The new year will bring new legal requirements for California employers. Legislative changes impacting minimum wage, paid sick leave, noncompete agreements and other employment and labor laws must be addressed by employers. Here are the top 10 changes for employers in the new year.
New Year – New Laws Effective Jan. 1, 2024!
- Minimum Wage Increase for the State of California
California’s minimum wage increases from $15.50 per hour to $16 per hour, regardless of the number of employees. As a result, the minimum salary to meet the “salary basis” test for exempt employees will increase from $64,480 to $66,560.
- Expansion of California Paid Sick Leave to Five Days or 40 Hours (SB 616)
Senate Bill (SB) 616 expands the Healthy Workplace, Healthy Families Act of 2014 to require California employers of all sizes to provide a minimum of five days or 40 hours of paid sick leave (PSL) per year. This is a substantial increase from the current California minimum of three days or 24 hours.
In addition to providing workers more paid sick days, SB 616 increases the accrual and carryover amounts for PSL. Specifically, employers may continue to use the existing accrual rate (one hour accrued for every 30 hours worked) or a different accrual method as long as employees accrue (a) no less than 24 hours or three days of PSL by the end of their 120th day of employment and (b) no less than 40 hours or five days of PSL by the 200th day of employment. Any remaining accrued PSL must be carried over to the next calendar year, but employers may cap PSL accrual at 80 hours or 10 days (doubling the prior cap minimum under state law). An employee’s use of PSL may be limited to 40 hours or five days in a calendar year or 12-month period.
For employers who frontload the entire amount of PSL at the beginning of the year, they may continue to do so if the amount banked is five days or 40 hours. There is no carryover requirement if an employer utilizes this lump-sum paid sick leave policy.
Further, the amended law extends some obligations and protections to employees covered by a collective bargaining agreement. It also expressly exempts employers covered by any local ordinance that is inconsistent with the amendments.
- Bereavement Leave for “Reproductive Loss” (SB 848)
SB 848 expands California Bereavement Leave law to require employers with five or more employees to provide up to five days of protected leave following a “reproductive loss event.” Under this new law, eligible employees are those who have worked for the employer for at least 30 days. A “reproductive loss event” means the day of or, for a multiple-day event, the final day of a failed adoption, failed surrogacy, miscarriage, stillbirth or unsuccessful assisted reproduction. Employees may take nonconsecutive days off for leave under this statute and, subject to narrow exceptions, the leave must be completed within three months of the triggering event. If an employee experiences more than one “reproductive loss event” within a 12-month period, a covered employer is not required to provide more than 20 days of reproductive loss leave.
Reproductive loss leave must be taken under any existing appliable leave policy of the employer. If the employer does not have an existing policy requiring paid leave, all five days of leave may be unpaid. However, employees may choose to use any accrued and available sick leave, or other paid time off, for reproductive loss leave. There is no requirement under this specific statute for an employee to provide documentation for the request for reproductive loss leave. Additionally, employers are required to maintain the confidentiality of any employee who requests leave.
- Rebuttable Presumption of Retaliation for Adverse Action within 90 Days of Protected Conduct by Employee (SB 497) and Local Enforcement of the Labor Code (AB 594)
The Equal Pay and Anti-Retaliation Protection Act (SB 497) amends California Labor Code sections 98.6, 1102.5 and 1197.5 to create a rebuttable presumption of retaliation if adverse action is taken against any employee or applicant for employment within 90 days of certain “protected activity.” This will make it easier for employees to establish workplace retaliation.
Under the current law, a retaliation claim includes three stages of a shifting burden of proof: (a) the employee or applicant must establish a prima facie case of retaliation; (b) the employer must identify a legitimate, non-retaliatory reason for their act(s) and (c) the employee or applicant must prove that the employer’s non-retaliatory reason was a pretext for retaliation. To establish a prima facie case of retaliation, an employee or applicant must demonstrate: (a) the employee engaged in protected activity; (b) the employer engaged in an adverse action against the employee and (c) there was a causal nexus between the protected activity and the alleged adverse action. The new rebuttable presumption will eliminate the initial burden on the employee to establish a prima facie case and shift the burden directly to the employer to prove a non-retaliatory reason for the adverse action.
