Labor & Employment Law Blog

With the close of the California legislative season, there are a variety of employment law bills which will become law on January 1, 2025. Golden State employers should be aware that several of these new laws necessitate updates to employment policies and handbooks. Specifically:

On October 7, 2021, Governor Newsom signed SB 331 to place additional restrictions on employers offering severance agreements and settling employment claims alleging harassment, discrimination or retaliation based on purported violations of the Fair Employment and Housing Act (“FEHA”). The new law, which is effective January 1, 2022, expands California’s current legal restrictions under California Code of Civil Procedure Section 1001. Currently, CCP section 1001 prohibits various confidentiality and non-disparagement clauses in settlement agreements, specifically those that would prevent disclosure of factual information relating to claims of sexual assault, sexual harassment, workplace harassment or discrimination based on sex, or retaliation against a person for reporting such acts.

On January 8, a trial court judge in Los Angeles issued an order finding the ABC Test—now used to determine independent contractor status in California—could not be applied to independent contractor truck drivers (“owner-operators”) due to federal pre-emption concerns.  While the decision represents a major victory for trucking companies, it will be subject to challenge.

On May 29, Assembly Bill (AB) 5 passed the California State Assembly, moving Californians one step closer to full implementation of a new test for independent contractor classification. AB5, which was introduced by Assemblywoman Lorena Gonzalez of San Diego, seeks to codify the California Supreme Court’s April 2018 Dynamex decision, which established the “ABC test” to determine classification of workers as employees or independent contractors.

Since its introduction in December 2018, AB5 has undergone several revisions.  Most significantly, the bill would confirm that the ABC test will be used in making worker classification decisions under California’s Wage Orders, Labor Code, and Unemployment Insurance Code.  Also important is a set of carve-outs that appeared in the most recent iteration of the bill: the ABC test would not apply to doctors, dentists, lawyers, architects, accountants, engineers, insurance agents, investment advisers, direct sellers, real estate agents, hairstylists and barbers renting booths at salons, some marketers, and human resources professionals. 

The California Chamber of Commerce and the “I’m Independent” Coalition are seeking to make additional exemptions to AB5, including carve-outs for short-term projects, business-to-business contracts, and others.

AB5 will now move to the Senate, where it will be heard in Senate Labor Committee in late June 2019.

Guidance for Employers

Though AB5 has not yet been passed into law, California businesses using independent contractors should consult with employment counsel concerning classification of contractors under the Dynamex ABC test.  The authors of this article welcome any questions on the legislation or the ABC test, and are following developments in the law closely. 

For more information and updates about Dynamex and its implications, employers can read our prior Alert on Dynamex here and register for the Firm’s complimentary webinar on this topic here.

On July 16, 2015, Governor Brown approved an amendment to the Fair Employment and Housing Act (“FEHA”) prohibiting an employer or other covered entity from retaliating, or otherwise discriminating, against a person for requesting accommodation of his or her disability or religious beliefs, regardless of whether the accommodation request was granted.

The legislation stems from the Court of ...