Business Litigation

Healthcare

Publications

A Summary of New Laws Coming for California Employers in 2024

December 5, 2023 Articles

In 2023, California has adopted several new employment laws either introducing new employee protections or codifying existing practices into state law. With these changes, employers will need to examine and adjust some of their policies. Unless otherwise noted, these laws take effect January 1, 2024.

Minimum Wage/Salary Increases

The California minimum wage will increase to $16.00 per hour on January 1. This means that the minimum annual salary employers must pay exempt employees must also be increased to not less than $66,560 for full or part-time employees. Employers should audit employees classified as exempt to determine whether both the salary and duties satisfy the exemption’s requirements. Many municipalities have higher minimum wages. Given the increase in remote work, employers need to be sure to apply the appropriate minimum wage based on where employees are performing their duties.

SB 616 - Paid Sick Leave Accrual Requirements

Employers must increase the minimum paid sick leave provided to their full-time and part-time employees each year from 24 hours (three days) to 40 hours (five days). The minimum allowable cap employers may place on paid sick leave will increase from 48 hours (six days) to 80 hours (10 days). In addition, the new law will make certain provisions of statutory Paid Sick Leave applicable to employees covered by a valid collective bargaining agreement, including the prohibition on retaliation for using paid sick leave. 

Employers who have adopted the minimum allocation and accrual caps for their employee sick leave policies will need to increase those caps. If employers have separate vacation leave banks that may satisfy the new sick leave requirements, those leave banks may be applied. However, you may still need to adjust your sick leave and vacation leave policies to make clear that vacation or personal leave can be used for statutory sick leave without advance approval.

SB 699 and AB 1076 – Prohibitions on Noncompete Agreements

SB 699 prohibits employers from enforcing noncompete agreements considered void and unenforceable under Section 16600 of the California Business and Professions Code. Effective January 1, 2024, SB 699 states that any contract that is void under Section 16600 is unenforceable regardless of where and when the contract was signed—meaning an out-of-state employer that attempts to enforce a noncompete in California would be bound to the requirements of this law.

Similarly, AB 1076 amends Section 16600 to further clarify prohibitions on noncompete agreements and codify existing precedent on the topic, in accordance with Edwards v. Arthur Andersen LLP, 44 Cal. 4th 937 (2008).

Section 16660 should now be construed “broadly” to void all noncompete clauses in an employment context, regardless of how narrow they may be, unless they are encompassed by one of three narrow exceptions. These exceptions include noncompetes associated with the sale of a partnership, dissolution of a partnership, or dissolution of limited liability interests.

In addition, AB 1076 adds new Section 16600.1, which provides that it is unlawful for employers to include noncompete clauses in an employment contract. Notably, the bill applies retroactively to January 1, 2022, such that any individuals who were employed after this date with a noncompete clause must be notified that those clauses are now void. Employers are required to render this notice by February 14, 2024 to the individual’s last known address and email address. Failure to follow the law’s requirements subjects employers to claims for unfair competition under the Business and Professions Code §§ 17200, et seq.

While California has long disfavored noncompete agreements, SB 699 and AB 1076 expand these prohibitions and impose strict new policies and potential liability on employers, including retroactive notice requirements. This aggressive legislation targets current employers with California employees or employers looking to hire California residents for remote work, so its reach broadly impacts all employers in the state. Employers are advised to consult with counsel to ensure they are complying with notice requirements and updating their employment agreements, offer letters, confidentiality agreements, and other employment-related documents that might contain clauses that could expose employers to liability.

SB 848 – Reproductive Loss Leave

Last year, the California Legislature passed AB 1949, which required California employers with five or more employees to offer five days of unpaid bereavement leave to employees upon the death of a qualifying family member. This year, California enacted SB 848, which requires California employers with five or more employees to offer up to five days unpaid leave when an employee suffers a “reproductive loss event,” i.e., a miscarriage, stillbirth, failed adoption, failed surrogacy, or unsuccessful assisted reproduction. 

Employers are only mandated to provide reproductive loss leave to employees who have been employed by the employer for at least 30 days. Employees must take such leave within three months of the reproductive loss event and, if an employee suffers multiple reproductive loss events, they are limited to 20 days of leave in a 12-month period. Though the leave is unpaid, employees must be allowed to use any accrued paid leave, including paid sick leave.

SB 848 mandates that employers maintain the confidentiality of any employee requesting a reproductive loss leave and is silent as to whether employers are allowed to request documentation supporting such leave. As with other FEHA-protected leaves, employers are prohibited from retaliating against employees for requesting a reproductive loss leave.

It’s key for employers to not act impulsively regarding employee requests for time off, especially in situations that might involve a tragedy in an employee’s personal life. Before denying a request for leave, employers should ensure that employees are aware of their rights to request protected leaves and that such information is included in an employee handbook. In addition to keeping employees informed of their rights to protected leaves, employers should ensure that managers and HR professionals are adequately trained to respond to and address requests for time off. While additional training may appear burdensome on the surface, the risk of potential liability would be much greater—and there is never anything wrong with supporting your employees and fostering a workplace built on trust, all of which would be reinforced with additional and targeted training. Finally, employers should exercise caution in taking adverse actions against employees who request reproductive loss leave.

SB 700 – California Expands Protections for Off-Duty Cannabis Use

For the second consecutive year, California has enacted a law providing more protections for off-work cannabis use. In September 2022, California enacted AB 2188 (effective Jan. 1, 2024), which prohibited employers from taking action against employees for off-duty cannabis use. This year, California has expanded that protection by prohibiting employers from requesting information from applicants about prior cannabis use.

Like AB 2188, SB 700 exempts employers in the building and construction trade and explicitly does not preempt state or federal laws allowing for drug testing. Employers are still allowed to inquire about an applicant’s criminal history if otherwise permitted by law.

