New Laws in 2024 - What Employers and Businesses Should Know
Starting January 1, 2024, California employers should be aware of a number of new employment-related laws. A summary is as follows, feel free to reach out to one of the attorneys you work with at Schwartz Semerdjian to discuss your workplace and any potential need to update any policies or handbooks because of these changes.
FOR ALL EMPLOYERS the following changes are ahead:
Minimum Wage (SB 3)
Senate Bill (SB) 3, signed in 2016, increases the minimum wage for all employees to $16 per hour, up from $15 per hour. The change in California’s minimum wage also affects the minimum salary an employee must earn to meet one part of the overtime exemption test. To meet the exemption test, an employee must earn no less than two times the state’s minimum wage for full-time work. As of January 1, 2024, employees in California must earn an annual salary of no less than $66,560 to meet this threshold requirement.
Paid Sick Leave (SB 616 i.e., the Healthy Workplaces, Healthy Families Act of 2014)
California’s new paid sick leave law, Senate Bill (SB) 616, significantly expands California’s existing paid sick leave law. Employees will now be entitled to five days or forty hours of paid sick leave, instead of the previous three days or twenty-four hours. The act excludes specified employees from its provisions, including an employee covered by a valid collective bargaining agreement.
Employers may still allow employees to accrue paid sick leave at the rate of one hour for every thirty hours worked. Regardless of the accrual rate, employees must be able to accrue forty hours by their 200th day of employment. Additionally, employees must be able to accrue at least twenty-four hours of paid sick leave by their 120th day of employment. Alternatively, employers may still “frontload” the entire amount of paid sick leave.
Employers may limit an employee’s annual use of paid sick leave to forty hours. Employers may cap an employee’s paid sick leave accrual at eighty hours or ten days; previously, the accrual cap was forty-eight hours.
Noncompete Clauses and Notice Requirements (SB 699, AB 1076)
Employers will be prohibited from requiring employees to sign noncompete agreements as a condition of employment. This law will apply to all employees, regardless of their occupation or industry.
Senate Bill (SB) 699 prohibits employers from entering into or attempting to enforce noncompete agreements with employees. The new law establishes that noncompete agreements are void in California regardless of where the employee worked when the employee entered into the agreement and/or where the employee signed the agreement.
Assembly Bill (AB) 1076 requires employers to notify current employees and former employees (employed after January 1, 2022) in writing by February 14, 2024, that any noncompete agreements they may have signed are void.
Retaliation Related to Employment Terminations (SB 497)
Senate Bill (SB) 497 (the Equal Pay and Anti-Retaliation Protection Act) amends California Labor Code sections 98.6, 1102.5, and 1197.5 to create a rebuttable presumption of retaliation if an employee experiences an adverse employment action within 90 days of engaging in any protected activity covered by the specified sections. The law squarely places the burden of proof on the employer to establish that the adverse employment action was based on a legitimate, non-retaliatory reason, effectively eliminating the plaintiff's need to establish a prima facie case by automatically starting the burden-shifting analysis at the second step.
However, because this is merely a rebuttable resumption, the employer may still articulate a legitimate, non-retaliatory reason for the decision. Further, the new law does not relieve an employee of the obligation to ultimately offer evidence to establish that the employer's non-retaliatory reason was pretextual in nature. This new law also entitles a prevailing plaintiff to civil penalties for each violation.
Cannabis Use (AB 2188 and SB 700)
Assembly Bill (AB) 2188 makes it unlawful for an employer to discriminate against individuals in hiring, termination, or any term or condition of employment, or to otherwise penalize an individual for cannabis use outside of work. An employer may still refuse to hire an applicant based on scientifically valid pre-employment drug screening conducted through methods that do not screen for non-psychoactive cannabis metabolites. Moreover, employers may still prohibit cannabis use during work hours and may discipline employees who are under the influence of cannabis while at work. There are also certain exceptions to AB 2188. AB 2188 does not apply to employees in the building or construction trades. It also does not apply to employees who are hired for positions that require federal background investigations or security clearances — and it does not preempt state or federal laws that require applicants or employees to be tested for controlled substances.
Piggybacking off AB 2188, Senate Bill (SB) 700 expands California’s Fair Employment and Housing Act to protect applicants from discrimination based on prior cannabis use, with some exceptions. Specifically, SB 700 prohibits employers from requesting information from an applicant for employment relating to the applicant’s prior use of cannabis. Further, when an employer gathers criminal history information regarding an applicant’s prior cannabis use, SB 700 makes it unlawful for employers to use such information. There are exceptions for situations in which the employer is permitted to consider or inquire about that information under state or federal law.
Workplace Violence Prevention Program (SB 553)
Starting July 1, 2024, Senate Bill (SB) 553 requires employers to adopt comprehensive workplace violence prevention plans, either as part of their injury and illness prevention programs or as a separate document. Employers subject to the law must also review and update their workplace violence prevention plans on an annual basis and provide an evaluation of the incidents that occurred and maintain records of workplace violence hazards previously identified.
