A Look at New California Labor and Employment Laws for 2024

The California Legislature has enacted several new laws that will impact the workplace in 2024. This Holland & Knight alert provides a brief summary of select employment laws that go into effect on Jan. 1, 2024, unless stated otherwise.

• Minimum Wage Increases: As of Jan. 1, 2024, the California state minimum wage will increase to $16 per hour for all employers, regardless of employee headcount. This also means that as of Jan. 1, 2024, exempt employees in California must be paid a minimum annual salary of $66,560. "Living wage ordinances" in various locales within the state have been enacted, so local standards should be confirmed to ensure compliance with all governing wage requirements. Covered exempt computer professional employees must be paid a minimum of $55.58 per hour, or $115,763.35 in annual salary. On April 1, 2024, covered fast food restaurant employers will see an increase in minimum wage, as will covered healthcare facility employers on June 1, 2024.
• SB 616 (Enhanced California Paid Sick Leave Benefits): SB 616 builds on 10 years of paid sick leave law and is one of the more significant expansions of employers' obligations regarding paid sick leave since the Healthy Workplaces, Healthy Families Act of 2014 was enacted. Under SB 616, an employer must either 1) frontload 40 hours/five days of paid sick leave (previously, 24 hours/three days) at the beginning of each year of employment, calendar year or 12-month period (in which case the employer does not need to accrue or carry over unused sick leave), 2) accrue one hour of paid sick leave for every 30 hours worked (in which case the employer must carry over paid sick leave from year to year but can implement an 80-hour/10-day accrual cap (previously, 40 hours/five days) and can limit the employee's use to 40 hours/five days (previously, 24 hours/three days) in each year of employment, calendar year or 12-month period, or 3) use a different accrual method provided that the accrual is on a regular basis so that employees have no less than 24 hours of paid sick leave by their 120th day of employment or each calendar year or in each 12-month period and, as a new requirement, no less than 40 hours of accrued sick leave or paid time off by the 200th calendar day of employment or each calendar year or in each 12-month period.¹
• SB 848 (New Employee Leave Entitlement for Reproductive Loss): This new law requires employers of five or more employees to provide up to five days of protected leave to employees who 1) have worked for the employer for at least 30 days and 2) have suffered a reproductive loss event. A reproductive loss event is defined as the day or, for a multiday event, the final day of a failed adoption, failed surrogacy, miscarriage, stillbirth or an unsuccessful assisted reproduction. The five days of protected leave are not required to be taken consecutively but should be taken within three months of the event. In the event of an employee experiencing more than one reproductive loss event within a 12-month period, the employer is obligated to provide up to 20 days within a 12-month period. The protected leave is not required to be paid leave; however, employees may use other types of leave concurrently. The bill does not require any paperwork or forms from the employee to utilize reproductive loss leave and, since it is protected leave, employers are prohibited from retaliating against employees who exercise their right to take this leave. Additionally, an employer must maintain confidentiality relating to reproductive loss leave.
• SB 699/AB 1076 (California's New Nationwide Focus on Noncompetition Agreements): For decades, California has taken arguably the most pro-employee-mobility position on noncompetition and nonsolicitation agreements in the country – generally, post-employment noncompetition and nonsolicitation agreements are outright prohibited. SB 699 adds a new Section 16600.5 to the California Business and Professions Code that boldly provides that "[a]ny contract that is void under this chapter is unenforceable regardless of where and when the contract was signed" (emphasis added). This blanket ban applies "regardless of whether the contract was signed and the employment was maintained outside of California." Additionally, employers are affirmatively prohibited from entering into noncompetition agreements (existing law established that noncompetition agreements were void against public policy, but there was no affirmative prohibition) or from attempting to enforce a noncompetition agreement. Employees have a private right of action to enforce the law and can obtain injunctive relief, actual damages and an award of attorneys' fees if they prevail. AB 1076, a companion bill, requires employers to notify current and former employees (employed after Jan. 1, 2022) in writing by Feb. 14, 2024, that any noncompetition clause or agreement already entered into is void.
• AB 2188/SB 700 (Protections for Off-Site, Off-Duty Marijuana Use): AB 2188 and SB 700 amend the Fair Employment and Housing Act (FEHA) by adding provisions explicitly protecting a person's off-site, off-duty marijuana use. The new law, effective Jan. 1, 2024, prohibits employers from discriminating against applicants or employees because they have 1) used cannabis off the job and away from the workplace, or 2) were found to have non-psychoactive cannabis metabolites in their hair, blood, urine or other bodily fluids by a drug screening test. However, these new protections do not cover all workers, such as exempting those in the building and construction trades. Employers are also prohibited from requesting information from a job applicant relating to the applicant's prior use of cannabis. Information about prior cannabis use obtained from the person's criminal history is subject to the new protections, unless the employer is permitted to consider or inquire about that information under state or federal law.

Employers may still use scientifically valid drug tests conducted through methods that screen for current impairment, as the new law does not permit employees to possess, be impaired by or use cannabis on the job, even for medicinal purposes. It also does not eliminate an employer's right to maintain a drug- and alcohol-free workplace under current health and safety laws.

