To: All Credit Unions Subject: 2019 California Legislative Summaries

This bulletin highlights many California laws that are effective in 2020. It is not intended to be an all-inclusive summary of the changes to laws that took place. However, it is designed to alert you to changes that may impact your credit union. All changes are effective January 1, 2020 unless otherwise noted.

New Laws for 2020

Table of Contents

ARBITRATION 1

1. SB 707 (CH. 707, WIECKOWSKI). FAILURE TO PAY FEES AND COSTS IN CONSUMER AND EMPLOYMENT

ARBITRATION 1 2. AB 51 (CH. 711, GONZALEZ). PROHIBITION AGAINST MANDATORY ARBITRATION OF FEHA OR LABOR CODE CLAIMS

IN EMPLOYMENT 3

COLLECTIONS 4

3. AB 1361 (CH. 48, OBERNOLTE). APPLICATION OF FUNDS IN SATISFACTION OF SEVERABLE JUDGMENTS 5 4. SB 187 (CH. 545, WIECKOWSKI). AMENDMENTS TO THE ROSENTHAL FAIR DEBT COLLECTION PRACTICES ACT 5

COLLECTIONS/OPERATIONS 5

5. AB 1821 (CH. 116, COMMITTEE ON JUDICIARY). INTERPRETATION OF THE “HOLDER RULE” 5 6. SB 616 (CH. 552, WIECKOWSKI). NEW PROCEDURAL AND EXEMPTION RULES FOR BANK LEVIES ON A MONEY

JUDGMENT 6

FINANCIAL SERVICES INDUSTRY 7

7. AB 857 (CH. 442, CHIU). AUTHORIZATION FOR LOCAL AGENCIES TO ESTABLISH PUBLIC BANKS 7 8. SB 455 (CH. 478, BRADFORD). CREATION OF DBO FINANCIAL EMPOWERMENT FUND (FEF) 10

LABOR/EMPLOYMENT 11

9. AB 5 (CH. 296, GONZALEZ). ABC TEST FOR INDEPENDENT CONTRACTORS 11 10. AB 61 (CH. 725, TING). GUN VIOLENCE RESTRAINING ORDERS PERMITTED FOR EMPLOYERS AND COWORKERS 14 11. AB 673 (CH. 716, CARRILLO). RECOVERY OF PENALTIES FOR LATE PAYMENT OF WAGES 15 12. AB 749 (CH. 808, MARK STONE). SETTLEMENT AGREEMENTS IN EMPLOYMENT DISPUTES 15 13. AB 1223 (CH. 316, ARAMBULA). ADDITIONAL UNPAID LEAVE OF ABSENCE FOR ORGAN DONATION 16 14. AB 1554 (CH. 195, GONZALEZ). NEW FLEXIBLE SPENDING ACCOUNT NOTICE REQUIREMENT 16 15. SB 3 (STATS. 2018, CH. 4, LENO). MINIMUM WAGE ADJUSTMENTS FOR JANUARY 1, 2020 17 16. SB 83 (CH. 24, COMMITTEE ON BUDGET AND FISCAL REVIEW). PAID FAMILY LEAVE EXPANSION 18 17. SB 112 (CH. 364, COMMITTEE ON BUDGET AND FISCAL REVIEW). PROHIBITION AGAINST REVERIFYING ELIGIBILITY

TO WORK 19

18. SB 142 (CH. 720, WIENER). CHANGES TO LACTATION ACCOMMODATION REQUIREMENTS 19 19. SB 188 (CH. 58, MITCHELL). PROHIBITION AGAINST RACIAL DISCRIMINATION INCLUDES TRAITS HISTORICALLY

ASSOCIATED WITH RACE 21 20. SB 778 (CH. 215, COMMITTEE ON LABOR, PUBLIC EMPLOYMENT AND RETIREMENT). UPDATES TO 2018 SEXUAL

HARASSMENT PREVENTION TRAINING LEGISLATION 22

LABOR/EMPLOYMENT: ADMINISTRATIVE 23

21. AB 9 (CH. 709, REYES). STATUTE OF LIMITATIONS EXTENDED FOR DISCRIMINATION CLAIMS 23 22. AB 1820 (CH. 834, COMMITTEE ON JUDICIARY). DFEH ENFORCEMENT OF FEDERAL CIVIL RIGHTS 23 23. SB 229 (CH. 721, HERTZBERG). LABOR COMMISSIONER CITATIONS BASED ON DISCRIMINATION OR RETALIATION 24 24. SB 688 (CH. 723, MONNING). PENALTIES FOR FAILURE TO PAY MINIMUM WAGE OR CONTRACT WAGES 25

LABOR/EMPLOYMENT: OCCUPATIONAL INJURY OR ILLNESS 25

25. AB 1804 (CH. 199, COMMITTEE ON LABOR AND EMPLOYMENT). OCCUPATIONAL INJURY OR ILLNESS REPORTING: PROCEDURE 25 26. AB 1805 (CH. 200, COMMITTEE ON LABOR AND EMPLOYMENT). OCCUPATIONAL INJURY OR ILLNESS REPORTING: KEY DEFINITIONS 25

LENDING 26

27. SB 306 (CH. 474, MORRELL). SUBSTITUTION OF TRUSTEE ON A MORTGAGE OR DEED OF TRUST 26

OPERATIONS 27

28. AB 473 (CH. 122, MAIENSCHEIN). INCREASE IN SMALL ESTATE AFFIDAVIT DOLLAR THRESHOLD 28 29. SB 30 (CH. 135, WIENER). CALIFORNIA’S DOMESTIC PARTNERSHIP LAW AMENDED 29 30. SB 496 (CH. 272, MOORLACH). MANDATORY REPORTERS OF SUSPECTED FINANCIAL ABUSE OF ELDER OR

DEPENDENT ADULTS 29

PRIVACY/DATA SECURITY 30

31. AB 1130 (CH. 750, LEVINE). AMENDMENT TO DATA SECURITY AND BREACH NOTIFICATION LAW DEFINITION OF

PERSONAL INFORMATION 30 32. SCR 44 (CH. 128, DODD). PRIVACY AWARENESS WEEK. 31

PRIVACY/DATA SECURITY: CCPA & AMENDMENTS 32

33. AB 375 (STATS. 2018, CH. 55, CHAU). CCPA TAKES EFFECT JANUARY 1, 2020 33 33-A. AB 25 (CH. 763, CHAU). CCPA TEMPORARY EXCEPTION FOR EMPLOYEE, APPLICANT AND DIRECTOR PERSONAL

INFORMATION 36 33-B. AB 874 (CH. 748, IRWIN). CCPA REVISED DEFINITIONS FOR PERSONAL AND PUBLICLY AVAILABLE

INFORMATION 37 33-C. AB 1146 (CH. 751, BERMAN). CCPA EXEMPTION FOR VEHICLE INFORMATION 37 33-D. AB 1202 (CH. 753, CHAU). CCPA DATA BROKER REGISTRATION 38 33-E. AB 1355 (CH. 757, CHAU). CCPA TECHNICAL CORRECTIONS 38 33-F. AB 1564 (CH. 759, BERMAN). CCPA REVISED METHODS FOR SUBMITTING VERIFIABLE CONSUMER REQUESTS 40

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New Laws for 2020

Of the 1,042 bills that the California legislature sent to Governor Gavin Newsom’s desk in 2019, he signed 870 (@83.5%) and vetoed 172 (@16.5%). Most of the new legislation took effect on January 1, 2020 (unless otherwise noted), with a heavy emphasis on employment law and privacy rights. The following is a summary of some of the changes that will impact credit unions in 2020. Please note that these are highlights only and are not intended as a comprehensive summary of the law. It is for educational and informational purposes only and is not intended as legal advice.

ARBITRATION

1. SB 707 (Ch. 707, Wieckowski). Failure to Pay Fees and Costs in Consumer and Employment Arbitration

Effective 1/1/20

SB 707 adds three (3) new sections to the Code of Civil Procedure to create new remedies for an employee or consumer subject to a predispute arbitration provision, as well as mandatory and optional sanctions against the “drafting party” (as defined) for material breach.

In an employment or consumer arbitration that requires the drafting party to pay certain fees and costs before the arbitration can proceed (§1281.97) or during the pendency of an arbitration proceeding (§1281.98), if the fees or costs are not paid within 30 days after the due date, the drafting party:

(1) Is in material breach of the arbitration agreement;

(2) Is in default of the arbitration; and

(3) Waives its right to compel arbitration or to compel the employee or consumer to proceed, as applicable.

The requirement to pay fees can be express, as a matter of state or federal law, or under the rules of the arbitration administrator or provider.

The “drafting party” is defined as the company or business that included a predispute arbitration provision in a consumer or employee contract, including any third party relying upon, or otherwise subject to, the provision (other than the employee or consumer).

Remedies

For a material breach for failure to pay pre-arbitration costs and fees, the employee or consumer may do either of the following:

(1) Withdraw the claim from arbitration and proceed in court.

The statute of limitations for all claims brought in arbitration (or that relate back to any claim brought) shall be tolled as of the date of the first filing of a claim in any court, arbitration forum, or other dispute resolution forum.

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The court shall impose sanctions on the drafting party in accordance with §1281.99.

or

(2) Compel arbitration, and the drafting party shall pay reasonable attorney’s fees and costs related to the arbitration.

For a material breach for failure to pay pending arbitration costs and fees, the employee or consumer may unilaterally elect to do any of the following:

(1) Withdraw the claim from arbitration and proceed in court.

The statute of limitations for all claims brought in arbitration (or that relate back to any claim brought) shall be tolled as of the date of the first filing of a claim in any court, arbitration forum, or other dispute resolution forum.

The employee or consumer may bring a motion, or a separate action, to recover all attorney’s fees and all costs associated with the abandoned arbitration proceeding. The recovery of arbitration fees, interest, and related attorney’s fees shall be without regard to any findings on the merits in the underlying action or arbitration.

The court shall impose sanctions on the drafting party in accordance with §1281.99.

(2) Continue the arbitration proceeding, if the arbitration company agrees to proceed despite the drafting party’s failure to pay fees or costs.

The neutral arbitrator or arbitration company may institute a collection action at the conclusion of the arbitration against the drafting party for payment of all associated fees, including the cost of administering any proceedings after the default.

If the employee or consumer continues in arbitration, the arbitrator shall impose appropriate sanctions on the drafting party, including monetary sanctions, issue sanctions, evidence sanctions, or terminating sanctions.

(3) Petition the court for an order compelling the drafting party to pay all arbitration fees that the drafting party is obligated to pay.

(4) Pay the drafting party’s fees and proceed with the arbitration proceeding.

As part of the award, the employee or consumer shall recover all arbitration fees paid on behalf of the drafting party, without regard to any findings on the merits in the underlying arbitration.

