The new decade is starting off with a massive swell of important new laws and regulations that will affect California businesses.
There are so many new laws and regulations that companies have to be on their toes especially at the start of 2020 to get their bearings. If you are operating a business in California, here’s what you need to know coming into the new year.
1. AB 5
Probably the most earth-shattering new law to hit the books in California is the highly controversial AB 5, which creates a new and more stringent test for determining who is an independent contractor or employee.
Known as the “ABC test,” the standard requires companies to prove that people working for them as independent contractors are:
A) Free from the company’s control when they’re on the job;
B) Doing work that falls outside the company’s normal business; and
C) Operating an independent business or trade beyond the job for which they were hired.
With this in mind, legal experts recommend that employers:
- Perform a worker classification audit, and especially review all contracts with personnel.
- Notify any state agencies about corrections and changes to a worker’s status.
- Discuss with legal counsel whether they should now also include them as employees for the purposes of payroll taxes, workers’ compensation insurance, federal income tax withholding, and FICA payment and withholding.
There have been a number of changes to who is exempt from this new regulation, be sure to stay up to date on which industries this applies to.
2. Wildfire safety regulations
Cal/OSHA has issued emergency regulations that require employers of outdoor workers to take protective measures, including providing respiratory equipment, when air quality is significantly affected by wildfires.
The regulations require that employers take action when the Air Quality Index (AQI) for particulate matter 2.5 is more than 150, which is considered in the “unhealthy” range.
All California employers with “a worker who is outdoors for more than an hour cumulative over the course of their shift” would be required to comply with these regulations:
- Checking the AQI.
- Creating a system of communications when the AQI is in the unhealthy range.
- Training outdoor workers in the safety regulation, how to report problems and how to properly don and use a respirator.
- Providing workers with protection that could include respirators, changing work schedules, moving them to a safe location, and more.
3. Arbitration agreements
Starting Jan. 1, the state will bar almost all employee arbitration agreements, under AB 51.
The new law bars employers from requiring applicants, employees and independent contractors to sign mandatory arbitration agreements and waive rights to filing lawsuits if they lodge a complaint for various forms of discrimination, harassment, wage and hour issues, and more.
But on Dec. 6, a coalition of businesses groups filed a suit to overturn the law on the grounds that it is preempted by the Federal Arbitration Act and should be declared invalid.
AB 51 applies to contracts entered into, modified or extended on or after Jan. 1, 2020. If you require new employees to sign arbitration agreements, you could be at risk of violating the new law.
4. Federal overtime rules
New federal overtime regulations have finally been introduced for non-exempt workers after years of wrangling over the issue.
Under the new rule, employers will be required to pay overtime to certain salaried workers who make less than to $684 per week ― or $35,568 per year ― up from the current threshold of $455, or $23,660 in annual salary.
5. Consumer privacy
Starting Jan. 1, 2020, under the state’s California Consumer Protection Act, businesses that are custodians of personal data of California consumers will be required to put in certain safeguards to protect that information and inform website users how their personal data may be used.
The law applies to firms with $25 million or more in annual revenues or those that sell personal information as part of their business. The CCPA requires that businesses must explain to consumers their rights under the act at the time their personal information is collected.
IT security professionals advise you to:
- Review your current processes to see if they need to be updated or recreated.
- Document all uses of the data and map where personal (consumer) data is stored and transmitted.
- Put systems in place to respond to a request from a consumer for the data you are storing on them.
- Update your website homepage with a clear and conspicuous link titled “Do Not Sell My Personal Information,” which allows the consumer to opt out.
- Improve your cyber security systems to better protect consumer data.
- Train your employees on how to respond to consumers and how to handle consumer information.
6. Return of the individual mandate
A new law brings back the individual mandate requiring Californians at least to secure health insurance coverage or face tax penalties. This comes after the penalties for not abiding by the Affordable Care Act’s individual mandate were abolished by Congress in late 2017.
Starting in 2020, California residents will be required to have health insurance or pay excess taxes.
This will have an effect on any of your employees who have opted out of your group health plan as it may mean they are going without coverage, unless they have opted to be covered by their spouse’s plan.
If you have staff who didn’t enroll in your plan for 2020, they may have to wait until your group’s next open enrollment at the end of the year. That could force them to pay tax penalties, depending on how long they are without coverage in 2020.
7. New audit, X-Mod thresholds
The threshold for physical workers’ compensation audits for policies incepting on or after Jan. 1, 2020 will be $10,500 in annual premium, a drop from $13,000. This means that any employer with an annual workers’ comp premium of $10,500 or more will be subject to a physical audit at least once a year.
On top of that, the threshold for experience rating (to have an X-Mod) has also fallen ― to $9,700 in annual premium as of Jan. 1, from $10,000.
8. Harassment training deadline pushed back for some employers
As you should already be aware, any employer with five or more workers is required to conduct sexual harassment prevention training for their staff by the end of 2019 under a California law passed in 2018.
Due to concerns that many employers in the state may not be ready to comply, a new law extends the compliance deadline for some employers.
Under SB 778, all employees, both supervisory and non-supervisory, must be trained by Jan. 1, 2021, which extends the deadline by a year.
The original law, SB 1343, required all employers with five or more staff to conduct sexual harassment prevention training to their employees before Jan. 1, 2020 ― and every two years after that.
Here are the new rules:
- If you trained your staff in 2019, you aren’t required to provide refresher training until two years from the time the employee was trained.
- If you trained your employees in 2018, you can maintain the two-year cycle and still comply with the new January 1, 2021 deadline. For example, if you trained your staff in November 2018, you would not have to train them again until November 2020.
- If you trained supervisors in 2017 under prior law, known as AB 1825, you should have completed a subsequent training in 2019.
9. Hairstyle discrimination
A new law makes it illegal for employers to discriminate against employees and job applicants based on their hairstyle if it is part of their racial makeup.
The CROWN Act (Create a Respectful and Open Workplace for Natural Hair), amends the state Education and Government Code to define race or ethnicity as “inclusive of traits historically associated with race, including, but not limited to hair texture and protective hairstyles like braids, locks and twists.”
This broader definition of race means that natural hair traits fall under the context of racial discrimination in housing, employment and school matters.
10. Reporting serious injuries
A new law broadens the scope of what will be classified as a serious illness or injury which regulations require employers to report to Cal/OSHA “immediately.”
The new rules being implemented by AB 1805 are designed to bring California’s rules more in line with Federal OSHA’s regulations for reporting. It will mean that some injuries that were not reportable before will be, such as:
- Any inpatient hospitalization for treatment of a workplace injury or illness will need to be reported to Cal/OSHA.
- For reporting purposes, an inpatient hospitalization must be required for something “other than medical observation or diagnostic testing.”
- Employers will need to report any “amputation” to Cal/OSHA. This replaces the terminology “loss of member.” Even if the tip of a finger is cut off, it’s considered an amputation.
As of yet, there is no effective date for this new law, as enabling regulations have to be written ― a process that will start in 2020.