As another year comes to a close, there is one thing we can always count on and that is new California employment laws. This year’s crop includes an expansion of the California Paid Sick Leave law, an expansion of bereavement leave to include reproductive loss time off, and Workplace Violence Prevention Program requirements. Two new laws further solidify California’s noncompetition agreement bans. The following is not an exhaustive list of the new California laws but includes those that I find most significant for employers.
Expansion of State-Wide Paid Sick Leave Requirements (SB 616)
In July 2015, the California Paid Sick Leave law (known as the Healthy Workplaces, Healthy Families Act of 2014) went into effect and thereafter has been clarified and expanded in minor ways until this legislative session when it underwent a significant expansion. The original law required California employers (subject to certain exceptions) to provide eligible employees who work in California with paid sick leave at the rate of one hour for every 30 hours worked up to a maximum accrual of 48 hours, or an allotment of 24 hours of paid sick leave each year. SB 616 now requires paid sick leave to accrue up to a maximum cap of 80 hours, or employees may receive an annual allotment of 40 hours of paid sick leave.
To be eligible, employees must work in California for 30 or more days within one year from their date of hire. There is no minimum number of employees that an employer must have to be covered. Excluded from coverage are employees who are covered by certain collective bargaining agreements, as well as employees of in-home supportive services and certain air carriers. SB 616 further excludes railroad carrier employers and their employees.
Employees may begin using their accrued paid sick leave after 90 days of employment. Unused sick leave carries over from year to year and continues to accrue up to the maximum accrual unless the employer uses the allotment method. Unused sick leave is not required to be paid to employees upon separation from employment.
Some employers have used July 1 as the annual allotment date because the law originally went into effect on July 1. Such employers must ensure that the appropriate allotment occurs on January 1, 2024.
Employers who provide one bank of paid time off (PTO) benefits which combine vacation and paid sick leave are not required to provide separate paid sick leave so long as the PTO meets the minimum requirements under the law. If a PTO policy does not cover part-time or temporary employees, the employer must either extend PTO to them or provide a stand-alone Paid Sick Leave policy for them to be in compliance.
Employers with so-called “unlimited time off” policies are not required to provide separate paid sick leave under this law although they should review all of their applicable leave of absence and other time off policies with their legal counsel.
As a reminder, paid sick leave is required to be provided for the employee’s or a family member’s health condition or preventive care or for an employee who needs time off to seek medical attention, psychological counseling, safe housing, and the like due to domestic violence, sexual assault or stalking. Family members are defined to include an employee’s child, parent, spouse, domestic partner, sibling, grandparent, grandchild, stepparent and stepchild, as well as a “designated person,” which is defined as any individual related by blood or whose association with the employee is the equivalent of a family relationship.
Employers must ensure that employees’ itemized wage statements reflect the accurate amount of paid sick leave accrued, allotted and/or used for each pay period. Employers with “unlimited paid time off” will comply with this requirement by indicating “unlimited” on the wage statement.
Given the increasing number of states and local jurisdictions with paid sick leave laws and employees working from home, employers must be vigilant in determining what laws apply and ensuring their policies comply.
Reproductive Loss Time Off Requirements (SB 848)
In an expansion of bereavement time off requirements which were enacted in the prior legislative session, SB 848 applies to employers with five or more employees (as well as the public sector) and provides that eligible employees may take up to five days off following a reproductive loss event. A reproductive loss is defined as a failed adoption, failed surrogacy, miscarriage, stillbirth or an unsuccessful assisted reproduction. If an employee experiences more than one reproductive loss event within a 12-month period, the employee may take up to a maximum of 20 days off.
Employees must have been employed for at least 30 days prior to the leave to be eligible. The time off must be taken within three months of the event but the days off do not need to be consecutive. If the employee is already on a leave of absence at the time of the loss, the employee has three months from the end of the leave to take the reproductive loss time off.
In the absence of an existing reproductive loss policy providing for paid leave, the reproductive loss leave may be unpaid. However, employees may substitute their accrued paid time off for the unpaid time.
The bill requires employers to maintain employee confidentiality relating to the employee’s time off.
Extension of Protections For Use of Cannabis (SB 700)
In the prior legislative session, the California Fair Employment and Housing Act (FEHA) was amended to prohibit employment discrimination based on a person’s use of cannabis off the job and away from the workplace.
