New Employment Laws and Requirements for 2024
The California Legislature passed a number of important new laws in 2023 that will affect California employers generally. The new laws relate to a wide range of issues that California employers regularly face, regardless of the size of their workforce, such as expanded leave rights, required employee notices, and additional worker protections against non-compete restrictions and for whistleblower activities. The following are key laws passed this year that may have an impact on many employers’ operations, and which may require review of employer policies and procedures.
Increased Paid Sick Leave Requirements, and Partial Revocation of Exemption for Employers with Collective Bargaining Agreements (SB 616)
In 2014, the California Healthy Workplace, Healthy Families Act established statewide requirements for paid sick leave. Employees covered by valid and conforming collective bargaining agreements were exempt from its requirements.
Senate Bill 616 increases the number of sick leave days employers must provide or make available each year. For employers that use a frontload method (i.e., employers that make a set number of sick leave days immediately available to an employee during a given year), SB 616 increases the minimum allocation that must be made available from 3 days or 24 hours to 5 days or 40 hours.
Similarly, employers that use an accrual method must also provide 5 days or 40 hours of sick leave annually. SB 616 further requires that employees must accrue at least 3 days or 24 hours by their 120th day of employment, and no less than 5 days or 40 hours by their 200th day of employment. Employees that accrue sick leave may now carry over 10 days or 80 hours of sick leave from year to year, instead of the six days or 48 hours previously mandated. Finally, employers may limit an employee’s use of accrued paid sick leave to 40 hours or five days in each year of employment, up from 24 hours or three days.
SB 616 also preempts local sick leave ordinances relating to paying out unused sick leave upon termination (which is not required under SB 616), permitting employers to lend sick days to employees in advance of accrual, employer obligations to provide written notice of paid sick leave, the method of calculation of pay for sick days, employee obligations to provide advance notice of the need for sick leave, and the timing of pay for sick leave actually taken.
Finally, under SB 616, employers with collective bargaining agreements are no longer exempt from Labor Code 246.5, which mandates that employers provide paid sick days in certain specified circumstances and prohibits discrimination and other adverse action against employees for using or attempting to exercise their right to use sick days, or filing a complaint with the Labor Commissioner relating to such rights. However, this change does not apply to employees subject to collective bargaining agreements in the construction industry.
Reproductive Loss Leave (SB 848)
Senate Bill 848 creates a new type of mandatory leave, similar to bereavement leave, which may be taken by employees that experience certain defined “reproductive loss events”, including a failed adoption, failed surrogacy, miscarriage, stillbirth, or an unsuccessful assisted reproduction (e.g. artificial insemination or embryo transfer/donation). The new law applies to employers with five or more employees and may be taken by employees who have been employed for at least 30 days prior to commencement of leave.
Beginning January 1, 2024, an employee may take up to five days of reproductive loss leave following any reproductive loss event. Employees are not required to provide documentation to support their request for leave, and employers are required to maintain confidentiality relating to any request. Leave may be taken by both the person who experiences the event, the person’s spouse or domestic partner, or by a person that would have been a parent of a child but for the event.
If an employee experiences more than one loss event within a 12-month period, employers are obligated to provide up to a maximum of 20 days within a 12-month period (5 days per event, with up to 20 days/four events permitted within any 12-month period).
Leave may be taken on non-consecutive days but must be completed within 3 months of the event giving rise to the leave. If the employee is on or takes pregnancy-related disability leave or FMLA leave prior to or immediately following the reproductive loss event (or any other leave to which they are entitled under state or federal law), reproductive loss leave must be completed within three months after the end date of such other leave.
In the absence of an employer policy providing for paid leave, reproductive loss leave may be unpaid. Employees are permitted to use vacation, personal leave, sick leave, or other paid time off available to them during their reproductive loss leave.
Finally, the statute expressly forbids retaliation, discrimination, or taking other adverse employment action against an employee for exercising their right to take reproductive loss leave or providing information or testimony in a proceeding related to reproductive loss leave.
Off Duty Cannabis Use (SB 700)
In 2022, the legislature passed and the Governor signed Assembly Bill 2188, which, beginning January 1, 2024, will prohibit employers from discriminating against or otherwise penalizing applicants and employees for off-site cannabis use outside of business hours, or positive drug screening results that show nonpsychoactive cannabis metabolites. Senate Bill 700, which was passed during the 2023 legislative session, expands AB 2188 protections.
Under the revised law, employers cannot request information from an applicant or employee about their prior cannabis use. Employers also cannot request or consider related information obtained through a criminal background check unless the employer is otherwise permitted to consider or inquire about that information under state and/or federal law.
As they plan to comply with the new law, employers should be aware of several notable exceptions to the new law. First, it does not apply to the building and construction trades, nor does it preempt state or federal laws that require applicants or employees to be drug tested as a condition of employment or as a condition to receiving federal funds or entering into a federal contract. Employers’ rights and/or obligations to maintain drug-free workplaces are not impaired, and employers are not prohibited from conducting preemployment or other drug screenings that are otherwise permitted by law. However, going forward, employers should ensure that if drug tests are administered, the tests used must be able to differentiate between THC (which indicates active impairment) and other nonpsychoactive cannabis metabolites.
Amended Wage Theft Notice Requirements (AB 636)
California’s Wage Theft Prevention Act requires employers to provide new employees a notice that contains information regarding their employment, wages, and entitlement to sick leave. Assembly Bill 636 requires all employers to also include in that written notice information about federal or state disaster declarations applicable to the county or counties where employees are employed, which were issued within 30 days before an employee begins work. The bill also creates additional requirements for employers that use the federal H-2A agricultural visa program.
