It’s that time of year again for employers to revisit their policies and employee handbooks to address important changes in California employment law that go into effect on January 1, 2024 or later in the year. Several new employment laws go into effect at the turn of the year: from changes in Paid Sick Leave law to the introduction of required Reproductive Loss Leave. Please take note of the following updates in California employment law revise your policies as needed.
Expansion of California’s Paid Sick Leave Law
Senate Bill 616 goes into effect on January 1, 2024 and will guarantee California employees five (5) paid sick leave days (40 hours) per year, up from three (3) paid sick days (24 hours) under previous law. The new law takes effect on January 1, 2024, and applies to employers of all sizes.
Employers can comply with the new law in different ways, depending on which method of accounting for paid sick leave the employer chooses. Below are details about how to comply with each method:
Continuous accrual method: For employers who use the continuous accrual method for sick leave, employees are still entitled to no less than 1 hour of sick leave for every 30 hours worked. However, the total cap on accrual must now be 10 days (80 hours), which was previously 6 days (48 hours). Under the continuous accrual method, once an employee reaches the cap, they cease to accrue new hours, but when they use time and fall below the accrual cap, the employee will start accruing again up to the cap. The cap on annual use of sick time was also expanded by SB 616: An employer using the continuous accrual method may cap use of sick leave at 5 days (40 hours) per calendar year or 12-month period. Previously, employers could limit use of sick time to 3 days (24 hours) per year or 12-month period.
Annual lump sum or frontloading method: For employers who grant sick leave in a lump sum (also called frontloading) at the beginning of each year of employment, calendar year, or 12-month period, the amount of sick leave given in a lump sum must now be 5 days (40 hours) annually. Previously, employers could grant a lump sum of 3 days (24 hours) annually.
Alternative accrual method: The new law keeps intact an employer’s right to use an alternative method for distribution of sick leave (aside from the continuous accrual or lump sum methods), so long as employees receive no less than 3 days (24 hours) of paid sick leave by the 120th calendar day of employment, and, as a result of the new law, no less than 5 days (40 hours) of paid sick leave by the 200th calendar day of employment.
The new law maintains several key components of existing law, including:
- Full-time, part-time, and temporary employees are eligible for paid sick leave if they have worked for the same employer for at least 30 days within one year in California.
- There is no requirement to cash out unused paid sick leave upon termination of employment.
- The employee’s amount of paid sick leave available must be listed on an itemized paystub provided every payday.
Leave for Reproductive Loss Takes Effect January 1, 2024.
Senate Bill 848 (SB 848), which takes effect on January 1, 2024, will require California employers to grant eligible employees up to five days off of protected leave, following a qualifying reproductive loss event. The new law defines the term “reproductive loss event” to mean a failed adoption, failed surrogacy, miscarriage, stillbirth, or unsuccessful assisted reproduction. The law does not list abortion as a qualifying event. SB 848 prohibits employers from retaliating against employees who take time off after a reproductive loss event. The new law does not require that the leave be paid. Employers will also be required to maintain employee confidentiality relating to reproductive loss leave.
Cannabis Discrimination Law Takes Effect January 1, 2024
Senate Bill 700 (SB 700), which takes effect on January 1, 2024, prohibits employers from discriminating against an employee or applicant based on the individual’s use of cannabis off the job and away from the workplace. Employers may still conduct preemployment drug testing, and an employer can still refuse to hire someone based on a valid preemployment drug screening test, however, such test should only screen for psychoactive cannabis metabolites (i.e., a type of drug screening that detects the recency of the cannabis use).
In addition, under SB 700, information about an individual’s prior cannabis use that is obtained from a criminal history check may not be considered in employment decisions, unless the employer is allowed to consider it under California’s Fair Chance Act.
Workplace Violence Prevention Law Takes Effect July 1, 2024
On September 30, 2023, Governor Newsom signed SB-553 into law, establishing new requirements for employers with 10 or more employees in California to implement a workplace violence prevention plan that includes (among other things): (1) Procedures for the employer to receive and respond to reports of workplace violence, and to prohibit retaliation against an employee who makes such a report, (2) Information about how an employee can report a violent incident, threat or other concern to the employer or law enforcement without fear of reprisal, (3) Methods to alert employees of the presence, location and nature of workplace violence emergencies, (4) Evacuation or sheltering plans that are appropriate and feasible for the worksite, (5) Information about how employee concerns will be investigated and how employees will be informed of the results of the investigation, (6) Procedures to obtain the active involvement of employees in developing and implementing the violence prevention plan, and (7) Procedures to review the effectiveness of the violence prevention plan and revise it as needed. Employers must implement their Workplace Violence Prevention Plan by July 1, 2024.
Expanded Scrutiny of Non-Compete Agreements and Clauses
In addition to the new laws taking effect this year, California recently enacted two new bills that further strengthen California’s stance against non-competition agreements and clauses (“non-competes”). On September 1, 2023, Governor Gavin Newsom signed Senate Bill (SB) 699 into law, which attempts to extend the reach of existing California non-compete law to contracts signed out of state. On October 13, 2023, Governor Newsom also signed Assembly Bill (AB) 1076 into law, which states that restrictive covenants (non-competes fall into this category)—no matter how narrowly tailored—are void unless they satisfy one of the few statutory exceptions. AB 1076 also requires employers to notify their employees if their existing employment agreements contain such covenants.
Both new laws will have significant impacts for businesses. Employers should take heed of the newly strengthened laws and review any contracts in which they attempt to place restraints on employee mobility.
Key Takeaways Regarding Non-Competes
- Employers should be extremely cautious about the language and scope of non-compete clauses to ensure they comply with California law (i.e., that they meet a statutory exception).
- Employers should avoid using non-compete clauses as a scare tactic, given that there is now a private right of action and potential liability attached to doing so.
- Employers should review their contracts for non-compete clauses that may apply to employees in other states and assess whether such clauses should be revised or removed.
- Employers who included non-compete provisions in their employment agreements with employees who were employed on or after January 1, 2022, must issue an individualized written notice to current and former employees no later than February 14, 2024, stating that any post-employment non-compete clauses are void.
In Conclusion . . .
Before the end of 2023, employers should review their policies and procedures to ensure compliance with these new laws and changes to California public policy. Employers should also reach out to their employment counsel with any questions regarding these pending changes. Proactive changes and working with counsel will help protect employers during this season of change!