California HR laws effective Jan. 1

Paul Sethi
Paul Sethi

RIVERSIDE COUNTY – Several new laws affecting human resources came into effect in California, starting Jan. 1.

Assembly Bill 5 concerns worker classifications, particularly employees versus independent contractors. It is the most widely reported bill of 2019 and will be discussed for many years to come. This bill was signed into the law in September. It clarifies the “ABC” test for employers as a standard for classifying the workers as an employee, who are issued a W-2, or as an independent contractor, who received a Form 1099. The burden of proof is on the employers to demonstrate the worker can be classified as an independent contractor. To demonstrate this classification, employers must abide by all the conditions stated in “ABC” test, as per Dynamex v. State of California, April 30, 2018.

“A” states that the person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.

“B” states that the person performs work that is outside the usual course of the hiring entity’s business.

“C” states that the person is customarily engaged in an independently established trade, occupation or business of the same nature as that involved in the work performed.

Many small-business owners have misclassified their workers as independent contractors as it saves them potentially 20-25% of the labor cost by avoiding the payroll taxes, workers’ compensation insurance and benefits to employees under the current labor laws, for both federal and state. The long-standing labor laws protect workers by providing them with rest and meal breaks, protections under the Fair Labor and Standards Act and workers’ compensation laws.

Some professions are exempt from this law, including licensed insurance agents, certain licensed health care professionals, registered securities broker-dealers or investment advisers, direct sales salespersons, real estate licensees, commercial fishermen, workers providing licensed barber or cosmetology services and others performing work under a contract for professional services, with another business entity or pursuant to a subcontract in the construction industry. To qualify for this exemption, independent contractors and business owners must prove that the independent contractor sets their own hours, pricing and how they conduct their business without control from others, including the business owners.

Assembly Bill 673 concerns penalties for failure to pay wages.

AB 673 allows employees to take legal action against their employer in order to recover unpaid wages. Before the law was passed, only the Labor Commissioner was permitted to seek the penalties outlined in Labor Code 210. The law now authorizes an employee to either recover statutory penalties under the Labor Code or to enforce civil penalties under the Private Attorneys General Act, but not both.

Assembly Bill 1804 requires immediate reporting of serious occupational injury, illness or death to California Occupational Safety and Health Administration by phone, email or online portal if available.

Senate Bill 778 concerns sexual harassment training requirements.

Under SB 1343, employers with five or more employees are required to provide sexual harassment training by Jan. 1, 2020, but SB 778 was introduced this year to make some clarifications and to postpone the changes made by SB 1343 until Jan. 1, 2021, giving employers extra time to comply. SB 778 also clarifies the requirements for training employees in a supervisory position, as well as employees who have been newly moved into such a position and allows employers who have already provided training to an employee in 2019 to provide the “refresher” training to that employee two years after their initial training date to avoid forcing employers to train the same employees twice in two years.

Paul Sethi is the president of Cognizant HR and Tax serving small businesses with their HR needs like payroll, compliance audits, employee handbooks, investigations, training, taxes and more. He brings over 15 years in HR field and is SHRM certified professional with MBA. Sethi is not an attorney, and this article is not meant to be legal advice or notice. Sethi can be reached via email at