As 2021 is quickly coming to an end, this article focuses on five steps employers can take in preparation for 2022:

1. Update employee handbooks to comply with AB 1033 which expanded the definition of family members covered under the California Family Rights Act.

AB 1033 passed in 2021 and takes effect on January 1, 2022, adds parents-in-law to the definition of “parent” for purposes of qualifying leave under the California Family Rights Act (CFRA).  As a reminder, effective January 1, 2021,  SB 1383 took effect that requires employers with 5 or more employees to comply with the CFRA.  Employers with as few as five employees must provide up to 12 weeks of unpaid job protected leave during any 12-month period for certain covered reasons.  In addition, the definition of family members covered under the CFRA was expanded under SB 1383 so that it no longer just includes a spouse, a parent or a child, but employees can take leave to care for grandparents, grandchildren, siblings, or domestic partners with a serious health condition. Employers should review their CFRA policies to ensure compliance with these recent changes.

2.  Review new hire packets and documents to ensure employees are receiving all required documents, and the most current versions of the required documents.

California employers are required to provide certain information and forms to new hires.  For example, California employers are required to provide non-exempt employees with certain information upon hire as required by the Wage Theft Protection Act.  The law became effective in 2012 and is codified at Labor Code section 2810.5.  Many employers use the Labor Commissioner’s template (available here) to meet their legal requirement, and will pre-populate the items in the form that do not change from employee to employee, lessening the information required to be completed on the form for each employee.

Our prior article here covers general considerations for employers to develop a checklist specific for their company.

3. Exempt employees – review and update salary to ensure minimum threshold is paid.

Employers need to review the base salary for all exempt employees to ensure the employees meet the salary required to be exempt.  To be exempt from the requirement of having to pay overtime to the employee, the employee must perform specified duties in a particular manner and be paid “a monthly salary equivalent to no less than two times the state minimum wage for full-time employment.” (Lab. Code, § 515, subd. (a).)  For more information about the salary basis test for exempt employees, see our previous article here.

With the increase in the state minimum wage on January 1, 2022, the equivalent of two times the minimum wage of $14 per hour for small employers (25 employees or less) equals $58,240 per year ($1,120 per week), and two times the minimum of $15 per hour for large employers (26 employees or more) equals $62,400 per year ($1,200 per week) to qualify for the white collar exemptions.

It is important to note that the salary basis test is set according to the California state minimum wage, not the applicable minimum wage that may apply in the various local city and counties in California.

4. Update severance agreements to ensure they comply with recent developments.

AB 331 was approved by the Governor on October 7, 2021, and its provisions applies to employment agreements (specifically severance agreements, settlements agreements, or a release of claims) entered into on or after January 1, 2022.  AB 331, known as the “Silenced No More Act,” amends Code of Civil Procedure Section 1001 and prohibits settlement agreements filed in “a civil action” or a complaint in “an administrative action” from preventing the disclosure of factual information related to the claim.  This applies to claims for sexual harassment, as well as workplace harassment, discrimination, or retaliation based on any other protected characteristic under California law.

AB 331 also prohibits employers from requiring employees to sign an agreement (a nondisparagement agreement or any other document) that would restrict the employee’s ability to disclose information about unlawful acts in the workplace.

The law also requires the following disclosure in an agreement that contains a non-disparagement provision or any other restriction on the employee’s ability to disclose information related to workplace conditions: “Nothing in this agreement prevents you from discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that you have reason to believe is unlawful.”

In terms of separation/severance agreements, the new law requires employers to notify the employee that they have at least five days to consider the agreement and that they have a right to consult an attorney.  The employee may sign the agreement prior to the expiration of this five-day period.

More information about AB 331 can be read in our prior article here.

5. Begin preparing in order to meet the March 31, 2022 deadline for California’s payroll reporting requirement.

California employers will need to comply with the March 31, 2022 deadline to report certain payroll data to the Department of Fair Employment and Housing (DFEH).  Yes, it is only the beginning of December, but for large employers, they should begin the process of gathering this information at the beginning of 2022 in order to meet the March deadline.  As a reminder, SB 973, passed in September 2020 that created a new obligation for California employers to annually submit pay data report to the DFEH.  The DFEH has recently published a frequently asked questions page clarifying some questions about SB 973.  Our prior article on which employers must comply and other requirements of the law can be read here.