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: 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

California continues to be “where the future happens” for employment law, and we are pleased to offer our 2023 version of Cal-Peculiarities How California Employment Law is Different. As in previous editions, this publication reflects the breadth and depth of our California employment practice and focuses entirely on the most vexing aspects of California employment law. Click here to request your copy today!

In connection with the launch of this year’s edition, please join us for Part 3 of our Cal-Pecs micro-webinar series on Wednesday, October 18, where Seyfarth California labor & employment attorneys will discuss some of the biggest changes to PAGA over the last year! Click here to register.

Wednesday, October 18, 2023
10:00 a.m. to 10:30 a.m. Pacific
11:00 a.m. to 11:30 p.m. Mountain
12:00 p.m. to 12:30 p.m. Central
1:00 p.m. to 1:30 p.m. Eastern

This micro-webinar, presented by Seyfarth attorneys Daniel Whang and Par Vafaeenia, will cover the latest PAGA developments of interest to executives, managers, in-house counsel, and human resources professionals with employees in California, including:

  • Arbitration of PAGA claims after Viking River and Adolph
  • Standing issues in PAGA cases
  • Significant developments that may be coming this coming year

Registrants for the webinar will receive presentation materials and a copy of the recording following the presentation. We look forward to seeing you at the webinar!

If you’d like to view Parts 1 & 2 of this series, please see the below links to the recordings:

Part 1: New Developments in Wage & Hour and Pay Equity & Pay Transparency

August 23, 2023 | View Recording Here

Part 2: California Leaves of Absence, Sick Leave, and Vacation Pay Developments

September 7, 2023 | View Recording Here

Seyfarth Synopsis: For employees looking to leave somewhere greener for somewhere warmer, California may now be climbing to the top of their list. On September 1, 2023, Governor Newsom signed legislation that extends California’s restrictions on non-compete agreements to contracts signed out of state, effective January 1, 2024. Specifically, SB 699 provides that any contract that is void under California law is unenforceable in the Golden State, regardless of where and when the employee signed the contract, and it created a private right of action for employees whose agreements include restrictive covenants.

Up In The Mountains, Down By The Ocean – The Far Reaching Implications Of California’s New Non-Compete Law

Under existing California law, non-compete agreements with California employees are typically void, with limited exception.

The new law goes a step further and adds section 16600.5 to the Business and Professions Code, which provides the following restrictions:

  1. Any contract that is void under Business and Professions Code section 16600 is unenforceable regardless of where and when the contract was signed, and cannot be enforced.
  2. An employer cannot enter into a contract with a prospective or current employee that includes a void provision under this chapter.
  3. An employer that enters into, or attempts to enforce a void contract commits a civil violation, and may be subject to a private action for injunctive relief or monetary damages. An employee bringing such an action may also recover reasonable attorneys’ fees and costs.

A Rebel Without A Cause…Can California Do That?

While California has long separated itself from the majority of the country in its treatment of employee non-compete agreements, the wrinkle in this new law is that it attempts to interfere with employee non-compete agreements that may be valid under another state’s law, which raises constitutional concerns under the commerce clause, full faith and credit clause, and potentially the contract clause.

For example, an employee based in Florida bound by a non-compete agreement enforceable under Florida law may be trying to outrun the bad luck tailin’ them and seek employment with a California-based company. Under the new California law, the agreement would be considered void and unenforceable under SB 699. If the employee’s former Florida employer sends a cease and desist letter to the California company saying they cannot hire the employee because of the non-compete that is enforceable in Florida, under this new law the California company can nullify the lawful Florida contract.

This new legislation puts in question whether California based employers should ask their non-California based employees to enter non-competition agreements even if they are enforceable under the laws in which the employee works or resides. In other words, the new law seeks to protect California employers and allow them to be more competitive by being able to hire out of state employees and not have them be bound by non-compete agreements in California. But then, why should those same California based employers be permitted to use non-compete agreements with out of state employees and enforce those agreements out of state? This is yet another example of the peculiarities of California.

