New California Real Estate Laws

By any measure, 2020 was an unprecedented year. The California commercial and residential real estate landscape changed significantly with the spread of COVID-19 and the resulting economic impacts. Throughout last year our Real Estate team provided updates on the latest legal changes through laws and emergency measures in a series of articles that can be found online on the firm’s COVID-19 resources page.

It’s important to note, however, that the sweeping changes to California real estate law set in motion in 2020 are not limited to COVID-19. We’ve compiled below legal summaries on more than a dozen new state laws involving tenancy, housing, zoning and planning, CEQA, and taxes. (All laws are effective as of January 1, 2021, unless otherwise noted.)

Arbitration agreements with Consumers and Employees

This law provides that the drafting party of a consumer or employment related arbitration agreement is in material breach of the arbitration agreement if the drafting party fails to pay, as required by existing law, specified costs and fees associated with the arbitration proceeding. This law defines the word “employee” to include any person who is, was, or who claims to have been misclassified as an independent contractor or otherwise improperly placed into a category other than employee or applicant for employment.

This new law provides that the drafting party of an employment or consumer arbitration agreement who is required, either expressly or through application of state or federal law or the rules of the arbitration administrator, to pay certain fees and costs before the arbitration can proceed, is in material breach of the agreement if the fees are not paid within 30 days after the due date, and waives its right to compel arbitration pursuant to existing law.

In the event of such a breach, an employee or consumer may generally withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction, or compel arbitration in which the drafting party shall pay reasonable attorney's fees and costs related to the arbitration.

Under this law “Consumer” means an individual who seeks, uses, or acquires, by purchase or lease, any goods or services for personal, family, or household purposes.

Under this law, “employee” means any current employee, former employee, or applicant for employment. The term also includes any person who is, was, or claims to have been misclassified as an independent contractor or otherwise improperly placed into a category other than employee or applicant for employment.