The Labor Commissioner will issue a new notice template by March 1, 2024. Employers should plan to incorporate the new notice into their new-hire paperwork, particularly in light of the potential for exposure under the Private Attorneys General Act (PAGA) for providing non-compliant notices.
Mandatory Workplace Violence Prevention Programs (SB 553)
The California Occupational Safety and Health Act of 1973 requires employer to establish, implement, and maintain injury prevention programs. Senate Bill 553 requires that employers also establish and implement a written workplace violence prevention plan by July 1, 2024.
SB 553 provides an extensive list of program requirements, but in general terms, programs must create procedures to identify, assess, and mitigate the risks of workplace violence; provide employees a means to report threats and incidents of violence; and establish procedures for employers to respond to and notify employees of emergencies and incidents of violence. Programs must also identify the specific individuals responsible for prevention plan implementation and provide for workplace training for all employees. Finally, SB 553 creates new employer recordkeeping requirements related to workplace violence prevention programs, incident reporting and investigations, and employee training.
The Division of Occupations Safety and Health has been given enforcement authority and may issue citations and impose civil penalties against employers that fail to comply with the new requirements.
SB 699 – Voiding Noncompete Agreements of Out of State Employees (SB 699 and AB 1076)
The Senate and Assembly this year both passed new laws that reinforce the State’s existing prohibition on non-complete clauses outside the context of certain business-sale or partnership dissolution contexts. By way of background, Business and Professions Code section 16600 prohibits contracts that restrain anyone from engaging in a lawful profession, trade or business, subject to the exceptions that appear in sections 16601 and 16602.
Senate Bill 699 adds section 16600.5 to the Business and Professions Code, which prohibits employers from entering into or attempting to enforce non-compete clauses as against an employee or former employee, even if the contract was signed and the employee worked or was based outside of California. Employees, whether current, former, or prospective, may bring an action against their employer under the new law for injunctive relief and/or actual damages, and recover their attorney’s fees and costs. Given its interstate application, it is expected that SB 699 will face legal challenges in the courts when it becomes effective on January 1, 2024.
Assembly Bill 1076 codifies the Supreme Courts’ 2008 holding in Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937, which provides that any noncompete agreement in an employment context is void, no matter how narrowly tailored, unless a statutory exception applies. AB 1076 also makes it unlawful for any employer to include a noncompete clause in an employment contract unless it satisfies a statutory exception, and it requires that any employer that has included such a provision in an employment contract applicable to current employees or former employees employed after January 1, 2022, send an individualized written notice to all such employees and former employees (to their last known physical address and email) no later than February 14, 2024, to notify them that the noncompete clause is void.
Finally, employers should be aware that their notification requirements under AB 1076 may extend to non-solicitation clauses in their employment agreements. While Edwards indicated that employers may prohibit the solicitation of customers or clients using the employer’s confidential information or trade secrets, a general prohibition on solicitation is not permitted.
Employers who have used non-compete provisions in employment arrangements will need to evaluate and take specific action by February 14, 2024, to be compliant with these new requirements.
Local Prosecution of Labor Code Violations (AB 594)
Traditionally, the State has enforced the Labor Code, and in particular wage and hour and classification requirements, through the authority of the Labor Commissioner and the Division of Labor Standards Enforcement (DLSE). Assembly Bill 594 expands Labor Code enforcement authority to “public prosecutors,” which includes the State Attorney General, district attorneys, city attorneys, county counsel, or any other city or county prosecutor.
Public prosecutors may bring civil or criminal actions to enforce the Labor Code through January 1, 2029, but this date may be extended in the future. The Bill also amends Labor Code provisions relating to the State and public prosecutors’ enforcement options and remedies available. Finally, SB 594 provides that any individual agreement that requires an employee to arbitrate employment disputes or restricts representative actions in any way shall be deemed to have no effect on public prosecutors’ authority to enforce the Labor Code.
SB 497 – 90-Day Presumption of Retaliation
Senate Bill 497 creates a rebuttable presumption of retaliation if an employer takes adverse action against an employee within 90 days an employee:
- Makes an oral or written complaint that they are owed unpaid wages, files a complaint or institutes a proceeding related to their rights with the Labor Commissioner, or testifies in a proceeding related to such rights (whether for themselves or any other person); or
- Makes an oral or written complaint, institutes an action, or assists in an action relating to an allegation that the employer pays any of its employees at wage rates less than the rates paid to employees of the opposite sex, or of another race or ethnicity, for substantially similar work.
While a rebuttable presumption of retaliation will lessen the burden employees face to establish a claim for retaliation, courts already consider the relative timing of the protected activity and alleged adverse action. And while the initial burden of proof is lessened, SB 497 does not prevent an employer from defending against such claims by establishing legitimate, nonretaliatory reasons for their employment actions.
Finally, SB 497 allows the $10,000 civil penalty that is assessed for violations of the whistleblower protections of Labor Code 1102.5 to be awarded to an employee who was retaliated against.
Reminder – Increase in Minimum Wage. Effective on and after January 1, 2024, the state minimum wage increases to $16.00 per hour for all employers. The minimum salary required for exempt employees also increases to $66,560. Employers should also continue to monitor local minimum wage requirements, as well industry-specific minimum wage requirements enacted during the 2023 legislative session (e.g., higher wages will be required for covered health care workers and fast-food industry employees).
If you have any questions regarding any of the foregoing new laws or need assistance with any labor or employee relations matter, please contact Dwayne McKenzie and Kevin Hannifan.