Compliance Tips for Small Business Private Employers to Minimize Claims
Small business private employers may find the 2024 California employment laws confusing and impractical. However, if you take the time to review our top ten list below, you may realize that compliance is now not only recommended, but essential. In effect, these new 2024 California employment laws not only protect workers with expanded rights but incentivize legal compliance by small business private employers.
We encourage all small business private employers to educate themselves and take action to ensure that they do not become the victims of disgruntled employees and plaintiffs’ attorney mills who are eager to sue. The best defense is to be in compliance with all required laws and to ensure that your policies, practices and procedures are lawful, communicated to all employees and applied fairly and consistently. When employees know what is expected and perceive their employers as fair, transparency is increased, as is productivity.
Are You a Small Business Private Employer?
For purposes of this blog, “Small Business Private Employers” are defined as private employers who employs fewer than 50 employees. A “private employer” refers to any employer that is not a government employer, regardless of whether the employer is publicly traded. The information and recommendations below may or may not apply to unionized work environments subject to collective bargaining agreements (CBAs). Unless stated otherwise, the employment laws listed below become effective on January 1, 2024. We have only included employment laws specifically focused on privately owned, non-unionized, small private business employers (with 1 to 49 employees).
In most cases, 2024 California employment laws are applicable to small business private employers based on employee headcount. Thus, to determine employee headcount you will want to include all employees who are on the payroll. This means you would count temporary, full time or part time, active or inactive employees (such as employees who are on a leave of absence). Some laws even include independent contractors and unpaid interns in the headcount. So, pay attention to the issue of applicability of the specific law.
Top Ten 2024 California Employment Laws for Small Business Private Employers
As you scroll down this Blog you will find:
- A list of top 2024 California Employment laws applicable to small business private employers. Each law includes a clickable link to the actual text of the law.
- A summary of important provisions of each new law.
- Recommended actions to proactively come into compliance and reduce the legal risks of claims and lawsuits.
1. SB 616 Expands California Paid Sick Leave
SB 616 (Healthy Workplaces, Healthy Families Act of 2014- HWHFA) adds two more days of paid sick leave, increasing the annual obligation to a total of 5 days or 40 hours. Small Private Business Employers still have the option to:
- frontload sick leave benefits at the beginning of each year of employment, calendar year, or 12-month period, or
- adopt an accrual system.
Small business private employers who currently frontload sick leave benefits will only need to increase the amount of annual lump sum to no less than 5 days or 40 hours.
Increased Alternative Methodology and Cap
For those small business private employers who currently use the accrual method, they can continue to accrue sick leave at rate of one hour for every 30 hours worked, or, alternatively, use a different accrual method. The alternative accrual method may be satisfied if the employee is provided not less than 24 hours or 3 days of paid sick leave that is available to the employee to use by the completion of the employee’s 120th calendar day of employment, and no less than 40 hours or 5 days of paid sick leave is available to the employee to use by the completion of the employee’s 200th calendar day of employment.
All eligible employees continue to be entitled to use accrued paid sick days beginning on the 90th day of employment, after which the employee may use paid sick days as they are accrued.
Increased Maximum Accrual Cap and Carryover
The amount of sick leave employees can accrue and carryover each year increases from 48 hours (6 days) to 80 hours (10) days. No carryover is required if the full amount of the sick leave (5 days or 40 hours) is received at the beginning of each year of employment, calendar year, or 12-month period.
Local Sick Leave Laws [Preemption of Certain Provisions]
If you are a small business private employer and have “covered” employees who work in specific geographical areas (Berkeley, Emeryville, LA City, Oakland, San Diego City, or San Francisco and maybe more) for the number of hours to be considered “covered”, then you are most likely also subject to local sick leave laws. SB 616 states “in order to establish a uniform statement regulation of certain aspects of paid sick leave”, …Sections 1, 2 and 3 of this Act amending Sections 245.5, 246 and 246.5 of the Labor Code apply to all cities, including charter cities.” This means that local sick leave laws will be preempted (this means higher level of government can limit or even eliminate the power of the lower level of government to a specific issue).