Sanctions (CCP §1281.99)

(1) Mandatory: The court shall impose a monetary sanction against a drafting party that materially breaches an arbitration agreement by ordering the drafting party to pay the reasonable expenses, including attorney’s fees and costs, incurred by the employee or consumer as a result of the material breach.

(2) Optional: In addition, the court may order any of the following sanctions against a drafting party that materially breaches an arbitration agreement, unless the court finds

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that the party acted with substantial justification or that other circumstances make the imposition of the sanction unjust:

A. An evidence sanction by an order prohibiting the drafting party from conducting discovery in the civil action.

B. A terminating sanction by one (1) of the following orders:

An order striking out the pleadings or parts of the pleadings of the drafting party.

An order rendering a judgment by default against the drafting party.

C. A contempt sanction by an order treating the drafting party as in contempt of court.

SB 707 also includes a savings clause, which provides that if any provision or its application to any person or circumstance is held invalid, that invalidity does not affect other provisions or applications that can still be given effect.

Reference: Amends Code of Civil Procedure §§1280 and 1281.96; adds Code of Civil Procedure §§1281.97, 1281.98, and 1281.99.

2. AB 51 (Ch. 711, Gonzalez). Prohibition Against Mandatory Arbitration of FEHA or Labor Code Claims in Employment

Effective 1/1/20 (see Author’s Note below)

Author’s Note: As anticipated, AB 51 was promptly challenged on the grounds that it is preempted by the Federal Arbitration act (FAA). [See U.S. Chamber of Commerce v. Becerra (U.S.D.C., Dec. 9, 2019) Case No. 2:19-cv-02456-KJM-DB.] On December 30, 2019, the U.S District Court issued a temporary restraining order preventing AB 51 from taking effect as scheduled on January 1, 2020. A hearing was set for January 10, 2020 and updates will follow.

AB 51 adds new Labor Code §432.6, which prohibits mandatory arbitration of FEHA and Labor Code claims in employment.

It prohibits a person, as a condition of employment, continued employment, or the receipt of any employment-related benefit, from requiring any applicant for employment or any employee to waive any right, forum, or procedure for a violation of any provision of FEHA or the Labor Code. This includes the right to file and pursue a civil action or a complaint with, or otherwise notify, any state agency, other public prosecutor, law enforcement agency, or any court or other governmental entity of any alleged violation.

It prohibits an employer from threatening, retaliating or discriminating against, or terminating any applicant for employment or any employee because of the refusal to consent to such a waiver.

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AB 51 applies to employment contracts entered into, modified, or extended on or after January 1, 2020.

Opt-Outs Not Permitted: An agreement that requires an employee to opt out of a waiver (or take any affirmative action to preserve their rights) is deemed a condition of employment.

Remedies: A court may award a prevailing plaintiff reasonable attorney’s fees in addition to injunctive relief and any other remedies available.

Exclusions: §432.6 does not apply to the following:

Post-dispute settlement agreements;

Negotiated severance agreements;

A person registered with a self-regulatory organization as defined by the Securities Exchange Act of 1934 or regulations (e.g., a stock exchange) that mandates arbitration of disputes.

AB 51 does not appear to prohibit mandatory employment arbitration agreements for other claims (not under FEHA or the Labor Code.

Severability: Labor Code §432.6 declares its sections to be severable, so the invalidity of any single provision will not affect the validity or enforcement of other provisions. This was possibly added because AB 51 is subject to challenge on Federal Arbitration Act (FAA) preemption grounds. However, §432.6 specifically states: “Nothing in this section is intended to invalidate a written arbitration agreement that is otherwise enforceable under the [FAA].”

This severability provision is also important because of the legislative intent language (below). This opens the door to an argument that, even if not prohibited, they are unconscionable and void as against public policy.

Legislative Intent: AB 51 declares it to be the policy of this state to ensure the following:

All persons have the full benefit of the rights, forums, and procedures established in the Fair Employment and Housing Act (FEHA) and the Labor Code;

Individuals are not retaliated against for refusing to consent to the waiver of those rights and procedures; and

Any contract relating to those rights and procedures is entered into as a matter of voluntary consent, not coercion.

AB 51 also adds new Government Code §12953, which declares it an unlawful employment practice for an employer to violate Section 432.6 of the Labor Code

Reference: Adds Government Code §12953; adds Labor Code §432.6.

COLLECTIONS

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3. AB 1361 (Ch. 48, Obernolte). Application of Funds in Satisfaction of Severable Judgments

Effective 1/1/20

Current law requires money received in satisfaction of a money judgment to be credited against costs, interest, court fees, and the principal amount of the judgment in a specified order. However, existing law does not take into account severable judgments.

AB 1361 affirms that a defendant/appellant may pay an uncontested portion of a monetary judgment without risk of waiving the right to appeal the contested portion. AB 1361 adds new Code of Civil Procedure §695.215, which provides:

Payment in satisfaction of a money judgment, or a severable portion thereof, interest, and associated costs, does not constitute a waiver of the right to appeal, except to the extent that the payment is the product of compromise or is coupled with an agreement not to appeal.

Payment in satisfaction of a severable portion of a money judgment, interest, and associated costs, does not constitute a waiver of the right to appeal other portions of the money judgment.

AB 1361 further states that it is declaratory of existing law, which means that it also applies to existing money judgments.

Reference: Adds Code of Civil Procedure §695.215.

4. SB 187 (Ch. 545, Wieckowski). Amendments to the Rosenthal Fair Debt Collection Practices Act

Effective 1/1/20

The Rosenthal Fair Debt Collection Practices Act (Act) defines the terms “consumer debt” and “consumer credit” to mean money, property, or their equivalent, due or owing (or alleged to be due or owing) from a natural person by reason of a consumer credit transaction. SB 187 amends Civil Code §1788.2 to clarify that, for purposes of the Act, "consumer debt" includes a mortgage debt. It declares this provision as declaratory of existing law.

SB 187 also removes the exception for attorneys and counselors at law from the definition of "debt collector."

Reference: Amend Civil Code §1788.2.

COLLECTIONS/OPERATIONS

5. AB 1821 (Ch. 116, Committee on Judiciary). Interpretation of the “Holder Rule”

Effective 1/1/20

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AB 1821 provides that a plaintiff who prevails on a cause of action against a defendant named pursuant 16 CFR Part 433 (the “Holder Rule”) or pursuant to the contractual language required by Part 433, may claim attorney’s fees, costs, and expenses from that defendant to the fullest extent permissible if the plaintiff had prevailed on that cause of action against the seller.

The Holder Rule, under the Federal Trade Commission (FTC) regulations, makes it an unfair or deceptive act or practice for a seller to take or receive a consumer credit contract in connection with the sale or lease of goods or services without including a specified provision regarding the obligations of all holders of that contract. The purpose is to ensure that future holders of the consumer contract (e.g., a credit union holding a retail installment contract obtained through an indirect lending relationship) are subject to all claims and defenses that the debtor could assert against the original seller.

AB 1821 was enacted to overturn an appellate court decision that limited a holder’s liability in a lawsuit brought by the buyer/consumer to the return of payments received from the consumer, plus interest and court costs, but not the consumer’s attorney fees [see Lafferty v. Wells Fargo, (2013) 213 Cal. App. 4th 545]. This limit was significant, as a consumer’s attorney’s fees can often exceed the amount of any payments received from the consumer, significantly increasing a holder’s potential liability.

Under AB 1821, effective January 1, 2020, holders can be liable for a consumer’s attorney fees to the same extent as the seller.

Reference: Adds Civil Code §1459.5.

6. SB 616 (Ch. 552, Wieckowski). New Procedural and Exemption Rules for Bank Levies on a Money Judgment

Select provisions effective 1/1/20 and 9/1/20

SB 616 amends the laws governing the levy process for civil money judgments.

Deadlines and Procedures

Effective September 1, 2020, SB 616 amends the filing deadlines and procedures as follows:

Currently, the account holder may claim certain exemptions from levy by filing a claim of exemption with the levying officer within 10 days of being personally served with the notice of levy (within 15 days if served by mail). This is increased to within 15 days of being personally served with the notice of levy (within 20 days if served by mail).

Currently, the judgment creditor may file an objection within 10 days of being served with the claim of exemption. This is increased to within 15 days of being served.

Currently, if an objection is filed, a hearing of the claim of exemption will be scheduled to take place within 30 days. Under SB 616, a claim of exemption will be deemed filed on the date mailed if it is assigned a tracking number; and otherwise, on the date received by the levying officer.

Two New Automatic Exemptions

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Effective September 1, 2020, SB 616 also creates a new automatic exemption for all funds in an account under the minimum basic standard of adequate care for a family of four (4), as established by Welfare and Institutions Code §11452 (currently $1,724). This exemption is not applicable when the judgment is based on wages, spousal, or child support owed. (The Writ of Execution will now specify if this is the case.)

SB 616 clarifies that, when a financial institution is required to apply other state or federal exemptions to the account (e.g., direct deposit of Social Security), those other exemptions will count toward the automatic exemption amount. If the other state or federal exemptions exceed the automatic exemption amount, then only the other state or federal exemptions apply.

The automatic exemption is limited to one (1) bank account per debtor.

➢ If the debtor has multiple accounts at the same financial institution, the financial institution has discretion to select the account to which the exemption will apply (unless the court orders otherwise).

➢ If the debtor has accounts at more than one (1) financial institution, the judgment creditor must seek a court order specifying to which account the exemption will apply (or the judgment debtor may do so).

➢ None of these provisions create a cause of action against the judgment creditor for execution of the levy or against the financial institution that carries out a levy in compliance with a court order.

The Notice of Levy and Writ of Execution forms will be amended to address these changes.

Additionally, effective January 1, 2020, all funds in a bank account provided to the account holder by the Federal Emergency Management Agency (FEMA) are exempt from judgment levy without making a claim.

Reference: Amends Code of Civil Procedure §699.520, 699.540, and 704.070; amends, repeals, and adds Code of Civil Procedure §§703.520 and 703.550; adds Code of Civil Procedure §§704.220, 704.225, and 704.230.

FINANCIAL SERVICES INDUSTRY

7. AB 857 (Ch. 442, Chiu). Authorization for Local Agencies to Establish Public Banks

Effective 1/1/20

AB 857 creates a framework for a local agency to establish a public bank, subject to Department of Business Oversight (DBO) and Federal Deposit Insurance Corporation (FDIC) approval. For purposes of the Financial Institutions Law and the Banking Law, the term “bank” is now defined to include a “public bank.”

