Seyfarth Synopsis: Collaborations with athletes, actors, and singers have always been a great way for companies to grow their brand recognition and create profitable products. Similar to celebrity-filled ads in the Super Bowl, collaborative relationships between influencers and companies on social media continue to be prevalent. With California’s unique laws on classifying independent contractors, including how “work made for hire” language is interpreted in California, businesses should pay attention to best practices for a successful partnership.

Like Patrick + Brittany and Travis + Taylor: Partnerships Are Key

Nowadays, celebrities and social media influencers are more business savvy. In the past, famous people simply served as the face of a brand or endorsed a product in a short advertisement. However, celebrities and even their family members, as well as budding social media influencers, are increasingly involved with brand collaborations. This includes providing input on package or product designs and colorways, and overseeing the production process. Whether it is Kansas City Chiefs’ quarterback Patrick Mahomes creating a clothing line with Adidas, or a clothing collection curated by Patrick’s off-the-field partner, Brittany, with Vitality (the commercial even features Patrick and Brittany’s daughter, Sterling Skye, after whom the line was named), the possibilities are endless. Even the mere appearance of a singer, athlete, or influencer in commercials or ads for businesses unrelated to sports or music can create brand associations, like Travis Kelce and Pfizer, Taylor Swift and Capital One, Christian McCaffrey and Xfinity, or Charli D’Amelio and Dunkin’ Donuts. But what if the collaboration results in the creation of legally protectable intellectual property rights? Who owns the copyright? The answer to this question often turns on the celebrity’s or influencer’s legal relationship with the business.

Instant Replay—Is the Celebrity an Independent Contractor or Employee under California Law?

The difference between employees and independent contractors is critical in California. If a worker is an employee, the business must report the worker’s earnings to the Employment Development Department (EDD) and must pay employment taxes on those wages. Thus, companies have a clear interest in ensuring that the freelancers they occasionally contract with are deemed independent contractors, not employees. Companies also benefit under federal copyright law if the celebrity or influencer can be classified as an independent contractor. The U.S. Copyright Act provides that certain specially ordered or commissioned works can be considered “works made for hire” and, when created by an independent contractor, the commissioning party is considered the author of the work and holder of the copyright. As a result, companies often include “work made for hire” clauses in contracts with independent contractors to ensure that the company owns all copyrights in the contractor’s work. But even if the contracted work qualifies as a work made for hire under federal copyright law, companies must still consider California law, which complicates the possibility of contractor status.

Call Reversal Where California’s View Of Work Made For Hire Effects Employment Status

Normally, the determination of whether an independent contractor should be classified as an employee in California is governed by AB 5 and its successor legislation AB 2257, which address the three-part ABC test for employment classification. But different rules apply when an independent contractor agreement includes work made for hire language.

According to California Labor Code section 3351.5(c) and California Unemployment Insurance Code section 621(d) and 686, an “employee” includes any person, including independent contractors, who enters into a written agreement to create a specially ordered or commissioned work of authorship stating “the work shall be considered a work made for hire.” This essentially means that by including a simple “work made for hire” clause in a contract, an otherwise independent contractor is deemed an employee under California law by statute. This arguably dispenses with the ABC test for these type of employment classification assessments. The independent contractor’s level of involvement in the project does not matter, because the inclusion of the work made for hire clause itself determines the employment status.

Avoiding a Flag on the Play: What Companies Can Do To Adjust and Win the Game

The employment status of their celebrity and social media partners may be more startling to California companies than the 49ers’ muffed punt in the 2024 Super Bowl. To avoid pitfalls, including penalties, companies with such partnerships and work made for hire contractual language, can properly classify these workers as employees.

Alternatively, companies considering partnering with a celebrity or influencer may opt to work with an individual who has created a corporation, LLC, or other business entity (excluding sole proprietorships), and contract with the business entity as opposed to the individual. This is a common approach for celebrities who contract through an entity on a loan-out basis. Entities are not considered employees in California and this strategy may allow a company to avoid the work made for hire employment classification risk. However, whether a loan-out company will survive an EDD audit remains an unanswered question.

Some celebrities and most influencers are unrepresented by a formal legal entity. When facing this kind of situation, companies may opt to omit the “work made for hire” clause and instead acquire the requisite rights through another mechanism, such as an assignment or license. This will allow the company to appropriately utilize the work. Ultimately, when dealing with an independent contractor in California, it is crucial to devise a game plan and consider the company’s end goal. Businesses seeking to own intellectual property created by a celebrity or influencer or as a result of such a collaboration should consider an assignment of rights or a license from the content creator to avoid needing a work made for hire clause and risking employment status. This approach is not without its own risks; grants of rights in copyright can be terminated after a period of time, which could result in the rights reverting back to the independent contractor.

Workplace Solutions

If you have questions or would like to strategize regarding compliance with this facet of California law, “works made for hire” generally, or other intellectual property and employment-related pitfalls that arise when working with celebrities, social media influencers, or independent contractors, don’t hesitate to reach out to your Seyfarth lawyer or the authors of this blog.

Edited by Coby Turner and Cathy Feldman

Seyfarth Synopsis: Employees have a right to request their employment records, but which records can they request? And how quickly do employers have to produce them? And who should they be produced to? And is there a way for employers to actually use these requests to their advantage? We offer guidance on these questions and more below.

Hollywood’s annual award season is upon us with its usual glitz and glamour. Less glamorous? Producing employee personnel files and other employment records. But everybody knows that it’s the behind-the-scenes work that really makes the stars shine on the big night. Read on to learn more about how you can make sure your practices are camera-ready when the bright lights hit.

Learn Your Lines

You can’t deliver an Oscar-worthy performance without knowing the script cold. So you get a request for an employee’s personnel file. Line?

First, check who the request is from. Employees have the right to request a copy of their own records, but often employers receive requests from someone claiming to act on the employee’s behalf. Under Labor Code section 1198.5(e), employers have the right to take reasonable steps to verify the identity of a current or former employee, or their authorized representative before producing records.

Second, check what the request is for. Personnel files? Payroll records? Both? Or some dramatic rendering of the employee’s history of employment? Delivering a performance that your director didn’t ask for isn’t going to score you a nomination here. As we previously addressed in detail, Labor Code sections 1198.5, 226, and 432, and particular Wage Orders, only require you to produce specific information in response to specific requests. And Section 1198.5 says you don’t have to produce personnel records where an employee has filed a lawsuit against their employer. There is no need for you to ad lib and volunteer more!

Third, check the date of the request and know your response deadline. Payroll records must be produced to an employee within 21 days, and personnel records must be produced within 30 days, unless another date is agreed upon. While movie releases are often delayed, employers who miss a record request deadline can be subject to a $750 penalty and attorneys’ fees under Labor Code sections 1198.5 and 226.

Hitting the Red Carpet

Your performance is a hit of Barbenheimer magnitude and you’ve made it to the red carpet! Now its time to get to know the other stars, but  just like when you’re producing personnel and payroll records, you’ll want to spend most of your time on the A-listers.  While there is no statutory definition of what comprises “personnel records,” according to the DLSE the file should include:

  1. Employment applications;
  2. Arbitration agreements;
  3. Signed policy acknowledgments;
  4. Offer letters;
  5. Payroll authorization forms;
  6. Records of employee performance, including performance reviews and written warnings;
  7. Notices of layoff, leave of absence, vacation, or termination;
  8. Notices of wage garnishment;
  9. Education and training notices and records; and
  10. Wage records (i.e., wage statements, or a computer-generated report showing the information required on the wage statements by Labor Code section 226), assuming the employee has asked for them.

Watch too for requests specifically calling out Labor Code section 432—this statute requires you to produce anything that an employee signed related to obtaining or holding employment.

As a matter of practice, you’ll generally want to avoid your seat-fillers. For example, email communications generally should not be included in an employee’s personnel file unless there is a special reason (e.g., documenting a performance-related conversation). Similarly, medical records should be kept in a separate and confidential medical file rather than the personnel file.

You’ll also want to watch for documents that are black listed—documents that are expressly excluded from production by the relevant statutes, or otherwise should not be produced. Records related to the investigation of a possible criminal offense, letters of reference, and records obtained prior to an employee’s employment or obtained in connection with a promotional examination are not covered by the rules requiring the production of employment records. The names of any nonsupervisory employees contained within an employee’s personnel file can (and generally should) be redacted before the file’s production as well. Also make sure to not produce anything subject to attorney-client privilege.

The Winner Is …

Employers?

Well, kind of.

Most HR personnel are probably as excited about a request for employment records as they are for a glass of lukewarm champagne. Responding to a request can be an administrative headache, and often a request is a precursor to a demand letter or complaint. 

