2025 Employment Law Update

With the new year, it is time once again to summarize the new legislation that will 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, 2025.  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. 

Changes Affecting Minimum Wage

2025 Minimum Wage Increases and Its Effect on Exemption Classifications

Starting January 1, 2025, California’s minimum wage will increase by .50 cents to $16.50/hour. Because of this increase, starting on January 1, 2025, the annual salary requirement for exempt employees in California will be $68,640 for employers. 

Many jurisdictions in California have enacted their own minimum wage ordinances requiring that employers pay higher minimum wages for work performed within their geographical boundaries.

Below are the current and expected increases in minimum wage in several major cities in California:

  • City of Los Angeles: $17.28 / hour – Since July 1, 2024
  • City of San Diego: $17.25 / hour – Effective January 1, 2025
  • San Francisco: $20.96 / hour – Since July 1, 2025
  • South San Francisco: $17.70/ hour – Effective January 1, 2025

Certain businesses may also be subject to industry-specific minimum wage and salary requirements, including without limitation: 

  • Fast Food Restaurant Workers – Effective April 1, 2024, the minimum wage for workers at national fast food chain restaurants increased to $20 an hour.
  • Hotel Workers – Certain hotel workers in varying cities have higher minimum wage requirements.  For example, in Los Angeles and Santa Monica hotel workers must be paid $20.32 per hour since July 1, 2024.
  • Health Care Workers – Effective October 16, 2024, the minimum wage of workers who work for a covered health care facility and provide health care services or support the provision of health care increased from a range of $18 per hour to $23 per hour, depending on the facility the covered health care workers work for.  
  • Computer Software Employees – In order for certain computer software employees to be exempt from overtime requirements under the labor code, one of the criteria that must be met is that they must be paid a minimum hourly rate of at least $56.97 per hour ($9,646.96 to $9,888.13 per month, $115,763.35 to $118,657.43 yearly) effective January 1, 2025.

Changes Affecting Substantially All Employers

Freelance Worker Protection Act – SB 988

The Freelance Worker Protection Act (“FWPA”) imposes certain minimum requirements on contracts between a hiring party and a “freelance worker.”  A “freelance worker” is defined as a person who is hired or retained as a bona fide independent contractor to provide “professional services” in exchange for an amount equal to or greater than $250.   The term “professional services” refers to the services outlined in California Labor Code Section 2778, which includes marketing, administrator of human resources, travel agent services, graphic design, grant writing, and fine artist, among others.

Under the FWPA, contracts between hiring parties and freelance workers must be in writing. The hiring party must furnish a signed copy of the written contract, either physically or electronically, to the freelance worker, and must retain the contract for no less than four years.

The new law also requires hiring parties to pay the freelance worker by the date specified by the contract or, if the contract does not specify a date, no later than 30 days after completion of the freelance worker’s services.   The law also prohibits a hiring party from discriminating or taking adverse action against a freelance worker for taking certain actions related to the enforcement of the Freelance Worker Protection Act.

Employers should assess whether their current contracts with freelance workers need to be amended and/or memorialized in writing to comply with this new law.

Social Compliance (Child Labor) Audits – AB 3234

Under AB 3234, any employer that has voluntarily subjected its business to a “social compliance audit” to determine in whole or in part if child labor is involved in the employer’s operations or practices, must post a link on its website to a compliance report detailing the findings of the audit.  A “social compliance audit” is defined as a voluntary, nongovernmental inspection or assessment of an employer’s operations and practices to verify that it complies with state and federal labor laws, including health and safety regulations about child labor.

The following information must be included in the compliance report:

  • The year, month, day, and time the audit was conducted, and whether the audit was conducted during a day shift or night shift;
  • Whether the employer engages in or supports the use of child labor;
  • A copy of the employer’s written policies and procedures regarding child employees;
  • Whether the employer exposes children to any workplace situations that are hazardous or unsafe to their physical and mental health and development;
  • Whether children work within or outside regular school hours, or during night hours, for the employer; and
  • A statement that the auditing company is not a government agency and is not authorized to verify compliance with state and federal labor laws or other health and safety regulations.

AB 3234 leaves critical compliance details unclear, such as disclosure deadlines and how an “employer” is defined. Because of these new disclosure requirements and the uncertainty AB 3234 has created, employers may be discouraged from voluntarily conducting “social compliance audits.”

PAGA Reform and Construction Worker Exemption – AB 1034

On July 1, 2024, Governor Newsom and business and labor groups negotiated and passed a compromise legislation (SB 92 and AB 2288) that significantly reformed the Private Attorneys General Act of 2004 (“PAGA”). These new laws apply only to cases submitted to the California Labor & Workforce Development Agency (“LWDA”) on or after June 19, 2024. For a summary of the key changes to PAGA, please refer to our article PAGA Reform – What Employers Need To Know.

AB 1034 extends the exemption from the PAGA for certain employees in the construction industry.  This exception, which began in 2016 and is now extended until January 1, 2038, only applies to employees in the construction industry covered by a collective bargaining agreement (CBA) that: (i) expressly provides for wages, hours of work, and working conditions of employees; (ii) provides premium wage rates for all overtime worked; and (iii) provides a regular hourly pay rate of not less than 30 percent more than the state minimum wage.

The CBA must also prohibit all violations that would be redressable under PAGA, and must expressly waive the requirements of PAGA, among other requirements.

