On September 27, 2021, Governor Gavin Newsom signed a bill package into law that includes measures ranging from phasing out the subminimum wage for those with disabilities to increased penalties for wage theft. Below we will get into more detail on specific legislation that has been passed.
A.B. 1003: Wage Theft
Effective January 1, 2022, the bill amends the current law which classifies violations of specific wage and gratuity provisions as a misdemeanor and punishable by civil penalty and remedies for recovery of wages. The amendment makes intentional theft of wages, including gratuities and benefits, in an amount greater than $950 from one employee or $2,350 in aggregate from two or more employees in a consecutive 12-month period, grand theft. Independent contractors are included as employees.
A.B 1033: California Family Rights Act
California Family Rights Act makes it an unlawful employment practice for an eligible employer to refuse to grant a request by an eligible employee to take up to 12 workweeks of unpaid protected leave during any 12-month period for family care and medical leave, as specified. Existing law requires the department to initiate mediation promptly following a request, prohibits an employee from pursuing a civil action until the mediation is complete, and tolls the statute of limitations for the employee.
Effective January 1, 2022, when an employee requests an immediate right to sue alleging a violation by the employer, the department must notify the employee in writing of the requirement for mediation prior to filing a civil action, only if mediation is requested by the employer or employee. The bill will also require the employee to contact the department’s dispute resolution division, in the manner specified by the department, prior to filing an action and to indicate whether they are requesting mediation.
A.B 1506: Worker Status. Newspaper Distributors and Carriers
This bill extends the ABC test exemptions for newspaper distributors working under contract with a newspaper publisher and for newspaper carriers from January 1,2022 to January 1, 2025. The bill also requires that every newspaper publisher or distributor that hires or directly contracts with newspaper carriers must submit to the Labor and Workforce Development Agency information related to their workforce for the current year on or before March 1, 2022, March 1, 2023, and March 1, 2024.
- The number of carriers for which the publisher or distributor paid payroll taxes in the previous year and the number of carriers for which the publisher or distributor did not pay payroll taxes in the previous.
- The average wage rate paid to carriers classified as independent contractors and as employees.
- The number of carrier wage claims filed, if any, with the Labor Commissioner or in a court of law.
- For the March 1, 2022, reporting date only, every newspaper publisher and distributor shall also report the number of carrier wage claims filed with the Labor Commissioner or in a court of law for the preceding three.
The agency will announce, at a later date how, they intend to collect this data.
S.B 639: Minimum Wage for persons with disabilities
This bill amends the existing law that permits the Industrial Welfare Commission to issue an employee who is mentally or physically disabled, or both, a license authorizing the employment of the licensee for a period not to exceed one year from date of issue, at a wage determined by the commission that is less than the minimum wage. The amendments prohibit the issuance of new licenses from being issued after January 1,2022. In addition, the license may only be renewed for existing license holders who meet required benchmarks.
The lesser minimum wage for an employee who is mentally or physically disabled will be repealed on January 1, 2025, or when the multiyear phaseout plan is released, whichever is later. The bill, commencing January 1, 2025, or when the plan is released, prohibits an employee with a disability from being paid less than the legal minimum wage or the applicable local minimum wage ordinance, whichever is higher.
S.B 727: Labor related Liabilities
A direct contractor making or taking a contract in the State of California, is liable for any debt owed to a wage claimant or third party on the wage claimant, incurred by a subcontractor acting under or for the direct contractor, for performance of labor included in the subject contract. The Labor Commissioner may enforce against a direct contractor the liability for unpaid wages, or through a civil action. The direct contractor’s liability is limited to unpaid wages, including any interest owed.
For contracts entered into on or after January 1, 2022, a direct contractor making or taking a contract in the state shall assume, and is liable for, any debt owed to a wage claimant or third party on the wage claimant’s behalf, incurred by a subcontractor at any tier acting under or for the direct contractor for the wage claimant’s performance of labor included in the subject of the contract between the direct contractor and the owner.
If a worker employed by a subcontractor on a private construction project is not paid the wage, fringe or other benefit payment or contribution owed by the subcontractor, the direct contractor of the project is not liable for any associated penalties or liquidated damages unless the direct contractor had knowledge of the subcontractor’s failure to pay the specified wage, fringe or other benefit payment or contribution, or the direct contractor fails to comply with all of the following requirements:
- The contractor shall monitor the payment by the subcontractor of wage, fringe or other benefit payment or contribution to the employees or the labor trust fund, by periodic review of the subcontractor’s payroll records which, at a minimum, contain the information set forth in subdivision (a) of Section 226, and which are payroll records as contemplated by Section 1174.
- Upon becoming aware of the failure of the subcontractor to pay the wage, fringe or other benefit payment or contribution to the employees or the labor trust fund, the contractor shall diligently take corrective action to halt or rectify the failure, including, but not limited to, retaining sufficient funds due the subcontractor for work performed on the private construction project.
- Prior to making final payment to the subcontractor for work performed on the private construction project, the contractor shall obtain an affidavit signed under penalty of perjury from the subcontractor that the subcontractor has paid the wage, fringe or other benefit payment or contribution due to the employees or the labor trust fund for all work performed on the private construction project.
Employers should review the bills listed above in the coming weeks, and if necessary, make any applicable changes.
Thank you for choosing Paylocity as your Payroll Tax and HCM partner. This information is provided as a courtesy, may change and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney or Advisor.