Last updated: January 2024 – Employment Law Updates for California 2024
It’s that time of the year when we all anticipate with a lot of trepidation – what new rules will California employers have to comply with come the first of the year? And we’re all secretly (or not so secretly) hoping it will be an “easy” year. Sorry to disappoint, but once again, quite a number of new pieces of legislation were passed that are not such great news for employers – an increase in CA Paid Sick Leave, expanded rights under California Family Rights Act (CFRA), Employment Protections for Cannabis Use, increased Enforcement of CA Labor Code, a Rebuttable Presumption of Retaliation for employees who have made workplace complaints, new rules regarding Workplace Violence Prevention, firmer prohibition of Non-Compete Agreements, as well as onerous new requirements in the fast food, grocery, hospitality, and health care industries, and the list continues…
New California Employment Laws – The following is a description of most of the more impactful (but not all) new employment laws that unless otherwise stated, will go into effect on 1/1/24:
CA Paid Sick Leave – Current CA law requires that employers provide no less than 3 days of Paid Sick Leave (PSL) to all employees who work for them for at least 30 days within a year. This applies to virtually all employees – full-time, part-time, temporary, seasonal, etc. (there are certain limited exceptions). Employers have the choice of providing 24 hours or 3 days (whichever is greater) of PSL in a lump sum upon hire or allowing employees to accrue 1 hour of PSL per 30 hours worked. If the accrual method is used, an employer may cap the employee’s total PSL accrued at 48 hours but is permitted to limit the employee’s annual utilization of PSL to 24 hours. With either methodology, employers are permitted to prevent new employees from using PSL until their 90th day of employment. Additionally, if the accrual method is used, at the end of the year, up to 48 hours of unused time in the employee’s PSL bank must be allowed to carry over to the following year. If the lump sum method is used, any unused time in the bank at the end of the year is forfeited, but the bank is immediately replenished at the start of the next year with another 24 hours of PSL. An employer can meet these requirements if they have a PTO plan that makes time available under the same conditions and provisions of PSL law and the employee is able to earn at least 3 days or 24 hours of PTO within 9 months of employment.
SB 616, effective 1/1/24, requires employers to increase the limits described above. For the lump sum method, employers will now have to provide 40 hours or 5 days (whichever is greater) per year (up from 24). If the accrual method of 1 hour of PSL per 30 hours worked is used, the employer must now allow a cap of the employee’s total PSL of no less than 80 hours (up from 48). With either methodology, an employer may now fix a maximum amount of PSL that an employee can use in a year at no less than 40 hours (up from 24). The new law allows employers to use an alternative accrual methodology instead of the 1 hour per 30 worked. Such an alternative method will be considered compliant as long as the accrual is on a regular basis (i.e. each payroll), the employee has accrued and is able to use at least 24 hours by the 120th day of employment, each calendar year, or each 12-month period (for example, an employee’s anniversary year), and they have accrued and are able to use no less than 40 hours by the 200th day of employment, each calendar year, or each 12-month period. If the employer wishes to use a PTO plan, the plan must meet all of the requirements of PSL leave.
There are a lot of additional twists and turns in the rules including how the new law interplays with the PSL laws in other CA cities (Berkeley, Emeryville, Los Angeles, Oakland, San Diego, San Francisco, and Santa Monica), permitted reasons to use PSL, employee rights and protections, notice requirements, how to calculate PSL, etc. Do you find this all a little confusing? So do your employees. Make sure you sign up to attend one of our upcoming online trainings for a deeper dive.
