2023 Employment Law Update

2023 Employment Law Update

Authors: Employment Law Team

The California Legislature again passed several new laws that will significantly affect California employers.  Solomon Ward remains committed to assisting employers with complying with all existing and new legal requirements.

This summary highlights some of the more significant new laws.  Unless stated otherwise, these new laws are effective January 1, 2023.

This is not an exhaustive list. We encourage you to ask specific questions about laws that may apply to your company. Our team is prepared to help. 

Changes Affecting Substantially All Employers

2023 Minimum Wage Increases and Its Effect on Exemptions

Each year, local and California minimum wage(s) are adjusted. This is a chart of the current minimum wage in California and several major cities:

  • California: $15.50 for all employers Effective January 1, 2023
  • City of Los Angeles: $16.04 / hour – Since July 1, 2022
  • City of San Diego: $16.30 / hour – Effective January 1, 2023
  • San Francisco: $16.99 / hour – Since July 1, 2022
  • South San Francisco: $16.70/ hour – Effective January 1, 2023

Because of these increases, starting on January 1, 2023, the annual salary requirement for exempt employees will be $64,480 for employers.

401K/Retirement/Pension – SB 1126

In 2016 California passed a law that requires employers, who do not sponsor an employee-retirement plan, to participate in a state-run retirement program known as CalSavers. CalSavers provides an opportunity for employees to defer wages, through payroll deductions by the employer, to a state-run individual retirement savings account program.  SB 1126 expands the definition of “eligible employer” under the CalSavers program to include those with one or more employees and requires employers with one or more employees that do not offer a retirement savings program to implement a payroll deposit retirement savings arrangement by December 31, 2025.

An employer need not participate in CalSavers if it sponsors or participates in a retirement plan such as a 401(k) plan. To be exempt from CalSavers, an employer may sponsor a retirement plan for its employees; but employees need not enroll in the retirement plan for the employer to be exempt.

Reproductive Health – SB 523

SB 523 amends the Fair Employment and Housing Act (FEHA) to prohibit employment discrimination based on an individual’s reproductive health decision-making and expands required health plan coverage for contraceptives.

“Reproductive health decision making” includes, but is not limited to, “a decision to use or access a particular drug, device, product, or medical service for reproductive health.” Reproductive decision-making also may be construed to fall under the definition of “sex” in the FEHA.

The law also makes it unlawful for an employer to require, as a condition of employment, continued employment, or a benefit of employment, the disclosure of information relating to an applicant’s or employee’s reproductive health decision-making.

Wage Transparency – SB 1162

Like many other states, California prohibits employers from asking applicants about their salary history during the hiring process. Employers also must provide applicants with the pay scale for a position upon reasonable request.

Pay disclosure requirements – SB 1162 now mandates that employers with 15 or more employees include the pay scale for a position in any job posting. This obligation extends to any third party the employer engages to announce, post, publish or otherwise make known a job posting. It also expands Labor Code to require employers to provide employees with the pay scale for the position in which the employee is employed, upon reasonable request.

Employers must also keep records of the job title(s) and wage rate history for each employee during the employee’s employment, plus 3 years after termination. These records must be open to inspection by the Labor Commissioner.  The new law creates a rebuttable presumption in favor of an employee’s claim if an employer fails to keep such records.

Pay data reporting requirements – The law now requires all private employers in California with 100 or more employees to submit a pay data report to the California Civil Rights Department (CRD) by the second Wednesday of May each year, beginning on May 10, 2023, and must include data covering the prior calendar year (the “reporting year”). Under the new law, employers can no longer satisfy this requirement by submitting an EEO-1 with similar information.

This new report requires several specific items of information that these larger employers must include, including certain personal characteristics, job categories, compensation and other information.

Further, employers with 100 or more employees hired through labor contractors within the previous calendar year must submit a separate pay data report covering those workers. Employers must also disclose in the pay data report the ownership names of all labor contractors used to supply employees. This pay data report is also due by the second Wednesday of May each year, beginning on May 10, 2023.

Off-The-Job Cannabis Use Protections – AB 2188

Effective January 1, 2024, employers may not discriminate against job applicants or take adverse action against employees for their use of cannabis off the job and away from the workplace. It specifically bars employers from considering the results of drug screenings that indicate “non-psychoactive” cannabis metabolites in a person’s urine, hair, blood or bodily fluids, because they do not indicate whether a person is impaired.

