CHANGES in CALIFORNIA EMPLOYMENT LAW 2024

Overview of Laws Relating to HR Functions

There are many laws and policies that establish employee rights and employer responsibilities. As an HR professional, you must be familiar with these laws and regulations. Failure to follow these laws can lead to fines, loss of an organization’s reputation, loss of business, and other negative penalties. 

Because there are so many laws relating to employment, the laws sometimes overlap or conflict with one another, especially when state laws differ from federal regulations. In situations where laws and regulations conflict, an employer should pursue whichever action is in the employee’s best interest. It is essential to be knowledgeable about both state and federal laws to avoid potential issues. 

The following laws and regulations are among the most common:

Americans with Disabilities Act (ADA)

The ADA protects qualified employees with disabilities and requires employers to make accommodations for employees with disabilities. In a job description, the duties and tasks must provide reasonable accommodations to ensure that the position can be done by people with disabilities. 

Clayton Antitrust Act

The Clayton Antitrust Act of 1914 clarified and strengthened many provisions of the Sherman Antitrust Act (see description below), but it specifically exempted labor unions from the law's provisions. The Clayton Antitrust Act allows the use of injunctions to stop strikes only when there is a threat of damage to property.

Computer Fraud and Abuse Act

The Computer Fraud and Abuse Act criminalizes "intentionally access[ing] a computer without authorization or exceed[ing] authorized access, and thereby obtaining . . . information from any protected computer." While initially passed to combat hacking, this Act has also been used by employers to bring charges against employees who have accessed unauthorized information on electronic devices, systems, or networks owned by the organization.

Consolidated Omnibus Budget Reconciliation Act (COBRA)

COBRA requires employers to extend a health care coverage purchase option for employees and dependents after an employee is terminated, resigns, or has a reduction in their work hours. The length of time that health care must be extended varies depending on the reason the employee is no longer with the organization. COBRA does not require that employers offer a health coverage purchase option to employees terminated for gross misconduct.

Consumer Credit Protection Act (CCPA)

The CCPA of 1968 established that employers may be required to withhold money from the paychecks of employees with certain kinds of financial debts. The CCPA also provides certain protections for employees whose wages are garnished. Employers are not allowed to terminate employees who have their wages garnished for a single debt, and limits are placed on how much may be garnished in any particular week.

Davis-Bacon Act

The Davis-Bacon Act was passed in 1931 and was the first federal legislation to mandate that laborers and mechanics be paid the prevailing wage on public works projects.

Drug-Free Workplace Act

The Drug-Free Workplace Act of 1988 aims to prevent workplace accidents arising from employee drug use. The law requires any employer that receives federal funding or has federal contracts totaling at least $100,000 annually to establish a drug-free policy for the workplace.

Electronic Communication Privacy Act

This Electronic Communication Privacy Act, passed in 1986, makes it illegal to monitor oral or wire-based communications unless an employer has a legitimate business need to do so or an employee consents to be monitored.

Employee Retirement Income and Security Act (ERISA)

ERISA provides the rules associated with employee vesting. It also outlines access to and withdrawals from qualified retirement plans. Employer contributions are 20 percent vested after three years of service, and vesting increases incrementally until seven years of service, when contributions are 100 percent vested. Employees are always entitled to the contributions they make to their pension plans. 

Equal Pay Act

This Equal Pay Act, which was passed in 1963,  requires that men and women in the same workplace be given equal pay for equal work. The jobs need not be identical, but they must be substantially equal. Job content (not job titles) determines whether jobs are substantially equal. If there is an inequality in wages between men and women, employers may not reduce the wages of either sex to equalize their pay.

Family and Medical Leave Act (FMLA)

The FMLA mandates that employers provide up to 12 weeks of unpaid leave to employees for qualified circumstances. These circumstances include the birth or adoption of a child, , the care for a seriously ill child, parent, or spouse, or care for themselves if seriously ill. Both men and women are entitled to the same leave benefit.

Fair Labor Standards Act (FLSA)

The FLSA is also referred to as the “Wage and Hour Act.” This act regulates the wages of workers who are paid on an hourly basis. The act requires employers to classify each employee as either exempt or nonexempt employees. Nonexempt employees must be paid at least the minimum wage and overtime when they are required to work more than 40 hours in a week. 

Federal-State Unemployment Insurance Program

Established in 1935 as an extension of the Social Security Act, the Federal-State Unemployment Insurance Program provides benefits to employees who have lost their employment for certain reasons. Employees may collect a percentage of their previous income in the form of unemployment for a limited amount of time after employment ends. The length of coverage and the number of unemployment benefits that can be collected vary from state to state, but most states do not permit employees to collect unemployment if they have been terminated for fault. Employers pay a state unemployment insurance tax to support the availability of this benefit.

Health Insurance Portability and Accountability Act (HIPPA)

HIPAA mandates that, regardless of pre-existing conditions, a worker must be able to switch to a new job and transfer the insurance he or she had with a previous employer to a new insurance program. HIPPA also regulates access to protected health information, which is any information that is collected or created by an entity involved in healthcare that could be connected to a particular patient or individual.