Which Provisions of the Act Preempt Local Laws
Because of this preemption, local sick leave laws are not permitted to:
- require employers to pay accrued, unused sick leave benefits at termination [LC 246 (g);
- require employers to advance, or prohibit employers from advancing sick leave benefits to employees [LC 246 (h);
- require employers to provide employees with notice of their sick leave benefit balances on paystubs or accompanying documents that differ from the Act’s requirements [LC 246 (i);
- require employers to calculate the rate at which sick leave benefits must be paid differently than what is set forth in the Act [LC 246 (l);
- contain different notice requirements that employees must provide for sick leave use [LC 246 (m); and
- contain different deadlines for sick leave benefit payment [LC 246 (n).
SB 616 Applies To:
All employers. An “employer” applies to any person employing another person under any appointment or contract and includes the state, political subdivisions of the state and municipalities. Thus, this bill applies to all small business private employers. Employees are entitled to paid sick leave when they work in California for the same employer for 30 or more days within a year from the commencement of employment.
Smart Small Business Private Employers Choose Compliant Best Practices to Increase Transparency and Minimize Legal Risks
Recommended Actions
- Review SB 616 and revise your Sick Leave policy. If you offer PTO in lieu of sick leave, review SB 616 to ensure you are still in compliance.
- Contact payroll provider to ensure accrual and tracking systems align with your revised sick leave policy. The 2024 Sick Leave FAQs: California Paid Sick Leave: Frequently Asked Questions will answer your questions re how set up tracking at Questions 15 & 16.
- Update your Wage Notice to Employees (Section 2810.5) to include the new sick leave requirements and within 7 days of any changes in information unless the new information appears on the next timely wage statement. Provide applicants and current employees with updated Wage Notice form. 2024 Notice to Employee [Section 2810.5]: NOTICE TO EMPLOYEE (ca.gov)
- Post 2024 Sick Leave Poster: HEALTHY WORKPLACES/HEALTHY FAMILIES ACT OF 2014 PAID SICK LEAVE (ca.gov).
2. AB 2188 and SB 700 Prohibit Discrimination, Harassment and Retaliation for Use of Cannabis Off Duty and Away from the Workplace
AB 2188 [which passed in late 2022 but is effective on 1/1/24] prohibits employers from discriminating, harassing or retaliating against an employee or applicant for cannabis use while off-duty and away from the workplace. The law does NOT prohibit an employer from discriminating in hiring, or any term or condition of employment, or otherwise penalize a person based on scientifically valid preemployment drug screening conducted through methods that do not screen for non-psychoactive cannabis metabolites in their hair, blood, urine or other bodily fluids.
Employers are permitted to screen applicants (after an offer of employment is made) and current employees for reasonable suspicion cause testing for Tetrahydrocannabinol (“THC”), the chemical compound that causes psychoactive effects and can indicate impairment. Employers may prohibit employees from using, being impaired by, or possessing cannabis while at the workplace or while on duty.
SB 700 prohibits employers from asking applicants about their prior cannabis use. Additionally, this bill also prohibits employers who learn about an applicant’s cannabis use from a criminal history search from using that information to discriminate against them (unless the employer is permitted to consider or inquire about that information under state and federal laws as noted above in AB 2188).
AB 2188 and SB 700 Apply To:
All employers, including small business private employers, with 5 more employees, except for certain exemptions noted below.
These laws do not apply to an employee in the building and construction trades and applicants or employees hired for positions that require a federal government background investigation or security clearance. They also do not preempt state or federal laws requiring applicants or employees to be tested for controlled substances, including laws and regulations requiring applicants or employees to be tested, or the manner in which they are tested, as a condition of employment, or receiving federal funding or federal licensing-related benefits, or entering into a federal contract.
Note: Although discrimination laws of the Fair Employment and Housing Act (FEHA) only apply to private employers who employ 5 or more employees, small private business employers with fewer than 5 employees may choose to include these protections in their employment practices. The California Constitution Article I, §1, provides that all people have inalienable rights, including rights to pursue and obtain privacy.
Smart Small Business Private Employers Choose Compliant Best Practices to Increase Transparency and Minimize Legal Risks
Recommended Actions
- Review AB 2188 and SB 700 and revise your Discrimination, Harassment & Prevention handbook policies to protect employees/applicants use of cannabis off the job and away from the workplace.
