Governor Newsom recently signed a slew of new bills into law at the close of California’s 2023 legislative session. Of those, there are several employment-related laws that California employers should take note of. We previously reported on some of these changes, including the expansion of California’s prohibition against non-compete agreements, limits on stays of proceedings pending the appeal of a denial of a motion to compel arbitration, and the obligation for venture capital companies to collect diversity data from founders. We summarize below other important employment-related laws that California employers should be aware of in the upcoming year.
California Expands Sick Leave Requirements
Effective January 1, 2024, California employers will need to increase their employee paid sick leave amounts. SB 616 amends the Healthy Workplace, Healthy Family Act of 2014 (California’s paid sick leave law) to expand the minimum amount of sick leave time eligible employees must accrue each year from 24 hours/three days to 40 hours/five days. Additionally, while existing law permits employers to cap annual sick leave usage to 24 hours/three days, the bill expands this annual usage cap to 40 hours/five days. The bill also increases the total amount of paid sick leave that employers must allow employees to accrue over time and carry over from year to year, from 48 hours/six days to 80 hours/10 days.
Employers may continue providing paid sick leave at the existing accrual rate of one hour for every 30 hours worked, provided an employee has accrued 40 hours/five days by the end of their 200th calendar day of employment. The amended law does not modify an employer’s ability to frontload the entire paid sick leave amount, a popular choice to ease administrative burdens.
Under SB 616, there continues to be an exception for employees covered by a valid collective bargaining agreement (CBA) that provides for paid sick leave or a paid time off policy that permits the use of sick days for the same reasons as covered employees who are not subject to a CBA.
Preventing Workplace Violence
By July 1, 2024, nearly all California employers will be required to develop and adopt a written workplace violence prevention plan and implement related employee training as part of their existing Cal-OSHA Injury and Illness Prevention Plan.
Specifically, Senate Bill 553 will require every California employer with at least one employee to “establish, implement, and maintain, at all times in all work areas, an effective workplace violence prevention plan containing specified information.” To protect employees and other personnel from aggressive and violent behavior at the workplace, employers are tasked with the following:
- Ensuring that the written plan provides effective procedures to accept and respond to employees’ workplace violence reports and that all employees comply with the plan.
- Reviewing the plan’s efficacy and updating, as necessary.
- Recording every workplace violence incident in a violence incident log with information including but not limited to: the date, time and location of the incident; the workplace violence type(s); a detailed description of the incident, including the perpetrator’s identity; the underlying circumstances of the incident (e.g., whether the employee was working alone); security or law enforcement contact (if any) and response; and the identity of the employee authoring the log.
- “Workplace violence” means any act of violence or threat of violence that occurs in a place of employment. Workplace violence includes any of the following:
- The threat or use of physical force against an employee that results in, or has a high likelihood of resulting in, injury, psychological trauma or stress, regardless of whether the employee sustains an injury
- An incident involving a threat or use of a firearm or other dangerous weapon, including the use of common objects as weapons, regardless of whether the employee sustains an injury
- Workplace violence does not include lawful acts of self-defense or defense of others.
- Providing effective training to employees, considering the appropriateness of the material based on employees’ educational levels, literacy and languages spoken. Trainings must also include information on how to obtain a copy of the employer’s plan at no cost, how to participate in the development and implementation of the employer’s plan, the requirements under Labor Code Section 6401.9, how to report workplace violence incidents or concerns to the employer or law enforcement, and how to seek assistance to prevent or respond to violence.
- Employers shall train all employees when the training program is first established; upon hiring; when employees are given a new job assignment; and whenever new substances, processes, procedures or equipment are introduced to the workplace and represent a new hazard. Additionally, employees should be trained whenever the employer receives notification of a new or previously unrecognized hazard.
- Keeping training records for at least one year and keeping violent incident logs and workplace violence incident investigation records for at least five years.
There are limited exceptions to which private employers can be excluded from the new law. The bill will not apply to employers already covered by California’s existing workplace violence prevention standard for healthcare and places of employment where there are fewer than 10 employees present at any given time and that are not accessible to the public. There are a few exceptions for public sector employers as well. For purpose of training compliance, employees teleworking from a location of their choosing that is not under the employer’s control will be exempt.