Let’s Flip A Coin On Whether There Are More Limitations To Come

It may seem like the California legislature may sometimes be driving for a day and then taking a look at the map when it comes to some of its proposed legislation, as this session has another bill that was passed and is waiting for the Governor’s signature. AB 1076 is another bill focused on non-compete agreements. If signed by the Governor, this legislation would codify the 2008 California Supreme Court decision in Edwards v. Arthur Andersen LLP and void all employment noncompete agreements no matter how narrowly tailored.

This proposed bill also includes a notice requirement. AB 1076 would require employers to notify current and former employees in writing by February 14, 2024, that any noncompete clause or agreement they had entered into are void.

There has also been recent interest by the FTC in banning or reforming non-compete laws on a nationwide basis.

Workplace Solutions

Your business may be thinking they’re gonna get out of here if they gotta ride a Greyhound bus, but they need to keep in mind that if their workers stay in California or move here, their agreements may no longer be valid. So, employers of California workers who utilize non-compete agreements in any context should review and consider revising their employment agreements, offer letters, employee handbooks, and policies to remove any non-compete provisions that may continue to exist with their California employees, consider the implication of SB 699 and/or AB 1076 on their out of state workers, and ensure that recruiting and hiring practices take into account the new legislation. The authors and your favorite Seyfarth attorneys are always available to help employers navigate the road to compliance and will be closely following the new and proposed California legislation and any potential legal challenges.

Edited by Cathy Feldman and Coby Turner

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

Seyfarth Synopsis: On September 13, 2023, the California legislature passed S.B. 616, which is expected to 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. Unless Governor Newsom vetoes the bill (which is not expected), the amendment will take effect on January 1, 2024.

California was one of the first states nationally to implement a statewide paid sick leave mandate, back in 2014. Since then, the law has been amended a number of times – but what hasn’t changed (so far) is the number of hours employers were required to provide. That may all be changing soon!

Impending Changes to California’s Paid Sick Leave Law

S.B. 616 proposes several key changes to California’s existing paid sick leave law, including:

  • Increased Annual Paid Sick Time. The bill increases the annual paid sick leave usage cap from 24 hours or three days per year to 40 hours or five days per year, regardless of whether an employer opts to accrue or frontload paid sick time. This increase would align California with a number of other state paid sick leave laws, including Arizona, Connecticut, Massachusetts, Michigan, New Jersey, and Oregon.
  • Increased Rolling Accrual Cap: The bill also would increase the current California rolling accrual cap (also known as “point-in-time” accrual cap and maximum accrual cap) from 48-hours or six days to 80-hours or 10 days.
  • Increased Alternative Accrual Rate. Under the current paid sick leave law, the accrual rate is one hour for every 30 hours worked, but employers may use a different accrual method as long as the employee receives no less than 24 hours of accrued paid sick leave by their 120th calendar day of employment and in each calendar year. S.B. 616 continues to allow an alternative to the 1 for 30 accrual method, but with an added wrinkle. Specifically, in addition to ensuring that employees accrue at least 24 hours of paid sick leave by their 120th calendar day of employment, employees must also now accrue at least 40 hours of paid sick leave by their 200th calendar day of employment. For each calendar year after the first year of employment, employees would need to accrue at least 40 hours of paid sick leave per year.
  • Increased Frontloaded Grant to Avoid Accrual and Carryover.
    • New Hires. Under the current paid sick leave law, employers can avoid accrual tracking with a lump grant of at least 24 hours or three days of paid sick leave for new employees to use by their 120th calendar day of employment. S.B. 616 requires employers to provide new hires with no less than 40 hours or five days of paid sick leave that is available to use by their 200th calendar day of employment to avoid accrual of paid sick leave. It is not completely clear from the text of the bill whether the 24-hour allocation by day 120 and the 40-hour allocation by day 200 are inclusive or exclusive of each other.
    • Existing Employees. S.B. 616 does not change employees’ right to carry over accrued, unused paid sick leave at year-end. However, it increases the amount of the lump sum grant a California employer must make each year to avoid the accrual and year-end carryover requirements, from at least three days or 24 hours to at least five days or 40 hours of paid sick leave granted at the beginning of each benefit year.

