By: Partners, Kevin Cleveland & Erica Rocush

After another crazy year of activity in the California State Legislature, Governor Newsom has now signed anything he’s going to sign this year, and we are ready to update you on the changes to Employment and Labor laws that matter most going into 2025. Please remember that we don’t have the time or space to fully explain all of the changes. If something on this list affects your business, we encourage you to reach out to your O’Hagan Meyer attorney of choice and get more details so you can ensure you’re staying legally compliant.

Minimum Wage and Sick Leave Increases
California minimum wage is increasing to $16.50 per hour on January 1, 2025. The minimum wage for a full-time exempt salaried employee will now be $68,640 a year.

However, there are higher minimum wages for those who are under the Fast-Food Council or those who work in the healthcare industry (more on that later). Additionally, multiple cities have higher minimum wages (and some have higher local minimum wages by industry (such as hotels)). Make sure to check any city in which you are doing business to confirm their current minimum wage and track it since many local minimum wages increase mid-year.

The state will continue to require 40 hours or 5 days of paid sick leave per year (whichever is higher). Do not forget that local laws may require more paid sick leave. For example, currently Berkeley, Emeryville, LA (City) and LA Hotels, Oakland and Oakland Hotels, San Diego (City) San Francisco (City), Santa Monica and Santa Monica Hotels, and West Hollywood all require higher amounts of paid sick leave.

The one change to state law with regards to paid sick leave is that paid sick leave was expanded from being available if an individual is a victim of domestic violence, sexual assault, or stalking, to now also include victims of a qualifying act of violence (QAV), which is defined as an act, conduct, or pattern of conduct which causes bodily injury; where a firearm or other dangerous weapon is shown, drawn, brandished or used; or when force (whether reasonably perceived or an actual threat of force) was used against another to cause physical injury or death. The list of things which qualify for the leave has also been expanded so make sure to reach out if you have someone asking for time off relating to being the victim of one of the new forms of protected conduct or if they have a family member, or someone they identify as family, who was. Victims of the above conduct are now also covered under California’s FEHA and entitled to accommodations (including possible leave) under such law. Additionally, the right to use sick time in such instances now also covers an employee where the victim is a family member or designated person. An updated notice will also be created regarding these rights which employers will have to post.

Agricultural employers must also now allow employees to use paid sick leave to avoid smoke, heat, or flooding conditions created by situations that have been declared a local or state emergency.

Lastly, after months of delay, California’s healthcare minimum wage worker increase will finally take effect on October 16, 2024, immediately hiking wages to $21 per hour for workers at many healthcare facilities and as high as $23 per hour for workers at dialysis clinics and large healthcare systems. Additional pay increases will be gradually implemented until ultimately all covered healthcare employers in the state will be required to comply with a $25 per hour minimum wage that will be adjusted for inflation each year. Remember that this law covers employees working in such facilities, not just those employed directly by the facility, and covers not just healthcare workers, but a wide range of support workers in healthcare facilities.

Workplace Violence Prevention Programs Should Be In Place
As a reminder, if you have more than 10 employers, unless you are one of a few exceptions, you should have a Workplace Violence Prevention Plan in place. If you do not, please reach out and we can help you get one set up.

PAGA Reform Actually Happened
We won’t get into the nuances of PAGA reform, which are extensive and detailed, but in short you can significantly reduce the harmful effects of a PAGA lawsuit by trying to make sure that you are legally compliant with the Labor Code. For example, things that the reforms indicated employers can do to reduce their liability include: “an audit of the alleged violations and taking action in response to the results of the audit, dissemination of lawful written policies as to the alleged violation, training of supervisors on applicable Labor Code and Wage Order compliance, and/or taking correct action with regard to supervisors.” Likewise, employees can now only bring claims for violations which they personally experienced. As a result, there is more reason than ever to revise handbooks and perform an audit and provide regular trainings on wage and hour matters to ensure that you are in compliance with the myriad California Labor Code requirements.

Construction Industry Employers Review Your CBAs To Keep Your PAGA Exemption
Unionized construction employers can enjoy 14 more years of not having to worry about PAGA when working under a valid CBA “that expressly provides for the wages, hours of work, and working conditions of employees, premium wage rates for all overtime hours worked, and for the employee to receive a regular hourly pay rate of not less than 30 percent more than the state minimum wage rate, and the agreement does all of the following:

• Prohibits all of the violations of th[e] [Labor] code that would be redressable pursuant to this part and provides for a grievance and binding arbitration procedure to redress those violations.
• Expressly waives the requirements of this part in clear and unambiguous terms.
• Authorizes the arbitrator to award any and all remedies otherwise available under th[e] [Labor] code, provided that nothing in this section authorizes the award of penalties under this part that would be payable to the Labor and Workforce Development Agency.”

So, if you may qualify, make sure that you negotiate changes to your CBA accordingly.

Beneficial Ownership Information Reporting (FINCEN Reporting)
Though it has been coming for a long time, this year is the first time that reporting companies (which are corporations, LLCs, and other companies created by filing paperwork with a secretary of state or similar office) have had to file information regarding any individual who owns or controls at least 25 percent of a company or has substantial control over the company. There are, however, approximately 23 types of companies which are exempt from filing. A helpful guide on filing can be found here. There are significant penalties for failing to file, so if you have not yet done so and may need to, based on the above definition please make sure to reach out.

“Captive Audience” Meetings are Banned
Employers are prohibited from holding or requiring employees to attend “captive audience” meetings (employer mandated meetings) that discuss religious or political matters (this includes union-representation discussions). There are significant penalties for requiring attendance at any such meetings. As a result, make sure to reach out if you are dealing with labor organizing efforts.