SB 553 requires the comprehensive workplace violence prevention plan include, among other things, the following:
- The names or job titles of the individuals responsible for implementing and maintaining the workplace violence prevention plan.
- Procedures to obtain the active involvement of employees in developing, implementing, and reviewing the workplace violence prevention plan, including their participation in identifying, evaluating, and correcting workplace violence hazards, designing and implementing training, and reporting and investigating workplace violence incidents.
- Methods the employer will use to coordinate the implementation of the workplace violation prevention plan among employees in the same facility or department.
- Procedures for obtaining assistance from the appropriate law enforcement agency during all work shifts, including a written policy prohibiting the employer from disallowing or taking punitive or retaliatory action against an employee for seeking assistance or intervention from law enforcement or emergency services.
- Procedures for the employer to respond to workplace violence and to prohibit retaliation against employees who make reports of workplace violence.
- Procedures for ensuring compliance with the workplace violence prevention plan.
- Procedures for communicating with employees regarding workplace violence matters.
- Procedures for developing and providing training on the employer’s workplace violence prevention plan.
- Assessment procedures to identify and evaluate risk factors for workplace violence.
- Procedures for correcting workplace violence hazards in a timely manner.
- Procedures for post-incident response and investigation.
- Maintaining policies prohibiting the employer from requiring employees to confront active shooters or suspected shoplifters.
In addition to developing and implementing a workplace violence prevention plan, covered employers must also “record information in a violent incident log about every incident, post-incident, response, and workplace violation injury investigation” performed in accordance with the workplace violence prevention plan.
The log must include information, including, but not limited to: (1) the date, time, and location of the incident; (2) a detailed description of the incident; (3) a classification of who committed the violence; (4) a classification of the circumstances at the time of the incident, including whether the employee was completing usual job duties; (5) a classification of the location of the violence incident; (6) the type of incident, including whether it involved physical, verbal, sexual, or animal attacks; (7) consequences of the incident, such as medical treatment needed and whether security or law enforcement was contacted; and (8) contact information for the individual completing the violent incident log.
The law covers all California employers except health care facilities, service categories, and operations covered by Section 3342 of Title 8 of the California Code of Regulations, facilities operated by the Department of Corrections and Rehabilitation that are in compliance with Section 3203 of Title 8 of the California Code of Regulations, law enforcement agencies that are a “department or participating department” as defined in Section 1001 of Title 11 of the California Code of Regulations and in compliance with Section 3203, employees teleworking from a location of the employee’s choice which is not under the control of the employer, and places of employment with less than 10 employees working at any given time and that are not accessible to the public and in compliance with Section 3203.
FOR EMPLOYERS WITH AT LEAST FIVE EMPLOYEES the following changes are ahead:
Reproductive Loss Leave (SB 848)
Under Senate Bill (SB) 848, it is unlawful for an employer with five or more employees to refuse to grant an eligible employee’s request to take up to five days of leave following a reproductive loss event. Employees experiencing a reproductive loss and wishing to take a leave must be employed for at least thirty days prior to the commencement of the leave. The law defines a “reproductive loss event” as “the day or, for a multiple-day event, the final day of a failed adoption, failed surrogacy, miscarriage, stillbirth, or an unsuccessful assisted reproduction.” The law limits the amount of reproductive loss leave to a maximum of 20 days within a 12-month period. Thus, although an employee may be subject to multiple reproductive loss events in a 12-month period, an employer is not required to provide more than 20 days of reproductive loss leave. Like many other California leave laws, SB 848 prohibits employers from retaliating against any employee for requesting or taking leave for a reproductive loss.
New Industry-Specific Laws
Increased Minimum Wage for Health Care Workers (SB 525)
This Senate Bill (SB) 525 enacts a multi-tiered statewide minimum wage schedule for health care workers employed by certain covered health care facilities. Under this new law, “covered health facility” covers nearly all health care facilities except those owned, controlled, or operated by the California Department of State Hospitals, tribal clinics exempt from licensure, and outpatient settings operated by federally recognized tribes. “Covered health care employee” covers a broad range of employees, from physicians and nurses to janitors and clerical workers. The new minimum pay rates are determined by the type of work each employee does and the place where they do it.
The law lays out new minimum pay requirements for salaried employees as well as hourly workers. Any employees who receive salaries must be paid a monthly salary equivalent to either:
- At least 150% of the health care worker minimum wage, or
- 200% of the relevant local or state minimum wage (whichever amount is greater).
Importantly, SB 525 also applies to independent contractors. The new law automatically extends these minimum wage rates to contract workers who work at qualified health care facilities (without requiring them to undergo the tests usually used to determine employee status and pay privileges).
