2021 Labor & Employment Law Update for California Employers

2020 has been an unprecedented year in many ways, but one thing that remains constant is the legislature's enactment of new laws that impact employers. Ranging from Covid-19 legislation to revisions to worker classification laws, new reporting requirements, and mandatory additions to boards of directors, below you will find our annual 2021 Employment Law Update.

New Reporting Requirements for COVID-19 Effective January 1, 2021

On September 17, 2020, Governor Newsom signed into law AB 685, which will go into effect on January 1, 2021. It requires employers whose employees may have been exposed to COVID-19 in the workplace to notify their employees accordingly and report to local health officials. The new law also allows OSHA to order a facility closed if it deems the potential for COVID-19 infection an “imminent hazard” for employees at that facility. OSHA will also be able to issue “serious violation” citations for COVID-19 without first delivering notice to the employer with an opportunity to respond. OSHA’s authority will remain in effect until January 1, 2023.

New Notice Requirement to Employees for COVID-19 Exposure

Effective January 1, 2021, all employers except for health facilities must take the steps outlined below within one business day of receipt of notice that its workforce was exposed to an individual who either tested positive for COVID-19, was diagnosed with COVID-19 by a licensed healthcare provider, was ordered by a public health official to isolate due to COVID-19, or was determined by the county public health department to have died due to COVID-19. Notice of potential exposure may come to an employer from the employee, the employee’s representative, the employee’s emergency contact, the testing protocol, or the employer of a subcontracted employee that was on the worksite. When notice is received, an employer must:

1. Determine which employees, including subcontracted employees, were at the worksite at the same time as the individual during his or her “infectious period,” which the California State Department has determined includes “at minimum, the 48 hours before the individual developed symptoms.”  The “worksite” is limited to the same building or location where the individual was physically present. It does not extend to areas which the individual did not enter.
2. Provide written notice to the potentially exposed employees, their exclusive representative (if any), and the employers of any exposed subcontracted employees that includes the following:

a. That they may have been exposed to COVID-19;

b. What COVID-19 related benefits are available to them under law;

c. Anti-retaliation and anti-discrimination protections; and

d. The employer’s disinfection and safety plan (per the guidelines of the federal Centers for Disease Control).

The notice can be provided in any manner that is likely to be received (e.g. personal service, email, or text message) and that is typically used for communicating with the employee. It must be in English as well as the language understood by the majority of the employees. An employer must retain a record of the written notice for at least three years.

3. Provide written notice to the exclusive representative (if any) of all employees within item 1, that contains the same information that would be required for an incident report within a Cal/OSHA Form 300 Injury and Illness Log (unless inapplicable or unknown), even if the organization is not required to maintain such a log. An employer must retain a record of the written notice for at least three years.

Employers may be subject to citations and/or penalties for failure to comply with these requirements.

New Notice Requirement to the Government for a “COVID-19 Outbreak”

In addition to the above, as of January 1, 2021, employers will have reporting requirements if they are notified that the number of cases at their worksite meets the definition of a “COVID-19 Outbreak” as defined by the State Department of Public Health.  When an employer has been notified that it has an “outbreak,” it will have 48 hours to provide the information listed below to the local public health agency in the jurisdiction of the worksite for any employee that either tested positive for COVID-19, was diagnosed with COVID-19 by a licensed healthcare provider, was ordered by a public health official to isolate due to COVID-19, or was determined by the county public health department to have died due to COVID-19. The employer must report:

1. The employee’s name;
2. The employee’s number;
3. The employee’s occupation;
4. The employee’s worksite;
5. The worksite’s business address; and
6. The worksite’s NAICS code.

The employer will be required to continue notifying the local health department of any subsequent laboratory-confirmed cases of COVID-19 at the workplace.

New Authority for OSHA

Effective January 1, 2021, and until January 1, 2023, the Division of Occupational Safety and Health will have the authority to determine whether a worksite or any part thereof exposes workers to COVID-19 such that it creates an “imminent hazard.” In response to an “imminent hazard,” it may prohibit operations at or entry to that worksite at the immediate area in which the hazard exists by posting a notice to the employer in a conspicuous place. The provision is not to be used in a manner that would interrupt the performance of critical government functions essential to ensuring public health and safety functions or the delivery of electrical power or water. However, there are no other carve-outs.

