Attention Employers: New California Employment Laws Have Arrived

Earlier this month, California Gov. Gavin Newsom, a Democrat, finished signing 890 bills into law from the 2023 legislative session. Several of these bills are employment related and have far-reaching implications for employers (and their HR teams tasked with administering changes).

Below we break down the key employment-related laws enacted this session. These laws become effective January 1, 2024, but employers should review their policies and practices now to be sure they are prepared to address these changes.

AB 933 – Privileged Communications: Workplace Harassment/Discrimination

AB 933 provides that employees who report unlawful workplace harassment or discrimination of any type cannot be liable for defamation unless their statements lacked credible evidence or were made with malice.

AB 1076 and SB 699 – Prohibitions on Noncompetition Agreements

As California employers are likely aware, under existing case law, noncompetition agreements in the employment context are void and unenforceable in California except in limited circumstances — no matter how narrowly tailored. AB 1076 codifies this and specifies that imposing an unlawful noncompetition clause or agreement constitutes an act of unfair competition under California law.

In addition, AB 1076 requires employers to notify current and former employees who were employed after January 1, 2022, and who have contracts that include a noncompete clause, or who were required to enter an unenforceable noncompete agreement, that the noncompete clause or agreement is void. Employers must provide written, individualized notice to the current or former employee’s last known address and email address by February 14, 2024.

Relatedly, SB 699 extends California’s ban on noncompetition clauses and agreements to all agreements, regardless of the state in which the agreement was signed or the state in which the employee works or worked. Additionally, SB 699 creates a private right of action so employees can seek recovery of damages, injunctive relief, and attorneys’ fees.

SB 365 – Elimination of Automatic Stays and Arbitration

SB 365 provides that trial court proceedings will not be automatically stayed during the pendency of an appeal of an order dismissing or denying a petition to compel arbitration. This amendment to California Code of Civil Procedure § 1294 essentially means employers may be forced to continue litigating in court even while challenging on appeal a denial of the right to arbitrate. It’s likely this new law will face challenges, with opponents arguing it is preempted by the Federal Arbitration Act.

SB 497 – Rebuttable Presumption of Retaliation

SB 497 establishes a presumption of retaliation if an employee or applicant engages in specified protected activity (e.g., making complaints about unpaid wages, making complaints about equal pay violations, and making complaints related to rights that are under the jurisdiction of the Labor Commissioner) and subsequently faces disciplinary action or termination within 90 days of doing so.The burden of proof then shifts to the employer to prove that the adverse action was not retaliatory. This new burden-of-proof structure will likely make it more difficult for employers to obtain dismissal of retaliation claims at the summary judgment stage. In light of this new structure, it is even more important for California employers to properly document employee performance issues to be better prepared in case of litigation.

SB 616 – Paid Sick Leave Increases to Five Days

Under current California law, employers are required to provide a minimum of three days of paid sick leave per year to their employees. SB 616 increases the minimum annual entitlement of paid sick days to five days. The bill also raises the total amount of paid sick leave that employers must permit employees to accrue and carry over from one year to the next from six days to 10 days.

Employers should remember that local jurisdictions may mandate more generous sick leave entitlements.

SB 700 – Prohibitions on Marijuana-Use Discrimination

As employers may recall, last year the California legislature passed AB 2188 (which goes into effect January 1, 2024), which makes it unlawful for an employer to discriminate against a person in hiring, termination, or any term or condition of employment, or otherwise penalize a person, if the discrimination is based on (1) the person’s use of cannabis off the job and away from the workplace or (2) an employer-required drug screening test that has found the person to have nonpsychoactive cannabis metabolites in their hair, blood, urine, or other bodily fluids. SB 700 expands on AB 2188 and also makes it unlawful for employers to discriminate against an employee or applicant based on information regarding prior use of cannabis that is learned from a criminal history report, unless otherwise permitted under applicable law.

SB 848 – Unpaid Leave for Reproductive Loss

SB 848 makes it an unlawful employment practice for an employer to refuse to grant a request by an employee to take up to five days of reproductive loss leave following a reproductive loss event, such as a failed adoption or surrogacy, miscarriage, stillbirth, or unsuccessful assisted reproduction. Under the new law, if an employee experiences more than one reproductive loss event within a 12-month period, the employer shall not be obligated to grant a total amount of reproductive loss leave time in excess of 20 days within a 12-month period. Reproductive loss leave shall generally be completed within three months of the event entitling the employee to that leave.

In the absence of an existing policy, reproductive loss leave may be unpaid, except that an employee may use vacation, personal leave, accrued and available sick leave, or compensatory time off that is otherwise available to the employee.