However, there can be a silver lining in even the biggest snub or upset. An employer pulling a file for production has the chance to audit that file for any issues that could turn into litigation on an individual or even a class action basis.

If you’re pulling an employee’s wage statements anyway, check them to ensure they contain all categories of information required by Labor Code section 226. If the employee has an arbitration agreement, check to see when it was last updated and consider whether it comports with the latest guidance from the U.S. and California Supreme Court. Do you see an agreement discussing employee uniform costs or usage, a non-compete, or some background check or drug testing forms signed last year that are on templates dated from the prior decade? Check with your Seyfarth attorney about whether you need to revisit those documents.

Workplace Solutions

Responding to a request for employment records doesn’t have to take a Marvel-movie budget or be as confusing as Mulholland Drive. Train your frontline employees to recognize these requests so they don’t sit in a stack of papers until after the deadline to respond has passed. Consider what is being requested and to whom it ought to be produced. And, consult this checklist and talk with your favorite Seyfarth attorney to evaluate what to include and exclude in the production!

Edited by Coby Turner and Cathy Feldman

Seyfarth Synopsis: In 2021, West Hollywood joined the growing ranks of California cities with their own local sick leave and/or minimum wage requirements. West Hollywood enacted an ordinance that created paid and unpaid time off mandates as well as minimum wage obligations and mandates for the distribution of service charges, which went into effect  for most employers on July 1, 2022. In May 2023, the City published amended regulations that made a few impactful changes to the Ordinance, including setting a specific threshold of compensated leave that could be designated for paid sick leave purposes only, adjusting accrual rates for compensated leave, and changing the waiting time period for use of leave.

On November 15, 2021, West Hollywood enacted an Ordinance that permits employees to accrue up to 96 hours of compensated leave per year for sick leave, vacation, or personal necessity, and up to 80 hours of uncompensated leave which can be used for employee or family member sick leave after compensated leave is fully exhausted. The Ordinance also set a schedule for increasing the City’s minimum wage. On May 16, 2022, West Hollywood amended the Ordinance to clarify some of its more confusing provisions. Most recently, in May 2023, the City amended the regulations on this Ordinance.

West Hollywood also publishes administrative materials, such as required posters regarding the minimum wage and the time off provisions.

How to Get Four Stars for Compliance

Employers need to make sure they stay on script with the key components of the Ordinance:

  • Different Effective Dates for Hotel Versus General Employers: For hotel employers, the Ordinance took effect on January 1, 2022. For all other employers, the Ordinance took effect on July 1, 2022.
  • Two Hours of Work Creates a West Hollywood “Employee”: “Employee” includes any person who performs at least two hours of work within the geographic boundaries of West Hollywood for an employer in a particular week, and is entitled to minimum wage (i.e. is nonexempt).
  • Broad Definitions of Employers and Hotel Employers: Employers are defined broadly. “Hotel employers” broadly encompasses hotels, as well as entities that own or control leased or sublet premises connected to the hotel (for example, a spa or restaurant).

West Hollywood Takes PTO to the Big Time

The City’s compensated time off (“PTO”) provisions enable employees to accrue compensated time off that can be used for sick leave, vacation, or personal necessity.

  • Up to 96 Hours of Compensated Time Off: Full-time employees are able to accrue up to 96 hours of compensated time off per year. Part-time employees must receive a pro-rated amount. Employers must not “unreasonably deny” an employee’s request to use accrued leave.
  • Employers Can Separate Paid Sick and Vacation/Personal Time: The regulations explain that employers can separate the 96 hours of compensated leave into separate buckets for sick time and vacation/personal time. However, at least 50% of the compensated time (48 hours) must be available for use for vacation or personal necessity. Any paid sick leave component must comply with both the California State paid sick leave law (which was amended effective January 1, 2024, by SB 616) and West Hollywood standards. Any personal necessity or vacation time must be treated as vacation time under California law (meaning no “use it or lose it” and accrued, unused time must be paid out upon termination).
  • PTO Allotment and Accrual: The May 2023 regulations provide that all employees, including part-time and temporary employees, who work at least 30 days within a year for the same employer, must receive at least 24 hours of compensated leave that can be used for sick leave purposes beginning on the 90th calendar day of employment. The 24-hour allotment of sick leave is part of employees’ total allotment of compensated time off per year. Full-time employees are still able to accrue up to 96 hours, inclusive of the 24-hour sick leave allotment, and part-time employees shall accrue a pro rata amount of time.
    • Accrual Rate for Paid Sick Leave in Excess of 24 Hours: The May 2023 regulations appear to require that the first 24 hours of compensated leave classified as paid sick leave accrue at an accelerated rate of .046 hours of sick leave per hour worked. Once an employee has accrued 24-hours of paid sick leave, any additional paid sick leave can accrue at a rate of no less than 0.033 hours of sick leave per hour worked (i.e. 1 hour of paid sick leave for every 30 hours worked). In comparison, the prior regulations set an accrual rate of 0.047 hours per hour worked for the entire bank of compensated leave, up to 96 hours per year, and an accrual rate of 0.039 hours for employees’ bank of uncompensated leave up to 80 hours per year. The new regulations generally provide that compensated and uncompensated leave can accrue at a rate that ensures full time employees receive 96 hours of compensated leave and 80 hours of uncompensated leave by the end of the 12 month period (which can be prorated for part-time employees).
  • Carryover: Unused, accrued compensated time off must be allowed to carry over until the time off reaches a maximum balance of 192 hours, unless the employer’s established policy is more generous. The maximum balance for uncompensated time off is 80 hours, which carries over from year to year.
  • Cash-Out Not Required: The original Ordinance required covered employers to provide a cash payment to employees for any accrued compensated time above 192 hours every 30 days. However, the amended version deletes the 30-day cash-out provision.
  • Rate of PTO Pay: Unlike California’s state-wide PSL, the rate of pay for compensated time off is based solely upon the base rate of pay. Employers who seek to have West Hollywood paid sick leave or any payout of PTO at termination comply with state requirements will need to tread carefully.
  • Uncompensated Time Off: Employers must also permit full-time employees to take at least eighty (80) additional hours per year of uncompensated time off to be used for sick leave purposes where the employee has exhausted their compensated time off for that year. Full-time employees should accrue 80/52 hours of uncompensated time off per week, or receive a frontload of time up to the 80 hour maximum. Part-time employees receive a proportional amount. Unused, accrued uncompensated time off will carry over until the time off reaches a maximum of 80 hours, unless the employer’s established policy is more generous. Uncompensated time off does not accrue in excess of 40 hours in a given week.
  • Credit Where Credit Is Due. Though the ordinance is not crystal clear on this point, the regulations suggest that only the hours worked within the City count towards accrual.
  • 90-Day Waiting Period. According to the May 2023 regulations, employees are eligible to use uncompensated leave and any accrued compensated leave after the first 90 days of employment, or consistent with company policies, whichever is sooner. The prior iteration of the regulations had a much lengthier six-month waiting period for uncompensated time off (although uncompensated time off cannot be used until the employee has exhausted compensated time off).
  • No Unlawful Practices or Retaliation: As with similar ordinances, employers are prohibited from reducing hours or benefits in order to pay wages less than the established minimum wage, and they are prohibited from retaliating against employees for exercising their rights under the Ordinance.
  • Liability for Civil Penalties and Lawsuits: The Ordinance provides for administrative penalties and creates a private right of action for aggrieved employees.
  • Rehire Obligations: Like regular California paid sick leave, if an employee is rehired within a year, the previously accrued and unused compensated leave (designated as sick leave) and uncompensated sick leave must be reinstated.

Minimum Wage Requirements

In addition to the paid time off components as described above, West Hollywood’s Ordinance contains a minimum wage component, raising the minimum wage above the levels set by the state and other local areas. Starting July 1, 2023, the citywide minimum wage for all businesses became $19.08. This rate will remain in effect until June 30, 2024, and will then increase based on the Consumer Price Index.

The City will announce the adjusted rates annually on or before each April 1st and publish a bulletin announcing the adjusted rates, which will also take effect on July 1st of each year.

  • Notice and Posting: Every employer shall post the City’s poster in a conspicuous place at any workplace or job site where covered employees work. Notices shall be posted in English, Spanish, and any other language spoken by at least five percent (5%) of covered employees. At hiring, employers are also required to provide notice of the employer’s name, address, and telephone number in writing. Employers should also inform their employees of the possible right to the earned income tax credit under state and federal law.
  • Record Retention: Similar to state requirements, employers need to retain payroll records pertaining for no less than three years.