The bill exempts certain applicants and employees from the bill’s provisions, including employees in the building and construction trades and applicants and employees in positions requiring a federal background investigation or clearance, as specified. The bill specifies that the bill does not preempt state or federal laws requiring applicants or employees to be tested for controlled substances as a condition of employment, receiving federal funding or federal licensing-related benefits, or entering into a federal contract.

Discrimination & Harassment: Hate Crimes – AB 2282

AB 2282 expands the definition of hate crimes in places of employment to include display of hate imagery. It expands offenses to include hanging a noose, placing or displaying a sign, mark, symbol, emblem, or other physical impression, including, but not limited to, a Nazi swastika, and burning, desecrating, or destroying a religious symbol, such as a cross, at schools and public places, generally, for the purpose of terrorizing a person.

The Legislature clarifies its intent to criminalize the display or placement of the Nazi swastika and not swastikas associated with Hinduism, Buddhism, and Jainism.

Laws Related to Protected Leaves

CFRA Expansion – AB 1041

The California Family Rights Act (CFRA) was dramatically expanded in recent years – and AB 1041 expands it even further.

The definition of a “family member” under the California Family Rights Act (CFRA) and California’s Healthy Workplaces Healthy Families Act (HWHFA)(CA paid sick leave) is now extended to include a “designated person.”

A “designated person” means any individual related by blood or whose association with the employee is the “equivalent of a family relationship,” including a domestic partner. Which means a “designated person,” which may include non-family members.

An employer may limit an employee to one designated person per 12-month period and may require the employee to substitute during this period the employee’s accrued vacation leave or other accrued time off or any other paid or unpaid time off negotiated with the employer.

Bereavement Leave – AB 1949

This new law prohibits employers from denying a request from an employee with at least 30 days of employment with the employer to take up to five days of bereavement leave upon the death of a family member. Family member includes a spouse, child, parent, sibling, grandparent, grandchild, domestic partner or parent-in-law.

The days of bereavement leave would not need to be taken consecutively but must be completed within three months of death of the family member. If the employer does not have a paid bereavement leave policy, the leave may be unpaid, except that an employee must be allowed to use compensatory time off that is otherwise available.

Further, employers may require documentation of the family member’s death as a death certificate, a published obituary, or a written verification of death, burial or memorial services from a mortuary, funeral home, burial society, crematorium, religious institution or governmental agency.

Employees’ Rights in Emergency Conditions – SB 1044

This new law prohibits an employer from taking adverse action against an employee for refusing to report to or leaving work during an emergency condition. SB 1044 also prohibits an employer from preventing an employee from accessing their mobile device or other communications device for seeking emergency assistance, assessing the safety of the situation, or communicating with a person to confirm their safety.

An “emergency condition” means the existence of either of: (1) conditions of disaster or extreme peril to the safety of persons or property at the workplace or worksite caused by natural forces or a criminal act; or (2) an order to evacuate a workplace, a worksite, a worker’s home, or the school of a worker’s child due to natural disaster or a criminal act. An emergency condition does not include a health pandemic.

This law is only intended to apply when emergency conditions pose an imminent and ongoing risk of harm to the workplace, the worksite, the worker or the worker’s home. Additionally, SB 1044 does not apply to certain categories of employees, including first responders and disaster service workers.

Industry Specific Law – Fast Food Industry

Fast Food Accountability and Standards Recovery Act (FAST Recovery Act) – AB 257

The FAST Recovery Act creates a 10-person Fast Food Sector Council (Council) within the Department of Industrial Relations (DIR) and is tasked with creating a bill of rights for fast-food workers. Members of the Council will include fast-food workers; their advocates, franchisees and franchisors; and representatives from the Governor’s Office of Business and Economic Development and the DIR, each serving four-year terms. The Council will be empowered to impose industry-wide minimum standards on wages, working hours, and other conditions related to the health, safety, and welfare of fast food restaurant workers.

The Council may not increase the minimum wage in California to more than $22 per hour for 2023. For 2024 and after, the law limits any increase in the minimum wage (whether by the Council or otherwise) to a percentage based on the consumer price index (not to exceed 3.5%), rounded to the nearest 10 cents.

COVID Specific Laws

COVID-19: Workers’ Compensation – AB 1751

This new law extends to January 1, 2024, the current rebuttable presumption that an employee’s illness resulting from COVID-19 was sustained during the employment for workers’ compensation benefits, and extends coverage to certain state employees not covered.

