We’ve reviewed this year’s legislation coming out of Sacramento to bring you this concise outline of the key statutory changes that could impact your California business sometime in 2020. We hope you find it useful.
California Consumer Privacy Act Provides New Personal Information Privacy Rights to Consumers.
The legislature amended the California Consumer Privacy Act of 2018 (“CCPA”) to add Civil Code sections 1798.100-1798.199, which provide consumers with new rights regarding their personal information collected by businesses and creates disclosure obligations and potential penalties for businesses collecting, using, sharing, or selling that information. For these purposes, the Act defines a “consumer” as any natural person who is a California resident. The Act also includes a limited private right of action so individuals can bring lawsuits on their own rather than rely on the State Attorney General to do so.
A business that violates these new provisions of the CCPA may be subject to an injunction requiring them to cease its illegal activity, and civil penalties of up to $2,500 per violation or $7,500 per intentional violation. The California Attorney General is responsible for enforcing the CCPA and the new amendments, although the amendments enacted in September 2018 delay enforcement until July 1, 2020, or six months after the Attorney General publishes implementing regulations, whichever is earlier. We will keep you posted on these developments.
Biometric Data Added to Breach of Security Disclosure Requirement.
Assembly Bill 1130 Amends Civil Code section 1798.29 to add biometric data to the requirement that California businesses that own or license computerized data that includes personal information must disclose a breach of the security of the system in which the data is maintained following discovery of the breach.
Exemptions to California’s New Consumer Privacy Act.
Assembly Bill 1355 includes new limited exemptions to the CCPA for the following: (1) most employee information; (2) information obtained in business-to-business interactions; (3) personal information in credit reports and other data covered by the Fair Credit Reporting Act; (4) personal information lawfully available from government records; and (5) de-identified or aggregate consumer information. The new amendment to the CCPA also provides that only personal information that is “reasonably” capable of being associated with a consumer or household is now subject to the requirements of the Act.
Data Broker Registry Created.
Assembly Bill 1202 creates a data broker registry and requires data brokers to register annually with the California Attorney General. A “data broker” is defined as a business that collects and sells to third parties the personal information of a consumer with which the business does not have a direct relationship. This includes sales for non-monetary consideration.
New Provisions Added to California Arbitration Act.
Senate Bill 707 adds several new provisions to the California Arbitration Act, which can be found at Civil Procedure Code sections 1280-1294.2. The additions generally concern the enforceability of arbitration clauses in employment and consumer contracts. The legislature found that, once an arbitration proceeding had been initiated by an employee or consumer, some companies were engaging in an abusive strategy by refusing to pay arbitration fees when due, thus suspending the arbitration proceeding and leaving the employee or consumer in legal limbo, unable to have their dispute with the company resolved. The legislature found that this strategy hindered efficient dispute resolution, contravened public policy, and was particularly unfair when the company that was now failing or refusing to pay the fees was the same party that imposed the obligation to arbitrate disputes on the employee or consumer in the first place.
Under the new law, if a company fails to pay the fees required either to commence or to continue an arbitration proceeding within 30 days of the date the fees are due, the company is deemed to be in material breach of the arbitration agreement and waives its right to compel arbitration.
Further, the employee or consumer gains the right to withdraw from the arbitration and proceed in court, as well as additional remedies. The new law also requires arbitration service providers to collect and publish specified information concerning arbitration proceedings, including demographic data on the ethnicity, race, disability, veteran status, gender, gender identity, and sexual orientation of the arbitrators as self-reported.
California Supreme Court’s Landmark Dynamex Decision on Gig Workers is Codified.
Assembly Bill 5 codifies the California Supreme Court’s landmark decision in Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903, setting out what’s known as the “ABC test” for determining whether a worker is an employee or an independent contractor. Under that test, a worker is only an independent contractor if (1) the worker is free from the hiring entity’s control in connection with the performance of the work; (2) the worker performs work that is outside the usual course of the hiring entity’s business; and (3) the worker is customarily engaged in an independently established business of the same nature as the work performed for the hiring entity.
Previously, California courts had determined independent contractor status using the standard established in S.G. Borello & Sons Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341, consisting of five disjunctive factors including the worker’s opportunity for profit or loss and the working relationship’s degree of permanence. Significantly, although the Supreme Court’s decision in Dynamex applied only to California Wage Orders, Assembly Bill 5 adopts the ABC test for purposes of the state’s Labor Code and Unemployment Insurance Code, greatly expanding the application of the legal test established in Dynamex.