Several new California laws went into effect on January 1, 2025 that will likely affect your business. Below is a summary of these new laws with compliance recommendations.
Effective January 1, 2025
Increase in Minimum Wage/Salary
The statewide California minimum wage increased to $16.50 per hour on January 1, 2025 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 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 increased to $68,640 on January 1, 2025.
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 increased to $0.70 per mile on January 1, 2025. 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.
Use of Paid Sick Leave
From January 1, 2025, employees can use paid sick leave if they or their family members are victims of a crime, with expanded rights based on employer size. All employees, regardless of employer size, can use paid leave to seek protective orders or relief. Employees at companies with 25 or more employees can also use leave to support family members in seeking medical attention, counseling, or legal services; accessing victim support organizations; safety planning or relocation; and attending related legal proceedings. Additionally, employees can take leave to care for affected family members or attend judicial proceedings related to violent crimes, theft, or embezzlement.
Expanded Protections: Intersectionality
California’s Fair Employment and Housing Act (FEHA) has been amended effective January 1, 2025, to explicitly prohibit discrimination based on the combination of two or more protected traits (known as intersectionality).
CROWN Act Update: Expanded Definition of Race Discrimination
On September 26, 2024, California updated the CROWN Act to strengthen protections against race-based discrimination. The law clarifies that “race” includes traits like hair texture and protective hairstyles, such as braids, locs, and twists, by removing the term “historically” from the definition. This change applies retroactively as part of existing law. Employers should review and update workplace dress and appearance policies to ensure compliance with these protections.
Limit to Driver’s License Requirements in Job Postings
Starting January 1, 2025, California employers cannot require a driver’s license in job advertisements, applications, or related materials unless driving is an essential job function and alternative transportation options, such as ride-hailing, carpooling, or biking, are not feasible in terms of time or cost. This law aims to prevent unnecessary barriers to employment for individuals without driver’s licenses. Employers should review job postings and application materials to ensure compliance.
Protections for Freelance Workers
California’s Freelance Worker Protection Act requires written contracts for freelance services worth $250 or more, starting January 1, 2025. The contract must include the names and addresses of both parties, an itemized list of services, payment terms, and timelines for reporting completed work. Once services begin, hiring entities cannot demand additional work or reduced pay as a condition for timely payment. The law also prohibits retaliation against freelancers for asserting their rights or participating in enforcement actions. Employers working with independent contractors should update their agreements to comply with the new requirements.
Limits on Captive Audience Meetings
Effective January 1, 2025, California’s Worker Freedom from Employer Intimidation Act prohibits employers from requiring employees to attend meetings or listen to communications about religious or political matters, including union organizing. Employers cannot retaliate against employees who decline participation, and violations can result in fines of $500 per employee per incident. Exemptions apply to religious organizations, political groups, and training required to meet legal obligations.
New Requirement for Workplace Injury Notices
Effective January 1, 2025, California employers must update workplace injury notices to inform employees of their right to consult a licensed attorney regarding workers’ compensation claims and that attorney’s fees may be covered as part of the worker’s award. This expands existing requirements for employers to provide workers’ compensation claim forms and notices of potential eligibility within one business day of an injury and to distribute workers’ compensation informational pamphlets to new hires by their first pay period. Employers should update their materials to ensure compliance.
New Whistleblower Rights Posting Requirement
Starting January 1, 2025, California employers must display a standardized whistleblower rights notice developed by the Labor Commissioner. This new notice will outline employee rights and responsibilities under whistleblower laws, include the whistleblower hotline number, and must be posted in a font size larger than 14 points.
Previously, employers were required to post general whistleblower protections, but there was no official format provided. While a sample notice existed, it came with a disclaimer that it might not meet legal requirements. The new standardized notice ensures employers meet compliance obligations and provides employees with clear, consistent information about their protections.
Employers should update workplace postings accordingly.
Changes to Paid Family Leave: No More Mandatory Vacation Use
California employers can no longer require employees to use accrued vacation leave before accessing benefits under the state’s Paid Family Leave (PFL) program. PFL provides wage replacement for individuals taking time off to bond with a new child, care for a seriously ill family member, or assist family members during military deployments.
Previously, employers could mandate up to two weeks of vacation usage before PFL benefits kicked in. This change, effective January 1, 2025, gives employees greater flexibility and quicker access to state-provided benefits. Employers should update their leave policies to comply with the new rule.
Expanded Protections for Time Off Related to Court, Jury Duty, and Victim Support
California has expanded employee rights for taking time off to assist family members who are victims of specified crimes and broadened the list of crimes for which protected leave applies. Under the bill employees are permitted to use vacation, personal leave, paid sick leave, or compensatory time off that is available unless otherwise provided in a collective bargaining agreement. Protections for jury duty, court appearances, and crime-related leave remain intact but now include acts of domestic violence, sexual assault, stalking, and threats involving force or weapons, even if no criminal charges are filed.
The law also moves these provisions from the Labor Code to the Fair Employment and Housing Act, placing enforcement under the California Civil Rights Department. Employers must provide written notice of these rights to new hires, annually to all employees, upon request, and when an employee or their family member is identified as a victim. These changes take effect January 1, 2025, and require updates to company leave policies and procedures.
Effective July 1, 2025
Cal/OSHA Expands Jurisdiction to Household Domestic Services
Historically, Cal/OSHA’s workplace safety regulations did not apply to household domestic services, as these were excluded from the definition of a “place of employment.” However, with the signing of Senate Bill 1350, that exemption has been removed, and most household domestic services will now fall under Cal/OSHA’s oversight, effective July 1, 2025.
Notably, certain services remain exempt, including publicly funded domestic services (even when beneficiaries share in the cost), services provided in family daycare homes, and work performed by individuals hiring household workers in their private residences for routine tasks such as cleaning, cooking, and caregiving.
This expansion reflects California’s continued push to enhance worker protections. Employers of domestic workers should familiarize themselves with applicable safety requirements to ensure compliance and avoid penalties.
Deadline Approaching December 31, 2025
CalSavers Compliance Deadline Approaching for Small Employers
Employers with 1-4 employees must register for California’s CalSavers Retirement Savings Program by December 31, 2025, if they do not offer a company-sponsored retirement plan. CalSavers requires employers to facilitate Roth IRA contributions for employees through payroll deductions but does not require employer contributions or fees.
Employers with 5 or more employees were already subject to the mandate, with their deadlines having passed. Non-compliance can result in penalties of $250 per employee after 90 days of notice, increasing to $500 after 180 days. Employers should act promptly to avoid penalties and ensure they provide employees with access to retirement savings options.
Summary
The above is a summary of the legislative updates. If you want to learn more, please watch our “New Year, New Laws: Essential Updates for 2025 Labor Compliance” Webinar.
