Governor Newsom approved many new employment laws late last week which generally favor employee rights and significantly expand employer obligations. Given that the majority of these new laws will become effective January 1, 2023, we highly recommend that California employers take immediate steps to assess compliance and implement any necessary changes. Highlighted below are many of the new bills signed into law:

SB 1162: Pay Transparency & Data Reporting Requirements

Governor Newsom approved SB 1162 as part of a packet of legislation to promote pay and gender equality. As previously reported by DWT here, SB 1162 significantly expands California's already progressive pay transparency and data reporting requirements.

New Pay Scale Disclosure Requirements

In 2017, California led the nation by passing the first mandatory pay transparency law, which required employers to provide pay scale information (i.e., salary or hourly wage range) to job applicants upon request. With the implementation of SB 1162, starting on January 1, 2023, employer transparency obligations will be greatly expanded to include the following:

  • All employers will be required to provide an employee, upon request, with the pay scale (defined as "the salary or hourly wage range that the employer reasonably expects to pay for the position") for the position in which the employee is currently employed.
  • All employers with 15 or more employees will be required to include the pay scale in any job posting.
  • The pay scale must be included in any job posting by any third party retained to advertise a job posting.
  • Employers will be required to maintain records of job title and wage rate history for all employees for the duration of employment plus three years.
  • Additionally, SB 1162 allows employees to file complaints with the Labor Commissioner within one year after the date the employee learned of the violation and/or a civil action for violations of these laws. The Labor Commissioner, which is required to investigate such claims, can assess a civil penalty in the range of $100 - $10,000 per violation.

New Pay Data Reporting Requirements & Pay Data Report Due May 10, 2023

SB 1162 also significantly expands employer pay data reporting requirements and moves the due date for employer reports to May 10, 2023. California, pursuant to legislation passed in 2020 as part of the nation's first such state-imposed obligations, requires that private employers with 100 or more employees (with at least one employee in California) report annually the number of their employees by race, ethnicity, and sex in specified job categories to the Civil Rights Department (CRD) (formerly known as the Department of Fair Employment and Housing).

SB 1162 expands these data reporting requirements, effective January 1, 2023:

  • Pay data reports will now be required to include the median and mean hourly rate of pay for each combination of race, ethnicity and sex within each category.
  • The new annual pay data report due date will be the second Wednesday in May. The first report will be due on May 10, 2023.
  • Private employers with 100 or more employees hired through labor contractors will be required to submit a separate pay data report to the CRD for those employees.
  • Employers will no longer be allowed to submit an Employment Information Report (EEO-1) in lieu of a pay data report.
  • Employers with multiple establishments are no longer required to submit a consolidated report but are required to submit a pay data report for each establishment. Establishment is defined as "an economic unit producing goods or services."
  • Failure to file the pay data report may result in civil penalties, not to exceed $100 per employee for an initial violation, and $200 per employee for each subsequent violation.
  • The new law does not include the provision contained in an earlier version of SB 1162 that would have required the CRD to publish each employer's submitted pay reports on a public website.

Significantly, SB 1162 fails to specifically address its impact on employers of remote employees working inside or outside of California. Many potential compliance issues are likely to arise, including those involving employers who publish nationwide job postings and non-California based employers who hire remote workers located in California. It is expected that CRD will publish additional information, including FAQs. In the meantime, if you have any questions regarding your company's compliance, please contact a member of DWT's Employment Services Group.

AB 152: Extension of COVID-19 Supplemental Paid Sick Leave to December 31, 2022

AB 152, effective immediately, extends the COVID-19 Supplemental Paid Sick Leave (SPSL) requirements (expired on September 30) until and including December 31, 2022. While AB 152 did not increase the number of SPSL leave hours to which an employee is entitled, it did provide three additional months for employees to use any remaining SPSL balance.

Under existing law, employers with more than 25 employees must provide up to 40 hours of SPSL for covered employees unable to work or telework due to certain reasons related to COVID-19. A covered employee is entitled to an extra 40 hours of SPSL if the employee, or a family member for whom the employee provides care, tests positive for COVID-19. An employer is not required to provide additional SPSL if an employee refuses to provide documentation of test results. The existing law also authorizes the employer to require the covered employee, if that employee tests positive, to submit to another test on or after the fifth day after the positive test, at the employer's expense, and provide documentation of those results.

AB 152 specifies that an employer has no obligation to provide additional SPSL if the employee refuses to submit to the above-mentioned tests and provide documentation. If the diagnostic test is positive, the bill authorizes the employer to require the employee to take a second test within no less than 24 hours, all at the employer's expense.

This new bill also extends, to December 31, 2022, the existing law that provides SPSL for specified in-home supportive service providers and waiver of personal care service providers, who are unable to work due to certain reasons related to COVID-19.

Additionally, AB 152 establishes the California Small Business and Non-profit COVID-19 Relief Grant Program to assist qualified small businesses or nonprofits (26 to 49 employees) that are incurring costs up to $50,000 for COVID-19 SPSL.

AB 1041: Paid Sick Leave and Family Leave Expanded to Non-Family Designated Persons

Effective January 1, 2023, AB 1041 expands the California Family Rights Act (CFRA) and the Healthy Workplaces, Healthy Families Act (HWHFA) to allow workers to take paid sick leave and family leave to care for a person designated by the employee, including non-family members.