California Worker Freedom From Employer Intimidation Act – SB 399

SB 399, which adds new criteria to section 1137 of the California Labor Code, prohibits public and private employers from threatening or taking adverse action against employees who decline to attend or participate in employer-sponsored meetings that involve discussions about an employer’s opinions on religious or political matters.

These meetings are commonly known as “captive audience” meetings. Although the law is broadly drafted, the practical impact, and anticipated target, are mandatory meetings about union organization. The Act may be enforced by private court action or the California Labor Commissioner.

FEHA Amendments – SB 1100 and SB 1137

SB 1100 adds to California’s Fair Employment and Housing Act (“FEHA”) by making it an unlawful employment practice for employers to include statements about the need for a driver’s license in job advertisements, postings, applications, and other employment material, except where the employer (i) reasonably expects driving to be one of the job functions of a position and (ii) reasonably believes that alternative transportation “would not be comparable in travel time or cost to the employer.”

According to the bill’s legislative history, the underlying focus of this law is that license requirements disproportionally impact people with disabilities, low-income individuals, and those living in urban areas with access to public transportation who choose not to drive or own a vehicle.

SB 1137 also clarifies existing law and prohibits discrimination based on the intersectionality (i.e., combination) of two or more protected traits. In the employment context, this law clarifies that the protections available to individual characteristics enumerated under FEHA also apply to a combination of those same characteristics.

Employment Workplace Poster Requirements – AB 1870 and AB 2299

AB 1870 amends Labor Code section 3550 relating to employee rights notices in the workplace. Section 3550 requires employers subject to the workers’ compensation system to keep posters conspicuously posted (in locations frequented by and easily read by employees) to inform employees about several topics, including how to obtain medical care for workplace injuries. With the passage of AB 1870, this notice now must include information regarding an injured employee’s right to consult a licensed attorney as to their rights under those same workers’ compensation laws. 

AB 2299 also addresses workplace posters involving different workplace topics. California employers must display a list of employees’ rights and responsibilities provided under state whistleblower laws. However, current law offers little guidance about how to display that information. AB 2299 attempts to resolve these questions by clarifying that the Labor Commissioner is responsible for the development of (i) a model list of employee rights and responsibilities under existing whistleblower laws and (ii) a model notice to be used in the workplace. 

The Labor Commissioner office has created a model document/poster, available here. All California employers should prominently display this poster where other workplace posters are displayed and ensure that the typeface is larger than size 14 point type.

Laws Related to Protected Leaves

Paid Family Leave Updates – AB 2123

AB 2123 eliminates an employer’s ability to require that employees use accrued vacation leave before accessing California’s Paid Family Leave Program (“PFL”). The PFL is a state-run program that provides certain benefits to qualified individuals who take time away from work to care for seriously ill family members, such as children and spouses.

Previously, employers could require that employees take up to two weeks of accrued vacation before they access PFL benefits. As of January 1, 2025, this requirement will no longer apply.

Reframing Victim-of-Violence Leave – AB 2499

AB 2499 revised and recasted the jury, court, and crime victim time off protections for employees as unlawful employment practices within the California Fair Employment and Housing Act (FEHA) and, thus, within the enforcement authority of the Civil Rights Department (CRD). AB 2499 affects both paid sick leave (Healthy Workplace Healthy Families Act), the statewide paid sick leave law, and unpaid leave (FEHA) requirements.

An employee who is the victim of a “qualifying act of violence” and works for an employer with 25 or more employees, may take time off from work, not to exceed a total of 12 weeks, for a number of purposes, including to obtain or attempt to obtain certain court relief for a family member, to assist a family member obtain medical attention for or to recover from injuries caused by a qualifying act of violence, to relocate or engage in the process of securing a new residence due to the qualifying act of violence, and other crime victim related purposes. The employer may limit the 12 weeks of leave under certain circumstances, such as when the employee’s family member is a victim who is not deceased as a result of a crime.

AB 2499 also expands California’s paid sick leave requirements and expands the eligibility for reasonable accommodations to include an employee who is a victim or whose family member is a victim of a “qualifying act of violence.” AB 2499 specifically provides that reasonable accommodations may include the implementation of safety measures, including a “transfer, reassignment, modified schedule, [or] changed work telephone,” among other accommodations, provided however that an employer is not required to undertake an action that would constitute an undue hardship on the employer’s business operations. 

For most protections under AB 2499, a crime victim means an individual against whom a “qualifying” act of violence” is committed. “Qualifying act of violence” includes domestic violence, sexual assault, stalking, and other crimes.

Finally, AB 2499 requires employers to notify employees of these rights upon hire, annually, at any time upon request, and at any time an employee informs the employer that the employee or the employee’s family member is a crime victim. The CRD is required to develop and post a model form by July 1, 2025.

AB 2499 is one of the more complex new employment laws for 2025 and employers should consult with their employment counsel about its specific requirements and update their policies accordingly.

Cal-Savers/Retirement – SB 1126

Senate Bill 1126 expands California’s CalSavers Retirement Savings Program by requiring employers with at least one employee to register for CalSavers by December 31, 2025, if the employer does not sponsor a retirement plan for its employees, or register as exempt if a retirement plan is provided.  Employers who do not register for CalSavers by the deadline may face penalties.   This law does not apply to sole proprietorships, self-employed individuals, or other business entities that do not employ any individuals other than the owners of the business.

Conclusion

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.***