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Definition of a Public Bank

A “public bank” is defined (Govt. Code §57600(b)) as a corporation, organized under the Nonprofit Mutual Benefit Corporation Law (Corp. Code §7110, et seq.) or the Nonprofit Public Benefit Corporation Law (Corp. Code §5110, et seq.) for the purpose of engaging in the “commercial banking business” or “industrial banking business,” that is wholly owned by one or more local agencies (i.e., cities and counties) or a joint powers authority (Govt. Code §6500, et seq.) composed only of local agencies. A local agency located within a county with a population of less than 250,000 may organize a public bank only if it does so as part of a joint powers authority formed for those purposes.

Purpose

The purpose of a public bank is to provide an alternative to commercial banks, and to allow taxpayer funds to be invested for the betterment of the local community. Public banks use their deposit and lending power to benefit the public through affordable housing, small business loans, and public infrastructure projects (e.g., rebuilding after wildfires).

Supervision and Regulation

A public bank will be supervised and regulated by the DBO and the FDIC. Before engaging in business, a public bank must obtain a certificate of authorization to transact business as a bank from the DBO (per Fin. Code §1000, et seq.). However, only two (2) public banks may be licensed by the DBO in any calendar year, with no more than ten (10) licensees in total. The DBO shall not issue a public bank license after seven (7) years from the date upon which the Commissioner first adopts regulations.

A public bank must also obtain and maintain FDIC insurance.

Permissible Activities

A public bank must conduct retail activities in partnership with local financial institutions and are prohibited from competing with local financial institutions except in the areas of local agency banking, infrastructure lending, wholesale lending, and participation lending (as these terms are defined below).

“Retail activities” means providing any kind of financial product or service to a person that is typically offered or provided by a local financial institution, including, but not limited to: (A) accepting a deposit of any kind from a person (including credit union shares); or (B) granting a loan or extension of credit of any kind.

“Conducted in partnership with” means pursuant to a written agreement with a local financial institution to provide financial products and services to the public located within the jurisdiction of the public bank.

“Local financial institution” means a certified community development financial institution, a state or federal credit union, or a small bank or an intermediate small bank. [§57600(a)]

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“Local agency banking” means providing any of the following services to a local agency: (A) accepting a deposit of any kind; or (B) granting a loan or extension of credit of any kind.

“Infrastructure lending” means granting a loan or extending credit to a local agency for the purpose of building or improving public infrastructure, including housing projects and affordable housing (as defined).

“Wholesale lending” means granting a loan or extension of credit to a local financial institution.

“Participation lending” means purchasing or selling an interest in a loan or loans originated by or sold to a local financial institution, or originating, leading, or directing a loan transaction involving a local financial institution pursuant to a written agreement with the local financial institution.

Exception

A public bank may engage in retail activities without partnering with a local financial institution if those retail activities are not offered or provided by local financial institutions in the jurisdiction of the local agency or agencies that own the public bank.

Conditions

Before submitting an application to establish a public bank, a local agency must conduct a study to assess the viability of the proposed public bank. AB 857 contains a list of mandatory elements to be addressed in the study including, but not limited to, a discussion of the purposes of the public bank (e.g., achieving cost savings, strengthening local economies, supporting community economic development, addressing infrastructure and housing needs for localities, etc.), a fiscal analysis of associated costs, an estimate of the initial capital to be provided by the local agency, financial projections for at least the first five years, a legal analysis of whether the proposed structure and operations would comply with California’s constitutional prohibition against making a gift of public funds, and an analysis of how the proposed governance structure would protect the bank from unlawful insider transactions and apparent conflicts of interest.

The study may also include a number of optional elements, such as a fiscal analysis of anticipated benefits (e.g., cost savings, jobs created, jobs retained, economic activity generated, and private capital leveraged), a qualitative assessment of social or environmental benefits, an estimate of the fees paid to the local agency’s current banker(s), and a fiscal analysis of the costs (including social and environmental) of continuing to do business with the current banker(s).

Prior to submitting an application for a public banking charter, the study must be presented to and approved by the governing body of the local agency, and a motion to move forward with an application must be approved by a majority vote of the governing body at a public meeting.

Tax Exemption

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A public bank is exempt from all other taxes and licenses, state, county, and municipal, imposed upon a public bank, local utility user taxes, sales and use taxes, state energy resources surcharges, state emergency telephone users surcharges, motor vehicle and other vehicle registration license fees, and any other tax or license fee imposed by the state upon vehicles, motor vehicles, or the operation thereof. [Rev. & Tax. Code §23701aa]

Reference: Amends Corporations Code §§5130 and 7130; amends Financial Code §§ 119, 1004, and 1100; adds Financial Code §1008; amends Government Code §§6254.26, 23007, 53601, 53635, and 53635.2; adds Government Code, Title 5, Division 5 (commencing with §57600); adds Government Code §§6254.35, 54956.97, and 54956.98; adds Revenue and Taxation Code §23701aa.

8. SB 455 (Ch. 478, Bradford). Creation of DBO Financial Empowerment Fund (FEF)

Effective 1/1/20 through 1/1/25

SB 455 applies specifically to 501(c)(3) non-profit entities looking to fund projects that address consumer economic security and financial education. While credit unions are not directly eligible, those who operate or partner with such entities should be aware of this opportunity.

Until January 1, 2025, SB 455 creates the Financial Empowerment Fund (FEF). It authorizes the Commissioner of Business Oversight to award grants from that fund to nonprofit organizations offering financial education and financial empowerment programs and services to at-risk populations in California.

The FEF is established in the State Treasury. The Controller is directed to transfer $4 million, plus DBO’s estimated administration costs, from the State Corporations Fund. The funds will be set aside for use by the Commissioner, who will award grants of up to $100,000 each, up to a maximum of $1 million in awards annually. The Commissioner will administer the program or contract it to an independent third party, provided administrative fees do not exceed 15% of the funds administered.

Eligibility: An applicant must be a 501(c)(3), with no part of the net earnings inuring to the benefit of a private shareholder or individual.

Criteria: Funded projects must meet all of the following criteria:

1) Promote and enhance the economic security of consumers;

2) Adhere to the five (5) principles of effective financial education described in the CFPB’s June 2017 report, “Effective financial education: five principles and how to use them;”

3) Include one (1) or more specific outcome targets; and

4) Include an evaluation component designed to measure and document the extent to which the project achieves its intended outcomes and increases consumers’ financial well-being.

Use of Grant Funds: Grant recipients may only use grant funds for the following financial education and financial empowerment programs and services for at-risk populations:

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1) Designing, developing, or offering, free classroom or web-based financial education and empowerment content to help unbanked/underbanked consumes achieve, identify, and access lower cost financial products and services, establish or improve their credit, increase their savings, or lower their debt.

2) Providing individualized, free financial coaching to unbanked/underbanked consumers.

3) Designing, developing, or offering, a free financial product or service to help unbanked/underbanked consumers identify and access responsible financial products and financial services, establish or improve their credit, increase their savings, or lower their debt.

Cost Cap: A grant recipient may use no more than 15% of its grant to cover administrative costs. Failure to comply with this requirement shall cause the organization to be ineligible for grant funding in the subsequent fiscal year.

Report Requirement: Each grant recipient must submit a report (in a form, and by a date, acceptable to the Commissioner) that does the following:

Documents the specific purposes to which grant funds were allocated;

Documents the number of individuals aided through use of the funds;

Provides quantitative results regarding the impact of the grant funding; and

Includes any other information requested by the Commissioner.

Failure to submit a report will result in the organization being ineligible for grant funding in the subsequent fiscal year. On or before December 31, 2021, and at least once annually thereafter, the DBO must post a summary of information contained in the grant recipients’ reports on its website.

SB 455 sunsets the program on January 1, 2025. Any remaining funds in the FEF will be transferred to the State Corporations Fund.

Reference: Adds and repeals Financial Code Division 10.5 (commencing with §24000).

LABOR/EMPLOYMENT

9. AB 5 (Ch. 296, Gonzalez). ABC Test for Independent Contractors

Effective 1/1/20

Effective January 1, 2020, AB 5 codifies the “ABC” test of Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018) 4 Cal.5th 903 (Dynamex) for determining whether a worker may be classified as an independent contractor or an employee for specified purposes. Under Dynamex, workers are presumed to be employees, and the hiring entity has the burden to justify classifying a worker as an independent contractor under the “ABC” test.

Beginning January 1, 2020, the “ABC” test will apply for purposes of the Labor Code, the Unemployment Insurance Code, and the Industrial Welfare Commission (IWC) Wage Orders. It

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will apply for purposes of workers’ compensation beginning July 1, 2020. It will not apply to tort claims or claims under the Government Code (e.g., harassment and discrimination protections).

Under AB 5, the “ABC” test [codified in new Labor Code §2750.3(a)(1)] states that a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that all of the following conditions are satisfied:

(1) 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;

(2) The person performs work that is outside the usual course of the hiring entity’s business; and

(3) The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

Any exceptions to the terms “employee,” “employer,” “employ,” or “independent contractor,” and any extensions of employer status or liability, expressly made in the Labor Code, the Unemployment Insurance Code, or the IWC Wage Orders will remain in effect.

Borello Test

The “ABC” test replaces the common law multi-factor “right to control” test of S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341 (Borello), which focused on the hiring entity’s ability to control how the work was performed. The Borello test has 11 factors focusing primarily on whether the hiring entity has the right to control the means and manner of performing work. According to the Department of Industrial relations (DIR) website, those 11 factors are:

1. Whether the person performing services is engaged in an occupation or business distinct from that of the principal;

2. Whether or not the work is a part of the regular business of the principal or alleged employer;

3. Whether the principal or the worker supplies the instrumentalities, tools, and the place for the person doing the work;

4. The alleged employee's investment in the equipment or materials required by his or her task or his or her employment of helpers;

5. Whether the service rendered requires a special skill;

6. The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision;

7. The alleged employee's opportunity for profit or loss depending on his or her managerial skill;

8. The length of time for which the services are to be performed;

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9. The degree of permanence of the working relationship;

10. The method of payment, whether by time or by the job; and

11. Whether or not the parties believe they are creating an employer-employee relationship (this may have some bearing on the question, but it is not determinative, as it is a question of law based on objective tests).

AB 5 includes a detailed list of occupations that are specifically exempt from the ABC test including, but not limited to:

Insurance brokers

Licensed professionals (e.g., lawyers, accountants)

Registered/licensed securities broker-dealers or investment advisers

Direct sales salespersons (if compensation is based on actual sales and not wholesale purchases or referrals)

Professional services, subject to meeting specified conditions (e.g., marketing, human resources administrator, travel agent, graphic designer, grant writer, etc.)

Licensed real estate agents

Licensed repossession agencies

Exempt occupations will instead follow the multi-factor Borello test, and additional exemptions are likely. Moreover, if the court determines that the “ABC” test can’t be applied in particular circumstances (other than an express exception), the determination will instead be made using the Borello test.

