Careful Review of California Workplace Law Is Critical for Compliance



California is a state where one tiny mistake can lead to class-action claims and seven-figure verdicts—but the good news for HR is that understanding California law is a career builder, said Brenda Kasper, a founding attorney at Kasper & Frank in Carlsbad, Calif.

It's nearly impossible to go over all of California's employment laws in an hour, Kasper told attendees at the 2019 Society for Human Resource Management Employment Law & Legislative Conference on March 19.

"Employers must remember that California state law is quite different than federal law in many respects," she said. For example, wage and hour laws are more expansive, and employees have a right to take leave for more reasons than outlined in federal law. Furthermore, employers can't ask job applicants about their criminal background until a conditional job offer is made, nor can they ask applicants about their salary history.

Employers must also pay attention to California's local laws, as many of the state's cities and localities have different minimum-wage and sick-leave laws, Kasper said in an interview with SHRM Online.

MJ Forbes, a conference attendee from Pleasant Prairie, Wis., said her company has about 900 employees in California. As an HR manager, she wanted to attend the session to be a better business partner to her company's HR team in California. "There's so much to know," she said.

Here are some of the latest legal developments in California that may cause compliance issues for HR professionals.

Independent-Contractor Classification

In Dynamex Operations West v. Superior Court, the California Supreme Court adopted a three-factor test—called the ABC test— to determine whether workers are employees or independent contractors under the state's wage orders. The worker is presumed to be an employee unless all of the following factors are met:

  • The worker is free from the control and direction of the hiring entity.
  • The worker performs tasks that are outside of the usual course of the hiring entity's business.
  • The worker is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed for the hiring entity.

The first factor has always been a test, but the second and third are problematic for employers, Kasper noted. "If you have any contractors who perform the same work as your employees, they're not contractors." Workers also have to have their own business to be independent contractors.

The decision made it very difficult for employers to properly classify workers as independent contractors, "and it is likely that the California Legislature this year is going to codify this case," she said.

Anti-Harassment Laws

The California Legislature passed several anti-harassment measures that went into effect in 2019. Businesses with at least five employees must provide sexual-harassment-prevention training to all workers by Jan. 1, 2020, and every two years thereafter. Employers should note that there are different training requirements for supervisory and nonsupervisory employees.

"If you trained your people in 2018 under the old laws, you have to train them again," Kasper said. 

State lawmakers recently introduced a bill that would clarify that businesses that provided the appropriate training after Jan. 1, 2018, would not need to do so again until after Dec. 31, 2020. But the bill is still working its way through the legislative process.  

[SHRM members-only toolkit: Complying with California Sexual Harassment Training Requirements]

Additionally, the new requirements limit when an employer can use confidentiality provisions in settlement agreements and clarify an employer's obligation to prohibit sexual harassment and other forms of harassment.

Tracking Time Worked

Last year, in Troester v. Starbucks, the California Supreme Court ruled that employers must pay workers for routine, off-the-clock activities, such as setting the alarm and closing the store at the end of the day, even if the amount of time is minimal.

Under federal law, businesses can require employees to work small amounts of time each day without compensation if the time is administratively difficult to track. But the state high court said the federal "de minimis" rule didn't apply in the Starbucks case because it hadn't been adopted under California wage and hour laws and didn't otherwise apply to the case under state law.

Still, the court didn't go as far as saying that every second worked must be captured and compensated. "We do not decide whether there are circumstances where compensable time is so minute or irregular that it is unreasonable to expect the time to be recorded," the court said.

So California employers can expect more class-action litigation over small periods of time that employees work, Kasper noted.

Review for Compliance

Employers that are new to the state are often surprised about how well California employees know their rights. They're "not afraid to complain about employer compliance in an active and vocal manner," Kasper said, noting that California's government agencies rarely side with employers.  

When federal, state and local laws differ, employers should comply with the law that's most favorable to employees. "Definitely have someone look at your policies and practices," she said. "There are a number of things that you're probably going to have to do differently" in California.


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