Service Charge Requirements in the Limelight

Employers are required to distribute Service Charges to employees who performed services (excluding managers and supervisors). The Ordinance defines a Service Charge as something that is not a gratuity, but is a separately-designated amount charged and collected from customers for service, or is described in such a way that customers might reasonably believe that the amount is for those services or is otherwise to be paid or payable directly to employees, including those charges designated on receipts, invoices, or billing statements under the term “service charge,” “table charge,” “porterage charge,” “automatic gratuity charge,” “healthcare surcharge,” “benefits surcharge,” or similar language.

Can We Exit Stage Left?

The ordinance provides an avenue for businesses that would experience hardship to seek a waiver, which requires specific notice provisions to employees. The provisions in the Ordinance can also be waived through a collective bargaining agreement, but only where the waiver is set forth in clear and unambiguous terms.

Workplace Solutions

As the paid leave landscape continues to expand, companies should reach out to their favorite Seyfarth attorney for solutions. To stay up-to-date on paid leave developments in California and beyond, click here to sign up for Seyfarth’s Paid Sick Leave mailing list.

Edited by Coby Turner

Seyfarth Synopsis: With the new year right around the corner, California published updated FAQs on the state’s amended Paid Sick Leave Law, which goes into effect January 1, 2024. We’re here to break down the key insights and details of the FAQs so you can start 2024 off on the right foot, including compliance requirements for January 1, coordination with local ordinances, exemption information, and medical documentation guidelines.

Out with the old, and ring in the new! Effective January 1, 2024, California’s amended Paid Sick Leave (“PSL”) law goes into effect. As detailed in our prior update, the amendments increase the annual amount of California paid sick leave from 3 days or 24 hours, to the greater of 5 days or 40 hours for eligible employees. The amendments also raise the accrual and year-end carryover cap from 6 days or 48 hours to the greater of 10 days or 80 hours.

The DIR has now published updated FAQs on the amended law, detailing requirements regarding employees’ annual entitlement to paid sick leave, eligibility criteria, accrual versus frontloading, use of paid sick leave, payment and tracking of earned and taken leave, and information to be provided to employees, which we will break down for our readers.

New Year, New Non-Calendar Benefit Year Compliance Requirements

The FAQs highlight how employers who provide paid sick leave benefits on a benefit year other than the calendar year (i.e., where the year does not start on January 1 and end on December 31) can comply with the impending PSL amendments as of January 1, 2024.

If an employer uses an accrual method, has an annual start date other than January 1, and caps annual usage at 3 days or 24 hours, according to the FAQs, the annual usage cap must increase to the greater of 5 days or 40 hours on January 1. The FAQ No. 15 offers the following example:

If an employer uses the 12-month period of May 1 – April 30 for accrual of paid sick leave with a usage cap of 24 hours or three days, the employer must allow the employee to use an additional 16 hours or two days before April 30 if the employee has accrued that additional leave.

Similarly, if an employer frontloads paid sick leave on an employee’s anniversary date, the FAQs provide that employer can either frontload two additional days on January 1, or move the measurement of the yearly period to January 1, 2024, and frontload the greater of 5 days or 40 hours at the start of 2024. Although not explicitly stated, the same guidance would likely apply for employers who frontload paid sick leave on another date that is not January 1.

Don’t Let The Ball Drop Regarding Local Paid Sick Leave Ordinances

The FAQs highlight that employers must comply with any applicable local ordinances and California’s PSL law. Generally speaking, where there are differences, employers must follow the law that is more generous to employees.

But, the new PSL law does bring some slight cheers for employers, with some limited exceptions where the state law requirements will preempt any different local ordinance provisions on the same subject, including:

  1. The lending of paid sick leave;
  2. Paystub statements;
  3. Calculation of paid sick leave;
  4. Providing notice of the leave if it is foreseeable;
  5. Timing of payment of paid sick leave; and
  6. Whether payment of sick leave is required upon termination.

While some local jurisdictions put their own special spin on paid sick leave requirements, none of these ordinances currently conflict with California’s PSL requirements on these six specific points. However, there are local PSL laws that include more generous sick leave provisions that are not preempted by the state PSL law, which employers would need to continue to comply with in the new year. 

For example, West Hollywood employees and hotel workers in the City of Los Angeles are eligible to receive up to 96 hours of compensated leave (inclusive of vacation and sick leave) each year, with a maximum cap of 192 hours. The first 24 hours allocated for sick leave purposes accrues at a rate of 96/52 hours per week rather than the 1 hour for every 30 hours worked state accrual rate. Check in with your favorite Seyfarth counselor for other oddities to keep on the radar!      

Limited Exemptions Stick Around Past The Stroke Of Midnight

California’s PSL requirements exempt individuals employed in specific industries including: (1) by an air carrier as a flight deck or cabin crew member, if they receive compensated time off at least as generous as the California PSL requirements; (2) retired annuitants working for government entities; (3) railroad employees; and (4) construction employees covered by a CBA with specific provisions.

As we previously wrote, certain CBA-covered employees outside of the construction industry can also be partially exempt from the state’s PSL requirements—if they are covered by a CBA with specific detailed provisions (detailed at new Labor Code section 245.5(a)(1)). But, this is a partial exemption only—these employees are still entitled to some PSL under their CBA. The updated FAQs note that as of January 1, 2024, CBA-covered employees must be allowed to take PSL for all the reasons covered in the California PSL law, they cannot be required to find a replacement worker as a condition for taking PSL, and they cannot be retaliated against for taking PSL (including likely not being disciplined for the absence), among other things.

For Auld Lang Syne, Employers Still Can’t Require Medical Documentation

As with the prior iteration of California’s PSL law, the amended law is silent on employers’ ability to require documentation for use of paid sick leave.

But, the FAQs confirm that employees can take PSL immediately upon oral or written request, and may not be denied the sick leave due to a lack of medical documentation. The FAQs note that it may be reasonable for an employer to ask for documentation before paying sick leave only if it has reason to believe the employee’s sick leave request is for an invalid purpose.

Make A Resolution To Update Your Model Poster And Wage Theft Notice

Last but not least, as we previously detailed, in addition to the FAQs, the Labor Commissioner has updated California’s paid sick leave poster and wage theft notice to comply with the amended law. Don’t forget to role these updates out on January 1! (And remember to check out our post regarding other updates to the Wage Theft Notice.)

Workplace Solutions

As the California Paid Sick Leave law amendments’ January 1, 2024, effective date is mere days away, here are some next steps for your business to consider:

  • Review existing sick leave or PTO policies and practices, including those in a California locality with a separate local paid sick leave mandate, and either implement new policies and practices or revise existing policies and practices to ensure compliance with the amendments, while doing the same for any related attendance, conduct, anti-retaliation, and discipline policies and practices.
  • Train supervisory and managerial employees, as well as HR, on the new requirements.
  • Update onboarding packets for non-exempt workers with an updated Wage Theft Prevention Act Notice reflecting the changes to CA law, if needed.

Seyfarth is here to help employers with solutions and recommendations to comply with California and nationwide paid leave requirements. Check out the CalPeculiarities Blog for updates on other laws affecting California employers.

Edited by Coby Turner

Seyfarth Synopsis: Prepare for new California workplace legal requirements effective January 1, 2024, now. Seyfarth has you covered with all the ways to protect your workplace just like Kevin McCallister defends his house.

This is your house. You have to defend it. But Seyfarth is here to help you get your business updates in order before the end of the year! Let’s get your policies and practices updated now, so you can ring in 2024 with peace of mind.

We’ve made your list for you. It’s up to you to check it twice and get your work done early – but we at Seyfarth are just a phone call away for help.

Wage Theft Prevention Notice Revision Requirements Sneakier Than The Wet Bandits

As we detailed previously, beginning on January 1, 2024, prepare your battle plans and be ready to roll out your revised Wage Theft Prevention Notices with updated paid sick leave accruals (see below) and additional information on “the existence of a federal or state emergency or disaster declaration applicable to the county or counties where the employee is to be employed, and that was issued within 30 days before the employee’s first day of employment, that may affect their health and safety during their employment.”

The DLSE just posted an updated Notice template for employers to follow.  

This House Is So Full of People It’s Making Me . . . Need More Paid Sick Leave

Make sure your recordkeeping and internal leave administration is updated to account for an increased allowance of paid sick leave under California law – moving from 24 hours/3 days per year to 40 hours/5 days per year with  a maximum rolling accrual cap of 80 hours/10 days. Note that the new version of this law may create new obligations even for employers covered by a CBA, so even those who may not have paid close attention to paid sick leave requirements before should do so now.