- Review Employment Application forms and new hire paperwork to ensure that there is nothing in these documents requesting applicants to disclose prior use of cannabis.
- Train supervisors and those involved in hiring (including third party agents that hire or screen applicants on your behalf) 1) to refrain from asking job applicants about prior cannabis use, 2) refrain from asking any questions about criminal history prior to an official offer of employment being made, and 3) taking any adverse action against employees because of off-duty and away from the workplace use of cannabis.
- If your business conducts pre-employment drug testing or you have a policy that includes reasonable suspicion/cause drug testing, you will want to locate a certified testing facility that screens for the active impairment/THC and discontinue testing for non-psychoactive cannabis metabolites that do not indicate impairment.
3. SB 848 Protects Leave for Reproductive Loss
SB 848 requires employers to provide eligible employees with up to 5 unpaid days off following reproductive loss leave upon suffering a failed adoption, failed surrogacy, miscarriage, stillbirth or an unsuccessful assisted reproduction (means a method of achieving a pregnancy through an artificial insemination or an embryo transfer and includes gamete and embryo donation).
If an eligible employee experiences more than one reproductive loss event within a 12-month period, an employer shall not be obligated to grant a total amount of reproductive loss leave time in excess of 20 days within a 12-month period. The time off may be nonconsecutive. Eligible employees may use vacation, available sick leave or any paid time off that is available to the employee for this purpose. This bill prohibits retaliation by an employer against an individual who requests or uses this leave, as well as prohibiting employers from sharing information about it. The employer shall maintain confidentiality of any employee requesting reproductive loss leave.
SB 848 Applies To:
Employers, including small business private employers who employ 5 or more persons to perform services for a wage or salary.
Smart Small Business Private Employers Choose Compliant Best Practices to Increase Transparency and Minimize Legal Risks
Recommended Actions
- Review SB 848 and if applicable, update your handbook Bereavement Policy to include Reproductive Loss Leave.
- Train supervisors on the requirements of this law, including confidentiality of the information.
- Set up tracking on payroll system to be able to process and track protected time off for reproductive loss leave.
4. SB 553 – Workplace Violence Prevention Requirements and Restraining Orders (SB 553 and 428)
SB 553 creates new general industry workplace violence prevention standards in California to be implemented by July 1, 2024.
This new Workplace Violence Prevention Standard will require employers to:
- Establish, implement and maintain, at all times in all work areas, an effective written workplace violence prevention plan.
- Record detailed information in a violent incident log for every workplace violence incident.
- Provide effecting training to employees on the workplace violence prevention plan, and provide additional training when a new or previously unrecognized workplace violence hazard has been identified, and when changes are made to the plan.
- Workplace Violence Records shall be created and maintained as follows: a) Workplace violence hazard identification, evaluation and correction shall be created and maintained for a minimum of five years; b) Employee training records shall be created and maintained for a minimum of one year; c) Violent incident logs shall be maintained for a minimum of five years; and d) Workplace violence investigations shall be maintained for a minimum of 5 years.
All of the required records above shall be made available to the CA Division of Occupational Safety and Health (“Division”) upon request for examination and copying. Certain required records shall be made available to employees and their representatives, upon request and without cost, for examination and copying within 15 calendar days of the request.
The Workplace Violence Prevention Plan must specifically include all of these requirements:
- Names and job titles of persons responsible for implementing the plan.
- Effective procedures to obtain the active involvement of employees and authorized representatives in developing, and implementing the plan, including through their participation in identifying, evaluating, and correcting workplace violence hazards, in designing and implementing the training, and in reporting and investigating workplace violence incidents.
- Methods the employer will use to coordinate implementation of the plan with other employers, to ensure those employers and employees understand their respective roles, that employees and are provided adequate training, and that workplace violence incidents involving any employee are reported, investigated and recorded.
- Effective procedures for the employer to accept and respond to reports of workplace violence, and to prohibit retaliation against an employee who makes such a report.
- Effective procedures that ensure that supervisory and non-supervisory employees comply with the plan and safe and healthful work practices.
- Effective procedures to communicate with employees regarding workplace violence matters (e.g. how to report a violent incident, how employee concerns will be investigated, and how employee will be kept informed of the results of investigation, etc.).