Reproductive Loss Leave under CFRA – In 2021, SB 1383 made employers with as few as 5 employees subject to the California Family Rights Act (CFRA). Eligible employees who experience certain family, medical, and military situations must be provided with up to 12 weeks of unpaid, job-protected leave. Last year, AB 1949 added an additional 5 days of unpaid leave for bereavement purposes. Effective 1/1/24, SB 848 adds reproductive loss to the now lengthy list of reasons for which someone can take CFRA leave (note the list of covered reasons is much more expansive than under the Federal Family Medical Leave (FMLA)). Employees who have worked for the employer for at least 30 days and who experience a reproductive loss (failed adoption, failed surrogacy, miscarriage, stillbirth, or unsuccessful assisted reproduction) can take up to 5 days of leave without pay. The days off do not need to be consecutive and must be taken within 3 months of the event unless the employee is taking other leave protected by federal or state law, in which case the 3 months would start at the end of that other leave. If an employee experiences more than one reproductive loss in a 12-month period, the employer may limit the total time off to 20 days in that year. Days off for these reasons will be in addition to the leave allowances described above. Employees will be authorized to use other available paid time off such as vacation or paid sick leave to offset unpaid time off when taking reproductive loss leave. Employers must maintain the confidentiality of these leave requests. The law is unfortunately silent on whether or not the employer can require documentation to substantiate the validity of the leave request.
Cannabis Use – Up until now, despite cannabis being legal in California under certain circumstances for recreational and medical use, employers have been able to deny or terminate employment based on a positive test for cannabis because marijuana remains an illegal substance under federal law. Following suit with more and more states who are passing laws restricting an employer’s ability to take adverse action against cannabis users, effective 1/1/24, AB 2188 (passed in 2022) makes the off-duty and off-premises use of cannabis a protected category for employment purposes under California’s Fair Employment and Housing Act. Employers will still be permitted to enforce a drug-free workplace and can prohibit the use, possession, and impairment by marijuana while at work. However, the most common and widely available test for marijuana detects the presence of cannabis metabolites in someone’s system, which only proves that the substance has been ingested at some point within the past days, weeks, or months. Tests and/or guidelines to determine current impairment by marijuana are not as readily available, leaving employers without a good mechanism to determine if adverse action can be taken. Note that companies in the “building and construction” trades will be exempted as well as positions where federal law requires screening for cannabis metabolites.
Labor Code Enforcement – AB 594 will authorize a public prosecutor to prosecute a civil or criminal action for certain violations of the CA Labor Code or to enforce those provisions independently up until January 1, 2029. Further, this new law provides that in any such action by a public prosecutor or the Labor Commissioner, any individual agreement between an employee and an employer that attempts to limit representative actions or mandate private arbitration will have no effect on the authority of the public prosecutor or the Labor Commissioner.
Rebuttable Presumption – Retaliation – SB 497 creates a rebuttable presumption that retaliation has occurred if an employee is subject to adverse action within 90 days of engaging in conduct described in sections 98.6 and 1197.5 of the CA Labor Code, i.e. making a complaint or claim with the Labor Commissioner regarding unpaid wages or equal pay violations. It also increases the civil penalties imposed on an employer who engages in unlawful retaliation to $10,000 per employee per violation.
Non-Compete Agreements – SB 699 and AB 1076 both expanded and reinforced California’s existing policies against non-compete agreements. SB 699 renders such contracts void regardless of where and when the contract was signed because some employers with offices or headquarters outside of CA have attempted to circumvent these restrictions based on more favorable laws in other states. AB 1076 confirms that noncompete clauses are void no matter how narrowly tailored and also prohibits noncomplete language in an employment contract. If employers have contracts with such clauses, they are required to provide notice to current and former employees hired after 1/1/22 that the noncompete clauses are void. The deadline for providing these notices is 2/14/24.
Workplace Violence Prevention Plan – SB 553 requires that all CA employers (with few exceptions) establish, implement, and maintain an effective workplace violence prevention plan by 7/1/24. Employers have to designate a person responsible for implementing the program, identifying and remedying hazards through periodic inspections, training employees on various aspects of the plan, and maintaining specific records. An unusual element requires that employers actively include employees and any unions in developing and implementing the plan and the training. Employers are further required to investigate all employee concerns over workplace violence, with the results of the investigation then communicated to the employee. They must also conduct an investigation after any incident of workplace violence.
Workplace Restraining Orders – Existing law allows employers to obtain a temporary restraining order against an individual who has engaged in workplace violence or a threat of violence against employees. Effective 1/1/25, SB 428, permits employers to seek and obtain a temporary restraining order against an individual who has harassed its employees.
