2024 Employment Law Update

2024 Employment Law Update

Authors: Employment Law Team

Nothing is certain in life except for death, taxes, and new laws from the California Legislature that will significantly affect California employers. Solomon Ward remains committed to helping employers comply 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, 2024.  This is not an exhaustive list. We encourage you to ask specific questions about laws that may apply to your company. Our team is ready to help. 

2024 Minimum Wage Increases and Its Effect on Exemption Classifications

Each year, local and California minimum wage(s) are adjusted. Below are the current and expected increases in minimum wage in California and several major cities:

  • California: $16.00 for all employers – Effective January 1, 2024
  • City of Los Angeles: $16.78 / hour – Since July 1, 2023
  • City of San Diego: $16.85 / hour – Effective January 1, 2024
  • San Francisco: $18.07 / hour – Since July 1, 2023
  • South San Francisco: $17.25/ hour – Effective January 1, 2024

Because of these increases, starting on January 1, 2024, the annual salary requirement for exempt employees will be $66,560 for employers.  Similarly, effective January 1, 2024, the minimum rate to satisfy the computer software exemption increases from $53.80 to $55.58 per hour ($9,338.78 to $9,646.96 per month, $112,065.20 to $115,763.35 yearly).

Fast Food Restaurant Industry Minimum Wage – AB 1228

A compromise between major fast food companies and various labor unions removed the Fast Food Accountability and Standards Recovery Act (AB 257) from the November 2024 ballot. As part of the agreement, the California Legislature implemented AB 1228 to raise the minimum wage for workers at national fast food chains to $20 an hour effective April 1, 2024. “National fast food chains” are defined as those with at least 60 limited-service establishments nation-wide “that share a common brand, or that are characterized by standardized options for decor, marketing, packaging, products, and services,” with limited or no table service. Bakeries that produce bread on the premises and sell it as a standalone menu item are exempt.

AB 1228 also establishes a Fast Food Council, empowered to recommend minimum standards for hours and other working conditions for fast food chains. The Council may raise the minimum wage for fast food chains annually beginning January 1, 2025, by no more than three and a half percent or the annual average change to the United States Consumer Price Index for Urban Wage Earners and Clerical Workers, whichever is lower.

Healthcare Minimum Wage – SB 525

Virtually all California healthcare facilities must meet certain minimum wage schedules beginning June 1, 2024. This law creates the following minimum wage schedules for covered health care employees.

  • Covered health care facility employers with 10,000 full-time equivalent workers or more and certain dialysis clinics must pay a minimum wage of $23 an hour starting June 1, 2024, $24 starting June 1, 2025, and $25 starting June 1, 2026. Annual minimum wage increases after 2026 will be increased by the lower of three and a half percent or the annual average change to the United States Consumer Price Index for Urban Wage Earners and Clerical Workers.
  • Hospitals with a high governmental payor mix, independent hospitals with an elevated governmental payor mix, rural independent covered healthcare facilities, or covered healthcare facilities that are owned, affiliated, or operated by a county with a population of less than 250,000 as of January 1, 2023, must pay a minimum wage of $18 an hour starting June 1, 2024. The minimum wage will be increased by three and a half percent yearly until it reaches $25 by June 1, 2033. Minimum wage after 2033 will be increased by the lower of three and a half percent or the annual average change to the United States Consumer Price Index for Urban Wage Earners and Clerical Workers.
  • For specific clinics that do not fall into one of the other two categories, employers will pay workers $21 an hour starting June 1, 2024, $22 starting June 1, 2026, and $25 starting July 1, 2027. Annual minimum wage increases after 2027 will be increased by the lower of three and a half percent or the annual average change to the United States Consumer Price Index for Urban Wage Earners and Clerical Workers.
  • Other hospitals or covered healthcare facilities that do not fall into one of the above categories (including licensed skilled nursing facilities), must pay a minimum wage of $21 starting June 1, 2024, $23 starting June 1, 2026, and $25 starting June 1, 2028. Annual minimum wage increases after 2028 will be increased by the lower of three and a half percent or the annual average change to the United States Consumer Price Index for Urban Wage Earners and Clerical Workers.