- Effective procedures to respond to actual or potential workplace violence emergencies.
- Procedures to develop and provide the training required.
- Procedures to identify and evaluate workplace violence hazards (which includes schedule periodic inspections to identify unsafe conditions and work practices).
- Procedures to correct workplace hazards in a timely manner.
- Procedures for post-incident response and investigation.
- Procedures to review the effectiveness of the plan and revise as needed.
- Procedures or other information required by the division and standards board as being necessary and appropriate to protect the health and safety of employees.
Although each of the requirements above must become effective on July 1, 2024, (which means Cal-OSHA is empowered to enforce this law starting on July 1, 2024), the Division has until December 31, 2025, to propose standards regarding the Workplace Violence Prevention Plan, and the standards board has until December 31, 2026, to approve these proposed standards.
SB 553 Applies To:
All California employers, employees, places of employment and employer-provided housing, subject to exceptions below. Most likely all small private business Employers would be subject to this law.
These exceptions apply:
- Health care facilities, service categories, and operations already covered by CCR 8 §3342;
- Facilities operated by the Department of Corrections and Rehabilitation, if in compliance with 8 CCR §3203;
- Employer that are law enforcement agencies if meet with CCR8 §3203; and
- Places of employment where there are fewer than10 employees working at the workplace at any given time and that are not accessible to the public, if the workplaces are in compliance with 8 CCR §3203 (Injury and Illness Prevention Program).
Restraining Orders
SB 553 revises CCP 527.8 which will, on January 1, 2025, allow employers to seek a temporary restraining order (TRO) and a protective order after hearing on behalf of the employee, and at the discretion of the court, any number of employees at the workplace, and, if appropriate, other employees at other workplaces of the employer, on behalf of their impacted employees who have suffered unlawful violence or a credible threat of violence, that can reasonably be construed to be carried out or to have been carried out in the workplace may apply for a TRO or protective order. The bill would also require an employer seeking such a temporary restraining order to provide the employee whose protection is sought the opportunity to decline to be named in the order, before the filing of the petition.
SB 428, which becomes effective on January 1, 2025, would authorize an employer whose employee has suffered harassment to seek a temporary restraining order and an injunction on behalf of the employee and other employees showing of clear and convincing evidence that an employee has suffered harassment, that great or irreparable harm would result to an employee, and that the respondent’s course of conduct served no legitimate purpose. The term “harassment” is a different standard than that of the Fair Employment and Housing Act (FEHA), which must be tied to a category protected by FEHA. Under the revised CCP § 527.8, harassment is defined as: “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. The course of conduct must be that which would cause a reasonable person to suffer substantial emotional distress and must actually cause substantial emotional distress.”
SB 428 Applies To:
“Employer”, including a small business private employer, means every person engaged in any business or enterprise in this state that has one or more persons in service under any appointment, contract of hire, or apprenticeship, express or implied, oral or written irrespective of whether the person is the owner of the business or is operating on a concessionaire or other basis. “Employee” includes a volunteer or independent contractor who performs services for the employer at the employer’s worksite.
Smart Small Business Private Employers Choose Compliant Best Practices to Increase Transparency and Reduce Legal Risks
Recommended Actions
- Review SB 553 (specifically § 4: 6401.9 of Labor Code). This will provide you with the specifics as to what is required for your Workplace Violence Prevention Plan (WVPP).
- Assign responsibility for your WVPP soon, with clear roles and responsibilities. This new law requires your WVPP to be implemented and employees trained by July 1, 2024. This law requires procedures to obtain the active involvement of your employees in developing the plan, so involve employees early in the planning and drafting process.
- Set up procedures and processes for recording information in a violent incident log for every workplace violent incident. See SB 533- § 6401.9 (d) (1 & 2) for lists of what must be included in these logs.
- Check in with Cal-OSHA for industry guidance on regulations for WVPP.
4. SB 497- Expanded Whistleblower Rights for Protected Employee Conduct
SB 497 further protects whistleblowers against retaliation claims for complaining of or opposing an employer’s illegal conduct and opposing an employer’s equal pay practices. If an employer engages in any action prohibited by amendments to Labor Code §§ 98.6, 1102.5 and 1197.5 within 90 days of the protected activities, there shall be a rebuttable presumption in favor of the employee’s claim. A reputable presumption is a legal principle that presumes something to be true unless proven otherwise. This bill shifts the burden of proof from the worker to the employer. This means the employer would have to prove that any adverse action taken against an employee was because of a legitimate non-retaliatory reason.
