California employers need to be prepared for new laws that become effective starting in the new year. Below is a brief overview of those laws (including the collection of diversity for venture capital companies, an amendment in non-compete law, new protections for workplace violence and harassment, increased and expanded leaves, new presumption of retaliation for protected activities, and updates to workplace cannabis laws), their effective dates, and what employers should do now to prepare.
Collection of Diversity Data for Venture Capital Companies
SB 54: This law requires venture capital companies meeting certain criteria (a “covered entity”) to collect and maintain diversity data relating to the founding teams of their portfolio companies and to report such data to the Civil Rights Department. A “covered entity” includes venture capital companies based in, or that have a significant presence in California, and that solicit or receive investments from California residents. The first reporting date is March 1, 2025.
How Employers Should Prepare: (1) determine whether you are a “covered entity” based on the criteria outlined in the new law; (2) if you are a covered entity, review your data collection and maintenance procedure and whether it currently includes the collection and maintenance of diversity data; and (3) begin collecting the relevant diversity data and be prepared to report it on March 1, 2025 and annually thereafter.
Amendment to Non-Compete Law
SB 699: Existing Business and Professions Code Section 16600 already prohibited noncompete agreements in California (with a few exceptions). SB 699 now makes any contract that is void under CA law unenforceable regardless of whether the contract was signed and employment was maintained outside of California. Employers who violate this new law will be committing a civil violation. Employees who bring an action to enforce this law are entitled to recover attorneys’ fees and costs if they prevail. This law will become effective on January 1, 2024.
How Employers Should Prepare: (1) update existing employment agreement templates and remove noncompete provisions that are not compliant; and (2) provide training to hiring managers and personnel relating to this prohibition on out-of-state non-competes for compliance during the hiring process. We previously reported on this amendment here.
AB 1076: Further, AB 1076 now specifies that Section 16600 is to be broadly construed to void the application of any noncompete agreement in an employment context, or any noncompete clause in an employment contract, no matter how narrowly tailored, that does not satisfy any specified exceptions. Furthermore, this bill requires employers to notify current and former employees (who are defined as those employed after January 1, 2022) in writing by February 14, 2024 that such a noncompete clause is void if they entered into a noncompete agreement that failed to satisfy an exception. This law will become effective on January 1, 2024.
How Employers Should Prepare: (1) review employee files for employees employed after January 1, 2022 for any non-compete agreements previously entered into and if such agreements exist, confirm whether such agreement satisfied an exception, and if it did not, provide a written notice to the employee that the noncompete agreement is void by February 14, 2024; and (2) update existing employment agreement templates and remove noncompete provisions that are not compliant.
New Protections for Workplace Violence and Harassment
SB 553: Employers are now required to establish, implement, and maintain at all times, in all work areas, a workplace violence prevention plan and provide training to employees on the plan. Employers must also maintain records of workplace violence incidents and trainings and require some of those records to be made available to certain governmental agencies, employees, and employee representatives. This law will become effective July 1, 2024.
How Employers Should Prepare: (1) create a workplace violence prevention plan if one does not exist already; (2) provide training on the plan and continue to provide training if the plan is updated; (3) establish record-keeping procedures for workplace violence related incidents; and (4) review and update company policies/handbooks as needed.
SB 428: While an existing law permits employers to seek temporary restraining orders on behalf of employees who have suffered unlawful violence or are under a credible threat of violence, SB 428 extends that protection to employees experiencing harassment. This law will become effective on January 1, 2025.
How Employers Should Prepare: (1) be award that this is an option to protect employees from harassment; (2) review and update company policies/handbooks as needed; and (3) provide additional training to supervisors and human resources personal as needed.
Increased and Expanded Sick and Reproductive Loss Leaves
SB 616: Existing law requires employers to provide a minimum of 24 hours or 3 days of paid sick leave for employees who work for the same employer for 30 or more days within a year from the commencement of their employment. This new expands that requirement to 40 hours or 5 days. Employers that use the accrual method must provide at least 40 hours or 5 days of sick leave by the 200th calendar day of employment. The law also increases the accrual threshold to 80 hours or 10 days from 48 hours or 6 days. This law will become effective on January 1, 2024.
How Employers Should Prepare: Ensure compliance by reviewing and revising current paid sick leave policies and employee handbooks. Note that this law does not supersede any additional municipal protections provided throughout the state.
SB 848: It is now unlawful for employers to refuse to grant eligible employees up to 5 days of leave for a reproductive loss event, which include a failed adoption, failed surrogacy, miscarriage, stillbirth, or an unsuccessful assisted reproduction. Eligible employees do not need to provide documentation to support their need for this leave and employers are required to maintain confidentiality relating to any requests. This law will become effective on January 1, 2024.
How Employers Should Prepare: (1) review and update relevant leave policies as necessary; and (2) provide training to supervisors and human resources personnel about the existence and parameters of this leave.
New Presumption of Retaliation for Protected Activities
SB 497: Existing law prohibits employers from discriminating or retaliating against an employee for engaging in certain protected conduct, such as complaining about wages or discriminatory conduct. SB 497 now creates a rebuttable presumption in favor of an employee if an employer disciplines or discharges an employee within 90 days of the employee’s engagement in protected activity. This law will become effective on January 1, 2024.
How Employers Should Prepare: (1) reassess your approach to employee discipline and be aware of the timing of any employment actions and an employee’s protected activity; (2) review and potentially revise training manuals, guidelines, and employee handbooks relating to employee discipline; and (3) ensure supervisors and managers are properly trained regarding discipline and discharge procedures and the documentation of employee complaints.
Additional Prohibitions on Cannabis-Related Discrimination
SB 700: SB 700 will now make it unlawful for an employer to request information from an applicant for employment relating to the applicant’s prior use of cannabis, though information about a person’s prior cannabis use obtained from the person’s criminal history would be exempt. This law expands on prior cannabis legislation prohibiting the discrimination of recreational usage of cannabis for employment purposes, which we previously wrote about here. This law will become effective on January 1, 2024.
How Employers Should Prepare: (1) update relevant policies relating to drug use, drug testing, and background checks; (2) update human resources personnel and recruiting guidelines; and (3) connect with relevant drug-testing vendors to ensure compliance.