In 2024, Governor Gavin Newsom signed several bills impacting California employers, which go into effect on January 1, 2025. We discuss the most notable new laws affecting employers below.
Increased Minimum Wage
As the new year approaches, California employers should anticipate implementing a new minimum wage for nonexempt employees. As of January 1, 2025, the state minimum wage will rise to $17.50 per hour for employers with more than 26 employees. For employers with 25 or fewer employees, the minimum wage must be at least $16.50 per hour. Alongside this new legislation, California Proposition 32 introduces a ballot measure that proposes a further minimum wage increase in 2026, setting the rate to at least $18 per hour for employers with 26 or more employees. Per the Secretary of State website, the results will be certified on December 13, 2024. Regardless of Proposition 32’s success, employers should be prepared to increase minimum wages for nonexempt employees in 2025.
California’s Worker Freedom from Employer Intimidation Act (SB 399)
Governor Newsom recently signed California Senate Bill (SB) 399 into law to take effect on January 1, 2025. SB 399 prohibits employers from requiring employees to attend meetings or participate in communications primarily intended to convey the employer’s stance on religious or political matters. SB 399 also includes a prohibition on holding mandatory meetings concerning union organizing, commonly known as “captive audience” meetings. Employees enjoy the right to refuse participation in such meetings or communications without fear of retaliation or adverse employment actions. Employers who violate this new law may be liable for statutory penalties of $500 per employee for each violation, and/or potential lawsuits. Although employers may still express their views on religious and political matters, they must be careful in presenting their views to avoid pressuring employees to participate. Although this new law may face a challenge on National Labor Relations Act (“NLRA”) preemption grounds, employers should be aware of the risks associated with such meetings.
Prohibition on Requiring Driver’s Licenses as a Job Qualification (SB 1100)
Starting on January 1, 2025, California’s Fair Employment and Housing Act (“FEHA”) will impose additional restrictions on the content for job listings, advertisements, or other application materials. Under SB 1100, employers will no longer be allowed to require a driver’s license in job postings unless “[t]he employer reasonably expects driving to be one of the job functions for the position,” and “[t]he employer reasonably believes that satisfying the job function described [above] using an alternative form of transportation would not be comparable in travel time or cost to the employer.” Employers should review all active job postings and applications to ensure compliance with this new law.
Revised NLRB Rules and the Growing Efforts to Unionize
National Labor Relations Board (“NLRB”) General Counsel Jennifer Abruzzo has been active in issuing guidance and pursuing changes aimed at strengthening workers’ rights and enhancing labor protections. Recently, Abruzzo issued an Advice Memorandum opining that overbroad non-compete agreements, and “stay-or-pay” provisions, violate Section 7 of the NLRA, citing the risk of potentially chilling unionization efforts and impairing job mobility. In addition, on August 22, 2024, the NLRB issued a decision in Metro Health, Inc., holding that the NLRB will no longer accept “consent orders.” These consent orders, which allowed administrative law judges to resolve unfair labor practice cases based on terms offered by the Respondent, will likely result in increased challenges for employers seeking to settle unfair labor practice cases. On November 13, 2024, in Amazon.com Services LLC (Cases 29-CA-280153, 286577, 287614, 290880, 292392, and 295663), the NLRB banned so-called “captive audience” meetings – reversing 76 years of precedent and stripping employers of a powerful platform many have used to discourage workers from supporting union-organizing efforts.
However, in light of the recent election, a new NLRB general counsel will likely rescind much of the guidance issued by Ms. Abruzzo. Employers should be cognizant of the evolving priorities of the NLRB in 2025 by carefully monitoring the published rulings and advice memoranda.
New Rules Concerning Paid Family Leave (AB 2123)
With the passage of AB 2123, as of January 1, 2025, employers are no longer permitted to require employees to exhaust up to two-weeks of employer-provided vacation before they start receiving paid family leave benefits. Employees may, however, opt to voluntarily use their vacation time if they wish.
Changes in the Hiring of Independent Contractors (SB 988)
Under the “Freelance Worker Protection Act,” SB 988 imposes specific requirements for employers who hire freelance workers for “professional services” that are, in total, worth more than $250. As part of this law, employers who hire such freelance workers must ensure that their contracts are in writing and contain key information such as names, dates, services to be provided, and payment information. Further, employers must pay these workers on the specific date listed in the contract, or no later than 30 days after the completion of their services. SB 988 also prohibits discrimination or retaliation against any freelance worker who seeks to exercise his or her rights under this law.