Additionally, this bill further establishes that, in addition to other remedies, the employer is liable for a civil penalty not exceeding $10,000 per employee for each violation of Labor Code §§ 98.6, and 1102.5 to be awarded to the employee who was retaliated against.
Labor Code § 1102.5 (f)(2) describes how the Labor Commissioner shall consider the nature and seriousness of the violation as follows: “The Labor Commissioner’s consideration of the nature and seriousness of the violation shall include, but is not limited to, the type of violation, the economic or mental harm suffered, and the chilling effect on the exercise of employment rights in the workplace, and shall be considered to the extent evidence obtained during the investigation concerned any of these or other relevant factors.”
Smart Small Business Private Employers Choose Compliant Best Practices to Increase Transparency and Minimize Legal Risks
Recommended Actions
- Review SB 497 carefully and train supervisors on the importance of good contemporaneous documentation and not taking any adverse action for any of the actions protected by this law.
- Ensure that your ethics and business policies: a) do not prohibit or discourage an employee from disclosing information: i) to a government or law enforcement agency, ii) to a person with authority over the employee, iii) or to another employee who has authority to investigate, discover or correct the violation or noncompliance from providing information to, or testifying before, any public body conducting an investigation, hearing or inquiry; or b) do not prohibit or discourage an employee from disclosing information if the employee has a reasonable cause to believe that the information discloses a violation of state or federal statute, or a violation of or noncompliance with a local, state, or federal rule or regulation, regardless of whether the information is part of the employee’s job duties.
- Include the Defend Trade Secrets Act (“DTSA”) whistleblower immunity provision. The DTSA states: “(1) An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that: (A) is made— (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.”
The DTSA requires employers to provide notice of whistleblower immunity “in any contract or agreement with an employee that governs the use of a trade secret or other confidential information”. The penalty for noncompliance with this DTSA requirement is that the employer will not be entitled to recover multiple damages and attorneys’ fees in the event of misappropriation by an employee who is not so notified. - Post California’s Whistleblowers are Protected poster, and this is referred to in your business and ethics policy.
- Audit company’s disciplinary practices and procedures and develop checklist of protected activities to consider and discuss with attorney before taking any adverse employment actions. Gut instincts are sometimes wrong. Employers are reminded to focus on legitimate business reasons for all adverse employment actions.
- Review company’s Fair Pay policies and practices to ensure that: a) employer is not paying its employees at wage rates less than the rates paid to employees of the opposite sex, or another race or ethnicity for substantially similar work, when viewed as a composite of skill, effort, and responsibility and performed under similar working conditions; and b) any wage differentials are based on one or more of the following factors: i) a seniority system; ii) a merit system; iii) a system that measures earnings by quantity or quality of production; iv) A bona fide factor other than sex, race or ethnicity [LC § 11192.5 (a)(D) and (b)(D)], such as education, training or experience. Any differential must be job related with respect to the position in question and consistent with business necessity.
- Ensure that Wage differentials are based on one or more of the following factors: i) a seniority system; ii) a merit system; iii) a system that measures earnings by quantity or quality of production; iv) A bona fide factor other than sex, race or ethnicity, such as education, training or experience. Any differential must be job related with respect to the position in question and consistent with business necessity.
- Prior salary may not justify any disparity in compensation.
- Employer must maintain records of wages and wage rates, job classifications, and other terms and conditions of employment of the persons employed by the employer for a period of three years.
- Employer must not prohibit employees from disclosing their wages, discussing the wages of others, or asking about another employee’s wages.
- Employers with 15 or more employees must include pay scale information for a position in any job posting. Additionally, all employers must provide applicants and current employees with a pay scale for the position that the applicant is applying for or currently hold.
- More Resources on the California Fair Pay Act can be found here.