Application and Retroactivity

AB 5 states that it is declaratory of existing law, and that some provisions will apply retroactively “to the maximum extent permitted by law,” which raises a number of questions. Other provisions will apply to work performed on or after January 1, 2020. Credit unions are encouraged to consult with counsel with any questions about proper classification. AB 5’s application to workers compensation takes effect July 1, 2020 and is specifically not retroactive.

An employer is prohibited from reclassifying an individual who was an employee on January 1, 2019 as an independent contractor due to the enactment of AB 5.

Penalties for Misclassification

Misclassification puts hiring entities at risk for individual or class actions, including wage order violations and penalties under the Private Attorney General Act (PAGA). AB 5 allows the California Attorney General, city attorneys, and local prosecutors to sue employers over violations, and to seek an order forcing the employer to reclassify workers appropriately.

Reference: Amends Labor Code §3351; adds Labor Code §2750.3; amends Unemployment Insurance Code §§606.5 and 621.

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10. AB 61 (Ch. 725, Ting). Gun Violence Restraining Orders Permitted for Employers and Coworkers

Effective 9/1/20

Existing law allows an immediate family member (as defined below) of a person, or a law enforcement officer, to petition courts to issue an ex parte “gun violence restraining order.” A gun violence restraining order would enjoin the person from having in their custody or control, owning, purchasing, possessing or receiving, or attempting to purchase or receive, a firearm or ammunition. It will expire no later than 21 days from the date of the order.

Effective September 1, 2020, AB 61 will also allow the following persons to petition:

An employer of the person.

A coworker of the person, if they have had substantial and regular interactions with the person for at least one (1) year and have obtained the approval of the employer.

An employee or teacher of a secondary or postsecondary school that the subject has attended in the last six (6) months, if the employee or teacher has obtained the approval of a school administrator or a school administration staff member with a supervisorial role.

Permissible Grounds

A court may issue an ex parte gun violence restraining order if the petition, supported by petitioner’s affidavit or oral statement and any additional information provided, shows that there is a substantial likelihood that both of the following are true:

(1) The person poses a significant danger, in the near future, of causing personal injury to him/herself or another by having in their custody or control, owning, purchasing, possessing, or receiving a firearm (determined by considering factors listed under Penal Code §18155, e.g., recent threat or act of violence, pattern of violent acts or threats, violation of a protective order, history of force, brandishing a weapon, etc.); and

(2) An ex parte gun violence restraining order is necessary to prevent personal injury to the person or another because less restrictive alternatives have either: (a) been tried and found ineffective; or (b) are inadequate or inappropriate for the circumstances of the person.

The affidavit must set forth the facts tending to establish the grounds of the petition, or the reason for believing that they exist. A gun violence restraining order would include an order for law enforcement to immediately go out and require the person to surrender all weapons and ammunition in their possession.

Same Day Decision

An ex parte order shall be issued or denied on the same day the petition is filed with the court, unless filed too late in the day to permit effective review, in which case it shall be issued or

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denied on the next court day (in sufficient time for the order to be filed that day with the clerk of the court).

For purposes of these sections, “immediate family” means any spouse, domestic partner, parent, child, any person related by consanguinity or affinity within the second degree (i.e., they share a common relative), or any other person who regularly resides in the household, or who, within the prior six (6) months, regularly resided in the household.

Reference: Amends, repeals, and adds Penal Code §§18150, 18170, and 18190.

11. AB 673 (Ch. 716, Carrillo). Recovery of Penalties for Late Payment of Wages

Effective 1/1/20

Existing law authorized civil penalties (independent of any other penalty) against an employer who fails to pay wages in a timely manner, in the amount of:

$100, for the initial violation; and

$200 plus 25% of the amount unlawfully withheld, for subsequent violations.

This penalty could only be recovered by the Labor Commissioner as part of a hearing to recover unpaid wages and penalties or in an independent civil action on behalf of the state. Of that penalty, 12.5% is to be paid into a fund within the Labor and Workforce Development Agency dedicated to educating employers about state labor laws, with the remainder paid into the State Treasury General Fund.

Effective January 1, 2020, AB 673 provides that the penalty may be recovered by the Labor Commissioner, payable to the affected employee, as a civil penalty or by the employee as a statutory penalty in a hearing pursuant to the Labor Commissioner’s authority. The Labor Commissioner’s authority to bring an independent civil action is removed.

An employee may also bring a private action to enforce the civil penalty under the Private Attorneys General Act (PAGA). However, the employee may not pursue both a civil and statutory penalty for the same violation.

Reference: Amends Labor Code §210.

12. AB 749 (Ch. 808, Mark Stone). Settlement Agreements in Employment Disputes

Effective 1/1/20

AB 749 prohibits “no rehire” clauses in settlement agreements entered into on or after January 1, 2020 between an employer and an employee, except under limited circumstances.

Under new Code of Civil Procedure §1002.5, a settlement agreement in an employment dispute shall not contain a provision prohibiting, preventing, or otherwise restricting a settling party that is an “aggrieved person” (as defined) from obtaining future employment with that

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employer, or any parent, subsidiary, division, affiliate, or contractor of the employer. A provision that violates this prohibition is void as a matter of law and against public policy.

An “aggrieved person” means a person who has filed a claim against the person’s employer in court, before an administrative agency, in an alternative dispute resolution forum, or through the employer’s internal complaint process.

This prohibition does not prevent the parties from making an agreement to:

End a current employment relationship; or

Prohibit or otherwise restrict the aggrieved person from obtaining future employment if the employer has made a good faith determination that the person engaged in sexual harassment (Govt. Code §12940(j)) or sexual assault (Penal Code §§243.3, 261, 262, 264.1, 286, 287, or 289).

This prohibition does not require an employer to rehire or continue to employ a person if there is a legitimate non-discriminatory or non-retaliatory reason for terminating or refusing to rehire the person.

Reference: Adds Code of Civil Procedure Part 2, Title 14, Chapter 3.6 (commencing with §1002.5).

13. AB 1223 (Ch. 316, Arambula). Additional Unpaid leave of Absence for Organ Donation

Effective 1/1/20

Under existing law, a private employer with 15 or more employees was required to grant an employee a leave of absence with pay of up to 30 business days in a one (1)-year period for the purpose of donating an organ.

AB 1223 now requires an employer to grant an additional unpaid leave of absence of up to 30 business days in a one (1)-year period for the purpose of donating an organ. The one (1)-year period is measured from the date the employee’s leave begins and consists of 12 consecutive months. For either the paid or unpaid leave, an employee must provide written verification to the employer that the employee is an organ donor and that there is a medical necessity for the organ donation.

Reference: Amends Education Code §§89519.5 and 92611.5; amends Government Code §19991.11; adds Insurance Code §§10110.8 and 10233.8; amends Labor Code §1510.

14. AB 1554 (Ch. 195, Gonzalez). New Flexible Spending Account Notice Requirement

Effective 1/1/20

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Under federal law, any unclaimed funds left in an employee’s flexible spending account after the end their plan year are forfeited to the employer. Federal law mandates only a single form of notice to an employee of the deadline to make a claim reimbursement.

AB 1554 adds new Labor Code §2810.7, which requires an employer to give an employee who participates in a flexible spending account two (2) different forms of notice of any deadline to withdraw funds before the end of the plan year (one of which may be electronic).

Notice may include, but is not limited to, the following:

Email

Telephone

Text message

Postal mail

In-person notification.

A “flexible spending account” includes, but is not limited to, the following:

Dependent care flexible spending account

Health flexible spending account

Adoption assistance flexible spending account

Reference: Adds Labor Code §2810.7.

15. SB 3 (Stats. 2018, Ch. 4, Leno). Minimum Wage Adjustments for January 1, 2020

Original legislation effective 1/1/17; current adjustment effective 1/1/20

SB 3, originally signed into law in 2016, established a series of incremental minimum wage adjustments over the next several years with a target of $15 per hour for all employees by 2023. After 2023, wages may then be increased each year for inflation, as measured by the national Consumer Price Index (up to 3.5%, rounded to the nearest 10 cents).

Effective January 1, 2020:

The minimum wage for larger employers (26 or more employees) will increase from $12 to $13 per hour. The minimum annual salary for certain exempt employees will likewise increase from $49,920 to $54,080.

The minimum wage for smaller employers (25 or fewer employees) will increase from $11 to $12 per hour. The minimum annual salary for certain exempt employees will likewise increase from $45,760 to $49,920.

For an employee to be exempt under the administrative, executive or professional exemption, he or she must earn a minimum monthly salary of no less than two (2) times the state

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minimum wage for full-time employment, based on a pre-determined sum, and not prorated for part-time work.

Employers will also need to post the updated official Minimum Wage Order.

It is important to keep in mind that certain local ordinances may impose higher minimum wage requirements, and employers must comply with the law that is more beneficial to the employee.

Reference: Amends Labor Code §§245.5, 246, 1182.12.

16. SB 83 (Ch. 24, Committee on Budget and Fiscal Review). Paid Family Leave Expansion

Urgency legislation effective 6/27/19 (funding provision); effective 7/1/20 (leave expansion)

California’s Family Temporary Disability Insurance program, also known as Paid Family Leave (PFL), provides up to six (6) weeks of partial pay within any 12-month period to employees who need to take time off from work to:

Care for a seriously ill family member (child, parent, parent-in-law, grandparent, grandchild, sibling, spouse, or registered domestic partner); or

Bond with a new child entering the family through birth, adoption, or foster care placement.

Under SB 83, beginning July 1, 2020, the PFL benefit will be extended from six (6) weeks to eight (8) weeks. This mirrors an increase in San Francisco’s Paid Parental Leave benefit.

SB 83 also requires the Governor to convene a task force to develop a proposal to increase the paid family leave duration to a full six (6) months by 2021–22 for parents to care for and bond with their newborn or newly adopted child.

This proposal must assess and address job protections for employees, wage replacement rates up to 90 percent for low wage workers, and provide a plan to implement and fund expanded paid family leave benefits, as well as other findings and recommendations of interest.

The Governor will present task force findings and observations to the Legislature.

PFL does not provide job protection, only wage replacement benefits, similar to the Social Security Disability (SDI) program, which administers PFL. Job protections may be available under other laws such as the federal Family and Medical Leave Act (FMLA) or the California Family Rights Act (CFRA).

Reference: Amends Government Code §§13302, 18930.5, 19792, 19803, 19809, 19815.6, 19878, 19879.1, 19880, 19881, 19882, 19883, 19884, 19995.1.5, 22551, 22555, 22556, 22560, 22600, 22602, 22871.3, 100014; adds Government Code §§3539.6, 19878.5; repeals Government Code §12472.5; amends Labor Code §§1420, 1421, 1428, 1429, 1429.5, 1430, 1434; adds Labor Code §6717.5; adds and repeals Labor Code §1455; amends Unemployment

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Insurance Code §§984, 1088.9, 1095; amends, repeals, and adds Unemployment Insurance Code §3301.

