New California Labor Laws Affecting the Workplace in 2024

With 2024 quickly approaching, it’s time for employers to prepare for new California laws affecting the workplace. Here are some of the more important employment laws to come out of Sacramento this year (with a more detailed description below):

• SB 497: Presumption of Employer Retaliation in the California Labor Code
• AB 2188 and SB 700: Limits on Cannabis Use in Employment Decisions
• 2 CCR § 11017.1 (2023): Consideration of Criminal History in Employment Decisions
• SB 616: Increase to Minimum Paid Sick Leave Requirements
• SB 848: New Reproductive Loss Leave (Pursuant to Existing Applicable Leave Policies)
• SB 553: Mandatory Workplace Violence Prevention Plan and Injury and Illness Prevention Plan
• AB 1076 and SB 699: Strengthening and Broadening California Non-Competition Laws
• SB 365: Litigation Stays Pending Arbitration Appeals
• AB 636: Wage Theft Prevention Notice Additions
• SB 525: Minimum Wage Increases for Healthcare Workers

These laws take effect on January 1, 2024, unless otherwise noted.

Harassment, Discrimination, and Retaliation

SB 497: Presumption of Employer Retaliation in the California Labor Code

This bill creates a rebuttable presumption¹ of retaliation in favor of the employee, if an employer takes an adverse employment action against an employee within 90 days of that employee engaging in certain protected conduct under Labor Code sections 98.6 or 1197.5, which includes, notably, exercising rights under the California Equal Pay Act, filing or participating in a Labor Commissioner claim, or engaging in lawful, off-duty conduct. It is already unlawful to discriminate or retaliate against an employee for engaging in these protected activities, but the presence of a rebuttable presumption will no doubt spur further claims from disgruntled former employees who otherwise lack direct evidence of retaliation. The bill additionally expands the maximum civil penalty under California’s whistleblower statute (Labor Code section 1102.5) to $10,000 per employee for each violation, from the previous maximum of $10,000 per violation.

What Should Employers Do To Prepare: Employers should implement trainings for supervisory employees about the effect of the new law, including the importance of contemporaneously documenting performance issues so that the employer can, if need be, successfully rebut the law’s presumption of retaliation.

AB 2188 and SB 700: Limits on Cannabis Use in Employment Decisions

Under AB 2188, employers may not discriminate against an employee or applicant based on the person’s off-duty, off-worksite use of cannabis. The law still allows employers to conduct preemployment drug testing and an employer may still refuse to hire on the basis of a valid preemployment drug test that looks only for psychoactive cannabis metabolites. The law maintains an employer’s right to insist upon a drug-free workplace, and likewise does not permit employees to possess, be impaired by, or use cannabis on the job. SB 700 additionally prohibits employers from requesting information from job applicants relating to prior use of cannabis.

What Should Employers Do To Prepare: Employers should review application materials and employment policies to ensure full compliance with the law. Employers should also train all interviewing and hiring employees on relevant prohibited questions relating to cannabis use. Employers who conduct preemployment drug testing should check policies and practices to ensure the test does not screen for non-psychoactive cannabis metabolites.

2 CCR § 11017.1 (2023): Consideration of Criminal History in Employment Decisions

The Fair Chance Act, enacted in 2018, limited the use of criminal history in employment decisions. Under existing law, it is unlawful for an employer to inquire about an applicant’s criminal history prior to a conditional offer of employment, subject to limited exceptions. Existing law also dictates express requirements when an employer intends to rescind a conditional offer, in whole or in part, due to the applicant’s criminal history. This includes an individualized assessment of whether the applicant’s criminal history has a direct and adverse relationship to the job position. In the event of an intended recission of the conditional offer, the law requires notice to the applicant in writing and a chance for the applicant to challenge the decision.

Newly in effect as of October 1, 2023, the law clarifies the definition of applicant to be inclusive of applicants, current employees seeking another position within the company, and employees who may undergo a background check due to a company’s change in management or changes in policy or practice. While the initial individualized assessment presently exists, new regulations set forth a more detailed list of factors to consider.² Likewise, if an applicant chooses to challenge the decision to rescind the job offer and provides mitigating evidence,³ the employer is required to consider it.