Also beginning January 1, 2021, and until January 1, 2023, if OSHA alleges that there has been a “serious violation” due to COVID-19, it need not deliver to the employer a standardized form containing the alleged violation descriptions prior to issuing its citation as would otherwise be required.

COVID-19 PRESUMPTIONS OF WORKERS’ COMPENSATION COMPENSABILITY

On September 17, 2020, Governor Newsom signed into law SB 1159, which codified parts of his prior executive order establishing a rebuttable presumption of compensability for some employees who receive a COVID-19 diagnosis. The executive order applied to dates of injury from March 19, 2020, through July 5, 2020. This bill applies to dates of injury after July 5, 2020, and will be in effect until January 1, 2023.

Any employee may file a workers’ compensation claim for COVID-19 with causation to be determined in due course. However, SB 1159 creates a new presumption of compensability for two classes of employees.

First, it creates a presumption of compensability for certain first responders and healthcare workers (listed in Labor Code § 3212.87) who test positive for COVID-19 within 14 days of a workday occurring at a worksite that is not their home. An employer has only 30 days after the claim form is filed to deny the claim (as opposed to the typical 90 days) and otherwise may rebut the presumption only with evidence obtained after that 30-day period.

Second, it creates a presumption of compensability for employees (a) whose employers have five or more employees; (b) who test positive within 14 days of a workday occurring at a worksite that is not their home (unless a caregiver); and (c) who test positive during an “outbreak” at their workplace. An “outbreak” exists if one of the following occurs within a period of 14 days at a specific place of employment:

1. Four employees test positive (if the employer has 100 or fewer employees);
2. Four percent of the number of employees who reported to the worksite test positive (if the employer has 100 or more employees); or
3. The specific place of employment is ordered closed by a local health department, the State Department of Health, the Division of Occupational Safety and Health, or a school superintendent due to the risk of infection of COVID-19.

When a presumption is applicable under this section, an employer has only 45 days after the claim form is filed to deny the claim (as opposed to the typical 90 days) and otherwise may only rebut the presumption with evidence obtained after that 45 day period. The bill provides that evidence of measures in place to reduce the potential transmission of COVID-19 in the employee’s place of employment or evidence of an employee’s nonoccupational risks of COVID-19 infection may successfully rebut the presumption.

Also, employers with five or more employees are required to notify their claims administrators within three business days when they know, or reasonably should know, that an employee has tested positive for COVID-19. The notice must include the date of the positive test, the address of the employee’s place of employment during the 14-day period preceding the test, and the highest number of employees who worked at the employee’s place of employment in the 45 days preceding the last day the employee worked at each location. This information is intended to help the claims administrator determine whether there is an “outbreak” at the worksite such that the presumption may be applicable.

SB 1159 effectively requires employers to promptly investigate and address cases of COVID-19 among employees. It should be read in conjunction with AB 685, which implements various notice requirements for cases of COVID-19 in the workplace.

Update on Significant Changes to California's Worker Classification Laws (AB 5, AB 2257, and Proposition 22)

In September 2019, the California Legislature passed AB 5 which overhauled California law with respect to independent contractor relationships. Contrary to prior law, AB 5 presumed that all workers are employees, rather than independent contractors. Accordingly, hiring businesses who wanted to classify a worker as an independent contractor had the burden of establishing that the worker either (1) fell under one of the exemptions set forth in AB 5; or (2) could meet each element of the stringent “ABC” test, set forth in Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal. 5th 903 (Dynamex).

Since its enactment, AB 5 has been the subject of criticism, litigation, and lobbying efforts from a number of “gig” industries, freelancers, and independent contractors that did not find the legislation workable for their industries. In response to some of these concerns, the California Legislature enacted AB 2257, which amended AB 5 and created additional exemptions for certain occupations and contractual relationships. Shortly thereafter, on Election Day 2020, California voters further amended AB 5 by passing Proposition 22 which defines app-based drivers – for companies such as Uber, Lyft, and Door Dash – as independent contractors.

California’s worker classification laws are rapidly developing and businesses operating in California must understand and adapt to these developments, in order to fit their workers into this ever-changing classification scheme. Failure to understand and adapt to the changes in worker classification law can expose California employers to significant risk, including the collection of unpaid wages and back taxes, civil penalties, and civil (and potentially class action) litigation.

