New Options for Avoiding PAGA Claims

Scott & Whitehead can help you meet your obligations to develop and implement a compliant Workplace Violence Prevention Plan. To get a customized Workplace Violence Prevention Plan and training program for your particular business, please call us.

Legislative Updates: The following is a summary of the primary State legislative actions impacting California employers, each of which will take effect January 1, 2024 except as otherwise stated. Please note, these descriptions are summaries only, and are not intended to provide a complete description of each new law. Please contact our office if you have any questions. California Hourly Minimum Wage and Exempt Salary Minimum: Effective as of January 1, 2024, the state minimum wage will move up to $16.00 per hour regardless of the number of employees working for the employer. The new minimum wage raises the minimum salary required to qualify for exempt status to $1,280 per week, $5,547 per month or $66,560 per year. [CALCULATION: $16.00 x 2 x 2080 working hours/year = $66,560] Local ordinances, such as those that apply to employees who are in at least 16 California cities, including San Francisco, Los Angeles and Santa Monica, mandate a higher minimum wage with scheduled changes that took effect as of July 1, 2023. Please note, the minimum salary requirement for exempt status does not change based on local ordinances. SB 525: Raises Minimum Wage for Many Health Care Workers (adds Sections 1182.14 and 1182.15 to the California Labor Code). The minimum wage for covered healthcare employees will increase to $18 per hour on June 1, 2024, and will continue to increase annually, with all covered employers paying $25 per hour by June 1, 2028. The Legislature’s stated purpose in adopting SB 525 was to address California’s shortage of healthcare workers and to create a “stable workforce.” “Covered Health Care Employers” is a very broadly defined term. It includes medical hospitals, psychiatric hospitals, skilled nursing facilities, urgent care clinics, physician groups, and a patient’s home when health care services are delivered by an entity owned or operated by a general acute care hospital. Dental offices and many small medical offices are generally not covered. The term “Covered Health Care Employees” includes not only nurses, physicians and caregivers, but workers in support roles such as janitors, groundskeepers, medical billing personnel, and gift shop workers. Also, if a health care facility exercises control over the worker’s wages, hours or working conditions, an independent contractor may be covered by this new law. The State Department of Industrial Relations is charged to develop a waiver program to provide some employers with limited financial relief from the new minimum wage requirements for healthcare workers. Effective June 1, 2024, various minimum wage schedules will take effect depending on the size, nature and structure of the business. AB 1228: Fast Food Industry Minimum Wage (adds Sections 1474, 1475 and 1476 to the Labor Code). As of April 1, 2024, Fast Food restaurant employees must be paid at least $20 per hour. The minimum wage for Fast Food restaurant employees will increase annually through 2029. This new law covers “fast food restaurants.” These are California restaurants that are part of a national fast food chain with more than 60 locations nationally. SB 616: Paid Sick Leave (amends Sections 245.2, 246, and 246.5 of the Labor Code). This new law expands California’s existing paid sick leave (PSL) law. It covers all employees who work for an employer in California for 30 days or more in a year. Under the new law, employers continue to have the option of frontloading PSL, in which case they must frontload the greater of 40 hours or five days. For example, if an employee works six hours per day, five days per week, 40 hours must be frontloaded because 40 hours is greater than 30 hours (five days). If, on the other hand, an employee works ten hours per day, four days per week, 50 hours must be frontloaded because five days (50 hours) is greater than 40 hours. Alternatively, employees may continue to accrue PSL at the rate of 30 hours worked. The amount of PSL they may USE per year increases from the greater of 24 hours or three days to the greater of 40 hours or five days. The amount of the PSL they may ACCRUE at any given time increases from the greater of 48 hours or six days to the greater of 80 hours or ten days. A third option allows employers to use an accrual method OTHER THAN one hour per 30 hours worked SO LONG AS the employee will accrue at least 24 hours of PSL by their 120 th day of employment, and 40 hours by their 200 th day of employment. The provision was drafted in such a manner that it leaves many questions unanswered at this time. The California Department of Industrial Relations (“DIR”) has published updated FAQs on the amended law: https://www.dir.ca.gov/dlse/paid_sick_leave.htm . A new California paid sick leave poster must be posted in the workplace: https://www.dir.ca.gov/DLSE/Publications/Paid_Sick_Days_Poster_Template_(11_2014).pdf . AB 2188 and SB 700: Off‑the‑Job Cannabis Use Protection (adds Section 12954 to the Government Code). It is now unlawful for an employer to discriminate against a person in hiring, termination, or any term or condition of employment, or otherwise penalize a person, based upon the person’s use of cannabis off the job and away from the workplace. Also, discrimination is not permitted due to drug screening that reveals non‑psychoactive cannabis metabolites. Employment‑related drug testing is to determine impairment on the job. The law excludes certain applicants and employees from the law’s protections, including employees in the building and construction trades and applicants and employees in positions