Changes Coming in 2024 – California Employment Law Update

The 2023 legislative session has closed which means a series of new laws impacting employers is just around the corner. We highlight the new laws enacted this session below, many of which will require employers to revise their policies and ensure compliance.

Major Changes – Review those Policies!

• Employers Must Now Provide 5 days of Paid Sick Leave (SB 616)

SB 616 expands paid sick leave entitlements for California employees. Beginning January 1, 2024, employers must provide a minimum of 40 hours/5 days of paid sick leave, instead of 24 hours or 3 days under current law. As before, employers can either implement an accrual method or a front-load method.

Under the accrual method, employees continue to accrue 1 hour of sick leave for every 30 hours worked. The accrual must result in no less than 24 hours or 3 days of sick leave by the 120^th day of employment and no less than 40 hours or 5 days of sick leave by the 200th day of employment. Employers can impose a maximum accrual cap of 80 hours or 10 days and limit the use of paid sick leave to 40 hours or 5 days in a 12-month period. Employers must allow employees to carry over accrued and unused sick days but can set a limit on the carryover to 80 hours or 10 days.

Under the front-load method, employers can grant sick leave days at the beginning of employment and each 12-month period thereafter, but must now provide employees 40 hours or 5 days at beginning. No carryover is required under the frontload method.

SB 616 also changes the sick leave requirement for providers of in-home supportive services and individual providers of waiver personal care services effective January 1, 2024, to permit an upfront grant of 40 hours or 5 days of sick leave, with no accrual or carryover, at the beginning of employment and each 12-month period thereafter.

• Employee Off-Duty Marijuana Use Will Be Protected (SB 700)

Last year, the California legislature passed AB 2188, to go into effect January 1, 2024, which prohibits discrimination against an employee under the Fair Employment and Housing Act (FEHA) based on the employee’s use of cannabis off the job and away from the work place or an employer-required drug screening test that detects the presence of “nonpsychoactive cannabis metabolites in their hair, blood, urine, other bodily fluids” –  the reason being that the presence of such metabolites may indicate historical use (i.e., lawful off-duty use), as opposed to impairment. Employers may still discipline employees who are “impaired by” cannabis on the job and using or possessing cannabis while on the job. Employers may still drug test their employees as long as the tests are not based on whether the employee has nonpsychoactive cannabis metabolites. Tests to look for include those that measure the presence of THC, the principal psychoactive constituent of cannabis.

SB 700 expands that protection by also prohibiting employers from requesting information from an applicant for employment relating to the applicant’s prior use of cannabis. Under SB 700, employers cannot use information obtained from an applicant’s or employee’s criminal history regarding prior cannabis use unless the employer can make this inquiry under another law, including the Fair Chance Act or other state or federal law.

SB 700 does not apply to employees in the building and construction trades, nor does it apply to employees in positions requiring federal government background investigations or security clearances through the U.S. Department of Defense.

• Employers Must Now Implement a Workplace Violation Prevention Plan (SB 553)

Effective July 1, 2024, SB 553 will require nearly all employers to develop and implement a Workplace Violence Prevention Plan (WVPP) as part of the already required Injury and Illness Prevention Plan (IIPP). This new law will require employers to provide effective procedures to respond to workplace violence reports, record every workplace violence incident in an incident log, provide training to employees and maintain training records, and additional obligations to address violence in the workplace.

Though this law is not in effect until July 2024, employers should start drafting and finalizing a Workplace Violence Prevention Plan ahead of time.

• Employers Will Now Be Required to Provide Leave for Reproductive Loss (SB 848)

Effective January 1, 2024, SB 848 will allow an employee who has been employed by their employer for at least 30 days to take up to 5 days of unpaid leave following a “reproductive loss event.” A “reproductive loss event” is defined as the day or, for a multiple-day event, the final day of a failed adoption, failed surrogacy, miscarriage, stillbirth, or an unsuccessful assisted reproduction.

The 5 days applies to each reproductive loss event per 12-month period. So, if an employee experiences more than one reproductive loss event in a 12-month period, they are entitled to 5 days per event, though the employer may limit the maximum number of days per 12-month period to 20 days of reproductive loss leave.

Employees cannot be required to take all 5 days of reproductive loss leave consecutively, but employers can require the employee to complete the leave within 3 months of the reproductive loss event. However, if prior to taking reproductive loss leave, the employee is on CFRA leave, FMLA leave, or any other leave to which they are entitled under state or federal law, the employer may only require the employee to complete their reproductive loss leave within 3 months of the date such other leave ends.

Reproductive loss leave is unpaid, but employers must allow employees to use any available paid sick leave, vacation, or other paid time off that is available.

• Enforcement of Non-Compete Agreements (AB 1076 and SB 699)

Two distinct but related laws reinforce California’s stance against noncompete agreements – SB 699 and AB 1076.

Effective January 1, 2024, SB 699 prohibits employers from entering into or attempting to enforce noncompete agreements. While noncompete agreements have always been void in California, absent certain exemptions, SB 699 expands the ways in which employees can challenge noncompete agreements because it establishes that a noncompete provision is unenforceable regardless of when and when the contract is signed. Thus, for example, an employee who signs a noncompete agreement in a state that allows these types of agreements cannot be prevented from working for a California employer based on the agreement.

AB 1076 codifies the 2008 decision, Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937, and voids noncompete agreements in employment, no matter how narrowly tailored. This bill also requires employers to notify current employees, as well as former employees who were employed after January 1, 2022, in writing by February 14, 2024, that any noncompete clause in a previously-executed contract is void.

