Eyes on Sacramento

Employers, it is time, once again, to update your existing handbooks and employment policies. California enacted several new laws that will affect your business beginning Jan. 1, 2024. On the flip side, in a win for employers, the governor vetoed several bills that would have placed onerous obligations on employers. This article highlights several new laws that employers must know as we enter the new year, and identifies a few bills that did make the cut.

California’s legislative session ended Sept. 14, 2023, and a slew of legislation was passed and presented to the governor, who had until Oct. 14 to do one of the following: (1) veto the bill, (2) sign the bill, or (3) approve the bill without signature. Payne & Fears has identified 21 employment-related laws relevant to our clients’ industries. Governor Newsom approved 15 new laws and vetoed six bills. For a full discussion of each of these new laws, and the ones that will not become law, we will be providing a detailed 2023 Key Legislative Developments document in the near future.

New Employment Laws Employers Must Know

Of primary importance are those new laws that will affect employment policies and handbooks, including:

• Increased Paid Sick Leave Accrual Requirements (SB 616) – Effective Jan. 1, 2024, employers must increase the minimum paid sick leave provided to their employees each year from 24 hours (three days) to 40 hours (five days). The minimum allowable cap employers may place on the total paid sick leave employees may accrue  also will increase from 48 hours (six days) to 80 hours (10 days). The new law will make certain provisions of the Paid Sick Leave law applicable to employees covered by a valid collective bargaining agreement, including the prohibition on retaliation for using paid sick leave.
• Reproductive Loss Leave (SB 848) – Effective Jan. 1, 2024, employers with five or more employees must provide up to five days of protected time off to an employee who suffers a “reproductive loss event,” which is defined as a failed adoption, failed surrogacy, miscarriage, stillbirth, or unsuccessful assisted reproduction. This leave does not need to be taken consecutively but must be completed within three months of the qualifying event, and absent a company policy to the contrary, this leave may be unpaid. If an employee experiences more than one qualifying event, the employer is not obligated to grant a total amount of reproductive loss leave in excess of 20 days within a 12-month period. Leave under this law is separate and distinct from any right under the California Fair Employment and Housing Act.
• Non-Discrimination for the Use of Cannabis (SB 700) – Effective Jan. 1, 2024, employers may not inquire about an employee’s prior use of cannabis. Employers are  prohibited from using any such information from a criminal history about an applicant or employee unless the employer is permitted to consider or inquire about that information under state or federal law. This law builds off of AB 2188, approved by the governor last year and also effective Jan. 1, 2024, which makes it unlawful for an employer to discriminate against a person based upon that person’s use of cannabis off the job and away from the workplace.
• Contracts in Restraint of Trade (AB 1076 & SB 699) – While existing case law generally precludes the enforcement of non-compete and non-solicit clauses in California, effective Jan. 1, 2024, this prohibition will now be codified in the Business and Professions Code. This new law will specifically apply the prohibition to contracts where the person being restrained is not a party to the contract, and will apply without regard for when or where the parties entered into the contract. In addition, by Feb. 14, 2024, employers are required to notify everyone they employed after Jan. 1, 2022 in writing, that any previously entered into non-compete clause or agreement is void. A company’s failure to do so is a violation of California’s Unfair Competition Law.

Employment Related Bills that Did Not Make the Cut

In a win for employers, Governor Newsom vetoed multiple bills that would have further complicated an employer’s ability to understand and comply with the law. The bills that were vetoed by the governor include:

• Discrimination on the Basis of Family Caregiver Status (AB 524) – This vetoed bill would have prohibited employment discrimination on account of family caregiver status, as defined, and would have recognized the opportunity to seek, obtain, and hold employment without discrimination because of family caregiver status as a civil right. The governor vetoed this bill because he believed it would have placed too large a burden on employers given the ambiguous nature of the language.
• Revisions to and Expansion of CalWARN (AB 1356) – This vetoed bill would have increased the current notice requirement under CalWARN from 60 days to 75 days, expanded the term “employer” to include a client employer of a labor contractor, and voided any general release, waiver of claims, or non-disparagement or nondisclosure agreement that is made a condition of the payment of amounts for which the employer is liable. The governor vetoed this bill because he believed it placed too onerous of an obligation on employers when trying to comply with the expanded provisions.
• Discrimination on the Basis of Ancestry (SB 403) – This vetoed bill would have added “ancestry,” defined to include, among other things, “caste,” as a protected characteristic under the Unruh Civil Rights Act and FEHA. The vetoed bill would have defined “caste” as “an individual’s perceived position in a system of social stratification on the basis of inherited status,” which may be characterized by factors including inability or restricted ability to alter inherited status; socially enforced restrictions on marriage, private and public segregation, and discrimination; and social exclusion on the basis of perceived status. The governor vetoed this bill because he found it unnecessary in light of already-existing protections provided under California law.
• Discrimination of Work-From-Home Employees (SB 731) – This vetoed bill would have made it an unlawful employment practice for an employer to fail to provide at least 30 calendar days’ advance notice to an employee who is working from home before requiring the employee to return to work in person. The vetoed bill would have required that notice be written and sent by mail or email and include, at a minimum, prescribed text with information about the rights of an employee to reasonable accommodation for a disability. The governor vetoed this bill because it would impose inflexible requirements that do not take into account the needs of the employer.