Immigration Reform and Control Act (IRCA)

IRCA makes it illegal for companies to base hiring decisions on a person's nationality or citizenship—as long as that person can legally work in the United States. At the same time, it also makes it illegal for companies knowingly to hire or recruit people who cannot work legally in the U.S. New hires must complete the I-9 form, and employers must confirm that the employee has the required documentation. Employers who hire undocumented workers or do not follow recordkeeping protocols face fines. Repeated violations can result in criminal charges.

Labor Management Relations Act (LMRA)

The LMRA of 1947, also known as the Taft-Hartley Act, identified union activities that constitute "unfair labor practices." The act stipulates that employees cannot be forced to join a union or take part in union activities, and it forbids unions from requiring members to discriminate against colleagues who are not members of the union. It also prohibits unions from charging members unreasonably high membership dues.

Mental Health Parity Act

The Mental Health Parity Act of 1996 requires that insurers provide the same limits for employees’ mental health services that they provide for other medical benefits.

National Labor Relations Act (NLRA)

The NLRA of 1935 guarantees workers the right to organize a union, to bargain collectively, and to engage in collective activities. It defines unfair labor practices, provides for secret ballots in union votes, and establishes the National Labor Relations Board (NLRB).

Norris-LaGuardia Act

The right to unionize was protected by the Norris-LaGuardia Act of 1932. This act also prevents employers from forcing employees to sign contracts indicating they will not join a union (also known as yellow dog contracts) and from interfering in nonviolent union activities.

Occupational Safety and Health Act

The Occupational Safety and Health Act protects employees who work in dangerous work environments. This act "requires employers to provide their employees with working conditions that are free of known dangers." The act created the Occupational Safety and Health Administration (OSHA), which sets and enforces protective workplace safety and health standards.

Old Age, Survivors, and Disability Insurance Program

The Old Age, Survivors, and Disability Insurance Program was established as part of the Social Security Act in 1935. This program offers benefits to employees who retire or become unable to work, as well as to eligible surviving dependents if the employee dies. To support the program, employees pay a percentage of their income to the federal government, and employers match those contributions.

Older Worker Benefit Protection Act

The Older Worker Benefit Protection Act of 1990, an amendment to the Age Discrimination in Employment Act of 1967, prohibits employers from discriminating against older employees within benefit plans.

Patient Protection and Affordable Care Act (PPACA)

The PPACA is a health care reform bill that was signed in March 2010. The PPACA has many employer implications, including requiring accommodation for breastfeeding. Most importantly, though, it ensures that Americans have access to affordable health care. While employers are not required to provide healthcare insurance, the law penalizes large organizations that do not provide access to affordable "minimal essential coverage."

Pension Protection Act

The Pension Protection Act of 2006 protects employees when they are entitled to pension plans, but those plans do not have the funds necessary to provide the promised benefits.

Portal-to-Portal Act

The Portal-to-Portal Act determined that commute time is not compensable, but that employers must compensate workers for performing job-related tasks outside of work hours or during lunch breaks.

Pregnancy Discrimination Act (PDA)

The Pregnancy Discrimination Act makes it illegal to discriminate against pregnant women and also requires that employers must amend the term of employment to allow a person who goes on maternity to return to the same job. 

Railway Labor Act

Passed in 1926 and amended in 1936, the Railway Labor Act was intended to prevent railroad and airline strikes from resulting in significant trade and transportation problems. It requires employees in these industries to seek alternative dispute resolution methods before resorting to a labor strike.

Retirement Equity Act

The Retirement Equity Act reduced the existing age limits restricting participation in pension plans, provided more protections for survivors of employees entitled to pensions, and restricted conditions that could be placed on survivor plans.

Sarbanes Oxley Act (SOX)

The Sarbanes-Oxley Act was passed in 2002 to hold senior executives responsible for the financial practices of an organization. The SOX Act also prohibits employers from retaliating against whistleblowers—employees who refuse to participate in or report financial misconduct or financial conduct they reasonably believe violated federal law.

Sherman Antitrust Act

The Sherman Antitrust Act of 1890 was intended to prevent organizations from inhibiting or restricting free trade. While it was originally meant to rein in the monopolistic practices of big-business trusts, the courts ruled that the law's prohibition of "restraint of commerce" applied to labor union strikes and boycotts, as well. By allowing legal injunctions to be used to stop strikes and boycotts, the Sherman Act was the first federal law that had an impact on organized labor.

Stored Communication Act

This act, also passed as part of the Electronic Communications Privacy Act in 1986, protects the storage of electronic communications, such as emails. In general, employers are not prohibited from accessing communications stored on their wire or electronic communications services (for example, employer-provided email service). Organizations should, however, announce this policy.