Other Changes to Keep in Mind

• Minimum Wage Increase to $16.00

California’s minimum wage will increase to $16.00 per hour for all employers regardless of size. However, keep in mind many cities and counties already have minimum wages higher than $16.00 per hour, as do some industry-specific wages. As a reminder, some cities already increased their minimum wage effective July 2023, including:

16. Los Angeles – $16.78/hour
17. San Diego – $16.30/hour
18. Santa Monica – $16.90/hour
19. Pasadena – $16.93/hour
20. San Francisco – $18.07/hour
21. West Hollywood – $19.08/hour
22. Berkeley – $18.07/hour
23. Alameda: $16.52/hour

• Workplace Violence Restraining Orders (SB 428)

Under current law, employers can seek a temporary restraining order (TRO) on behalf of an employee against an individual who has engaged in workplace violence or made credible threats of violence against the employee. However, effective January 1, 2025, employers will also be able to seek TROs on behalf of an employee for harassment that does not necessarily involve violence or threats of violence. Harassment for the purposes of this law means “a knowing and willful course of conduct directed at a specific person that seriously alarms, annoys, or harasses the person, and that serves no legitimate purpose.”  The course of conduct must also “be that which would cause a reasonable person to suffer substantial emotional distress and must actually cause substantial emotional distress.” 

• Retaliation Presumed, Unless Rebutted (SB 497)

Effective January 1, 2024, SB 497 makes it easier for employees to establish a prime facie case of retaliation. Under this new law, an employer is presumed to have retaliated against an employee if the employer disciplines or takes adverse action against an employee within 90 days of the employee filing or participating in a Labor Commissioner claim, filing or participating in a Fair Pay Act claim, engaging in lawful, off duty conduct, or other actions protected by the Labor Code. The employer must then articulate a legitimate, nonretaliatory reason for the alleged retaliation. Because it will be much easier for employees to establish a prima facie case of retaliation, employers are encouraged to be diligent in timely documenting performance issues and training managers to do the same. 

• No Automatic Stay of Trial Court Proceedings, While Appeal Granting or Denying Arbitration is Pending (SB 365)

Effective January 1, 2024, there will not be an automatic stay in litigation while the grant or denial of a petition to compel arbitration is on appeal. This is a costly change for employers, as it will force them to continue to spend time and resources defending their claims while they appeal a trial court’s order denying arbitration. 

• Amendments to Labor Code Section 2810.5 Notice

Under current law – Labor Code section 2810.5 – employers are required to provide a wage and employment notice to new hires which contains specific information in the language that the employer normally uses to communicate to the employee. AB 636 would require an employer to include in this notice information regarding the existence of a federal or state disaster declaration applicable to the county in which the employee is employed. Beginning March 15, 2024, employers will also be required to provide information about rights and protections under California law to H-2A employees – employees who are working in the United States pursuant to a temporary agricultural program.

Changes Applicable to Specific Industries

• Recall and Retaliation Rights Extended for Hospitality and Building Service Employees (SB 723)

Under current law (SB 93), certain employees in the hospitality and building service provider industry who are laid off due to COVID-19 can be recalled in order of seniority. SB 723 not only extends those specific rights of hospitality and building service provider workers to December 31, 2025, but it also expands it to include such workers who were employed by an employer for at least 6 months and whose most recent separation of employment by the employer occurred on or after March 4, 2020. Under the new law, there is a rebuttable presumption that anyone laid off due to lack of business, reduction in force, or other economic reason is laid off because of the COVID-19 pandemic.

• Minimum Wage Increase in Fast Food Restaurants (AB 1228)

This bill applies to national fast food chains, defined as a set of limited-service restaurants consisting of more than 60 establishments nationally. The restaurants must share a common brand or be characterized by standardized options for decor, marketing, packaging, products, and services, and must be primarily engaged in providing food and beverages for immediate consumption on or off premises. The bill establishes the Fast Food Council which will work to establish minimum wages, working hours and other working conditions for fast food restaurants. This law raises the minimum wage for fast food restaurant employees to $20 per hour effective April 1, 2024. The council can then establish a new minimum wage rate beginning January 1, 2025.

• Healthcare Industry

There are new minimum wage requirements for California employees in the healthcare industry, depending on the size and type of the facility. Covered employees include nurses, caregivers, physicians, medical residents, interns, janitors, housekeeping staff, gift shop workers, and virtually anyone that works in the facility.

• Food Facility Employers (SB 476)

Effective January 1, 2024, SB 476 requires all food facility employers to pay an employee for costs associated with the employee obtaining a food handler card (a certificate required for all food employees who are involved in the preparation, storage, or service of food in a food facility). To get this card, an employee must complete training and examination that meet certain requirements. Employers are now required to pay employees for the time it takes to do this training and all associated costs.  Under the new law, employers are also prohibited from conditioning employment on the applicant or employee having a food handler card.

• Grocery Store Workers (AB 647)

AB 647 revises recall rights for grocery workers when there is a change of control in a grocery establishment (i.e., distribution center owned and operated by a grocery establishment and used primarily to distribute goods to and from its owned stores). Under existing law, buyers of an existing grocery store must retain employees for a 90-day transition period during which an employee may only be discharged for cause, as specified, and considered for continued employment at the end of the transition period. This bill revises the definition of grocery establishment (by, for example, excluding from the definition a retail store that has ceased operations for 6 months or more), and imposes additional requirements on grocery establishments.

There are a lot of changes coming in the new year for employers in California. If you have any questions regarding these changes, please reach out to the attorneys at LBBK!