The Labor Commissioner also updated the California paid sick leave poster, which you will need to replace in your workplace, and the Department of Industrial Relations updated its California Paid Sick Leave Frequently Asked Questions, which endeavor to answer many of the questions employers may have, including how to transition an existing policy to one that is compliant with the increased allowances.

Remember you must also state sick time on each paystub (or in another writing each pay day), and that needs to be updated as well.

Are You Thirsty For More? Minimum Wage And Exempt Salary Thresholds Go Up Again!

Don’t forget that California’s statewide minimum wage increases to $16.00 per hour on January 1, 2024. Multiple municipalities are also raising their minimum wages, including cities like San Jose (up to $17.55), Oakland (up to $16.50), San Diego (up to $16.85), and Belmont topping the list (up to $17.35) (check with your Seyfarth team for a comprehensive list of municipal minimum wage increases). For certain health care workers, the minimum wage will also increase to $18/hour on January 1, 2024, and $23/hour on June 1, 2024, via SB 525. Employers with minimum wage workers should make sure their payroll is ready to make that increase starting on the first of the year, including for those that may be burning the midnight oil on overnight shifts New Years’ Eve.

Employers should also confirm that exempt employees’ salaries will meet the new required thresholds for their exempt classifications, which rise with the minimum wage increase to no less than two times the state minimum wage for full time work – a minimum of $66,560 annually for 2024 for most exempt workers, and a minimum of $115,763.35 for computer software employees.

I Got The Milk, Eggs, And New Workplace Protections

  • Pregnant Workers’ Protections: Not new California requirements, but worthy of note are two new federal protections for pregnant workers. Mark your calendars for December 29, 2023 – the date regulations are slated to issue for the federal Pregnant Workers’ Fairness Act – then review your handbooks and procedures to ensure compliance.
  • Reproductive Loss Leave: As a follow up to the new laws in 2022 related to mandatory protected bereavement leave, this year California has enacted a separate and additional protected leave entitlement specifically related to reproductive loss. So, remember to revise your handbook, policies, and procedures, to ensure employees who suffer a miscarriage, unsuccessful assisted reproduction, failed adoption or surrogacy, or stillbirth, receive up to 5 days of leave per loss event (this may be capped at a total of 20 days in a 12-month period). This applies whether the loss was personal to the employee, or occurred for their spouse, domestic partner, or other individual (so long as the employee would have become a parent but for the loss event).

While the leave may be unpaid, employees must be allowed to use vacation, personal leave, accrued and available sick leave, or compensatory time off that is otherwise available, to cover the leave time. Also, in contrast to bereavement leave, this category of leave does not require a written request or any sort of proof as a prerequisite to granting this leave.

Fuller, Go Easy On Checking About Cannabis Use

Beginning January 1, 2024, it will be unlawful for most employers to discriminate against a person in connection with hiring, termination, or another employment decision if the discrimination is based on: (1) the individual’s off-the-job cannabis use away from the workplace; or (2) the individual’s positive nonpsychoactive cannabis metabolites test results. As addressed in Seyfarth’s prior blog in detail, this essentially makes cannabis users a protected class in California, subject to certain industry, job position, and state and federal drug testing exceptions. It also limits the type of drug tests employers may use to ones that measure psychoactive cannabis metabolites—eliminating almost any possible drug testing options for most employers.

Cannabis users are further protected by SB 700 related to prior cannabis use. Employers are forbidden from asking about prior cannabis use on job applications, and they cannot use information obtained from a criminal history report about an applicant or employee’s prior cannabis use (unless the employer is permitted to consider or inquire about that information under other state or federal law) in order to take adverse action or refuse to hire someone.

So, remember to review your policies and practices related to drug testing, criminal history check reviews, and any inquiries related to cannabis use, to ensure compliance with these new requirements.

Don’t Get Caught In Employment Contract Booby Traps

For employees with access to all your private stuff, can you come out and stop them? California is making that tough. To ensure compliance with the requirements and restrictions imposed by SB 699 and AB 1076, by January 1, 2024, employers must evaluate whether any of their employment agreements with California employees—both current and former—contain non-compete provisions, non-solicit of customer or employee provisions, anti-raiding provisions, and overly broad confidentiality agreements, that may be considered unlawful under Section 16600 of the Business & Professions Code, which prohibits contracts in restraint of trade.

For employers who identify that they may have problematic restraint of trade employment contract provisions with current or former employees, by February 14, 2024, they must notify those individuals (who were employed on or after January 1, 2022) in writing that the offending contracts, agreements, or clauses are void. Consult with legal counsel concerning the implication of these new laws on your out of state workers, and on how to engage in the notification process. And, avoid being les incompétents, by ensuring your recruiting and hiring practices going forward take into account this new legislation.

Last but not least for your employment contracts, don’t forget to double-check your arbitration agreements to ensure the language accounts for changes made by SB 365 related to whether claims may be stayed if efforts to arbitrate claims are being appealed. Effective January 1, 2024, Section 1294 of the Code of Civil Procedure no longer contains an automatic stay of all trial court proceedings pending appeal of a denial of a motion to compel arbitration. The decision whether to stay proceedings will be discretionary with the trial court, and it may mean employers will have to defend lawsuits in court while attempting to enforce arbitration agreements. Updating your arbitration agreements now in line with best practices for this new legislation is a must!

All The Great Ones Leave Their Mark With A Workplace Violence Prevention Plan

Be aware and prepared that all employers in California must create, adopt, and implement a written Workplace Violence Prevention Plan July 1, 2024 (thanks to SB 553), which includes 13 requirements (such as procedures to respond to reports or acts of workplace violence, reporting procedures, and emergency alert planning), as well as annual workplace violence prevention training, violent incident logs, and new record retention requirements.

I Made The Paper Disappear!

In a rare bright spot for employers, you’ll now be permitted (via AB 1355) to provide employees with certain required notifications via email instead of through paper, provided they opt into the electronic option with either a written or electronic acknowledgment. This includes notices under the Revenue and Taxation Code that employees may be eligible for the federal and CA earned income tax credit (and more, due at time of W-2/1099), and Unemployment Insurance Code copies of printed statements or materials relating to claims for benefits. This provision will be in effect between January 1, 2024, and January 1, 2029.

Workplace Solutions

While we have no doubt you can channel your inner Kate McCallister to get the family to the airport on time, you don’t want to leave for vacation only to realize you left your work family members behind to their own devices. Use this checklist now as the basis for your year-end updates, and don’t hesitate to reach out to your favorite Seyfarth counselor with any questions and to make sure you’re on track.

Edited by: Cathy Feldman and Coby Turner

Seyfarth Synopsis: Among new workplace legal requirements effective January 1, 2024, making employers green in the face with end of the year preparations are necessary revisions to Wage Theft Notices. They must be ready for distribution starting January 1 to new hires and when information changes, in line with the new template notice from the DLSE.

As stealthy as the Grinch on Christmas Eve, California has slipped in a few additional requirements for employers effective January 1, 2024. Even if you thought you were ahead of the game making your year-end list, Seyfarth is here to help make sure you check everything off  – and top of your list should be to update your Wage Theft Notices for all employees. Stay tuned for a follow up blog on other items, and make sure to check your list twice!

As Cuddly As A Cactus – New Wage Theft Prevention Notice Revisions  

California Labor Code Section 2810.5 has required employers since 2012 to provide Wage Theft Notices containing specific information to all employees at the time of hire, and within seven days of any changes of the information unless the new information appears on the next timely wage statement.

With all the tender sweetness of a seasick crocodile, California recently passed AB 636, now requiring employers to revise and be ready to roll out, starting January 1, 2024, updated Notices with additional information on “the existence of a federal or state emergency or disaster declaration applicable to the county or counties where the employee is to be employed, and that was issued within 30 days before the employee’s first day of employment, that may affect their health and safety during their employment.” While one man’s toxic sludge may be another man’s potpourri, it will now be incumbent on employers to notify employees in updated Wage Theft Notices of such emergency declarations.

UPDATE!! New Employer Obligations Here Mangled Up In Tangled Up Knots

Yes, this will be as logistically difficult for employers as getting the Grinch in the holiday spirit. It would seemingly require employers to be constantly checking federal, state, and county websites to determine whether a state of emergency/disaster has been issued within the past 30 days impacting workers in their county, and to provide that information with the Wage Theft Notice as appropriate for each situation and work location.

This new requirement came without ribbons, it came without tags. It came without packages of template notices from the DLSE, as AB 636 requires the Labor Commissioner to publish an updated Notice template, but not until March 1, 2024 – timed for the other major change AB 626 made, to require employers with federal H-2A agricultural visa employees to, by March 15, 2024, include on the Wage Theft Notice information (in Spanish and English if requested by the employee) about the agricultural employee’s rights under California law.

