2022 California Labor & Employment Year End Review

• Jurisdiction: California,United States
• Law Firm: Lewis Brisbois Bisgaard & Smith LLP
• Subject Matter: Employment and HR, Health & Safety, Employee Benefits & Compensation, Employee Rights/ Labour Relations
• Author: Olivia Perry, Alexandra Adams, Emily Hoskins, Kelley Fox and Alison Korgan
• Published date: 03 February 2023

Los Angeles, Calif. (February 1, 2023) - The California legislature had another busy year passing employment regulations ranging from protecting employee leaves of absence to extending statutes of limitations. Judicial decisions also played a major role in shaping the employment world moving into 2023. This alert provides summaries of the most significant employment-related laws passed or altered in 2022 - all of which are effective as of January 1, 2023, unless otherwise indicated - and caselaw updates that will impact employers and employees in the Golden State going forward.

Minimum Wage Increase

On January 1, 2023, California's minimum wage increased to $15.50 per hour for all businesses, regardless of the number of workers. This increase stems from Senate Bill 3, passed in 2016, which sought to gradually increase the minimum wage. Still, some cities and counties may enact or maintain ordinances offering a higher minimum wage than the state's minimum requirement. Importantly, the minimum wage is an obligation of employers that cannot be waived by any agreement, including collective bargaining agreements.

Pay Transparency and Reporting

On September 27, 2022, Governor Newsom signed Senate Bill 1162, which provides an update to the previous pay data reporting bill, Senate Bill 973. Similar to the efforts in several other states, this bill represents a major attempt to encourage pay transparency and fight workplace discrimination. This bill imposes two general obligations upon California employers.

First, it requires all private employers with at least 15 employees, that are either based or hiring in California, to include a job position's pay scale or salary range in any corresponding job posting or advertisement. This includes job postings or advertisements through third parties, like general job posting websites. "Pay scale" is defined by the statute as the salary or hourly wage range that the employer reasonably expects to pay for the position.

Second, Senate Bill 1162 requires all California-based private employers of at least 100 employees to publish annual pay data reports. These pay data reports must contain three component sub-reporting requirements. For more information on these sub-reporting requirements, reach out to a Lewis Brisbois employment law attorney. Employers operating multiple establishments must submit a separate pay data report for each of its establishments as the bill expressly prohibits such employers from submitting consolidated reporting. An employer that initially fails to timely submit a compliant pay data report to the California Civil Rights Department is subject to a civil penalty of up to $100 per employee. Any subsequent failure may expose an employer to a civil penalty of up to $200 per employee. The due date for the pay data report is also altered under this bill, making the new due date the second Wednesday of May of each year.

IMPORTANT CASE LAW DECISIONS

Worker Classification

On June 30, 2022, the U.S. Supreme Court declined to review the Ninth Circuit's holding inCalifornia Trucking Association, Inc. v. Bonta,regarding whether California's worker classification law runs afoul of the Federal Aviation Administration Authorization Act of 1994 (FAAAA) as applied to truck drivers.

For decades, classification of California workers as independent contractors or employees had been governed by the multi-factor test described inS.G. Borello & Sons, Inc. v. Department of Industrial Relations, 769 P.2d 399 (Cal. 1989). Prior to 2018, motor carriers treated owner-operators as independent contractors, a move beneficial to all. In 2018, the California Supreme Court held that a new test for independent contractor status, the so-called "ABC" test, would apply to claims under state wage orders.SeeDynamex Operations W., Inc. v. Superior Ct., 416 P.3d 1 (Cal. 2018). Thereafter, California's legislature passed AB5, which went into effect in 2020, and codified the ABC test. In effect, under California's AB5, any motor carrier engaging a driver must create an employer-employee relationship and bear all additional costs and burdens of that relationship.

Since its passage, the FAAAA has expressly preempted state laws "related to a price, route, or service, of any motor carrier." 49 U.S.C. ' 14501(c)(1). The Ninth Circuit previously upheld California's worker classification statute as it applies to motor carriers. In contrast, the First Circuit and the Massachusetts Supreme Judicial Court have both held an identical Massachusetts statute was preempted by the FAAAA. Despite the circuit split, the U.S. Supreme Court declined to review. Unfortunately, the Court's decision to deny certiorari fails to harmonize conflicting circuit decisions and will undoubtedly increase transportation costs in an industry already plagued by supply chain issues.

PAGA Arbitrability Addressed inViking River Cruises Inc. v. Moriana

The United States Supreme Court held inViking River Cruises, Inc. v. Morianathat individual claims under California's Private Attorneys General Act (PAGA) may be separated from the PAGA action and forced into arbitration, which then causes the individual plaintiff to lose standing to act as a group-wide PAGA representative.

Prior to theViking Riverdecision, the California Supreme Court inIskanian v. CLS Transp. Los Angeles, LLC(2014) 59 Cal.4th 348, characterized PAGA claims as representative claims in which every employee has standing, as an agent or proxy of the state, to assert in a judicial or arbitral forum. The holding inViking Riveropens a path for employers around the holding inIskanian v. CLS Transp. Los Angeles, LLC, which precluded the division of PAGA actions into individual and representative claims through an agreement to arbitrate.

The Court delineated a distinction between "representative" / "non-individual" and "individual" PAGA claims. It explained that although every PAGA action is a representative action asserted by an employee acting as a proxy of the state, the cause of action is "representative" / "non-individual" in nature when it is predicated on violations sustained by other employees, but not the plaintiff. It is individual in nature when the PAGA claim arises from violations sustained directly by the plaintiff.

For now, the U.S. Supreme Court has provided a...