The New Year rang in a collection of California employment law updates with major implications for Golden State employers. If they have not already, California employers should address the items listed below as soon as possible. This article summarizes some of the key employment law updates under California law, but it not intended to be an exhaustive list of all changes.
1. Newly Enhanced Non-Compete Ban With February Deadline for ALL Employers
AB 1076 requires all employers, by Feb. 14, 2024, to notify their current and former employees employed after Jan. 1, 2022, that any noncompetition agreements or clauses they previously signed are void.
SB 699 expands California’s ban on noncompetition agreements and most non-solicitation agreements to restrictive covenants entered outside of California, regardless of when.
Employers need to take immediate action to comply with both new laws. Nelson Mullins’ alert addressing both of these changes is available here.
2. Expanded Paid Sick Leave: Update Everything
What’s New?
Before Jan. 1, California law required employers to provide a minimum of 24 hours or three days of paid sick leave to employees, and an accrual cap of 48 hours or six days. After Jan. 1, employers must now allow 40 hours or five days of paid sick leave, with an 80 hour/10-day accrual cap. Employers must apply the hourly or daily total that gives their employees the greater amount of leave. These requirements apply regardless of whether employers adhere to a calendar year or another timeline, and whether sick leave and/or time off is accrued throughout the year or front-loaded.
Action Items
New notices. The new paid sick leave notice is linked here. This should be posted immediately (along with the Wage Theft notice discussed below).
New handbooks, etc. California has many employee handbook requirements, but the paid sick leave provisions are among the most important. Sick time accrual can be a moving target, and this is one of the most common policies employees will reference. Make sure your policy is up to date and consistent with the new law. California employers that offer PTO will also need to reassess those programs and policies to ensure compliance with the new law. Your handbooks and policies should reflect sick leave accrual under the new law. Finally, do not forget about other agreements and policies that may overlap with this or otherwise reference sick time.
Payroll. These new accruals are now in effect, so make sure your payroll accounts for these changes and that all wage statements accurately reflect accrued sick leave. Confirm this with any outside vendors.
Management and employee training. Train and notify all supervisors of any changes to your sick leave policies. There is always a risk that individual supervisors and employees will reference prior documents or assume old rules apply. One person’s oversight can quickly become your company’s headache, so make sure people know about this change. A quick training never hurts.
Check the local laws. Some local jurisdictions have adopted sick leave ordinances that provide expanded sick leave. Confirm all applicable local laws.
3. Wage Theft Prevention Notices
What’s New?
Pursuant to California AB 636 and Labor Code 2810.5, employers need to provide new wage theft prevention notices to employees, which includes the new sick time rules discussed above and information concerning an emergency or disaster declaration “applicable to the county or counties where the employee is to be employed, and that was issued within 30 days before the employee’s first day of employment, that may affect their health and safety during their employment.” Employers should take care to update this notice as the referenced laws and declarations are subject to change.
Action Items
Prepare and provide the notice. California’s DLSE prepared this template. Each notice requires details specific to individual employees, so set aside the time to: (1) make sure the details are correct and (2) update the notice when necessary.
Stay updated. Figure out where workers are located. Develop a plan to check for possible updates to these notices, including the new categories.
4. Workplace Violence Prevention Plan
What’s New
By July 1, 2024, employers must create and implement new workplace violence prevention plans that include the items listed in the new California Labor Code Section 6401.9, including: the names or job titles of people responsible for implementing the plan and their specific roles in doing so; procedures to develop, implement, and maintain the plan; procedures to respond to workplace violence reports and prohibitions on retaliation against employees who make a report; procedures to ensure management complies with necessary regulations; procedures to ensure employees know how to make a report; emergency response procedures; training procedures; and evaluation and investigation procedures.
Action Items
Calendar the deadline and draft the plan. July 1, 2024, is the deadline. Make sure the plan includes the required information. Maintain the plan over time to ensure all categories like points of contact, procedures, workplace specific items, are all up to date.
Make it “Effective.” This is a statutory requirement. Employers should make sure this is a plan that actually works, is easy to understand, easy to find, easy to use, and actually applies to their workplace.
