Changes Coming in 2025 – California Employment Law Update

California’s 2024 legislative session has come to a close, which means new laws impacting employers will take effect in the new year. We highlight these new laws enacted this session below, many of which will require employers to revise their policies and ensure compliance.

Unless otherwise stated, these laws will take effect on January 1, 2025.

Changes that May Require Employment Policy Review

1. Employers Can No Longer Require Employees to use Accrued Vacation Before Receiving Paid Family Leave Benefits (AB 2123)

Previously, employers could require employees to use accrued vacation leave before accessing California’s Paid Family Leave Program (PFL). PFL provides wage replacement benefits to workers who take time off to care for serious ill family members, bond with a child, or help family members called to active duty.  Effective January 1, 2025, AB 2123 will eliminate the ability of employers to require employees to use accrued vacation before accessing PFL benefits.

2. New Limits on Employers Requiring Driver’s Licenses (SB 110)

SB 110 addresses discrimination against individuals without driver’s licenses by making it unlawful to include statements about the need for a driver’s license in job advertisements, postings, applications, and similar employment material unless:

1. 1. The employer reasonably expects driving to be one of the job functions of the position; and
   2. The employer reasonably believes that using an alternative form of transportation would not be comparable in travel time or cost to the employer.

3. Changes to Jury and Witness Duty Leave, and Crime Victims’ Leave (AB 2499)

Pursuant to AB 2499, the California Civil Rights Department (CRD) will now have authority to enforce rights to jury and witness duty leave, and crime victims’ leave. AB 2499 also expands the list of crimes for which employees can take time off and replaces the terms “crime or abuse” and “domestic violence, sexual assault, or stalking” with the broader term “qualifying acts of violence,” which applies regardless of an arrest, prosecution or conviction. Protections extend not only to employees who are victims but also to their “family members,” including a child, parent, grandparent, grandchild, sibling, spouse, domestic partner, or designated person, as defined under FEHA. Additionally, employees can use paid sick leave to cover qualifying time off.

Employers are required to provide a new notice, which will be developed by the CRD, to employees at specific intervals: upon hiring, annually, upon request, and whenever an employer learns that an employee or their family member is a victim of a qualifying act.

4. Definition of “Race” Amended to Included Traits Associated with Race (AB 1815)

AB 1815 updates the definition of “race” in the anti-discrimination provisions of the California Government Code and Education Code. Race is now defined as “inclusive of traits associated with race, including but not limited to hair texture and protective hairstyles.” Protective hairstyles “include but are not limited to such hairstyles as braids, locs, and twists.” This law applies retroactively. Employers should review their existing policies regarding acceptable dress and appearance in the workplace to ensure it does not run afoul of this new law.

5. Workers’ Compensation Notice Must Now Indicate Injured Employees Can Consult Attorney (AB 1870)

Existing law requires employers to post a notice that includes information on how to report workers’ compensation injuries, including to whom injuries should be reported, the rights of an employee to select and change a treating physician, and employee protections against discrimination. Effective January 1, 2025, AB 1870 requires this notice to include information that an injured employee can consult a licensed attorney to advise them of their rights under workers’ compensations laws.

Other Changes to Keep in Mind

1. California Minimum Wage Increases to $16.50

Effective January 1, 2025, California’s minimum wage will increase from $16.00 per hour to $16.50 per hour for all employees, regardless of employer size. An increase in minimum wage means a corresponding increase in the minimum salary threshold for exempt employees (professional, administrative, executive exemptions). Thus, exempt employees must earn a minimum of $68,640 per year to be in compliance with California law. 

Employees who work for a covered health care facility and provide health care services or support the provision of health care are subjected to a different minimum wage increase. The increase varies across different employers, and will increase in phases (with the first phase already in effect since October 16, 2024).