Next Steps: Signature, Effective Date

As noted above, this law will go into effect unless Governor Newsom vetoes it, which is unlikely. Unless vetoed, the amendments will go into effect on January 1, 2024. Stay tuned for updates in the coming weeks as Governor Newsom has until October 14, 2023, to sign or veto bills that were passed by the state legislature.

Also, stay tuned for Seyfarth’s full legislative update coming soon!

Workplace Solutions

As the paid leave landscape continues to expand, companies should reach out to the authors or your favorite Seyfarth attorney for solutions and recommendations on addressing compliance with the California sick leave law and sick leave requirements generally. To stay up to date on paid leave developments, click here to sign up for Seyfarth’s Paid Sick Leave mailing list.

Edited by Cathy Feldman and Coby Turner

Seyfarth Synopsis: The California Supreme Court held that a plaintiff whose individual PAGA claims are compelled to arbitration retains standing to pursue representative PAGA claims in court in Adolph v. Uber Technologies, Inc., meaning that their claims may live on way past the first volley.

Wimbledon may be over but, on Monday, the California Supreme Court returned Viking River’s serve and took the match with its highly anticipated decision in Adolph v. Uber. The headline? A plaintiff whose individual PAGA claims are compelled to arbitration retains standing to pursue representative PAGA claims in court.

Game

Those following the play at home may remember the California Supreme Court’s 2014 decision in Iskanian v. CLS Transportation. Iskanian set the rules of play that PAGA claims could not be split into their individual and representative parts. It also said the right to bring a PAGA claim in court was unwaivable, using the dropshot to make otherwise enforceable arbitration agreements inapplicable to these claims. As a result, for many years California employers were forced to defend against PAGA claims in Court even where employees signed arbitration agreements with class and representative action waivers.

Set

Iskanian lasted nearly a decade as good law—a lifetime in PAGA litigation—until the U.S. Supreme Court issued last year’s decision in Viking River. As we previously blogged about, SCOTUS held that the FAA preempted California’s rule preventing courts from dividing PAGA actions. PAGA actions could be split, and an employee’s individual PAGA claims could be compelled to arbitration. Without the individual claims though, a PAGA plaintiff lacked standing to pursue the representative claims and those claims had to be dismissed.

But Justice Sotomayor noted in dissent that the majority’s foot may have been on the line when it issued its decision. She warned that California law would govern what happens to a PAGA plaintiff’s representative claims after the individual claims are compelled to arbitration and, under the right circumstances, California courts would “have the last word.”

Match

Taking Justice Sotomayor up on her invitation, the California Supreme Court held in Adolph that an order compelling a PAGA plaintiff’s individual claims to arbitration does not strip the plaintiff of standing to pursue representative claims in court. The Court relied heavily on the legislative purpose of PAGA, as well as statutory language establishing (in the Court’s view) that a worker achieves PAGA standing if they have had one Labor Code violation committed against them by their employer.

In sending Uber’s volleys back to their side of the net, the Court also resolved several other points concerning the litigation of PAGA actions, including:

  • The outcome of a PAGA plaintiff’s individual arbitration will be binding on issues of standing. If the plaintiff prevails at individual arbitration, they get to keep the representative claims and pursue them. If the plaintiff loses, they do not.
  • Sending an employee’s individual PAGA claims to arbitration does not split the underlying PAGA action into two cases. The PAGA action remains a single case that is subject to the mandatory stay provisions of applicable California statutes.

Takeaways For Those In The Stands

Although California may have taken the match, points were scored for employers.

15 – Under Adolph, employers can (and ought to) vigorously defend against individual PAGA claims in arbitration knowing that, if they prevail, the plaintiff will be unable to proceed with their representative PAGA claims. Going to individual arbitration first should allow employers the chance to defeat an individual PAGA plaintiff’s claim without facing the burden and expense of responding to overbroad discovery and fishing expeditions requesting information as to every non-exempt employee.

