December 14, 2023

Client Alert: New Employment Laws Taking Effect January 1, 2024

Starting on January 1, 2024, several new employment laws will take effect in California, including state minimum wage increases, expansion of paid sick leave, and new laws relating to non-compete agreements and off-duty cannabis use. In addition, several COVID-19-related laws will sunset in 2024, while others will extend to 2025.

More information on the new employments laws is available below. Please reach out to Katherine M. Forster and Margaret G. Maraschino to learn more.

Non-Compete Agreements: SB 699 and AB 1076: Two new laws will address non-compete agreements in California beginning in 2024.

SB 699 adds section 16600.5 to the Business and Professions Code and specifically states that any non-compete agreement is void and unenforceable regardless of where and when the non-compete agreement was signed (i.e., including if the employment was maintained outside of California). Employers who attempt to enter into or enforce a non-compete agreement commit a civil violation and employees, former employees, or prospective employees may bring a private action for injunctive relief, recovery of actual damages, and reasonable attorney’s fees and costs.

AB 1076 amends section 16600 and adds section 16600.1 to the Business and Professions Code. The amendment codifies existing case law which holds that the provision is to be read broadly to void non-compete agreements and clauses in an employment contract if they do not satisfy an exception. Section 16600.1 will make it unlawful to include a noncompete clause in an employment contract or to require an employee to enter into a noncompete agreement that does not satisfy an exception. Further, employers are required to notify in writing, by February 14, 2024, all current and former employees who were employed after January 1, 2022, and whose contracts included a noncompete clause or who were required to enter into a noncompete agreement that do not satisfy an exception that the noncompete clause or agreement is void. The notice must be delivered to the last known address and email address of the employee or former employee. Violation of Section 16600.1 shall be considered an act of unfair competition.

Minimum Wage Increase: California state minimum wage will increase to $16 per hour for employers of all sizes. As a result, the monthly salary for California exempt-status employees will increase to $5,546.67 per month, or $66,560 annually.

Updated Wage Theft Notice: AB 636: Employers are now required to provide written notification, at the time of hire, of the existence of a federal or state emergency or disaster declaration applicable to the county or counties where the employee will be employed that may affect the employee’s health and safety during employment and that was issued within the 30 days prior to the employee’s first day of employment. This information will require employers to update their Wage Theft Notice. Templates for this notice requirement will be provided by the Labor Commissioner. Further, pursuant to AB 636, beginning on March 15, 2024, employers of agricultural workers who are brought to California under the federal H-2A agricultural worker visa program must notify employees admitted under this visa program of their additional rights and protections under California law. Templates for this notice requirement will be provided by the Labor Commissioner no later than March 1, 2024. Employees covered by valid collective bargaining agreements are generally not covered by these provisions.

Expansion of Paid Sick Leave: SB 616: California’s Healthy Workplaces, Healthy Families Act of 2014 will now require almost all California employees to receive 40 hours or 5 days of paid sick leave per year.

Employers may still use either a front-load or accrual method for sick leave. The standard accrual method remains one hour per 30 hours worked. An employer using an alternative accrual method must ensure that its employees accrue at least 24 hours (or 3 days) of leave by the 120th day of employment and an additional 16 hours (for a total of 40 hours or 5 days) by the 200th calendar day of employment. The permitted cap on an employee’s total accrual has increased to 80 hours or 10 days per year. Employers must also allow employees to carry over at least 40 hours or 5 days of sick leave each year, unless the employer provides 5 days or 40 hours of sick leave at the beginning of each year of employment, calendar year, or 12-month period.

SB 616 also extends section 246.5 to include employees covered by collective bargaining agreements and specifies procedural requirements on the use of sick days (such as specifying the purposes for which sick leave can be used, preventing the employer from requiring the employee to find coverage when using sick leave, and prohibiting discrimination or retaliation for using the sick days). Finally, state law will now preempt many local ordinances with contrary requirements.

Reproductive Loss Leave: SB 848: California employers with more than five employees will be required to provide up to five days of reproductive loss leave following a reproductive loss event (defined to include a failed adoption, failed surrogacy, miscarriage, stillbirth, or an unsuccessful assisted reproduction). The law is a subset of California’s Bereavement Leave Law and will be available to individuals who have been employed for at least 30 days. The leave must begin within 3 months of the triggering event (unless another leave is in progress prior to or immediately after the loss) and it need not be taken on consecutive days. Unless an applicable policy provides pay (e.g., PTO or sick leave), the leave is unpaid. If more than one loss occurs, individuals may take up to 20 total days of reproductive loss leave in a 12-month period. The employer shall maintain the confidentiality of any employee requesting reproductive leave and may not retaliate or discriminate against an individual who uses this leave.

Privileged Communications in Incidents of Sexual Assault, Harassment or Discrimination: AB 933: This law seeks to protect individuals who make a statement or complaint (without malice) about their own experience of sexual assault, workplace harassment or discrimination, or cyber sexual bullying from defamation liability. It makes such communications privileged as long as the individual has, or had, a reasonable basis to file a complaint, regardless of whether or not the complaint was filed. Also, a prevailing defendant in a defamation case may recover their reasonable attorney’s fees and costs, treble damages for any harmed caused to them by the defamation action, punitive damages under section 3294 and any other relief permitted by law.

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