Background – AB 5 and the “ABC” Test

AB 5 (Section 2750.3 of the Labor Code) was signed into law on September 18, 2019, by Governor Gavin Newsom. AB 5 codified and expanded the scope of the “ABC” test established in Dynamex. The strict three-prong “ABC” test presumes that all workers are employees, and places the burden on the hiring business to establish the following factors in order to classify a worker as an independent contractor: (A) the worker is free from the control and direction of the hirer in connection with the performance of the work; (B) the worker performs work that is outside the usual course of the hiring entity’s business; and (C) the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity. If the hiring business fails to establish any of these factors, the worker will remain classified as an employee.

AB 5 also exempted certain occupations, industries, and contractual relationships from the “ABC” test, and continued to allow those hiring entities to use the less-stringent, pre-Dynamex test established in G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341 (Borello). A brief discussion of businesses and occupations that were initially exempted from AB 5 is available here.

The California Legislature Amends AB 5 by Enacting AB 2257

AB 5 represented a significant change in California law and received concerted pushback and litigation from many industries, including the publishing and entertainment industries, trucking industry, and the “gig” economy, whose workers have traditionally been classified as independent contractors. Indeed, cases have been brought by California truckers, freelance journalists, and gig economy businesses challenging the application of AB 5 to their industries and the constitutionality of the law itself. In response, the California legislature acknowledged the impact of AB 5 on certain industries and effectively rewrote the law to address these concerns through the passage of AB 2257.

AB 2257 expressly repeals Labor Code Section 2750.3 (AB 5) and codifies sections 2775-85 of the Labor Code. However, the core of AB 5 remains unchanged. The strict three-part “ABC” test still applies when determining whether a California worker can be classified as an independent contractor unless there is an exemption, in which case the more lenient Borello test would be used. The main changes that AB 2257 makes are (1) modifying and clarifying the business-to-business, referral agency, and professional services exemptions set forth in AB 5; and (2) exempting additional occupations and business relationships. Some of the significant exemptions that AB 2257 creates or amends are set forth below.

• Business-To-Business Exemption: AB 2257 maintains the exemption for “bona fide business-to-business contracting relationships” where a contractor “acting as a sole proprietor, or a business entity formed as a partnership, limited liability company, limited liability partnership or corporation contracts to provide services to another such business.” AB 2257 also extends the business-to-business exemption to include a “public agency or quasi-public corporation” that has retained an independent contractor.
• “Single-Engagement” Business-To-Business Exemption:  AB 2257 creates an exemption for a “stand-alone non-recurring event in a single location, or a series of events in the same location no more than once a week” as long as the worker has “control and direction” over the work, mutual freedom to negotiate the rate of pay, a written contract that specifies the pay rate, the tools and materials are provided by the worker, and both the hiring and performing entities maintain separate business locations.
• Entertainment/Music Industry Exemptions: AB 2257 also creates several new entertainment industry exemptions, which are largely focused on the music industry. Some positions that are generally exempt include: recording artists; songwriters, lyricists, composers, and proofers; managers of recording artists; record producers and directors; musical engineers, mixers, and musicians engaged in the creation of sound recordings; vocalists; and independent radio promoters. However, film and television unit production crews, still photographers and cinematographers, are not exempt. Non-independent music publicists are also not exempt. Additionally, musicians and vocalists who do not receive royalties are to be treated as employees for purposes of receiving minimum wages and overtime.
• Referral Agency Exemption: AB 2257 expands the referral agency exemption by adding additional services, including consulting, youth sports coaching, caddying, wedding or event planning, services provided by wedding and event vendors, and interpreting services, among others. The requirements for this exemption have also been modified to allow service providers to negotiate their rates with the client.
• Professional Services Exemption: AB 2257 expands the professional services exemption set forth under AB 5 for still photographers, photojournalists, freelance writers, editors, and newspaper cartoonists who had more than 35 submissions in a year. This exemption now includes services provided by a still photographer, photojournalist, videographer, or photo editor who works under a written contract that specifies the rate of pay and time of payment. AB 2257 also removes the submission requirement which allows for more workers to fall under this exemption. AB 2257 also adds translators, copy editors, and illustrators to this exemption provided that work is performed under a contract that specifies the rate of pay, time of payment, and intellectual property rights.
• Miscellaneous Exemptions: Subject to certain requirements, AB 2257 also adds exemptions for individuals engaged in underwriting inspections and other services for the insurance industry; manufactured housing salespersons; certain individuals engaged by international exchange visitor programs; and competition judges.

