The California annual legislative session has now ended, with Governor Newsom approving numerous laws impacting employers with employees in California. Below is a summary of some of the key new employment laws going into effect in 2024, several of which will require modifications to employee handbooks, employment agreements, as well as employment-related policies and practices for businesses to remain in compliance. Please note that this is not a comprehensive account of all significant legal developments, but rather a summary of those laws that will impact many of our clients. If you have any questions about employment laws impacting your business or place of employment, please contact us.
Increased Statewide Minimum Wage
Effective January 1, 2024, the state minimum wage will increase to $16/hr for all employers regardless of size. As we shared with you earlier this year, a number of California cities, including LA, Santa Monica, and West Hollywood, have local minimum wages that are higher than the state minimum wage. Employers need to comply with whichever law affords employees the highest minimum wage.
Increases in the state minimum wage impact not only minimum wage workers but also those employees that have been classified as exempt salaried workers because exempt salaried workers generally must be paid a base salary that is at least twice the state minimum wage for full-time employment (40 hours per week). Therefore, as of January 1, 2024, most exempt salaried workers must be paid no less than $66,560 annually to retain exempt status. Employees who have been misclassified as exempt, including because their salaries are below this threshold, can seek damages and penalties for unpaid overtime, missed meal and rest breaks, interest, and attorney’s fees.
Increased Paid Sick Leave Requirements
For nearly the past decade, most California employers have been required to provide employees with 3 days or 24 hours (whichever is greater) of paid sick leave per year under the Healthy Workplaces, Healthy Families Act of 2014. A new law going into effect on January 1, 2024 increases this to 5 days or 40 hours (whichever is greater) of paid sick leave per year.
Employers who require employees to accrue paid sick leave (as opposed to frontloading the full amount of mandatory sick leave on an annual basis) must allow unused time to roll over from year to year, subject to an accrual cap. Under the previous law, that cap was 48 hours or 6 days, whichever is greater. Now, the lowest accrual cap employers may set is 80 hours or 10 days, whichever is greater. There is no exception for part-time workers.
Note that many cities in CA entitle employees who work in those cities to more sick leave than CA state law requires. For example, most hourly workers in the City of LA are entitled to 48 hours of paid sick leave per year. However, current City of LA law allows employers to impose an accrual cap of 72 hours. Effective January 1, 2024, that accrual cap will be non-compliant with CA law. As a result, employers in the City of LA who have policies providing for a 72-hour cap should evaluate whether an adjustment needs to be made to their policies and practices to remain in compliance with state law.
New Mandatory Unpaid Reproductive Loss Leave (applicable to employers with 5+ employees)
On January 1, 2023, a new bereavement leave law went into effect, entitling eligible employees to take up to 5 days of unpaid bereavement leave for the death of a family member.
A new law going into effect January 1, 2024 will now also entitle eligible employees (those who have worked for the employer for at least 30 days) to take up to 5 days of leave due to a reproductive loss event, meaning a failed adoption, failed surrogacy, miscarriage, stillbirth, or unsuccessful assisted reproduction, as those terms are defined by law. The leave must be taken within 3 months of the date of the reproductive loss event and need not be taken consecutively. The leave may be unpaid, or the employee may use accrued, unused vacation or sick leave. If an employee experiences more than one reproductive loss event within a 12-month period, the employee will be eligible for a maximum of 20 days of unpaid reproductive loss leave within a 12-month period.
Anti-Discrimination Laws Extended to Protect Cannabis Users (applicable to employers with 5+ employees)
Effective January 1, 2024, it will be illegal under FEHA for an employer to discriminate against an individual as a result of their use of cannabis off the job and away from the workplace, including that employers will not be able to take adverse action against employees found to have nonpsychoactive cannabis metabolites in their body through a drug test. Employees may still be prohibited from possessing, using, or being impaired by cannabis while on the job, and employers will still be able to conduct drug testing provided that the test does not screen for nonpsychoactive cannabis metabolites. The statute will not apply to employees in the building and construction trades and also doesn’t apply to applicants or employees hired for positions requiring federal government background investigations.
Workplace Violence Prevention Plan
SB 553 will require the vast majority of CA employers to develop a written workplace violence prevention program by July 1, 2024. The program will need to include a written plan along with employee training on the subjects below, among others:
- Procedures that involve employees in developing and implementing the plan, including through identifying, evaluating, and correcting workplace violence hazards, designing and implementing training, and reporting and investigating workplace violence incidents
- Procedures to accept and respond to reports of workplace violence, and to prohibit retaliation against reporters of workplace violence
- Procedures to communicate with employees regarding workplace violence matters and to alert employees of workplace violence emergencies
- Procedures to identify and evaluate workplace violence hazards and concerns
Additionally, employers will be required to keep records of workplace violence incidents.
Certain employers are exempt from some of these obligations, including some health care facilities as well as places of employment where there are less than 10 employees working at the place at any given time and that are not accessible to the public.
Expansion of Restrictions on Non-Compete Agreements
California has long banned employers from including provisions in employment agreements that prohibit employees from working for competitors (“non-compete agreements”) once their employment has ended, subject to very few, narrow exceptions. The Governor signed off on two new laws imposing further obligations.