30 – Even if the individual defense in arbitration is unsuccessful, employers retain the ability to challenge a plaintiff’s representative claims on substantive and/or procedural (e.g., manageability) grounds.

40 – Because the Court specifically held that ordering an employee’s individual claims to arbitration does not sever a PAGA action, trial courts should apply a mandatory stay to the representative PAGA claims pending the outcome of individual arbitration, potentially tying up any kind of representative litigation for an extended period of time.

The winner of the game thus remains undetermined.

Workplace Solutions

The fight over PAGA claims is far from over, and the next tournament is right around the corner. Other important decisions are still pending from the California Supreme Court and talk of proposed ballot measures that would make wholesale changes to the PAGA framework. Employers wanting to stay up to date on the latest should be in touch with their Seyfarth attorney to ensure they do not miss any important updates in this developing area of the law.

Edited by Coby Turner

Seyfarth Synopsis: On June 20, 2023, the California Department of Public Health (CDPH) updated its guidance to local health departments on the definition of a COVID-19 outbreak. The new definition changes the timeframe for counting COVID-19 cases that make up an outbreak from 14 to 7 days. The CDPH change necessitates that the definition of an outbreak for purposes of Cal/OSHA’s non-emergency COVID-19 standard also changes. Now, an employer need only implement the more stringent outbreak provisions of the COVID-19 standard if there have been at least three COVID-19 cases within an exposed group during a 7 day period.

At this stage in the COVID-19 pandemic, and under the more relaxed Cal/OSHA COVID-19 non-emergency standard that went into effect earlier this year, most California employers have a smoothly running COVID-19 prevention program in place. But the prospect of an “outbreak” still causes dread among employers.

The outbreak provisions under the new standard require implementation of various COVID-19 mitigation protocols that are costly and challenging to administer, and that may cause extreme resistance in the employee population. In addition, the analysis of whether an “outbreak” exists, and which employees are subject to the stricter protocols (the “exposed group”—essentially people in the presence of a COVID-19 case anywhere on the premises during their infectious period), is confusing.

Since the early days of the pandemic, Cal/OSHA’s regulations have required outbreak protocols when there have been three or more COVID-19 cases within an exposed group who visited the workplace during their infectious period at any time during a 14-day period. However, the current Cal/OSHA standard was written to be automatically updated to reflect CDPH outbreak changes.

What Changed?

On June 20, 2023, the CDPH quietly updated its guidance on the definition of outbreaks in non-healthcare settings by taking the timeframe for counting COVID-19 cases in a particular exposed group down from 14 days to 7 days. This change means that the Cal/OSHA outbreak requirements now only apply when there have been three or more COVID-19 cases within an exposed group during a 7 day period. CDPH’s stated reason for the change is “based on the shortened disease incubation period with more recent SARS-CoV-2 variants.​”

The change should make it much easier for employers to avoid hitting outbreak status, and triggering the accompanying restrictions. But, employers still need to look at a 14-day period for getting out of outbreak status, i.e. Section 3205.1 applies until there are one or fewer COVID-19 cases detected in the exposed group for a 14-day period. Also, the major outbreak provisions, which require even more mitigation controls and are triggered by 20 or more employee COVID-19 cases in the exposed group within a 30-day period, remain unchanged from the 14-day counting window (they are not tied to the CDPH changes).

What Does Our Business Still Need To Do If There Is An Outbreak?

Now, if your business has 3 or more COVID-19 cases in an exposed group during their infectious period in a 7-day period, it will be in outbreak status. During an outbreak, employers must still:

  • Immediately make testing available to employees in the exposed group for the outbreak and continue to make tests available at least weekly until there are one or fewer new COVID-19 cases detected in the exposed group for a 14-day period.
  • Ensure that all employees who had close contacts and remain at work take a COVID-19 test within three to five days after the close contact, and exclude from the workplace employees who test positive for COVID-19.
  • Exclude employees who do not take a COVID-19 test within three to five days after the close contact until the return-to-work requirements for COVID-19 cases are met.
  • Perform a review of potentially relevant COVID-19 policies, procedures, and controls and implement changes as needed to prevent further spread of COVID-19 as soon as the outbreak provisions apply, and then periodically thereafter.
  • Implement ventilation changes to mechanical ventilation systems including increasing filtration efficiency to at least MERV-13, or the highest efficiency compatible with the ventilation system. Evaluate whether HEPA air filtration units are needed.
  • Require employees in the exposed group, regardless of vaccination status, to wear a face coverings when indoors, or when outdoors and less than six feet from another person, unless an exception applies.