Notably, AB 2257 also grants district attorneys the ability to file injunctive relief actions against businesses suspected of misclassifying employees as independent contractors. Under AB 5 only the Attorney General and certain city attorneys were able to seek such relief.

Proposition 22 Carves Out Additional Exemption for App-Based Transportation Companies

While AB 2257 addressed the grievances that many industries and freelance workers had with AB 5, it declined to offer exemptions to other industries, such as app-based transportation companies. In response, Uber, Lyft, DoorDash, InstaCart, and Postmates spent more than $200 million in lobbying efforts for a ballot initiative that would override AB 5 and AB 2257, and classify drivers as independent contractors. This ballot initiative was presented to California voters as Proposition 22. California voters were definitive in their support of Proposition 22, with nearly 10 million voters approving the Proposition.

Proposition 22 defined app-based transportation and delivery drivers as independent contractors and adopted certain labor and wage policies specific to app-based drivers and companies. The ballot initiative defined app-based drivers as workers who (a) provide delivery services on an on-demand basis through a business’s online-enabled application or platform or (b) use a personal vehicle to provide prearranged transportation services for compensation via a business’s online-enabled application or platform. Due to this classification, California’s employment and labor laws (and protections) do not apply to app-based drivers. To address this, Proposition 22 included labor and wage policies specific to app-based drivers and companies. These policies provide workers with minimum compensation levels, health insurance subsidies, medical costs for on-the-job injuries, and prohibits drivers from working more than 12 hours in a 24-hour period unless the driver has been logged off for 6 uninterrupted hours. It also requires companies to develop anti-discrimination and sexual harassment policies; training programs for drivers related to driving, traffic, accident avoidance, and training programs recognizing and reporting sexual assault and misconduct. The ballot initiative also includes zero-tolerance policies for driving under the influence of drugs or alcohol, and requires criminal background checks for drivers.

California Family Rights Act Expanded to Smaller Employers

Effective January 1, 2021, employers with as few as five employees will have to comply with the California Family Rights Act (CFRA). The CFRA previously only applied to private employers with 50 or more employees within 75 miles of the worksite. However, the new CFRA (SB 1383) expands the scope and requires compliance employers with five or more employees and also eliminates the requirement that employees work within 75 miles of the same worksite. The law does not specify whether this figure is limited to California employees or includes employees outside of California. Employers covered by the expanded CFRA are required to provide unpaid, job-protected leave of up to 12 weeks during each 12-month period for employees to bond with a new child of the employee or to care for themselves or a family member with a serious medical condition.

Larger employers previously covered by the CFRA and smaller employers complying with CFRA for the first time should take note of the change to the definition of “family members,” which now includes a child, parent, grandparent, sibling, spouse, or domestic partner.  This expanded definition of the term “family member” is important because it is broader than the definition under the federal Family and Medical Leave Act (FMLA). Since the CFRA provides time off for employees to care for a wider group of family members than the FMLA, CFRA leave will not always run concurrently with FMLA leave. As a result, employees may be eligible to take as much as 24 weeks of combined leave under the CFRA and FMLA depending on the reason for the leave.

There are several other significant changes to the CFRA that employers need to consider in 2021. CFRA no longer has a provision permitting employers to provide fewer than 12 weeks for leave in connection with the birth, adoption, or foster care placement of a child if both parents work for the same employer. In addition, employers are no longer permitted to refuse reinstatement to salaried employees who are among the highest 10% of the employees at the company and where the refusal is necessary to prevent substantial and grievous economic injury.

No Re-Hire Provisions Clarified

Currently, California Code of Civil Procedure Section 1002.5, which went into effect on January 1, 2020, prohibits “no-rehire” provisions in settlement agreements, i.e., provisions that prevent, or otherwise restrict an employee from obtaining future employment with the employer or any related entity. The only exception is where an employer has made a “good faith determination” that the former employee engaged in sexual harassment or sexual assault. CCP 1002.5 does not apply to standard severance agreements; only to settlement agreements when an employee has filed a claim against the employer in court, before an administrative agency, or through some form of ADR or employer internal complaint process. Read more in last year's alert.