The new law also increases the potential penalties employers may face for retaliation to include a civil penalty to $10,000 per employee, per violation, “to be awarded to the employee who was retaliated against.”
The Equal Pay and Anti-Retaliation Protection Act increased in significance following the passage of Assembly Bill 594, which specifically authorizes local prosecutors to bring actions to enforce the California Labor Code. It also provides a budget of $18 million for local prosecutors to enforce statewide labor laws. Enforcement actions by local prosecutors will not be subject to arbitration agreements between the employer and employee (other than collective bargaining agreements) and may result in the award of unpaid wages, penalties and attorneys’ fees. The Los Angeles, San Francisco, and San Diego district attorney offices already have “workplace justice” divisions specializing in prosecution of such matters. Employers in those counties should beware that there will likely be an increase in enforcement proceedings due to these new laws.
- Illegal Non-Compete Agreements Now Risk Significant Civil Exposure (SB 699/AB 1076)
SB 699 prohibits employers from entering into or attempting to enforce noncompete agreements that are void under state law regardless of where the employee worked when the agreement was entered and/or where the agreement was signed. This bill adds section 16600.5 to the California Business and Professions Code, which makes it a civil violation for an employer to enter into a violative noncompete contract and provides a private right of action to employees, former employees and prospective employees for injunctive relief or for the recovery of actual damages, or both, as well as reasonable attorney fees and costs. SB 699 discusses the Legislature’s findings that noncompete agreements apply to one in five workers and that these agreements have a chilling effect on employee mobility. The bill also restates that California’s public policy provides that every contract that restrains anyone from engaging in a lawful profession, trade or business of any kind is void, except under limited statutory exceptions.
AB 1076 adds section 16600.1 to the California Business and Professions Code, codifying existing case law in Edwards v. Athur Anderson LLP (2008) 44 Cal.4th 937 regarding the prohibition on noncompete agreements being broadly construed, absent a specific statutory exemption. Section 16600.1 makes it illegal for an employer to include a noncompete clause in any employment contract or to require an employee to enter into a noncompete agreement. This amendment also requires employers to notify all employees hired after Jan. 1, 2022, that any noncompete clauses entered are void. Such notice must be complete on or before Feb. 14, 2024. Finally, a violation of section 16600.1 shall constitute an act of unfair competition and provide a private right of action for violations.
- Cannabis Discrimination (AB 2188 (2022))
Passed during the 2022 legislative session, AB 2188 makes it unlawful for an employer to discriminate against an applicant or employee for the use of cannabis off the job and away from work. Further, employers may not discriminate against employees or applicants based on an employer-required drug test that found non-psychoactive cannabis metabolites in the person’s hair, blood, urine or other bodily fluids. Employers may still test employees and applicants for cannabis, but they must ensure that the drug screening does not screen for non-psychoactive metabolites. Certain applicants and employees are exempt from this new law based on their profession, such as those in the building and construction trades, and based on their relation to the federal government, such as an applicant for a position requiring a federal background investigation.
With AB 2188’s effective date approaching, it will be important for employers to reassess their background check and drug screening procedures to ensure compliance with the new law.
Coming Later This Year…
- Workplace Violence Prevention Plans (SB 553)
SB 553 requires most California employers to adopt a written comprehensive workplace violence prevention plan by July 1, 2024. The plan must include and detail, among other things, procedures:
(a) ensuring compliance with the plan,
(b) developing and providing training on the plan,
(c) correcting workplace violence hazards in a timely manner,
(d) establishing post-incident response and investigation,
(e) to assess and evaluate risk factors for workplace violence,
(f) to communicate with employees regarding workplace violence matters,
(g) obtaining assistance from the appropriate law enforcement agency during all work shifts and
(h) ensuring active involvement of employees in developing, implementing and reviewing the plan.