Effective June 1, 2024, the monthly salary of an exempt healthcare employee paid on a salary basis shall be no less than 150 percent of the applicable healthcare worker minimum wage or 200 percent of the minimum wage (under the Labor Code section 1182.12), whichever is greater.

New California Background Check Requirements

The California Fair Chance Act of 2018 prohibits employers from asking about an applicant’s criminal history until after a conditional offer of employment has been made to the applicant. Effective October 1, 2023, “applicants” now also include existing employees who have applied for, or indicated a specific interest to be considered for, a different position(s), or existing employees who undergo a background check in connection with a change in ownership, a change in management, or a change in policy or practice. The definition of an employer under this act is also expanded to any “direct or joint employer, any entity that evaluates the applicant’s conviction history on behalf of an employer, or acts as an agent of an employer, directly or indirectly, any staffing agency, and any entity that selects, obtains, or is provided workers from a pool or availability list.”

Additionally, subject to certain exemptions, employers: (1) cannot ask about criminal history through an employment application, background check, or internet searches; (2) are prohibited from including statements in job advertisements, postings, applications, or other materials that no people with a criminal history will be considered for hire, such as “No Felons” or “Must Have Clean Record;” (3) must individually assess each candidate with a criminal record before making hiring decisions to discern whether the applicant’s criminal history “has a direct and adverse relationship with the specific duties of the job that justify denying the applicant the position;” (4) are strictly prohibited from considering certain types of criminal convictions at any time (arrest/detention not leading to conviction, referral/participation in a diversion program, dismissed/sealed/expunged/statutorily eradicated convictions, certain juvenile matters, non-felony marijuana convictions over two years old, etc.); and (5) must follow a “fair chance process” involving a step-by-step procedure if the employer denies employment based on an applicant’s criminal record. If an applicant voluntarily offers information about their criminal history before receiving a conditional offer, the new regulations clarify that the employer still cannot consider this information. Employers who violate this law cannot, after extending a conditional offer of employment, use an applicant’s failure to reveal criminal history before the conditional offer as a factor in later employment decisions, including denial of the position conditionally offered. 

Off-The-Job Cannabis Use Protections – AB 2188 and SB 700

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, except for preemployment drug screenings. Employers also cannot consider 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 show whether a person is impaired.

Employers in the building and construction trades and employers with applicants or employees in positions requiring a federal background investigation or clearance, are exempt from this law. AB 2188 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.

Under SB 700, it is also unlawful for an employer to ask for information from applicants regarding their past cannabis use and to discriminate against an applicant based on information about their past cannabis use obtained from an applicant’s criminal history, unless the employer may otherwise consider or ask about that information under the law.

Workplace Violence Prevention Safety Plan – SB 553

Effective July 1, 2024, all California employers, with limited exceptions, will be required to: (1) develop, implement, and maintain an “effective” workplace violence prevention plan; (2) train employees on how to report incidents without fear of retaliation; and (3) create and maintain a violent incident log about every incident, post-incident, response, and workplace violation injury investigation performed under the workplace violence prevention plan.

Under the law, “workplace violence” is defined as “any act of violence or threat of violence that occurs in a place of employment that results in, or has a high likelihood of resulting in, injury, psychological trauma, or stress, regardless of whether the employee sustains an injury.”. SB 553 also permits an employer to seek a restraining order against an individual who carried out, or may reasonably be construed to carry out, acts of unlawful violence, or threats thereof, towards an employer’s employee at the workplace.

Equal Pay and Anti-Retaliation Protection – SB 497

The Equal Pay and Anti-Retaliation Act creates a rebuttable presumption of retaliation if an employee is disciplined or discharged within 90 days of engaging in certain protected activity, including without limitation filing complaints, making a written or oral complaint regarding owed unpaid wages, aiding, or encouraging any other employee to exercise their rights, participating in investigations, revealing an employee’s own wages, or discussing or asking about the wages of others.

Employees may establish a prima facie case of retaliation by showing (1) the employee engaged in certain protected activity, and (2) the employer engaged in an adverse employment action against the employee within 90 days after the employee engaged in such protected activity. Employers must then articulate a legitimate, nonretaliatory reason for the alleged retaliation. If the employer does so, the burden shifts back to the employee to show that, despite the nonretaliatory justification offered by the employer, the adverse action was still retaliatory.  