BUT UPDATE!! On December 14, 2023, just in the nick of time, the DLSE (ahead of schedule) updated the template notice available online for employers to use starting January 1, 2024.

Moldy Purple Spots And Toadstool Sandwiches With Arsenic Sauce – What’s A Health And Safety Emergency?

While the DLSE and Legislature have not yet provided any guidance on what constitutes the kind of emergency or disaster declaration that may need to be included on Notices, early discussions in the legislative history indicate this provision was prompted by COVID-19 outbreaks amongst vulnerable H-2A farm worker populations. With that as the backdrop, we think it is likely broad emergency or disaster declarations addressing things like disease outbreaks (COVID upticks, and possibly also localized outbreaks of things like measles, monkeypox, or TB), or natural or physical disasters (including wildfires, wildfire smoke, earthquakes, floods) will likely be included.

We’ll keep an eye on the DLSE’s website to see if it issues guidance on what “that may affect your health and safety during employment” means for purposes of this law, and to see if it issues an updated Notice sooner. To be safe, employers should consult their attorneys to prepare language that will comply with these new requirements for the Wage Theft Notice, and to establish a process to check for emergency/disaster declarations, in order to be ready to go by January 1.

Before Climbing Mt. Crumpet, Don’t Forget To Also Update The Paid Sick Leave Notice Portions

The Wage Theft Notice must also contain a section related to Paid Sick Leave and the amounts employees may accrue under the law. As we addressed in our prior blog, California has changed the current state law requirements of up to 24 hours/3 days per year to up to 40 hours/5 days per year. Like the Grinch getting that last crumb up the chimney, don’t forget to change this part of the Notice too.

Workplace Solutions

While some of these new 2024 requirements may be as terrible as a bad banana with a greasy black peel, your Seyfarth counseling team will be here to guide you through the end of the year and into compliance. Stay tuned for our next blog on additional end of year items!

Edited by Coby Turner

Seyfarth Synopsis: While Governor Newsom vetoed several impactful bills prior to his October 14, 2023, signing deadline, he approved a wide array of new laws with which businesses will need to comply with in 2024 and beyond, such as those affecting non-compete agreements, paid sick leave, workplace violence prevention plans, new minimum wage standards for health care workers, and more.

We previously detailed the remarkable number of bills California legislators introduced in 2023, many of which died before making it to Governor Newsom’s desk for consideration by his October 14, 2023, signing deadline. Governor Newsom signed 890 of the 1,046 bills presented for his consideration, and he vetoed 156 bills (approximately the same veto rate as last year) according to a prominent Capital lobbyist.

The labor and employment measures the Governor approved carry hefty obligations for employers. Top of employers’ minds are bills that impact the validity of non-compete agreements, increase paid sick leave allotments and accrual caps, relate to employment restraining orders and workplace violence prevention plans, raise minimum wages for health care workers, and create (again) a mandatory wages and working conditions program for fast food workers.

Below is our summary of the labor and employment bills the Governor signed into law, notable bills that are back before the Senate for reconsideration, and key measures that did not make the cut. All new laws are effective January 1, 2024, unless otherwise stated.

Bills Signed Into Law

Non-Compete Agreements

SB 699 and AB 1076: Non-Compete Agreements

As we previously reported, SB 699 makes any contract that is void under California law unenforceable regardless of where and when the employee signed the contract. AB 1076 codifies Edwards v. Arthur Andersen LLP, to void any non-compete clause or agreement in an employment context, no matter how narrowly tailored, with limited exception.  It also adds additional “protections” including a notification requirement for California employers, and makes a violation of these provisions a violation of BPC 17200 et seq.

These bills amend Section 16600 of and add Sections 16600.1 and 16600.5 to the Business and Professions Code.

Leaves and Accommodations

SB 616: Paid Sick Days Accrual and Use

As we reported in depth, SB 616 increases the annual amount of paid sick leave from three days or 24 hours to five days or 40 hours for eligible employees, and raises the accrual cap from 48 hours to 80 hours. It also extends the anti-retaliation and procedural provisions in California’s sick pay law to include those covered by a valid CBA, and expressly excludes railroad carrier employers and their employees. Of note, the new law preempts certain procedural, notice, and use provisions in local ordinances that contradict the state law.

This bill amends Sections 245.5246, and 246.5 of the Labor Code.

SB 848: Leave for Reproductive Loss

Following 2022’s mandatory (unpaid) bereavement leave, SB 848 requires employers to provide eligible employees up to five days of (unpaid, unless the employer has an existing policy stating otherwise) reproductive loss leave upon suffering a failed adoption or surrogacy, miscarriage, stillbirth, or an unsuccessful assisted reproduction. The bill also prohibits retaliation against an individual who uses this leave or shares information about it.

This bill adds Section 12945.6 to the Government Code.

Wage/Hour & Other Labor Code Bills

SB 497: Retaliation Rebuttable Presumption 

SB 497 creates a rebuttable presumption of retaliation under Labor Code sections 98.6 and 1197.5 if an employer subjects an employee to an adverse action within 90 days of an employee engaging in the conduct described by those sections (i.e. making complaints or claims related to rights under the jurisdiction of the Labor Commissioner, making complaints about unpaid wages, or making complaints about equal pay violations). The bill also increases the civil penalty imposed on an employer under section 1102.5 from $10,000 generally to $10,000 per employee per violation.

This bill amends Sections 98.61102.5, and 1197.5 of the Labor Code.

AB 594: Local Enforcement: Wage Theft

AB 594 authorizes public prosecutors, including the Attorney General, a district attorney, a city attorney, a county counsel, or any other city or county prosecutor, to independently prosecute specified violations of the Labor Code that occur within their geographic jurisdictions. The bill also provides that any individual agreement (i.e., not CBAs) that requires arbitration of a dispute or limits representative actions does not affect the prosecutor or Labor Commissioner’s ability to enforce the Labor Code.

This bill amends Sections 218 and 226.8 of, and adds Chapter 8 and repeals Section 181 of, the Labor Code.

Other Bills

AB 933: Defamation Privilege: Sexual Harassment 

AB 933 extends the defamation privilege to expressly include an individual’s communications made without malice, regarding factual information related to incidents of sexual assault, harassment, or discrimination, experienced by that person, provided the individual had a reasonable basis to file a complaint (regardless of whether it was filed or not). The bill also authorizes a defendant who prevails in an action related to making such a privileged communication to recover its reasonable attorney’s fees and costs, treble damages, and punitive damages.

This bill adds section 47.1 to the Civil Code.

SB 428: Workplace Violence Restraining Orders: Harassment

SB 428 will, starting January 1, 2025, allow employers to seek restraining orders on behalf of their employees who have been harassed, or suffered unlawful violence or a credible threat of violence in the workplace or reasonably construed to be carried out in the workplace, or where there is “a knowing and willful course of conduct directed at a specific person that seriously alarms, annoys, or harasses the person, and that serves no legitimate purpose.” The new law will prohibit a court from issuing such an order if it would prohibit speech or activities protected by the National Labor Relations Act or provisions governing the communications of exclusive representatives of public employees.

This bill amends, repeals, and adds Section 527.8 of the Code of Civil Procedure.

SB 553: Workplace Restraining Orders and Violence Prevention Plan

As we reported in-depth, SB 553 requires nearly all employers in the State of California to prepare a Workplace Violence Prevention Plan, train employees on how to identify and avoid workplace violence, and maintain a violent incident log by July 1, 2024. It also has similar provisions regarding allowing employers to seek temporary restraining orders on behalf of employees suffering violence or credible threats of violence, as with SB 428.

This bill amends, repeals, and adds Section 527.8 of the Code of Civil of Procedure, and amends Section 6401.7 and adds 6401.9 to the Labor Code.

SB 365: Civil Procedure: Arbitration

This bill eliminates the automatic stay of trial court proceedings pending the appeal of an order denying a motion to compel arbitration. This means that the decision whether to stay proceedings will be discretionary with the trial court, though whether the FAA preempts this provision will be an issue.

This bill amends Section 1294 of the Code of Civil Procedure.

SB 235: Civil Procedure: Discovery

SB 235 requires parties to a civil action in state court to exchange initial disclosures with all other parties within 60 days of a demand by any party to the action, unless modified by stipulation. Similar to the initial disclosures already required under the Federal Rules of Civil Procedure, these disclosures must include: (1) the name and contact information of persons likely to have discoverable information and the subject of the information; (2) a copy or description of all documents in support of the party’s claims or defenses, or that is relevant to the action; and (3) contractual agreements or insurance policies under which an insurance company or person may be liable to satisfy a judgment entered in the action, or to indemnify or reimburse for payments made to satisfy the judgment. The only documents and information expressly excluded from these disclosures are those to be used solely for impeachment purposes. The new law also increases sanctions imposed for failure to respond in good faith to a document request, meet and confer in good faith regarding discovery disputes, or produce documents within seven days of a motion to compel discovery due to a failure to respond in good faith from $250 to $1,000. 

