, and sex in a variety of job categories, including but not limited to executive or senior-level officials and managers, professionals, laborers and helpers, and service workers. The new law also authorizes the DFEH to seek an order requiring the employer to comply with these requirements and to recover the costs associated with seeking the order for compliance.

5. Limited On-Call Rest Breaks Exemption for Unionized Security Officers 

Existing law generally prohibits an employer from requiring an employee to work during a mandated meal or rest or recovery period and provides for certain exemptions from these requirements. Previously, the California Supreme Court’s decision in Augustus v. ABM Security Services, Inc., (2016) 2 Cal.5th 257, prohibited on-call rest breaks for covered employees. AB 1512, passed as an urgent response to Augustus, allows security officers who are registered under the Private Security Services Act, and whose employer is a registered private patrol operator, to remain on the premises and on-call and restart a rest period as soon as practicable if it was interrupted. 

Notably, the new law only applies to security officers covered by a valid collective bargaining agreement that expressly provides for (1) the wages, hours of work, and working conditions of employees; (2) rest periods for those employees; (3) final and binding arbitration of disputes concerning the application of its rest period provisions; (4) premium wage rates for all overtime hours worked; and (5) a regular hourly rate of pay not less than one dollar more than the state minimum wage rate.

The provisions of AB 1512 took effect September 30, 2020, but will not apply to any litigation initiated before January 1, 2021. The law will remain in effect only until January 1, 2027.

Final Thoughts

Although this article only briefly covers some of the significant new changes to the legal landscape for California employers, being aware of the above changes in the law will allow employers to adjust their operating practices and procedures, and update their employee handbooks and policies accordingly. 

For more information on these new laws, contact the author of this post or visit our Labor & Employment Practice page to find an attorney in your area.

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