6. SB 699 & AB 1076- Strengthens Laws Against Non-Compete and Non-Solicitation Agreements
SB 699 strengthens California’s public policy that provides that every contract that restrains anyone from engaging in a lawful profession, trade, or business of any kind is, to that extent, void except under limited statutory exceptions. Legislators noted that in recent years employers have been utilizing broad noncompete clauses and other contract clauses to attempt to subvert this longstanding public policy by requiring employees to enter void contracts that impact employment opportunities once an employee leaves employment of the existing employer.
This bill adds § 16600.5 to the Business and Professions Code and states:
- Any contract that by which anyone is restrained from engaging in a lawful profession, trade or business of any kind is void. [Contracts under Restraint of trade §§16600 to 16607].
- Enforcement of non-compete and non-solicitation agreements are prohibited regardless of where and when the contract was signed.
- Employers who enter into a void contract or attempts to enforce a void contract commits a civil violation. Employees may bring a private right of action to enforce this law, and to recover attorney’s fees and costs. These laws apply to business-to-business contracts even if the person being restrained is not a party to the contract (such as contracts restricting each from hiring the other’s employees).
AB 1076 declares that it is unlawful to include a non-compete clause in an employment contract, or to require an employee to enter into a non-compete agreement that does not satisfy an exception from §§16600, et seq.
This bill also requires employers to notify current and former employees, no later than February 14, 2024, who were employed after January 1, 2022, whose contracts include a non-compete clause, or who were required to enter a non-compete agreement to notify the employee in writing at the last known address or email address, that the non-compete clause or non-compete agreement is void. Violation of this law constitutes an act of unfair competition.
Smart Small Business Private Employers Choose Compliant Best Practices to Increase Transparency and Minimize Legal Risks
Recommended Actions
- Review current and past employment agreements to determine if non-compete or non-solicitation clauses were included. If so, notify current and former employees no later than February 14, 2024, that the non-compete clause or non-compete agreement is void.
- California employers must not use non-compete and non-solicitation clauses in any contracts [certain exceptions apply for sales of businesses].
7. AB 1355 & AB 636- Employee Notifications
AB 1355 will now permit employers to meet notification requirements to employees concerning eligibility for Earned Income Tax Credit and Unemployment Insurance Program electronically. This bill does not change the requirements but does offer another option for providing employees with required notices.
Employers may provide the electronic notification to employees via email account of employee’s choosing in PDF, JPEG or other digital image file type format, if an employee affirmatively, and in writing or by electronic acknowledgment, opts into receipt of electronic statements or materials.
This law begins on January 1, 2024, and shall remain in effect until January 1, 2029. Employers may not discharge an employee or in any manner discriminate, retaliate, or take any adverse action against an employee who does not affirmatively, in writing or by electronic acknowledgment, opt into receipt of electronic statements or materials.
AB 636 amends § 2810.5 of the Labor Code [Notice to Employee Form] to require employers to provide written notice at the time of hiring of “(I) The existence of a federal or state emergency or disaster declaration applicable to the county or counties where the employee is to be employed, and that was issued within 30 days before the employee’s first day of employment, that may affect their health and safety during their employment.”
Smart Small Business Private Employers Choose Compliant Best Practices to Increase Transparency and Minimize Legal Risks
Recommended Actions
- Advise and train payroll/HR/ bookkeeper of electronic employee notifications for Earned Income Tax Credit and Unemployment Insurance Program requirements.
- Advise and train payroll/HR/bookkeeper to update Wage Notice of Employee Form [LC § 2820.5] for distribution to all new hires and current employees to include notification of the existence of a federal or state emergency or disaster declaration, if applicable.
8. AB 594 Alternative Prosecution for Wage Theft
The legislators came up with a new way to enforce legal compliance on employers who refuse to follow employment laws, particularly those employers who willfully misclassify workers as independent contractors. This bill declares that “existing resources are insufficient to protect workers or to incentivize legal compliance by employers.”
AB 594 empowers city, district and county attorneys to prosecute certain civil and criminal violations of the California Labor Code independently of the Department of Labor Standards Enforcement (DLSE) but only until January 1, 2029. It also clarifies that where a public prosecutor or the Labor Commissioner initiates an action to enforce this code, any employment agreement between an employer and a worker to limit representative actions or to mandate arbitration, shall have no effect. Moneys recovered by public prosecutors under this code will be applied first to payments, such as wages, damages and other penalties, due to affected workers. All civil penalties recovered by the public prosecutor shall be paid to the General Fund of the State.