The plan must also designate the person(s) responsible for implementing and maintaining the plan by name or job title, and it must be easily accessible to all employees. Finally, covered employers must also record specifically enumerated information in a “violent incident log” about every incident, post-incident, response and investigation performed in accordance with the workplace violence prevention plan.
Be on the lookout for a follow up article by DMW in the new year outlining the features of this plan!
- Additional Disclosure of Disaster Declarations and Agricultural Employers under Labor Code Section 2810.5 (AB 636)
Under California Labor Code section 2810.5, existing law requires California employers to provide an employee, at the time of hiring, a written notice containing specified information about the employer and the terms and conditions of employment in the language the employer normally uses to communicate with the employee.
Effective Jan. 1, 2024, AB 636 amends section 2810.5 to require the written notice of the existence of any federal or state emergency or disaster declaration applicable to the county or counties in which the employee will be employed that was issued within 30 days prior to the employee’s first day of employment and that may affect the employee’s health and safety during their employment.
Effective March 15, 2024, agricultural employers must provide employees working under the federal H-2A visa with written notice, in Spanish (and, if requested by the employee, in English), describing the employee’s additional rights and protections under California law and regulations, including, but not limited to:
(a) the federal H-2A program wage rate required to be paid during the contract period,
(b) frequency of pay,
(c) pay for piece-rate workers,
(d) entitlement to paid and unpaid breaks,
(e) transportation travel time compensation when required,
(f) contents of itemized wage statements,
(g) sexual harassment prohibitions,
(h) requirements regarding availability of toilets, potable water, handwashing facilities and shade,
(i) workplace safety requirements, training and correction of hazards,
(j) prohibitions against tool or equipment charges,
(k) right to accrue and take sick leave, workers’ compensation coverage, disability pay and medical care for injuries and
(l) the right to complain to state or federal agencies and to seek advice from collective bargaining representatives or legal assistance organizations.
The Labor Commissioner is required to publish an updated section 2810.5 notice template for agricultural employers by March 1, 2024.
- Revised Deal on Fast Food Workers Minimum Wage (AB 1228)
Beginning in April 2024, the minimum wage for fast food workers in California will increase to $20 per hour, a nearly $4 per hour increase over the average wage of California’s 500,000 fast food workers in 2022, under AB 1228. Covered employers include “national fast food chains” with more than 60 limited-service restaurants nationally, and at least one in California, who fall under North American Industry Classification System (NAICS) Code 722513 for limited-service restaurants (establishments primarily engaged in providing food services (except snack and nonalcoholic beverage bars) where patrons generally order or select items and pay before eating). Excluded from the new law are bakeries or restaurants located in a grocery store or airport.
AB 1228 also establishes a new Fast Food Council, including employer and worker representatives. Going forward, the Fast Food Council will have the power to annually raise fast food workers’ minimum wage and develop proposals for other working conditions, including health and safety standards and training.
- Minimum Wage Increase for Healthcare Workers (SB 525)
Effective June 1, 2024, SB 525 raises the statewide healthcare worker minimum wage to $23 per hour for healthcare facilities: (a) with 10,000+ full-time employees, (b) that is part of an integrated healthcare system with 10,000+ full time employees, (c) that is, owns, controls or operates a dialysis clinic or (d) that is owned, affiliated or operated by a county with a population of more than 5 million.
For these healthcare facilities, that rate will rise to $24 on June 1, 2025, and $25 on June 1, 2026. Most clinics (other than dialysis clinics) will see the minimum wage rise to $21 per hour on June 1, 2024, and then to $22 on June 1, 2026. Other healthcare facilities will be required to pay its employees at least $21 per hour beginning on June 1, 2024, and then $23 per hour beginning on June 1, 2026. This is the nation’s first law creating a statewide healthcare worker minimum wage and cannot be overridden by local ordinances.
For more information regarding any of the above, or if you would like to discuss any other employment matters, please contact DMW employment law attorneys Rose Huelskamp Serrano, Anne Wilson or Tony Skogen.