Falling into Compliance: California Employment Law Updates (Fall Edition)
We hope you had a restful summer. As we enter end-of-year planning, we wanted to send a brief review of recent legal developments that will impact California employers. **The changes are in addition to new legislation that will go into effect in 2025, which we will write about separately & offer a free training for clients in early 2025.
Key changes to be aware of include:
New Indoor Heat Illness Regulation
Effective immediately, Cal/OSHA has approved new indoor heat illness prevention measures. This regulation applies to most indoor worksites, including restaurants, manufacturing facilities, and warehouses. These requirements apply when indoor temperatures reach 82 degrees Fahrenheit, and include rest, water, training, and cool-down areas. Further protections kick in when the indoor temperature reaches 87 degrees. The agency has published employer resources regarding these requirements here.
PAGA Reform & Updates
One of the summer’s biggest stories was the finalization of a PAGA reform deal signed by Governor Newsom in early July. This agreement prevented PAGA from appearing on the November ballot as something the voters could repeal entirely. These new provisions are applicable to cases filed on or after June 19, 2024, and some of the primary changes include:
In general, PAGA plaintiffs may now only bring representative claims for violations which they have personally suffered, whereas previously they could include claims suffered only by other employees.
PAGA claims are subject to a one-year statute of limitations, resolving a previous lack of clarity on this front.
Potential penalties for employers may be less severe in a number of ways that create significant incentives for employers to regularly audit payroll/wage and hour practices to ensure compliance with the Labor Code, including:
With some exceptions, there can be caps on penalties when employers take all reasonable steps to comply with the law (15% before receiving a PAGA notice, 30% after).
Courts may reduce "stacked" penalties for multiple violations arising from the same payroll or policy error.
Wage statement penalties are capped at lower amounts for technical violations such as a failure to list the employer's name/address or short-term violations resulting from isolated events.
Employers can now cure more Labor Code violations and make employees "whole" to avoid litigation. Employers with fewer than 100 staff have 33 days to cure, and employers with 100 or more can request an early evaluation conference and mandatory stay.
Additional PAGA-related developments have arisen from the Turrieta v. Lyft, Inc. case, in which the California Supreme Court resolved a circuit split in ruling that a PAGA plaintiff does not have standing to intervene in or object to a settlement in a parallel case encompassing overlapping PAGA claims, and Stone v. Alameda Health System, in which the California Supreme Court held that public entities are exempt from civil penalties under PAGA and various Labor Code provisions.
Prop 22 Upheld
In a significant win for gig economy companies, the California Supreme Court resolved a multi-year legal battle in upholding the constitutionality of Prop 22. Passed by the voters as a ballot initiative in 2020, Prop 22 allows certain companies such as those that develop rideshare and food delivery apps to classify workers as independent contractors subject to additional requirements like minimum compensation and healthcare subsidies, but does not require them to provide workers’ compensation coverage. In Castellanos v. State of California, the Court rejected the argument that Prop 22 conflicts with an article of the California Constitution granting plenary power to the legislature to create and enforce a workers’ compensation system, finding that Prop 22 does not impede the legislature’s powers in this area. We will continue to monitor the legal questions related to Prop 22, which remain ongoing.
Discrimination and Retaliation Standards Refined
In Bailey v. San Francisco District Attorney’s Office, the California Supreme Court held that a co-worker’s single use of a racial slur in the workplace could give rise to an actionable discrimination claim. The Court explained that an isolated instance of harassing conduct can be severe enough under the totality of the circumstances to support a claim under FEHA, and that a colleague’s use of an unambiguous racial epithet may suffice. The Court also held that a course of conduct that seeks to effectively eliminate an employee’s means of reporting and addressing workplace harassment can support a claim of retaliation. This case highlights the continued importance of promptly investigating and addressing all reports of possible harassment both as a matter of creating a safe and inclusive workplace culture, as well as defending against potential claims.
Wage Statement Liability Potentially Lessened for Employers
In a ruling favorable to employers, the California Supreme Court held that an objectively reasonable, good faith belief by an employer that it has provided employees with accurate wage statements can shield the employer from penalties under Labor Code section 226(e)(1). In Naranjo v. Spectrum Security Services, Inc., the Court ruled that even if this good faith belief is mistaken, an employer has not “knowingly and intentionally” failed to comply with statutory requirements under these circumstances, which can preclude a claimant being awarded penalties of up to $4,000 or actual damages under section 226(e)(1).
Clarifications on Compensable Time for Non-Exempt Employees
In Huerta v. CSI Electrical Contractors, the California Supreme Court provided additional guidance to employers on what may qualify as compensable time under certain circumstances involving: 1) security exit procedures, 2) time spent traveling on worksite property, and 3) meal periods during which workers are not allowed to leave the premises. The Court ruled that:
An employee’s time spent on a worksite awaiting and completing exit and security screening procedures may be compensable if employer control is present to an extent that it includes things like visual inspection of the vehicle and requiring employees to complete “specific and supervised tasks.”
The opinion also explained that time spent entering and driving on an employer’s property is not necessarily compensable as “hours worked” just because employer policies mandating safe and lawful conduct govern employee conduct while they are in transit. However, under Wage Order 16 (specific to industries including construction, mining, and logging), time spent traveling to and from an employee parking lot may need to be paid as “employer-mandated travel” if a security gate is the first place an employee is required to be for a work-related reason other than accessing the worksite.
Finally, the Court held that employees properly exempted from meal period requirements due to a valid collective bargaining agreement are still entitled to minimum wage during such meal periods, including those that are off-duty, if a restriction on an employee’s ability to leave prevents them from engaging in activities they could otherwise access if permitted to leave.
Though these holdings may be somewhat limited to the circumstances specific to this case, they warrant employer review of current security procedures, travel time policies, and any meal break policies restricting off-duty time for employees.
Increased Employer Access to Applicant Driving History
In Doe v. California Dept.of Motor Vehicles, a California appellate court recently ruled that DMV disclosure of the reasons for administrative per se or APS driver’s license suspensions not resulting in convictions (which commonly relate to alcohol-impaired driving) to employers does not run afoul of state privacy laws regarding non-conviction arrest information. Though this area of law is constantly evolving, this opinion potentially provides employers with access to additional information regarding the driving histories of candidates for positions requiring operation of motor vehicles.
If you have any questions about these new developments, feel free to reach out to us at wilder@clementsemploymentlaw.com. We will be in touch in the coming weeks with updates regarding new employment-related legislation going into effect in 2025!