Seyfarth Synopsis: Now that the Legislature’s September 14, 2023 deadline to pass bills to the Governor has come and gone, we are providing an overview of  which employment bills are before the Governor for consideration, including bills that impact non-compete agreements, FEHA protected categories, paid sick leave, Cal-WARN, industry-specific requirements, and more.

It’s unnatural – 2023 saw a historic number of bills introduced, many of which we previously detailed but failed to proceed past the June House of Origin deadline. And many of the more onerous bills saw significant amendments before moving from the Assembly to the Senate and vice-versa. Now that the Legislature’s September 14, 2023, deadline to pass bills to the Governor has come and gone, we look at what which bills before the Governor for consideration are top of employers’ minds, such as new limitations on non-compete agreements, new family caregiver and caste FEHA protected categories, increased paid sick leave allotment, expanded Cal-WARN application, and changes to industry-specific requirements. Read on for our summary of key employment bills that may soon become law.

Still I Can’t Let Go – Bills That Made The Cut

Non-Compete Agreements

SB 699: Unenforceable Non-Compete Agreements

As we previously reported, SB 699 will make any contract that is void under California law unenforceable regardless of where and when the employee signed the contract. Governor Newsom signed SB 699 on September 1, 2023, to be effective January 1, 2024.

This bill would add Section 16600.5 to the Business and Professions Code.

AB 1076: Void Employment Non-Compete Agreement

AB 1076 seeks to codify Edwards v. Arthur Andersen LLP (2008) 44 Cal. 4th 937, to void any non-compete clause or agreement in an employment context, no matter how narrowly tailored, with limited exception.  It would also add additional “protections” including a notification requirement for California employers, and make a violation of these provisions a violation of BPC 17200 et seq.

This bill would amend Section 16600 of Business and Professions Code and add Section 16600.1 to the Business and Professions Code.

New Proposed FEHA Protected Classes

AB 524: The Family Caregiver Anti-Discrimination Act

AB 524, would add “family caregiver” status as a protected class under the Fair Employment and Housing Act (“FEHA”). This term is defined as “a person who provides direct care to” certain family members or any “individual previously identified as a ‘designated person’ under Section 12945.2.” The bill expressly does not create any obligation upon employers to provide special accommodations.

The bill would amend Sections 12920, 12921, 12926, and 12940 of the Government Code.

SB 403: “Caste” Protected Class

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

The bill would amend Section 51 of the Civil Code and Section 12926 of the Government Code.

Both AB 524 and SB 403 incorporate the same amendments to Section 12926 of the Government Code, in case one is enacted after the other, so that the amendments to that Section by both bills can become law.

Leaves and Accommodations:

SB 616: Paid Sick Days Accrual and Use

As we previously reported, SB 616 would significantly expand the State’s existing paid sick leave mandate by increasing the annual amount of paid sick leave from three days or 24 hours to five days or 40 hours for eligible employees, and raising the accrual cap from 48 hours to 80 hours. The bill would also extend the anti-retaliation and procedural provisions in California’s sick pay law to include those covered by a valid CBA, and expressly exclude railroad carrier employers and their employees. Of note, any local ordinance provisions that contradict this bill would be preempted, which should reduce employers’ burden of juggling various differing sick pay laws.

This bill would amend Sections 245.5, 246, and 246.5 of the Labor Code.

SB 848: Leave for Reproductive Loss

Following on 2022’s mandatory (unpaid) bereavement leave, SB 848 would require employers to provide eligible employees up to 5 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 would also prohibit retaliation against an individual who uses this leave or shares information about it.  

This bill would add Section 12945.6 to the Government Code.

SB 731: Notice of Remote Work as a Reasonable Accommodation

SB 731 would require 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 bill provides specific language that such notice must include.

This bill would add Section 12940.2 to the Government Code.

Wage/Hour & Other Labor Code 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 would add Section 512.2 to the Labor Code.

AB 1356: Mass Layoff Notifications 

AB 1356 would amend 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 include non-temporary employees of labor contractors. The bill would also increase the notice period for employees from 60 to 75 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 prohibit 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.

This bill would amend Sections 1400.5, 1401, 1402, and 1403 of the Labor Code.

