2023 California Labor & Employment Year End Review
Los Angeles, Calif. (February 5, 2024) - During 2023, California continued its long history of enacting legislation intended to protect the rights of employees. Below is a summary of the most critical legal updates affecting California employers and employees as of 2024, as well as recent notable State Supreme Court opinions from 2023.
Noncompete Agreements (SB 699)
California has long been notoriously hostile to noncompete agreements. Continuing that pattern, the new law states that beginning January 1, 2024, non-compete agreements in California are void “no matter how narrowly tailored” the non-compete clause in an employment contract is written. Under the new law employers are prohibited from entering into or attempting to enforce noncompete agreements with employees no matter where they work. Employers who violate this prohibition will be deemed to have engaged in unfair competition as set forth in Business & Professions Code section 17200. Furthermore, under the new law California employers must provide all current and certain former California employees with individual written notices, by February 14, 2024, that any noncompete clauses or noncompete agreements they may have executed are void.
Employees, former employees, or prospective employees whose rights have been violated under this new law may also bring a private action for injunctive relief and/or actual damages and recover their reasonable attorney’s fees and costs if deemed the prevailing party.
Arbitration – Discretionary Stays Pending Arbitration (SB 365)
Senate Bill 365 changes existing law by giving trial courts discretion to stay a case pending an appeal of an order dismissing or denying arbitration. Previously, an appeal of such an order resulted in an automatic stay of all proceedings. The amendment allows litigation to continue during an appeal of an order denying a petition to compel arbitration.
Cannabis Use (SB 700 and AB 2188)
Senate Bill 700 makes it unlawful for an employer to request information or disclosures from job applicants regarding prior use of cannabis. Employers are also prohibited from discriminating against job applicants who have used cannabis, based on information obtained from the applicant’s criminal history, unless the employer is otherwise permitted to consider or inquire about that information under the law.
Assembly Bill 2188, meanwhile, makes it unlawful for employers to discriminate against employees for off-duty cannabis use beginning on January 1, 2024.
COVID–19 (SB 723)
Senate Bill 723 extends an existing law that provides workers displaced due to COVID-19 in certain industries with various recall rights when the employer has open positions. Senate Bill 723 extends this law another year, to the end of 2025, but adds that covered employees separated from employment are presumed to have been separated due to a COVID-19-related reason unless the employer establishes otherwise.
Labor Code Violations – Prosecutions by Local Prosecutors (AB 594)
Assembly Bill 594 authorizes public prosecutors to bring civil and criminal actions for California Labor Code violations that arise within their jurisdiction. The law also prohibits any agreements between employer and employee that attempt to limit representative actions or mandate private arbitration. Public prosecutors are also permitted to enforce misclassification violations.
Minimum Wage – Private Sector Employers (SB 3)
Commencing January 1, 2024, California’s minimum wage is increased to $16 an hour. The minimum exempt salary for California employees will also rise from $64,480 to $66,560. Some cities and counties have a higher local minimum wage, according to the Department of Industrial Relations.
Minimum Wage – Healthcare Facilities (SB 525)
Senate Bill 525 requires California healthcare facilities to raise minimum wage schedules beginning on June 1, 2024. The applicable minimum wage schedules (from $18 per hour up to $23 per hour) depends on the type of healthcare facility and the nature and size of the business. In addition to the varying minimum wage schedules, SB 525 requires that healthcare workers who are paid on a salary basis be paid a monthly salary equivalent to at least 150% of the healthcare worker minimum wage, or 200% of the applicable state minimum wage, whichever is greater.
Minimum Wage – National Fast-Food Restaurants (SB 1228)
Assembly Bill 1228 increases fast food minimum wages that must be paid by national fast-food chains operating in California to $20 per hour beginning April 1, 2024. This new law applies to chains of limited-service restaurants consisting of more than 60 establishments that share common branding, marketing, and products. This bill also allows for the possibility of annual wage increases beginning January 1, 2025, and creates a Fast-Food Council that can recommend minimum standard for hours and other working conditions for applicable employers.
Paid Sick Leave (SB 616)
Senate Bill 616 increases paid sick leave for employees from three days (24 hours) to five days (40 hours) for full-time employees. Employers using the accrual method must allow accrued sick days to carry over to the following year. However, an employer may limit an employee’s use of accrued paid sick days to 40 hours each year. The law also increases the accrual threshold from six days (48 hours) to 10 days (80 hours).