AB 2143 slightly amends this law in three ways:

• First, AB 2143 clarifies that, in order to qualify for the current “no-rehire” exception related to sexual harassment or sexual assault, the employer must have made “and documented” a good faith determination, “before the aggrieved person filed the claim,” that the former employee engaged in sexual harassment or sexual assault.
• Second, AB 2143 expands upon this “no-rehire” exception such that no re-hire provisions are allowed when the former employee engaged in “any criminal conduct,” (i.e., no longer limited to sexual harassment or sexual assault).
• Third, AB 2143 clarifies that the prohibition against “no-rehire” provisions in settlement agreements does not apply where the former employee did not file their complaint in good faith.

New Diversity Requirements For Boards of Public Companies

AB 979 creates a new requirement that publicly-held domestic or foreign corporations whose principal executive offices are located in California have a minimum number of directors from underrepresented communities. Specifically, AB 979 defines “director from an underrepresented community” as “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.” In its findings and declarations supporting AB 979, the California Legislature noted that currently, over 35 percent of publicly-traded corporations headquartered in California have all White boards of directors. These new requirements are in addition to the requirements enacted last year, requiring female representation on such corporate boards, set forth in California Corporations Code section 301.3, as detailed in our firm’s alert from last year.

AB 979 defines a "publicly-held corporation" as a corporation with outstanding shares listed on a major United States stock exchange and creates a timeline by which a minimum number of directors from underrepresented communities must be achieved.

• By December 31, 2021, such publicly-held corporations must have at least one director from an underrepresented community.
• By December 31, 2022: (i) such corporations with five to eight directors must have at least two directors from underrepresented communities; and (ii) such corporations with nine or more directors must have a minimum of three directors from underrepresented communities.

A corporation may increase the number of directors on its board to comply with this new law. Failure to timely comply with this new law may result in fines up to $100,000 for a first violation and additional fines thereafter.

Extended Period To File DLSE Complaints And Attorneys’ Fees For Whistleblowers

As of January 1, 2021, AB 1947 makes two significant changes to existing laws: (1) revising Labor Code section 98.7 to increase the time to file a complaint with the Division of Labor Standards Enforcement from six months to one year; and (2) authorizing courts to award reasonable attorneys’ fees to plaintiffs who bring successful retaliation claims under Labor Code section 1102.5.

Under Labor Code section 98.7, the Division of Labor Standards Enforcement (DLSE) has jurisdiction to investigate complaints of discharge or discrimination in violation of any law within the jurisdiction of the DLSE. Such complaints can lead to an investigative hearing and remedial action (e.g., rehiring or reinstatement, reimbursement of lost wages, penalties). Under existing law, individuals have six months to make complaints to the DLSE. Starting January 1, 2021, AB 1947 extends this time period for filing a complaint to one year.

Labor Code section 1102.5 broadly prohibits whistleblower retaliation. Specifically, § 1102.5 prohibits employers from retaliating against an employee for:

1. disclosing a violation of state or federal law or a violation of or noncompliance with a local, state, or federal rule, or regulation to a government or law enforcement agency, to a person with authority over the employee or another employee who has the authority to investigate, discover, or correct the violation or noncompliance, or for providing information to, or testifying before, any public body conducting the investigation, hearing or inquiry. (Section 1102.5 also prohibits retaliation because the employer believes that the employee disclosed or may disclose such information or because the employee is a family member of a person who has, or is perceived to have, made such disclosures. In addition, employers are prohibited from making, adopting, or enforcing any rule, regulation, or policy that prevents employees from such disclosures or participation.); and
2. refusing to participate in an activity that would result in a violation of state or federal statute, or violation of or noncompliance with a local, state, or federal rule, or regulation.

Under existing law, the consequences of a violation were already significant, but are increased with this amendment. Violation of Section 1102.5 is currently a misdemeanor and may lead to actual damages (Labor Code §1105) and/or a civil penalty of $10,000 for each violation (Labor Code § 1102.5(f)). Current law, however, does not provide for recovery of attorneys’ fees. AB 1947 changes this by adding Section 1102.5(j), which authorizes courts “to award reasonable attorney’s fees to a plaintiff who brings a successful action for a violation of these provisions.” This change will likely lead to more whistleblower claims, as more often than not, attorneys’ fees provisions are a driver of litigation.