Limitations On When Employers Can Require a Driver’s License For A Job
California employers cannot require or tell job applicants that a driver’s license will be required for a job unless they reasonably expect driving to be one of the job functions and no alternative forms of transportation are comparable in travel time or cost to the employer. Make sure to review your job postings, applications, and other information provided to applicants to guarantee you’re in compliance, and that if driving would ever be required for a job that it is clearly stated in the job description and posting.

New Law Expands Protections for Freelance Workers
The “Freelance Worker Protection Act,” protects individual independent contractors (whether an individual or a single person entity) in the private sector who are paid at least $250 for their professional services for contracts entered after January 1, 2025. The bill requires that workers be paid on, or before, the date in their contract, or no later than 30 days after completion of services if payment timing is not stated in the contract. It also prohibits conditioning payment on accepting less compensation or making certain changes to the contract. A written contract is required between the hiring party and the worker, and the hiring party must keep the written contract for four years. The hiring party is also prohibited from discriminating or retaliating against a freelancer for exercising their rights under this bill and allows civil lawsuits to enforce the bill. There is a good amount packed into this bill, so at a minimum, you should identify any freelance workers you may currently be using and update any template independent contractor agreements that you might be using with such freelance workers to make sure that they meet the requirements of this law.

New Law Enacts Requirements for Voluntary Social Compliance Audits
Beginning January 1, 2025, any employer that voluntarily performs, or subjects itself to, a voluntary “social compliance audit” defined as an “inspection of any production, house, factory, farm, or packing facility” to determine if it complies with “social and ethical responsibilities, health and safety regulations and labor laws, including those regarding child labor,” must post a “clear and conspicuous” link on their website to a report which includes the results of such audit. The report must include, at a minimum:

• The year, month, day, and time the audit was conducted, and whether the audit was conducted during a day shift or night shift.
• Whether the business does or does not engage in, or support the use of, child labor.
• A copy of any written policies and procedures the business has regarding child employees.
• Whether the business exposes children to any workplace situations that are hazardous or unsafe to their physical and mental health and development.
• Whether children work within or outside regular school hours, or during night hours, for the business.

No Required Use of Vacation Before Paid Family Leave
Starting January 1, 2025, employers may no longer require employees to use up to two weeks of accrued vacation before they can start collecting PFL benefits. Though this is a minor change, you should check your handbook policy and make sure that the person handling HR for your company is aware of this change.

Changes to Posted Notices
Workers’ compensation notices in the workplace must now include information concerning an injured employee’s ability to consult a licensed attorney to advise them of their rights under workers’ compensation laws. Similarly, the Labor Commissioner has created a model notice on whistleblower rights which, if posted after January 1, 2025, will be deemed in compliance with the state’s posting requirement. As a result, make sure that your labor/employment all in one posters are updated this year and include these two changes.

New Law Allows For Local Enforcement of Employment Discrimination
California will now allow local jurisdictions to enforce local anti-discrimination laws that are at least as protective as state law, in addition to allowing them to enforce state laws. As a prerequisite to this local enforcement, the Civil Rights Department (CRD) must issue a right-to-sue notice. During any local enforcement, the statute of limitations will be tolled but an employee will not be prevented from filing a lawsuit. This will likely result in an increase in claims in areas where local governments choose to engage in such local enforcement.

Anti-Discrimination Law Updates
The legislature has clarified that the California Fair Employment and Housing Act, Unruh Civil Rights Act, and the provisions of the Education Code barring discrimination in public education prohibit discrimination not just on individual protected traits, but also on the basis of the “intersectionality” (meaning combination) of two or more protected traits. This may affect the way that your discrimination policies and trainings are drafted but will most likely have the largest effect by making discrimination cases a little easier for Plaintiffs to prove.

California also amended the definition of “race” in the anti-discrimination provisions of the California Government and Education Codes to match recent changes that already applied generally in the employment context. Under the amendments, race is “inclusive of traits associated with race, including but not limited to hair texture and protective hairstyles.” Protective hairstyles “include but are not limited to such hairstyles as braids, locs, and twists.” For those operating under the Government or Education codes, this may, once again, affect your policies and trainings and make cases relating to discrimination a little easier for Plaintiffs to prove.

The California Automatic Renewal Law Was Expanded
To address the growing number of subscription-based services available on the internet, California has expanded the regulations relating to such services. Those changes will take effect on July 1, 2025, and include, but are not limited to:

• Free Trials that convert to paid subscriptions now fall under this law.
• Businesses must obtain “express affirmative consent” to autorenewal or continuous service terms. Businesses must also keep the verification for three years or one year after the termination of the contract, whichever is longer.
• Businesses must allow customers to cancel their subscriptions “in the same medium” used to enroll or in which the “customer is accustomed to interacting with the business.”
• Businesses must answer telephone calls “promptly” during normal business hours and return voicemails (or process requested cancellations) within one business day.
• “Providing a discount offer or other consumer benefit” is allowed as long as the business also displays a prominent “click to cancel” button adjacent to any save offer. This button must, when clicked, result in “prompt” cancellation. There are additional specific requirements for discount offers when a customer requests to cancel via telephone.
• Companies are now required to notify consumers about the automatic renewal or continuous service terms both annually and when any price changes are made to an existing automatic renewal or continuous service plan, in addition to material changes as currently required by CARL.

If you provide any sort of subscription services, you should review the law with counsel to determine what, if any, changes are needed to be compliant.