This bill amends Sections 2016.090 and 2023.050 of the Code of Civil Procedure

SB 700: Cannabis Use

SB 700 expands existing law which, starting January 1, 2024, makes it unlawful for an employer to discriminate against a candidate or employee because of the person’s use of cannabis off the job and away from the workplace. This bill also makes it unlawful to request information from an applicant relating to the applicant’s prior use of cannabis, with certain exceptions.

This bill amends Section 12954 of the Government Code.

Industry-Specific Bills

SB 41: Airline Cabin Crew Employees Meal and Rest Breaks 

SB 41 was approved by the Governor on March 23, 2023, and went into effect the same day. As of that date, airline cabin crew employees covered by CBAs with valid meal and rest break provisions are expressly exempt by virtue of new Labor Code section 512.2 from California’s meal and rest period requirements.

This bill adds Section 512.2 to the Labor Code.

SB 525: Health Care Employee Pay

As we reported in detail, SB 525, effective June 1, 2024, will raise minimum wages for health care workers across the state. The bill includes five separate minimum wage schedules for covered health care employees depending on the nature, size, and structure of the employer’s business, which establish a patchwork of three separate minimum wage schedules (setting minimum wages at a rising scale over time from $18-$25) for covered health care employees.

This bill adds Sections 1182.14 and 1182.15 to the Labor Code.

SB 723: Right to Recall in Hospitality 

SB 723 amends Labor Code 2810.8, established via SB 93 of 2021 (which we discussed at the time of its passage), to expand certain hospitality employees’ right to recall after being laid off for a reason related to the COVID-19 pandemic. This new law extends the December 31, 2024, sunset date to December 31, 2025.

This bill amends and repeals Section 2810.8 of the Labor Code.

AB 647: Successor Grocery Employers 

AB 647 places new requirements on successor grocery employers’ hiring and reinstatements when there is a “change in control,” reminiscent of legislative efforts in 2014-2015, and it expands the definition of a grocery establishment subject to existing laws about preferential hiring lists to include distribution centers.

AB 647 amends Sections 25022504, and 2512 of the Labor Code and adds Sections 2509, 2510, and 2517 to the Labor Code.

AB 1228: Fast Food-Industry Changes 

As we reported in depth, AB 1228 repeals existing law, presently suspended due to a referendum petition, which established the Fast Food Council within the Department of Industrial Relations, only if the referendum is withdrawn by January 1, 2024. If withdrawn by that date, the bill will, until January 1, 2029, re-establish the Fast Food Council, deem the council to be a governmental agency, and re-establish its duties to include, among other things setting: (1) minimum wages, and (2) requirements and review procedures for health, safety, and employment standards. It also increases minimum wage for fast food workers to $20 an hour, effective April 1, 2024.

This bill would add Part 4.5.5 (commencing with section 1474) to Division 2 of the Labor Code and repeal Part 4.5.5 (commencing with section 1470) of Division 2 of the Labor Code.

SB 476: Food Handler Card Expenses & Requirements

SB 476 requires an employer to pay costs associated with an employee obtaining a food handler card, including the time it takes for the employee to complete the training (which would be considered “hours worked”), the cost of the food handler certification program, and the time it takes to complete the certification program. The bill also prohibits an employer from conditioning employment on an applicant or employee having an existing food handler card.

The bill amends Section 113948 of the Health and Safety Code.

Vetoed Bills

SB 731: Notice of Remote Work as a Reasonable Accommodation

SB 731 would have required an employer to provide 30 days’ written notice to an employee working remotely that the employee has the right to ask the employer to allow continued remoted work as a reasonable accommodation before requiring that employee to return to work in person.

The Governor stated that the bill “would impose an inflexible 30-day advance notice requirement to return-to-work that would not take into account the needs of any particular employer. Businesses, especially small businesses, may have limited employees to staff in-person positions and the 30-day advance notice requirement of return-to-work could be impractical, especially in times of critical need or emergencies.”

SB 403: “Caste” Protected Class

SB 403 would have added “caste” as a protected class under the FEHA and Unruh Act. The bill attempted to clarify existing law prohibiting caste discrimination as a type of ancestry, which is already a listed protected class, and also define “ancestry” as including additional markers, such as “lineal descent, heritage, parentage, caste, or any inherited social status.”

SB 627: Chain Businesses Notice Requirements to Displaced Workers

Vetoed SB 627 would have required chain businesses consisting of 100 or more nationwide establishments to provide a 60-day displacement notice prior to closing a location to employees who have worked for the employer for at least six months. For one year after the closure of a covered establishment, employers would have had to offer workers the opportunity to remain employed by the employer and to transfer to a location of the chain within 25 miles of the closed location, as positions become available. To comply with the bill, employers would have also needed to maintain a preferential transfer list of covered workers and make transfer offers to covered workers based on their length of service.  

The Governor stated as his reason for veto: “new notice requirements, transfer rights, processes and criteria, and associated penalties established by this bill would impose significant burdens on employers. The arbitrary 25-mile radius for transfers does not take into account substantial regional differences among commute times. In addition, this bill applies to an overly broad list of establishments and creates vague processes and criteria, which will lead to implementation and enforcement challenges.”

SB 725: Successor Grocery Employers 

SB 725 was vetoed by the Governor as “unduly prescriptive and overly burdensome”. The bill would have required a successor grocery employer to provide a dislocated worker a one-week allowance of pay for each year of employment if the successor grocery employer does not hire or retain the eligible grocery worker.

AB 524: The Family Caregiver Anti-Discrimination Act

AB 524 would have added “family caregiver” status as a protected class under the Fair Employment and Housing Act (“FEHA”). The Governor stated he was “concerned about the large burden it will place on employers, particularly small businesses, especially given the ambiguous nature of the language,” as “it is not clear what types of acts would constitute unlawful discrimination and what types of acts would be lawful denials of ‘special accommodations’,” which would “be difficult to implement and lead to costly litigation for employers in California.”

AB 575: Paid Family Leave Benefits: Child in Loco Parentis

AB 575 would have, beginning February 1, 2025, added “an individual’s assumption of responsibilities for a child in loco parentis” to the reasons for which an employee taking leave may receive family temporary disability (PFL) insurance benefits to bond with a minor child within one year (in addition to existing reasons of the child’s birth, and placement of the child in connection with foster care or adoption). The bill also would have removed the restriction that only one family member at a time is allowed to access PFL benefits and prohibited the employer from requiring a worker to take vacation leave before receiving benefits.

The Governor vetoed the bill because it “would create pressure on the DI Trust Fund’s solvency and adequacy resulting in higher disability contributions paid by employees… [and] contains implementation costs not accounted for in the annual budget process.”

AB 1356: Mass Layoff Notifications 

AB 1356 would have amended California’s Worker Adjustment and Retraining Act (Cal-WARN) to expand its application beyond industrial or commercial facilities to all places of employment that have employed 75 or more persons in the preceding 12 months, and included non-temporary employees of labor contractors. The bill would also have increased the notice period for employees from 60 to 75 days prior to initiating a mass layoff, and revise the definition of “mass layoff” to include employees “reporting to” to those at a covered establishment. The bill would also have prohibited employers from conditioning severance payments in a mass layoff situation on the employee assenting to a general release, waiver of claims, or non-disparagement or nondisclosure agreement, unless additional consideration for those terms is provided and clearly stated. In his veto message, the Governor: “urge[d] the author to work with my Administration to develop solutions that may better address the problem, while fulfilling the objectives of Cal/WARN.”

SB 799:  Striking Workers’ Unemployment Benefit Eligibility 

SB 799 would have made striking workers eligible for unemployment benefits after two weeks of leaving work due to a trade dispute (other than a lockout). In his September 30 veto message the Governor said: “[a]ny expansion of eligibility for UI benefits could increase California’s outstanding federal UI debt projected to be nearly $20 billion by the end of the year and could jeopardize California’s Benefit Cost Ratio add-on waiver application, significantly increasing taxes on employers….Now is not the time to increase costs or incur this sizable debt.”

Workplace Solutions

We welcome you to attend our November 2, 2023, webinar regarding these new laws, and the new compliance obligations they create for employers. Among other things, we’ll discuss necessary updates to paid sick leave policies and practices, the need to revise or create workplace prevention plans, the new pay rate requirements for health care workers, and more. Please visit our website to register for the free webinar.