Workplace Solutions

While many companies may have put these issues somewhat out of sight and out of mind, it is important to remember that restrictions remain as employees may be traveling and bringing illnesses back to the workplace. Outbreaks are still happening, but this change helps blunt some of the impact. Stay tuned for updated guidance and developments, and don’t hesitate to reach out to your favorite Seyfarth attorney should you have any questions.

Edited by Coby Turner

Seyfarth Synopsis: When the Legislature reconvenes from Spring Break on April 10, 2023, it will resume consideration of the employment bills that were among the 2,600 introduced.  Notable employment bills include those impacting new FEHA protected classes, leaves and accommodations, background checks, layoff and rehire rights, and more.

As one prominent Sacramento lobbyist tweeted: “More than 500 bills were introduced [on February 20], the deadline for 2023 bills, bringing the total to just over 2,600 bills between the Assembly and Senate. That figure is one of the highest in the past decade.” Like the Legislature, the Governor also has been hard at work, already signing into law a bill that, as of March 23, 2023, exempts airline cabin crew employees covered by CBAs with valid meal and rest break provisions from California’s meal and rest period requirements. Lawmakers’ top-of-mind subjects for 2023 include expanding protected classes, reasonable accommodations and leaves of absence, workweek flexibility, and mass layoffs. With the Legislature returning from Spring Break on April 10, and the deadline for bills to pass each house coming up on June 2, we take a look at the most significant labor and employment related bills on their docket for continued consideration.

Non-Discrimination

New Proposed FEHA Protected Classes: The Family Caregiver Anti-Discrimination Act, AB 524, would add family caregiver status — defined as “a person who is a contributor to the care of one or more family members”—“a spouse, child, parent, sibling, grandparent, grandchild, domestic partner, or any other individual related by blood or whose association with the employee is the equivalent of a family relationship” — as a FEHA-protected class. SB 403, introduced as a spot bill, has been amended to add caste as a protected class to various laws including the FEHA and Unruh Act. SB 461 was originally intended to expand the FEHA “religious observance” protected category to more broadly include “cultural observance” or a religious, cultural, or heritage holiday or ceremony. However, this bill has been amended to instead deal with state employees’ allotment of time off for observance of religious holidays.

Veterans: SB 73, the Voluntary Veterans’ Preference Employment Policy Act, would permit private employers to establish and maintain a written veterans’ preference employment policy that would need to be applied uniformly to hiring decisions and allow a voluntary preference for hiring a veteran over another qualified applicant. SB 855 would prohibit employers from requiring an employee who is a veteran to work on Veterans Day, subject to certain requirements, including that: (1) the employee provide advance notice of his or her intent to take the day as a holiday; (2) the employee provide proof of veteran status; and (3) absences on this date, either individually or in the aggregate, do not negatively impact public health or safety, or significantly disrupt the employer’s operations. 

Criminal Conviction History:  SB 809, the “Fair Chance Act of 2023” would make it an unlawful employment practice to: (1) take adverse action against an employee or applicant based on arrest or conviction history; and (2) end an interview, reject an application, or otherwise terminate the employment application process based on conviction history information provided by any source unless the conviction history “has a direct and adverse relationship with one or more specific duties of the job documented.” The bill would also provide a specific individualized assessment, notice, and response process that must be followed if the employer initially determines that an employee or applicant’s conviction history disqualifies them from employment or promotion.  The bill would also add elements to the required notification to be provided to the consumer; impose posting, records retention, and other requirements; and authorize employers to conduct a conviction history background check only in specified circumstances, e.g., when “[a]n individual with a particular conviction history is prohibited by federal or state law from holding the position sought,” or when the employer is required to compile such information pursuant to federal law.

