Update: On May 31, 2024, Governor Newsom passed S.B. 828, which delays implementation of S.B. 525, the health care minimum wage law signed by Governor Newsom on October 13, 2023. S.B. 828 delays all of the minimum wage adjustments in S.B. 525 by one month. This means that S.B. 525, which was set to take effect on June 1, 2024, will instead take effect on July 1, 2024. It further means that the minimum wage increases scheduled to take place after 2024 will take place on July 1, rather than June 1, of each year.

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

Seyfarth Synopsis: California lawmakers have introduced legislation that would give employees the right to ignore communications from their employers that are received outside the contours of their “working hours,” which must first be agreed upon, in writing.

If signed into law, AB 2751 would add a section to the Labor Code that would require employers to establish a workplace policy that would give employees the right to disconnect from employer communications during defined “nonworking hours.”

Who Gets to Unplug?

Under the newly proposed legislation, an employer may only contact a covered employee during non-working hours when there is:

(1) an emergency situation, which is defined as an “unforeseen situation that threatens an employee, customer, or the public; disrupts or shuts down operations; or causes physical or environmental damage”; or

(2) a change to a work schedule within 24 hours.

As currently drafted, the legislation would not apply to employees covered by a collective bargaining agreement. Beyond this limitation, the bill applies broadly to public and private employers and exempt and non-exempt employees. However, AB 2751 is in its infancy, and will likely undergo amendment to further clarify its scope. In fact, the first committee to analyze the bill recommended considering carving out exempt professionals and other amendments to clarify the definition of “employer,” “contact,” and “emergency.”

If You Don’t Turn Off That Computer Right Now…

Importantly, the bill does not afford a private right of action. Instead, employees could file a complaint with the California Labor Commissioner if there is a “pattern” of violations (i.e. three or more documented instances of their employer communicating with them outside of working hours). A pattern of such violations are punishable by a fine of no less than $100 (and the bill is currently silent on maximum penalties).

Is Anyone Else Changing the Channel on Workplace Communications?

While no other state has advanced comparable legislation, several countries have implemented laws similar to AB 2751, such as Belgium, Germany, France, Italy, and most recently, Australia. In 2018, New York City unsuccessfully attempted to pass a measure that would have prohibited retaliation against employees for refusing to respond to after-hours employer communications.

Supporters assert that this legislation is necessary to account for a so-called “cultural shift” in the U.S. workforce. The bill’s author, Assm. Matt Haney, defends his proposal on the grounds that the rapid rise of remote work and the use of smartphones has caused many employees to feel “tethered to the office.”

Opponents, such as the California Chamber of Commerce, believe that the bill is a step backwards for workplace flexibility. Rather than promoting the separation of work and home life, critics state that the bill will effectively subject all employees to a rigid working schedule and prohibit communication between employers and employees absent an emergency.

Workplace Solutions

Employers do not need to take any steps towards compliance yet. We will continue to keep you apprised of developments with this and other California legislation through the September 30, 2024 bill signing deadline. Our blog will provide a deep dive of the bills that ultimately pass and will affect your California workforce. Please check back in 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, Coby Turner, and Elizabeth Levy

Seyfarth Synopsis: California healthcare employers are facing primetime levels of costly litigation alleging claims based on miscalculation of the regular rate of pay. Healthcare employers are often targets because non-exempt healthcare employees may be paid myriad different incentives—premiums, bonuses, differentials, on-call pay, and more—that may need to be included in the regular rate of pay, as we explain below.

The regular rate of pay in the California healthcare system is about as easy to understand as the plot twists in Grey’s Anatomy. The regular rate of pay is at its core the product of a fraction – but you want to ensure you don’t Nip/Tuck anything you shouldn’t, that the dollar numbers on the top and hours number on the bottom of the fraction for each workweek are correct, and that the resulting numbers are correctly included on wage payments.

It Starts With the Workweek

Just like under federal law, in California a “workweek” for overtime and regular rate purposes doesn’t necessarily start at the same day or time for everyone. The workweek is any seven consecutive days starting with the same calendar day each week. The workday is any consecutive 24-hour period beginning at the same time each calendar day.

