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CLIENT UPDATE – 2024 California Labor Law Update

Image of 2024 Cummins & White LLP CA Labor Law Seminar

2024 has seen a number of new employment laws take effect in the following areas: sick leave, cannabis, federal regulations, workplace violence prevention plans, whistleblower claims and PAGA claims. This Cummins & White LLP summary will aid you in updating your employee handbooks for the upcoming year to ensure compliance with these new requirements.

SB 616: Sick Leave – The New Requirements

The most significant change in sick leave is its increase to 40 hours (5 days) of paid sick leave (PSL) each calendar year or 12-month period, effective January 1, up from the previous 24 hours (3 days) minimum.  This method does not require an accrual or carryover of unused sick leave.  The accrual method accrues one hour of PSL for every 30 hours worked (carry over from year to year is now capped at 80 hours (10 days) accrued. Part-time employees who accrue differently from one hour of PSL for every 30 hours worked must accrue 24 hours of PSL by their 120th day of employment and 40 hours by their 200th day of employment. Below is a bullet point summary of the new requirements enacted by the California Legislature:

  • Increase to 40 hours (5 days) effective January 1
  • Increase to accrual rate carryover to 80 hours
    (Note: no carryover for lump sum method)
  • Accrual of full sick leave for newly hired employees by 200th day of employment
  • Notice to employees on pay stub and 2810.5 notice
  • Part-time employees: employees who accrue differently from one hour of PSL for every 30 hours worked must accrue 24 hours of PSL by their 120th day of employment and 40 hours by their 200th day of employment;
    • If using 1:30, employer DOES NOT have to provide 24 hours or 3 days by the 120th day and 40 hours or 5 days by the 200th day
  • Effect on local paid sick leave laws
  • Adapting if non-calendar year is used for lump sum method
    • Must add minimum of 16 hours as of January 1
    • Employee receive full 40 hours when 12 months expires (anniversary of hire, etc.)
    • Can convert to calendar year and give full 40 hours
    • Not required to carry over unused sick leave from 2023
  • Adapting if non-calendar year is used for accrual method
    • Carryover from prior year can be used
    • No requirement to add additional accrual
    • Allow employees to use up to 40 hours until 12 months expires
  • Adapting if PTO is offered in lieu of sick leave
    • Should not need to change if PTO accrues at rate that equals 40 hours annually
    • Must make sure minimum accruals are met by the deadlines (120/200 days) for newly hired employees
    • Other Compliance Requirements
    • Must post revised sick leave poster
    • Must revise 2810.5 notice with sick leave information and distribute to all current and newly hired employees
    • Must reflect new sick leave balances on employee pay stubs (or alternate document provided with pay stub)
  • Cannot require employees to take sick leave
  • Requiring doctor’s note for paid sick leave
    • Cannot require proof of sickness as a condition of paying out sick leave
    • PTO plans make it difficult to distinguish between protected sick leave and non-protected regular time off
    • Can require a note releasing the employee to return to work at the conclusion of sick leave
  • Sick leave must be tracked for hourly and salaried employees
    • Deductions can be made to the sick leave allotment for exempt employees (full and partial days)
    • Cannot deduct from salary for partial day absence once sick leave is exhausted

SB 700/AB 2188: Cannabis Law – CA as the Cheech & Chong State

Effective January 1, 2024, discrimination against employees for off-duty marijuana use is explicitly prohibited per an amendment to the Fair Employment and Housing Act (FEHA) by both SB 700 and AB 2188.  This new law prohibits employers from asking about off-duty use in interviews or job applications, except where federal background check or security clearance is required, where testing is required by state or federal law (drivers, pilots, etc.), or in construction and building trades.  Employers may still use valid drug testing, screening for impairment, and may terminate employment based on reasonable suspicion or impairment testing.  The best practice is to have evidence of  both reasonable suspicion and impairment.  It is important to note that the new law does not permit employees to be impaired by, or to possess, cannabis on the job.  Employers still have the right to maintain a drug (and alcohol) free workplace.

