California governor Gavin Newsom signed a number of bills into law that are set to take effect in the new year. These mandates represent vast change amid disruption brought on by the pandemic and continuing into the start of the year.
Compliance will require extra attention from employers and their HR teams, according to attorneys who spoke with HR Dive. Those involved should lean on the support and resources provided by the state as much as they can, Julie Hall, counsel at Davis Wright Tremaine, LLP, advised.
"California does a really good job with this," she said. "The agencies that enforce these laws can have very helpful links and sites on their web pages to help employers comply."
With respect to the ongoing pandemic,updates to COVID-19 precautions are changing on a regular basis in the state, nearly daily, sources said. They recommended employers task an individual with regularly checking the state's Department of Industrial Relations site for any updates.
"Cal-OSHA recommends having a coordinator that is dealing with these issues at the company," Walter Stella, member at Cozen O'Connor, told HR Dive. "Those companies that are in a mostly remote if not exclusively remote situation, it doesn't get any easier. But for those employers who have employees coming into the physical space [...] most clients I know typically have at least one, if not more, and maybe even the department HR, that's really focused on dealing with COVID-19."
SB-1383 - CFRA leave expansion
A leave law, SB 1383, is the most significant new law that is not directly related to COVID-19, attorneys told HR Dive.
The bill expanded the California Family Rights Act to include employers with at least five employees and also expanded the list of reasons for taking family or medical leave. Employees can now take leave to care for siblings, grandparents and grandchildren.
There are some gray areas that may need to be settled, either by an update from the DIR or by a court. "One of the questions that comes up, and we still don't have notice definitively, is if the five employees have to all be California-based. And the answer is we aren't sure at this point," Hall said.
It's also unclear whether employees that use CFRA are also eligible for time off under the federal Family Medical and Leave Act, Hall and Stella pointed out. "It's possible that you may have employees out for weeks under CFRA," Stella said, "and then for a different reason that triggers FMLA would have another 12 weeks off for FMLA."
Hall also said pregnant employees will likely have the ability to use this leave on top of the pregnancy leave afforded to them in California. "CFRA doesn't cover pregnancy disability leave so I theoretically could take my four months of pregnancy disability leave, whether it's intermittent or continuous [...] then I get my 12 weeks to bond with my baby."
SB-973 - Pay data reporting
Separate legislation, SB 973, will require employers with 100 or more employees to submit a pay data report by March 31, 2021, and annually thereafter. The report must include the number of employees by race, ethnicity and gender and their job categories as well as pay band data.
"It's a pay equity enforcement mechanism for the state of California," Hall said. "So it's important for that reason because if the employer does have pay equity issues, based on gender or race, they should know that before they file."
Hall recommended employers get to work on this report and identify any problem areas before the March 31 deadline so they can attempt to address them. "My recommendation is [...] to have some sort of compensation analysis done [...] Because if there are problems, you want to try to fix them before you have to file your report," she said. "So there's not a lot of time and those employers should already have kind of done that" because the data reported aligns closely with the EEO-1 report required by the EEOC.
"Employers might want to approach this by pre-identifying any problems because it's going to be public information in due time," Stella added.
AB-979 - Board diversity requirements
Finally, AB-979 mandates that boards have at least one nonwhite board member by the end of 2021. By the end of 2022, boards with five through eight members will be required to have two from underrepresented groups; a corporation with 9 or more directors must have at least 3 directors from underrepresented communities. This builds on earlier legislation which required similar measures for female representation in 2019 and 2021.
"There are a number of legal challenges [to the gender representation law], so we'll see where that goes," Stella said. "It is difficult to argue against the policy behind it. We're just not seeing the diversity on boards that reflect the general population or workforce. That said, it will be interesting to see how the legal challenges play out. Because it means a strict quota system and it is requiring decision making based on protected classes."
Employers have until the end of this year and 2022 to make these changes, but for many companies, changes at the board level and the search for a replacement can take time to unfold. "For the most part I see it as a corporate governance issue, because it's all about the bylaws," Stella said. "The bylaws that control how board members are removed or replaced, and so you're going through that process."
If complying with AB-979 requires the removal of board members, Stella suggested employers exercise caution. "I'm always worried about adverse actions. Because at the end of the day, it's adverse actions that create risk for companies," Stella said, noting the potential for a wrongful termination allegation from a board member, who will have contractual protections even if not an employee.