For most employers, the workday and workweek are the same defined period for all non-exempt employees (like Sunday at 12 a.m. to Saturday at 11:59 p.m.). But particularly with healthcare employers, different non-exempt employee populations may have different workweeks and workdays, based on their regular work schedule. For example:

  • Night shift employees may not have a 12 a.m. workday start time like the day shift population, but instead have workday/week that begins at noon.
  • Some hospitals and residential care establishments may have an exception to normal overtime rules, where non-exempt employees are on an “8 and 80” schedule, which results in a fixed period of 14 consecutive days as the period for calculating overtime.

This means there may be several different workweeks to account for throughout a healthcare employer’s departments and operations when figuring out the regular rate of pay.

Then How Do We Figure Out the Regular Rate of Pay?

The regular rate of pay is the weighted average rate of (almost) all forms of pay for work performed by non-exempt employees in the workweek. It can also include monies earned after the fact that relate back to a workweek (such as a quarterly bonus). This means you add up all these forms of compensation associated with work or performance covering that workweek, and this total generally is divided by the total hours worked by that employee in the workweek.

So, when a non-exempt employee earns compensation in addition to the base hourly rate, the regular rate of pay will be higher than the employee’s base hourly rate. It’s this higher rate that is used to calculate the amount paid for overtime and double time premiums, California paid sick leave, meal and rest period premiums, and reporting time pay.

In a General Hospital, What Hours Count for the Regular Rate Calculation?

Some types of hours do, some don’t (and make sure to check any CBAs for exceptions to the usual rules). Here are some examples:

What’s In

  • Regular hours
  • Education hours
  • Controlled standby time

What’s Out

  • Meal and rest period premiums
  • Unworked reporting time pay hours
  • Uncontrolled standby time
  • Vacation, sick pay, PTO, etc.

And How Do We Treat Different Types of Pay for the Regular Rate?

Unfortunately this is where things can get a bit tricky. Here are some common examples of types of pay that would be in (or out) of the regular rate of pay calculation:

What’s In

  • Preceptor pay
  • Hazard pay
  • Shift differentials
  • Extra shift bonuses
  • Standby pay
  • Commissions
  • Non-discretionary bonuses
  • Attendance bonuses
  • Bonuses designed to incentivize workers to work harder or more efficiently

What’s Out

  • Overtime (the premium [e.g., the .5])
  • Premium pay for work on weekends, holidays, or other special days (if premium is at least 1.5x base rate).
  • Discretionary bonuses (spot bonuses or other unexpected bonuses)
  • Gifts not based on hours worked, production, or efficiency and that aren’t pursuant to an agreement
  • Percent of total earnings bonuses
  • Payments to profit-sharing plans or trusts
  • Contributions to employee benefit plans

Is This Prescription the Same for Flat-Sum Bonuses?

No! A flat-sum bonus is generally speaking a bonus that does not increase in rough proportion to hours worked. And, how to deal with flat-sum bonuses may be as surprising to healthcare employers operating in California as the diagnoses in House.

Instead of following federal law, in California, for regular rate purposes, flat-sum bonuses are divided by straight-time hours only (i.e. not necessarily all hours worked) to determine the addition to the regular rate. This amount is multiplied by 1.5 for each overtime hour and 2.0 for each double time hour in the applicable pay period in order to calculate the regular rate of pay adjustment.

Up To Your Scrubs in Regular Rate Calculations – Now What?

First, don’t assume that your payroll provider is getting it right. Payroll providers need specific instructions about what to include in the regular rate of pay calculations. The healthcare industry often utilizes more pay codes than the “normal” employer, so the regular rate calculation and how different categories of pay appear on the wage statement will need to be reviewed and directed by the employer.

Second, evaluate your payroll codes to make sure they are configured correctly in the underlying system, and that they show up the way you expect on a wage statement. Run test scenarios with different pay types and codes to ensure your system is operating as it should with holiday pay, shift differentials, bonuses, etc. This is technical and will take a lot of time and understanding, but it’s important.

Third, don’t be shy to ask for support. Seyfarth has a team of attorneys and analytics professionals who specialize in the healthcare industry. Whether it’s a one-off question, an audit of pay codes or the regular rate calculation and application, or defending litigation, we have a team of subject matter experts who can help.

Workplace Solutions

Figuring out the regular rate doesn’t mean your Private Practice needs to end up in court. Check out our prior healthcare webinar series for additional helpful compliance tips, and tune into our new series on wage and hour tips for healthcare employers in California for even more useful insights. And, as always, please don’t hesitate to reach out to the authors or your favorite Seyfarth attorney for help with all your regular rate questions and needs.