The revised law specifically prohibits consideration of non-felony convictions for marijuana possession that are two or more years old, pursuant to Labor Code section 432.8. However, the law also recognizes and affirms that employers who are subject to federal or state laws that prohibit individuals with certain criminal records from holding particular positions or occupations or mandate a screening process, can comply with those laws.⁴ Examples include, but are not limited to, health facilities where applicants will have regular access to patients or health facilities and pharmacies where applicants would have access to medication and controlled substances.

What Should Employers Do To Prepare: Employers should review internal hiring procedures and ensure any of the employer’s agents, such as hiring agencies, are compliant with the act. Employers should prepare check lists or update any template notices to ensure that any notices of recission for conditional offers include all required information. While the notice to the applicant requires detail individual to the applicant, there are some boilerplate information sections that can be prepared in advance.⁵ Whatever method you choose, it is important to ensure that the employee responsible for drafting the applicant notice includes all required information.

Leaves of Absence

SB 616: Increase to Minimum Paid Sick Leave Requirements

This law increases required paid sick leave that an employer must provide each year from three days (24 hours) to five days (40 hours) and increases the minimum total accrual cap from six days (48 hours) to 10 days (80 hours). Employers may still use an accrual method of one hour of paid sick leave for every 30 hours worked, or a different accrual method so long as the accrual is on a regular basis such that the employee has no less than 3 days (or 24 hours) of paid sick leave by the completion of the employee’s 120th calendar day of employment, and no less than 5 days (or 40 hours) of paid sick leave by the completion of the employee’s 200th calendar day of employment.

Employers still may limit an employee’s annual usage of paid sick leave, but the annual usage cap increases from 24 hours to 40 hours. Additionally, employers must allow employees to roll over at least five days of accrued sick leave into the following year (up from three days under prior law). Employers still must provide written notice to employees about the amount of paid sick leave they have available, such as including their current balance on pay stubs.

Notably, this bill generally excludes employees covered by collective bargaining agreements (CBAs) that meet certain criteria, but does extend some provisions regarding the use of paid sick leave to non-construction industry CBAs. For example, CBA employees who use paid sick leave cannot be required to search for or find a replacement worker for that time. CBA employees are also entitled to a rebuttable presumption of retaliation if an employer takes adverse action within 30 days of certain protected activity.

What Should Employers Do To Prepare: Employers should examine their existing paid sick leave policy (or general paid time off policy if the policies are combined) to ensure their existing policies are compliant with the new requirements.

SB 848: New Reproductive Loss Leave (Pursuant to Existing Applicable Leave Policies)

SB 848 requires employers with five or more employees to provide employees who have worked for at least 30 days with up to five days (which can be nonconsecutive) of reproductive loss leave. The leave shall be taken under an existing applicable leave policy of the employer and can be unpaid if there is no existing policy that would provide leave for these purposes, except that an employee can use certain other paid leave balances that are available, such as vacation or accrued and available paid sick leave. The list of qualifying events, which is illustrative and not exhaustive, includes miscarriage, failed adoption, stillbirth, or an unsuccessful assisted reproduction.

The leave must be taken within three months of the qualifying event. If the employee chooses to take leave under another leave entitlement provision, reproductive loss leave must be taken within three months of the last day of the other leave entitlement end date (for example, leave under the California Family Rights Act). If an employee experiences multiple qualifying events, employers are not required to grant more than 20 days of leave in one twelve-month period. Unlike California’s recent bereavement leave law, SB 848 is silent regarding the provision of documentation supporting the need to take reproductive loss leave. The new law also requires employers to maintain employee confidentiality relating to requests for, or use of, reproductive loss leave.

What Should Employers Do To Prepare: Employers should update their employee handbook to include notice to employees of their right to take reproductive loss leave. Employers should also train supervisors and managers regarding their obligations under these provisions.

Workplace Safety Laws

SB 553: Mandatory Workplace Violence Prevention Plan and Injury and Illness Prevention Plan

Effective July 1, 2024, employers will be required to implement and train employees on a Workplace Violence Prevention Plan (WVPP) and an Injury and Illness Prevention Plan (IIPP). These requirements apply to nearly all employers, excluding employees teleworking from a location of the employee’s choice; employment workplaces with fewer than 10 employees working at any given time and where the workplace is not accessible to the public; healthcare facilities operating under Cal/OSHA’s Violence Prevention in Health Care regulation; and law enforcement agencies.