The CFRA currently makes it unlawful for public employers and private employers with 5 or more employees to refuse to grant a request from an employee who meets specified requirements to take up to a total of 12 weeks in a 12-month period for family care and medical leave. AB 1041 expands the class of people for whom an employee may take leave to include a designated person identified at the time the leave is requested. A designated person is defined as any individual related by blood or whose association with the employee is the equivalent of a family relationship. Employers will be authorized to limit an employee to one designated person per 12 month period.

The HWHFA currently entitles an employee, who works in California for the same employer for 30 or more days within a year, to paid sick days, including the use of paid sick days for the care of an employee's family member. AB 1041 expands the definition of family member to include a designated person identified by the employee when the employee requests paid sick days. An employer may limit an employee to one designated person per 12-month period for paid sick days.

AB 1949: Job Protected Bereavement Leave

AB 1949 expands the CFRA to allow an eligible employee to take up to 5 days of bereavement leave upon the death of a family member, as defined. The leave must be completed within 3 months of the date of death. The new law requires that leave be taken pursuant to any existing bereavement leave policy of the employer. If no such policy exists, leave may be unpaid. However, the employee may use other leave balances, such as accrued paid sick leave, towards the bereavement leave.

AB 2188: Prohibits Employment Discrimination Based Upon Use of Cannabis

Effective January 1, 2024, AB 2188 will make it unlawful for an employer to discriminate against an applicant or employee based upon use of cannabis off the job and away from the workplace or based upon an employer-required drug screening test that has found the person to have nonpsychoactive cannabis metabolites in the person's hair, blood, urine, or other bodily fluids. AB 2188 does allow employers to take adverse action against someone based on scientifically valid preemployment drug screening conducted through methods that do not screen for nonpsychoactive cannabis metabolites. The bill does not permit an employee "to possess, to be impaired by, or to use, cannabis on the job, or affects the rights or obligations of an employer to maintain a drug- and alcohol-free workplace." Certain applicants and employees will be exempted from the law, including those in the building and construction trades and those requiring a federal background investigation or clearance.

AB 2243: Cal/OSHA to Submit Revisions to Heat Illness Standard & Wildfire Smoke Standard

AB 2243 would require the Division of Occupational Safety and Health (Cal/OSHA), before December 1, 2025, to submit to the Occupational Safety and Health Standards Board a rulemaking proposal to consider revising the heat illness standard and wildfire smoke standard for certain employees, including farmworkers.

AB 2693: Extension and Revision of COVID-19 Notice Requirements

AB 2693 extends, to January 1, 2024, current law (Labor Code section 6325) authorizing the Division of Occupational Safety and Health to identify and prohibit imminent workplace hazards related to COVID-19 and to require that employers post a notice of the hazard in a conspicuous place at the worksite.

Significantly, AB 2693 also revises employer notification requirements to its employees upon learning of a potential exposure to COVID-19; the notification requirements shall remain in place until January 1, 2024 (Labor Code section 6409.6). Under the current law, an employer is required to take specified actions within one business day of the notice of potential exposure, including providing written notice to all employees on the premises at the same worksite that they might have been exposed to COVID-19. AB 2693 changes this notice requirement and permits an employer to satisfy its duty by prominently displaying a notice in all places where notices to employees concerning workplace rules or regulation are customarily posted. The notice must be posted within one business day of notification and must remain posted for 15 days. The notification must include the dates and location of exposure, as well as contact information for employees to receive information regarding COVID-19 related benefits and contact information for employees to receive the employer's cleaning and disinfection plan. Additionally, employers will be required to keep a log of all the dates the notice was posted to be provided to the Labor Commissioner.

AB 2693 will also remove an existing requirement that employers notify local public health agencies within 48 hours if they are notified of a number of cases that meets the definition of a COVID-19 outbreak.

SB 951: Revision of Paid Family Leave and State Disability Insurance Formulas

On January 1, 2025, SB 951 will revise the formulas used to calculate Paid Family Leave and State Disability Insurance benefits for lower-income workers. Under the new law, employees who earn 70% or less than the state's average wage, will receive 90% wage replacement, while higher earners will receive 70% wage replacement. In addition, SB 951 ensures that the wage replacement wages over the next two years will remain at their current rates of 70% for lower earners and 60% for higher earners.

SB 1044: Emergency Conditions Leave

Effective January 1, 2023, SB 1044 prohibits an employer from taking or threatening adverse action against an employee who refuses to report to or leaves a workplace because the employee has a reasonable belief that the workplace is unsafe due to "emergency conditions," defined as "[c]onditions of disaster or extreme peril… caused by natural forces or a criminal act" and "[a]n order to evacuate a workplace, a worksite, a worker's home, or the school of a worker's child due to natural disaster or a criminal act." The definition specifically excludes a health pandemic and therefore is not applicable to an employee's refusal to work due to conditions related to COVID-19.

SB 1477: Revision of Wage Garnishment Formula

By revising the formula used to calculate the portion of a debtor's wages that can be garnished to satisfy a judgment, SB 1477 will significantly decrease the number of California employees subject to wage garnishment. Effective September 1, 2023, the new law provides the maximum amount of disposable earnings of a judgment debtor for any workweek that is subject to levy must not exceed the lesser of 20% of the individual's disposable earnings for that week or 40% of the amount by which the individual's disposable earning for that week exceeds 48 times the state minimum hourly wage.

As always, DWT will continue to monitor these issues and provide updates on these new laws as needed. In the meantime, if you have any questions about your company's compliance, please contact a member of the DWT Employment Services Group.

* DWT California attorney Christopher Im and DWT law clerk Michael Kolvek contributed to this advisory.