Employers should review their drug and alcohol policies for compliance with both new laws and train all personnel who interview candidates. Employers who drug test applicants as part of their onboarding process should work with their vendors to ensure they do not receive any information regarding an applicant’s cannabis use. It is imperative for those conducting interviews to know what is and isn’t allowed.

Additionally, employee handbooks are a critical tool in providing structure for employees and protection for businesses. An employee handbook is only useful to the extent it reflects existing, lawful policies, so employers should remember to update it regularly. They also serve as an ongoing resource for any related questions that may arise in the future.

SB 553 – Workplace Violence Prevention

Effective July 1, 2024, California employers must update their existing injury and illness prevention programs (IIPP) to include workplace violence prevention plans (WVPPs) that comply with new Labor Code section 6401.9. The WVPP must be in writing and be easily accessible to employees—and it must comply with the state’s Injury and Illness Prevention Program. 

The plan must offer a reporting channel for incidents and threats of violence and establish logs where threats and acts of violence are centrally tracked. Employers are required to train on workplace violence prevention once per year. Employer locations with no public access and with fewer than 10 employees at a time are exempted, along with health care facilities, facilities operated by the Department of Corrections and Rehabilitation, certain law enforcement agencies, and teleworkers.

Employers will be required to maintain the following records for five years: 1) records of workplace violence hazard identification, evaluation, and correction; 2) workplace violence incident investigations; and 3) violent incident logs. All WVPP records required under the statute must be made available to Cal/OSHA upon request. Employees and their representatives are entitled to records reflecting hazard identification, evaluation, and correction, as well as violent incident logs, within 15 days of request.

Cal/OSHA will enforce the new law through its standard inspection, citation, and penalty framework. Depending on the nature of an alleged violation, potential penalties may climb as high as $25,000 (for violations classified as “serious”) or $153,744 (for violations classified as “willful”).

Post-pandemic, workplace safety has gained new importance given the increased frequency of mass shootings nationwide, many of which take place at a business or store – a workplace.

This bill has a substantial training element to it. Employers are required to provide training when the plan is initially implemented and then annually thereafter. This bill takes effect next summer, so it’s imperative that employers begin crafting their initial training session to review their WVPP with their employees. Training must include:

  • The WVPP plan and how employees can obtain copies;
  • The definitions and requirements of the law;
  • How to report workplace violence incidents or concerns without fear of reprisal;
  • Workplace violence hazards specific to the employees’ jobs, the corrective measures the employer has implemented, how to seek assistance to prevent or respond to violence, and strategies to avoid physical harm;
  • The violent incident log and how to obtain copies of records; and
  • An opportunity for interactive questions and answers with a person knowledgeable about the employer’s plan.

Additionally, training is required for all new employees, so employers should begin working this WVPP discussion into their onboarding process. The sooner, the better.

Firm Highlights

News

Farella Braun + Martel Named Among 2024 Bay Area Best Places to Work

Read More
Publication

7 Ways Companies and Content Creators Can Navigate Copyright Law for a Successful Partnership

In recent years, the advent of the social media “influencer” has revolutionized advertising. Companies often partner with influencers to market their products, hoping to tap into the influencer’s devoted audience. Likewise, influencers create certain content...

Read More
Publication

Nonprofit Quick Tip: State Filings in Oklahoma and Texas

Welcome to  EO Radio Show - Your Nonprofit Legal Resource . This is the 12th in a series of “Quick Tip” episodes focusing on the details of state registration of nonprofit corporations. In previous episodes, we...

Read More
Publication

How to Navigate California Wage Statement Penalties After Naranjo v. Spectrum

On May 6, 2024, the California Supreme Court, in Naranjo v. Spectrum Security Services Inc. , clarified that an employer is not liable for statutory penalties for inaccurate wage statements when it had a...

Read More
News

Farella Advises TILT Holdings Inc. on $10.5M Loan Transaction

Northern California legal powerhouse Farella Braun + Martel advised TILT Holdings Inc. , a global provider of cannabis business solutions, and its Pennsylvania subsidiary, grower and processor Standard Farms, on a $10.5 million loan transaction...

Read More
News

Chambers USA 2024 Recognizes Farella Braun + Martel Lawyers, Practices

Farella Braun + Martel is pleased to announce that Chambers USA has recognized 16 lawyers and six practice areas in the legal directory’s 2024 edition. Individual California and Western U.S. Rankings: Sarah Bell &ndash...

Read More
News

City of San Mateo Sued by Nonprofit Over New Housing Plan

Tom Mayhew spoke to CBS News about the lawsuit filed by Housing Action Coalition (HAC) and Farella against the City of San Mateo. The lawsuit challenges the city's recently adopted Housing Element in order to...

Read More
News

Ex-DraftKings Exec Seeks Fast Trial To Test Noncompete Law

Holly Sutton, chair of Farella's Employment Law Group, provided expert commentary to Law360 for the article "Ex-DraftKings Exec Seeks Fast Trial To Test Noncompete Law." Read the article here (subscription required).

Read More
Publication

Advice for Nonprofit Investment Committees From an Investment Advisor

Welcome to  EO Radio Show - Your Nonprofit Legal Resource . In episode 82, we revisit the duties of directors in managing investment assets. Joining Cynthia Rowland today is Jennifer Nelson, Senior Wealth Manager...

Read More
Publication

Nonprofit Book Review: ABA Guidebook for Directors of Nonprofit Corporations

Welcome to  EO Radio Show - Your Nonprofit Legal Resource . In today’s episode, Cynthia Rowland’s guest is Bill Boyd, one of the editors, along with Lisa Runquist, of the newly published fourth edition of...

Read More