SB 700 makes it unlawful for an employer to request information from applicants for employment relating to their prior use of cannabis. However, employers may inquire about prior cannabis use if the information was obtained from the applicant’s criminal history background investigation, provided that the employer has complied with applicable laws in conducting the background investigation.
Workplace Violence Prevention Program Requirements (SB 553)
Most California employers are required to implement an Illness and Injury Prevention Program (IIPP), setting forth basic workplace safety guidelines and a complaint reporting mechanism. Beginning July 1, 2024, SB 553 requires covered employers to have a Workplace Violence Prevention Program containing specified information. The new law requires employers to record information in a violent incident log for every workplace violence incident. Workplace violence is broadly defined as any act of violence or threat of violence that occurs in a place of employment, but does not include lawful acts of self-defense or defense of others. Various documentation is required, including workplace violence hazard identification, evaluation, and correction, as well as training and investigation records.
Employers are to provide effective training to employees on the Workplace Violence Prevention Program, as well as additional training when a new or previously unrecognized workplace violence hazard has been identified and when changes are made to the plan.
Employers and places of employment excluded from these requirements are health care facilities, law enforcement agencies, correctional facilities, employees who telework and workplaces with less than 10 employees that are not accessible to the public.
Cal-OSHA has enforcement authority to issue citations for violations. The agency is required to propose standards by December 1, 2025.
SB 553 further expands who can seek a temporary restraining order for workplace violence. It authorizes a collective bargaining representative to pursue a TRO on behalf of a union member due to violence or a credible threat of violence.
Reinforcement of the Ban on Noncompetition Agreements (SB 699 & AB 1076) and Nationwide Developments
Governor Newsom signed into law two bills which further cement California’s prohibition of restrictions on employees’ ability to change jobs via noncompetition (or noncompete) agreements. California Business & Professions Code Section 16600 has long been in place which voids contracts that restrain employees from engaging in a lawful profession, trade, or business, subject to limited exceptions such as the sale of a business or ownership interest.
SB 699 adds that such agreements are unenforceable regardless of where and when the contract was signed and prohibits employers from attempting to enforce a void contract regardless of whether the contract was signed and the employment was maintained outside of California. It further provides that if an employer violates this law by entering into these void contracts, it will have automatically committed a civil violation and as such, the employee may bring a lawsuit for injunctive relief or the recovery of actual damages, and potentially reasonable attorney’s fees and costs.
SB 699 includes legislative findings regarding the impetus for the bill. It states that California employers have continued to have their employees sign noncompete clauses that are clearly unenforceable which negatively impacts employee mobility, entrepreneurship and growth. It further states that as the talent market has become national with the prevalence of remote workers, California employers have faced challenges when trying to hire workers outside California because employers based outside California have tried to prevent their employees from accepting employment pursuant to noncompete agreements. It noted that California courts have been clear that California’s public policy against restraint of trade takes precedence over other state laws when an employee seeks employment in California, even if the employee signed a contractual restraint while outside California and working for a non-California employer.
It is an open question whether this California law will have an impact on non-California employers’ ability to enforce their noncompete agreements, provided such agreements are valid under that state’s law and the employment being restricted occurs outside of California.
AB 1076 amends Section 16600 by explicitly requiring the prohibition on noncompete agreements to be broadly construed to void any employment noncompete provision, no matter how narrowly tailored, unless one of the exceptions applies. This codifies existing case law (Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937). This bill extends the prohibition to contracts where the person being restrained is not a party to the contract, which creates another open question as to enforcement.
This new law contains the following provision which is vague and likely difficult to administer. For employers whose current or former employees have signed noncompete agreements, they are required to notify these current and former employees in writing by February 14, 2024, that the noncompete clause or agreement is void. Violating this requirement will constitute an act of unfair competition under the statute.
The new law does not specifically define noncompete agreements. Presumably, this requirement pertains to the scenario in which a California employer required a California employee to sign an employment agreement which prevented the employee from working for another company.
