Will California’s New Employment Laws Impact Office Demand?

This year, several new employment laws went into effect in California to tackle the impacts of COVID-19 and to ensure the safety of employees. Many of these laws broadly impact companies and office occupiers. While these laws certainly impact operations, some have the ability to hamper office demand as well, even after stay-at-home orders were lifted.

The COVID-19 pandemic drove the passage of key workplace laws last year,” Dwayne McKenzie, a partner at Cox, Castle & Nicholson, tells GlobeSt.com. “The pandemic is not over yet, and depending on how 2021 unfolds, the legislature may see a need to add to, modify, or extend some of those laws.”

These laws specifically have the potential to impact office demand for companies to comply. “It is possible that the new workplace laws will affect the way that companies use office space. In the immediate near term, potentially even after stay-at-home orders have been lifted, employers may prefer to keep employees working remotely as much as possible, in light of SB 1159’s presumption that covered workers who test positive for COVID-19 under certain circumstances be presumed to have contracted it at their workplaces,” Cathy Moses, a partner at Cox, Castle & Nicholson. “So long as COVID-19 exposure remains a risk in workplaces, keeping employees remote reduces the likelihood of worksite exposure that triggers notice obligations to employees under AB 685 and other obligations, such as payment of wages and benefits, under Cal-OSHA’s emergency COVID-19 standards.”

The state also passed several employment laws unrelated to the COVID-19 pandemic. Separate from the coronavirus-related laws, other employment legislation will likely have a limited impact on office demand. “It is unclear whether other new laws will have an appreciable impact on employers’ desire to relocate or keep operations within the state,” says McKenzie. “For years, many have predicted that continued increase of regulation of business and employers in the state would cause business to relocate elsewhere. With remote work arrangements now having been put to the test by the pandemic, we may see businesses finding it easier to leave California for less regulated and less expensive environments.”

Prior to the pandemic, most employment laws have been related to wages and benefits. Once the pandemic subsides, these laws will once again take center stage. “If we step back, much of the new legislation prior to the pandemic has been focused on increasing wages and benefits to workers and providing mechanisms of enforcement of their rights to those wages and benefits,” says Moses. “Since concerns over wage levels and equality will continue to be issues in California, we would expect new legislation regarding those matters to continue as well.”