The Essentials - California Employment Law Update

Over the last few months, several important developments have come into effect. Notably, the injunction on the California Consumer Privacy Act (CCPA) makes enforcement take effect in March of 2024, giving employers more time to finalize internal policies for compliance. We also note two new ordinances for Los Angeles businesses.   

California Chamber of Commerce V. California Privacy Protection Agency (Decided on 30 June 2023)

As part of California’s privacy laws, the California Privacy Rights Act (CPRA) created a new privacy enforcer, the California Privacy Protection Agency (the Agency). The Agency was to adopt final regulations required by the CPRA by 1 July 2022 with enforcement not to commence until 1 July 2023. However, the Agency did not issue timely regulations under the CPRA. On 29 March 2023, the Agency finalized regulations for 12 of 15 subject matter areas contemplated by the CPRA. 

The California Chamber of Commerce sued the Agency to stay enforcement of the CPRA regulations issued on 29 March 2023, arguing that the Agency may not enforce the regulations until one year after all 15 subject matter areas are finalized. The court agreed that impacted businesses must have a 12-month waiting period before enforcement begins, but was unwilling to delay enforcement indefinitely for regulations that have already been finalized. Thus, the Agency cannot enforce the CPRA regulations for the 12 areas finalized on 29 March 2023 until 29 March 2024. The court, however, was unwilling to mandate a specific date by which the Agency must finalize regulations for the last three contemplated subject matter areas.

Although businesses will receive a reprieve with respect to enforcement of the regulations implementing CPRA, the CCPA has its own regulations that apply to employers as of 1 January 2023. 

City of Los Angeles Freelance Worker Protections Ordinance

The City of Los Angeles’ Freelance Worker Protections Ordinance (FWPO) requires written contracts and other protections for freelance workers within the City of Los Angeles. A “freelance worker” under the FWPO is an independent contractor, which can be either an individual or an entity comprised of no more than one person. 

So long as the freelance worker performs job(s) valued at US$600 or more within a calendar year, the freelance worker and the hiring entity must memorialize their relationship in a written contract that includes at least: (1) the name, mailing address, phone number, and email address of the parties; (2) an itemization of the services to be provided by the freelance worker, the value of the services, and the rate and method of compensation; and (3) the date of payment. Records related to the agreement must be retained for at least four years, including contracts and payment records. 

Entities that hire app-based transportation and delivery drivers to provide prearranged services are exempt from the FWPO.   

CITY OF LOS ANGELES FAIR WORK WEEK ORDINANCE

The City of Los Angeles’ Fair Work Week Ordinance (FWWO) requires retail employers to meet certain transparency and notice standards related to employee work schedules. The FWWO applies only to businesses that are identified as retail businesses in the North American Industry Classification System and that have at least 300 employees. Within those retail businesses, the FWWO covers employees working at least two hours a week in the City of Los Angeles who are entitled to minimum wage under California law. The FWWO does not apply to employees who fall within the executive, administrative, or professional exemptions or employees whose primary duty is to support administrative functions related to a company’s corporate office rather than supporting retail operations. 

Employers must provide each covered employee with a Good Faith Estimate (GFE) of his or her work schedule upon hiring and within 10 days upon request. The estimate must include the hours, days, shifts, on-call status, and locations each employee is expected to work in a given work period. These expectations must be specifically stated and employers cannot provide ranges. 

While the GFE is not a binding contractual offer, an employer must have a legitimate, documented reason to “substantially deviate” from the GFE that was unknown to the employer at the time it provided the GFE. Alternatively, the employer must document employee-initiated and employee-approved changes. 

In addition to the GFE, employers must provide existing employees with a written work schedule 14 days in advance of each work period. An employee has the right to decline any proposed schedule changes made less than 14 days before the start of the work period. Any employer-initiated changes to this schedule will likely result in additional “predictability pay” being awarded to the employee. Predictability pay is calculated as one-half of an employee’s regular rate of pay or one hour of the regular rate of pay, and is awarded for employer-initiated schedule changes that result in an increase or decrease in employee hours. 

Before offering additional hours to new employees or contractors, an employer must first offer the work to any current qualified employees unless the additional hours would result in overtime hours for current employees. However, employees who accept this additional work are not entitled to predictability pay. Employers are required to provide premium pay to any employee working two shifts separated by less than 10 hours. An employee working two shifts separated by less than 10 hours is entitled to premium pay equal to 1.5 times the employee’s regular rate of pay for all hours worked in the second shift. The premium pay does not apply to hours for which an employee is already entitled to receive overtime pay. Employers are also required to retain all relevant records, including GFEs and work schedules, for three years. 

Potential violations of the FWWO are referred to the Office of Wage Standards and can result in fines if the employer does not cure the violation within the allotted 15-day window. Full enforcement of the FWWO by the Office of Wage Standards does not begin until September of this year. However, employees may be able to pursue civil claims based on an employer’s alleged FWWO violation prior to that date.

We acknowledge the contributions to this publication from our summer associates Jake Winningham and Trent Haines.