As always, employers must review local city or county minimum wage ordinances. To the extent the local minimum wage requirement is higher than the state requirement, employers are obligated to pay their employees the higher rate. For example, the following cities require a higher minimum wage than the state requirement:

1. San Diego – $17.25/hour (as of January 1, 2025)
2. Los Angeles – $17.28/hour (as of July 1, 2024)
3. West Hollywood – $20.86/hour (as of July 1, 2024)
4. Santa Monica – $17.27/hour (as of July 1, 2024)
5. Pasadena – $17.50/hour (as of July 1, 2024)
6. San Francisco – $18.67/hour (as of July 1, 2024)
7. Berkeley – $18.67/hour (as of July 1, 2024)
8. Alameda – $17.00/hour (as of July 1, 2024)

2. Greater Collaboration on the Enforcement of Workplace Discrimination Laws (SB 1340)

Pursuant to SB 1340, local agencies (city, county, or other political subdivision of the state) may now play a more active role in handling discrimination complaints, potentially providing quicker and more localized responses. SB 1340 now provides that any political subdivision of the state may enact and enforce anti-discrimination laws that are at least as protective as state law. Importantly for employers, local enforcement may occur only after the Civil Rights Department issues a right-to-sue notice; however, the statute of limitations provided in the right-to-sue notice is tolled during any local enforcement, without prohibiting the potential plaintiff from filing during local enforcement.

3. Discrimination on the Basis of the Intersectionality of Two or More Protected Traits is Prohibited (SB 1137)

SB 1137 clarifies that the Fair Employment and Housing Act (FEHA), the Unruh Civil Rights Act, and provisions of the Education Code now prohibit discrimination on the basis of the combination (intersectionality) of two or more protected traits. Previously, California prohibited discrimination based on an individual protected class, not a combination of protected classes. Through SB 1137, California’s Legislature affirms the decision of Lam v. University of Hawai’i (9th Cir. 1994) 40 F.3d 1551, involving a female Asian professor that found that discrimination may be directed at a combination of protected classes beyond a single category.

4. Employers Cannot Require Employees to Attend Meetings on Political or Religious Matters (SB 399)

SB 399 prohibits employers from requiring employees to attend “captive audience meetings” on political or religious matters, including union-related discussions. Effective January 1, 2025, the law ensures employees cannot be compelled to listen to an employer’s views on these matters under threat of adverse employment actions such as termination or retaliation.

 “Political matters” are defined as any matter “relating to elections for political office, political parties, legislation, regulation, and the decision to join or support any political party or political or labor organization.” Employees who are scheduled to work during these meetings must be paid for their time, regardless of whether they attend the meeting. Employers can still hold meetings to share legally required and job-related information and certain exceptions apply to religious and political organizations.

1. Required Disclosures During Voluntary “Social Compliance” Audits (AB 3234)

Effective January 1, 2025, AB 3234 establishes new disclosure requirements for employers conducting voluntary “social compliance audits.” These audits assess whether an employer complies with labor laws, including those related to child labor. There is no requirement under the new law for employers to conduct a social compliance audit. However, if employers choose to conduct an audit, they must comply with the reporting requirements of AB 3234, which include posting the audit results on a conspicuous link on their website.

Changes Applicable to Specific Industries

1. Expanded Protections for Freelance Workers (SB 988)

SB 988, known as the Freelance Worker Protection Act, enhances protections for freelance workers. Effective January 1, 2025, the law mandates specific requirements for hiring entities working with freelance workers. A “freelance worker” is defined as a person or organization composed of no more than one person, whether or not incorporated or employing a trade name, that is hired or retained as a bona fide independent contractor by a hiring party to provide professional services in exchange for an amount equal to or greater than $250. Under the law, (1) an agreement between a hiring party and a freelance worker must be in writing and include specific provisions; (2) once a freelance worker has commenced providing services, a hiring entity is prohibited from requiring the worker to accept less compensation or provide more services than previously agreed in order to receive timely payment; (3) the hiring entity is prohibited from discriminating or taking adverse actions against freelancers for asserting their rights.

SB 988 also authorizes an aggrieved freelance worker, the Labor Commissioner, or a public prosecutor to bring a civil action and for a prevailing plaintiff to recover various fees and damages depending on the violation. 

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!