Expanded Successor Liability for Wage and Hour Judgments

AB 3075, effective January 1, 2021, makes it easier for workers to enforce judgments for unpaid wages by making certain successor businesses liable for their predecessor’s unpaid wage and hour judgments. The bill seeks to prevent employers from evading unpaid wage and hour judgments by discontinuing the judgment debtor entity, only to form a new business entity that is substantially similar to the prior entity. Specifically, AB 3075 adds Section 200.3 to the Labor Code and provides that a "successor" to a judgment debtor will be liable for any "wages, damages, and penalties owed to any of the judgment debtor's former workforce pursuant to a final judgment, after the time to appeal therefrom has expired and for which no appeal therefrom is pending."

Section 200.3 defines a "successor" entity as one that:

• (i) uses substantially the same facilities or substantially the same workforce to offer substantially the same services as the judgment debtor;
• (ii) has substantially the same owners or managers that control the labor relations as the judgment debtor;
• (iii) employs as a managing agent any person who directly controlled the wages, hours, or working conditions of the affected workforce of the judgment debtor; and
• (iv) operates a business in the same industry as the judgment debtor and the business has an owner, partner, officer, or director who is an immediate family member of any owner, partner, officer, or director of the judgment debtor.

In support of the above, AB 3075 also requires that certain business entities verify in their Statement of Information filed with the Secretary of State, whether any officer, director, or any member or manager of a limited liability company has an outstanding final judgment in any court or issued by the Division of Labor Standards Enforcement. This requirement is not operative until January 1, 2022, unless the Secretary of State implements "California Business Connect" (the Secretary of State's anticipated online portal that automates all paper-based processes) sooner.

Finally, this bill amends Labor Code Section 1205, which currently states that local jurisdictions are not precluded from enforcing their own local labor laws that are more stringent than state law. Amended Section 1205 goes further to expressly address local laws that relate to the payment of wages, and authorizes local jurisdictions to enforce such laws, so long as they are more stringent than state law.

New Pay Data Reporting Requirements for California Employers With 100 or More Employees

On September 30, 2020, Governor Newsom signed SB 973, which requires certain employers to collect and submit compensation data to the California Department of Fair Employment and Housing (DFEH). Aimed at addressing pay inequities based on gender, race, and ethnicity, the bill requires California employers who have 100 or more employees, and who are required to file an annual Employer Information Report (EEO-1) under federal law, to submit an annual report containing two categories of information.

The first category mirrors the federal EEO-1 and requires employers to report the number of employees by race, ethnicity, and gender in 10 federally identified job categories: executive or senior-level officials and managers; first or mid-level officials and managers; professionals; technicians; sales workers; administrative support workers; craft workers; operatives; laborers and helpers; and service workers.

The second category requires employers to report the number of employees by race, ethnicity, and gender whose annual earnings fall within each of the pay bands used by the U.S. Bureau of Labor Statistics in the Occupational Employment Statistics survey, which ranges from a low of “less than $19,239” to a high of “more than $208,000” based on W-2 wages. This report must also include the total number of hours worked by each employee in each pay band during the reporting year. Employers with multiple establishments must submit a consolidated report that includes all employees as well as a separate report for each establishment.

The DFEH intends to issue standard forms for employers to submit their pay data reports and will implement an employer submission portal on the DFEH website. If the DFEH does not receive the required report from an employer, the Department may seek an order requiring the employer to comply with these requirements and shall be entitled to recover the costs associated with seeking the order.

The bill takes effect on January 1, 2021. Employers must submit their pay data reports to the DFEH on or before March 31, 2021, and then annually thereafter.

Update on Employment Arbitration Agreements

In last year’s alert, we noted that AB 51, codified as Labor Code section 432.6, would prohibit employers from requiring employees to enter into arbitration agreements covering claims under the Fair Employment and Housing Act (FEHA) and the Labor Code as a condition of employment. This new law has been challenged as being preempted by the Federal Arbitration Act (FAA), and section 432.6 is currently enjoined from being enforced. Stay tuned as to how this litigation turns out and the impact on arbitration agreements in California.