Required Posters and Notices (AB 1870)
AB 1870 adds to employer’s posting and notice obligations regarding workers’ compensation laws. In addition to the prior requirements, employers must provide a notice to employees that they may need to consult a licensed attorney for advice on their rights under the applicable workers’ compensation laws. Employers should contact their worker’s compensation insurance carrier for updated posters. In addition, employers will be required to display an overview of employees’ rights and responsibilities under California’s whistleblower laws. Although AB 2299 imposes a new requirement that the California Labor Commissioner develop a model list of these rights and responsibilities, in order to be in compliance, employers should still ensure that this model list appears in a font larger than 14 points, and contains the whistleblower hotline telephone number.
Leaves of Absence (AB 2499)
Under AB 2499, jury and witness leave, along with crime victims’ leave, will be moved from the Labor Code to the Fair and Employment and Housing Act (“FEHA”). This change means that the California Civil Rights Department will now have enforcement authority over violations. Furthermore, the law enhances protections for crime victims by permitting employees of companies with 25 or more employees to take time off to assist family members who have been victims of certain qualifying acts of violence.
PAGA Exemption for Construction Industry Extended Through January 1, 2038 (AB 1034)
In 2024, the Private Attorneys General Act (“PAGA”), which permits employees to file lawsuits against their employers for violations of the California Labor Code on behalf of the Attorney General, underwent significant reform. Specifically, new measures were introduced to allows employers to “cure” violations, resulting in a reduction of penalties by up to 85%. In 2025, further PAGA legislation will be enacted to extend the exemption from PAGA for certain construction industry employees until January 1, 2038. This exemption applies exclusively to employees covered by a collective bargaining agreement and requires specific conditions: 1) the employee must earn a regular hourly wage at least 30% higher than the state minimum wage, 2) they must receive premium rates for all overtime hours worked, and 3) there must be explicit terms regarding wages, hours worked, and working conditions.
CA Expands the California Dignity in Pregnancy and Childbirth Act (AB 2319)
In 2025, AB 2319 will broaden the training requirements for hospitals related to implicit bias and how employees engage with perinatal patients. This update affects physician assistants, licensed vocational nurses, doctors, or anyone involved in facilitating or providing medical treatment, and mandates new basic training be completed by June 1, 2025 (or within six months for new hires). Additionally, these employees must undergo refresher courses every two years to remain compliant. Hospitals must annually provide proof of this implicit bias training and will be considered non-complaint if either 10% or more of their employees, or 25 employees, whichever is less, fail to complete the training. Non-complaint hospitals will incur a $5,000 fine for the first violations, and a $15,000 fine for any subsequent violations.
New Law Alters the Definition of “Race” (AB 1815)
Under the newly enacted AB 1815, the definition of “race” under California law will no longer include the term “historically” from the definition. This change in definitions means that traits associated with race, such as hair style and texture, will be protected. Because this law is declaratory of existing law, it applies retroactively and prospectively.
Intersectional Discrimination under FEHA, the Unruh Civil Rights Act, and the Education Code (SB 1137)
SB 1137 clarifies that “intersectional discrimination,” or discrimination based on the combination of two or more protected traits, is prohibited under the Fair Employment and Housing Act (“FEHA”), the Unruh Civil Rights Act and the Education Code.
The Enforcement of Anti-Discrimination Law by Political Subdivisions in California (SB 1340)
Starting in 2025, SB 1340 permits political subdivisions across California to implement anti-discrimination laws that are “at least as protective” as state legislation. With this new authorization, the California Civil Rights Department (CRD) must work alongside local agencies to prevent unlawful discrimination in the workplace. As local agencies take on a more significant role in handling discrimination complaints, including investigation and enforcement, employers may face a greater responsibility to adequately address administrative actions.
Although not exhaustive, this list provides key changes in 2025 that may impact your organization. If you have further questions, please contact Tyler Paetkau, Jon McNutt, or your Husch Blackwell attorney.
Written with the assistance of Abby Treadwell, a fall clerk in Husch Blackwell’s Los Angeles office.