17. SB 112 (Ch. 364, Committee on Budget and Fiscal Review). Prohibition Against Reverifying Eligibility to Work

Urgency legislation effective 9/27/19

SB 112 is primarily a budget appropriations bill that included one small change related to Labor Code §1019.2, which prohibits an employer, except as required by federal law, from reverifying the employment eligibility of a current employee at a time or in a manner not required by specified federal law.

New Labor Code §1019.4 was added to state: “For purposes of this chapter, the terms “reverify” or “reverifying” mean the actions described in [8 CFR §274a.2(b)(1)(vii)]. These terms shall be interpreted consistently with any applicable federal rules, regulations, and controlling federal case law.”

This change is only intended to clarify that this state law prohibition is not intended to interfere in any way with an employer’s obligations under federal law, or to prohibit an employer from taking any lawful action to review the employment authorization of an employee upon knowing that the employee is, or has become, unauthorized to be employed in the United States.

Reference: Amends Business and Professions Code §23320; amends Government Code §§12815, 16418.8, 19822.3, 20397, and 100002; repeals Government Code §100006; amends Health and Safety Code §11495; amends Labor Code §1019.2; adds Labor Code §1019.4; amends Penal Code §§6126, 6126.2, 6126.3, 6126.5, and 6133; amends Vehicle Code §§27150.2, 27151, and 40610.

18. SB 142 (Ch. 720, Wiener). Changes to Lactation Accommodation Requirements

Effective 1/1/20

Existing law requires an employer to provide a reasonable amount of break time to accommodate an employee who wishes to express breast milk for their infant child. It also requires the employer to make reasonable efforts to provide the employee with the use of a room or other location, other than a bathroom, in close proximity to the employee’s work area, for the employee to express milk in private (which may include the place where the employee normally works if it otherwise meets the legal requirements).

SB 142 modifies these location requirements as follows:

An employer shall provide an employee with the use of a room or other location. The qualifying words “make reasonable efforts to” are deleted, except for undue hardship.

A lactation room or location shall not be a bathroom and shall be in close proximity to the employee’s work area, shielded from view, and free from intrusion while the

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employee is expressing milk (which may include the place where the employee normally works if it otherwise meets the legal requirements).

Additional Requirements

Room/Location Conditions: SB 142 specifies that a lactation room or location must:

➢ Be safe, clean, and free of hazardous materials.

➢ Contain a surface to place a breast pump and personal items.

➢ Contain a place to sit.

➢ Have access to electricity or alternative devices (e.g., extension cords, charging stations) needed to operate an electric or battery-powered breast pump.

➢ Be shielded from view, and free from intrusion while the employee is expressing milk.

The employer must also provide access to a sink with running water and a refrigerator suitable for storing milk in close proximity to the employee’s workspace or, if a refrigerator cannot be provided, another cooling device suitable for storing milk (e.g., an employer-provided cooler).

If Using a Multipurpose Room: Use of the room for lactation shall take precedence over the other uses, but only for the time it is in use for lactation purposes.

Multi-Tenant Buildings/Multi-Employer Worksites: If the employer cannot provide a lactation location within the employer’s own workspace, it may provide a space shared among multiple employers within the building or worksite.

Multi-Employer Worksites: Employers or general contractors coordinating a multi-employer worksite shall either:

➢ Provide lactation accommodations; or

➢ Provide a safe and secure location for a subcontractor employer to provide lactation accommodations on the worksite, within two (2) business days, upon written request of any subcontractor employer with an employee that requests an accommodation.

Undue Hardship Exemption (only available to employers with under 50 employees): An employer that employs fewer than 50 employees may be exempt from a particular requirement of this section (not the whole section) if it can demonstrate that the requirement would impose an undue hardship by causing the employer significant difficulty or expense when considered in relation to the size, financial resources, nature, or structure of the employer’s business.

If the employer can demonstrate that the requirement to provide an employee with the use of a room or other location, other than a bathroom, would impose such an undue hardship, the employer shall make reasonable efforts to provide the employee with the use of a room or other location, other than a toilet stall, in close proximity to the employee’s work area, for the employee to express milk in private.

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Prohibition Against Discharge/Discrimination/Retaliation: An employer is prohibited from discharging, discriminating or retaliating against an employee for exercising (or attempting to exercise) these rights.

Remedies for Noncompliance: The denial of reasonable break time or adequate space to express milk is now deemed a failure to provide a rest period under Labor Code §226.7, and the employer shall pay the employee one additional hour of pay at the employee’s regular rate of compensation for each workday that the meal or rest or recovery period is not provided

In addition, an employee may report a violation to the Labor Commissioner, who may issue a citation. Civil penalties are increased from $100 per violation to $100 per day that an employee is denied reasonable break time or adequate space.

Policy Requirement: SB 142 adds a new requirement for employers to develop and implement a lactation accommodation policy that includes:

An employee’s right to request lactation accommodation.

The process to make the request.

An employer’s obligation to respond to the request. If an employer cannot provide break time or a location that complies, the employer shall provide a written response to the employee.

A statement about an employee’s right to file a complaint with the Labor Commissioner for violation of a right under this chapter.

The employer shall include the policy in an employee handbook or set of policies made available to employees and distribute the policy to new employees upon hiring and when an employee makes an inquiry about or requests parental leave.

Reference: Amends Labor Code §§1030, 1031, and 1033; adds Labor Code §1034.

19. SB 188 (Ch. 58, Mitchell). Prohibition Against Racial Discrimination Includes Traits Historically Associated With Race

Effective 1/1/20

Under the Fair Employment and Housing Act (FEHA), discriminate on the basis of race or ethnicity is prohibited.

SB 188 expands the definition of “race or ethnicity” to prohibit discrimination against employees (and students) based on their natural hairstyles. Government Code §12926 defines “race or ethnicity” to include ancestry, color, ethnic group identification, and ethnic background. It is now amended to include the following additional definitions:

“Race” is inclusive of traits historically associated with race, including, but not limited to, hair texture and protective hairstyles.

“Protective hairstyles” includes, but is not limited to, such hairstyles as braids, locks, and twists.

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Reference: Amends Education Code §212.1; amends Government Code §12926.

20. SB 778 (Ch. 215, Committee on Labor, Public Employment and Retirement). Updates to 2018 Sexual Harassment Prevention Training Legislation

Amends SB 1343 (Stats. 2018, Ch. 956, Mitchell) Employers: sexual harassment training: requirements.

Urgency legislation effective 8/30/19

In 2005, AB 1825 (Stats. 2004, Ch. 933, Reyes) began requiring employers with 50 or more employees to provide two (2) hours of sexual harassment prevention training and education to all supervisory employees in California within six (6) months of hire or promotion, and every two (2) years thereafter.

In 2018, SB 1343 (Stats. 2018, Ch. 956, Mitchell) amended this requirement as follows:

All employers with five (5) or more employees (“covered employers”) are now subject to this requirement.

Covered employers are now required to provide one (1) hour of training to all nonsupervisory employees within six (6) months of hire, and every two (2) years thereafter.

Beginning January 1, 2020, covered employers are required to provide training to seasonal, temporary, and other employee hired to work for less than six (6) months, within 30 days of hire or 100 hours worked, whichever occurs sooner.

Although SB 1343 took effect on January 1, 2019 and established an initial training deadline of January 1, 2020, it left many unanswered questions about how these requirements would impact employees who received training in 2018 or 2019.

Effective August 30, 2019, SB 778 was enacted as urgency legislation to address those questions.

It extends the initial training deadline for covered employers to January 1, 2021.

Covered employers are required to provide training to new nonsupervisory employees within six (6) months of hire and to new supervisory employees within six (6) months of the assumption of a supervisory position.

Covered employers who provided training in 2018 must provide training again in 2020.

Covered employers who provided training to employees in 2019 aren’t required to provide it again for two (2) years (i.e., in 2021).

Although SB 1343 did not change the training timing requirements for “seasonal, temporary, and other employee hired to work for less than six (6) months,” another bill, SB 530 (Ch. 722, Galgiani), was subsequently signed into law to push that requirement out by one (1) year. Under SB 530, employers must provide training to seasonal, temporary, and other employee hired to work for less than six (6) months, beginning January 1, 2021.

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Reference: Amends Government Code §12950.1.

LABOR/EMPLOYMENT: ADMINISTRATIVE

21. AB 9 (Ch. 709, Reyes). Statute of Limitations Extended for Discrimination Claims

Effective 1/1/20

Under existing law, claims for discrimination, harassment or retaliation in violation of the Fair Employment and Housing Act (FEHA) must be filed with the Department of Fair Employment and Housing (DFEH) within one (1) year from the date the unlawful practice occurred. Failure to do so would prevent the individual from pursuing the claim in court.

AB 9 extends the statute of limitations to three (3) years for unlawful employment practices.

“Filing a complaint” is defined for this purpose as the date of filing an intake form with the DFEH, and the date of filing the complaint would revert to the date of filing the intake form.

AB 9 does not serve to revive a lapsed claim. It may, however, extend the time to file on a claim that might otherwise have soon lapsed.

Once a right to sue letter is issued, a plaintiff has one (1) year to file a civil action in court.

Employers are urged to keep these statutes of limitations in mind when setting record retention policies and extend the retention periods accordingly.

Reference: Amends Government Code §§12960 and 12965.

22. AB 1820 (Ch. 834, Committee on Judiciary). DFEH Enforcement of Federal Civil Rights

Effective 1/1/20

The Department of Fair Employment and Housing (DFEH) is responsible to receive, investigate, conciliate, mediate, and prosecute complaints alleging unlawful practices of specified civil rights, including sexual harassment claims (Govt. Code §12940, et seq.).

Federal law authorizes a state agency (e.g., the DFEH) to enforce federal civil rights laws. However, a federal court has previously held that the DFEH cannot do so because this authority is not explicit in California law.

AB 1820 amends Government Code §12930(h) to confirm that the DFEH is authorized to bring civil actions for violations of specified federal civil rights and antidiscrimination laws including:

Title VII of the Civil Rights Act of 1964 (Public Law 88-352; 42 U.S.C. Sec. 2000 et seq.), as amended;

The federal Americans with Disabilities Act of 1990 (Public Law 101-336; 42 U.S.C. 12101, et seq.), as amended; and

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The federal Fair Housing Act (42 U.S.C. Sec. 3601 et seq.);

and to prosecute those civil actions before state and federal trial courts.

Reference: Amends Government Code §12930.

23. SB 229 (Ch. 721, Hertzberg). Labor Commissioner Citations Based on Discrimination or Retaliation

Effective 1/1/20

Existing Labor Code §98.74 prohibits an employer from discharging or otherwise discriminating, retaliating, or taking any adverse action against any employee or applicant because the employee or applicant engaged in specified protected conduct. Under that provision, the Labor Commissioner is authorized to issue a citation to the person responsible for violation.