Electronic Notices – AB 1355 – Existing law requires an employer to provide a specific notice to employees regarding Unemployment Benefits when they become unemployed. Additionally, employers must provide notice of potential eligibility for the Earned Income Tax Credit to their employees twice a year. This bill allows employers up until 1/1/29 to provide these notices to employees electronically as long as the employee opts into this method of delivery and is apprised of how they can revoke this election.
Minimum Wage and Exemptions – Although SB3 was passed in 2016, it provided for an annual increase in our minimum wage. For the past several years, the minimum wage has depended upon the size of the company. Starting last year, all employers are now subject to the same minimum wage, regardless of headcount. Effective 1/1/24, the new amount is $16.00 per hour.
As a reminder, in California, minimum wage has an impact on more than just the employees who earn at that level. In order to be exempt from overtime, an employee must have job responsibilities that meet certain legal requirements and must generally be paid a salary that is at least twice the state minimum wage for the equivalent of full-time work. This now means that the minimum salary requirement for exempt employees will be $66,560 per year. Additionally, remember that minimum wage has an impact on determining if inside sales employees are exempt and when certain trade employees can be required to provide their own hand tools.
Note that for computer professionals to be exempt, they must be paid no less than $55.58 per hour; $9,646.78 per month, or $115,763.35. Exempt licensed physicians and surgeons must be paid no less than $101.22 per hour. For more information on exemptions, see Vantaggio’s Info Bulletins Exempt vs. Non-Exempt General Guidelines – California and Special Exemptions Classification Rules – California
Also, keep in mind that over 40 different cities and other municipalities in California have their own minimum wage ordinances. And note below, that we are starting to see legislation imposing industry-specific minimum wages.
Industry-Specific Legislation – As is common practice in California, a number of new laws were passed this year that impact employers in specific industries:
- Fast Food – Minimum Wage – Last year AB 257 authorized the creation of the Fast Food Council that was due to regulate minimum standards for workers in the industry, including for wages and working conditions. Shortly after its passage, a lawsuit imposed an injunction blocking the law’s implementation pending a referendum that would take the matter to the CA voters. AB 1228 is a compromise bill that repeals AB 257 but puts the Fast Food Council back in place with some modifications, avoids the referendum, and provides for a $20 per hour minimum wage for fast food workers effective 4/1/24.
- Health Care – Minimum Wage – SB 525 establishes 5 separate minimum wage schedules for certain covered health care employees depending upon the nature and size of the employer’s business. These schedules mandate that wages increase over time to an hourly rate between $21 and $25. The bill further creates a new rule for an employee in a covered healthcare facility to be considered exempt from minimum wage. The employee would have to be paid on a salaried basis and earn a monthly salary equal to no less than 150% of the health care worker minimum wage or 200% of the applicable minimum wage, whichever is greater, for full-time work.
- Hospitality – Right to Recall – SB 723 expands certain hospitality workers’ rights to be recalled established these rights in 2021 (SB 93) was due to sunset on 12/31/24. This bill extends that date to 12/31/25.
- Grocery – Successor Employers – SB 647 creates onerous requirements regarding employee hiring and reinstatements when there has been a change in control of a grocery establishment.
What should employers do?
- Decide how you will get in compliance with the new Paid Sick Leave Update written policies, work with your payroll provider to amend your accruals.
- Develop or update your CFRA Policy to address reproductive loss leave.
- Review your current Drug Testing protocols and decide on when and how you will amend policies and procedures related to Cannabis Testing.
- Update Employee Handbooks for: PSL, CFRA, cannabis, protected categories, etc.
- Ensure all employees are being paid the correct Minimum Wage and that all exempt employees are paid the minimum salary requirements. It would also be a good time to do an Exempt/Non-Exempt audit of your employees to ensure proper classification.
- Ensure your managers and fully trained in Retaliation. Pay careful attention to any adverse employment actions post an employee complaint.
- Review all employee agreements to ensure there are no illegal Non-Compete If so, provide the appropriate notices to current and former employees.
- Begin work on a Workplace Violence Prevention Plan in conjunction with your employees.
- Draft a notice for employees to opt into Electronic Delivery of Notices regarding unemployment and earned income tax credit.
- Obtain and post your new 2024 Employment Posters. Click here to order via Vantaggio’s online store. We anticipate 2024 posters being available by mid-January.
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