requiring a federal background investigation or clearance. The law will not preempt state or federal laws requiring applicants or employees to be tested for controlled substances as a condition of employment, in order to receive federal funding or federal licensing‑related benefits, or to enter into a federal contract. Employers are prohibited from requesting from an employee or applicant information about prior use of cannabis. This law does not interfere with employers maintaining a drug‑free workplace. Employers are within their rights to stop their workers from possession of, being impaired by, or using cannabis at work. SB 553: Workplace Violence Prevention Plans and Restraining Orders (adds Section 6401.9 to the Labor Code). SB 553 requires California employers to (a) create and implement an effective written Workplace Violence Prevention Plan (WVPP); (b) keep a log of violent incidents and investigations; and (c) train employees on how to report incidents without fear of retaliation. These requirements will take effect July 1, 2024. The WVPP can be integrated into an employer’s Injury and Illness Prevention Program (IIPP). Or, it can be a stand‑alone plan. Worksites with less than 10 employees may be exempt from the requirements of SB 553. Healthcare facilities are only required to comply with Cal/OSHA regulations, but not with SB 553. In response to unlawful violence, or a credible threat of violence, the employer or the employee’s collective bargaining representative may seek a temporary restraining order on behalf of the affected employee. SB 428: Employers Can Seek Legal Relief for Harassed Employees (amends Section 527.8 of the Code of Civil Procedure). On behalf of a harassed employee, an employer can seek a temporary restraining order and injunction against the harasser. This is an expansion of the law allowing employers to protect employees who have suffered violence or a credible threat of violence. This expansion takes effect on January 1, 2025. What conduct qualifies as harassment? It is (a) knowing and willful course of conduct directed at a specific person, (b) that seriously alarms, annoys, or harasses the person, and (c) that serves no legitimate purpose. To qualify as harassment under this law, the course of conduct must cause substantial emotional distress. AB 1076 and SB 699: Non‑Compete Agreements are Unlawful; Notice to Current and Former Employees Required. It is unlawful to: 1. Impose non‑compete clauses on employees; 2. Include a non‑compete clause in an employment contract; or 3. Require an employee to enter a non‑compete agreement that does not satisfy an exception in the Business & Professions Code. By February 14, 2024, employers are required to reach out to current, and some former employees, to notify them that any non‑compete clause or non‑compete agreement to which they were subject is void. California’s rules in this regard trump other state laws and will invalidate such provisions, including when an out of state employee seeks employment in California. AB 848: Leave for Reproductive Loss (adds Section 12945.6 to the Government Code). This new law provides employees with up to five days of unpaid leave after a miscarriage, unsuccessful assisted reproduction, failed adoption or surrogacy, or stillbirth . The employee may use vacation, personal leave, accrued and available sick leave, or compensatory time off for the days off. If an employee experiences more than one reproductive loss event in a 12‑month period, the employee is entitled to no more than 20 days of leave under this new law. The individual may, however, be entitled to protected leave under other provisions of law, such as the California Family Rights Act or the Pregnancy Disability Act. The law prohibits retaliation against an individual who uses this leave. The employer must maintain the confidentiality of any employee requesting leave for reproductive loss. REMINDERS: IRS Standard Mileage Reimbursement Rate: Each year, the IRS adjusts the IRS Standard Mileage Reimbursement Rate for business travel. For 2024, the rate increased 1.5 cents to 67 cents per mile driven for business travel. Reimbursement at the IRS Standard Mileage Rate is presumed by law to constitute payment in full for the business use of an employee’s personal vehicle (including fuel, insurance, maintenance, repairs, etc.). Therefore, employers are advised to always reimburse employees at this rate (or more, but not less) for all business-related mileage driven in the employee’s personal vehicle. If you are reimbursing employees for driving electric vehicles, you may want to consult with a tax professional to understand the rules related to EV mileage reimbursement and potential tax deductions. Computer Software Professionals Minimum Pay for Overtime Exemption: Effective January 1, 2024, California employers will have to pay select computer software employees these minimum amounts to avoid an overtime obligation: $55.58 per hour, $9,646.96 per month or $115,763.35 annually. Licensed Physicians and Surgeons Minimum Pay for Overtime Exemption: Effective January 1, 2024, the minimum pay rate for exemption from overtime for licensed physicians and surgeons will increase from $97.99 to $101.22 per hour. CalSavers: CalSavers retirement plan mandate, which has been phased in, larger employers first, now applies to nearly every employer in California. The statute applies to both for‑profit and non‑profit employers (but not to churches or government agencies). This bulletin is provided as a service to our clients and other friends to highlight current developments in the law. It is not intended to provide a legal opinion or specific legal advice. Should issues arise involving these, or other legal matters, please contact this office to speak directly with an attorney. We look forward to working with you.