At this point it is uncertain how much time and resources public prosecutors will be willing to invest in prosecuting violations under this code given the workloads they already have prosecuting criminals. Additionally, the arbitration provisions of this law will likely be challenged under the Federal Arbitration Act (FAA).
Smart Small Business Private Employers Choose Compliant Best Practices to Increase Transparency and Minimize Legal Risks
Recommended Actions
- Audit your 1099 worker records to ensure that they are lawfully classified as independent contractors (as opposed to W-2 employees). It’s best to do this under the direction of your employment lawyer to maintain the attorney-client privilege for your audit.
- Review any arbitration agreements with legal counsel in light of this new law to ensure compliance.
9. SB 365 Revocation of Automatic Stay of Civil Legal Proceeding During the Pendency of an Appeal or an Order Dismissing or Denying a Petition to Compel Arbitration
SB 365 provides that trial court proceedings will not automatically be stayed pending the appeal of an order dismissing or denying a motion to compel arbitration. The U.S. Supreme Court, decided on June 23, 2023 (Coinbase v. Bielski), that appeals under the Federal Arbitration Act (FAA) that deny arbitration automatically stay (put on hold) district court proceedings pending appeal. Under this new California law, state courts will have the discretion to decide whether a case can proceed while an appeal is heard in the state court system.
Smart Small Business Private Employers Choose Compliant Best Practices to Increase Transparency and Minimize Legal Risks
Recommended Actions
- Review your arbitration agreements and discuss with employment counsel whether to expressly include language in your arbitration agreements to invoke the FAA’s procedural rules.
10. AB 933 Defamation Protection
AB 933 establishes that complaints and related communications regarding sexual assault, harassment, or discrimination are privileged and therefore protected from civil actions, such as defamation suits.
Also Pay Attention to These New Miscellaneous Rules That Require Action
New I-9 Forms and Remote Verification Process
Form I-9 Instructions: Employees must complete Section 1 of the form no later than the first day of employment (but cannot complete the form before acceptance of an offer of employment). Employers must complete Section 2 of the form within three business days after the employee’s date of hire.
Remote Verification Process: During Covid-19, and up until July 31, 2023, the Department of Homeland Security temporarily relaxed the requirement that employers physically inspect the document verifying identity and employment authorization to work in the U.S. Employers who did not physically inspect documents for remote employees during the Covid-19 period, were required to complete an in-person physical verification no later than August 30, 2023.
An authorized representative may complete the in-person document examination. Although the U.S. Citizenship and Immigration Services (USCIS) allows a personnel officer, foreman, agent or anyone acting on employer’s behalf, including a notary public, to physically examine I-9 documents, under California law (Business and Professions Sections 22440, 22441) the only individuals who can assist clients with completing immigration forms (such as Form I-9) are licensed attorneys, individuals authorized under federal law to provide immigration services and individual qualified and bonded as an immigration consultant under California law. A notary public in California who is not qualified and bonded as an immigration consultant is prohibited from assisting clients with Form I-9 document verification.
For those employers who used the E-Verify system during the Covid-19 period and continue to use E-Verify, they do not need to reverify with a physical inspection of the documents and can continue to use E-Verify in the future for remote workers.
Effective August 1, 2023, all employers may remotely examine employee’s Form I-9 provided they are enrolled in E-Verify. Employers are not required to use E-Verify. However, some California employers choose not to do so because of the fact that the system is not always current, and this leads to errors in the verification process, including rejecting some workers who are qualified to work in the US.
Recommended Actions
- Employees who were hired after March 20, 2020, up until July 31, 2023, and did not submit to a physical examination of the required documents must complete an in-person physical inspection. You’ll need to ensure that every employee has completed an I-9 form, and if the documents were not completed correctly or completely, then follow the procedures for correcting I-9 mistakes.
- If you employ remote workers, it may be worthwhile to sign up for E-Verify.
