California Law Alerts: September 2019

On September 18, 2019 California Governor Newsome signed final legislation for AB 5, drastically altering worker classification compliance. See official law alert below or Read How AB5 Compliance Affects CA Employers

On August 30, 2019 the California Fair Employment and Housing Act was amended to extend the Sexual Harassment Training deadline by one year. (S. B. 778)

Additionally, the Pregnancy Leave Brochure was updated to include new rights and obligations included in the New Parent Leave Act. 

California Law Alerts for September 2019

tryHRIS’s membership includes the Regulatory Compliance Database, which alerts you the moment Federal & State laws, regulations or requirements change, keeping you informed.

Law Alert 3: Assembly Bill 5 (AB 5) Redefines Worker Classification

The new legislation amends the California Labor Code, the California Unemployment Insurance Code, and for the Industrial Welfare Commission’s wage orders, to define a person providing labor or services for remuneration as an employee rather than an independent contractor unless the hiring entity demonstrates that all of the following conditions are satisfied for the ABC Test.

On September 18, 2019, California Governor Gavin Newsom signed legislation (A.B. 5) codifying the California Supreme Court decision in Dynamex Operations West, Inc. V. Superior Court of Los Angeles, where the court “cited the harm to misclassified workers who lose significant workplace protections, the unfairness to employers who must compete with companies that misclassify, and the loss to the state of needed revenue from companies that use misclassification to avoid obligations such as payment of payroll taxes, payment of premiums for workers’ compensation, Social Security, unemployment, and disability insurance.”

Specifically, the law amends the California Labor Code, the California Unemployment Insurance Code, and for the Industrial Welfare Commission’s wage orders (IWC wage orders), a person providing labor or services for remuneration will be considered an employee rather than an independent contractor unless the hiring entity demonstrates that all of the following conditions are satisfied (ABC Test):

  1. The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;
  2. The person performs work that is outside the usual course of the hiring entity’s business; and
  3. The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

The law clarifies:

  • Any exceptions to the terms “employee,” “employer,” “employ,” or “independent contractor,” and any extensions of employer status or liability, that are expressly made by a provision of the Labor Code, the Unemployment Insurance Code, or in an applicable IWC wage order, including, but not limited to, the definition of “employee” in subdivision 2(E) of Wage Order No. 2, remain in effect.
  • That it does not apply to the following occupations, and instead, the determination of employee or independent contractor status for individuals in those occupations is governed by Borello (a multi-factor test):
    • A person or organization who is licensed by the California Department of Insurance pursuant to Chapter 5 (commencing with Section 1621 – insurance agents), Chapter 6 (commencing with Section 1760 – surplus line brokers), or Chapter 8 (commencing with Section 1831 – life and disability insurance analysts) of Part 2 of Division 1 of the Insurance Code.
    • A licensed physician and surgeon, dentist, podiatrist, psychologist, or veterinarian performing professional or medical services provided to or by a health care entity.
    • A licensed, practicing lawyer, architect, engineer, private investigator, or accountant.
    • A securities broker-dealer or investment adviser or their agents and representatives that are registered with the Securities and Exchange Commission or the Financial Industry Regulatory Authority or licensed by the State of California.
    • A direct sales salesperson.
    • A commercial fisherman working on an American vessel. 
  • That the holding in Dynamex does not apply to a contract for professional services, defined within the law, and instead the determination of whether the individual is an employee or independent contractor is governed by Borello if the hiring entity demonstrates that all of the following factors are satisfied:
    • The individual maintains a business location, which may include the individual’s residence, that is separate from the hiring entity. However, individual may choose to perform services at the location of the hiring entity.
    • If work is performed more than six months after the effective date of the law, the individual has a business license, in addition to any required professional licenses or permits for the individual to practice in their profession.
    • The individual has the ability to set or negotiate their own rates for the services performed.
    • Outside of project completion dates and reasonable business hours, the individual has the ability to set their own hours.
    • The individual is customarily engaged in the same type of work performed under contract with another hiring entity or holds themselves out to other potential customers as available to perform the same type of work.
    • The individual customarily and regularly exercises discretion and independent judgment in the performance of the services.

Moreover, the law and Dynamex do not apply to:

  • Specific occupations subject to the state’s Business and Professions Code (real estate licensee and repossession agency);
  • A bona fide business-to-business contracting relationship under specific conditions;
  • The relationship between a contractor and an individual performing work pursuant to a subcontract in the construction industry;
  • The relationship between a referral agency and a service provider under specific conditions; and
  • The relationship between a motor club with certificate of authority and an individual performing services pursuant to a contract between the motor club and a third party to provide motor club services utilizing the employees and vehicles of the third party.

The law also states that an action for injunctive relief to prevent the continued misclassification of employees as independent contractors may be prosecuted against the employer in court, in addition to any other remedies available.

The law is effective January 1, 2020.

Read the governor’s signing message and CA A.B. 5

Law Alert 2: Sexual Harassment Training Requirement Deadline Extended.

This legislation extends the deadline from January 2020 to January 2021 due to the outcry from the business community. Employers now have an additional 12 months to provide their Supervisors and Employees with approved sexual harassment training.  

On August 30, 2019, California Governor Gavin Newsom signed legislation (S.B. 778) amending the California Fair Employment and Housing Act. Employers with five or more employees are required by January 1, 2021, to provide:

  • At least two hours of classroom or other effective interactive training and education regarding sexual harassment to all supervisory employees in California; and
  • At least one hour of classroom or other effective interactive training and education regarding sexual harassment to all nonsupervisory employees in California.

Thereafter, each covered employer must provide sexual harassment training and education to each employee in California once every two years. New nonsupervisory employees must be trained within six months of hire and new supervisory employees must be trained within six months of their assumption of a supervisory position.

The law also clarifies that an employer who has provided this training and education to an employee in 2019 is not required to provide refresher training and education again until two years thereafter. Additionally, beginning January 1, 2020, seasonal, temporary, or other employees that are hired to work for less than six months, must be provided sexual harassment training by their employer within 30 calendar days after hire date, or 100 hours worked — whichever is earlier.

The law took effect August 30, 2019.

Read CA S.B. 778

tryHRIS offers California Approved Sexual Harassment Training for Supervisors. $95 per course for Unlimited Supervisors. Completion Certificates included.

Law Alert 1: Pregnancy Leave Brochure Updated

In August 2019, the California Department of Fair Employment and Housing updated its pregnancy leave brochure to include information about rights and obligations under the state’s New Parent Leave Act.

View New Brochure.

If you have questions regarding these or other law alerts, our advisors can help your company navigate every new change, requirement, legislation, law and regulation. Give us a call to see how we can help streamline HR for professionals or office managers.

tryhris HR Solutions guarantee and signature