Major Employment Changes Introduced in the Form of Three Workplace Bills

Major Employment Changes Introduced in the Form of Three Workplace Bills

With an introduction of the “#MeToo” movement, the California Legislature further introduced new bills in favor of workers to take legal action against their employers. The legislature has also extended regulatory burden on the companies.

The lawmakers have passed the Assembly Bill 5, which will summarize Dynamex v. Superior Court[1], a debatable California Supreme Court decision that upended the existing legal standards applied in determining whether a worker is an employee or an independent contractor. Under Dynamex’s ABC test, a person providing any labor or services is presumed to be an employee rather than an independent contractor unless the hiring entity demonstrates that (a) the person is free from the control and direction of the hiring entity in connection with the performance of the work, (b) the person performs work that is outside the usual course of the hiring entity’s business, and (c) the person is customarily engaged in an independently established trade, occupation, or business.

After the Supreme Court’s decision, the ruling of Dynamex was only administered to Industrial Welfare Commission’s Wage Orders governing minimum wages, overtime, and meal and rest breaks. But the new bill AB 5 goes much further. If the bill becomes law, the ABC test would apply to both the Labor Code and the Unemployment Insurance Code. The bill also contains few occupational exemptions which include doctors, dentists, lawyers, engineers, accountants, architects, realtors, travel agents, graphic designers, human resources administrators, grant writers, marketers, fine artists, investment advisors and broker-dealers. The common law standard as stated in S.G. Borello & Sons, Inc. v. Department of Industrial Relations, 48 Cal.3d 341 (1989) would remain same on these occupations. [New Section 2750.3 (3)]. The common law tradition declares “[t]he principal test of an employment relationship is whether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired. . . .”

Another bill which has been sent to Governor S.G. Borello & Sons, Inc. v. Department of Industrial Relations is Assembly Bill 51 – A Ban on Mandatory Arbitration. The former Governor Jerry Brown had already rejected the attempts made by the California Legislature (AB 3080 and AB 465) so many times to prohibit arbitration as a condition of employment.

With effect to the same, Section 3 of the new bill added Section 432.6 to the Labor Code by superseding Section 432.4 of the Labor Code. The bill prohibits the use of arbitration as a condition of employment. It also makes it a criminal misdemeanor against the employers or businesses who waive employee’s right to take legal action against them for violations of the California Fair Employment and Housing Act (“FEHA”). Also, employers are prohibited to retaliate against employee to refuse to arbitrate. The new bill does not affect arbitration agreements executed before January 1, 2020. [New Section 432.6 (g)]

Another bill to be presented is Assembly Bill 9 – wherein, time to file a claim under the Department of Fair Employment and Housing (DFEH) extends from one to three years. Under the FEHA, an individual can file a case against employer with the Department of Fair Employment and Housing within one year from the date upon which the last unlawful practice occurred. The unlawful practice here means discrimination or harassment of employees based on race, sex, age, physical or mental disability, medical condition, sexual orientation, veteran status, and other protected characteristics. (Cal. Gov. Code, § 12940)

This deadline extends in the proposed AB 9 to file an allegation of unlawful workplace harassment, discrimination, or civil rights-related retaliation with the DFEH from one year to three years. It will also impose a statute of limitations period that is six-times the length of the federal standard and three-times the length of the current state standard. [Cal. Gov. Code, § 12965 (d)]

[1](2014) 179 Cal.Rptr.3d 69.