A person issued a citation may obtain review of the citation by submitting a written request for a hearing to the Labor Commissioner within 30 days of service of the citation. If no hearing is requested within 30 days, the citation becomes final.

A person issued a citation may obtain review of the decision of the Labor Commissioner by filing a petition for a writ of mandate to the appropriate superior court within 45 days of service of the Labor Commissioner’s decision. If no petition is filed within 45 days of service of the decision, the decision becomes final.

As a condition to filing a petition for a writ of mandate, the petitioner must post a bond equal to the total amount of any amounts due and owing, other than penalties.

SB 229 establishes and expands appeal and enforcement procedures and deadlines for the Labor Commissioner, the court, and affected employers to follow when adjudicating and contesting a citation.

It requires the commissioner, within 10 days, to file a certified copy of a final citation with the superior court for judicial enforcement in any county in which the person assessed the penalty has or had property or a place of business, unless the person cited requests an informal hearing to challenge the citation, as specified.

It requires the court clerk to immediately enter judgment for the amount in the citation.

It authorizes the commissioner to file a petition with the court for an order to show cause why injunctive and nonmonetary relief should not be ordered, and to schedule a hearing.

It specifies procedures for a person who does not contest the citation to transmit to the office of the Labor Commissioner the amount specified on the citation and to provide certification of compliance to the office that any other remedies ordered have been complied with.

Reference: Amends Labor Code §98.74.

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24. SB 688 (Ch. 723, Monning). Penalties for Failure to Pay Minimum Wage or Contract Wages

Effective 1/1/20

Under existing Labor Code §1197.1, any employer or other person (acting either individually or as an officer, agent, or employee of another person) who pays or causes to be paid a wage less than the state or local minimum wage shall be subject to a civil penalty, restitution of wages, liquidated damages payable to the employee, and any applicable penalties, including a citation issued by the Labor Commissioner.

SB 688 expands this provision and adds that, if the Labor Commissioner determines that an employer has paid or caused to be paid a wage less than the wage set by contract in excess of minimum wage, the Labor Commissioner may issue a citation to the employer to recover restitution of the amounts owed. “Contract wages” mean wages based upon an agreement, in excess of the applicable minimum wage, for regular, non-overtime hours.

Reference: Amends Labor Code §1197.1.

LABOR/EMPLOYMENT: OCCUPATIONAL INJURY OR

ILLNESS

25. AB 1804 (Ch. 199, Committee on Labor and Employment). Occupational Injury or Illness Reporting: Procedure

Effective 1/1/20

Under existing law, employers were required to immediately report a serious occupational injury, illness, or death to the California Division of Occupational Safety and Health (Cal/OSHA) by telephone or email. Email reports have proven problematic due to the tendency to omit meaningful information, interfering with proper investigations.

AB 1804 instead requires the report to be made immediately by telephone or through an online mechanism established by the division for that purpose. Until the division has made such an online mechanism available, the employer shall be permitted to make the report required by this subdivision by telephone or email.

Reference: Amends Labor Code §6409.1.

26. AB 1805 (Ch. 200, Committee on Labor and Employment). Occupational Injury or Illness Reporting: Key Definitions

Effective 1/1/20

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Under federal law, employers are required to report certain occupational injuries and illnesses to the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA). Any state with its own OSHA plan (including California’s Cal/OSHA) must conform to the federal OSHA regulation. However, the list of reportable injuries under California law is more limited than the current federal regulation, so it is necessary to update them.

AB 1805 revises the definition of “serious injury or illness” and “serious exposure” in Labor Code §6302 to bring them consistent with federal OSHA definitions.

The definition of “serious injury or illness” is amended as follows:

Removes the 24-hour minimum time requirement for inpatient hospitalization for other than medical observation or diagnostic testing

Includes an employee suffering “an amputation” or “the loss of an eye” (among other things)

Does not include any injury, illness or death caused by an accident on a public street or highway “unless the accident occurred in a construction zone”

The exclusion of serious injury, illness or death caused by violations of the Penal Code in the workplace is deleted.

The definition of “serious exposure” is also amended to include exposure of an employee to a hazardous substance in a degree or amount sufficient to create a “realistic possibility” that a death or serious physical harm could result from the “actual hazard created by the” exposure (previously, “substantial probability”)

AB 1805 further confirms that a complaint is deemed to allege a serious violation if Cal/OSHA determines that the complaint charges that there is a “realistic possibility” that death or serious harm could result from the “actual hazard created by” a condition (previously, “substantial probability”).

Reference: Amends Labor Code §§6302 and 6309.

LENDING

27. SB 306 (Ch. 474, Morrell). Substitution of Trustee on a Mortgage or Deed of Trust

Effective 1/1/20

SB 306 creates a statutory procedure for a trustee on a mortgage or deed of trust to “resign” or “refuse to accept appointment” to that role. While the law is clear that a trustee may not be “forced” to act, there is no mechanism under state law allowing a trustee to resign or decline to act.

Under existing law, a mortgage trustee whose sole duty is to exercise the power of sale, may be substituted by recording (in the county where the property is located) a substitution executed and acknowledged by:

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A. All of the beneficiaries under the trust deed, or their successors in interest; or

B. The holders of more than 50% of the record beneficial interest of a series of notes secured by the same real property, or of undivided interests in a note secured by real property equivalent to a series transaction (exclusive of any notes or interests of a licensed real estate broker that is the issuer or servicer of the notes or interests or of any affiliate of that licensed real estate broker).

A substitution under the second option is not effective unless all parties signing the substitution also sign a separate written document under penalty of perjury that affirms the facts under that option and confirms that notice of the substitution was sent by certified mail (postage prepaid, return receipt requested) to each holder of an interest in the obligation secured by the deed of trust who has not executed the substitution or the separate document. This separate document shall be attached to the recorded substitution. Recording shall constitute conclusive evidence of compliance with the above requirements in favor of substituted trustees.

SB 306 is a technical change allowing a trustee to resign or decline to act.

A trustee named in a recorded substitution is deemed to be authorized to act from the date the substitution is executed. The named trustee may resign or refuse to accept appointment at his or her own election, without the consent of the beneficiary(ies) or their authorized agents, by:

Mailing notice of resignation to the beneficiary or their authorized agents; and

Recording notice of resignation in each county where the deed of trust is recorded, at which time it will become effective.

The trustee’s resignation does not affect the validity of the mortgage or deed of trust, except that no action required to be performed by the trustee under this chapter or under the mortgage or deed of trust may be taken until a substituted trustee is appointed pursuant to this section.

A resigning trustee must provide an address for service of process for the next five (5) years and retain all relevant writings, as specified.

If a trustee is not designated in the deed of trust, or upon the resignation, incapacity, disability, absence or death of the trustee, or the election of the beneficiary to replace the trustee, the beneficiary or the beneficiary’s authorized agents shall appoint a trustee or a successor trustee.

Reference: Amends Civil Code §2934a.

OPERATIONS

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28. AB 473 (Ch. 122, Maienschein). Increase in Small Estate Affidavit Dollar Threshold

Effective 1/1/20

Effective January 1, 2020, AB 473 increases the dollar limit for the administration of small estates without probate under Probate Code §13050, et seq, among other Probate Code dollar limits, and provides for automatic future inflation adjustments.

Previously, under Probate Code §13100, if the gross value of the decedent’s real and personal property in California did not exceed $150,000 (subject to specified exclusions under §13050), and provided 40 days have elapsed since decedent’s death, the decedent’s successor may do any of the following by affidavit or declaration under penalty of perjury, without letters of administration or a probate action:

Collect any money due the decedent (including deposit accounts).

Receive any tangible personal property of the decedent.

Have any evidence of a debt, obligation, interest, right, security, or chose in action belonging to the decedent transferred, whether or not secured by a lien on real property.

Effective January 1, 2020, the dollar threshold to use this affidavit procedure is increased from $150,000 to $166,250. The dollar threshold in effect on the date of the member’s death will control, regardless of when the affidavit is presented.

This amount (along with the other dollar thresholds adjusted by this bill) will be adjusted by the Judicial Council every three (3) years beginning on April 1, 2022 based on the Consumer Price Index for All Urban Consumers (CPI) for the previous 40 months (rounded to the nearest $25). At that time, they will publish a list of the current dollar thresholds, together with the date of the next scheduled adjustment.

If the decedent dies prior to April 1, 2022, the dollar amount reflected in the affidavit text shall be $166,250.

If the decedent dies on or after April 1, 2022, the list of published adjusted dollar amounts in effect on the date of the decedent’s death must be attached to the affidavit.

New probate Code §13117 is also added to give the court discretion to excuse a person who erroneously received property under these provisions, from liability to pay interest to the rightful owner, in whole or in part, if it finds that the person acted reasonably and in good faith under the circumstances as known to the person, if it would be equitable to do so.

Reference: Amend§ Probate Code §§6602, 6609, 13050, 13100, 13101, 13111, 13112, 13151, 13152, 13154, 13200, 13206, 13207, 13562, 13563, 13600, 13601, and 13602; adds Probate Code §§13117, 13211, and 13565; adds Probate Code Division 2, Part 21 (commencing with §890).

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29. SB 30 (Ch. 135, Wiener). California’s Domestic Partnership Law Amended

Effective 1/1/20

SB 30 modifies California’s domestic partnership law. Under existing law, a domestic partnership could only be entered into by either: a) two (2) adults of the same sex; or b) two (2) adults of the opposite sex who are over the age of 62.

SB 30 removes those limitations and allows any two (2) adults over the age of 18 to enter into a domestic partnership.

It also requires the Secretary of State to make the forms for the creation or termination of domestic partnerships available on its website, and to include on its website and in the form instructions an explanation:

(a) That registered domestic partners have the same rights, protections, and benefits, and are subject to the same responsibilities, obligations, and duties under law as are granted to and imposed upon spouses; and

(b) How a registered domestic partnership can be terminated.

Reference: Amends Family Code §§297, 297.1, 298, 298.5, 298.6, 298.7, and 299.2; repeals Family Code §299.3.

30. SB 496 (Ch. 272, Moorlach). Mandatory Reporters of Suspected Financial Abuse of Elder or Dependent Adults

Effective 1/1/20

While SB 496 primarily expands the category of mandated reporters of suspected financial abuse to include broker-dealers and investment advisers, some small changes will also impact financial institutions.

Under existing Welfare and Institutions Code §15630.1, all officers and employees of financial institutions are “mandated reporter of suspected financial abuse of an elder or dependent adult.” Financial institutions are authorized to report information relevant to the suspected financial abuse to an investigator from an adult protective services agency, a local law enforcement agency, the office of the district attorney, the office of the public guardian, the probate court, the bureau, or an investigator of the Department of Consumer Affairs, Division of Investigation who is investigating a known or suspected case of elder or dependent adult abuse.

