Predicting California Legal Trends for 2023

California employment law had a very active year in 2022, with a slew of new laws and important cases, especially in the areas of arbitration, employee classification and statutory leave. Will these trends continue in 2023? What should HR professionals and employers expect in the next year in legal compliance?

"Following the pandemic, courts got so backlogged for so long," said Ryan Crosner, an attorney with Ogletree Deakins in Los Angeles. "In 2023, there will be a lot more trials than we had in the last few years. Courts are starting to clear their dockets. I predict it's going to be a really busy year" in employment law.

Some banks and business executives are predicting an economic downturn or recession in 2023. Employers could see lots of litigation if there are big layoffs in California during an economic downturn or recession next year, just like it did during the Great Recession, Crosner said.

PAGA

California's Private Attorneys General Act (PAGA) authorizes individuals to file lawsuits to recover civil penalties on behalf of themselves, other employees and the state of California for labor code violations.

This topic came up frequently in court cases this year, including a case in which the U.S. Supreme Court ruled that the Federal Arbitration Act pre-empts PAGA, allowing companies to compel arbitration of individual claims regarding labor code violations. The court found that if an individual PAGA claim is sent to arbitration, the individual will lack "standing" to pursue a representative PAGA claim in court, and therefore the class-action case must be dismissed.

The state Supreme Court will address this topic when it hears Adolph v. Uber Technologies in 2023. A driver for UberEats claimed that Uber misclassified its employees as independent contractors. He signed an arbitration agreement stating that all disputes must be resolved in arbitration, waiving his right to make a PAGA claim in court. Uber argued that the question of whether he was an employee or independent contractor should be settled in arbitration. In April, the California Court of Appeal disagreed and ruled in favor of the driver.

"Federal court judges are all over the place as to the scope of those [PAGA] waivers. I foresee it will continue to be a significant issue," Crosner said.

Classifying independent contractors also will remain at the forefront of legal trends in the state next year, Crosner predicted. "A lot of things are still unsettled," he said. "You can still utilize independent contractors in California, but it's getting more and more difficult each year."

Mandated Leave

California passed a number of bills this year to expand statutorily required time off work, including leave to care for a designated person with a serious illness and bereavement leave upon the death of a family member. The Legislature might continue to address paid and unpaid leave next year.

"California required supplemental COVID-19 leave three different times—in 2020, 2021 and 2022—but that leave is set to expire at the end of 2022," said Nisha Verma, an attorney with Dorsey & Whitney in Costa Mesa, Calif. "Meanwhile, in 2022, the Legislature expanded both unpaid and paid leave rights under the California Family Rights Act and the paid-sick-leave law but did not expand the number of days leave would be available. As both employees and employers navigate the post-pandemic economy, I predict a continuing trend in requiring employers to recognize and make accommodations for the family and care obligations of their workforce."

Revising Job Descriptions

A new law in California requires employers to include pay ranges in job postings. This may prompt many employers to re-evaluate all of their job descriptions, especially when the work actually performed doesn't align with the job description.

"With these new pay transparency requirements, you're going to want to take a close look at your job descriptions again," Crosner said. "What I see all the time is you'll have a job description that was written eight or nine years ago for one type of employee," and it doesn't reflect the work anymore because technology and job duties have changed.

Topics Recede

What legal issues will become less important or less active in 2023? Crosner pointed to laws related to COVID-19. "I don't foresee that growing in 2023," he said.

Verma said she expects to see less action on limiting the use of nondisclosure agreements and nondisparagement agreements because "the laws surrounding those topics are becoming comprehensive at this point."

Regardless of what lawmakers and courts decide in 2023, employers will want to be prepared. The anticipated 2023 legislative changes will require both handbook updates and a review and analysis of existing operational procedures to make sure that when requests come in, HR has a playbook from which to respond, Verma said.