As we start April 2022, here are five new California employment law developments that California employers need to know about:

1. Court rules California’s law requiring corporate board diversity is unconstitutional.

California passed AB 979 which enacted Corporations Code section 301.4 in 2020.  The law requires corporations with their principal executive offices located in California to have set number of board members from an “underrepresented community” on its board by the end of 2021.  The law sets forth that a “’Director from an underrepresented community’ means an individual who self-identifies as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaska Native, or who self-identifies as gay, lesbian, bisexual, or transgender.”

The court ruled that:

Corporations Code § 301.4 violates the Equal Protection Clause of the California Constitution on its face. The statute treats similarly situated individuals – qualified potential corporate board members – differently based on their membership (or lack thereof) in certain listed racial, sexual orientation, and gender identity groups. It requires that a certain specific number of board seats be reserved for members of the groups on the list – and necessarily excludes members of other groups from those seats.

The court’s opinion in Crest v. Padilla can be read here.

This case illustrates an issue that faces many companies implementing diversity and inclusion programs – no matter how well intended these efforts are, California law specifically prohibits treating applicants or employees differently based on a protected characteristic, such as race, gender, or sexual orientation.

2. Cal/OSHA proposes new language for revised emergency temporary standards (ETS).

The current ETS regulations are set for expire on May 6, 2022.  This week, Cal/OSHA published the language for the revised ETS that would be voted on by Cal/OSHA on April 21, 2022, and if approved, would be in effect until December 31, 2022.  The revised language still contains many of the existing requirements facing California employers, such as exclusion pay, and requiring to notify employees of positive cases at the workplace.  We will be covering the potential changes to the ETS closer to the April 21 vote, so subscribe to the blog to not miss any updates.

3. LA Times article explains employees working from home are seeking reimbursement for not only businesses expenses, but missed revenue the employees could have made for renting out their office instead of using it for work.

As we have detailed on this blog before, California Labor Code section 2802 requires employers to pay for necessary business expenses incurred by employees.  However, as the article reports, plaintiffs are alleging that not only should employers have to pay for their printers and computers, but also for missed revenue the employee could have received for renting out their home office.  It will be interesting to see how plaintiffs would prove that they lost revenue from rent because they had to work from home.  A lot of workers were required to work from home during the pandemic, and many were not fortunate enough to have separate office to work in (nor was it likely that employers made this a requirement for the employees), and for the fortunate employees who did have a separate office in their house to now claim that their employer owes them for missed rent will be difficult to prove.

4. California drafts regulations regarding the use of artificial intelligence in the hiring process.

The California Fair Employment and Housing Council (FEHC) published draft regulations concerning automated decision-making systems used by employers and agents of employers, such as recruiters, payroll, and staffing agencies.  The draft regulations state that it would be unlawful for an employer or its agents to “use qualification standards, employment tests, automated-decision systems, or other selection criteria that screen out or tend to screen out an applicant or employee or a class of applicants or employees on the basis of a characteristic protected by this Act,” unless the employer can show job-relatedness and is a business necessity.   The Council met on March 25, 2022 to discuss the proposed regulations, but did not take any specific action, leaving the issue open for now.  Employers who use software, or who rely upon third parties that utilize software for applicant screening need to closely monitor for any further developments.  The draft regulations can be found here.

5. Proposed law would implement a 32-hour workweek in California.

AB 2932 is a proposed bill that would change the 40-hour workweek in California to a 32-hour workweek for employers with 500 or more employees.  The effect of this would mean that large employers would need to pay overtime for all work performed over 32 hours in a week.