Leaves and Accommodations

Paid Sick Days Accrual and Use:  No legislative year in California is complete without a paid sick leave expansion bill. SB 616 would increase mandatory paid sick leave, and an employer’s authorized limitation on the use of annual carryover sick leave, from 24 hours or 3 days each year of employment to 56 hours or 7 days. The bill would also increase sick leave accrual thresholds from 48 hours or 6 days to 112 hours or 14 days.

Paid Family Leave Expansion: Continuing the “designated person” theme from 2022 bills, AB 518 would expand eligibility for benefits under the paid family leave program to include individuals who take time off work to care for a seriously ill “designated person,” defined as “any individual related by blood or whose association with the employee is the equivalent of a family relationship.” The bill would authorize the employee to identify the designated person when they file a claim for benefits.

Leave for Loss Related to Reproduction or Adoption: 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 miscarriage, unsuccessful assisted reproduction, failed adoption, and other similar events. 

Reasonable Accommodation: Remote Work: SB 731 would amend FEHA to require an employer to grant the reasonable accommodation request of an employee with a qualifying disability to work remotely, provided (1) the remote work request originated prior to the onset of the pandemic; (2) the employee “performed their essential job functions remotely for at least 6 of the 24 months preceding the renewed request;” and (3) the employee’s essential job functions have not changed and are still able to be performed remotely. 

Wage/Hour/Labor Code Bills

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 at all facilities located within California and to labor contractors. The bill would increase the period within which the employer must provide notice prior to ordering a mass layoff from 60 to 90 days, and revise “mass layoff” to include employees at or reporting to a covered establishment. The bill would also prohibit employers from, and subject them to penalties for, including a general release, waiver of claims, or nondisparagement or nondisclosure agreement as a condition of payment for which the employer is liable under Labor Code section 1402 unless obtained in exchange for additional and separate consideration.

Retaliation Rebuttable PresumptionSB 497 would create a rebuttable presumption of retaliation under Labor Code sections 98.6 and 1197.5 if an employer discharges, threatens with discharge, demotes, suspends, retaliates against, or otherwise subjects an employee to an adverse action within 90 days of an employee engaging in conduct protected by those sections. The bill would increase the civil penalty  imposed on an employer under section 1102.5 from $10,000 to $10,000 per employee per violation, awarded to the aggrieved employee(s), and expands the penalty to employers that are not corporations or LLCs.

Workweek Adjustments:  SB 703, the “California Workplace Flexibility Act of 2023,” would permit an individual nonexempt employee to request an employee-selected flexible work schedule providing for workdays up to 10 hours per day within a 40-hour workweek without the obligation to pay overtime compensation for those additional two hours in a workday. AB 1100 would allow employers with five or more employees to apply for grants to the DIR for the purpose of administering pilot programs that provide each employee the option to work a 32-hour workweek.

Caregiver Rest Periods: AB 1031 would exempt employers from requiring a nonexempt employee be relieved of all duties for rest periods if the employee is providing direct support to an individual with an intellectual or developmental disability in an integrated community setting, under prescribed circumstances, provided that another rest period be authorized and permitted reasonably promptly after the circumstances that led to the interruption have passed. If circumstances do not allow the employee to take a replacement rest period, the bill would require the employer to pay the employee one hour of pay at the employee’s regular rate of pay for the missed rest period.

Paid Sick Days: Health Care Employees: AB 1359 would establish new procedures governing the accrual and use of paid sick leave days for employees of a covered “health care facility,” unless covered by an existing CBA. The bill would permit accrued paid sick days to carry over to the following year of employment for those employees, subject to certain conditions, and would prohibit a covered health care facility from limiting an employee’s use of accrued paid sick days. The bill would authorize an employee to bring a civil action against employer that violates this provision.

Wage Theft: Alternative Enforcement: AB 594 would authorize public prosecutors to prosecute violations of the Labor Code independently and without direction from the DLSE, DWC, Cal-OSHA within their geographic jurisdictions, make available prevailing party attorneys’ fees, costs, and injunctive relief, and exempt these actions from any arbitration agreement between the employer and employee.

