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Top 5 New Business Laws in California for 2022

Updated: Feb 21

Happy New Year!


California has a number of new laws going into effect in 2022. This is my ranking of the top new business laws going into effect in 2022. My criteria pretty much boiled down to what I thought was interesting, what will impact my clients the most, and how broad the change will be in general.


I've done the same for Texas here.


5. Electronic Transmission of Workplace Notices (SB 657)


SB 657 adds Lab. Code section 1207. Current law requires California employers to post information physically at their location related to wage, hours, working conditions, health, and other issues.


Section 1207 states that employers may also provide that information via email as well. The purpose is likely to make sure that employees have this information, but employers would do well to take advantage of this (and maintain your email records) as a way to protect themselves.


We will likely see more changes like this to existing laws as people continue to work remotely. This bill went into effect on January 1, 2022. The text of Section 1207 is available here.


4. Direct Contractor Liability for Lower Tier Unpaid Wages (SB 727)


Cal. Lab. Code section 218.7 has several provisions related to direct contractors on private works of improvement. SB 727 amends section 218.7 to apply only to contracts entered into between January 1, 2018 and December 31, 2021. And SB 727 adds section 218.8 to apply to contracts entered into beginning on January 1, 2022.


Cal. Lab. Code section 218.7 made direct contractors liable for subcontractors' failure to pay wages, benefits, etc. for private works of improvement. Section 218.8 extends this liability to penalties, liquidated damages, and interest if the direct contractor had knowledge of the subcontractor's failure to pay. See Section 218.8(a)(3).


Even if the direct contractor had no knowledge of the subcontractor's failure to pay, the direct contractor may still be liable for the added liabilities. That liability may still arise for (A) failing to monitor (by periodic review) the subcontractor's payroll records, (B) upon becoming aware, failing to take diligent steps to correct that failure, or (C) at the end of the project, failing to obtain a subcontractor affidavit (under penalty of perjury) that the subcontractor has paid all wages and benefits. Lab. Code section 218.8(a)(3)(A) through (C).


These sections went into effect on January 1, 2022. You can read section 218.7 and section 218.8 here.


3. Wage theft and grand theft (AB 1003)


AB 1003 adds Cal. Pen. Code section 487m, by which California now allows prosecution for intentional wage theft as grand theft when the amount is over $950 for one employee, or over $2,350 for two or more employees, in a given 12 month period.


"Wage theft" includes things like paying below the minimum wage, or failing to pay overtime. It is critical that employers pay their employees (which, for purposes of AB 1003, includes independent contractors) keep sufficient records of pay, pay rates, breaks, etc.


Section 487m went into effect on January 1, 2022, and you can read it here.


2. Female and Minority Representation on Corporate Boards (SB 826 and SB 979)


These are older bills, originally signed in 2018 and 2020, respectively. However, several provisions (now contained at Cal. Corp. Code sections 301.3 and 301.4) did not go into effect until January 1, 2022.


Sections 301.3 and 301.4 mandate certain diversity requirements for publicly held corporations with headquarters in California.


Section 301.3 mandates that, beginning in 2022, publicly held corporations with six or more directors shall have at least three female directors. With five directors, they shall have at least two female directors. And with four or fewer directors, they shall have at least one female director.


Section 301.4 mandates that, beginning on January 1, 2022, that publicly held corporations have at least one director from an underrepresented community.


Section 301.4 also mandates that, by January 1, 2023, publicly held corporations with nine or more directors shall have at least three directors from underrepresented communities. With four to eight directors, they shall have at least two directors from underrepresented communities. With fewer than four directors, they shall have at least one director from an underrepresented community.


"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. Corp. Code section 301.4(e)(1).


You can read sections 301.3 here and 301.4 here.


1. Minimum wage increase (SB 3)


SB 3 was signed into law in 2016. Among other changes, SB 3 amended Cal. Lab. Code section 1182.12, mandating an increase in the minimum wage beginning on January 1, 2018. In 2022, this means that employers with 26 or more employees must pay their employees at least $15 per hour. Employers with 25 or fewer employees must pay their employees at least $14 per hour.


Employers with 25 or fewer employees, be aware that on January 1, 2023, this minimum wage will increase again to $15 per hour. And beginning in August 2023, the minimum wage will be adjusted by the California Director of Finance on an annual basis.


You can read the full text here.


Conclusion


This list is of course non-exhaustive. There are a number of others statutes and regulations going into effect in 2022 in California, and they are often industry-specific. It's a good idea to check in with your business (and, at least in the case of California, employment law) attorney to see if any changes may affect your business.


Happy 2022!

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