The WVPP must be in writing and easily accessible to all employees, authorized representatives, and representatives of Cal/OSHA, at all times. The WVPP must include:

• Names or job titles of persons responsible for implementing the plan
• Effective procedures to obtain active involvement of employees and authorized employee representatives in developing and implementing the plan
• Methods employer will use to coordinate implementation
• Effective procedures to accept and respond to reports of workplace violence
• Effective procedures to ensure compliance with the plan
• Effective procedures to communicate with employees on workplace violence matters such as how employees report incidents and how incidents will be investigated
• Effective procedures to respond to actual or prospective workplace violence emergencies
• Procedures to develop and provide training
• Procedures to identify and evaluate workplace hazards
• Procedures to correct workplace violence hazards
• Procedures to review the effectiveness of the plan
• Any other procedures or other information required by Cal/OSHA

Likewise, the IIPP must be in writing and include:

• Identification of person(s) responsible for implementing the program
• Employer’s system for identifying and evaluating workplace hazards, including scheduled periodic inspections
• Employer’s methods and procedures for correcting unsafe or unhealthy conditions and work practices
• An occupational health and safety training program designed to instruct employees in general safe and health work practices, including specific instruction regarding hazards specific to each employee’s job assignment
• Employer’s system for communicating with employees on health and safety matters
• Employer’s system for ensuring employee compliance
• A WVPP compliant with this law

Employers are required to create workplace violence incident logs. The new law defines “workplace violence” as “any act of violence or threat of violence that occurs in a place of employment” and includes “threat or use of physical force against an employee,” or “[a]n incident involving a threat or use of a firearm or other dangerous weapon.” Notably, there is no requirement of actual injury. Lawful acts of self-defense or defense of others are not considered “workplace violence.”

Workplace violence incident logs must contain specific information about the incident, including the date, time, and location of the incident; the type of workplace violence; a detailed description of the incident; a classification of who committed the violence; a classification of circumstances at the time of the incident; a classification of where the incident occurred; the type of incident and whether it involved things like a weapon, sexual assault, or a threat of violence; any consequences of the incident; and information about the person completing the incident log.

Violence incident logs and records of workplace violence hazard identification, evaluation, and correction shall be maintained for a minimum of five years, and training records shall be maintained for a minimum of one year. On request and without cost, records shall be made available for examination and copying within 15 calendar days of the request. Records of workplace violence investigations must be maintained for a minimum of five years and shall be available to the Division of Occupational Safety and Health upon request for examination and copying.

Effective January 1, 2025, the WVPP will additionally allow an affected employee’s collective bargaining representative⁶ to seek a Temporary Restraining Order (TRO) against the individual responsible for violence (or threat thereof) on behalf of the employee. Effective the same date, TROs may also be sought for harassment in the workplace.

What Should Employers Do To Prepare: Employers should create Cal/OSHA compliant plans relating to Workplace Violence Prevention and Injury and Illness Prevention. Though the law does not take effect until July 1, 2024, these requirements are extensive and will take time to implement.

Non-Compete Agreements

AB 1076 and SB 699: Strengthening and Broadening California Non-Competition Laws

Aside from very narrow exceptions, non-compete agreements are generally unenforceable in California. AB 1076 codifies existing case law in California that, in effect, makes it unlawful for employers to require employees to sign a non-competition agreement or include a non-compete clause in an employment agreement, aside from very narrowly-specified exceptions under the law.

The law also requires employers to send written notice by February 14, 2024 to any current or former employee (employed after January 1, 2022) who signed an invalid non-competition agreement. The notice must inform the employee that the non-competition agreement (or clause) is void. Any such notices must be delivered to the last known address and the email address of the employee or former employee.

Relatedly, SB 699 adds that non-competition agreements are void and unenforceable under existing California law regardless of where they are signed and regardless of whether the employment was maintained outside of California. Facially, this would, for example, prohibit an Oregon employer who has a valid non-compete agreement under Oregon law with an Oregon-based employee from seeking to enforce that agreement against an employee who wishes to move to California to join a competitor.