Amended §15633.5 adds the Department of Business Oversight to the list of agencies, and now makes it mandatory to provide information to the above investigators.

Reference: Amends Welfare and Institutions Code §§15633, 15633.5, 15640, and 15655.5; adds Welfare and Institutions Code §15630.2.

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PRIVACY/DATA SECURITY

31. AB 1130 (Ch. 750, Levine). Amendment to Data Security and Breach Notification Law Definition of Personal Information

Effective 1/1/20

AB 1130 revises the definition of “personal information” for purposes of the data security and data breach notification laws.

Existing Civil Code §1798.81.5 imposes the following data security requirements:

A business that owns, licenses, or maintains “personal information” about a California resident shall implement and maintain reasonable security procedures and practices appropriate to the nature of the information, to protect the personal information from unauthorized access, destruction, use, modification, or disclosure.

A business that discloses “personal information” about a California resident pursuant to a contract with a nonaffiliated third party that is not subject to the above requirement shall require by contract that the third party implement and maintain reasonable security procedures and practices appropriate to the nature of the information, to protect the personal information from unauthorized access, destruction, use, modification, or disclosure.

Existing Civil Code §1798.82 imposes the following data breach notification requirements:

A person or business that conducts business in California, and that owns or licenses computerized data that includes “personal information,” shall disclose a breach of the security of the system following discovery or notification of the breach in the security of the data to a resident of California:

(1) Whose unencrypted personal information was, or is reasonably believed to have been, acquired by an unauthorized person, or,

(2) Whose encrypted personal information was, or is reasonably believed to have been, acquired by an unauthorized person and the encryption key or security credential was, or is reasonably believed to have been, acquired by an unauthorized person and the person or business that owns or licenses the encrypted information has a reasonable belief that the encryption key or security credential could render that personal information readable or usable.

The disclosure shall be made in the most expedient time possible and without unreasonable delay, consistent with the legitimate needs of law enforcement, as specified, or any measures necessary to determine the scope of the breach and restore the reasonable integrity of the data system.

A person or business that maintains computerized data that includes personal information that they do not own shall notify the owner or licensee of the information of the breach of the security of the data immediately following discovery, if the

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personal information was, or is reasonably believed to have been, acquired by an unauthorized person.

“Personal information” for both of these provisions means either of the following:

(1) A username or email address in combination with a password or security question and answer that would permit access to an online account; or

(2) An individual’s first name or first initial and their last name in combination with any one or more of the following data elements, when either the name or the data elements are not encrypted or redacted:

Social security number;

Driver’s license number or California identification card number;

Account number, credit or debit card number, in combination with any required security code, access code, or password that would permit access to an individual’s financial account;

Medical information; or

Health insurance information.

AB 1130 revises the definition of “personal information” for these purposes to include the following additional data elements:

Tax identification number

Passport number

Military identification number

Other unique identification number issued on a government document commonly used to verify the identity of a specific individual.

Unique biometric data generated from measurements or technical analysis of human body characteristics, such as a fingerprint, retina, or iris image, used to authenticate a specific individual. Unique biometric data does not include a physical or digital photograph, unless used or stored for facial recognition purposes.

In addition, when a data breach involves biometric data, the person or business providing a data breach notification may include instructions on how to notify other entities that used the same type of biometric data as an authenticator to no longer rely on data for authentication purposes.

Reference: Amends Civil Code §§1798.29, 1798.81.5, and 1798.82.

32. SCR 44 (Ch. 128, Dodd). Privacy Awareness Week.

Effective 8/19/19

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SCR 44 declares the third week of May 2019, and the third week of every May thereafter, as Privacy Awareness Week. Key provisions of the resolution are indicative of future legislative priorities, including:

Consumers should be aware of the risks to their privacy and the steps they can take to protect sensitive personal information;

Consumers should be aware of their rights under the California Consumer Privacy Act of 2018 to request information about a business’ privacy and data collection practices;

Consumers should be aware of the disclosure duties of businesses that collect a consumer’s personal information under the California Consumer Privacy Act of 2018; and

Consumers should understand available resources for reporting identity theft and other privacy-related thefts and data breaches with the office of the Attorney General.

Reference: Senate Concurrent Resolution No. 44, Filed August 19, 2019.

PRIVACY/DATA SECURITY: CCPA & AMENDMENTS

Author’s Note: AB 375, the California Consumer Privacy Act of 2018 (CCPA), was introduced in the legislature at the end of the 2018 legislative session and quickly signed into law, with an effective date of January 1, 2020. Out of the more than 20 bills introduced in 2019 attempting to amend the CCPA prior to its effective date, six (6) were signed into law, all with a January 1, 2020 effective date. Both the CCPA (#33 below) and the 2019 amendments (#33-A through #33-F below) are briefly summarized below.

On October 11, 2019, the California Attorney General published proposed implementing regulations. These were introduced before any of the 2019 amendments were signed into law, so additional changes are expected. The Attorney General held public hearings and solicited comments through December 6, 2019 and received a significant amount of feedback and concerns. We are now awaiting publication of the final regulations. Under the CCPA, the Attorney General may begin enforcement on July 1, 2020 or six (6) months after publication of the final regulations, whichever is sooner. This means that enforcement could begin quickly after final regulations are published.

At the same time, the architect of AB 375 (initially drafted as a 2018 ballot initiative) has now introduced a new proposition for November 2020 ballot that, if passed, would further amend the CCPA. It would also establish a new enforcement agency that would ultimately assume regulatory authority.

Credit unions that meet the definition of a “business” should already be taking steps to comply with the statutory provisions of the CCPA, as amended, but should also be prepared to make further adjustments as needed to accommodate final regulations and additional changes to the privacy landscape. Credit unions are encouraged to work with legal counsel to ensure compliance.

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33. AB 375 (Stats. 2018, Ch. 55, Chau). CCPA Takes Effect January 1, 2020

Amended by SB 1121 (Stats. 2018, Ch. 735, Dodd). California Consumer Privacy Act of 2018.

Effective 1/1/20

The California Consumer Privacy Act of 2018 (CCPA) applies to a “business,” defined as a legal entity doing business in California, organized or operated for the profit or financial benefit of its owners, and meets at least one of the following criteria:

a) Has annual gross revenues in excess of $25 million;

b) Alone or in combination, annually buys, receives for the business's commercial purposes, sells, or shares for commercial purposes, alone or in combination, the personal information of 50,000 or more consumers, households, or devices; or

c) Derives 50 percent or more of its annual revenues from selling consumers' personal information

It applies if the business collects consumers' personal information and determines the purposes and means of the processing of consumers' personal information. A “consumer” means a California resident.

“Personal information” means information that identifies, relates to, describes, is reasonably capable of being associated with, or could reasonably be linked, directly or indirectly, with a particular consumer or household, including, but not limited to:

Identifiers such as a real name, alias, postal address, unique personal identifier, online identifier, internet protocol address, email address, account name, social security number, driver’s license number, passport number, or other similar identifiers.

Any categories of personal information described in subdivision (e) of Section 1798.80.

Characteristics of protected classifications under California or federal law.

Commercial information, including records of personal property, products or services purchased, obtained, or considered, or other purchasing or consuming histories or tendencies.

Biometric information.

Internet or other electronic network activity information (e.g., browsing history, search history, and information regarding a consumer’s interaction with an internet website, application, or advertisement).

Geolocation data.

Audio, electronic, visual, thermal, olfactory, or similar information.

Professional or employment-related information.

Education information, as defined.

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Inferences drawn from any of the above information to create a profile about a consumer reflecting the consumer’s preferences, characteristics, psychological trends, predispositions, behavior, attitudes, intelligence, abilities, and aptitudes.

For credit unions that meet the definition of a “business,” there are several key provisions (this is illustrative only and not an exhaustive summary):

1. Notice At or Before the Point of Collection. A business that collects a consumer’s personal information shall, at or before the point of collection, inform consumers as to the categories of personal information to be collected and the purposes for which the categories of personal information shall be used.

2. Verifiable Consumer Request. In response to a “verifiable consumer request” (as defined), a business shall disclose to the consumer:

(a) The categories of personal information it has collected about that consumer.

(b) The categories of sources from which the personal information is collected.

(c) The business or commercial purpose for collecting or selling personal information.

(d) The categories of third parties with whom the business shares personal information.

(e) The specific pieces of personal information it has collected about that consumer.

2. Right to Delete. A consumer has the right to request that a business delete any personal information about the consumer, subject to certain exceptions.

3. Right to Opt-Out. If a business sells the consumer’s personal information, or discloses it for a business purpose, the consumer has a right to opt-out of such sale or disclosure. The business must include a “Do Not Sell My Personal Information” button on its website home page with a link to a page that describes this opt-out right and allows the consumer to do so.

4. Right to Not Be Discriminated Against for Exercising Rights Under the CCPA. Discrimination includes:

Denying goods or services to the consumer.

Charging different prices/rates for goods or services, including through the use of discounts, benefits or imposing penalties.

Providing a different level/quality of goods or services to the consumer.

Suggesting that the consumer will receive a different price/rate for goods or services or a different level/quality of goods or services

5. Website Privacy Policy. A business must have a website privacy policy, updated at least every 12 months, that contains the following elements:

(a) A description of a consumer’s rights under the CCPA, including:

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The right to request specific pieces of personal information the business has collected about the consumer;

The right to obtain individualized disclosures when the business sells their personal information or discloses it for a business purpose;

The right to request deletion of the personal information the business has collected;

The right not to be discriminated against for exercising rights under the CCPA; and

(b) Identify one or more methods for submitting verifiable consumer requests.

(c) A list of the categories of personal information it has collected about consumers in the preceding 12 months.

(d) A list of the categories of sources from which the personal information is collected.

(e) The business or commercial purpose for collecting or selling personal information.

(f) The categories of third parties with whom the business shares personal information.

(g) If the business sells consumers’ personal information or discloses it for a business purpose:

A list of the categories of personal information it has sold in the preceding 12 months, or a statement that it has not done so.

A list of the categories of personal information it has disclosed for a business purpose in the preceding 12 months, or a statement that it has not done so.

(h) If a business sells consumers’ personal information, notice that it may do so, and:

A description of the consumer’s right to opt-out of the sale of their personal information;

A link to the business’s “Do Not Sell My Personal Information” opt-out page.

(i) If a business offers financial incentives for the collection, sale, or deletion of a consumer’s personal information, a notice clearly describing the incentive program’s material terms.

6. Exceptions. The provisions of the CCPA do not apply to personal information collected, processed, sold, or disclosed pursuant to the federal Gramm-Leach-Bliley Act, and implementing regulations, or the California Financial Information Privacy Act (Financial Code §4050, et seq.). However, this is a limited exception and personal information not collected, processed, sold, or disclosed pursuant to these laws would still be subject to the CCPA.

