PUBLICATIONS

Executive Summary: Employers should look forward to another round of changes to the Golden State’s employment standards this year, the most challenging of which will be addressing employee protections for off-premises cannabis use, expanded paid sick leave benefits, and further restrictions on the use of noncompete agreements.

As 2024 is fast approaching, employers should be aware of a number of new California laws, many of which will go into effect in 2024. Below is a brief overview of the most notable new laws affecting businesses in California:

• Expanded Protections for Off-Duty/Off-Premises Cannabis Users (SB 700). Last year, the California legislature caused a stir when it amended the state Fair Employment and Housing Act (FEHA) to create employee protections for off-premises, off-duty cannabis use and restricted the type of cannabis testing that employers could use. Fortunately, the state delayed enforcement of the law until January 1, 2024. California has since doubled down on these protections by enacting SB 700, which makes it unlawful, with limited exceptions, for employers to ask applicants about their prior cannabis use. To summarize, beginning next year, employers will only be permitted to take action against an employee for their on-the-job or on-premises use of cannabis. Additionally, testing designed only to detect the presence of nonpsychoactive cannabis metabolites will not be a valid basis for taking action against an employee. Nor will prospective employers be permitted to inquire about an applicant’s past cannabis use.
• Expanded State Paid Sick Leave Mandates (AB 518). We previously discussed the state’s expansion of paid sick leave rights for employees in our October 6, 2023 Alert. Prior to the amendment, employees were only entitled to three days of paid sick leave per year. Beginning next year, employers will be required to provide at least five paid sick days annually to employees.
• Reproductive Loss Leave (SB 848). Currently, California requires employers to provide up to five days of bereavement leave upon the death of a family member. As a result of SB 848’s enactment, employers will now be required to provide up to five days of unpaid leave to an employee following a reproductive loss event. Leave may be taken within three months of each reproductive loss event, and may be taken for multiple events, up to 20 days within a 12-month period.
• Expanded Whistleblower Retaliation Rights (SB 497). Under SB 497, employees will find it easier to maintain certain whistleblower retaliation claims under the California Labor Code, including retaliation claims for complaining of or opposing an employer’s illegal conduct, and opposing an employer’s equal pay practices. Specifically, the law now prescribes a rebuttable presumption of liability “if an employer engages in any action prohibited by this section within 90 days of the protected activity specified in this section.” The amendments are likely to have a significant impact on employers’ disciplinary practices.
• Stricter Laws Governing Noncompete/Nonsolicitation Agreements (SB 699/AB 1076). SB 699 expands upon existing law barring certain post-employment noncompete agreements and nonsolicitation agreements. Per the expansion, the amendment prohibits enforcement of noncompete/nonsolicitation agreements regardless of where and when the contract was signed. Critically, the amendment allows the employee to bring a private right of action to enforce the law, and to recover attorney’s fees and costs. In conjunction with SB 699’s enactment, the state also enacted AB 1076, which not only codifies existing legal precedent banning certain noncompete/nonsolicitation agreements, but also requires employers to notify current and former employees in writing by February 14, 2024, that any prior noncompete agreements that contravened the law are void.
• Workplace Violence Prevention Requirements (SB 428 / SB 553). Under SB 428, employers may seek temporary restraining orders and injunctions on behalf of their employees who have suffered harassment. In conjunction with SB 428, California also enacted SB 553, which requires certain employers, by July 1, 2024, to establish, implement and maintain an effective workplace violence prevention plan, including providing effective procedures to accept and respond to employees’ workplace violence reports, recording incidents of workplace violence, providing effective training, and retaining records for a certain time period. The law also allows, beginning January 1, 2025, an employee’s collective bargaining representative to seek a temporary restraining order on the employee’s behalf.
• Electronic Employee Notifications (AB 1355). Owing to the sea change in remote work practices driven by the COVID-19 pandemic, and in an effort to help the environment, California will now permit employers to send all notifications concerning eligibility for the Earned Income Tax Credit and other tax credit programs electronically, provided that the employee affirmatively, and in writing, voluntarily opts into the electronic receipt of such statements. Unless further extended, the new law is scheduled to sunset on January 1, 2029.

