California Propositions 2020

California Proposition 19

The passage of Proposition 19 changes the rules for tax assessment transfers for eligible California Homeowners.  Individuals over 55, individuals with severe disabilities, or victims of natural disasters (e.g. wildfires) may transfer their base property tax assessments to a different primary residence of the same or lesser market value, without an increase in property tax.  A formula to minimize the increase in base year value will now apply in the case that a more expensive property is purchased.  The passage of this law also increases the number of times this exception can be used from one to three for individuals over 55 or with severe disabilities, however disaster and contamination victims would continue to be allowed one transfer.

While mitigating property tax increases for eligible homeowners, Prop 19 increases property taxes for those inheriting properties by eliminating the parent-child and grandparent-grandchild exclusion from reassessment for properties outside of the “family home.”  When the law goes into effect on February 16, 2021, parents and grandparents would no longer be able to transfer primary residence and other properties (up to $1,000,000 of assessed value) to their children while maintaining the base year value for property tax assessment.  The exclusion is now terminated unless both the parent and the child will use the property as his or her primary residence.  There might still be an increase in property tax for this type of transfer as Prop 19 significantly decreases the parent-child and grandparent-grandchild exclusion on a primary residence from unlimited value to one million dollars above the current assessed value.  Ultimately, CA Prop 19 may result in substantial increases in property taxes on inherited property, creating a climate in which keeping inherited homes as rental properties may become unprofitable.

California Proposition 22

The passage of Proposition 22, a controversial referendum on California labor law, allows app-based, gig-economy corporations such as Uber, Lyft and DoorDash to retain drivers and workers as “independent contractors” instead of “employees”.  These companies will remain exempt from providing minimum wage, unemployment benefits and health insurance for rideshare drivers and other gig-economy workers with “independent contractor” status.  Unless your business utilizes rideshare drivers, the passage of Prop 22 poses no changes to the current independent contractor statutes.

California Proposition 24

California Proposition 24, also known as the California Privacy Rights Act (CPRA),   expands on current state consumer data privacy laws (California Consumer Privacy Act, 2018) while shifting all funding, regulatory and enforcement authority from the Attorney General to the newly established California Privacy Protection Agency (CPPA).  The funding and creation of California PPA is likely to begin as early as December 2020.

The new CPRA will apply to businesses that meet any of the following criteria:

  • Annual gross revenues in excess of 25 million dollars
  • Annually buys, sells, or shares the personal information of 100,000 or more individual consumers or households
  • Earns 50% of annual revenue from selling or sharing the personal information of consumers

CPRA includes provisions that allow consumers to: (1) prevent businesses from sharing personal information; (2) correct inaccurate personal information; and (3) limit businesses’ use of “sensitive personal information”—including precise geolocation; race; ethnicity; religion; genetic data; private communications; sexual orientation; and specified health information.  It also prohibits businesses’ retention of personal information for longer than reasonably necessary and triples the maximum penalties for violations concerning consumers under age 16 previously articulated in CCPA.  These provisions would require businesses to prominently notify consumers about their data collection, sharing and sales practices on their website or app.  Additionally, the law would require businesses to disclose to consumers, all of the personal information they have collected, either directly or through a third party.

While CPRA will not become fully operational until 2023, businesses will need to interpret and make preparation to comply with the law’s additional consumer privacy rights in accordance with the following timeline over the course of the next two years:

  • As early as July 1, 2021, the newly established CPPA will begin the rulemaking process and will adopt final regulatory provisions by July 1, 2022.
  • The obligations for business will become operational on January 1, 2023 and will apply to any personal information collected on or after January 1, 2022.
  • Enforcement of the new regulations will begin July 1, 2023 and apply to violations occurring on or after that date.  In the meantime, all provisions of CCPA will continue and will be enforceable until the new regulations of CPRA take effect.

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