As we wind down the end of an eventful year, we must also prepare for the one constant in California employment law and that is – change. The following are the significant (though not exhaustive) new California employment laws for 2025, ranging from more favorable Paid Family Leave eligibility requirements to specific requirements for independent contractor agreements to additional time off benefits for victims of crime. Except as noted, these laws go into effect January 1, 2025.
Elimination of Mandatory Vacation Usage for Paid Family Leave Eligibility (AB 2123)
In the “time flies” category, it has been over 20 years since California enacted a Paid Family Leave (PFL) program, the first in the nation. PFL provides up to 8 weeks of state-provided wage replacement benefits to eligible workers who take time off to care for a seriously ill family member or for new child bonding. PFL is funded by employees through a payroll tax and was an expansion of the California State Disability Insurance (SDI) program.
Current law allows employers to require that employees exhaust up to two weeks (or 80 hours) of accrued vacation or paid time off before they become eligible to receive PFL benefits. This did not impact the total amount of employees’ PFL benefits, but lessened the cost to employers to have employees return from leave with large vacation balances. AB 2123 eliminates this option for employers and employees may begin receiving PFL benefits as soon as they are eligible, regardless of how much vacation time they have accrued.
Addition of Freelance Worker Protection Act (SB 988)
SB 988 establishes the Freelance Worker Protection Act, imposing minimum requirements on contracts between a hiring party and a freelance worker. Hiring entities are required to provide written contracts to freelance workers and pay the workers the compensation specified by the contract. “Freelance worker” is defined as a person or organization composed of not more than one person, whether or not incorporated or using a trade name, that is hired or retained as a bona fide independent contractor to provide professional services in exchange for payment of $250 or more. “Hiring party” is broadly defined with exclusions for governmental agencies and individuals hiring services for the personal benefit of themselves, their family members or their homestead.
SB 988 provides that if the contract does not specify the payment date, the hiring party is required to pay the worker no later than 30 days after the completion of the services. An itemized list of services to be provided must be included in the contract. The bill authorizes the worker or a public prosecutor to bring a civil action to enforce the contractual provisions. The bill further provides that if the worker requests a written contract and the hiring entity refuses to provide one, there is a penalty of $1,000, and liquidated damages of two times the amount of the services will be awarded if the hiring party fails to timely pay the worker.
Clarifications to Prohibited Bases of Discrimination (SB 1137 & AB 1815)
The California Fair Employment and Housing Act (“FEHA”) prohibits employment discrimination based on various characteristics, such as race and gender. These protected characteristics (also referred to as protected classes) have expanded over time to reflect societal norms. California has other laws that prohibit discrimination in housing, education and public accommodations. SB 1137 provides that discrimination is also prohibited when it is based on a combination of multiple protected characteristics, which was not previously specified in the law.
The sponsors of SB 1137 note that some courts have not recognized the concept of intersectionality, that is, the interplay between multiple protected characteristics, when adjudicating discrimination cases. SB 1137’s stated intent is to recognize the intersectionality analytical framework that different forms of inequality operate together, exacerbate each other and can result in amplified forms of prejudice. It further states that where two or more bases for discrimination or harassment exist, they cannot be neatly reduced to distinct elements and it may be necessary to determine whether it occurred due to a combination of factors rather than any one protected characteristic by itself.
In 2020, the Creating a Respectful and Open World for Natural Hair (“CROWN”) Act was enacted which included an expanded definition of race under FEHA and other civil rights laws to include “traits historically associated with race, including hair texture and protective hair styles.” Since 2020, nearly half of the states have enacted similar legislation.
In this legislative session, AB 1815 was enacted to eliminate the vague requirement that traits must be “historically” associated with race. Protective hair styles are specified to include braids, locks and twists.
Expansion of Protections for Victims of Violence (AB 2499)
Existing California law requires employers with 25 or more employees to provide unpaid time off for employees to seek medical attention for injuries caused by domestic violence, sexual assault or stalking, or other crimes, to obtain services from a domestic violence shelter, to obtain psychological counseling, and to participate in safety planning. Employers have been required to make reasonable accommodations for the safety of such employees, such as transferring the employee or changing the locks, unless undue hardship would result.
Current California law further requires employers to provide time off for employees who were subpoenaed to testify in a legal proceeding due to the employee being a victim of a crime or a witness.
AB 2499 makes various changes to these provisions. The statutory requirements are now part of FEHA rather than being part of the Labor Code. This means that employees may pursue violations of these provisions as discrimination claims with their attendant remedies.
AB 2499 expands the reasons for time off to include securing new housing, providing care to an injured family member and to secure childcare. The bill expands those eligible to request reasonable accommodations to include an employee whose family member is a victim. The new law allows employers to limit the total leave taken to 12 weeks and to require that the leave runs concurrently with leave taken under the Family Medical Leave Act (FMLA) and the California Family Rights Act (CFRA) if the employee is eligible for such leaves. The law further allows employers to limit the total time off to 10 days if the employee’s family member is a victim, except that the employer may limit the time off to five days if the employee’s family member is a victim and the reason for time off is to secure a new residence, including enrolling the family member in a new school.
The law requires employers to inform each employee of their rights under this law, to be provided to new employees upon hire, to all employees on an annual basis and upon request. The California Civil Rights Department is responsible for updating and publishing this notice (which the Labor Commissioner previously published).
AB 2499 also impacts the California Paid Sick Leave law by expanding the types of time off that qualify consistent with the expanded definitions described above.