Notably, this bill creates a private right of action, allowing a current, former, or prospective employee to seek an injunction and civil penalties challenging an allegedly unlawful non-competition provision, and, if successful, to recover attorney’s fees and costs.

What Should Employers Do To Prepare: Employers should look at all current employment agreements and restrictive covenants and ensure that any non-competition language is either removed or meets an exception within the law — even if the employer has no intention of actually enforcing any unlawful restrictive covenants. Although we expect the portions of this law that purport to invalidate non-competition agreements between out-of-state employers and out-of-state employees to be subject to quick legal challenge, unless (and until) those portions are struck down, the significant penalties available to employees make it potentially very costly for an employer to either agree to, or seek to enforce, an invalid restrictive covenant agreement.

Moreover, employers should determine which current or former employees require notice and create a plan for meeting the written notification requirement by February 14, 2024. Employers should maintain copies of any such notices in the employees’ or former employees’ personnel files.

Discretionary Stays Pending Appeals of Arbitrability

SB 365: Litigation Stays Pending Arbitration Appeals

California Code of Civil Procedure section 916 generally grants an automatic stay of trial proceedings when a party appeals a trial court order, including an order dismissing or denying a petition to compel arbitration. SB 365 changes this law, and gives courts discretion as to whether to stay a case pending an appeal of an order dismissing or denying a petition to compel arbitration.

Notice and Minimum Wage

AB 636: Wage Theft Prevention Notice Additions

Employers are already required under existing law (Labor Code section 2810.5) to provide a wage and employment notice to new, non-exempt hires (sometimes referred to as a Wage Theft Prevention Notice). AB 636 amends Section 2810.5 to require employers to provide additional information in their Wage Theft Prevention Notices regarding federal and state emergency declarations applicable to any counties where employees are employed that may affect the employees’ health and safety during their employment and that were issued within 30 days before the employee’s first day of work.

The Labor Commissioner will create and post an updated template on its website that is compliant with the new requirements.

Separately, by March 15, 2024, agricultural employers will also be required to give a separate notice to H-2A employees on their first day of work.

What Should Employers Do To Prepare: Employers should check the Labor Commissioner website for revised Section 2810.5 notice templates and, once issued, update their new-hire documents to include the revised notices for non-exempt employees.

SB 525: Minimum Wage Increases for Healthcare Workers

This bill establishes five scheduled minimum wage increases for covered healthcare workers, starting June 1, 2024. (Though, some county-owned facilities are not subject to these increases until 2025.)

The schedules depend on the nature of the employer and schedules vary as to dates of compliance and wage amounts. Wages range from $18 to $25 per hour and applicable dates range as early as June 1, 2024 and, at times, continue compliance through at least June 1, 2033. Rates of increase also vary widely depending on the type of healthcare facility. For example, for large employers and integrated health systems with 10,000 or more full-time equivalent employees, the minimum wage will increase to $23 per hour on June 1, 2024, $24 per hour on June 1, 2025, and $25 per hour on June 1, 2026. For most other hospitals, the minimum wage will increase to $18 per hour on June 1, 2024, with 3.5% increases annually until May 31, 2033, when the minimum wage will become $25 per hour.

The law also requires the creation of a process for employers who believe they cannot continue to operate as a going concern if forced to meet the new minimum wages to seek a temporary pause or alternative phase in schedule of the minimum wage requirements. This process must be established by the Department of Industrial Relations no later than March 1, 2024.

What Should Employers Do To Prepare: While many California healthcare employees’ wages are set by collective bargaining agreements, healthcare employers should examine the new law to determine what their new minimum wage rates will be beginning on June 1, 2024. Employers who think they may need to apply for a temporary pause or alternative phase in schedule should contact their employment counsel to navigate the application process.

The above advisory was created by Labor and Employment attorneys at Arnold & Porter’s San Francisco office. The Labor and Employment group can offer a range of services from general advice, reviewing policies and practices for compliance, dispute settlement, litigation, traditional labor work, and more. Should any questions or concerns arise, please feel free to contact any of the attorneys listed here for additional support.

© Arnold & Porter Kaye Scholer LLP 2023 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.