New Laws Impacting Employers in California

New Laws Impacting Employers in California

California Governor Gavin Newsom has recently signed into law a number of bills that are significant for California employers. Here’s a rundown of the changes that affect employers in the state:

New Rebuttable Presumption of Retaliation. As we have discussed in a prior post, beginning on January 1, 2024, that state Labor Code will include a rebuttable presumption of retaliation if an employer takes adverse action against or disciplines an employee within 90 days of the employee engaging in protected conduct. Protected conduct may include, but isn’t limited to, discussing, inquiring, or complaining about wages, or encouraging other employees to exercise their own protected conduct rights.

Higher Minimum Wage for Fast Food Workers. Fast-food workers at national fast food chains in the state must get no less than $20 per hour in minimum wage. The term “national fast food chains” is defined as:

Limited-service restaurants consisting of more than 60 establishments nationally that share a common brand, or that are characterized by standardized options for decor, marketing, packaging, products, and services, and which are primarily engaged in providing food and beverages for immediate consumption on or off premises where patrons generally order or select items and pay before consuming, with limited or no table service.

In addition, the legislation also creates a “Fast Food Council” within the Department of Industrial Relations. The Council will be responsible for establishing minimum standards for wages, hours, and other working conditions to ensure and maintain the health, safety, and welfare of fast-food workers.

This new wage is effective April 1, 2024.

Expanded Restrictions on Non-Compete Agreements. As detailed in our previous client insight, beginning on January 1, 2024, employers may not enter into or enforce employment agreements, regardless of how narrowly it’s tailored, that restrict an employee from “engaging in a lawful profession, trade, or business of any kind.” This applies “regardless of where and when” such agreements are presented or were originally executed.

Written Prevention Plans. As we have previously posted, by July 1, 2024, most California employers must create, adopt, and implement a written Workplace Violence Prevention Plan. The plan must include “effective” procedures to:

  1. Investigate and respond to complaints of workplace violence;
  2. Prohibit retaliation against those who report issues;
  3. Communicate with employees regarding workplace violence;
  4. Identify and evaluate workplace violence hazards; and
  5. Revise and review the plan as needed.

The new law defines “workplace violence” as “any act of violence or threat of violence that occurs in a place of employment.”

The legislation also requires annual employee training related to workplace violence and the employer’s plan. This includes topics like how to report workplace violence, potential corrective measures, and how to avoid physical harm. Additional training will be required whenever an employer changes its plan or identifies a previously unrecognized workplace violence hazard. In addition, employers must maintain training records and records of each workplace violence hazard or incident (including how they were identified, investigated, and corrected, as applicable) for five years. Note that the new law does not apply to the following:

  1. employers already covered Cal/OSHA’s Violence Prevention in Health Care requirements;
  2. employees who telework from a location of their own choice outside of the employer’s control;
  3. locations not accessible to the public with fewer than 10 employees at one time;
  4. the Department of Corrections and Rehabilitation; and
  5. law enforcement agencies.

Temporary Restraining Orders. California employers may seek restraining orders on behalf of employees who’ve suffered harassment, and not merely those with a “credible threat of violence.” The new law defines “harassment” as “a knowing and willful course of conduct directed at a specific person that seriously alarms, annoys, or harasses the person,” “that serves no legitimate purpose,” that “would cause a reasonable person to suffer substantial emotional distress,” and actually does “cause substantial emotional distress” to the employee at issue. Further, the employee doesn’t need to be named in the temporary restraining order. This law goes into effect January 1, 2025.

Reproductive Loss Leave. As of January 1, 2024, employees are entitled to five days of protected time off for a “reproductive loss event.” This new law applies to private employers who have five or more employees and any California employee employed for at least 30 days prior to the commencement of leave—even if part of that time was spent working outside of California. “Reproductive loss event” is defined to include a failed adoption, failed surrogacy, miscarriage, stillbirth, or unsuccessful assisted reproduction. Employers are required to keep an employee’s request and related information confidential unless necessary or otherwise required by law. The employers’ existing leave policies will determine if the leave is paid or unpaid. Nonetheless, employees must be permitted to use paid time off, paid vacation, paid personal leave, accrued paid sick leave, or other compensatory time off in lieu of taking the five days unpaid. The five days must be taken within three months’ of the reproductive loss event but don’t have to be taken consecutively.

