New Laws and Regulations for 2022 – Part 3

New Laws and Regulations for 2022 – Part 3

By: Sierra N. Grandbois, Esq.

February 8, 2022

2021 proved to be an interesting year for California in terms of new laws and regulations as we attempt to transition into a post-pandemic world. Some of the changes to be aware of as we head into 2022 include new diversity requirements for board of directors, banning the sale of gas-powered leaf blowers, lawn mowers & small off-road engines, continuing to-go sale for alcoholic beverages, and a tax credit for business owners who employ homeless persons.

A few years ago, California enacted two board diversity statutes, with SB 826 requiring that publicly held companies with principal executive offices in California have at least 2 women on its five-member board of directors by December 31, 2021. Publicly held companies is defined as corporations listed on major U.S. stock exchanges. The second statute, AB 979, required that no later than December 31, 2021, a publicly held corporation must also have a minimum of 1 director from an underrepresented community. At the close of 2022, a publicly held corporation with more than 4 but fewer than 9 directors will be required to have a minimum of 2 directors from underrepresented communities and a corporation with more than 9 directors will need at least 3 directors from underrepresented communities. “Underrepresented community” in this statute is defined as a director who self-identifies as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, Alaska Native, gay, lesbian, bisexual, or transgender. In 2021, a case was filed, Alliance for Fair Board Recruitment v. Weber, challenging both SB 826 and AB 979 for violation of the Equal Protection Clause of the 14th amendment and the internal affairs doctrine, but it may be a few years before we see a resolution on the constitutionality.

An extremely controversial law was passed in 2021 implementing regulations and an eventual ban on selling small, gas-powered equipment. AB 1346 was approved by Governor Newsom on October 9, 2021, with the goal of banning the sale of small-gas powered equipment such as leaf blowers, lawn mowers, and off-road engines by January 2024. In the interim, the state will begin to adopt regulations on the gas-powered equipment by July 1, 2022. These regulations may include commercial rebates or incentive funding to limit the amount of gas-powered equipment being sold as well as provide support to help facilitate the transition to zero-emission equipment. AB 1346 is consistent with California’s goal to achieve 100 percent zero emissions from off-road equipment by 2035 but it is unknown how quickly the regulations will be implemented or whether a ban by 2024 is feasible given the amount of power needed by commercial operations to operate with the same efficiency and longevity as gas-powered equipment.

During the early months of the pandemic, the California Department of Alcohol Beverage Control permitted restaurants to sell in “to-go” containers of alcohol with food. This temporary permission was to help struggling restaurants stay afloat during uncertainty of COVID-19 regulations and inconsistent shutdowns. With SB 389, the permission to continue selling the to-go alcoholic beverages has been extended until December 31, 2026. Customers must buy a meal with their to-go beverages and there is a limit of 2 beverages per meal. Mixed drinks and cocktails cannot exceed more than 4.5 ounces of distilled spirits. This extension was supported by The California Restaurant Association and will potentially allow restaurants to keep their doors open and possibly thrive in post-pandemic years.

Finally, Beginning January 1, 2022, AB 150, also known as the Homeless Hiring Tax Credit (“HHTC”), will take effect through December 31, 2026. The HHTC is to help incentivize business owners to hire homeless within California and reduce the ever-growing homeless population. Employers may receive $2,500 up to $10,000 in tax credit per eligible employee based on the hours worked in the taxable year, with a cap of $30,000. To be eligible, an employer must obtain a certificate for each eligible employee from a certifying organization, pay wages equal to or greater than 120% of the state minimum wage, and make a tentative credit reservation within 30 days of completing the New Hire reporting requirement with the Employment Development Department. An eligible employee is someone who is currently or who has been homeless within 180 days of hire or must be receiving services from a homeless services provider. The eligible employee must also receive a certificate through a certifying organization. Information for certification will be provided in January 2022 on the State of California’s Franchise Tax Board website.

With the somewhat tumultuous year 2021 turned out to be in terms of the continuing uncertainty of the pandemic, we hope 2022 will shape up to be a steadier year that will facilitate the recovery of business within the State. As always, we will continue to keep an eye on the updates and changes to come throughout the year.

The attorneys at BPE Law have a long history working with landlords, property managers and real estate investors on their real estate needs. If you or someone you know has questions related to their real estate holdings, BPE’s attorneys are here to help you navigate the complex web of statutes and regulations related real estate.

The information presented in this Article is not to be taken as legal advice. Every person’s situation is different. If you are facing a legal issue of any kind, get competent legal advice in your State immediately so that you can determine your best options.

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