Among the lasting 2020 impacts of fires, politics and COVID-19, is increased regulation of California employers. More than 563 bills introduced in the last California legislative session mention “employer,” compared to about 300 bills in 2019. While most bills stalled in the Legislature, many were signed into law by Gov. Gavin Newsom, bringing more rules and risks for employers in our state, dealing with workplace safety; sick leave; workers’ compensation; diversity and discrimination; worker classification and wages; privacy; employee leaves; and settlements.
On January 1, a number of new and revised state and local workplace regulations went into effect, including requirements related to the legalization of recreational marijuana. This update reviews these new requirements to help you and your organization stay in compliance.
For the full alert, visit the Faegre Drinker website.
California is notorious in the non-compete world for its prohibition and extreme scrutiny of individual non-compete and other types of restrictive covenant agreements. These types of agreements between two businesses, however, have received less attention.
In August, the Supreme Court of California in Ixchel Pharma, LLC v. Biogen, Inc., 470 P.3d 571, 573 (Cal. 2020), examined an agreement between two businesses and found “that a rule of reason applies to determine the validity” of business-to-business non-compete agreements. While some commentary on Ixchel has examined the validity of business-to-business non-compete agreements, the larger focus of the Ixchel case was “whether contractual restraints on business operations or commercial dealings are subject to a reasonableness standard under [California Business and Professions Code] section 16600.” Id. at 581 (emphasis added). It is important to note that the Ixchel court reiterated California’s strong position that agreements not to compete related to the termination of employment are invalid and not subject to a reasonableness test. Id. at 583-584. The Ixchel court adopted the reasonableness standard from the Cartwright Act (California’s antitrust law which generally assesses whether an agreement promotes or suppresses competition) for application to business-to business non-competes and further stated that its decision potentially affects all California contracts “that in some way restrain a contracting party from engaging in a profession, trade, or business.” Id. at 581, 588.
Several new laws in California impact employers in a multitude of operational areas. From leave regulations to workers’ compensation, safety enforcement, wages and more, business leaders have much to research when it comes to compliance. All employers with operations in California should be aware of these new laws, understand how these laws may affect their operations and consult with counsel to address any questions on these new obligations.
In the article “California Steps Up to Collect Pay Data, With Feds at Square One,” Bloomberg Law reports on new California legislation that authorizes a collection of wage data, broken down by race, sex, ethnicity, and job category, on or before March 31, 2021.
The legal industry publication turned to labor and employment partner Lynne Anderson for insight on the law and whether other states may follow suit.
On September 30, 2020, California Governor Newsom signed into law Senate Bill 973, which requires California private employers with 100 or more employees to submit an annual pay data report to the state’s Department of Fair Employment and Housing beginning on March 31, 2021. See our previous alert for additional details. We recommend that employers with 100 or more employees in California work with legal counsel as soon as possible to conduct privileged pay audits prior to collecting pay data and submitting the report to California.