Benefit News

Onslaught of New California Laws Set To Take Effect

November 12, 2019

The latest California legislative session has come to an end with Governor Gavin Newsome signing a slew of bills into law that will significantly impact California employers and employees. The following briefly summarizes significant laws that were enacted pertaining to health benefits, as well as labor and employment related issues. These are generally scheduled to take effect January 1, 2020, unless otherwise noted.

New Employee Benefit Laws

Changes to Domestic Partner Definition. On July 30, 2019, SB 30 was signed into law, amending the California Family Code to extend domestic partnership benefits, rights and privileges to all opposite sex partners who register their partnership with the California Secretary of State. Thus, there is no longer a requirement that at least one opposite sex partner be at least age 62.

Flexible Spending Account Notice Requirement. AB 1554 adds Section 2810.7 to the California Labor Code and requires an employer to notify an employee who participates in a flexible spending account (FSA) of any deadline to withdraw funds before the end of the plan year. Notice must be by two different forms, one of which could be electronic. Permitted forms of communication include (but are not limited to) email, telephone, text, postal and in-person.

Individual Mandate. SB 78 establishes a penalty under state law for individuals who do not have minimum essential coverage. This, in effect, reinstitutes the federal individual mandate penalty that was reduced to zero beginning in 2019. SB 78 also creates a temporary Individual Market Assistance program to subsidize health insurance for individuals earning less than 600 percent of the federal poverty level. There is also an annual reporting requirement similar to that under the Affordable Care Act.

Individual Policy Open Enrollment Periods. AB 1309 extends the open enrollment period for persons purchasing policies in the individual market, both inside and outside Covered California. The revised open enrollment period will run from November 1 to January 31, and the effective date of coverage for enrollments between December 15 and January 31 will be February 1.

Telehealth Coverage. Effective for policies issued on or after January 1, 2021, AB 744 requires plans to cover telehealth services at the same levels as when those services are delivered in-person. Thus, telehealth services must be subject to the same deductible and annual or lifetime dollar maximums, as those applicable to equivalent services not provided through telehealth. Likewise, a health plan or health insurer must cover and reimburse a healthcare provider of telehealth services on the same basis and the same extent as non-telehealth services.

New Labor And Employment Laws

Minimum Wage Updates. Effective January 1, 2020, the state’s minimum wage increases to $13.00 per hour for employers with at least 26 employees ($12.00 per hour for employers with 25 or less employees). Additional information regarding the state’s minimum wage requirements can be found here. Frequently asked questions are available here.

In addition, several cities and municipalities currently have minimum wage rates above the state thresholds that must be complied with. For example, San Francisco’s current minimum wage requirement is $15.59 per hour and the minimum wage rate for Los Angeles is $14.25 for employers with at least 26 employees ($13.25 per hour for employers with 25 and fewer employees). These rates are all set to increase effective July 1, 2020 with San Francisco’s to be adjusted based on the annual increase in the Consumer Price Index. Los Angeles’ minimum wage will increase to $15.00 per hour for employers with at least 26 employees ($14.25 for employers with with 25 or fewer employees). The minimum wage requirements for several other cities and munincipalities will also see increases in 2020 (see listing here ).

Independent Contractor Classification. AB 5 codifies the court decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018), replacing the “Borello Test” with the three-part “ABC Test” to determine whether individuals in certain professions should be classified as employees or independent contractors for purposes of the California Labor Code, Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission. As a result, it is expected to be more difficult to classify individuals as independent contractors. Certain occupations are exempt from using the ABC Test and must continue using the Borello Test. These include, but are not limited to, podiatrists, veterinarians, psychologists, repossession agents, and commercial fisherman.

Sexual Harassment Prevention Training. Several pieces of legislation related to sexual harassment prevention training were signed into law. SB 778 delays sexual harassment mandated training for non-supervisory employees until January 1, 2021 and requires them to be provided the training within 6 months of hire. Furthermore, new supervisory employees must be provided the training within 6 months of assuming a supervisory position. Under SB 530, the training requirement for seasonal, temporary and other employees required to work for less than 6 months is also extended until January 1, 2021. SB 530 also instructs the Division of Labor Standards Enforcement to develop industry specific harassment prevention policy and training standards and delays the sexual harassment prevention training requirement for the construction industry until January 1, 2021. In addition, AB 543 requires public and charter schools for grades 9-12 to prominently display a poster in each bathroom and locker room at the school site, notifying them of the school’s sexual harassment policy and the rules and procedures for reporting charges of sexual harassment, and AB 547 requires the Department of Industrial Relations to establish an advisory committee to create a list of qualified organizations that employers of janitorial employees can use to provide training.

Paid Family Leave. SB 83 increases paid family leave from 6 weeks to 8 weeks beginning July 1, 2020, to allow employees to take time off work in order to care for a seriously ill family member or to bond with a minor child within one year of birth or placement of that child.

