Part 1: 2023/2024 Legal Updates for California

10.25.23Olivia Hernandez

The California Legislature had another busy year with several bills being sent to the Governor’s desk. The Governor had until October 14th to sign or veto them and with that deadline behind us, we now know what’s on the horizon.

Here is a recap of some of the employment bills of particular interest to employers passed in this legislative session. These laws are effective date January 1, 2024.

SB 616Increase in Sick Leave Requirements

Beginning in 2024, the amount of sick leave an employee is eligible for will increase from 24 hours or 3 days to 40 hours or 5 days per year. Employers may still require employees to wait until their 90th day of employment before using their sick leave.

There are different methods an employer may use to comply with California’s sick leave requirement. They may accrue the sick leave on a regular basis or they may front load the full 40 hours at the beginning of the year. Employers are still allowed to combine sick leave and vacation into a Paid Time Off (PTO) bank for employees. If sick leave is kept separately from vacation, accrued but unused sick leave is not required to be paid out at employee separation.

If employers accrue the sick leave or use a PTO bank, the accrual rate is a minimum of one hour for every 30 hours worked. However, the employer may use a different accrual method as long as the employee has no less than 24 hours of accrued sick leave or PTO by their 120th calendar day of employment and 40 hours of accrued sick leave or PTO by their 200th calendar day of employment. Under the accrual method, the accrued but unused sick leave will carry over from year to year and the employer may cap the employee’s leave bank at 80 hours. The employer may still limit how much sick leave an employee may use to 40 hours per year.

If the employer chooses to front load the 40 hours of sick leave, unused sick leave is not required to be carried over to the next year.

SB 699 and AB 1076: Restrictions on Non-Compete Agreements

California has a strong history of prohibiting contracts that restrain anyone from engaging in a lawful profession, trade or business and considers such contracts as void in almost every case. This applies to employment non-compete agreements that attempt to bar an employee from working for another employer after separation from the company. There are three narrow exceptions where non-compete agreements are enforceable, including during the sale of a business, the dissolution of a partnership or the dissolution or termination of a limited liability company.

SB 699 states that if an applicant is applying for a job in California, and they signed a non-compete agreement in another state, it will be unenforceable regardless of where and when the contract was signed even if their prior employment was outside of California. The law also allows employees to bring a lawsuit against the employer and recover attorneys fees if they violate the prohibition against non-compete agreements.

AB 1076 voids employment non-compete agreements no matter how narrowly they are tailored and requires employers to notify employees who have previously signed a non-compete agreement that the agreement is now void.

By February 14th, 2024, employers must notify current employees and former employees who were employed after January 1, 2022 that any non-compete agreement they signed is void.  The notice must be in the form of a written individualized communication delivered to the last known address and email of address of the employee or former employee.

SB 848Leave for Reproductive Loss

Employers with five or more employees are required to provide employees who have worked at least 30 days and who have experienced a reproductive loss with five days of leave.  Reproductive loss includes a miscarriage, failed surrogacy, stillbirth, unsuccessful artificial insemination or failed adoption.

An employee does not need to take the leave on consecutive days but it must be completed within three months of the loss. The leave can be unpaid but the employee is able to use accrued and available paid sick leave.

If an employee experiences more than one reproductive loss within a 12 month period, the employer is not required to grant more than 20 days of leave within 12 months.

Drug Testing and Marijuana Use

AB 2188, passed on September 18th, 2022 prohibits employers from discriminating against an employee based on lawful off-duty marijuana use and from using traditional drug tests to determine if an applicant or employee uses marijuana. This law goes into effect on January 1, 2024.  Employers can still prohibit employees from possessing, being impaired or using marijuana while performing work for the company.

Non psychoactive cannabis metabolites are produced when the body metabolizes the THC in marijuana. This can be stored in the body for weeks and means traditional drug tests cannot be used as an indicator that someone is currently under the influence of marijuana. THC is the compound in marijuana that causes impairment and employers are still able to test for THC to determine if the employee is actively under the influence at work. If an employee or an applicant tests positive on a valid test that “does not rely on the presence of non psychoactive cannabis metabolites,”  the law does not prohibit employers from declining to hire or terminating an employee based on the outcome of those tests.

SB 700, passed this year and effective January 1, 2024, expands marijuana protections for employees and applicants by making it unlawful for an employer to request information about their prior marijuana use. Employers also may not use any information they obtained from a criminal background check on the person about their prior marijuana use.

Certain employers, such as those in the building and construction industry and those who are required to conduct federal background investigations or clearances are exempt from these laws.

SB 497: Presumption of Retaliation for Whistleblowers

This law amends the Labor Code to provide a presumption of retaliation on the part of an employer if an employee is disciplined or terminated within 90 days of certain protected activities. These activities are covered by the California Labor Code, the Labor Commission and California’s Equal Pay Act and include disclosing their wages, complaints about unpaid wages, discussing the wages of others, encouraging others to exercise their rights in regards to their wages or for making a bona fide complaint about their wages to the Labor Commision.

Should an employer discipline or terminate an employee in the situation described above, they are presumed to have retaliated against an employee unless they can show their actions were legitimate and non-retaliatory. Ensuring that ongoing performance issues have been effectively documented and discussed with the employee may help to provide the proof needed to overcome the presumption of retaliation against an employee.

The Governor signed several other laws this legislative year that will go into effect later in 2024 such as those requiring a Workplace Violence Prevention Plan and increases in the minimum wage for health care and fast food workers. Keep an eye out for our upcoming blogs with more information about these topics.

Some of these new laws will require you to update the relevant sections of your Employee Handbook. Contact us and let one of SDHR Consulting’s knowledgeable consultants help you through this process!

Author: Traci Hagan