The workers who are exempted from SB 525’s pay schedule are outside salespersons, public sector workers whose primary duties are not health care, waste collection workers, and workers providing medical transportation services.
Fast-Food Minimum Wage Increase to $20/hour (AB 1228)
Assembly Bill (AB) 1228 repeals the FAST Food Accountability and Standards Recovery Act and replaces it with a $20 per hour minimum wage for fast food workers, among other provisions. Under this law, the minimum wage for California fast food restaurant employees will increase to $20 per hour starting April 1, 2024. This minimum wage will increase annually through 2029.
Food Handler Cards (SB 476)
The California Health and Safety Code currently requires certain workers to obtain a food handler card within thirty days of their hire date and to maintain this card throughout their employment as a food handler. Senate Bill (SB) 476 requires employers to cover any cost associated with obtaining a food handler card. In addition to the certification program cost, this obligation includes payment for employees’ time required to complete training, the cost of testing, and any element required for the completion of the certification program.
2024 – NEW LAWS BUSINESSES SHOULD KNOW
Corporate Transparency Act
Effective January 1, 2024, the Corporate Transparency Act (CTA) requires all new businesses (the deadline for existing businesses has been changed to January 1, 2025) to report their beneficial owners to the Financial Crimes Enforcement Network (FinCEN) to combat money laundering, tax fraud, and other illicit activities. Businesses that are created after January 1, 2024, will have 90 days to comply with the reporting requirements.
The act applies to both foreign and domestic reporting companies, including corporations, LLPs, and other entities created by filing a document with a secretary of state or any similar office under the law of a state or Indian tribe. Sole-proprietorships that don’t use a single-member LLC are not considered a reporting company, and businesses with more than 20 employees and more than $5 million in sales can qualify for exemptions.
American Rescue Act - Digital Transactions Reporting of Transactions Over $600
The new reporting threshold of $600 for third-party settlement organizations (TPSOs) under the American Rescue Plan Act of 2021 was originally set to take effect on January 1, 2023. However, the Internal Revenue Service (IRS) announced a delay in the implementation of this requirement. As a result of this delay, TPSOs will not be required to report tax year 2022 transactions on a Form 1099-K to the IRS or the payee for the lower, $600 threshold amount. The transition period described in Notice 2023-10 delays the reporting of transactions in excess of $600 to transactions that occur after calendar year 2022. This means that the new reporting requirements will effectively apply to transactions that occur in the calendar year 2023 and beyond.
Starting 2024, businesses will have to report digital transactions over $600 to the IRS. This new rule is expected to affect millions of businesses and freelancers who receive payments through platforms like PayPal, Venmo, and Stripe. This law is not intended to track personal transactions such as sharing the cost of a car ride or meal, birthday or holiday gifts, or paying a family member or another for a household bill. In addition to being more costly and burdensome on businesses to record and report digital transactions over $600, this change is significant because tax compliance is higher when amounts are subject to information reporting, like the Form 1099-K.
Small Business Loans Reporting
Starting in 2024, businesses that receive small business loans will have to report them to the IRS. The Consumer Financial Protection Bureau (CFPB) has finalized a rule to increase transparency in small business lending, promote economic development, and combat unlawful discrimination. Lenders will collect and report information about the small business credit applications they receive, including geographic and demographic data, lending decisions, and the price of credit.
Specifically, lenders that originate at least 2,500 small business loans annually must start collecting data from October 1, 2024. This rule aims to provide a comprehensive view of small business lending and support economic growth. The CFPB has issued a set of resources known as the 2024 filing instructions guide to assist with the filing of small business lending data.
The National Labor Relations Board (NLRB) issued a final rule on the standard for determining joint employer status. Effective February 26, 2024, two or more entities may be considered joint employers of a group of employees if each entity has an employment relationship with the employees, and if the entities share or co-determine one or more of the employees’ essential terms and conditions of employment.
The new rule more faithfully grounds the joint-employer standard in established common-law agency principles. The rule considers the alleged joint employers’ authority to control essential terms and conditions of employment, whether or not such control is exercised, and without regard to whether any such exercise of control is direct or indirect.
Essential terms and conditions of employment are defined as:
- wages, benefits, and other compensation;
- hours of work and scheduling;
- the assignment of duties to be performed;
- the supervision of the performance of duties;
- work rules and directions governing the manner, means, and methods of the performance of duties and the grounds for discipline;
- the tenure of employment, including hiring and discharge; and
- working conditions related to the safety and health of employees.
The joint-employer standard is only implicated if an entity employs the workers at issue and has authority to control at least one of these terms or conditions. Authority over other matters is not sufficient.
If you have questions about these changes or to discuss your workplace and any potential need to update any policies or handbooks, please reach out to one of the attorneys you work with at Schwartz Semerdjian.