Lactation Accommodation. SB 142 which modifies existing state lactation accommodation requirements, requires employers to develop and implement a lactation accommodation policy that must be provided to employees along with new hire documents and when an employee asks about parental leave. The policy must provide for a private lactation room in close proximity to an employee’s workstation with access to refrigeration or a cooler and running water, and that is not a bathroom. The law also contains prohibitions against terminating, retaliating, or otherwise discriminating against an employee for exercising or attempting to exercise her rights under this law, and denial of a reasonable break time or adequate space to express milk is deemed a failure to provide the employee with a rest period in violation of state law. There is a hardship exemption available to employers with under 50 employees, but employers still must make reasonable efforts to provide a location that is not a bathroom for employees to privately express milk.

Living Organ Donation. Existing law had required a private employer to provide up to 30 business days of paid leave a year for the purpose of organ donation. AB 1223 applies to both public and private employers and provides for an additional unpaid leave of up to 30 business days a year to an employee who is an organ donor and who has exhausted all available sick leave.

Employment Discrimination. AB 9 extends statute of limitations from 1 to 3 years for claims alleging employment discrimination under the state’s Fair Employment and Housing Act (FEHA), determined from the date the complaint was filed with the California Labor Commissioner.

Racial Discrimination. Known as the CROWN Act, SB 188 bars employers from discriminating based on traits historically associated with race, including, but not limited to, hair texture and protective hair styles (natural hair), dress codes and grooming standards.

Waiver of Rights. AB 51 is applicable to agreements (other than post dispute settlement or negotiated settlement agreements) entered into, modified, or extended on or after January 1, 2020, and prohibits employers from requiring employees or job applicants from waiving a right, forum or procedure under the California Fair Employment and Housing Act (FEHA), the Labor Code, or any other statute governing employment, as a condition of employment. The law also prohibits employers from terminating, retaliating, or otherwise discriminating against employees who refuse to consent to any such waiver.

Arbitration Fees. Under SB 707, an employer’s failure to pay arbitration fees within 30 days after the due date results in a material breach of the arbitration agreement, a default of the agreement, and waiver of its right to compel arbitration (or compel an employee from proceeding with the arbitration). This would allow an employee to unilaterally withdraw from arbitration and proceed in court or alternatively compel arbitration. Monetary penalties and other sanctions could also be assessed against the employer. In addition, SB 707 requires a private arbitration company to collect and publicly report aggregate demographic data regarding the ethnicity, race, disability, veteran status, gender, gender identity and sexual orientation of all arbitrators.

No “No-Rehire” Provisions. AB 749 requires that any agreement to settle an employment dispute not contain a provision prohibiting, preventing, or otherwise restricting the employee from obtaining future employment with that employer (or subsidiary or affiliate) unless the employer made a good faith determination that the person engaged in sexual harassment or assault.

California Privacy Act Amendments. Several amendments were made to the California Consumer Privacy Act of 2018 (CCPA). AB 25 exempts for one year (until January 1, 2021) certain personal information gathered by employers on employees and job applicants during the hiring process. AB 874 amends the definition of “personal information” under the CCPA and expands the scope of “publicly available” information exempted from the definition of “personal information”. AB 1130 revises the definition of “personal information” in the data breach notification statutes to include certain additional sensitive information, including biometric data and certain identification numbers. AB 1355 addresses various drafting errors and makes clarifying changes, including to clarify provisions of the CCPA’s Fair Credit Report Act exemption and to create an exemption until January 1, 2021 for personal information a business collects about an employee when collected as part of a business-to-business transaction. AB 1564 revises available options for customers to submit requests regarding private information gathered by a company that operates exclusively online, and AB 1146 provides a limited exemption from the application of the CCPA for certain vehicle or ownership information necessary for warranty repairs or recalls under federal law.

Labor Commissioner’s Authority. SB 688 expands the Labor Commissioner’s authority to assess penalties to an employer who fails to pay the minimum wage. AB 673 provides recourse for employees who are not paid wages on time by permitting the Labor Commissioner to assess penalties against the employer or to seek civil penalties under the Private Attorneys General Act (PAGA). In addition, SB 229 expands enforcement procedures for employer citations for workplace retaliation; imposes bond requirements and deadlines for seeking enforcement.

For additional information, please contact your Burnham Benefits Consultant or Burnham Benefits at 949-833-2983 or inquiries@burnhambenefits.com.


Burnham Benefits does not engage in the practice of law and this publication should not be construed as the providing of legal advice or a legal opinion of any kind. The consulting advice we provide is intended solely to assist in assessing its compliance with the Patient Protection and Affordable Care Act and other applicable federal and state law requirements, and is based on Burnham Benefit’s interpretation of federal guidance in effect as of the date of this publication. To the best of our knowledge, the information provided herein, and assumptions relied on, are reasonable and accurate as of the date of this publication. Furthermore, to ensure compliance with IRS Circular 230, any tax advice contained in this publication is not intended to be used, and cannot be used, for purposes of (i) avoiding penalties imposed under the United States Internal Revenue Code or (ii) promoting, marketing or recommending to another person any tax-related matter.

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