The Division of Occupational Safety and Health will prepare a model Injury and Illness Prevention Program for non-high-hazard employment and make copies of the model program available to employers, upon request, for posting in the workplace.
Reproductive Loss Leave
In addition to bereavement leave, under SB 848, California will now require private employers with five or more employees to provide employees with up to five days of protected time off following a “reproductive loss event,” starting January 1, 2024. A reproductive loss event is broadly defined to include a failed adoption, failed surrogacy, miscarriage, stillbirth or unsuccessful assisted reproduction. Employees are eligible for this leave if they have been employed for at least 30 days prior to the need for leave.
An employee does not need to take this time off consecutively but must complete their leave within three months of the reproductive loss event. If an employee experiences more than one reproductive loss event within a 12-month period, the employer may, but is not obligated to, grant up to a total of 20 days of leave.
Reproductive loss leave may be unpaid, unless there is already a company policy in place stating otherwise. However, the bill authorizes employees to use any accrued paid time off available to them, such as vacation and/or paid sick leave, to receive pay during this time.
Employers are prohibited from retaliating against an employee who takes reproductive loss leave or gives information or testimony regarding their own or another’s reproductive loss leave. Employers are also required to maintain employee confidentiality relating to requests for such leave.
Employment Discrimination: Cannabis Use
Beginning January 1, 2024, SB 700 makes it unlawful for employers to discriminate against an employee’s or a prospective employee’s use of cannabis while off the job and away from the workplace. Additionally, it will be unlawful for employers to request applicant information regarding the person’s prior use of cannabis.
Exempt from SB 700 are:
- Employees in the building and construction trades
- Applicants or employees hired for positions that require a federal government background investigation or security clearance in accordance with regulations issued by the United States Department of Defense
SB 700 also does not preempt state or federal laws requiring applicants or employees to be tested for controlled substances as a condition of employment.
Restraints on Trade
We previously reported that SB 699 renders non-compete agreements as unenforceable in California, regardless of where and when the agreement was signed. AB 1076 buttresses SB 699’s prohibition by codifying Edwards v. Arthur Andersen LLP (2008) 44 Cal. 4th 937, to void even narrowly tailored non-compete agreements in the employment context. Together, under SB 699 and AB 1076, the only non-compete provisions that remain enforceable in California are those that concern the sale or dissolution of a corporation, partnership or limited liability corporation. These provisions go into effect January 1, 2024.
AB 1076 further requires employers, by February 14, 2024, to notify all current and former employees hired after January 1, 2022, and who executed non-compete agreements void under this bill, that such agreements are void. Notice must be via a written individualized communication to the last known address and email address of the employee or former employee.
Retaliation Rebuttable Presumption
SB 497 makes it easier for employees to establish retaliation claims by amending California Labor Code Sections 98.6, 1102.5 and 1197.5 to create a rebuttable presumption of retaliation if an employee is subject to adverse action within 90 days of engaging in certain protected activity. Protected activity includes, but is not limited to, complaining about unpaid wages, reporting suspected unlawful activity in the workplace and complaining about equal pay violations.
SB 497 specifies that employers are liable for a civil penalty of up to $10,000 per employee, per violation, which would be awarded to the employee who was retaliated against. SB 497 goes into effect on January 1, 2024.
Employers Expanded Rights to Seek TROs on Behalf of Employees
Under existing law, California employers are permitted to seek an injunction and temporary restraining order (TRO) on behalf of any employee who has suffered unlawful violence or a credible threat of violence from any individual that can reasonably be construed to be carried out or to have been carried out at the workplace.
Starting January 1, 2025, AB 428 modifies Section 527.8 of the California Code of Civil Procedure to further authorize employers to seek a TRO on behalf of any employee who has suffered harassment. Harassment under SB 428 is defined as “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 be that which would cause a reasonable person to suffer substantial emotional distress and must actually cause substantial emotional distress.” The definitions for a covered employer and employee under the bill have not been modified.
Covered employers include any business or enterprise in California that has one or more persons in service under any appointment, contract of hire or apprenticeship (whether express or implied, oral or written).
