Last Updated on December 1, 2020 by bigfish-admin
Every year, federal, state, and local governments release new laws regulating employment. 2021 brings a myriad of new laws to consider, on both the federal and state level. Let’s take a deeper dive into 2021 California legislative updates and compliance hot topics employers will be required to comply with.
Title VII of the Civil Rights Act of 1964 prohibits discrimination in the workplace on the basis of race, color, religion, sex, and national origin. On June 15, 2020, the U.S. Supreme Court ruled that workplace discrimination based on an individual’s sexual orientation or gender identity is unlawful discrimination under Title VII.
With this decision, sexual orientation discrimination and gender identity or transgender discrimination are both forms of sex discrimination covered under Title VII. While many states across the country have laws prohibiting this type of discrimination in the workplace, it is crucial for an employer to proactively take steps to prevent and prohibit any discrimination.
- Review policies and handbooks to ensure nondiscrimination and harassment policies extend to sexual orientation and gender identity.
- Update policies or handbooks as necessary to ensure that sexual orientation and transgender status are added as protected categories.
- Communicate and train employees on any changes to company policies or practices.
- Thoroughly document and investigate all allegations or suspected harassment or discrimination.
IRS Contribution Limits
Below are the wage base limits for 2021, as announced by the Social Security Administration:
- Social Security: 6.2% up to $142,800
- Medicare: 1.45% with no wage base limit
- Additional Medicare Tax: 0.9% for all wages paid in excess of $200,000. Please note: this tax is applied to employees only.
- Maximum contribution for 401(k), 403(b), 457: $19,500 with $6,500 maximum catch-up (no change from 2020)
- Maximum contribution for Simple IRA: $13,500 with $3,000 maximum catch-up (no change from 2020)
Please Note: The above figures are listed as of October. Please consult with your tax advisor to determine if any of the above limits have been revised. View Adjusted IRS Limits.
As usual, the California state legislature and various city councils have had a busy year regulating the economy. Since 2009, the federal minimum wage has remained $7.25 per hour. However minimum wage varies throughout California, here’s what employers need to know:
- For California employers with one to 25 employees, the 2021 minimum wage rate has increased to $13.00 per hour.
- For California employers with 26+ employees, the 2021 minimum wage rate has increased to $14.00 per hour.
- Minimum wage rates differ in many cities and counties within California.
On Sept. 17, 2020, Governor Newsom signed legislation SB 1383 which greatly expands the California Family Rights Act, impacting employers of all sizes in the state. Effective January 1, 2021, here’s what employers need to know:
- The CFRA will expand to all employers with five or more employees, requiring covered employers to provide employees with 12 weeks of unpaid leave for family and medical purposes during each 12-month employment period.
- SB 1383 expands the scope of ‘family members’ to include a child of any age, spouse, parent, sibling, grandparent, grandchild, or domestic partner.
- The new bill deletes provisions in the law regarding parents working for the same employer and employer’s refusal to reinstate salaried employees.
In an effort to address race- and gender-based pay gaps, California Governor Gavin Newsom signed Senate Bill 973 (SB 973) into law on Sept. 30, 2020. Here’s what employers need to know:
- California has passed a law requiring employers with 100 or more employees to report pay data by job categories, race, ethnicity, and gender to the Department of Fair Employment and Housing.
- The law will permit state agencies to identify patterns of wage disparities and further allow for targeted enforcement of equal pay and discrimination laws.
- The first annual report to the Department of Fair Employment and Housing is beginning on March 30, 2021.
On Sept. 28, 2020, Governor Newsom signed AB 2292, expanding the existing law which provides entitlement to leave for crime and abuse victims in the state, effective January 1, 2021. Here’s what employers need to know:
- California employers are prohibited from “discharging, or discriminating or retaliating against, an employee who is a victim of crime or abuse[,] for taking time off from work to obtain or attempt to obtain relief.”
- Leave coverage includes the following eligible victims: victim of stalking, domestic violence, or sexual assault; a victim of a crime that caused physical injury or that caused mental injury and threat of physical injury; or an individual whose immediate family member is deceased as the direct result of a crime.
- The bill outlines acceptable documentation required for leave and includes additional obligations for employers with 25+ employees.
On Sept. 4, 2020, Governor Newsom signed AB 2257 which enacts changes to independent contractor laws in California. These changes went into effect immediately upon signature. In an effort to clarify AB 5, the new bill focuses largely on expanding and/or clarifying the exemptions to the ABC test for independent contractors under AB 5. California employers in many industries are affected by AB 2257; pay close attention to the changes in the bill and the litigation that may ensue. Here’s what employers need to know:
- Additional exemptions are outlined to key industries and professions in regard to independent contractor law.
- The following are key exemptions to focus on: business-to-business exemptions; referral agency exemptions; exemptions for writers, photographers, and journalists; music industry and performance exemptions; and additional miscellaneous exemptions.
- Misclassification remains a significant risk to California employers due to the nature of current regulations. It is important to keep in mind that even if an exemption applies, the common law multifactor Borello test must still be applied to determine a worker’s status.
COVID-19 Notification Requirements for Employers (AB 685)
On Sept. 17, 2020, Governor Newsom signed AB 685, requiring employers to provide written notification to employees within one business day of receiving notice of potential COVID-19 exposure. Here’s what employers need to know:
- Employers must notify employees of potential exposure to COVID-19 within one business day of receiving notice.
- The note must be drafted to preserve employee privacy.
- AB 685 authorizes the Division of Occupational Safety and Health of California to prohibit operations, prohibit processes, and prevent entry into workplaces determined to present a risk of COVID-19 infection (severe enough to constitute an imminent hazard).
- The bill confirms current law that California employers must report certain occupational injuries and illnesses within a prescribed period, now expanded to include COVID-19.
In September, the California legislature passed SB 1159, which evolves the framework for workers’ compensation claims related to COVID-19. As emergency legislation, this bill took effect immediately. Here’s what employers need to know:
- From July 6, 2020 through January 1, 2023, a ‘disputable presumption’ exists for an employee who suffers illness or death resulting from COVID-19.
- Employers may dispute the presumption using the following as evidence: measures in place to reduce potential transmission in place of employment; the employee’s non-occupational risks of COVID-19 infection; statements made by the employee; or any other evidence normally used to dispute a work-related injury.
- Presumably, if an employee suffers illness or death resulting from COVID-19 after January 1, 2023, the presumption no longer applies, and the case will be treated under the traditional workers’ compensation framework.
Starting in July 2019, California began offering an estimated 7 million workers the opportunity to contribute to an Individual Retirement Account (IRA) and improve the financial direction of their futures. Employers in California with at least five employees who don’t already offer a workplace retirement plan should pay close attention to deadlines. Here’s what employers need to know:
- CalSavers Retirement Savings Program was designed to give employers an easy way to help their employees save for retirement, with no employer fees, no fiduciary responsibility, and minimal ongoing responsibilities.
- Registering your business is easy, as there are no fees for employers and state law requires you to offer an employer-sponsored retirement plan or participate in CalSavers.
- If you are currently an employer in California with more than 50 employees, you need to register for CalSavers by the June 30, 2021 deadline.
Big Fish will continue to report on further developments to these laws and other related legislation nationwide. Information contained in this publication is intended for educational or informational purposes only and does not constitute legal advice or opinion, nor is this a substitute for the professional judgment of an attorney. For additional assistance with how to prepare to comply with these new requirements, contact Big Fish Employer Services.