5. Reproductive Loss Leave
What’s New?
Certain California employees may be eligible for up to five days of protected leave for a “reproductive loss event,” which SB 848 defines as including a failed adoption, failed surrogacy, miscarriage, stillbirth, or unsuccessful assisted reproduction. There are limits to when and how any employee can take leave, including that they must complete leave within three months of the event. Employees are eligible if they have worked for an employer with five or more employees for at least 30 days.
Action Items
Update handbooks. Covered employers should update their handbook. Among other details, employers should confirm whether this leave is paid or unpaid and specify when and how this leave is available. The law does not require paid leave but employers should take care to avoid inconsistencies with other kinds of leave in your policies.
Train management and HR. Management and HR personnel should understand when and how this leave is available and know how and when an employee may be eligible. Employers should train management on how to handle requests related to this law. There are important overlaps with federal and state laws that govern disability discrimination and reasonable accommodations that employers need to consider.
6. New Minimum Wage and Exempt/Non-Exempt Thresholds
What’s New?
California’s 2024 minimum wage is now $16/hour for all employees. This raises California’s minimum salary for exempt employees from $64,480 (2023) to $66,560 (2024). Other exceptions and industry-specific differences will apply here, e.g., healthcare employees, computer professionals, etc., so employers should pay careful attention here to avoid any wage violations.
Action Items
New Notice. The new notice, which employers should post, is available here.
Assess exempt/non-exempt status for existing and incoming employees. Review employee rosters and payroll to ensure compliance. Update any policies where necessary.
Check those local laws. Many cities and other municipalities also increase minimum wage every year, so take care to check and see if those increases may also apply to any worker near the minimum.
7. Off-Duty Cannabis Use: A New Protected Class?
What’s New?
Addressing the question in the heading, the answer is effectively, yes. The new law, SB 700, which took effect on Jan. 1, makes it unlawful for an employer to discriminate against a person based on the person’s off-duty use cannabis use. This means an employer may not request information from any applicant relating to their prior use of cannabis. Moreover, employers may also not use any information about a person’s cannabis use obtained from their criminal history for any employment-related decision, with certain exceptions depending on other laws that apply.
Action Items
This is somewhat newer territory, and there are also nuances between protections for off-duty cannabis use by employees, and other situations, such as employees arriving at work impaired or under the influence. Employers should review company policies, including employee handbooks and drug testing policies, to confirm compliance with the new law.
8. Brush Up Those Arbitration Agreements
What’s New?
Last summer, the California Supreme Court issued its decision in Adolph v. Uber Technologies, Inc., which answered the US Supreme Court’s invitation in Viking River Cruises, Inc. v. Moriana on whether certain employee arbitration provisions entirely foreclosed that employee’s representative claims under California’s Private Attorneys General Act, or “PAGA.” The decision included some important details, which employers should in turn check against their existing arbitration and dispute resolution provisions with employees to ensure they are up to date and enforceable.
In the fall, California’s arbitration landscape shifted again with the passage of SB 365, which amends California’s Code of Civil Procedure and grants courts that have denied a motion to compel arbitration the discretion to decide if they will stay proceedings in court while that appeal is pending. Because this increases the chances employers will need to litigate an employee’s claims in court while the appeal is pending, it reinforces the importance of a legally sound and up to date arbitration or dispute resolution provision. Adding one more layer, on Jan. 1, a court permanently enjoined California’s ability to enforce AB 51, which banned mandatory arbitration agreements as a condition of employment. This affirmed a February 2023, Ninth Circuit decision which held that the Federal Arbitration Act (“FAA”) preempted the California law. Although this decision cements a meaningful victory for employers and the law’s final defeat, the other factors just described indicate that California continues to apply a rigorous and scrutinizing standard to these clauses and agreements.
Action Items
Employers should review any existing employee agreements and other policies that include arbitration clauses to ensure the best chances of its enforceability upon a motion to compel arbitration. This includes certain issues like management of PAGA claims, as discussed above.