SB 699 reaffirms that the vast majority of noncompete agreements are void under California law, and further prohibits employers from attempting to enforce these agreements against their current and former employees – regardless of whether the employee signed the agreement while living and working in another state that may have laws allowing noncompete provisions. In other words, if a California employer hires an employee who previously signed a noncompete while living and working out-of-state for an out-of-state employer, and the employee moves to CA, this law arguably prohibits the former employer from enforcing their own non-compete agreement. Also, if an employee signed a permissible noncompete while living and working out-of-state and then moves to live and work in California, that noncompete is arguably void with respect to that employee. Likewise, this statute can be read to prohibit California employers from requiring an out-of-state employee to sign a noncompete agreement even if the law of the state in which the employee is working allows noncompete agreements.
This law is almost definitely going to be subject to challenge given that it can be seen to infringe on the ability of lawmakers in other states to determine the reach and effect of their own state laws. However, until we have more clarity, employers should exercise caution as violations can subject them to lawsuits for damages and/or injunctive relief as well as liability for the employee’s attorney’s fees and costs.
AB 1076 requires, among other things, that employers that have noncompete provisions in their agreements must notify all current and former employees employed as of January 1, 2022 in writing by no later than February 14, 2024 that the noncompete clause or agreement is void.
Written Agreements Required for Freelancers/Independent Contractors in the City of LA
California law is very narrow and restrictive when it comes to who may be properly classified as an independent contractor as opposed to an employee. For those few workers who do qualify as freelancers/independent contractors and work in the City of LA, the City of LA enacted the Freelance Worker Protections Ordinance which requires the following things among others as of July 1, 2023:
Where an individual or entity that itself does not have any employees provides services having a value of at least $600 for an entity engaged in business or commercial activity, the ordinance requires that the parties enter into a written contract which must include, among other things, a description of the services to be performed, the rate and method of compensation, and the date for payment to be made or the manner by which the date will be determined. If no date is specified in the contract, payment must be made within 30 days after the services are rendered. The hiring entity and freelance worker must keep records for at least four years of their contracts, payments made, and all other documents to demonstrate compliance.
Increased Minimum Wage for Many Workers in the Health Care Industry
A sweeping new law will impact many workers in the health care industry, including not only many physicians, nurses, and caregivers, but also janitors, guards, clerical and food service workers.
Finding that workers in the health care industry are vital to the state, and that the pandemic worsened shortages in the industry, the Legislature has established a new hourly and salary wage framework applicable to “covered health care employees,” defined as an “employee of a health care facility employer who provides patient care, health care services, or services supporting the provision of health care, which includes, but is not limited to, employees performing work in the occupation of a nurse, physician, caregiver, medical resident, intern or fellow, patient care technician, janitor, housekeeping staff person, groundskeeper, guard, clerical worker, nonmanagerial administrative worker, food service worker, gift shop worker, technical and ancillary services worker, medical coding and medical billing personnel, scheduler, call center and warehouse worker, and laundry worker, regardless of formal job title.” The definition also arguably extends to independent contractors.
The statute defines a “covered health care facility” to include 20 different categories of facilities, including but not limited to certain psychology clinics, physician groups, surgical clinics, rehabilitation clinics, general acute care hospitals, home health agencies, licensed residential care facilities for the elderly, and “a facility or other work site that is part of an integrated health care delivery system.”
With respect to covered health care employees of covered health care facilities, the statute sets minimum wage schedules that are higher than the CA state minimum wage and higher than the minimum wage in most cities in CA. The earliest the new minimum wage goes into effect is June 1, 2024. On that date, the applicable minimum wage will range from $18 to $23 per hour depending on the particular health care employer.
Significantly, the increased minimum wage will not only affect hourly workers but will also impact salaried exempt workers. In order to retain their exempt status, the employee will need to earn a salary that’s at least 150% of the applicable health care worker minimum wage or 200% of the applicable state-wide minimum wage, whichever is greater, for full-time employment.
The Department of Health Care Access is expected to publish additional guidance on its website on or before January 31, 2024.
Increased Minimum Wage for Fast Food Workers
Effective April 1, 2024, fast food employees will be entitled to a statewide minimum wage of $20/hr. Impacted employers are those that are part of a “national fast food chain,” meaning a set of limited-service restaurants consisting of more than 60 establishments nationally that share a common brand or share standardized décor, marketing, products, and services.
Compensation and Reimbursement Required for Food Handlers
Existing law requires certain workers to have a food handler card when they are engaged in preparing, storing, or serving food in a food facility. A new law will require employers to pay employees to complete the training and examination required to obtain a food handler card and reimburse for any necessary expenses incurred by the employee in obtaining the card. Moreover, employers will be prohibited from conditioning employment on the applicant or employee already having a food handler card.
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Given the many legal changes going into effect next year, all California employers should update their handbooks and personnel policies to bring them into compliance for 2024. If you have any questions about these new laws or would like us to review or revise your handbooks, employment-related agreements, or other employment-related documentation to bring it up to date in light of the new legislation, please contact us. The new year is a good time to roll out handbook updates and implement other changes to your personnel practices.
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The above summary has been prepared for general informational purposes only and is not intended as legal advice.
Bernstein & Friedland, P.C. is a boutique employment law firm in Los Angeles specializing in wrongful termination, discrimination, harassment, retaliation, and unpaid wage and overtime matters. Please visit our website at www.laemploymentcounsel.com to learn more about us. We are here to support you if you have questions about any of the above or any other employment-related matters.