• AB 636 (Updated Wage Theft Prevention Notice Published by the California Labor Commissioner): California Labor Code Section 2810.5 requires employers to provide each employee with written notice (referred to as a Wage Theft Prevention Notice), at the time of hiring, with the basic terms of employment as set forth in California Labor Code Section 2810.5, such as rate(s) of pay, payday, legal name of the employer and any "doing business as names," address, workers' compensation information and paid sick leave information, among other items. Section 2810.5 allows employers to communicate these items "in the language the employer normally uses to communicate employment-related information to the employee," though the California Labor Commissioner publishes a template Wage Theft Prevention Notice for employer use.

AB 636, among other things, adds a new requirement that the written notice provide information on "the existence of a federal or state 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." On Dec. 14, 2023, the California Labor Commissioner published an updated Wage Theft Prevention Notice to address this new requirement. Thus, employers who use the Labor Commissioner's template Wage Theft Prevention Notice should update their template notice accordingly.

• SB 553 (New Requirement to Develop and Implement a Workplace Violence Prevention Plan): This law adds Section 6401.9 to the California Labor Code, which requires nearly all California employers to establish, implement and maintain an "effective" workplace violence prevention plan by July 1, 2024. Under the new law, a covered employer must establish a workplace violence prevention plan that includes, among other things, the following: 1) the names or job titles of the individuals responsible for implementing the plan, 2) procedures to obtain the active involvement of employees in developing and implementing the plan, including their participation in identifying, evaluating and correcting workplace violence hazards, designing and implementing training, and reporting and investigating workplace violence incidents, 3) procedures for the employer to respond to reports of workplace violence and to prohibit retaliation against the employee who reported the incident, 4) procedures to develop and provide training on the employer's plan, 5) procedures to correct workplace violence hazards in a timely manner, 6) procedures for post-incident response and investigation, and 7) procedures for the employer to review and update the plan for effectiveness at least annually, or when a deficiency is observed, or after an incident of violence. Covered employers must also maintain detailed records regarding the workplace violence hazard identification, evaluation and correction, the employer's investigations and a detailed violent incident log. Given the extensive requirements under Labor Code Section 6401.9 and the assessment of monetary penalties for noncompliance, covered employers should take active steps to ensure they have a compliant workplace violence prevention plan in place before July 1, 2024.
• SB 497 (New 90-Day Rebuttable Presumption for Workplace Retaliation): SB 497, also known as the Equal Pay and Anti-Retaliation Protection Act, amends California Labor Code Sections 98.6, 1102.5 and 1197.5 by creating a rebuttable presumption of retaliation in favor of an employee's workplace retaliation claim. The new presumption applies if an employer takes adverse action (such as discharge, discipline, demotion or threat of discharge or demotion) against an employee within 90 days of the employee engaging in certain protected activity. This presumption ultimately makes it easier for employees to establish a prima facie case of retaliation. Under the current law, employees must establish a prima facie case of retaliation by showing: 1) they engaged in a protected activity, 2) their employer took an adverse action against them and 3) there was a casual nexus between the employee's protected activities. Under SB 497, however, if the 90-day presumption applies, the burden shifts to the employer to articulate a legitimate, nonretaliatory reason for the alleged retaliation. If the employer is able to do so, the burden shifts back to the employee to demonstrate that, despite the non-retaliatory justification, the discipline was nonetheless retaliatory in nature. SB 497 further directs civil penalties "to be awarded to the employee … who suffered the violation."
• SB 365 (Elimination of Automatic Stay of Litigation Pending Arbitration Appeal): Under current law, trial court proceedings are automatically stayed pending an appeal of an order denying a motion to compel arbitration. However, effective Jan. 1, 2024, such an appeal will no longer automatically stay trial court proceedings. Instead, employers (and others seeking to arbitrate) may have to litigate the merits of the underlying claims while the case is appealed unless the court exercises its discretion to order a stay. As with other recent California laws adverse to arbitration, SB 365 substantially changes existing law and is likely subject to challenge on preemption grounds. SB 365 also conflicts with recent U.S. Supreme Court precedent that held that a district court must stay proceedings pending an interlocutory appeal on the question of arbitration.
• AB 594 (Changes to California Labor Code Permits Public Prosecutors to Prosecute Actions for Wage Hour Violations): Until Jan. 1, 2029, this law will authorize a public prosecutor to file an action, either civil or criminal, for a violation of specific provisions of the California Labor Code related to payment of wages to employees and willful misclassifications of individuals as independent contractors. This bill also provides that arbitration agreements that require individual arbitration and limit representative actions shall have no impact on the public prosecutor or the Labor Commissioner to enforce the California Labor Code. If actions brought under this law are successful, recovered wages are prioritized for payments to the affected workers and civil penalties will be paid to California's General Fund. The law also permits public prosecutors to seek injunctive relief and prevailing attorney's fees and costs.

For more information or questions on the new California labor and employment laws and their potential impact on employers and employees, contact the authors.

Notes

¹ The California Division of Labor Standards Enforcement (DLSE) takes the position that because the statute is disjunctive (40 hours or five days) employers may have to provide five regularly scheduled workdays of leave. For employees working a 4/10 alternate workweek, this would mean (under the DLSE's interpretation) that the employer must provide 50 hours of paid sick leave (five days x 10 hours/day).

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.