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California employers need to be aware of how a variety of new laws (and continually changing COVID-19-related requirements) will affect their HR teams and reporting requirements in 2021. For example, as of January 1, pay data reporting is mandatory, and employers with only five or more employees are required to provide unpaid family leave. Let’s take a look at these and other areas where California employers may expect to see potential exposure to risk.
Pay data reporting (SB 973)
According to the California Department of Fair Employment and Housing (DFEH) “California employers of 100 or more employees must report pay and hours-worked data by establishment, job category, sex, race, and ethnicity,” by March 31, 2021 (and every year thereafter). Employers will now have to submit Pay Data for a single “snapshot” pay period, and should also expect significant enforcement of the law.
The National Law Review notes that “the new legislation left some uncertainty for employers in several areas” and that “guidance is coming soon” with regard to required content, pay, hours worked, multi-establishment employers, acquisitions, mergers, and spinoffs.
Employers should likewise be aware that SB 973 applies to employees outside of California. According to the DFEH’s FAQs on California Pay Data Reporting:
“When reporting to DFEH, employers must include their employees assigned to California establishments and/or working within California, and employers may include their other employers. Thus, DFEH expects that a single-establishment employer in California will include on its pay data report all employees (including any employees outside of California) whether or not teleworking.
“Similarly, DFEH expects that a multiple-establishment employer with establishments only in California will include across its establishment-level data in its report all employees (including any employees outside of California) whether or not teleworking.”
Given the complexities involved in determining 1) which employees are covered by SB 973 and 2) what data to report to the DFEH, employers should prepare now for the March 31, 2021 deadline.
Expansion of California Family Rights Act (SB1383)
Prior to January 1, 2021, employers with 50 or more employees were subject to the California Family Rights Act (CFRA) and its federal equivalent, the Family and Medical Leave Act (FMLA). Now, in a drastic shift, the CFRA applies to employers with just five (5) or more employees; these businesses “are now required to offer employees up to three months of unpaid job-protected leave to care for a domestic partner, grandparent, grandchild, sibling, or parent-in-law who has a serious health condition.”
As a result, the CFRA will now deviate from the federal Family Medical Leave Act. According to law firm Liebert Cassidy Whitmore, this could “potentially [create] entitlements for employees under both laws for up to 24 weeks of protected leave in a 12-month period.”
In a statement, the bill’s author (State Sen. Hannah-Beth Jackson, D-Santa Barbara) said “Newly enacted federal leave tied to COVID-19 leaves out up to 80% of the workforce … making this bill necessary to ensure California workers affected by the coronavirus can take time to care for themselves or a sick family member.”
The new law is intended to make up for that 80% shortfall; the National Law Review states that “the CFRA will apply to almost all California employers, including those who never had to comply with family and medical leave laws.”
New board diversity requirements (AB 979)
California continues to push for increased diversity on corporate boards. As of January 1, 2021, publicly held companies headquartered in California are required to have board members from underrepresented communities. This includes individuals who self-identify as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaska Native, or as gay, lesbian, bisexual, or transgender.
The Harvard Law School Forum on Corporate Governance notes that “companies that do not comply with the new law will face similar penalties as those noncompliant with SB 826, the gender diversity law.”
Similar bills nationwide requiring boards of directors to include minimum representation by women or members of minority communities are heading toward governors’ desks, according to Bloomberg Law: “At least 12 other states have proposed or enacted legislation aiming to diversify boards.”
Various requirements related to COVID-19
California’s Department of Industrial Relations website notes that “Workplace safety and health regulations in California require employers to take steps to protect workers exposed to infectious diseases like the Novel Coronavirus (COVID-19), which is widespread in the community.”
However, keeping track of regulations and requirements is anything but simple. “Updates to COVID-19 precautions are changing on a regular basis in the state,” as stated in HRDive. These ever-shifting requirements apply to employers, whether or not they have employees coming into a physical space.
According to the Los Angeles Times, Assembly Bill 685, which took effect Jan. 1, “toughens rules requiring employers to report cases and imposes penalties governing outbreaks.” Employers must now “notify employees within one business day of learning of any potential COVID-19 exposure” and “must also offer them information on benefits such as workers’ compensation and sick leave; on protection against retaliation; and on the company’s virus safety measures.”
Again, California may be seen as the tip of the spear with regard to other states; Investopedia reports that “Virginia, Michigan, and Oregon have also enacted coronavirus workplace regulations.”
With three substantial new laws going into effect, and the ever-changing requirements related to COVID-19, California employers should be proactive. Now’s the time to assess the impact these new laws might have on their ACA compliance and compensation practices, and to make any necessary adjustments. For example, employers covered by SB 973 reporting requirements should conduct a pay equity audit now. Not doing so could expose them to unnecessary risk resulting from annual pay data reporting.
To learn more about ACA compliance, click here.
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