And, of course, stick with us here at Cal Peculiarities, and you can also check out our Policy Matters podcast and newsletter for regular check-ins on California (and national) policy and legislative updates.

Edited by Cathy Feldman and Coby Turner

Seyfarth Synopsis: The Governor has approved a new and adjusted Fast Food Council responsible for establishing minimum standards on wages and for developing minimum standards for other topics affecting workers in the industry, including health and safety conditions, protected time off work, and discrimination, harassment, and retaliation.

Fresh Bill Off The Grill

On the heels of the FAST Act in 2022, Governor Newsom approved AB 1228, the Fast Food Franchisor Responsibility Act, on September 28, 2023, which will increase minimum wage for half a million California fast-food workers to $20 an hour, effective April 1, 2024.

FAST Act Placed On The Back Burner

On Labor Day in 2022, Governor Newsom signed AB 257, the Fast Food Accountability and Standards Act (or FAST Recovery Act), which was slated to go into effect January 1, 2023. Immediately after it was signed, the Save Local Restaurants coalition submitted over 1 million signatures in support of a referendum to overturn the law. They later filed a lawsuit, and in January 2023 obtained a preliminary injunction preventing AB 257 from going into effect pending: (1) completion of the referendum process, including signature verification, and (2) if the referendum petition qualifies for the ballot, approval by the majority of California voters at the November 2024 election. 

If allowed to take effect, AB 257 would establish a 10-member Fast Food Sector Council, within the Department of Industrial Relations, responsible for setting “sector-wide” minimum standards on wages, working hours, and other working conditions “adequate to ensure and maintain the health, safety, and welfare of, and to supply the necessary cost of proper living” for fast food workers. The law would also protect covered employees from discrimination or retaliation for filing a complaint, or refusing to work based on a reasonable belief that the condition of the restaurant violates worker health and safety laws.

Happy Meal Deal

The new legislation, AB 1228, is very similar to AB 257, and incorporates much of the same language, but there are some notable differences. Those differences are the product of collaboration between Governor Newsom, the Save Local Restaurants coalition, and the Service Employees International Union (SEIU). Ultimately, the parties were able to reach a deal consisting of withdrawing the referendum challenging AB 257 in exchange for a $20 minimum wage, the creation of a new Fast Food Council, and the exclusion of joint-employer liability provisions.

Who’s Wrapped Up In This?

AB 1228 covers national fast food chains, which are defined as consisting of at least 60 establishments that  share a common brand, décor, marketing, packaging, products, and/or services and that are primarily engaged in:

  • Providing food and beverages for immediate consumption on or off premises;
  • To customers to order/select items and pay before consuming; and
  • With limited or no table service.

Fast food restaurants that operate in a grocery store where the grocer employs the restaurant’s employees and bakeries are exempt from coverage. 

New Council With New Ingredients 

Like AB 257, AB 1228 will establish a Fast Food Council, within the Department of Industrial Relations. This Council will serve the same purpose as the one established in AB 257 but with a far more circumscribed role. The Council’s authority regarding sector-wide standards is limited to developing and proposing minimum employment standards to the appropriate regulatory agency, except with respect to minimum wage increases. 

Unlike AB 257, the Council created by AB 1228 will consist of nine members rather than ten.  The members will be appointed fast food workers and their advocates, franchisees or restaurant owners, a representative from the fast food restaurant industry, and an unaffiliated member of the public. Each member of the Council will serve a term of four years and cannot serve more than two consecutive terms.

A Side of Protection For Employees

Covered employers are prohibited from discharging, discriminating, or retaliating against any employee due to their participation in or testimony to any proceeding convened by the Council. However, unlike AB 257, there is no rebuttable presumption of unlawful discrimination or retaliation.

Free Of Joint And Several Liability

When AB 1228 was first introduced, it contained joint-employer liability provisions that would have had franchisors share civil responsibility and liability for franchisees’ labor violations. As part of the comprise between Governor Newsom, Save Local Restaurants, and SEIU, such provisions were tossed.

Workplace Solutions

Fast food chain employers should reach out to the authors or your favorite Seyfarth attorney for solutions and recommendations to ensure compliance with AB 1228 before April 1, 2024.  Check out the CalPeculiarities Blog for updates on other laws affecting California employers.

Edited by Cathy Feldman and Coby Turner

Seyfarth Synopsis: Senate Bill 553, signed into law by Governor Gavin Newsom, requires nearly all employers in the State of California to prepare a Workplace Violence Prevention Plan, train employees on how to identify and avoid workplace violence, and maintain a violent incident log by July 1, 2024.

Governor Newsom has signed SB 553, a first of its kind workplace violence prevention law, which requires nearly all California employers to create, adopt, and implement written Workplace Violence Prevention Plans that include numerous elements, annual workplace violence prevention training, violent incident logs, and the creation and retention of various records.

Interestingly, the Division of Occupational Safety and Health (Cal/OSHA) in collaboration with various stakeholders has been working on a general industry workplace violence standard since 2017. Now, SB 553 requires the Division to start enforcing new workplace violence requirements that are largely modeled on Cal/OSHA’s existing draft standard. Under the new law, the Cal/OSHA Standards Board is required to adopt workplace violence standards codifying SB 553 no later than December 31, 2025. But regulations or not, Cal/OSHA is empowered and directed to start enforcing SB 553 on July 1, 2024.

Who is Covered?

The requirement for a Workplace Violence Prevention Plan applies to all employers and employees in the State, with a few limited exceptions:

  • Employers already covered by Cal/OSHA’s Violence Prevention in Health Care standard
  • Employees who telework from a location of their choosing that’s outside the control of the employer
  • Locations not open to the public where fewer than 10 employees work at a given time
  • Department of Corrections and Rehabilitation and law enforcement agencies

Defining “Workplace Violence”

“Workplace violence” is defined broadly as any act of violence or threat of violence that occurs in a place of employment. The law also defines 4 specific types of workplace violence.

The definition includes, for example, verbal and written threats of violence and incidents involving use of firearm or dangerous weapon regardless of whether an employee sustains an injury.

However, the definition also captures acts that some might think waters down the meaning of workplace violence, such as a threat against an employee that results in or has a high likelihood of resulting in, injury, psychological trauma, or “stress,” regardless of whether the employee sustains an injury. This means there’s no “reasonable person” test; the definition is subjective. A seemingly innocuous comment to some might be considered workplace violence based on the perception of an employee.

What Must be Included in a Workplace Violence Prevention Plan?

Workplace Violence Prevention Plans must be in writing and easily accessible by employees. The Plans can be included as a stand-alone section within an existing injury and illness prevention plan (IIPP) or they can be maintained as a separate document.

Along with identifying the individuals responsible for implementing the Plan, a Plan must include the following procedures for:

  • Involving employees in the development and implementation of the Plan
  • Coordinating implementation of the Plan and training with other employers such as staffing agencies.
  • Accepting and responding to reports of workplace violence, and prohibiting retaliation against reporting employees
  • Ensuring employees comply with the Plan
  • Communicating with employees about: (1) how to report violent incidents, threats, or workplace violence concerns to employer or law enforcement and (2) how concerns will be investigated and results communicated
  • Responding to actual and potential workplace violence emergencies
  • Identifying and evaluating workplace violence hazards
  • Post incident response and investigation
  • Reviewing Plan effectiveness annually, when deficiency is apparent, or after a workplace violence incident

Training Requirements

SB 553 also requires employee training. Employers must provide employees with initial training when the Plan is first established and continue to conduct annual trainings thereafter. Training needs to cover the following topics:

  • The employer’s Plan and how employees can obtain a free copy of the Plan
  • How to report workplace violence hazards and workplace violence incidents
  • Corrective measures the employer has implemented
  • How to seek assistance to prevent or respond to violence
  • Strategies to avoid physical harm
  • Information about the violent incident log and how employees can obtain a copy

Additional training is required when new or previously unrecognized workplace violence hazards are identified, or when there are changes to the Plan.

Employers must retain training records for at least 1 year.

Recording and Reporting Requirements

Employers are required to record every workplace violence incident in a violent incident log including:

  • Date, time, and location of the incident
  • Detailed description of the incident
  • Classification of who committed the violence
  • The violence type including whether it was a physical attack or threat, whether weapons or other objects were involved, or whether it was a sexual assault
  • Consequences of the incident including whether security or law enforcement was contacted and whether actions were taken to protect employees from a continuing threat

Employers must retain the log for 5 years and omit personal identifying information. Employees are entitled to view and copy the log within 15 calendar days of a request.