Driver’s License Job Requirements Must Be Legitimate (SB 1100)
SB 1100 makes it an unlawful employment practice for employers to include in a job advertisement or posting that applicants must have a driver’s license unless they reasonably expect driving to be one of the job functions for the position and reasonably believe that satisfying the job function through an alternative form of transportation would not be comparable in travel time or cost to the employer. Proponents of this bill explained that discriminating against individuals without driver’s licenses disproportionately affects people with disabilities, low-income individuals and those living in urban areas with access to public transportation.
Reforms to Labor Code Private Attorneys General Act (AB 2288 & SB 92)
The Labor Code Private Attorneys General Act (PAGA) authorizes employees to file lawsuits to recover civil penalties on behalf of the State of California for various Labor Code violations. On July 1, Governor Newsom signed two PAGA reform bills (AB 2288 and SB 92) into law as part of a negotiation for the withdrawal of a state-wide ballot initiative. The new laws apply to cases based on PAGA notices filed on or after June 19, 2024.
Significant changes include that plaintiffs will now be required to show that they were personally impacted by the specific Labor Code violation being alleged. Penalties for wage statement violations that were not willful or intentional will be capped and courts may reduce stacked penalties for multiple violations due to the same payroll mistake. Penalties may also be capped for employers who can show they took all reasonable steps to comply with the law, which includes conducting periodic payroll audits and training supervisors. The new law further allows employers to “cure” (or fix) certain violations to avoid PAGA penalties.
Enactment of California Worker Freedom from Employer Intimidation Act (SB 399)
Current law prohibits employers from coercing or controlling employees’ political activities or affiliations. The federal National Labor Relations Board (NLRB) is tasked with safeguarding employees’ rights to organize, as well as with preventing and remedying unfair labor practices by private sector employers and unions.
SB 399 creates the California Worker Freedom from Employer Intimidation Act, which prohibits employers from taking adverse employment actions against employees for declining to attend an employer-sponsored meeting, the purpose of which is to communicate the employer’s opinion about religious or political matters. These types of meetings are referred to as “captive audience” meetings and generally relate to meetings about union organizing campaigns. There are some exceptions, including religious entities which are exempt from civil rights laws and employers who require employees to undergo training to comply with the employer’s legal obligations, such as harassment prevention and safety training.
In 2022, the NLRB announced that these mandatory meetings would be viewed as a violation of the National Labor Relations Act. This is unlikely to be the view of the NLRB after the new Presidential administration begins. However, SB 399 will nonetheless be in place in California unless and until it is overturned.
Addition of Local Enforcement of Discrimination Claims (SB 1340)
The California Civil Rights Department (CRD) is responsible for processing, investigating, and prosecuting discrimination and harassment complaints under FEHA. SB 1340 does not alter this. However, it provides that cities, counties, and other political subdivisions may enact and enforce their own laws prohibiting employment discrimination based on at least the same protected classes as FEHA. They may also enforce FEHA. Prerequisites to doing so include, among others, that a complaint was already filed with the CRD and a right to sue notice was issued.
New Posting Requirement for Whistleblower Protections (AB 2299)
Existing law requires employers to post a list of employees’ rights and responsibilities under the whistleblower laws. This is typically accomplished by employers purchasing and displaying a large, laminated poster that contains the various federal and state laws (in very small font) which are required to be posted. AB 2299 requires the Labor Commissioner to develop a model list of employees’ rights and responsibilities under the whistleblower laws for employers to post. The posting is required to be in a font size larger than 14 point.
Posting of Social Compliance Audits (AB 3234)
AB 3234 requires employers who voluntarily conduct “social compliance audits,” whether conducted to determine if child labor is involved in their operations or not, to post on the employers’ website a report detailing the audit’s findings of the employers’ compliance with child labor laws. “Social compliance audits” are audits to evaluate compliance with state and federal labor laws, including wage and hour and health and safety regulations, including those impacting child labor.
The author of this bill explained that due to the state’s agencies being understaffed, voluntary audits are often the only ones that are conducted and are often performed in response to negative press coverage, particularly regarding child labor. The bill’s requirement to post the audit results relates only to an audit’s findings as to child labor and not more generally regarding compliance with overall wage and hour and safety laws.
New California Minimum Wage, Health Care Workers’ Minimum Wage (SB 828) and Salary Requirements for Overtime Exemptions
The state-wide ballot measure (Proposition 32) did not pass, which would have increased the state minimum wage to $18 per hour. However, there will nonetheless be a minimum wage increase as of January 1, 2025 due to existing law to $16.50 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.
Last year, a law was passed which established five separate minimum wage schedules for covered health care employees, depending on the size and type of business. This year, SB 828 was signed into law, providing for a one month delay in these various minimum wage adjustments for the health care industry.
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, 2025, the minimum salary threshold is $68,640 per year.
The California computer software overtime exemption’s minimum thresholds are tied to the Consumer Price Index and adjust each year. For 2025, the minimum hourly rate of pay to qualify for this exemption is increasing to $56.97, the minimum monthly salary will increase to $9,888.12, and the minimum annual salary will be $118,657.43.
Your 2025 HR Compliance Checklist
- Update your policy and leave of absence materials to remove any requirement for employees to use two weeks of accrued vacation before being eligible for Paid Family Leave benefits.
- Edit your Employee Handbook to reflect the updated discrimination definitions, as well as the additional time off protections for victims of crime.
- Review job postings and job descriptions to ensure compliance for driver’s license requirements.
- Have your legal counsel review your independent contractor agreements to ensure compliance.
- Conduct regular payroll audits and train supervisors (again) on wage and hour compliance.
- Ensure that “captive audience” meetings are not held.
- 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.
- Reminder that a Workplace Violence Prevention Program was due to be implemented by July 1, 2024, which includes training employees.
- As always, 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.