SB 497: Retaliation Rebuttable Presumption 

SB 497 would create 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. The bill would also increase the civil penalty imposed on an employer under section 1102.5 from $10,000 generally to $10,000 per employee per violation.

This bill would amend Sections 98.6, 1102.5, and 1197.5 of the Labor Code.

AB 594: Local Enforcement: Wage Theft

AB 594 would authorize 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 would also provide that any individual agreement (i.e., not CBAs) that require arbitration of a dispute or limit representative actions would not effect the prosecutor or Labor Commissioner’s ability to enforce the Labor Code.

This bill would amend 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 would extend 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 filed or not. The bill would also authorize a prevailing defendant in any action for making such a privileged communication to recover their reasonable attorney’s fees and costs, treble damages, and punitive damages.

This bill would add section 47.1 to the Civil Code.

SB 428: Workplace Violence Restraining Orders: Harassment

Starting January 1, 2025, SB 428 would allow employers to  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. The bill would prohibit a court from issuing such an order that 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 would amend, repeal, and add Section 527.8 of the Code of Civil Procedure.

SB 553: Workplace Restraining Orders and Violence Prevention Plan

SB 553 would permit a collective bargaining representative to seek workplace violence restraining orders on behalf of the union’s members, and revise Cal/OSHA to establish, implement, and maintain a workplace violence prevention plan as part of their injury and illness prevention program. A coalition of employers, including the California Chamber of Commerce oppose the measure, on the basis that this measure inappropriately applies across all industries a standard that originally intended to apply only to hospitals.

This bill would amend, repeal, and add Section 527.8 of the Code of Civil of Procedure and  amend Section 6401.7 and adds 6401.9 to the Labor Code.

SB 799:  Striking Workers’ Unemployment Benefit Eligibility 

SB 799 would make striking workers eligible for unemployment benefits after 2 weeks of leaving work due to a trade dispute (other than a lockout). The practical implications of this legislation would be quite staggering, as the whole point of a strike is to inflict pain and bargaining pressure on the understaffed employer, and without comparable pressure on the out of work striking employees, their side would certainly have more leverage. The bill would require greater draws on California’s $18 billion unemployment insurance fund deficit— perhaps resulting in higher payroll taxes.

This bill would amend Section 1262 of the Unemployment Insurance Code.

Industry-Specific Bills

SB 525: Health Care Employee Pay

SB 525 would 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, depending on the nature of the employer.

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

SB 627: Chain Businesses Notice Requirements to Displaced Workers

SB 627 would require chain businesses consisting of 100 or more nation-wide 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 must offer workers the opportunity to remain employed by the employer and to transfer to a location of the chain within 25 miles of the establishment subject to closure as positions become available. Employers must “maintain a preferential transfer list of covered workers . . . and shall make offers of transfer to covered workers in order of greatest length of service based on the worker’s date of hire at the chain.” These requirements may be waived by a clear and unambiguous CBA waiver.

This bill would add Part 9.7 (commencing with section 2550) to Division 2 of 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. The bill extends the December 31, 2024, sunset date to December 31, 2025.

This bill would amend and repeal Section 2810.8 of the Labor Code.

AB 647 and SB 725: Successor Grocery Employers 

AB 647 and SB 725 would both place new requirements on successor grocery employers’ hiring and reinstatements when there is a “change in control,” reminiscent of legislative efforts in 2014-2015.

These bills would amend Sections 2502, 2504, and 2512 of the Labor Code and add Sections 2507, 2509, 2510, and 2517 to the Labor Code.

AB 1228 and SB 476: Fast Food-Industry Changes 

In some political jockeying, AB 1228 would repeal 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 would, 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, to establish a minimum wage and requirements and review procedures for health, safety, and employment standards.

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 would require 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 would also prohibit an employer from conditioning employment on an applicant or employee having an existing food handler card.

This bill would amend Section 113948 of the Health and Safety Code.

Workplace Solutions

Why does the legislature keep playing with our mind? We will continue to keep you apprised of developments as they come out of the Governor’s office through the October 14, 2023, bill signing deadline. Expect a deep dive on our blog of bills that ultimately pass and will affect you and 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 and Coby Turner