Other Recordkeeping Requirements

Unlike the IIPP standard, which has a 1-year retention period for records of implementation, SB 553 has a lengthy 5-year retention requirement for workplace violence hazard identification, evaluation, and correction records. Records of workplace violence incident investigations (which may not include medical information) are also subject to the 5-year retention requirement.

Changes to Existing Rules On Seeking Temporary Restraining Orders on Behalf of Employees

Finally, SB 553 changes California’s Code of Civil Procedure by adding several employee-friendly protections to the process by which employers may petition for temporary restraining orders (TROs) and orders after hearings (i.e. restraining orders that are often in place for three or more years) on behalf of employees.

California Code of Civil Procedure Section 527.8 previously allowed employers to petition for a Workplace Violence TRO on behalf of their employees who had “suffered unlawful violence or a credible threat of violence from any individual, that can reasonably be construed to be carried out or to have been carried out at the workplace” to seek protection from an individual; often a former employee or member of the public who is violent and/or threatening the employee at their workplace. This was a helpful, albeit limited, remedy for employers seeking to protect the workplace.

SB 553 expands Section 527.8 and authorizes collective bargaining representatives, not just employers, to petition for TROs on behalf of employees, allowing even more relief for employees faced with threats and violence. SB 553 also provides for employee names to be withheld from the TRO papers, providing anonymity for victims who otherwise might have hesitated on supporting a TRO for fear of retaliation from the individual at issue.

SB 553 also expands upon the actionable conduct necessary to give rise to a TRO and amends Section 527.8 to allow employers to seek a TRO on behalf of their employee where the employee suffers harassment––and not simply violence or threats of violence.

Will Cal/OSHA Publish A Model Program? 

Cal/OSHA frequently creates model programs, and using them has benefits: they’re easy to use, and, if completed correctly and implemented properly, they pass muster during a Cal/OSHA inspection. While Cal/OSHA hasn’t yet said whether they plan to publish a model Workplace Violence Prevent Plan program, the chances are high that they will.

Workplace Solutions

Employers should reach out to the authors or your favorite Seyfarth attorney to strategize about how to create and roll out compliant Plans, modify existing policies to conform to the new SB 553 requirements before July 1, 2024.

Edited by Cathy Feldman and Coby Turner

Seyfarth Synopsis: On September 14, 2023, the California legislature passed S.B. 525, which will raise minimum wages for health care workers across the state. The bill includes five separate minimum wage schedules for covered health care employees depending on the nature, size, and structure of the employer’s business. Unless Governor Newsom vetoes the bill (which is not expected), the bill will take effect on June 1, 2024.

Grey’s Anatomy might be set in Seattle, but now it’s all eyes on California’s health care workers. Starting June 1, 2024, S.B. 525 will raise minimum wages for health care workers across the state to a minimum of $18 per hour, or up to $23 per hour, depending on the applicable wage schedule, and based on the nature, size, and structure of an employer’s operations.

From Grey Sloan Memorial Hospital To The Denny Duquette Clinic – Most Health Care Employers Are Covered

The bill’s provisions will apply to “Covered Health Care Employers,” as that term is defined under the soon-to-be newly added Labor Code sections 1182.14 and 1182.15, including:  

  • Hospitals: licensed general acute care hospitals, licensed acute psychiatric hospitals, and other special hospitals.
  • Clinics: specialty care clinics, dialysis clinics, community clinics, psychology clinics, government run clinics, rural health clinics, and urgent care clinics.
  • Psychiatric and Mental Health Facilities: mental health rehabilitation centers, county mental health facilities, and psychiatric health facilities.
  • Licensed Skilled Nursing Facilities: including those that are owned, operated, or controlled by a hospital or integrated health care delivery system or health care system.
  • Home Health Care: including licensed home health agencies and a patient’s home when health care services are delivered by an entity owned or operated by a general acute care hospital or acute psychiatric hospital.
  • Licensed Residential Care Facilities for the Elderly
  • Integrated Health Care Delivery System Work Sites
  • Ambulatory Surgical Centers Certified for Medicare Participation
  • Physician Groups
  • County Correctional Facilities Providing Health Care Services

The term “Covered Health Care Employers” expressly excludes: (1) hospitals owned, controlled, or operated by the State Department of State Hospitals; (2) tribal clinics exempt from licensure; and (3) outpatient settings conducted, maintained, or operated by a federally recognized Indian tribe, tribal organization, or urban Indian organization.

The Scrub Nurse, The Chief, And More Are Included

The term “covered health care employee” is also defined broadly under both the new Labor Code section 1182.14 and section 1182.15 to include employees who provide patient care, health care services, or services supporting the provision of health care. Examples span from nurses and physicians to clerical workers, gift shop workers, janitors, schedulers, and billing personnel.

Contracted and subcontracted employees are also included if they:

  1. Perform contracted or subcontracted work primarily on the premises of a health care facility to provide health care services or services supporting the provision of health care;
  2. Are employed by an employer that contracts with the health care facility employer, or with a contractor or subcontractor to the health care facility employer, to provide health care services, or services supporting the provision of health care; or
  3. Perform work for a health care facility employer that directly or indirectly, or through an agent or any other person, exercises control over the employee’s wages, hours or working conditions.

Covered Health Care Employees will be able to enforce their rights under this new law through civil action, in the same manner they can currently enforce other minimum wage requirements.

The Anatomy Of Employers’ Minimum Wage Obligations

The bill includes five separate minimum wage schedules, but the minimum wage rates set forth under two of these schedules are identical. Thus, Covered Health Care Employers will fall within one of the four following groups:

1. Group 1: Covered health care facilities with 10,000 or more full-time equivalent employees, covered health care facility employers that are part of an integrated health care delivery system or health care system with 10,000 or more full-time equivalent employees, covered dialysis clinics, and covered health facilities that are owned, affiliated, or operated by a county with a population of more than 5,000,000 as of January 1, 2023.

  • June 1, 2024 to May 31, 2025: $23 per hour.
  • June 1, 2025 to May 31, 2026: $24 per hour.
  • June 1, 2026 to August 1, 2027: $25 per hour.

2. Group 2: Covered hospitals with high populations of Medicare/Medicaid patients, covered rural independent health care facilities, and covered health care facilities that are owned, affiliated or operated by a county with a population of less than 250,000 as of January 1, 2023.

  • June 1, 2024 to May 31, 2033: $18 per hour with 3.5 percent increases annually.
  • June 1, 2033 to August 1, 2034: $25 per hour.

3. Group 3: Covered primary care community or free clinics that are open for limited services of no more than 40 hours a week and that are not conducted or maintained by a government entity, covered community clinics along with any associated intermittent clinics exempt from licensure, covered rural health clinics, and covered urgent care clinics that are owned by or affiliated with a community clinic.

  • June 1, 2024 to May 31, 2026: $21 per hour.
  • June 1, 2026 to May 31, 2027: $22 per hour.
  • June 1, 2027 to August 1, 2028: $25 per hour.

4. Group 4: all other covered health care facilities

  • June 1, 2024 to May 31, 2026: $21 per hour.
  • June 1, 2026 to May 31, 2028: $23 per hour.
  • June 1, 2028 to August 1, 2029: $25 per hour.

Following these minimum wage increases, the Director of Finance will calculate an adjusted minimum wage on or before August 1 of the following year, and on or before each August 1 thereafter – seemingly in perpetuity. The calculation will increase the minimum wage by 3.5% or the rate of change in the averages for the U.S. Consumer Price Index for Urban Wage Earners and Clerical Workers, whichever is lower.

Even The New Residents Might Be Entitled To A Salary Increase

Notably, the minimum wage requirements summarized above will impact a Covered Health Care Employer’s exempt California employees as well, to the extent those employees qualify as Covered Health Care Employees. These employees will have to earn a monthly salary equivalent to no less than: (1) 150% of the applicable health care worker minimum wage or (2) 200% of the State’s generally-applicable minimum wage—whichever is greater—for full-time employment in order to qualify as exempt under California’s laws.

Any Other Changes Next Season?

In one small piece of consolation to employers, the new legislation provides that no city, county, city and county, including charter cities, charter counties, or charter cities and counties can enact any ordinance, regulation, or administrative action relating to wages or compensation for Covered Health Care Employees before January 1, 2034. So, at least local ordinances won’t be weighing Covered Health Care Employers down and requiring complicated and varied compliance.

Workplace Solutions

Health care employers should reach out to the authors or your favorite Seyfarth attorney for solutions and recommendations on addressing compliance with the new Labor Code sections 1182.14 and 1182.15 before June 1, 2024.

Edited by Cathy Feldman and Coby Turner