Need to Know

SB 62: Ends piece rate payment and establishes new protections for garment workers
With passage of the Garment Worker Protection Act, California became the first state to require garment workers to be a paid a minimum wage.  The landmark law ends the practice of piece rate payments in the industry, in which workers are paid per garment or unit, and imposes compensatory damages of $200 per employee for each pay period in which a piece rate is paid.  SB 62 also ensures greater accountability for wage and hour violations by expanding the definition of a garment manufacturer and clarifying that any person contracting to have garments made is liable for unpaid wages, any other compensation, attorney’s fees, and civil penalties, regardless of the number of layers of contracting that exist.  A worker need only file a claim with the California Labor Commissioner, along with a brand label or other information, to establish a presumption that the garment manufacturer or brand guarantor is liable with the contractor for any amounts that are owed to the employee.

AB 701: Adopts protections for warehouse workers against unreasonable quotas
Recent years have seen increased scrutiny of Amazon’s employment practices.  Amazon warehouses are known as some of the most brutal places to work due to the high productivity quotas employees are forced to meet, leading to an unrelenting pace of work that prevents employees from exercising their rights, and high rates of workplace injury.

This bill intervenes to provide warehouse employees with the opportunity to challenge unreasonable pace-of-work standards of their employer.  The law applies to hourly employees at warehouses with at least 100 workers or employers with 1000 or more warehouse workers throughout the state.  The law applies to direct employees, so-called temporary service workers, staffing agency employees, and third-party employer workers.

Covered employers must provide employees with a written statement of any expected quota, and the consequences of failing to meet the quota at the time of hire, or the employee will not be required to fulfill the quota.  Workers do not have to fulfill a quota that prevents full meal periods or rest breaks, violates Cal-OSHA rules, or denies the right to use the restroom as necessary.  If the worker believes their right to meal/rest/Cal-OSHA compliance is being denied, they may request (one time) the written quota and the worker’s last 90 days of speed data.  There is a “rebuttable presumption” of a violation by the employer if the employee suffers any adverse action within 90 days of the request, or of an employee filing a complaint with any government agency.

Workers who are required to fulfill a quota which interferes with any of the above rights, or who are wrongfully disciplined for asserting their rights under this law, may sue for injunctive relief to stop violations, with the ability to obtain a cease and desist order to stop enforcing the unlawful quota, reversal of adverse action against the employee, and the award of attorney fees.  The Labor Commissioner has broad authority to enforce the law’s provisions by investigating complaints, pursuing larger investigations in conjunction with other state agencies, and reporting findings to the legislature.  The California Attorney General, County District Attorneys, and City Attorneys may also prosecute employer violations.

AB 1003: Increases criminal penalties for wage theft
Existing law provides that violating certain wage laws is a misdemeanor, and there are civil penalties and remedies.  Existing criminal law provides that “grand theft,” theft of more than $950, is punishable as a misdemeanor by imprisonment for up to one year, or as a felony by imprisonment for up to three years.  This bill adds section 487m to the Penal Code to provide that intentional theft of wages, including gratuities, of more than $950 from any one employee or$2,350 from two or more employees within a consecutive 12-month period, is grand theft.

In addition to imposing imprisonment, a court can also order the guilty party to pay the unpaid wages as restitution.  The new law expressly applies to wage theft from “independent contractors,” as well as from employees.  The new law does not affect civil remedies for wage violations, for example under the California labor code, which are still available.

SB 331: Further prohibits settlement and NDA agreements from preventing the disclosure of workplace harassment and discrimination involving all protected characteristics
SB 331 expands the Stand Together Against Non-Disclosure (STAND) Act enacted in response to the #MeToo movement in several important ways.  This bill expands two existing laws regarding employee settlement agreements and nondisclosure agreements, Civil Procedure Code (CCP) Section 1001 and California Government Code Section 12964.5 (a section of the California Fair Employment and Housing Act (FEHA), which is codified as Government Code Sections 12900 - 12996.)

At this time, CCP Section 1001 prohibits language in settlement agreements that does not allow disclosing factual information related to a claim of sexual assault, harassment, or discrimination based on sex, or retaliation for reporting harassment or discrimination based on sex.  SB 331 expands this law to broadly prohibit non-disclosure clauses in settlement agreements involving workplace harassment or discrimination on any protected bases, not just sex.  Effective January 1, 2022, California law will prohibit a settlement agreement from preventing or restricting the disclosure of factual information related to a claim or complaint of sexual assault, sexual harassment, workplace harassment or discrimination, failure to prevent workplace harassment or discrimination, or retaliation for reporting or opposing harassment or discrimination.  Similar to prior law, the bill allows the identity of the claimant and the settlement or severance amount to remain confidential.

SB 331 also expands FEHA by making it unlawful for an employer to (1) require an employee to sign a release of a claim or right in exchange for a raise or bonus, or as a condition of employment or continued employment, or to (2) include in an employee’s separation agreement any provision that prohibits the disclosure of information about unlawful acts in the workplace.  An employer who utilizes a nondisparagement or other contract provision that restricts an employee’s ability to disclose information related to conditions in the workplace will be required to include, in substantial form, language stating: “Nothing in this agreement prevents you from discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that you have reason to believe is unlawful.”  The new FEHA provisions do not apply to a voluntary, deliberate, and informed settlement agreement that resolves a claim filed in court, before an administrative agency, in an ADR forum, or through an internal complaint process in which the employee is given consideration of value, notice and an opportunity to retain an attorney consideration of value to the employee.

AB 1561: Clarifications regarding Worker classification: employees and independent contractors.
AB 1561 makes changes for five types of workers and how the law determines whether they are employees or independent contractors.   Under existing law, workers in certain occupations and business relationships are exempt from the application of the “ABC Test.”  Their employment status is instead determined by multiple relevant factors such that when an employer does not control work details, an employer-employee relationship may still be found based on other factors.  For licensed manicurists and construction trucking subcontractors, AB 1561 extends the date when the exemption would sunset to January 1, 2025.  AB 1561 also makes changes to the scope of the exemption between a data aggregator and a research subject who willingly engages with a data aggregator to provide individualized feedback.  AB 1561 also extends the exemption for the insurance industry to individuals providing claims adjusting or third-party administration work.

SB 727: Adds general contractor liability for penalties, liquidated damages, and interest
This law expands consequences for a general contractor where its subcontractor failed to follow Labor Code requirements.

Currently, for contracts entered into after 2018, a direct construction contractor is required to assume, and be liable for, any debt owed to a wage claimant or third party on the wage claimant’s behalf that was incurred by a subcontractor acting under that direct contractor.

Under existing law, a direct contractor is only liable for unpaid wage, fringe, or other benefit payment or contribution, including interest, but is not liable for penalties or liquidated damages. This bill would extend a direct contractor’s liability to penalties, liquidated damages, and interest owed by the subcontractor for contracts entered into after January 1, 2022.

AB 1023: Authorizes the California Labor Commissioner to impose monthly penalties for failure to upload electronic certified payroll records on public works projects
Contractors and subcontractors working on public works construction projects (construction, demolition, or repair of projects paid for by public funds) are required to regularly provide the California Labor Commissioner with payroll records via an electronic portal on the Department of Industrial Relations (“DIR”) website, so that the Labor Commissioner can monitor whether the employers are complying with prevailing wage requirements.  This bill makes an employer who fails to provide those records liable for a penalty of $100 per day, up to a total of $5,000 per project, to be deposited in the State Public Works Enforcement Fund.

December 16, 2021

Legal Developments