A slew of new California employment laws were passed in 2023, many late in the year, and these new laws mandate changes to employer practices and policies, including updates to employee handbooks, as well as employment applications, offer letters, restrictive covenant agreements and related documents. In addition, management should be informed of these legislative updates to ensure ongoing compliance (for instance, in recruiting, screening and interviewing candidates). Below is a summary of some key changes (all are effective Jan. 1, 2024, unless otherwise indicated).
- Paid Sick Leave (SB 616, Cal. Labor Code sections 245.5, 246 and 246.5). The amount of paid sick leave required under state law increases from 24 hours (or three days, whichever is greater) to 40 hours (or five days, whichever is greater), and the annual usage cap is increased accordingly. For employers who elect to do an upfront grant, effective Jan. 1, the annual grant must be 40 hours/five days. For employers who opt for the accrual method, the accrual rate remains one hour for every 30 hours worked; however, employers may use different accrual methods if they comply with the statutory requirements (i.e., no less than 24 hours/three days accrued by the end of their 120th day of employment, and no less than 40 hours/five days accrued by the end of the 200th day of employment), and employees now must be allowed to carry over 80 hours/10 days (versus 48 hours/six days under current state law). These requirements are subject to certain exceptions for employees covered by collective bargaining agreements. For some employers (such as those in Los Angeles, Santa Monica and various cities in the San Francisco Bay area), the modifications to state paid sick leave requirements will have little to no impact, given the greater benefits offered by local law. That said, all employers should review their policies and confirm, at a minimum, that accrual and grant rates meet these new requirements, particularly for employees hired partway through the year for whom the employer pro-rates paid sick leave awards, and that caps on usage and carryover are compliant.
- Updated Poster and Notice to Employee (Labor Code section 2810.5). With the enhanced paid sick leave requirements, employers should ensure that their required posters are up to date. In addition, the Division of Labor Standards Enforcement has updated the Notice to Employee required to be provided to non-exempt workers under the Wage Theft Protection Act. It also includes a new section for employers to provide notice of disaster declarations, as applicable. Employers should issue this revised Notice promptly to employees, given that notice is required to be provided to affected employees within seven days of changes (including modifications to paid sick leave). The new notice (only the English-language version is currently available) can be found here.
- Reproductive Loss Leave (SB 848, Cal. Govt. Code section 12945.6). This law supplements the bereavement leave requirements added to the California Family Rights Act (CFRA) in 2023, creating a new protected leave for an employee’s “reproductive loss event.” Employers with five or more employees must provide eligible employees (i.e., those who have been employed for at least 30 days prior to the need for leave) with up to five days of protected time off following a reproductive loss event, which includes a failed adoption, failed surrogacy, miscarriage, stillbirth or unsuccessful assisted reproduction effort (each as further defined in the statute). Leave may be unpaid, but employees must be permitted to substitute accrued paid time off (including PTO, paid vacation and paid sick leave). Leave days may be taken nonconsecutively but must be completed within three months of the reproductive loss event. Employees may be entitled to multiple leaves if they experience more than one reproductive loss event within a 12-month period, but the employer is not obligated to grant a total amount of leave time in excess of 20 days. Employers must maintain confidentiality regarding requests for this leave and employers may not ask for documentation as proof of the need for leave (which they can seek for bereavement leave). Retaliation for using protected leave and exercising other rights under the law is prohibited. For employers who have embedded the statutory bereavement leave within their CFRA policy, we recommend pulling it into a separate policy and combining it with reproductive loss leave; these provide protected leave in addition to the standard (i.e., up to 12 weeks of) CFRA leave.
- Protections for Off-Duty Cannabis Use (AB 2188, SB 700, Cal. Gov’t Code section 12954). The Fair Employment and Housing Act (“FEHA”) previously provided that, effective Jan. 1, 2024, employers would be prohibited from discriminating against individuals in hiring, termination or other terms or conditions in employment, or otherwise penalizing individuals because of their use of cannabis off the job and away from the workplace, with certain limited exceptions (e.g., those in the building and construction trades, or those for whom drug testing is required under applicable laws and regulations), and would not be able to screen for “nonpsychoactive cannabis metabolites” in drug tests conducted in accordance with applicable law. With this new law, employers also will be prohibited from requesting information from applicants relating to prior use of cannabis. Such information obtained from the applicant’s criminal history is exempt from these restrictions only if the employer is permitted to consider or inquire about that information under California’s Fair Chance Act (Gov’t Code section 12952) or other state or federal law. If not already incorporated into the protected categories described in EEO and harassment policies, this should be added. Employers should specifically consider whether they fall under the definition of a government contractor or DOT-regulated entity; if so, they should include a carve-out for applicants or employees hired for positions that require a federal government background investigation, security clearance or mandatory drug testing. In addition, employers should review their drug testing policies and contracts with drug testing facilities to ensure that they are legally compliant.