NLRB Opinion on Unlawful Employment Policies
On August 2, 2023, the National Relations Labor Board (NLRB) issued a decision in Stericycle, Inc. adopting a new legal standard for evaluating employer work rules challenged as facially unlawful under Section 8(a)(1) of the National Labor Relations Act. Under the new standards, if the General Counsel proves that a challenged rule has a reasonable tendency to chill employees from exercising their rights, then the rule is presumptively unlawful. Employers may rebut the presumption by proving that the rule advances a legitimate and substantial business interest and that the employer is unable to advance the interest with a more narrowly tailored rule. This NLRB opinion applies to employers regardless of whether they are unionized or not.
Recommended Actions
1. Review your handbooks/work rules/policies from the perspective of an employee and ask yourself- What purpose does this rule/policy serve? Can it be drafted more narrowly? Could it reasonably be perceived as having a chilling effect on employees engaging in protected activities? If so, eliminate or redraft the rule or policy to comply with Stericyle standards.
Some policies that have been challenged as overbroad and unlawful include :1) insubordination, 2) use of cameras and recording devices in the workplace, 3) restricting criticism, negative comments and disparagement of the company’s management, products or services, 4) rules prohibiting outside employment; 5) restrictions on comments to media, government agencies or other third parties; 6) employee’s use of social media; 7) attendance and leaving work without permission; 8) uniforms and professional appearance; and 8) any other policies that appear to limit an employee’s NLRA Section 7 rights.
2. Consult with employment law counsel for questions about this NLRB ruling and recommended drafting language and disclaimers.
New California Minimum Wage Rates
California’s State Minimum Wage increases to $16.00 per hour for all employers on January 1, 2024. This impacts the minimum wage for exempt salaried employees (Executive, Administrative and Professional exemptions) who must receive a salary that is at least two times the minimum wage. Thus, the minimum annual salary for California exempt positions is $66,560. If the employer has workers who perform work in certain cities and counties, they must be paid at the local minimum wage rate.
Please note that there are two new California laws which impact the Fast-Food Restaurant Industry Wages (AB 1228) and Healthcare Workers Wages (SB 525). While these two new laws are most likely not applicable to small business private employers (because of the employee headcount and other requirements), they may have an impact on small business private employers in the food industry and health care industry. This is because these higher minimum wage requirements ($20 min per hour for fast food workers and even more for health care workers) will make it difficult for small business private employers to compete for employees. Employers can expect some push back from their employees to offer wages that are more than fast food workers.
Recommended Actions
- Post up-to-date Minimum Wage posters in break rooms; and send electronically to remote workers.
- If local minimum rates apply, confirm that payroll is processing these rates correctly and local minimum wage posters are posted.
- Ensure that all non-exempt employees are paid at least minimum wage, and new hires are offered at least minimum wages.
- Audit exempt employees to ensure exempt employees are receiving at least a minimum salary of $66,560 annually (which does not include bonuses, or other forms of compensation) and also meet the duties test and other requirements.
It Pays to Minimize Legal Risks for Small Business Private Employers for 2024 California Employment Laws
It’s important to realize that legal compliance is simply a cost of doing business. Litigation is expensive and time consuming. We understand that laws are complicated and often difficult to understand, even for lawyers. Hopefully, this listing of Top Ten 2024 California Employment Laws for small business private employers will make it a little easier to bring your Employee Handbooks into compliance. Save this page as a favorite so you can come back to it when issues or questions come up and you want to refer to direct source materials. You might also find our Self-Help Legal Resources useful which includes links to employment agencies.
Need More Help?
Feel free to contact the authors if you have any further questions about these new 2024 California Employment Laws, including applicability to your industry and how to implement them.
Authors: Chuck Farrar, aka The Frog Knows Employment Lawyer and Janice Knight, Senior HR Consultant (Knight Line Consulting)
Contact Chuck (for legal advice) or Janice (for HR compliance prevention strategies) with questions or to schedule an appointment.
Disclaimer
The Law Office of Chuck Farrar provides this Blog/Website post for educational purposes only, as well as to give the public general information and a general understanding of employment laws for small business private employers in California. It is not intended to and does not provide specific legal advice. By using this Blog/Website you understand that there is no attorney client relationship between you and The Law Office of Chuck Farrar. Do not use this Blog/Website as a substitute for competent legal advice from a licensed professional attorney in your state.