Reproductive Loss Leave (SB 848)
Senate Bill 848 requires employers with five or more employees to provide up to five days of unpaid leave following a “reproductive loss event,” defined as “the day or, for a multiple-day event, the final day of a failed adoption, failed surrogacy, miscarriage, stillbirth, or an unsuccessful assisted reproduction.” Reproductive leave loss is capped at 20 days within a 12-month period, though employees are permitted to use other types of available leave such as PTO, sick leave, etc. Also, any information provided to the employer relating to the leave must be maintained as confidential and must not be disclosed except to internal personnel or counsel, or as required by law. The law also prohibits retaliation against employees who exercise their rights to take leave.
Retaliation (SB 497)
Senate Bill 497 creates a rebuttable presumption of retaliation if an employee is disciplined or discharged within ninety days of engaging in certain protected activity, making it easier for employees to establish a prima facie case of retaliation. Protected activities include, but are not limited to, reporting wage and hour violations; disclosing what the employee reasonably believes is information of a violation of state or federal statute, rule, or regulation; and, reporting or attempting to enforce rights pertaining to equal pay. The employer faces the burden to rebut the presumption by offering some other legitimate, non-retaliatory reason for the adverse employment decision.
Workplace Violence Prevention Programs (SB 553)
Under Senate Bill 553 employers must implement and maintain workplace violence prevention programs, maintain records related to these programs, investigate claims brought under the program, and train employees on the program. The Bill regulates the content of a plan which must include an anti-retaliation provision for employees that file workplace violence reports. This bill also allows unions to seek workplace violence restraining orders on behalf of employees beginning on March 1, 2025, while the rest of the law becomes effective July 1, 2024.
NOTABLE STATE SUPREME COURT OPINIONS (2023 to Present)
Adolph v. Uber Technologies, Inc. – On July 17, 2023, the California Supreme Court ruled that a plaintiff can pursue non-individual claims in court even if their individual claims are compelled to be resolved in arbitration. As a result, employers may wind up having to battle their employees’ PAGA claims in two forums.
Estrada v. Royalty Carpet Mills – On January 18, 2024, the California Supreme Court held that California courts do not have discretion to strike PAGA claims on the grounds that the cases are deemed unmanageable. The Court concluded that, while trial courts may use a variety of tools to efficiently manage PAGA claims, striking such claims is not among those tools. The Estrada ruling resolves the differing Appellate Court District opinions that have considered the issue.
Law Finance Group, LLC v. Key – The Supreme Court remanded this case to the court of appeal to determine in the first instance whether the plaintiff was entitled to equitable relief from the 100-day deadline prescribed by Cal. Code Civ. P. 1288.2 – petition to confirm an arbitration award – holding that the section 1288.2 deadline is not jurisdictional and does not otherwise prelude a party from invoking equitable tolling or estoppel for having missed the deadline.
Kuciemba v. Victory Woodworks Inc. – The Court that held that, while it is foreseeable that an employer’s negligence in permitting the spread of COVID-19 within the workplace will cause members of employees’ households to contract the disease, employers do not have a duty of care to non-employees in this context to prevent the spread of COVID-19 to their employees’ household members.
Discrimination – Liability of Agents
Raines v. U.S. Healthworks Medical Group – On August 21, 2023, the Supreme Court held that an employer's business entity agents can be held directly liable under the California Fair Employment and Housing Act (FEHA), Cal. Gov. Code 12900 et seq., for employment discrimination in appropriate circumstances when the business entity agent has at least five employees and performs on the employer’s behalf activities regulated by FEHA.
Whistleblower (Labor Code §1102.5)
People ex rel. Garcia-Brower v. Kolla’s, Inc. – On May 22, 2023, the Supreme Court held that a report of unlawful activities made to an employer or agency that already knew about the violation is a protected "disclosure" within the meaning of Cal. Labor Code 1102.5(b). The Court explained that “disclose” need not mean only the revelation of information previously unknown to the recipient.
For additional information about these legislative developments and/or California Supreme Court opinions, contact the authors of this alert. Visit our Labor & Employment Practice page to learn more about Lewis Brisbois' capabilities in this area.
George Romain, Partner
Sara Shok, Associate
Peter Shapiro, Partner