Several new California laws will go into effect next year that will likely affect your business. Below is a summary of these new laws with compliance recommendations.
Effective January 1, 2024
Increase in Minimum Wage/Salary
The statewide California minimum wage will increase to $16.00 per hour on January 1, 2024 for all employers.
Almost thirty different counties and cities in California such as Los Angeles, San Diego, and San Francisco have adopted local minimum wage ordinances as high as $19.00 (West Hollywood) that have a minimum wage that is higher than the statewide standard. Please contact us if you are unsure whether your municipality has a higher minimum wage than the statewide standard.
The statewide California minimum salary for properly classified exempt employees will increase to $66,560 on January 1, 2024.
A municipality with a minimum wage higher than the statewide minimum wage will not affect the minimum salaries for exempt employees. Please remember that for an employee to be properly classified as exempt, that employee must receive at least the above minimum annual salary AND satisfy the exempt duties requirements. Please contact our office for an analysis of whether your salaried employees are properly classified as exempt.
Increase in Mileage Reimbursement Rate
The IRS Standard Mileage Rate for cars, vans, pickups, and panel trucks for business use will increase to $0.67 per mile on January 1, 2024. California Labor Code Section 2802 requires that employers reimburse employees for business expenses, and the California courts have held that reimbursing employees’ mileage at the IRS Standard Mileage Rate complies with Section 2802 for business use of an employee’s personal vehicle.
Paid Sick Leave Increase
Existing California law requires that employers provide the greater of 3 days or 24 hours of paid sick leave to employees per year through front-load, statutory accrual, or alternative accrual methods. Beginning on January 1, 2024, the required level of paid sick leave for employees is increasing to the greater of 5 days or 40 hours per year through the same methods as follows:
• Front-load: employees are granted the greater of 5 days or 40 hours at the beginning of employment and each year thereafter;
• Statutory accrual: employees accrue 1 hour of paid sick leave for every 30 hours worked with an allowable maximum accrual cap of 10 days or 80 hours with a possible use limit of 5 days or 40 hours per year and mandatory year-to-year carry over; or
• Alternative accrual: employees accrue paid sick leave time in increments set by the employer so long as employees accrue at least 3 days or 24 hours of paid sick leave by the 120th day of work and 5 days or 40 hours by the 200th day of work with the same caps and carryover rules as the statutory accrual method.
Employers that combine vacation and paid sick leave must evaluate their current policies for compliance with the 2024 increases. Please contact us for review and evaluation of paid sick leave or combined paid time off policies.
Employers must update their new hire form required by Labor Code 2810.5 informing employees of rates of pay and paid sick leave policies.
New Form I-9
The new form I-9 required for verification of employment of new hires is available at: https://www.uscis.gov/sites/default/files/document/forms/i-9.pdf.
Verification of eligibility documents must take place in person unless an employer is enrolled in E-Verify and follows the recent regulations for remote verification.
Cannabis Screening
Employers in California may no longer test for off the job cannabis use unless required to by existing law (such as screening for government contractors or Department of Transportation regulated drivers). Testing, whether prior to employment or during employment, must only screen for current intoxication (absent an exception).
Cannabis testing typically screens for cannabis metabolites that may be present in one’s system long past current usage causing a person to potentially test positive for off the job protected usage even though that person is not currently intoxicated. Employers that test for current cannabis usage must communicate with their licensed testing clinics to arrange for testing that screens for current intoxication and not past off the job usage.
Reproductive Loss Leave
Employers with 5 or more employees must provide up to 5 unpaid days off to an employee who suffers a reproductive loss, per reproductive loss event. Reproductive loss generally includes miscarriage, failed surrogacy, still birth, failed adoption, and unsuccessful assisted reproduction (such as IUI, IVF, or embryo transfer). Reproductive loss leave is available to each person intending to become a parent. Employers with 5 or more employees who maintain employee handbooks must include a written reproductive loss policy in their handbooks. Please contact us for assistance with adding such a policy and updating your employee handbook for 2024.