The presumption is now available to an employee who suffered an illness or death from COVID between July 6, 2020 and January 1, 2024. It applies if the employee tested positive during an outbreak at the employee’s specific place of employment and whose employer has five or more employees. But this presumption may be disputed with evidence regarding the employer’s COVID-19 precautions, and how the employee may have been exposed to risks unrelated to their work.

An employer who “knows or reasonably should know that an employee has tested positive for COVID-19” now must report certain information to its claims administrator within 3 business days.

COVID-19: Exposure Notifications – AB 2693

Under existing law adopted under AB 685, if an employer receives notice of potential exposure to COVID-19, the employer must provide written notice of the potential exposure within one business day to all employees at the worksite.  Originally, this notification requirement was set to expire on January 1, 2023.  AB 2693 extends this reporting requirement to January 1, 2024 and gives employers another option for complying with these notification requirements.

As an alternative to providing written notice to employees, the employer may now prominently display a notice to alert employees to a potential COVID-19 exposure.  If an employer opts to use this notification route, the employer must, within one business day of the notice of potential exposure, prominently display a notice where notices to employees about workplace rules or regulations are customarily posted (including on employee portals) stating:

  • The dates on which an employee, or employee of a subcontracted employer, with a confirmed case of COVID-19 was on the worksite premises within the infectious period.
  • The location of the exposures, including the department, floor, building, or other area, but the location need not be so specific as to allow individual workers to be identified.
  • Contact information for employees to receive information regarding COVID-19-related benefits to which the employee may be entitled under applicable federal, state, or local laws, including, but not limited to, workers’ compensation, and options for exposed employees, including COVID-19-related leave, company sick leave, state-mandated leave, supplemental sick leave, or negotiated leave provisions and an employee’s anti-retaliation and anti-discrimination protections.
  • Contact information for employees to receive the cleaning and disinfection plan that the employer is implementing.

The notice must remain posted for no less than 15 calendar days. The notice must be in English and the language understood by the majority of employees. The employer must keep a log of all the dates the notice required by this section was posted at each of the employer’s worksites.

Cal/OSHA COVID-19 Permanent Standard

On April 21, 2022, the California Division of Occupational Safety and Health (Cal/OSHA) Standards Board (Board) adopted the fourth iteration of its COVID-19 Emergency Temporary Standards (ETS), which became effective May 5, 2022, and remains in effect until Dec. 31, 2022.

Employers, employee advocates, and other organizations have expressed weariness of the ever-changing regulations. Among others, the Board has drafted a Permanent Standard. The Board voted to adopt the proposed Permanent Standard on December 15, 2022. The Permanent Standard will become effective once approved by the Office of Administrative Law in January (this could happen as early as January 1, 2023) and will remain in effect for two years after the effective date.

The Permanent Standard, if passed, will mean employers no longer will be required to (1) provide exclusion pay to employees excluded from the workplace due to COVID-19; (2) make COVID-19 testing available to employees who have close contact with a COVID-19 case outside of the workplace and/or who experience symptoms; and (3) provide notice in a set time period (however, employers still would have to follow AB 2693 see above).

Under the new Permanent Standard, employers may include their COVID-19 procedures in their written Injury and Illness Prevention Program (“IIPP”) or keep them in a separate document. Because of the complexity of the new Permanent Standard we recommend speaking with your counsel about updating your existing IIPP or separate COVID Prevention Program.

Case Law Update – Viking River Cruises, Inc. v. Moriana

Earlier this year, on June 15, 2022, the US Supreme Court ruled for Viking River Cruises Inc. in a case over whether it could use an arbitration agreement to force a lawsuit brought under California’s Private Attorneys General Act (PAGA) on behalf of aggrieved employees into arbitration.

The ruling follows the Supreme Court’s trend of enforcing arbitration agreements. Importantly, the decision in Viking River Cruises indicates California employers may use properly drafted arbitration agreements to limit liability for PAGA representative claims.

However, the Supreme Court’s reasoning could leave room for California to allow representative claims to proceed separate from individual claims. There is already a case before the California Supreme Court that could allow for this.

Employers with operations in California and have existing arbitration agreements may want to update their agreements (if they have not done so already), and those employers with operations in California but without arbitration agreements may want to reassess whether to roll out an arbitration agreement to take advantage of the Supreme Court’s ruling.


We stand ready to assist your company with advice and practical solutions regarding your employment practices. For additional information, please contact our Employment Law Team.

***The information provided in this article is for informational purposes only and not to provide legal advice. Contact your attorney to obtain advice regarding any particular issue or problem.***