California Introduces Slate of New Employment-Related Laws
Los Angeles, Calif. (November 15, 2021) - On September 22, 2021, Governor Gavin Newsom signed into law several employment-related bills, which are set to go into effect January 1, 2022. This alert contains a summary of those new laws.
SB 762 – Contracts and Timing of Arbitration Fees
This bill closes a gap in current law regarding the payment of arbitration fees by establishing clear guidelines for when an arbitrator must send an invoice containing the total amount due and the due date. The basic requirements of the new law are that arbitration providers must provide invoices stating the total amounts due with due dates to all parties on the same date and in the same manner.
Under existing federal and California law, businesses and employers can include clauses in consumer and employment contracts mandating arbitration to resolve certain disputes. To protect consumers and employees who can no longer bring their claims in court, the law provides a recourse for employees when the employers and businesses fail to timely pay arbitration fees in attempts to delay the arbitration. Specifically, when a business or employer is more than 30 days past due on an arbitration payment, they are considered in material breach of the agreement and the consumer or employee may elect to proceed with the arbitration or bring the case in court.
While this seemed like appropriate protection, there were previously no requirements governing when an arbitrator was required to send the invoices or how the payments and due dates must be disclosed. This created a loophole where employers could receive undisclosed payment extensions solely for the purpose of delaying arbitration proceedings. Unsurprisingly, this law was immediately challenged in court to determine precisely when the 30-day timeline for payment commenced.
Under SB 762, the arbitration provider must immediately provide to all parties an invoice for any fees and costs required before the arbitration can proceed, or fees and costs required to continue the arbitration. The invoice must state the full amount owed, the due date, and must be provided to all parties by the same means and on the same date it is generated. For arbitration proceedings that require payment of fees and costs during the arbitration, if no time frame for payment of an arbitration invoice is established in the agreement, payment is due upon receipt.
Any extensions to payment due dates, whether for prepayment or payment during arbitration, must be agreed to by all parties. Importantly, SB 762 does not affect the 30-day grace period for payment after a deadline has passed.
Failure to comply with payment time frames can result in the imposition of sanctions against the drafter of the agreement (employers and businesses) or loss of the ability to arbitrate the claim, at the election of the employee or consumer.
While the bill skews in favor of consumers and employees, it also provides much needed clarity for businesses and employers. For employers and businesses, best practice is to establish clear payment time frames in your arbitration agreements with employees and consumers, otherwise your payment is due upon receipt. Additionally, employers should never exceed payment due dates by more than 30 days given the potential loss of the ability to arbitrate the claim.
AB 701 – Warehouse Distribution Center
Due in part to the accelerated growth of e-commerce caused by the COVID-19 pandemic, AB 701 aims to ensure that workers at large warehouse facilities are not penalized for complying with health and safety standards, or prevented from taking meal and rest breaks, in attempting to meet their job performance quotas.
Employers covered under AB 701 include those with 100 or more nonexempt employees at a single warehouse distribution center, or 1,000 or more nonexempt employees at one or more warehouse distribution centers in the state. Covered employers are required to provide each nonexempt employee with a written description of each quota to which the employee is subject, including the quantified number of tasks to be performed, materials to be handled within the defined time period, and any potential adverse employment action that could result from failure to meet the quota.
Importantly, the bill provides that an employee shall not be required to meet a quota that prevents compliance with meal or rest periods, use of bathroom facilities, or occupational health and safety laws. Moreover, the bill prohibits an employer from taking adverse action against an employee for failure to meet a quota that has not been disclosed or for failure to meet a quota that does not allow a worker to comply with meal or rest periods. Any action taken by an employee to comply with occupational health and safety laws or division standards is considered time spent on task and productive time for the purposes of any quotas or monitoring systems. The bill also gives employees the right to request a description of quotas to which they are subject and data reflecting their personal work speed from the most recent 90 days. The Labor Commissioner is charged with coordinating with the Department of Industrial Relations to enforce the provisions of this bill.
The bill is intended to protect workers from the increasing demands of e-commerce by raising standards for workplace safety. Despite this, employers are concerned about the feasibility of the bill’s numerous requirements. Moreover, there is fear that the continued creation of sections of the Labor Code provides new Private Attorneys General Act (PAGA) liability, giving more grounds to leverage large settlements from warehouse employers. Notwithstanding these concerns, this bill is a clear indication of the legislature’s intent on continued expansion of business regulations in the wage and hour realm.
All warehouse distribution center employers should consider investigating whether their current quotas comply with health and safety laws. Employers should also consult with an attorney before taking any adverse employment action against an employee in regard to quotas.
AB 941 – Grant for Farmworker Assistance Resource Centers
AB 941 requires the Department of Community Services and Development to establish a grant program for counties to establish farmworker resources centers. These centers will provide the approximately 420,000 California farmworkers and their families with information and services relating to labor and employment rights, education, housing, immigration, and health and human services. The bill also makes state provided funding to the counties contingent upon the counties’ cooperation with local and community-based organizations to develop the center, as well as providing services in at least English and Spanish. These resource centers will help create a social safety net for some of California’s most essential – yet most vulnerable – workers.
AB 1031 – State Agency Preference for Victims of Human Trafficking in Hiring
In hiring for internships and student assistant positions, this bill requires state agencies to give preference to a qualified applicant who has been a victim of human trafficking as defined in Penal Code section 236.1. The preference given to these individuals is intended to expand job opportunities for these individuals and decrease victim’s rate of regression back to human trafficking.
SB 509 – Emergency Temporary Licensure for Optometrists
This bill allows the Board of Optometry to establish provisions for temporary licensure due to the state of emergency presented by the COVID-19 pandemic. One portion of the optometry licensing test, the NBEO Part III, is only available at a testing site in North Carolina. All 50 states, the District of Columbia, and Puerto Rico require passage of this exam for licensure. Due to the travel restrictions and the dangers of travel because of the pandemic, many optometry students were forced to delay their exam or place themselves and their families at risk, just to take the licensing test.
The bill allows the board to issue a temporary license to any person who applies and is eligible under existing state law but is unable to immediately take the required examination. The temporary licensee is required to pay an application fee, satisfy the prescribed conditions for issuance, and practice under the direct supervision of a supervising optometrist. Temporary licensees may not open their own optometric office. The temporary license expires when the temporary licensee completes all the requirements for licensure or six months after the date of the state of emergency due to the COVID-19 pandemic has ended. The bill aims to allow optometry students the ability to practice while still ensuring the safety of students and the public.
SB 779 – California Workforce Innovation Opportunity Act
This bill expands the job definitions under the “earn and learn” program to include “transitional jobs” and “subsidized employment.” An “earn and learn” program is a program designed to combine applied learning in a workplace setting with paid wages. These programs allow workers to gain work experience and further their learning in the career for which they are preparing.
The new definitions, defined by the federal Workforce Innovation Opportunity Act, include employment provided by an employment social enterprise or a worker cooperative, particularly for individuals with barriers to employment. An employment social enterprise can include a non-profit or for-profit organization so long as it demonstrates evidence of a mission to provide access to employment and supportive services with on-the-job life skills training to a direct labor force comprised of individuals with barriers to employment. By providing jobs and trainings to thousands of individuals overcoming work barriers, the expansion of the “earn and learn” program has the potential to stimulate the economy and elevate equity. While these expanding definitions will immediately impact only the employers involved in the “earn and learn” program, the expected long-term effects include a more skilled and well-trained workforce.
For more information on any of these new laws, contact the author or editor of this alert, or visit our Labor & Employment Practice page to find an attorney in your area.
Emily Hoskins, Law Clerk
Thalia S. Rofos, Partner