Gear Up for These 2023 Changes to California Employment Law

It’s the time of year again to dive in and take a look at upcoming changes to California employment law. This fall, Governor Newsom approved several new employment laws, generally expanding on employee rights and creating new obligations for employers. From new pay scale disclosure requirements to mandatory bereavement leave to nuanced changes to the California Family Rights Act, here are summaries of a few key bills signed into law, that go into effect on January 1, 2023.

SB 1162: Pay Transparency & Data Reporting Requirements

New pay scale disclosure requirements. In 2017, California led the nation by passing the first mandatory pay transparency law, which required employers to provide pay scale information (i.e., annual salary or hourly wage range) to job applicants upon request. Effective January 1, 2023, SB 1162 will expand the law to require:

• Employers with 15 or more employees must now include in all their job postings the “salary or hourly wage range that the employer reasonably expects to pay for the position.” If the employer uses a third party to publish or post a job, that third party must also include it in the posting.
• Upon an employee’s request, all employers must provide the pay scale for the requesting employee’s current position.
• All employersmust maintain records of job title and wage history for each employee for the duration of their employment and three years after the end of employment so that the state’s Labor Commissioner – who is authorized to inspect these records – can determine if there is a “pattern of wage discrepancy.”

Pay data reporting requirements. California currently requires employers with 100 or more employees, to submit annual pay data reports to the state’s Civil Rights Department (“CRD”) (formerly the DFEH). Current law allows employers to file an annual Employer Information Report (EEO-1) with the federal Equal Employment Opportunity Commission (EEOC) in lieu of the pay data report to the CRD.

• Effective January 1, 2023, California employers will no longer be able to file the EEO-1 in lieu of the California report to the CRD. This is because California has expanded the required information to be reported beyond what the EEO-1 requires. Thus, SB 1162 will require employers with 100 or more employees to submit a separate report to the CRD, including:
  • The number of employees by race, ethnicity, and sex in 10 job categories, based on a “snapshot” that counts all individuals employed in these categories during a single pay period of the employer’s choice between October 1 and December 31 of the reporting year.
  • The job categories include: (1) Executive or senior-level officials and managers, (2) First or mid-level officials and managers, (3) Professionals, (4) Technicians, (5) Sales workers, (6) Administrative support workers, (7) Craft workers, (8) Operatives, (9) Laborers and helpers, and (10) Service workers.
  • Within each job category, for each combination of race, ethnicity, and sex, the median and mean hourly rate.
  • The total number of hours worked by each employee in each pay band during the reporting year.
  • The employer will have the option, but is not required, to provide clarifying remarks regarding the information provided.
• Employees hired through labor contractors. In addition, employers with 100 or more employees hired through third-party labor contractors must also submit a separate pay data report to the CRD covering those employees and disclosing the ownership names of all labor contractors used to supply such employees. A labor contractor is defined as “an individual or entity that supplies, either with or without a contract, a client employer with workers to perform labor within the client employer’s usual course of business.”

The bill also changes the deadline for all future pay data reports from March 21 to the second Wednesday of May each year, beginning in 2023.

Penalties for noncompliance with SB 1162

• Employees claiming an employer’s noncompliance with the pay disclosure requirements may file a complaint with the California Division of Labor Standards Enforcement (DLSE) within one year of the date that they learned of the violation.
• If the DLSE finds that an employer violated the law, employers may be subject to civil penalties of $100 to $10,000 per violation. The Labor Commissioner will determine the amount of the penalty based on the totality of the circumstances, including prior violations.
• Notably, no penalty will be assessed for a first violation where an employer shows that “all job postings for all positions have been updated to include the pay scale.”
• If an employer fails to file the pay data reports, the CRD can seek a court order requiring compliance and recovering costs associated with seeking such an order. A court also can impose civil penalties of $100 per employee, and up to $200 per employee, for subsequent failures to file the report.
• If an employer cannot comply because a labor contractor has not provided the required pay data information, a court may also apportion an “appropriate amount of penalties” to the labor contractor.

Private right of action for injunctive relief

• SB 1162 also includes a civil private right of action for injunctive relief “and any other relief that that court deems appropriate.” Very little detail is provided in the text of the bill regarding what that private right of action will entail, and who will have standing to pursue such an action.
• The bill simply provides: “A person who claims to be aggrieved by a violation of this section may also bring a civil action for injunctive relief and any other relief that the court deems appropriate.”

It is expected that the CRD will publish additional information, including FAQs and a User Guide for Employers, in the coming months.

Changes to the California Family Rights Act (“CFRA)

AB 1041: Paid Sick Leave and Family Leave Expanded to “Designated Persons”

Effective January 1, 2023, AB 1041 will expand the California Family Rights Act (“CFRA”) and the Healthy Workplaces, Healthy Families Act (“HWHFA”) to allow employees to take paid sick leave and family leave to care for a “designated person” chosen by the employee, including non-family members. The definition of designated person is: “any individual related by blood or whose association with the employee is the equivalent of a family relationship.”

An employee may change their designated person once per 12-month period.

AB 1949: Job Protected Bereavement Leave

Effective January 1, 2023, AB 1949 will expand the CFRA to allow an eligible employee to take up to 5 days of bereavement leave upon the death of a family member.

The leave must be completed within three months of the date of death. The new law requires that leave be taken pursuant to any existing bereavement leave policy of the employer. If no such policy exists, leave may be unpaid. However, the employee may use other leave balances, such as accrued paid sick leave, towards the bereavement leave.

California’s Privacy Rights Act (“CPRA”)

California’s Privacy Rights Act (“CPRA”) will become effective January 1, 2023. Under the CPRA, “consumers,” including employees, will be able to exercise several new rights including:

1. The right to know (request disclosure of) what personal information was collected by the business about the consumer or employee, from whom it was collected, why it was collected, and, if sold, to whom;
2. The right to delete personal information collected from the consumer or employee;
3. The right to opt-out of the sale of personal information (if applicable);
4. The right to opt-in to the sale of personal information of consumers under the age of 16 (if applicable);
5. The right to non-discriminatory treatment for exercising any rights; and
6. The right to initiate a private cause of action for data breaches.
7. The right to correct inaccurate personal information; and
8. The right to limit use and disclosure of sensitive personal information.

Because the new law applies these protections to employees, and not just consumers, the CPRA presents a unique set of challenges for employers. The most notable is understanding what employee data the employer holds, where that data is stored, and which data is truly essential and that which should be deleted at an employee’s request.

SB 1044: Emergency Working Conditions

SB 1044, which will also become effective January 1, 2023, prohibits an employer in the event of an emergency condition, from taking or threatening adverse action against any employee for refusing to report to, or leaving, a workplace or worksite because the employee “has a reasonable belief that the workplace or worksite is unsafe.” An emergency condition is defined as:

1. Conditions of disaster or extreme peril to the safety of persons or property at the workplace or worksite caused by natural forces or a criminal act.
2. An order to evacuate a workplace, a worksite, a worker’s home, or the school of a worker’s child due to a natural disaster or a criminal act.

Notably, an emergency condition does not include a health pandemic.

SB 1044 also prohibits an employer from preventing an employee from accessing the employee’s mobile device or other communications device in order to seek emergency assistance. An employee is required to notify the employer of the emergency condition requiring the employee to leave or refuse to report to the workplace or worksite.

In Conclusion . . .

Before the end of 2022, employers should review their policies and procedures to ensure compliance with these new laws. Employers should also reach out to their employment counsel with any questions regarding these pending changes. Proactive changes and working with counsel will help protect employers during this season of change!

Reach out to us here at Protea Financial if you want to network with people who can help make doing business easier. We are here to help!