Navigating California’s New Employment Laws Taking Effect in 2024

September 14, 2023, marked the end of the California legislative session for 2023. Typical of past years, California Governor Gavin Newsom signed a flurry of new laws, many of which will begin taking effect on January 1, 2024. The following is an overview of some of the more significant new laws that will impact employers.

SB 616 – Increase in Number of Paid Sick Days

Effective January 1, 2024, most employers (with a few exceptions) will be required to provide their employees with 56 hours or seven days (whichever is greater) of paid sick leave by the 280th calendar day of employment, each calendar year, or in each 12-month period. Current law only requires employers to provide employees with a minimum of 24 hours or three days (whichever is greater) of paid sick leave by the 120th calendar day of employment, each calendar year, or in each 12-month period.

Consistent with current law, an employer who uses the accrual method of granting paid sick leave must allow employees to carry over unused accrued sick leave to the next year. However, the employer may limit the amount of accrued sick leave the employee may use in a year to 56 hours or seven days (whichever is greater). This is an increase from existing law, which allows employers to limit the use of accrued sick leave in a year to 24 hours or 3 days (whichever is greater).

As with existing law, the new law allows an employer to cap the total amount of unused sick leave an employee may accrue. The new cap is 112 hours or 14 days (whichever is greater), which is an increase over the existing cap of 48 hours or six days (whichever is greater).

For employers that award employees the full amount of sick leave at the start of each year of employment (the front-loaded method), no accrual or carryover is required.

Consistent with the current law, the new law does not require employers to pay their employees for unused accrued sick leave upon termination.

SB 848 – Leave for Loss Related to Reproduction or Adoption

Under current law, an employer with five or more employees must allow an employee who has been employed for at least 30 days to take up to five days of unpaid bereavement leave for the death of a family member. Effective January 1, 2024, the right to bereavement leave extends to an employee who suffers a reproductive loss, including a miscarriage, failed surrogacy, unsuccessful assisted reproduction (such as through artificial insemination), stillbirth, or failed adoption. If an employee experiences more than one reproductive loss leave event within a 12-month period, the total amount of time taken shall not exceed 20 days within a 12-month period. The leave is unpaid, but employees may elect to use certain other leave balances otherwise available to the employee, including accrued and available paid sick leave.

SB 700 – Employment Discrimination – Cannabis Use

Effective January 1, 2024, an employer may not discriminate against an employee for using cannabis products during non-working hours and away from the workplace. SB 700, which Governor Newsom signed on October 7, 2023, expands existing law to prohibit an employer from requesting information from applicants relating to their prior cannabis use. Additionally, the new law prohibits employers from considering an applicant’s history of cannabis use obtained from a criminal background check, unless they are allowed to do so under the California Fair Chance Act or other state or federal law.

SB 553 – Workplace Violence

Under existing law, employers are required to establish, implement, and maintain an effective written injury prevention program. Effective July 1, 2024, covered employers must adopt a written workplace violence prevention plan that must include:

1. Names or job titles of the persons responsible for implementing the plan;
2. Effective procedures to obtain the active involvement of employees in developing and implementing the plan, including, but not limited to, through their participation in identifying, evaluating, and correcting workplace violence hazards, in designing and implementing training, and in reporting and investigating workplace violence incidents;
3. Methods the employer will use to coordinate implementation of the plan with other employers, when applicable, to ensure that those employers and employees understand their respective roles, as provided in the plan;
4. Effective procedures for the employer to accept and respond to reports of workplace violence, and to prohibit retaliation against an employee who makes such a report;
5. Effective procedures to ensure that supervisory and nonsupervisory employees comply with the plan;
6. Effective procedures to communicate with employees regarding workplace violence matters;
7. Effective procedures to respond to actual or potential workplace violence emergencies;
8. Procedures to develop and provide training;
9. Procedures to identify and evaluate workplace violence hazards;
10. Procedures to correct workplace violence hazards identified and evaluated in a timely manner;
11. Procedures for post-incident response and investigation;
12. Procedures to review the effectiveness of the plan and revise the plan as needed; and
13. Procedures or other information required as being necessary and appropriate to protect the health and safety of employees.

Additionally, the new law requires employers to maintain a log of workplace violence incidents and provide workplace violence training to all employees.

SB 365 – Arbitration

Existing law allows a party to immediately appeal an order denying a motion to compel arbitration. However, effective January 1, 2024, the appellant is not entitled to an automatic stay of the proceedings in the trial court pending the outcome of such an appeal. The practical effect of this new law is that an employer could be forced to defend a case in court that an appellate court ultimately determines should be litigated in private arbitration. This will likely increase defense costs as the employer is forced to litigate the case in two forums.

Earlier this year, the United States Supreme Court held in Coinbase, Inc. v. Bielski that the Federal Arbitration Act (“FAA”) requires a district court to stay its proceedings while a party pursues an interlocutory appeal of an order denying a petition to compel arbitration that invokes the FAA. SB 365 appears to conflict with the Coinbase decision. Thus, it is likely that there will be future legal challenges to this new California law.

AB 1076 and SB 699 – Noncompete Agreements

Current law generally provides that noncompete agreements in employment relationships are void except in very narrow circumstances that are defined by statute. AB 1076 takes this law a step further by making it unlawful to include a noncompete clause in an employment agreement or to require an employee to enter a noncompete agreement that does not fall within a statutory exception. Additionally, the law requires employers to notify, in writing, by February 14, 2024, current and former employees who were employed after January 1, 2022 and whose contracts include a noncompete clause, or who were required to enter a noncompete agreement, that does not fall within a statutory exception. The notification must advise the current and former employees that the noncompete clause or agreement is void.

Further, SB 699 provides that void noncompete agreements are unenforceable regardless of when or where they were signed. Thus, an employer is precluded from enforcing a void noncompete agreement even if it is with an employee or applicant who is located and/or signed the agreement outside of California. The new law allows employees or prospective employees to sue their employers or perspective employers for injunctive relief and actual damages for violating this law.

Conclusion

We will continue to monitor these new laws and any future legal challenges that are made to them.

For more information or specific guidance, please contact Jennifer Morin.