Posted on March 12th, 2020
2020’s California Labor Law Changes and Challenges
Workers and companies throughout the state have already begun facing challenges by the new California labor law changes for 2020. Learn more here!
It’s a new year, a time that many people spend charting plans and goals for the months ahead. But thanks to new California labor law changes, this new year feels different for some.
Instead, some members of California’s workforce worry about the difficulties that new employment laws could create.
Employers and corporations have already begun scrambling to avoid noncompliance.
Though several new laws intended to protect and empower employees, some workers aren’t feeling very hopeful. Freelance journalists and photographers have filed a lawsuit against California over new laws.
If you’ve entered a state of confusion over California’s new labor laws, you’re not alone. Some of California’s newest laws have sent shock waves across the country.
Employers and employees need to understand the full scope of challenges the new work legislation presents. You may not think the changes impact you. But there’s a chance you’ll find out otherwise as the year unfolds.
Read on for a rundown on how California’s labor laws are changing in 2020.
AB5: The New Law That’s Wreaking Havoc on Today’s Gig Economy
Assembly Bill 5 went into effect on January 1st, 2020 and changes the classification for independent contractors. Under AB5, many workers will no longer qualify as independent contractors.
These days, more people have begun shifting to freelancing. And more employers have begun relying on “on-demand” labor.
The law implicates many California employers. And it also affects the entire “gig economy,” including freelancers and rideshare workers.
According to the most recent “Freelancing in America” study by the Freelancers Union, freelancers currently occupy 35% of the US workforce. If California’s new law were nationwide, it would affect more than 57 million workers.
The ABC Test
Employers must now abide by strict requirements defining how they classify on-demand workers. The “ABC test” outlines 3 requirements for a business to label a worker as an independent contractor, rather than an employee. These requirements include the following:
- The worker is free from control and direction of the hiring entity
- The worker performs work outside the usual course of the hiring entity’s business
- The worker is customarily engaged in an independently established business of the same nature as that of the work involved
If a worker fails to pass the “ABC test,” the business is obligated to classify them as an employee.
Employee Benefits
Employees are subject to minimum wage and overtime benefits, such as workers’ compensation.
As of January, employers are required to reclassify their workers according to the new law.
While the ABC test went into effect on January 1st, it will not apply to the Workers’ Compensation Code until July of 2020.
The law does require all businesses to abide by the AB5 classification requirements from this point forward. California employers who do not classify workers accordingly can face serious consequences.
Minimum Wage Increase
In 2020, California’s statewide minimum wage increases to $13 dollars per hour. Companies with fewer than 26 employees must now pay a minimum wage of $12 dollars per hour.
The minimum wage increases are part of a 2016 law that requires payment of $15 dollars per hour by the year 2023. Several cities and counties have higher wage requirements than the state’s minimum wage.
According to a study by UC Berkeley, 2.6 million Californians were due a pay raise at the start of the new year to be up to par with new minimum wage requirements.
Arbitration Agreements
California’s new law bans forced arbitration agreements. These are agreements requiring employees to seek mediation prior to formal court proceedings. Employers are not allowed to threaten or penalize employees who refuse to sign arbitration agreements.
New laws taking place in 2020 also extend the period allowing an employee to file a grievance for discrimination and harassment. According to new guidelines, the extension allows employees to file a report for up to 3 years after an incident takes place.
Additional 2020 California Labor Law Updates
In addition to the law changes outlined above, there are several other updates planned for 2020 that employers and employees need to be aware of. These include the following:
- Mandatory sexual harassment training is now required by companies employing 5 or more employees. There are also time limits set for when the training must occur, including within 6 months for nonsupervisory employees.
- Employers are not allowed to discriminate on the basis of certain hairstyles which include hair texture, braids, locks, and twists.
- Businesses must make an effort to accommodate mothers who wish to breastfeed, by providing a private area for them to express breastmilk during work hours.
- No-rehire clauses are now prohibited. An exception is made for employees who are found guilty of sexual harassment. If an employee is guilty of sexual assault or sexual harassment or violates a separation agreement, then a no-rehire policy is allowable.
- Under the California Paid Family Leave Act, wage replacement benefits increase from 6 weeks to 8 weeks.
- Certain construction employers must provide Valley Fever awareness training. Training must take place prior to work that disturbs the soil.
California employers and workers should review the 2020 labor laws. There may be portions of the laws that apply to certain circumstances or individuals.
Protect Yourself and Your Business
Many employers worry about facing potential lawsuits by employees. 2020’s California labor law changes may bring new concerns.
Are you worried that employees may take action against you over labor laws? Or perhaps someone has already sought counsel against you or made a threat to do so.
Employers can potentially face serious penalties when charged with violating labor laws. Sometimes, employers may not even realize when they’re violating a law.
Employers deserve legal protection too. Contact us today to find out how you can defend your business.