This exception does not extend to the private right of action that exists in the event of a data breach.

5. Remedies

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(a) Attorney General Enforcement. The Attorney General may bring an enforcement action for violation of the CCPA.

(b) Private Right of Action. An individual may bring an action only in the event of a data breach resulting from failure to maintain and implement reasonable security practices.

Reference: Adds new Division 3, Part 4, Title 1.81.5 (commencing with §1798.100) to the Civil Code.

33-A. AB 25 (Ch. 763, Chau). CCPA Temporary Exception for Employee, Applicant and Director Personal Information

Effective 1/1/20, sunsets 1/1/21

As initially passed, the California Consumer Privacy Act (CCPA) appeared to inadvertently include employees and job applicants in the definition of “consumer” under, as well as volunteers and others beyond the scope of the traditional business-consumer relationship.

AB 25 exempts personal information collected by a business in certain limited contexts from the the CCPA until January 1, 2021, including:

Personal information collected about a natural person in the course of (and used solely for the purpose of) acting as a job applicant, employee, owner, director, officer, medical staff member, or contractor of the business.

Personal information collected for (and used solely for the purpose of) emergency contact information of the job applicant, employee, owner, director, officer, medical staff member, or contractor of that business.

Personal information necessary for (and used solely for the purpose of) the business to administer benefits for another natural person acting as a job applicant, employee, owner, director, officer, medical staff member, or contractor of that business.

AB 25 excludes this information from the following provisions of the CCPA:

The right to request deletion of their personal information; and

The right to request:

➢ The categories of personal information collected;

➢ The sources from which it is collected;

➢ The purpose for collecting or selling personal information; and

➢ The categories of third parties with whom the business shares their personal information.

However, the following CCPA provisions still apply:

(a) The initial notice at or before the point of collection identifying the categories of personal information collected and the purposes for which the information will be used.

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(b) A consumer’s limited private right of action for data breaches.

AB 25 also authorizes a business to require reasonable authentication of consumers in connection with a verifiable consumer request, and to require a consumer to use their existing accounts to make their requests.

Reference: Amends Civil Code §§1798.130 and 1798.145.

33-B. AB 874 (Ch. 748, Irwin). CCPA Revised Definitions for Personal and Publicly Available Information

Effective 1/1/20

“Personal information” is defined in the CCPA as “information that identifies, relates to, describes, is reasonably capable of being associated with, or could reasonably be linked, directly or indirectly, with a particular consumer or household.” It specifically excludes “publicly available information.”

As originally enacted, “publicly available information” was defined as “information that is lawfully made available from federal, state, or local government records,” unless that data is “used for a purpose that is not compatible with the purpose for which the data is maintained and made available in the government records or for which it is publicly maintained.”

AB 874 removes this limitation, so that “publicly available information” means simply “information that is lawfully made available from federal, state, or local government records.”

AB 874 also amends the definition of “personal information” to: 1) correct a drafting error to clarify that “personal information” does not include deidentified or aggregate consumer information; and, 2) state that “personal information” includes information that is "reasonably capable" of being associated with a particular consumer or household, as opposed to "capable" of being associated.

Reference: Amends Civil Code §1798.140.

33-C. AB 1146 (Ch. 751, Berman). CCPA Exemption for Vehicle Information

Effective 1/1/20

Under the California Consumer Privacy Act (CCPA), a consumer has the right to direct a business not to sell his or her personal information to third parties, as defined (the right to opt-out).

AB 1146 would exempt from that opt-out right vehicle information or ownership information retained or shared between a new motor vehicle dealer and the vehicle’s manufacturer if the vehicle or ownership information is shared for the purpose of effectuating (or in anticipation of effectuating) a vehicle repair covered by a warranty or a recall. This is provided that the dealer or manufacturer with which that information is shared does not sell, share, or use that information for any other purpose.

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Personal information necessary for a business to maintain to fulfill terms of a vehicle warranty or recall is also exempted from a consumer’s right to request deletion.

Reference: Amends Civil Code §§1798.105 and 1798.145.

33-D. AB 1202 (Ch. 753, Chau). CCPA Data Broker Registration

Effective 1/1/20

AB 1202 requires data brokers (as defined) to register with the Attorney General, provide certain identifying information, and pay a registration fee.

A “data broker” is defined as “a business that knowingly collects and sells to third parties the personal information of a consumer with whom the business does not have a direct relationship.” I

It does not include a consumer reporting agency, a financial institution, or an entity subject to the Insurance Information and Privacy Protection Act.

Failure to register could result in an action brought by the Attorney General for an injunction as well as civil penalties ($100 per day), fees and costs, which would be deposited in the Consumer Privacy Fund.

The Attorney General will make the information provided by data brokers accessible on its internet website.

Reference: Adds Civil Code Title 1.81.48, Division 3, Part 4 (commencing with §1798.99.80).

33-E. AB 1355 (Ch. 757, Chau). CCPA Technical Corrections

Effective 1/1/20

AB 1355 made several changes to the California Consumer Privacy Act (CCPA) to correct drafting errors and clarify certain provisions, including:

1) Definition of “Personal Information”: AB 1355 clarifies that “personal information” excludes “consumer information that is deidentified or aggregate consumer information.” It was previously only excluded from the definition of “publicly available information.” “Publicly available information” remains excluded from the definition of “personal information.”

2) Definition of “Personal Information”: The definition of “personal information” is clarified and narrowed by adding the term “reasonably.”

”Personal information” means information that identifies, relates to, describes, is reasonably capable of being associated with, or could reasonably be linked, directly or indirectly, with a particular consumer or household.

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3) FCRA Exemption: AB 1355 clarifies that the Fair Credit Reporting Act (FCRA) exception applies to the wider variety activity authorized by the FCRA, not just to the sale of personal information from a consumer report.

It now states that it applies to “activity involving the collection, maintenance, disclosure, sale, communication, or use of any personal information bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living by a consumer reporting agency…, by a furnisher of information… who provides information for use in a consumer report…, and by a user of a consumer report…”

However, it applies only to the extent that the activity by that agency, furnisher, or user is subject to regulation under the FCRA and the information is not used, communicated, disclosed, or sold except as authorized by the FCRA.

4) Nonencrypted and Nonredacted Personal Information: AB 1355 modifies the basis for a private right of action for a data breach to apply to a consumer whose nonencrypted and nonredacted personal information is subject to an unauthorized access and exfiltration, theft, or disclosure as a result of the business’s violation of the duty to implement and maintain reasonable security procedures and practices appropriate to the nature of the information to protect the personal information. Previously, a private right of action was permitted if the consumer’s nonencrypted or nonredacted personal information was breached.

5) Business-to-Business Exemption: AB 1355 exempts personal information reflecting communications or transactions between a business and a consumer from various provisions of CCPA, where the consumer is acting in their capacity as an employee, owner, director, officer, or contractor of a government agency or business, and whose communications or transactions with the business occur solely within the context of the business conducting due diligence regarding, or providing or receiving a product or service to or from, such business or government agency.

The rights of access, deletion, opt-out, and the notice requirements imposed by CCPA do not apply to personal information gathered under these circumstances, though the basic obligation to implement reasonable security practices and procedures remains. (Adds §1798.145(l)).

This exemption sunsets as of January 1, 2021.

6) Verifiable Consumer Request: A business is not obligated to provide information to the consumer pursuant to §§1798.100, 1798.105, 1798.110, and 1798.115 if the business cannot verify the consumer.

7) California Attorney General Regulations: AB 1355 expands the Attorney General’s rulemaking authority to include establishing rules and procedures on:

“How to process and comply with verifiable consumer requests for specific pieces of personal information relating to a household in order to address obstacles to implementation and privacy concerns.”

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As necessary to further the purposes of this title.

8) Identity Authentication: AB 1355 clarifies that a business, in response to a verified consumer request, may require verification of the consumer that is reasonable in light of the nature of the personal information requested.

A business may require a consumer to submit the request through their existing account (if they have one). It may not ask a consumer to create an account simply to make the request.

9) Opt-In to Sale for Minors: AB 1355 clarifies that affirmative consent is needed from consumers who are at least 13 and less than 16 years of age before a business can sell their personal information. Consent of a parent or guardian is needed for consumers under 13 years old.

10) Nondiscrimination: AB 1355 clarifies that nothing prohibits a business from charging a consumer a different price or rate, or from providing a different level or quality of goods or services to the consumer, if that difference is reasonably related to the value provided to the business by the consumer’s data (as opposed to the value provided to the consumer).

11) Personal Information Collection and Retention: AB 1355 clarifies the CCPA shall not require a business to collect personal information that it would not otherwise collect in the ordinary course of its business or retain personal information for longer than it would otherwise retain such information in the ordinary course of its business.

Reference: Amends Civil Code §§1798.100, 1798.110, 1798.115, 1798.120, 1798.125, 1798.130, 1798.140, 1798.145, 1798.150, and 1798.185.

33-F. AB 1564 (Ch. 759, Berman). CCPA Revised Methods for Submitting Verifiable Consumer Requests

Effective 1/1/20

The California Consumer Privacy Act (CCPA) currently requires a covered business to, in a form that is reasonably accessible to consumers, make available to consumers (and disclose in its website privacy policy) two (2) or more designated methods for submitting “verifiable consumer requests” (as defined) including, at a minimum, a toll-free telephone number and, if the business maintains an internet website, a website address.

AB 1564 amends this requirement as follows:

It limits the requirement to, at a minimum, a toll-free telephone number, deleting the requirement to provide a website address if the business maintains an internet website.

It provides that a business that operates exclusively online and has a direct relationship with a consumer from whom it collects personal information shall only be required to provide an email address for submitting requests.

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If the business maintains an internet website, it must also make the internet website available to consumers to submit requests for information (as opposed to simply providing a website address).

The verifiable consumer requests at issue pertain to information the business collects (§1798.110):

(1) The categories of personal information it has collected about that consumer.

(2) The categories of sources from which the personal information is collected.

(3) The business or commercial purpose for collecting or selling personal information.

(4) The categories of third parties with whom the business shares personal information.

(5) The specific pieces of personal information it has collected about that consumer.

and information the business sells or discloses for a business purpose (§1798.115):

(1) The categories of personal information that the business collected about the consumer.

(2) The categories of personal information that the business sold about the consumer and the categories of third parties to whom the personal information was sold, by category or categories of personal information for each category of third parties to whom the personal information was sold.

(3) The categories of personal information that the business disclosed about the consumer for a business purpose.

Reference: Amends Civil Code §1798.130.

The material in this publication is provided by the California Credit Union League and PolicyWorks for educational and informational purposes only and does not constitute legal or financial advice. Use of any material or information in this publication should never be a substitute for seeking the advice of an attorney.