  • Prohibition on discriminating against employees for off-duty marijuana use
    • Now a protected classification under FEHA
  • Cannot ask about off-duty use in interviews or job applications
  • Can still terminate based on reasonable suspicion or impairment testing
  • Can still enforce rules prohibiting use or being under the influence
  • Exceptions to coverage: construction, where federal background check or security clearance required, or where testing required by state or federal law (drivers, pilots, etc.) or federal contracts
  • Effect on pre and post employment drug testing
    • You can still engage in drug and alcohol testing
    • Cannot use test that only measures non-psychoactive cannabis metabolites (hair and urine)
    • Can use test that measures recent use of cannabis (saliva and breath) or impairment (roadside) tests
    • Can still terminate if employee refuses to take compliant test
    • Uncertainty whether saliva or breath tests are sufficiently accurate with respect to the window of impairment to prove employee is under the influence
  • Enforcing policies prohibiting on duty use
    • Reasonable suspicion can still be the basis for a termination
    • Need strong evidence of recent use
    • Important to have supervisors and managers trained on how to evaluate employees suspected of use
    • Must document the observed behaviors leading to suspicion
  • Best practice is to combine reasonable suspicion with testing
    • Even though test results can be challenged, harder when paired with evidence from trained observers

Department of Labor Regulations: What You Need to Know

Independent Contractors

  • Rescinds rule issued in 2021 that identified two core factors to determine whether employee or independent contractors, nature and degree of control over the work and opportunity for profit or loss
  • Reinstitutes totality of circumstances analysis based on economic realities, taking into account multiple factors
  • Less restrictive than AB 5, but makes it more likely that individuals in other states will be found to be employees

Overtime Exemption

  • Rule proposed to raise the federal exempt salary threshold to $55,068 expected to be adopted in April
  • Wouldn’t change the higher California exempt salary threshold, but would affect employees in other states

NLRB Regulations: What You Need to Know

Work Rules and Employee Handbooks

  • Stericycle decision outlaws overbroad rules and handbook provisions that interfere with Section 7 rights
  • Examples of potential unlawful policies include civility rules, limitations on social media, camera recording, confidentiality and use of company email or other internet resources
  • Important to review handbook and other policy documents and put limiting language to defend against overbreadth

Severance Agreements

  • McLaren McComb decision prohibits use of non-disparagement and broad confidentiality clauses in severance agreements
  • Important to update severance agreements and revise language to restrict defamation of company and employees and limit breadth of confidentiality and release clauses

SB 553: Workplace Violence Prevention – Avoiding MMA at Your Work Site

Section 6401.9 of the California Labor Code was added to require all California employers to develop, implement and maintain a workplace violence prevention plan effective July 1, 2024.  The workplace violence prevention plan must include 1) the names or job titles of the persons responsible for implementing the plan, 2) ________.

  • New workplace violence prevention requirements effective 7/1/24
    • Applicable if have 10 or more employees in California
  • Must develop a workplace violence prevention plan
    • Can include in IIPP or standalone plan
  • Must provide workplace violence training annually and provide Q&A
  • Required to keep a log of workplace violence incidents: details and employer response; must keep training and violence logs for 1 year
  • No requirement to report to OSHA or other agency

SB 497: Whistleblower Claims – What You Need to Know

  • Employee complaints about unlawful work practices can result in retaliation claims
    • If employee is disciplined or terminated following a complaint
  • New law creates a rebuttable presumption of retaliation
    • For any discipline or discharge within 90 days of submitting the complaint
  • Rebutting the presumption will require documented evidence of a non-retaliatory reason for the action

Private Attorney General Act of 2004 (PAGA): What You Need to Know

PAGA = Pay A Gargantuan Amount

PAGA = Pretty Much All Goes to the Attorneys

  • 1 year limitations period; penalties for Labor Code Violations, 75% of penalties to the State
  • Approx.1/3 of penalties amount to plaintiff’s counsel; minor payment (e.g., $5k) for named plaintiff
  • Individual PAGA claims can and are being sent to arbitration to determine if plaintiff is an “aggrieved employee” with standing to pursue representative claims
  • Representative claims are being stayed
  • Ballot initiative in the works for 2024 to repeal PAGA, expect HUGE spending on this
    • Repeal arguments: workers get more, more quickly, and employers pay less, when state prosecutes actions directly

Arbitration Agreements: Are They Still Valid?

  • Arbitration agreements are valid and enforceable if they are written correctly
  • Ongoing litigation over whether signing arb agreement can be a condition of employment
  • Cannot agree to arbitrate representative PAGA claims
  • Can still agree to arbitrate class claims and individual PAGA claims
  • Agreements must be drafted to specifically state an intention to arbitrate PAGA and class claims
  • If in a union contract, must specifically identify waiver of CA Labor Code/PAGA rights and intention to arbitration all claims
  • If used with union members, must state that Federal Arbitration Act applies

Independent Contractors: Can You Still Work With Them?

  • Yes, you can use independent contractors, but…
  • You must use an independent contractor agreement that addresses all of the factors taken into account when determining whether a worker is an employee or an independent contractor
  • Business to business relationship is still a good idea
  • Note: Growing list of businesses excluded from AB5 via legislation

SB 699/AB 1076: Restrictive Covenants – Enforceable or No?