Edited by Cathy Feldman and Coby Turner

Seyfarth Synopsis:  The reporting deadline for the 2023 California pay data reporting cycle is only six weeks away. Employers with at least 100 employees with at least one California employee must file their Pay Data Report with the California Civil Rights Department (CRD) by May 8, 2024.  While the reporting requirements are largely the same as the 2022 reporting requirements, the CRD now requires information on remote workers and labor contractor demographic data. 

With California’s May 8, 2024, pay data reporting deadline right around the corner, California employers should ensure compliance with the CRD’s reporting requirements.  To help with these obligations, here is your helpful summary of the CRD’s recent changes requiring reporting on remote workers and labor contractor demographic data that you did not have to deal with the last time around. 

What Do I Need to Know About Remote Workers?

New for the 2023 reporting cycle is a requirement that both payroll and labor contractor employee reports include information regarding the number of employees per employee group who worked remotely. Specifically, the data templates ask for:

  1. the number of employees that do not work remotely,
  2. the number of remote employees located within California, and
  3. the number of remote employees located outside of California.

This has been a sizable undertaking for many employers who do not necessarily maintain this information in an easily accessible format.

The recently published CRD Frequently Asked Questions define a “remote worker” as “a payroll or labor contractor employee who is entirely remote, teleworking, or home-based, and has no expectation to regularly report in person to a physical establishment to perform work duties.”

Many workplaces utilize hybrid working models in which employees split time between the physical office and their home.  For hybrid employees or those who are in a “(partial) teleworking arrangement,” a common question that has arisen is how to approach reporting and whether the individual qualifies as a remote worker. The FAQs explain that “employees in hybrid roles or (partial) teleworking arrangements expected to appear in person to perform work at a particular establishment for any portion of time during the Snapshot Period would not be considered remote workers for pay data reporting purposes.”  Therefore, the key consideration is the employee’s status and work location during the Snapshot Period (i.e. a single pay period between October 1, 2023 and December 31, 2023).

Do I Need Labor Contractor Demographic Data This Year?

The short answer to this common question is, “yes.” Last year, the CRD granted an exception that permitted using “unknown” for race, ethnicity, or sex of labor contractor employees. However, “unknown” is no longer an acceptable response and demographic data is now required for labor contractor employees.

The CRD provides a few options for collecting this information, the preference being voluntary self-identification. If a worker declines to provide the information, employers must use one of three other options provided by the CRD: (1) current employment records, (2) other reliable records or information, or (3) observer perception. The CRD explicitly acknowledges the risk of inaccurate data using the observer perception, and instructs employers that observer perception should be a last resort.

What Are The Penalties?

There are a number of enforcement mechanisms for employers who fail to comply with the pay data reporting requirements.  The CRD is actively pursuing non-filers and has already issued fines to companies that fail to file the required reports.  To that end, the Department has the authority to seek:

  1. Civil Penalties:  Employers who fail to file a required report can be assessed  penalties of $100 per employee. The penalties increase to $200 per employee for a subsequent failure to file a required report and  may also assessed against a labor contractor for failing to timely provide pay data necessary to complete the required filing.
  2. An Order to File:  The CRD may seek an order requiring an employer to file a required pay data report;
  3. Recovery of Costs:  The CRD may recover its costs in any enforcement action.

Accordingly, employers should take care to timely file the required reports.

CRD Pay Reporting Resources

As we previously wrote, the CRD has made several resources available to assist employers with their pay reporting obligations, including:

Workplace Solutions

Given the new reporting obligations, covered employers should ensure they have all required categories of data ready to submit for the upcoming deadline.  Please contact the author or your favorite Seyfarth attorney with any questions about complying with California’s pay reporting requirements.

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. On March 7, 2024, Cal/OSHA published the long-awaited model Workplace Violence Prevention Plan.

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.

The model Cal/OSHA Workplace Violence Prevention Plan complies with the full slate of requirements for a written Plan, and using this Plan will reduce the likelihood of a programmatic Cal/OSHA citation.

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.

The model Workplace Violence Prevention Plan published by Cal/OSHA includes all of the required information necessary for compliance including identifying the individuals responsible for implementing the Plan, and 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.

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, and modify existing policies to conform to the new SB 553 requirements before July 1, 2024.

Edited by Cathy Feldman and Coby Turner

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