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Labor Law Update: Your Labor of Love

*Originally published by CalCPA in the January/February 2020 issue of California CPA.

More than 300 bills introduced in the 2019 California Legislative session mention “employer,” compared to 589 bills in 2018. While most bills bogged down or died in the Legislature, many of the bills—which likely would have been vetoed by former Gov. Jerry Brown—were signed into law by first-term Gov. Gavin Newsom, ushering in a new wave of more regulation of employers in the Golden State.

The following are essential elements of many key state Assembly Bills (AB) and Senate Bills (SB) that became law Jan. 1 (unless otherwise noted) and affect private employers.

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Illinois Amends Recreational Marijuana Statute to Clarify Employers’ Rights

On December 4, 2019, Illinois Governor J.B. Pritzker signed into law amendments to the Illinois Cannabis Regulation and Tax Act (Illinois Cannabis Act) that clarify employer rights to enforce reasonable workplace drug policies once recreational marijuana use becomes legal in Illinois on January 1, 2020. As originally drafted, the Illinois Cannabis Act created confusion for employers as to whether they could lawfully test and/or discriminate against applicants who tested positive for cannabis, based on pre-employment and off-duty use of the drug.

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Summary of Key New California Laws for 2020 (and Beyond): What Employers Should Know

In his first year in office, California Governor Gavin Newsom signed several laws impacting California employers. A summary of some of the key new laws follows. The effective date of the particular new law is indicated in the heading of the Assembly Bill (AB) or Senate Bill (SB).¹ The list below is in numerical order by AB or SB.

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No More “No Rehire” Clauses in California Settlement Agreements

In most jurisdictions, it is standard practice to include a “no-rehire” clause when negotiating a settlement agreement in an employment dispute. “No-rehire” clauses bar the departing employee from seeking future employment with the employer or one of the employer’s related entities. If the former employee applies for a job with the employer or a related entity, the “no-rehire” clause allows the employer to reject the former employee’s application or require the former employee to withdraw the application for employment. In some instances, if the former employee is hired inadvertently, the “no-rehire” clause provides the employer a legitimate nondiscriminatory basis to rescind the offer. Although the use of “no-rehire” clauses is a common practice, California recently prohibited the practice and joined Vermont, which banned “no-rehire” provisions in 2018.

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DOL Final Overtime Rule Takes Effect January 1, 2020

On September 24, 2019 the U.S. Department of Labor (DOL) issued a revised Final Overtime Rule increasing the minimum salary threshold for overtime exemption to $35,568. The Final Overtime Rule takes effect on January 1, 2020.

The DOL’s Final Overtime Rule increases the weekly salary threshold for minimum wage and overtime exemption under the Fair Labor Standards Act (FLSA) from $455 to $684 (an increase in the annual minimum salary from $23,600 to $35,568). The Final Overtime Rule also increases the minimum annual exemption salary threshold for highly compensated employees (HCEs) from $100,000 to $107,432.

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Do You Have Independent Contractors in California?

If so, you should be on alert about California Assembly Bill 5 (AB5), a bill based on the California Supreme Court’s decision in Dynamex v. Superior Court.* If it becomes law, AB5 will have wide-ranging repercussions for companies that rely on independent contractors in California.

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