Increased Sick Leave. Employees in the state must now be provided with at least five days or 40 hours of paid sick leave under the Healthy Workplaces, Healthy Families Act. That’s an increase from the three days or 24 hours. Note that local ordinances may require higher amounts of paid sick leave. Employers may still require employees to work for 90 calendar days before using sick leave. Accrued but unused sick time provided separate and apart from a vacation or omnibus paid time off policy still doesn’t have to be paid out upon termination. This law is effective as of January 1, 2024.

Discretionary Stays Pending Appeals of Arbitrability. As we have discussed in detail, the California Code of Civil Procedure will no longer provide for automatic stays of trial court proceedings pending appeal of orders dismissing or denying a petition to compel arbitration as of January 1, 2024. Rather, trial judges will have discretion to deny a stay pending appeals of arbitrability.

Expanded Public Prosecution Rights. Beginning January 1, 2024, public prosecutors (such as district attorneys, city attorneys, and county counsel) can prosecute or independently enforce violations of the Labor Code (except those related to agricultural labor relations, apprenticeships, or a Private Attorneys General Act or “PAGA” action). In effect, the public prosecutors can assume the position of the Labor Commissioner for their jurisdictions and seek injunctive relief and seek the same attorney’s fees and costs the Labor Commissioner would be entitled to under Labor Code § 98.3. Moreover, the amended law also says that any agreement between an employee and a putative employer limiting representative actions or mandating arbitration “shall have no effect on the authority of [a] public prosecutor or the Labor Commissioner to enforce the [Labor] [C]ode.” The law also states that an “appeal of the denial of any motion … to impose such restrictions on a public prosecutor or the Labor Commissioner shall not stay the trial court proceedings.”

Increased Penalties for Independent Contractor Misclassification. A new law will impose civil penalties of between $5,000 to $15,000 per violation for:

  1. willful misclassification, and/or
  2. charging a willfully misclassified person a fee or “making any deductions from compensation” for any purpose “arising from [their] employment” that would otherwise be illegal if they weren’t misclassified.

The penalties can be upped to $10,000-$25,000 per violation where there is or has been a pattern or practice of violations. The penalties are in addition to any other available penalties or fines. The Labor Commissioner can do the following:

  1. determine that a person or employer has committed violations;
  2. investigate alleged violations;
  3. order temporary relief after an investigation or hearing;
  4. issue citations; and
  5. file civil actions.

Employees suing to enforce these rights have the option to recover damages or enforce a civil penalty under PAGA (not both).

This law is effective January 1, 2024.

Laid-Off Hospitality Employees Re-Hiring Rights. As of January 1, 2024, California Labor Code § 2810.8 will be expanded to cover more employees. The statute will require covered employers to provide laid-off employees with information about available job positions for which they’re qualified and to offer them positions based on a preference system and in accordance with a specified timeline. The new law defines “laid-off employee” as an individual who’s employed:

[Six] months or more and whose most recent separation from active employment by the employer 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, reduction in force, or other economic non-disciplinary reason due to the COVID-19 pandemic.

Like the original version of the law, covered employers include hotels with 50 or more guest rooms, airport hospitality operations and service providers, certain event centers, and employers that provide “janitorial, building maintenance, or security services” to office, retail, or other commercial buildings.

Prior Marijuana Usage. Starting January 1, 2024, employers may not ask for information about an applicant or employee’s prior use of marijuana. They also can’t discriminate against current or prospective employees on the basis of criminal history related to prior marijuana use unless otherwise permitted by law.

Bottom Line

Employers should become familiar with these new laws and changes to existing statutes and make changes to employment policies and employee handbooks.

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