Employers who are found liable for violating this law may face a civil penalty of up to $10,000 per employee for each violation. The penalty will be awarded to the employee who experienced retaliation in addition to other remedies available under applicable law for employees.

Because SB 497 makes it easier for employees to allege that they have been retaliated against, employers should carefully review their policies and procedures for managing workplace complaints and disciplinary actions.

Noncompete Agreements in Employment – AB 1076 and SB 699

Existing California Business and Professions Code section 16600 states that, subject to limited exceptions, “…every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.”  

AB 1076 makes it unlawful for an employer to include a noncompete clause in an employment contract or to require an employee to enter a noncompete agreement. Employers must tell employees by February 14, 2024, that their non-compete clause or noncompete agreement is void if this employee was employed after January 1, 2022, and no exemption applies. Any written notice must be individualized and delivered to the last known address and the email address of the employee or former employee.

SB 699 provides that the ban on non-compete clauses extends to agreements regardless of the state in which it was signed and or the state in which the employee worked. It voids clauses or contracts that restrain an employee from engaging in a lawful profession, trade, or business of any kind.  Employees, former employees, or prospective employees will have a private right of civil action to sue for injunctive relief, recovery of actual damages, and recovery of their reasonable attorneys’ fees and costs if they prevail. AB1076 and SB 699 do not apply where there is an exception to this statutory framework, such as noncompete agreements entered into in connection with the certain sales of ownership in the employer.

The Pregnant Workers Fairness Act

The Pregnant Workers Fairness Act (PWFA) is a new federal law that protects the rights of pregnant and postpartum workers and applicants. Effective since June 27, 2023, the PWFA requires employers with 15 or more employees anywhere in the country to provide “reasonable accommodations” to an employee’s known limitations related to pregnancy, childbirth, or related medical conditions, unless the accommodation will cause the employer an “undue hardship.” 

The EEOC is tasked with the enforcement of the PWFA and had until December 29, 2023, to issue final regulations. However, proposed regulations have already been published. Here are key takeaways:

  • The terms “pregnancy, childbirth, or related medical conditions,” are broadly defined and include: “current pregnancy, past pregnancy, potential pregnancy, lactation (including breastfeeding and pumping), use of birth control, menstruation, infertility and fertility treatments, endometriosis, miscarriage, stillbirth, or having or choosing not to have an abortion, among other conditions.”
  • A key way that the PWFA may depart from California law is that the PWFA may require the “temporary” removal of one or more essential functions of an employee’s position where the employee is expected to be able to perform the essential function in the “near future,” and the temporary removal of the function can be reasonably accommodated. The proposed definition for “temporary” is “lasting for a limited time, not permanent, and may extend beyond ‘in the near future.’” “In the near future” is defined as “generally 40 weeks.”
  • The proposed regulation also identifies four modifications that the EEOC believes will, in virtually all cases, be found to be reasonable accommodations that do not impose an undue hardship when requested by an employee due to pregnancy:
    • Letting an employee carry water and drink in their work area;
    • Allowing an employee more restroom breaks;
    • Allowing an employee whose work requires standing to sit, and vice versa; and
    • Allowing breaks to eat and drink, as needed.
  • Under the proposed regulations, an employer may require documentation only if it is reasonable to do so under the circumstances and allows it to decide whether to grant the accommodation. The EEOC provides several examples of when it would be unreasonable for the employer to require documentation, including without limitation:
    • The limitation and need for accommodation are obvious;
    • The employer already has enough information to substantiate the known limitation;
    • The request is for one of the four accommodations above; and
    • The request is for lactation accommodation.

We expect slight modifications to these proposed regulations before its finalization. Employers should update their policies as needed.

Paid Sick Leave Expansion – SB 616

SB 616 amends the Healthy Workplaces, Healthy Families Act of 2014 to increase the amount of annual mandatory paid sick time from three days (or 24 hours) to five days (or 40 hours) for most employees. SB 616 also increases the accrual cap and year over year carryover limits from six days (or 48 hours) to 10 days (or 80 hours).

