Seyfarth Synopsis: On Monday, September 27, Governor Newsom signed a number of employment-related bills, including bills aimed at combatting wage theft and wage/hour violations by garment manufacturers, all of which go into effect on January 1, 2022. The Governor also vetoed two measures by Assembly member Lorena Gonzalez aimed at paid family leave and recall rights for hotel workers.
Going into the weekend, Governor Newsom had (mostly) signed (with a few vetoes) approximately 300 bills awaiting his approval. Very few of them, most notably AB 701 related to warehouse quotas which we previously blogged about here, were employment bills.
But, on Monday, the Governor signed a number of important measures relevant to employers: SB 62 (joint and several liability for brand guarantors and garment manufacturers), AB 1003 (wage theft = grand theft), AB 1033 (small employer mediation program / CFRA leave), SB 606 (workplace safety citations), and SB 639 (minimum wage for employees with disability), each discussed below. He signed some industry-specific bills as well, such as AB 73 (Cal/OSHA—agricultural workers wildfire smoke protections), and SB 646 (creating a limited exception from PAGA for specific janitorial employees performing work under a CBA).
On Tuesday, the Governor vetoed two bills authored by the chair of the appropriations committee, Lorena Gonzalez: AB 123 (increasing the formula for determining wage replacement) and AB 1074 (extending recall rights to hotel workers).
SB 62: Retailers Face Potential Liability for Wage/Hour Violations by Garment Manufacturer Contractors In The Supply Chain
Designated as a job killer by the California Chamber of Commerce, SB 62 will subject those sitting at the top of the supply chain—what the bill calls “Brand Guarantors” —to liability for the wage violations committed by their garment manufacturing vendors, even where the ultimate seller of the garment was completely unaware of the violation. In other words, as we previously blogged here, the bill will make clothing “brands” and holding companies—and even retailers—jointly liable with the contractors from whom they purchase t-shirts, hats, or even belts to sell for the contractor’s wage/hour violations, and perhaps even for violations by the contractor’s subcontractor.
According to the Governor’s signing announcement, SB 62 aims to “protect marginalized low-wage workers, many of whom are women of color and immigrants, ensuring they are paid what they are due and improving workplace conditions.” The California Chamber of Commerce disagrees, noting that “[n]othing in SB 62 will address the problem of underground bad actors in the garment industry evading the law”; SB 62 simply “allows those bad actors to continue operating as usual while passing the cost and liability to companies that have no control over the workers.” Time will tell if this measure will accomplish its intended goal. Regardless, employers should begin auditing their garment manufacturing vendors as soon as possible.
SB 606: Increasing Cal/OSHA’s Authority
As our OSHA team reported Tuesday morning, SB 606 will radically increase Cal/OSHA’s enforcement power. The bill expands this authority by establishing two additional categories of violations for which Cal/OSHA can issue citations: (1) “Enterprise-wide Violations” and (2) “Egregious Violations,” both of which are summarized in detail in the blog linked above.
The California Chamber of Commerce initially designated SB 606 a job killer, but removed the bill from the list after amendments removed a provision that would have created a rebuttable presumption of retaliation if an employer were to take adverse action against an employee within 90 days of the employee taking any of a number of actions, such as disclosing a positive COVID-19 test or diagnosis of a communicable disease or reporting a possible violation of an OSHA standard.
AB 1003: Adding Intentional Wage Theft to … The Penal Code?
This soon-to-be-new-law is as daunting as it is straightforward: AB 1003 adds Section 487m to the Penal Code, making it the crime of grand theft to engage in intentional theft of wages, including gratuities, “in an amount greater than nine hundred fifty dollars ($950) from any one employee, or two thousand three hundred fifty dollars ($2,350) in the aggregate.” Grand theft is generally punishable either as a misdemeanor by imprisonment in a county jail for up to one year or as a felony by imprisonment in county jail for 16 months or two or three years.
AB 1033: Parents-in-Law Care CFRA Leave and DFEH Small Employer Mediation Program
AB 1033, co-sponsored by the California Chamber of Commerce, will add parents-in-law to the list of family members for which an employee can take leave under the California Family Rights Act (CFRA). This addition builds upon SB 1383 here, which expanded CFRA to require businesses with as few as five employees to provide 12 weeks of mandatory family leave per year. SB 1383 also expanded the categories of persons for whom an employee can take CFRA leave to care to include, grandparents and domestic partners. According to the Chamber of Commerce, the inclusion of “parents-in-law” was inadvertently omitted from 1383, and its inclusion here, in AB 1033, is to fix this oversight.
AB 1033 will also require the Department of Fair Employment and Housing (DFEH) to notify an employee in writing of the requirement for mediation under the DFEH’s small employer mediation program prior to filing a civil action and would require an employee to contact the DFEH’s dispute resolution division to indicate whether they are requesting mediation, and make other related changes.
AB 1506: Newspaper Distributor and Carriers AB 5 Exemption Extension
AB 1506 will extend the AB 5 exemption for newspaper distributors working under contract with a newspaper publisher and newspaper carriers from January 1, 2022, to January 1, 2025, but will also require all newspaper publishers and distributors that hire or directly contract with newspaper carriers to submit specified information related to their workforce to the Labor and Workforce Development Agency (LWDA) on or before March 1 of 2022, 2023, and 2024.
SB 639: Minimum Wages for Persons with Disabilities
SB 639 will prohibit, starting January 1, 2022, the Industrial Welfare Commission from issuing special licenses that authorize the employment of a person with a disability for less than the minimum wage.
Enough is Enough, Says the Governor: AB 123 Would Unnecessarily Increase the Formula for Paid Family Leave.
AB 123 would have revised the formula for calculating certain leave benefits by requiring the weekly benefit amount be increased to equal to 65% or 75% of the highest wages paid to an individual. In his veto message, the Governor expressed his support for a robust paid leave program, but noted that his administration has already enacted a number of measures—SB 83 (increased duration of paid family leave), SB 1383 (CFRA expansion), AB 138 (increasing wage replacement)—aimed at increasing paid leave, making this legislation an unnecessary new expense. According to the bill’s author, however, the current formula for determining wage replacement is woefully deficient for low-income workers.
Enough is Enough, Says the Governor: AB 1074 Confers Recall Rights Already Conferred.
AB 1074 would have renamed the “Displaced Janitor Opportunity Act” the “Displaced Janitor And Hotel Worker Opportunity Act,” extending the right to recall provisions of the Act to hotel workers. The Governor vetoed the measure yesterday, explaining, as we summarized, that in the beginning of 2021, he already enacted SB 93, which provided robust recall rights for hotel workers displaced by the pandemic.
Thankfully, none of the soon-to-be-new-laws has an urgency clause, so employers will a few months to prepare before the bills become effective on January 1, 2022. Should you have a specific question about proactive measures to ensure compliance with any of the above new requirements, please feel free to reach out to your Seyfarth counsel.
Edited by Coby Turner