Industry Specific Changes

Employers in certain industries will also need to be mindful of the following changes affecting their workforces:

• Higher Minimum Wage Requirements for Certain Healthcare Workers (SB 525). Beginning June 1, 2024, California will set separate minimum wage requirements for employees in the healthcare industry. Depending on the type of health care operation or facility, the Golden State will prescribe minimum wages that range between $18 to $23 on June 1, 2024, with annual or bi-annual increases thereafter. As an example, covered health facilities with 10,000 or more full-time equivalent employees (FTEEs); covered health care facilities that are part of an integrated health care delivery system with 10,000 or more FTEEs; covered dialysis clinics or persons who own, operate or control a dialysis clinic; or covered heath facilities owned, affiliated or operated by a county with a population of 5,000,000 as of January 1, 2023, must begin offering minimum hourly wages for covered health care employees at $23 by June 1, 2024; $24 by June 1, 2026; $25 by June 1, 2026, and adjusted annually for inflation thereafter.
• Amendments to Fast Food Worker Law (AB 1228). In our September 19, 2022 Alert, we discussed California’s enactment of AB 257 (the so-called Fast Food Worker Law), which made significant changes to employment relations within the fast food industry. AB 257 would have, among other things, required the establishment of a 10-member “Fast Food Council” that would have had broad powers to establish sector-wide minimum standards on wages, working hours and other working conditions related to the health, safety and welfare of fast food restaurant workers. It would have also created a path for franchisors to be liable for the employment law violations of their franchisees. Following a response from several industry groups seeking a referendum in the November 2024 election to put a hold on the implementation of the Council, a compromise was reached between the fast food industry and labor unions. This compromise resulted in the enactment of AB 1228, which made several amendments to AB 257. The amendments include:
  • Limited application of the new law to “national fast food chains”—namely, a set of limited-service restaurants consisting of more than 60 establishments nationally.
  • A new version of the Fast Food Council with more limited authority. As an example, this new version would not be able to develop regulations governing paid time off benefits or predictable scheduling.
  • A minimum wage of $20 per hour for employees of “national fast food chains,” effective April 1, 2024; thereafter, the council may provide annual increases every year beginning January 1, 2025.
  • Removing the joint liability provision that would have imposed employment liability on a franchisor.
• Meal/Rest Break Exemption for Certain Airline Flight Crew Members Covered by the Railway Labor Act (SB 41). In follow-up to a 2021 Ninth Circuit appellate ruling that extended strict meal and rest break requirements to airline crews, California made the sensible choice of creating a limited exemption for certain airline employees. Under the new law, the exemption applies to airline cabin crew employees who are either covered by a valid collective bargaining agreement that addresses the provision of breaks and compensation or are in the process of entering a collective bargaining agreement addressing the same points. As an emergency measure, the law went into effect immediately.
• Expanded Re-Hiring Rights for Hospitality/Airport Employees (SB 723). The new law amends an existing law providing certain hospitality and airport employees with the right to recall after being laid off for a reason related to the COVID-19 pandemic. Previously, certain covered employers in the hospitality industry (including airport hospitality and service providers) were required to offer open positions to qualified employees laid off due to the COVID-19 pandemic but those rights only applied to individuals employed with the employer prior to January 1, 2020. Prior law also was unclear regarding how employees could demonstrate they were separated for a reason related to the COVID-19 pandemic. The amendments now expand those rights to include anyone who was employed by an employer for at least six months—at any time—and whose most recent separation of employment by the employer occurred on or after March 4, 2020. The new law also creates a rebuttable presumption that anyone separated due to lack of business, reduction in force, or other economic, nondisciplinary reason was separated because of the COVID-19 pandemic. The new law is scheduled to sunset by December 31, 2025.