Although employers must allow accrued and frontloaded paid sick leave to carry over from year to year, an employer may limit an employee’s use of paid sick days in each year of employment, calendar year or 12-month period. SB 616 increases the permitted annual use cap to 40 hours or 5 days. If an employer uses the “front-loading” method of providing paid sick leave, that employer must now provide five days (40 hours) at the beginning of the year. If an employer uses a different accrual method, other than providing one hour for every 30 hours worked, the employer must now ensure an employee has at least 40 hours of accrued sick leave by the 200th calendar day of employment, in addition to the preexisting requirement that such employees have no less than three days (72 hours) by the 120th calendar day of employment.

SB 616 further provides that certain provisions “shall preempt any local ordinance to the contrary” specifically regarding: leave advances; balance notification requirements; employee notice requirements for unforeseeable and foreseeable leave; rate of pay for sick leave; timing of that pay; and reinstatement of leave upon rehire.

Reproductive Loss Leave – SB 848

SB 848 requires employers with five or more employees to provide up to five days of leave following a “reproductive loss event,” which is defined as “a failed adoption, failed surrogacy, miscarriage, stillbirth, or an unsuccessful assisted reproduction.” Only employees who have worked for the employer for at least 30 days are eligible for reproductive loss leave. Subject to certain exemptions, eligible employees must take the leave within three months of the reproductive loss event.

The leave is capped at a maximum of 20 days within a 12-month period, and employees may take this leave nonconsecutively. Leave may be unpaid, though employees may use vacation, personal leave, accrued sick leave, or other paid time off. Any information provided to the employer relating to the leave must be maintained as confidential and must not be revealed except to internal personnel or counsel, or as required by law. Like many other California leave laws, SB 848 prohibits employers from retaliating against any employee for requesting or taking leave for a reproductive loss.

Hospitality and Building Services Recall Rights Extended – SB 723

California Labor Code section 2810.8, which provides recall rights to certain hospitality and business services employees laid off because of Covid-19, is scheduled to sunset in December 2024. SB 723 extends the sunset provision and makes section 2810.8 expire in December 2025.    

Employers in the hospitality and building services, such as hotels with 50 or more guest rooms, certain private clubs, event centers of a certain size, airport hospitality operations, airport service providers, and employers that provide “janitorial, building maintenance, or security services” to office, retail, or other commercial buildings, must make written job offers to rehire employees whom they have laid off “due to reason related to the Covid-19 pandemic.” 

SB 723 redefined qualifying employees to mean any employee who worked for a covered employer for six months or more and whose separation from active employment occurred on or after March 4, 2020 and was due to a reason related to the Covid-19 pandemic, including a public health directive, government shutdown order, lack of business, a reduction in force, or other economic, nondisciplinary reason related to the Covid-19 pandemic. SB 723 adds a presumption that separations, due to lack of business; reduction in force; or other economic, non-disciplinary reasons, are due to a reason related to the Covid-19 pandemic unless the employer establishes otherwise by a preponderance of the evidence.   

Effective January 1, 2023, the California Privacy Rights Act (CPRA), which amends the California Consumer Privacy Act (CCPA), became the country’s first-ever comprehensive U.S. data privacy regime applicable to human resources data. First drafted to apply to consumer personal information, the CPRA now applies to employers and how they collect, use, store, and share personal information belonging to their California employees, job applicants, and contractors.  Employers must now post an online privacy policy to inform them how they collect, use and share personal information, ensure that contracts with service providers have statutorily mandated language, and establish procedures so that their California employees, job applicants and contractors can exercise their new data rights, including without limitation the right to have an employer delete their personal information, right to receive a copy of collected personal information, right to correct their personal information, and right to restrict the use of their sensitive personal information.

Thanks to a last-minute decision from the Sacramento County Superior Court on June 30, 2023, related to a complaint filed by the California Chamber of Commerce, the enforcement of CPRA regulations was moved from July 1, 2023, to March 29, 2024. Employers now have a few more months to put the finishing touches on required notices and policies, distribute them, and take the other steps necessary to implement their compliance program.  

We stand ready to help your company with advice and practical solutions regarding your employment practices. For more 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.***