In California, non-compete and non-solicitation (of customers, employees) clauses have been invalid and unenforceable for decades.  Now, they are unlawful.  The new law invalidates past non-compete language, and SB 699 adds a new Section 16600.5 to the California Business and Professions Code that provides that any contract that is void under this chapter is unenforceable regardless of where and when the contract was signed.  So, employers can’t enforce agreements entered in other states under different state laws.  The only exceptions authorized by the statute are narrowly defined as relates to goodwill of a business, sale of a business or substantial ownership stake in a business.  AB 1076 requires employers to notify in writing by February 14, 2024, employees and former employees who were required to sign a noncompetition clause or agreement, that such agreement or clause is void.

  • In general, restrictive covenants like non-compete and non-solicitation (of customers, employees) clauses are invalid
  • They were unenforceable, they’re now unlawful
  • New law invalidates past non-compete language unless narrow exceptions met (e.g., sale of business)
  • Can’t enforce agreements entered in other states under different state laws
  • Requiring an employee to sign an agreement with a restrictive covenant is an “unfair business practice” and opens the employer up to lawsuits for damages
  • Feb. 14: must have notified employees required to sign restrictive covenants that they are void
  • Can still enforce provisions on confidentiality and maintenance of trade secrets and invention assignment agreements
  • Suggested practice: focus on language around confidentiality of trade secrets, proprietary and confidential information and enforcement of agreements regarding the same

Privacy Laws: What You Need to Know

  • Employee data covered by CPRA/CCPA
    • CPRA applies to businesses with more than $25 million gross revenue
  • CCPA regulations effective March 2023, but grace period to July 1, 2023 then delayed
  • Effective date for employers/enforcement was pushed to March 29, 2024
    • But Feb. 9 appeals court ruling: enforcement can happen in February, subject to an ongoing appeal by the CA Chamber of Commerce
  • Recommendation 1: ensure your own practices, policies and procedures are compliant
    • Notices to applicants, new and current employees re collection, use, retention of info/data; check your website’s privacy and cookie policies/notices
    • Users have the right to review, edit, get copies of, delete data
  • Recommendation 2: ensure your contracts with third parties are compliant
  • Recommendation 3: ensure you are complying with state/global privacy laws if applicable

SB 848: Reproductive Loss Leave – The Essential Facts

This new law applies to employers of 5 or more employees who have 1) completed 30 days of service and 2) suffered a reproductive loss such as miscarriage, stillbirth, failed adoption, unsuccessful assisted reproduction, or failed surrogacy. The 5 days of protected leave need not be taken consecutively, but they must be taken within 3 months of the event.  An employee suffering from a reproductive loss may use any available paid leave, but the protected leave is not required to be paid leave.  A maximum of 20 days per year is available for multiple losses, but only 5 days per loss event.  The employer is required to maintain confidentiality of reason of leave.  The employee is not required to provide documentation to use the protected leave.  This protected leave applies to anyone who would have been a parent, save for the reproductive loss.

  • Applies if 5 or more employees, employee has completed 30 days of service, and would have become parent
  • Requires five days of unpaid leave for employee experiencing reproductive loss
  • Reproductive loss defined as miscarriage, stillbirth, failed adoption, failed surrogacy, or unsuccessful assisted reproduction
  • Applies to anyone who would have been a parent
  • Application to religious employers
  • Employee not required to provide documentation
  • May use any available paid leave but employer cannot require use
  • Restrictions
    • Can be intermittent but must be taken within 3 months of loss
    • Maximum of 20 days per year for multiple losses, only 5 days per loss event
    • Employer required to maintain confidentiality of reason of leave

What’s Coming Next: Can It Get Any Worse for Employers?

  • Artificial Intelligence Regulation: 30+ AI related bills in CA legislature, CA privacy agency involved
  • Federal Department of Labor: considering a rule to make AB 5 applicable nationwide
  • Federal Department of Labor: new rule proposed to raise exempt salary threshold for “white-collar” exemptions from approx. $35k/year to approx. $55k/year to be exempt from overtime

How to Reach Us:

Erick Becker, Cummins & White LLP

Erick Becker, Senior Partner


Portrait of Garrett Fahey, Partner, Cummins & White LLP

Garrett Fahy, Partner


Image of Image of Joshua Park, attorney for Cummins & White LLP

Joshua Park, Senior Associate

If you have any questions regarding these new employment laws and how to implement them in your workplace, please do not hesitate to contact Erick Becker (ebecker@cwlawyers.com), who heads our labor and employment practice, Garrett Fahy (gfahy@cwlawyers.com) and Joshua Park (jpark@cwlawyers.com), to set up a time to discuss.