Covered employees for which employers may seek such a TRO include:
- Any person (including minors and persons who are not citizens or nationals of the United States) rendering actual service in any business for an employer, whether gratuitously or for wages or pay
- Members of boards of directors of private, public and quasi-public corporations and elected and appointed public officers
- A volunteer or independent contractor who performs services for the employer at the employer’s worksite
Seeking a TRO to prevent harassment requires a showing of clear and convincing evidence that: (1) an employee has suffered harassment; (2) great or irreparable harm would result to an employee; and (3) the alleged harasser’s course of conduct served no legitimate purpose. The bill would also require an employer seeking a TRO to provide the employee whose protection is sought the opportunity to decline to be named in the order before the filing of the petition. Lastly, the bill expressly prohibits a court from issuing such an order to the extent the order would prohibit speech or activities protected by the federal National Labor Relations Act or specified provisions of law governing the communications of exclusive representatives of public employees.
Privileged Communications: Incident of Sexual Assault, Harassment or Discrimination
Existing law makes certain publications and communications privileged and therefore protected from claims of libel or slander. Specifically: (1) complaints of sexual harassment by an employee to an employer that are based on credible evidence; and (2) communications between the employer and individuals of interest to such a complaint of sexual harassment, cannot form the basis for a claim of libel or slander.
Starting January 1, 2024, AB 933 extends the privilege protection to communications made by an individual regarding an incident of sexual assault, harassment or discrimination in the context of a defamation action. To qualify as privileged, the communication must: (1) be made without malice; (2) concern factual information related to incidents of sexual assault, harassment or discrimination experienced by the individual making the communication; and (3) be made by an individual that has, or at any time had, a reasonable basis to file a complaint of sexual assault, harassment or discrimination (regardless of whether the complaint was filed or not).
In addition, AB 933 permits a defendant who prevails in a defamation lawsuit regarding such privileged communication(s) to recover its reasonable attorney fees and costs, treble damages and punitive damages.
Local Enforcement of Wage Theft
AB 594 provides an alternative method of enforcing California’s Labor Code by authorizing public prosecutors, from January 1, 2024, until January 1, 2029, to independently prosecute, civilly or criminally, violations of specified provisions of the Labor Code that occur in their geographic jurisdiction. Public prosecutors so authorized include the Attorney General, a district attorney, a city attorney, a county counsel or any other city or county prosecutor.
AB 594 further provides that public prosecutors are not bound by any individual agreement that purports to require arbitration or limit representative actions when enforcing the Labor Code. An individual agreement does not include a collective bargaining agreement.
California Permits Email Notification of Employee Tax Credit and Unemployment Eligibility
Employers subject to California’s Unemployment Insurance Code, which includes, but is not limited to, any employer who employed one or more employees in the current or preceding calendar year, and paid wages for employment in excess of one hundred dollars during any calendar quarter, should know about two key revisions to existing law under AB 1355.
First, the bill amends Section 19853 of the Revenue and Taxation Code (also known as the Earned Income Tax Credit Information Act) to redefine how an employer may send their employees notifications regarding their eligibility for certain federal and California tax credits. Under existing law, employers must send such notification to their employees twice a year. The first notification was required to be hand delivered or mailed to the employee’s last known address, while the second notification could be sent electronically.
Under AB 1355, employers may now also send the first notification electronically until January 1, 2029, provided the employee consents, either in writing or by electronic acknowledgement, to receive such electronic notification.
The bill also amends Section 1089 of the Unemployment Insurance Code to allow employers, until January 1, 2029, to send unemployment benefits notification to employees electronically, so long as the employee, either in writing, by email or by some form of electronic acknowledgement, consents to receiving such notification electronically. If consent is provided via electronic acknowledgement, the acknowledgement must: (1) fully explain that the employee is agreeing to electronic delivery of the notification; (2) provide the employee with information about how they can revoke consent to electronic receipt; and (3) create a record of the employee’s agreement to electronic delivery of the notification.
Lastly, the bill prohibits employers from taking adverse action against an employee who does not consent to receiving notifications electronically.