- Workplace Violence Prevention (SB 553, Cal. Code of Civ. Proc. Section 527.8, Cal. Labor Code sections 6401.7 and 6401.9). By July 1, 2024, nearly all California employers will be required to develop and implement a workplace violence prevention plan containing specified information, as well as an incident log (with no personally identifiable information, or “PII”), as part of their Cal-OSHA Injury and Illness Prevention Plan (IIPP). Employers also must provide effective training to workers on an ongoing basis. Specified records must be maintained as detailed in the law, and employees must be provided with copies of records within 15 days of requesting them. There are some limited exceptions, for instance, for employers covered by existing workplace violence prevention standards for the health care industry, as well as places of employment where there are fewer than 10 employees present at any given time and that are not accessible to the public. In addition, employees telecommuting from a location of their own choosing (such as their home) that is not under the employer’s control will be exempt. A template workplace violence prevention plan is expected to be made available by the Division of Occupational Safety and Health in the near future. Covered employers should ensure that this is on their radar for timely follow-up, including designating the individual(s) responsible for implementing the program.
- Background Checks (regulations applicable to Cal. Gov’t Code 12952, C.C.R. Title 2, section 11017.1). California’s Fair Chance Act provides detailed timing and procedural requirements applicable to background and criminal history checks. Effective Oct. 1, 2023, the Fair Chance Act regulations expanded the definition of “applicants” to include not just applicants for employment and current employees seeking other roles within the company, but also employees who undergo background checks in connection with a change in ownership, a change in management, or a change in policy or practice. In addition, the definition of “employer” was expanded to include not only direct employers, but entities acting on their behalf. Employers cannot include statements in job postings or ads that persons with criminal records will not be considered for employment, and employers may not consider even criminal history information volunteered by an applicant prior to receiving a conditional offer of employment. The new law also delineates detailed factors that must be considered, at a minimum, by employers in conducting an individualized assessment of criminal history information, including the degree and permanence of harm inflicted, the age of the individual when the conduct occurred, the amount of time elapsed since various events, and whether a disability or trauma contributed to the conduct. Conducting this individualized assessment will doubtless require information not readily obtainable from publicly available court or related documents; thus, the process for reviewing and considering criminal history information will likely need to be updated. Employees responsible for interviewing should be apprised of this new law. In addition, employers would be well-advised to keep these requirements in mind in connection with corporate transactions.
- Rebuttable Presumption of Retaliation (SB 497, Cal. Labor Code sections 98.6, 1102.5 and 1197.5). This law creates a rebuttable presumption of retaliation against employees who are subjected to adverse employment action within 90 days of engaging in designated protected activities, including (among other things) complaining about equal pay violations or unpaid wages and reporting suspected unlawful activity in the workplace. The law provides for a civil penalty of up to $10,000 per employee for each violation. While it is always important to consider prior protected conduct when considering adverse action against employees, this law imposes a new bright-line test with respect to timing that should be considered in every instance.
- Non-Compete Restrictions (SB 699 and AB 1076, Cal. Bus. & Profs. Code sections 16600, 16600.1 and 16600.5). Among other things, these laws expand California’s general employment non-compete prohibitions to cover agreements entered into outside of California. In other words, an individual can enter into a valid non-compete with an employer in another jurisdiction and later invoke this law to invalidate that non-compete within California. It also expands the prohibition to individuals who may be affected but who are not parties to the contract (which would implicate non-recruitment provisions, for instance). In addition to non-compliant contracts being void, employers entering into non-compete contracts with employees or prospective employees that do not satisfy an applicable exception can be subject to a civil action for injunctive relief, damages and attorneys’ fees, and such conduct is unlawful and constitutes unfair competition under the Business & Professions Code. In addition, on or before Feb. 14, 2024, employers must notify current and former employees hired after Jan. 1, 2022, who signed a void non-compete with the employer that the restrictive covenant or agreement is void. While further guidance has not been released, based on the language of the statute, employers outside of California that have California employees are subject to the same notification requirements. Communications must be individualized and sent to the last known address and last known email address of each such individual. (These modifications do not impact sale-of-business covenants, as excepted by the applicable statutes.) Employers should review existing and prior agreements to determine whether modification going forward, including with respect to non-solicitation, non-recruitment or broad confidentiality provisions that could be construed as anti-competitive, may be needed, as well as identifying individuals to whom the required notices should be sent. And the review should not be limited to confidentiality agreements; also implicated are other employment agreements and policies, equity agreements, customer agreements (e.g., “no poach” provisions) and documents related to corporate transactions. On the plus side, employers now can hire out-of-state employees in California with fewer restrictions, even where a non-compete provision was valid in the jurisdiction in which it was executed.
This document is intended to provide you with general information regarding several new California employment laws. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions. The information in this article is accurate as of the publication date. Because the law in this area is changing rapidly, and insights are not automatically updated, continued accuracy cannot be guaranteed.