The “California Wage Theft Protection Act” (Cal. Labor Code section 2810.5) requires employers to provide a “Notice to Employee” that contains certain information, including the employee’s rate of pay, paid sick leave information, and other items. The Notice must be provided at the time of hire or within seven days of any changes to the information. Two significant changes will apply to the Notice as of January 1 st : California recently passed SB 616, which will increase the amount of paid sick leave benefits that must be provided to most employees from 24 hours or three days to 40 hours or five days. This change must be reflected in the Notice.  California recently passed AB 636, which will require that the Notice include additional information on “the existence of a federal or state emergency or disaster declaration applicable to the county or counties where the employee is to be employed, and that was issued within 30 days before the employee’s first day of employment, that may affect their health and safety during their employment.” The Labor Commissioner recently published an updated Notice template that includes the required information. If you have any questions about the new notice requirements, please call our office and one of our attorneys will review the requirements with you.

Starting January 1, 2024 , the California Department of Finance has announced that the state minimum wage is set to increase to $16 per hour . This increase will apply to all California employers, regardless of size. This increase may come as a surprise with the recent state-wide increase to $15.50 just this past January 2023. However, due to inflation, the Department of Finance has determined that an increase of 3.5% is appropriate. This increase will not only impact non-exempt hourly employees. The hourly increase will adjust the minimum salary requirement for salaried, exempt employees, which is set at two times the hourly minimum wage. The increase means that as of January 1, 2024, in addition to meeting all of the other exemption criteria, exempt employees must earn a minimum of $66,560 per year to maintain their exempt status. This is an increase from the current exempt minimum salary requirement of $64,480 per year. Please keep in mind, there may be city or industry minimum wage requirements that are higher than $16 per hour that must be considered, and as of July 1, 2023, many local ordinances have already increased minimum wage for workers beyond $16 an hour. For example, the minimum wage in Alameda is now $16.52, Berkeley is now $18.07, Emeryville is now $18.67, Fremont is now $16.80, City of Los Angeles is now $16.78, County of Los Angeles (unincorporated areas only) is now $16.90, Malibu is now $16.90, Milpitas is now $17.20, Pasadena is now $16.93, San Francisco is now $18.07, Santa Monica is now $16.90 ($19.73 for hotel workers), and West Hollywood is now $19.08. You will be required to provide notice of the pay increase to employees and can do so by ensuring all changes are reflected in a timely wage statement or posting a notice along with other employment law posters in a conspicuous place. Now is a good time to start preparing to ensure these wage increases are accounted for in next year’s budget and employees are paid properly.

Changes to the regulations governing inquiries into a job applicant’s criminal history go into effect on October 1, 2023. The rules apply to new applicants, as well as existing employees who are either applying for a different position or are subject to a criminal history review because of a change in ownership, management, policy, or practice. Most employers are already aware that they may only inquire into an applicant’s criminal history after making a conditional offer of employment, and that they must conduct an individualized assessment before rescinding a job offer based on the results of a background check. The new regulations make clear that employers must conduct the individualized assessment before making a preliminary decision to rescind an offer of employment. They also expand on the factors that employers may consider when making an individualized assessment. For example, employers should consider factors such as whether the applicant had a disability or experienced trauma, domestic or dating violence, assault or stalking, human trafficking, duress or other similar factors that may have contributed to the offense. The employer must then consider the applicant’s rehabilitation or evidence of mitigation. Specifically, employers may look at the following factors, among others, to determine whether the individual has been rehabilitated: 1) if the conviction resulted in incarceration, the applicant’s conduct during incarceration and whether they participated in work and educational programs; 2) the applicant’s employment history since the conviction or incarceration; 3) the applicant’s community service and engagement since the conviction, such as volunteer work with community or religious organizations; and 4) if the individual was previously impaired by a disability or substance addiction, whether the disability or substance addiction has been mitigated, and the likelihood of harm in the future. While an employer may consider these factors, it may not require an applicant to submit information regarding rehabilitation or provide a specific type of evidence. Likewise, employers may not require applicants to disclose their status as survivors of domestic or dating violence, sexual assault, stalking or similar status, or the existence of a disability. Employers must, however, accept and consider evidence voluntarily provided by the applicant as part of the individualized assessment. Importantly, if an applicant voluntarily provides information about their criminal history before a conditional offer is made, the employer may not consider the information until after it has decided whether to make a conditional offer of employment. The regulations also make clear that employers must not include a statement in their job ads or postings that applicants will not be considered if they have a criminal history. The rules do not apply to employers and other covered entities that are required by law to conduct background checks. Laws that require entities other than the employer to conduct a background check (such as an occupational licensing board) do not exempt employers from these regulations. Finally, employers may use IRS Form 8850 to pre-screen and make a written request to their state workforce agency (SWA) to certify an individual as a member of a targeted group for purposes of qualifying for the Work Opportunity Tax Credit as long as the information from the form is used solely to apply for the Work Opportunity Tax Credit.  Employers should ensure that all recruiting, hiring and human resources personnel are fully and properly trained on these new mandates.