Miscellaneous Other Bills

California Worker Freedom from Employer Intimidation Act: SB 399 would prohibit an employer from requiring its employees to participate in meetings or communications whose purpose is to (very broadly) communicate the employer’s opinion about religious or political matters, or rights guaranteed by the First Amendment, with limited exceptions.

Unlawful Employee Contracts: AB 747 would add new prohibitions on contractual employment and post-employment terms, including in part (1) prohibiting employers from requiring employees, prospective employees, or former employees to pay for a debt if the individual’s employment or work relationship with a specific employer is terminated; (2) prohibiting employers from imposing penalties, fees, or costs on an employee or independent contractor for terminating the employment relationship; and (3) prohibiting employers from entering into or presenting employees or prospective employees as a term of employment or attempting to enforce any covenant not to compete that is void.

Non-Competes: AB 1076 would codify Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937, which held that the statutory provision voiding noncompete contracts must be broadly construed to void the application of any noncompete agreement in an employment context, or any noncompete clause in an employment contract, no matter how narrowly tailored. The bill would also make it an unlawful employment practice, and unfair competition under the UCL, to even include a noncompete clause in an employment contract, or to require an employee to enter into a noncompete agreement.

Defamation Privilege: Sexual Harassment: AB 933 would extend the defamation privilege to expressly include “[a] communication made by an individual, without malice, regarding an incident of sexual assault, harassment, or discrimination.”

Workplace Violence Restraining Orders: Harassment: SB 428 would permit employers to seek restraining orders on behalf of their employees not only for violence or credible threat of violence, but also for harassment, or “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 bill would not permit a court to issue such an order if doing so would prohibit speech or activities protected by the National Labor Relations Act or provisions governing the communications of exclusive representatives of public employees.

Civil Rights Department: Labor Trafficking: AB 235 would establish a Labor Trafficking Unit within the California Rights Division (formerly Department of Fair Employment & Housing), which would receive and investigate complaints alleging labor trafficking, take steps to prevent labor trafficking, and coordinate with or refer cases to the DOJ’s Labor Enforcement Task Force or the DLSE for potential civil actions.

Statute of Limitations CCPA Claims: AB 1546 would establish that the statute of limitation for the Attorney General to file an enforcement action under the California Consumer Privacy Act of 2018 is five years. 

Industry-Specific Bills

** NEW LAW: Meal and Rest Breaks Airline Cabin Crew Employees:  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.

Licensed Manicurists AB 5 Exemption:  SB 451 would extend the licensed manicurists exemption to AB 5 to December 31, 2029.

Health Care Employee Pay:  SB 525 would increase pay to at least $25 per hour for health care employees performing any work on the premises of a covered health care facility starting January 1, 2024. The bill would require the minimum wage rate to increase annually. 

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 at the subject location and satisfy other requirements.  For one year after the closure of a covered establishment, employers must offers 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.

Right to Recall in Hospitality: SB 723 (originally a spot bill) amends Labor Code 2810.8, established via SB 93 of 2021 (which we discussed in 2021), to expand hospitality employees’ right to recall after being laid off, removing the restriction and original purpose that it be due to COVID-19. The bill would also remove the December 31, 2024, sunset date.

Successor Grocery Employers: AB 647 and SB 725 would all place new requirements on successor grocery employers, reminiscent of legislative efforts in 2014-2015.

Fast Food-Industry Changes: AB 1228 would make fast food restaurant franchisors jointly and liable with their franchisees for the franchisees’ violations of prescribed laws, including PAGA. This proposal is back after being amended out of 2022’s FAST Act, which established the Fast Food Council, and is presently suspended due to a referendum petition. SB 476 would require an employer to pay costs associated with the employee obtaining a food handler card, including the time it takes for the employee to complete the training, the cost of the food handler certification program, and the time it takes to complete the certification program.

Workplace Solutions

We’ll keep you updated here at Cal Peculiarities as these bills move through the California Legislative process. 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 Elizabeth Levy & Cathy Feldman