Title VII of the CIvil Rights Act of 1964

This act states that it is illegal for private employers, state and local governments, and educational institutions with 15 or more employees to discriminate in the job based on race, color, religion, sex, or national origin. Sexual harassment also violate Title VII, according to the Supreme Cour case Meritor Saving Bank v. Vinson. The Age Discrimination in Employment Act makes it illegal to discriminate against anyone that is 40 or older from holding a job in a government agency, a private enterprise with 20 or more workers, or a union with more than 25 members. Additionally, several states and municipalities have passed laws to protect against other forms of discrimination based on personal characteristics, such as discrimination based on sexual orientation, parental or marital status, and political affiliation.

Uniformed Services Employment and REemployment Rights Act (USERRA)

USERRA was enacted to protect the rights of military reservists who are called to duty in the armed forces. The law prohibits employers from discriminating based on past, current, or future military obligations. USERRA applies to all employers, regardless of size; it covers regular employees, but not temporary workers.

Walsh-Healey Public Contracts Act

The Walsh-Healey Public Contracts Act of 1936 protects employees working under government contracts from working for substandard wages. It established that employees were entitled to overtime pay, prohibited hiring children under 18 and people who have been convicted of a crime, and required that workplaces meet safety and sanitation standards. Many of these provisions were incorporated two years later into the Fair Labor Standards Act, which covers all private-sector employees—not just those working for companies with federal contracts.

Worker Adjustment and Retraining Notification Act (WARN)

The WARN Act, enacted in 1988, requires larger employers to give their workers advance notice in the event of mass layoffs or plant closings. The Act applies to employers with 100 or more full-time employees, or 100 or more full- and part-time employees who work a combined 4,000 or more hours per week. It requires an employer to provide 60 days' notice to employees or their union before going through with a mass layoff or plant closing.

Fair Labor Standards Act (FLSA)

FLSA Banner

DOL Issues Independent Contractor Final Rule

The U.S. Department of Labor (DOL) released a final rule Jan. 9 that changes the criteria for classifying independent contractors.

The final rule largely mirrors the DOL’s proposed rule and requires companies to weigh a variety of economic factors to determine whether a worker is an employee or an independent contractor. The final rule will take effect on March 11.

In public comments to the DOL on the proposed rule, SHRM had said the proposal would create uncertainty and confusion for employers. It also said the proposed test would require more time and resources from businesses to apply. The proposed changes to the regulations would undercut workers’ ability to work independently, SHRM added.

“We’re making sure workers get the protections they need while also leveling the playing field for employers,” Acting Secretary of Labor Julie Su said in a press briefing on Jan. 8.  When businesses misclassify workers, “it’s not fair to their law-abiding competitors.” Su has been renominated by President Joe Biden to be labor secretary after her nomination did not pass the Senate last year, Bloomberg reports.

The final rule has major ramifications for the gig economy, because app-based platforms have typically classified their delivery drivers and other gig workers as independent contractors. Freelance workers or consultants such as writers, musicians, IT professionals, trainers and other people whose work is project-based may be similarly affected.

Under the federal Fair Labor Standards Act (FLSA), employees are entitled to minimum wage, overtime pay and other benefits. Independent contractors are not entitled to such benefits, but they generally have more flexibility to set their own schedules and work for multiple companies.

“Misclassified employees don’t get paid for all their hours,” Su said. “They see their economic security eroded because of misclassification. This rule provides greater clarity and consistency in determining a worker’s status.”

Background

The final rule rescinds a 2021 rule in which two core factors—control over the work and opportunity for profit or loss—carried greater weight in determining the status of independent contractors. Under the new rule, employers would use a totality-of-the-circumstances analysis, in which none of the factors carry greater weight.

The new test includes six factors:

• The degree to which the employer controls how the work is done.

• The worker’s opportunity for profit or loss.

• The amount of skill and initiative required for the work.

• The degree of permanence of the working relationship.

• The worker’s investment in equipment or materials required for the task.

• The extent to which the service rendered is an integral part of the employer’s business.

“No factor or set of factors has a predetermined weight, and a totality of the circumstances of the working relationship must be considered,” Jessica Looman, administrator of the DOL’s Wage and Hour Division, said in a Jan. 8 press briefing. “The six factors are not exhaustive, nor are any of them more important than any others.”

Looman confirmed that work-related expenses imposed by the employer are not indicative of contractor status, and actions taken by the employer with the sole purpose of complying with the law do not indicate control exercised by the employer.

She noted that the final rule is meant to apply broadly to all types of workers, not specifically to certain industries or certain types of work.

The DOL intends to release more guidance to help employers comply with the final rule.

NLRB Case

In June 2023, a decision from the National Labor Relations Board (NLRB) altered the standard employers must use to determine whether someone qualifies as an independent contractor under the National Labor Relations Act (NLRA).

The NLRB rejected a previous standard that held that entrepreneurial opportunity for gain or loss should be the animating principle of the independent contractor test. Instead, the board said entrepreneurial opportunity should be taken into account alongside a list of traditional common-law factors. Those factors include the extent of control the employer exercises over the details of the work, the method of payment, how much skill is required in the work, and whether the employer supplies the tools and the place of work.

Unlike employees, independent contractors can’t form unions and can’t file unfair labor practice charges with the NLRB.