February 22 was the last day to introduce new legislative proposals for the 2019 California legislative year. As a result, we now have an idea of the employment issues the California legislature will be confronting in 2019.
The following are the most important issues – in my opinion -- which the Legislature will attempt to address:
Dynamex-Related Legislative Proposals:
The most important employment law development last year was the California Supreme Court’s Dynamex decision. The Court adopted an entirely new test for determining whether an individual is an employee or an independent contractor. The new test effectively broadened the definition of what it means to be an employee and, as a result, made it more difficult for businesses to utilize independent contractors when those contractors are performing services that are within the ordinary scope of the hiring entity’s business.
The Dynamex decision threatens the use of independent contractors across broad sectors of the economy (real estate, insurance, etc.). Gig economy companies are particularly vulnerable to the decision, because such companies rely heavily on independent contractors to perform services that are within the ordinary scope of their business (e.g., Uber hiring drivers as independent contractors).
The legislative negotiations around Dynamex will be intense. Business groups will seek to repeal (or carve out for their particular sector) the Dynamex standard, while labor representatives will seek to maintain the standard (or limit exceptions to it). See Assembly Bills 5 (seeking to codify the standard for independent contractors), 71 (seeking to revert the independent contractor standard back the previous multi-factor Borello test) 233 (regarding insurance agents and brokers); and 238 (placeholder).
Renewed Effort to Eliminate Mandatory Arbitration in Employment:
Labor advocates are again pushing for a proposal to ban mandatory arbitration agreements in employment contracts. Such agreements are often an obligatory part of accepting employment with leading companies in the State. But with Google voluntarily agreeing to remove mandatory arbitration agreements from its employment contracts and the #metoo movement seeking greater transparency in matters involving workplace harassment, expect this issue to get traction (although possibly not become law this year). See AB 51.
Senate Bill 188 would amend the definition of “race” under the Fair Employment and Housing Act to include “traits historically associated with race, including but not limited to, hair texture and protective hairstyles” (such braid, locks and twists). This is an emerging issue, with the New York City Commission on Human Rights recently issued legal enforcement guidance on race discrimination on the basis of hairstyles most closely associated with particular races.
AB 1224 would eliminate the requirement that an employee, in order to be eligible for unpaid family and medical leave under the California Family Rights Act, must work at least 1,250 hours for the employer within the last 12 months.
Unpaid or Late-Paid Wages:
AB 673 would authorize employees to file a new type of representative claim for failure to pay wages or late payment of wages.
Employment Discrimination and Cannabis (and Beyond):
AB 882 would prohibit a private employer from terminating an employee if the sole reason for termination is that the employee tested positive on a drug test for a drug that “is being used as a medication-assisted treatment under the care of a physician or pursuant to a licensed narcotics treatment program.” As written, AB 882 is not limited to medical cannabis and could potentially extend to other drugs.
Consumer Privacy and Data Breaches:
The California legislature enacted the California Consumer Privacy Act (CCPA) in 2018 – significant legislation designed to provide consumers with rights regarding the collection and sale of personal information. The CCPA does not go into effect until 2020 and, as a result, there has been much activity designed to clarify the law before the effective date.
It’s an open question as to whether the CCPA and its rights and responsibilities will apply to employees and employment information. Business groups will be sponsoring legislation seeking to exclude employees from the definition of “consumer” under the CCPA.
Much like 2018, expect 2019 to be an active year for the California legislature with a wide-reaching impact on California employers and employees. In particular, the fundamental question of what it means to be an employee will be at stake – affecting the bottom lines of both employers and employees no matter which way the legislation shakes out.