Governor Newson recently signed into law several bills that will impose new requirements on employers. Unless specifically noted below, each of these new laws takes effect on January 1, 2024, and some will require changes to Employee Handbooks and company policies.
On October 4, 2023, Governor Newsom signed Senate Bill No. 616 (“SB 616”), increasing the amount of paid sick leave employers must provide to California employees. Employers must increase the amount of sick leave provided from three days (24 hours) to five days (40 hours) per year.
Similar to California’s existing paid leave statute, employers will be able to either frontload or allow employees to accrue the five days of sick leave. Employers must ensure that employees have accrued no less than three days of paid sick leave by the 120th calendar day of employment or calendar year and no less than five days of paid sick leave by the 200th day of employment or calendar year. Local ordinances that require more than five days of sick leave per year are still in effect and should be followed for employees who work in those localities.
On October 10, 2023, Governor Newsom signed Senate Bill No. 848 (“SB 848”) that further expands required unpaid leave by allowing employees to take protected time off due for reproductive loss. Similar to the bereavement leave that is required starting this year, SB 848 will entitle eligible employees to receive up to five days of protected time off following a failed adoption, failed surrogacy, miscarriage, stillbirth, or unsuccessful assisted reproduction. The bill also prohibits retaliation against an individual who uses this leave or shares information about it.
On October 8, 2023, Governor Newsom signed Senate Bill No. 497 (“SB 497”)—also referred to as the Equal Pay and Anti-Retaliation Protection Act. SB 497 amends California Labor Code Sections 98.6, 1102.5, and 1197.5 to create a rebuttable presumption of retaliation if an employee is disciplined or discharged within ninety days of making a wage claim or a compliant about unequal pay. By doing so, SB 497 makes it easier for employees to establish a case of retaliation. Employers would be able to rebut the retaliation presumption by showing that there is a legitimate, non-retaliatory reason for the discipline.
On October 10, 2023, Governor Newsom signed Senate Bill No. 365 (“SB 365”). Effective January 1, 2024, SB 365 provides that an appeal from an order dismissing or denying a petition to compel arbitration shall not automatically stay proceedings in the trial court during the pendency of the appeal. Currently, both California law and federal law require trial court proceedings to cease while appeals of orders denying arbitration are decided, in order to prevent interim litigation from depriving the appealing party of the benefits of arbitration during the appeal. The impact of SB 365 will be significant as it likely will lead to increased litigation, either in seeking a discretionary stay of trial court proceedings or by permitting plaintiffs to engage in discovery and pretrial motion practice while the appeal is pending. SB 365 raises serious due process concerns and is expected to be challenged.
Businesses and employers should take note that an appeal from an order denying a petition to compel arbitration in California state courts will not automatically obviate the need to continue litigating in court pending the outcome on appeal. Employers will be forced to spend resources litigating in court even though the court of appeal may ultimately order the matter to arbitration.
On September 20, 2023, Governor Newsom signed Senate Bill No. 553 (“SB 553”), which requires covered California employers to take steps to prevent and respond to workplace violence. SB 553 will require employers to implement a written workplace violence prevention plan, record workplace violence incidents, and train employees. Workplace violence prevention plans will be enforced by the Division of Occupational Safety and Health within the Department of Industrial Relations by issuance of citation and notice of civil penalty. Businesses must begin complying with the law on July 1, 2024.
Effective January 1, 2025, Senate Bill No. 428 (“SB 428”) will allow employers to seek restraining orders on behalf of their employees who have been harassed, or suffered unlawful violence or a credible threat of violence in the workplace or reasonably construed to be carried out in the workplace, or where there is “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.”
On October 13, 2023, Governor Newsom signed Senate Bill No. 525 (“SB 525”), which raises the minimum wage for California healthcare employees and sets a new salary threshold for who is considered an exempt healthcare employee (and exempt from overtime). SB 525 establishes three separate minimum wage schedules for covered healthcare employees, dependent on the nature of the employer. The bill will increase the minimum wage requirement to $21.00 – $25.00 over a period of years, commencing June 2024. The minimum wage increase will be applicable to employees of health care facilities, hospitals, clinics, and skilled nursing facilities. For healthcare employers with Union represented workers, this change may jeopardize the collective bargaining agreement (CBA) exemptions from daily overtime and hours of work requirements imposed by Labor Code sections 510 and 511, by making the 130% of minimum wage requirement of Labor Code section 514 economically infeasible.
On September 28, 2023, Governor Newsom signed Assembly Bill No. 1228 (“AB 1228”), which repealed the FAST Act and implemented new regulations of the fast food industry in California. Effective April 1, 2024, the minimum wage for fast food restaurant employees will increase to $20 per hour. Each year thereafter on January 1, the Fast Food Council (established within the Department of Industrial Relations) may increase the minimum wage by the lesser of 3.5% or the average change in the U.S. Consumer Price Index.
The California Health and Safety Code currently requires relevant workers to obtain a food handler card within 30 days of their hire date and to maintain a valid card for the duration of their employment as a food handler. On October 8, 2023, Governor Newsom signed Senate Bill No. 476 (“SB 476”), which will shift the burden entirely to employers to pay their workers for all costs associated with obtaining a food handler card. The new law also prohibits employers from conditioning employment on an applicant or employee having an existing food handler card.
On October 13, 2023, Governor Newsom signed Assembly Bill No. 1076 (“AB 1076”) which adds new Business & Professions Code §16600.1, making it unlawful to impose non-compete clauses on employees.
Under AB 1076, employers must notify current employees and former employees (employed after January 1, 2022), that any noncompete agreement or noncompete clause contained within an agreement the current or former employee signed is void unless the agreement or clause falls within one of the statutory exceptions set forth in Business and Professions Code section 16600, et seq.
Such notices must be an individualized communication to the employee or former employee, delivered to the last known address and email address the employee provided to the employer, and must be provided by February 14, 2024. A violation of these new provisions constitutes unfair competition under California’s Unfair Competition Law, which provides that a court must impose a civil penalty of up to $2,500 for each violation.
On October 7, 2023, California Governor Gavin Newsom signed Senate Bill No. 700 (“SB 700”) into law, expanding California’s Fair Employment and Housing Act (FEHA) to protect applicants from discrimination based on prior cannabis use, with certain exceptions.
The FEHA prohibits various forms of workplace discrimination. Last year, Assembly Bill 2188 amended FEHA to prohibit employers from engaging in any adverse employment action against employees for off-duty marijuana use. SB 700 expands that protection by prohibiting employers from requesting information from an applicant for employment relating to the applicant’s prior use of cannabis. SB 700 also prohibits employers from using information obtained from a criminal history about an applicant or employee’s prior cannabis use, unless the employer is permitted to consider or inquire about that information under the state’s Fair Chance Act, or other state or federal law. Employers should review and revise their antidiscrimination policies and drug use policies to comport with the new protections concerning prior cannabis use.
Please contact your Hill Farrer attorney or any member of our Labor and Employment department at (213) 620-0460 if you have any questions regarding how these legislative bills affect your business. We are available to review and revise your Employee Handbooks and policies to ensure that they comply with and accurately summarize new California laws.