Aside from California’s restrictions, employers in all states need to stay abreast of developments in all locations in which they have employees. For example, in January 2023, the Federal Trade Commission formally proposed a rule that would ban employers nationwide from imposing noncompete provisions on their workers. The FTC concluded that these provisions are an unfair method of competition and therefore violate Section 5 of the Federal Trade Commission Act. The FTC sought public comment over several months, although no ruling has been issued yet.
In May 2023, the National Labor Relations Board’s General Counsel issued a memorandum that overbroad noncompete agreements are unlawful. It concluded that they chill employees from exercising their rights under Section 7 of the National Labor Relations Act, which protects employees’ rights to take collective action to improve their working conditions.
Rehiring Requirements Due to COVID-19 (SB 723)
In January 2022, a bill was enacted to require hotels, private clubs, event centers, airport hospitality operations, airport service providers, janitorial and building maintenance providers and security service providers who laid off certain employees due to COVID-19 reasons to offer to rehire them as jobs become available until December 31, 2024. The job offer must be made within five business days of the position becoming available.
SB 723 redefines laid off employees to include having been employed by the covered employer for six months or more and whose most recent separation from active employment by the employer occurred on or after March 4, 2020, and was due to a reason related to the COVID-19 pandemic. This new law creates a presumption that a separation due to a lack of business, reduction in force, or other economic, nondisciplinary reason is due to a reason related to the COVID-19 pandemic, unless the employer establishes otherwise. The rehire requirements now extend to December 31, 2025.
Retaliation Burden of Proof (SB 497)
The proponents of SB 497 referred to a National Employment Law Project, highlighting the prevalence of workers experiencing retaliation in contrast to the small percentage of retaliation claims filed. It further noted that over 90% of retaliation claims filed with the Labor Commissioner’s office have been dismissed in large part due to the worker having the burden of proof yet not having the same access to information as the employer.
SB 497 shifts the burden of proof under Labor Code Sections 98.6 and 1197.5 from the employee to the employer if the employee was discharged or otherwise retaliated against within 90 days from the employee engaging in protected activity. This presumption of retaliation is rebuttable by the employer by establishing a legitimate, non-retaliatory reason for the adverse action. The new law also adds a civil penalty of up to $10,000 per employee, to be awarded directly to the employee by the Labor Commissioner.
New California Minimum Wage, Health Care Workers’ Minimum Wage (SB 525) and Salary Requirements for Overtime Exemptions
On January 1, 2024, the California minimum wage will increase to $16 per hour for all employers, regardless of the number of employees they have. Various local ordinances have minimum wages higher than the state-wide requirement and thus, employers must ensure that the correct rate is applied depending on the employee’s work location.
SB 525 establishes five separate minimum wage schedules for covered health care employees, depending on the size and type of business.
In California, the Administrative, Executive and most Professional overtime exemptions require the payment of a monthly salary at the minimum rate of two times the California minimum wage times 2,080 hours. Thus, beginning January 1, 2024, the minimum salary threshold is $66,560 per year.
The California computer software overtime exemption’s minimum thresholds are tied to the Consumer Price Index and adjust each year. For 2024, the minimum hourly rate of pay to qualify for this exemption is increasing to $55.58, the minimum monthly salary will increase to $9,646.96, and the minimum annual salary will be $115,763.35.
Your 2024 HR Compliance Checklist
- Update your Paid Sick Leave policy to increase the accrual or allotment to the new amount. For companies with a Paid Time Off (PTO) policy, ensure the accrual rate is at least the minimum required for Paid Sick Leave.
- Add or edit your Bereavement Leave policy to include reproductive loss.
- Ensure that employees who conduct interviews are aware of the prohibition on questions regarding applicants’ prior use of cannabis – and other non-job-related areas of inquiry which are prohibited.
- Create and implement a Workplace Violence Prevention Program by July 1, 2024, including a plan for training employees.
- Have your legal counsel review your employment agreements to ensure compliance with the noncompetition prohibitions.
- Ensure the correct minimum wage rate is applied. Review the salaries of all overtime exempt employees and ensure that the new minimum salary thresholds are met to maintain the exemption classifications.
- Review harassment prevention training records for all supervisory and non-supervisory staff and provide required training.
For more information or assistance with employment law compliance matters, please contact Ms. Topliff at topliff@joblaw.com.
Photo credit: Sora Shimazaki