PUMP Act
California law previously guaranteed certain rights to employees who are lactating or expressing breastmilk at work. Federal law caught up to California and starting January 1, 2024, all U.S. employers must adopt policies on lactation or expressing breastmilk at work. Though this law is not new to California, the following a summary of the California and Federal law:
• Employees must be allowed to use rest breaks to express milk. Employees may take additional rest break time to express milk but are subject to state law and employer policy on whether such additional time is paid or unpaid.
• Employees may not be denied time to express milk. Frequency, duration, and timing varies depending on the needs of the employee. If unpaid, employees must be relieved of all duties.
• Employers must provide a lactation room for employees to express milk at work. The lactation room must:
• Be separate, private, and not a breakroom or bathroom (4 walls with a door that closes and latches);
• Have a sink and running water;
• Have a means to store breastmilk such as a refrigerator or freezer;
• Have adequate seating;
• Have a flat surface such as a counter or table; and
• Have an electrical outlet.
• If an employer with fewer than 50 employees is unable to provide such a lactation room due to a demonstrable undue hardship, that employer is not required to provide such a room. Even if an employer meets the requirements for this exception, that employer must still provide private space that is not a breakroom or bathroom so employees may express milk at work.
• These requirements apply to remote workers as well.
Rebuttable Presumption of Retaliation
Starting January 1, 2024 California law will presume unlawful retaliation if the employer takes an adverse action against an employee within 90 days of the employee engaging in a protected activity. The presumption is rebuttable if the employer can demonstrate a good-faith non-retaliatory motive for the adverse action.
Notice of Illegal Non-Compete Agreements
California contract law already refuses to enforce restrictive covenants such as non-compete agreements in the employment context. Beginning on January 1, 2024, any employer that enters into a non-compete agreement or includes non-compete terms in an agreement with an employee will be subject to civil and possible criminal liability. California employers who entered into such restrictive covenants prior to January 1, 2024 must provide written notice to such involved employees that the restrictive covenant terms are not enforceable.
If you need assistance with a review of your employment agreements, to determine whether they contain non-compete terms, please contact us.
Corporate Transparency Act
A new Federal law named the Corporate Transparency Act (CTA) will go into effect on January 1, 2024. CTA will require certain business entities to file a beneficial ownership report with the United States Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). Certain exemptions exist for larger, highly regulated companies. CTA may apply to your business entity and if so, you will need to prepare to make this filing or face hefty penalties by FinCEN.
Please contact our office to determine whether your Company needs to make this filing.
Effective July 1, 2024
Workplace Violence Prevention Plan
All California employers are required to write and follow an illness and injury prevention plan or IIPP. Beginning on July 1, 2024, all employers must adopt a workplace violence prevention plan or WVPP along with their IIPP. The WVPP must comply with certain new requirements and imposes training and recordkeeping obligations. More information will become available in 2024. The California Department of Occupational Safety and Health will prepare and publish model plans.
Arbitration Agreements
Employer-employee arbitration agreements are very much alive and well in California at the moment. We recommend all California employers enter into arbitration agreements with their employees. California courts regularly issue opinions that modify current laws on drafting and enforcing arbitration agreements. We recommend that you stay updated on current laws on arbitration agreements and work with our firm to use current and up-to-date arbitration agreements.
Generative Artificial Intelligence
We recommend that employers evaluate the role and risks of generative artificial intelligence or AI in the workplace. AI lags behind in legal compliance despite its ever-increasing usage and capabilities. We are working with employers to draft and implement a workplace AI policy to prevent legal issues such as unlawful discrimination, security and confidentiality breaches, bias, intellectual property infringement, and wage theft. Please contact us if you would like to know more about AI and/or would like assistance drafting a workplace AI policy.
Summary
The new laws that will go into effect in 2024 have affirmative requirements that employers revise and update their employee handbooks. For any information or questions on these laws, or for assistance in revising your employment handbooks, policies, or procedures, please contact Kurtis Urien at (714) 972-2333 or kurtis@mrclawcorp.com or Luna Hernandez at (714) 972-2333 or luna@mrclawcorp.com.
