Several new laws impacting California employers will take effect in 2025. The California legislature recently passed new laws increasing minimum wage, creating new obligations for employers, and expanding various protections for employees, and employers should take note of the new laws highlighted below.
State Wage Increases
Beginning January 1, 2025, minimum wage for all California employees, regardless of employer size, will increase from $16.00 per hour to $16.50. However, certain cities, counties, and specific industries have other minimum wage ordinances that are typically greater than $16.50 per hour. Employers are encouraged to check city, county, and industry-specific minimum wage ordinances to ensure compliance. Additionally, beginning January 1, 2025, the salary for exempt-status California employees will increase from $66,560 annually to $68,640 (i.e., $5,720 per month).
Fair Employment and Housing Act (“FEHA”): Driver’s License – SB 1100
Beginning January 1, 2025, FEHA makes it unlawful for an employer to require a prospective worker to provide a driver’s license in response to a job advertisement, posting, application or other material, unless the employer reasonably expects driving to be one of the position’s job functions and the employer reasonably believes that satisfying the job function using an “alternative form of transportation” would not be comparable related to travel time or cost. “Alternative form of transportation” includes ride hailing services, taxis, carpooling, bicycling, or walking.
To prepare, employers should: (1) review any current job advertisements, postings or applications to ensure they do not include a driver’s license requirement unless the above two conditions are met; (2) review any job descriptions, policies or handbook provisions that may also reference a driver’s license requirement, even though the law does not currently define “other material”; and (3) ensure that all employees involved with hiring are trained on the new law.
Freelance Worker Protection Act (“FWPA”) – SB 988
If hiring a “freelance worker” to provide professional services for $250 or more, the FWPA imposes a written contract requirement between the hiring party and the “freelance worker.” A “freelance worker” is a an individual or single-person organization, whether incorporated or using a tradename, hired as a genuine independent contractor to provide professional services for $250 or more. The FWPA requires the hiring party to retain that contract for no less than four years and list all services to be performed and the value of those services. If the contract does not specify the date the hiring party will pay the freelance worker, the freelance worker must be paid no later than thirty days after completion of the services agreed to. There are other minimum requirements for the contracts under the FWPA. If the hiring party is found to have violated the FWPA, the freelance worker may recover damages and attorneys’ fees.
Paid Family Leave Program (“PFL”) – AB 2123
The PFL provides wage replacement benefits to workers who take time off to care for seriously ill family members, bond with a minor child, or help family members called to active military duty. The PFL initially allowed employers to require an employee to take up to two weeks of accrued vacation time before accessing PFL benefits. However, AB 2123 revises the PFL to allow employees to immediately access PFL benefits without first using any accrued vacation time.
Freedom from Employer Intimidation Act (“FEIA”) – SB 399
The FEIA creates protections for employees who decline to attend or participate in employer-sponsored meetings or communications regarding religious or political matters (i.e., “captive audience” meetings). Employees who are scheduled to work during such a meeting must be paid for their time regardless of whether they attend the meeting. Employers who violate FEIA will be subject to a penalty of $500 per employee.
Protections Against Discrimination Expanded
Trait Intersection Protection– SB 1137
SB 1137 prohibits discrimination based on the combination of two or more “protected classes,” which includes race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, age, sexual orientation, reproductive health decision making, and veteran or military status.
“Race” Definition Expanded – AB 1815
AB 1815 clarifies that traits associated with race include hair texture and protective hairstyles, and it further removes the term “historically” from the definition of race. AB 1815 applies retroactively and prospectively.
Local Enforcement of Laws Against Discrimination – SB 1340
Previously, only the California Civil Rights Department (“CRD”) was authorized to enforce the employment discrimination laws codified in FEHA and the Unruh Civil Rights Act. However, beginning January 1, 2025, any city, county, or local California governmental entity may work with the CRD to enforce anti-discrimination laws that are at least as protective as California state law under certain circumstances. Practically, SB 1340 will result in an increase in local agency investigation and enforcement of anti-discrimination laws, which may increase the burden on employers to proactively respond to administrative actions.
Victims of Violence– AB 2499
It is unlawful for an employer to retaliate or discriminate against an employee who serves on a jury, who is called as a witness in a judicial proceeding, or who is a crime victim for taking time off from work to obtain relief, including a restraining order or other injunctive relief, for themselves or their child. AB 2499 broadens the scope of who is entitled to those protections by adding protections for certain employees whose family member is a victim of a qualifying act of violence (so long as the employee disclosed their or their family member’s status as a victim to the employer) and allows the use of vacation time and/or paid sick leave concurrently with time off for a qualifying reason. Employers will be required to give written notice of their rights under AB 2499 to new employees, to existing employees annually, when requested by an employee, and when an employee informs the employer that they or a family member is a victim.
Employers may limit the amount of leave taken in certain circumstances based on employer size and may require that any leave run concurrently with leave taken pursuant to the federal Family Medical Leave Act and the California Family Rights Act.
California Dignity in Pregnancy and Childbirth Act (“DCPA”) – AB 2319
Beginning June 1, 2025, hospitals are required to have provided and completed implicit bias training to employees who interact with perinatal patients, including physician assistants, medical assistants, licensed vocational nurses, doctors or those who facilitate, control or coordinate access to timely and appropriate medical treatment, and others who provide medical and ancillary treatment. The foregoing training must also be provided to new employees within six months, and employees are required to complete continued training every two years. Failure to comply with the DCPA can result in statutory fines.
New Employer Notices
Whistleblowing – AB 2299
The California Whistleblower Protection Act requires employers to post a notice that includes information regarding employees’ rights and protections under the state’s whistleblower laws. AB 2299 requires the California Labor Commissioner to create and publish a model notice of employees’ rights and responsibilities under the state’s whistleblower law. Employers are free to develop their own posting with the required information, but the lettering must be at least 14-point typeface, and the posting must comply with other notice requirements under California law and must include the state’s whistleblower hotline number. AB 2299 does not provide any guidance regarding how employees working remotely should receive the above-mentioned posting. However, Labor Code Section 1207 allows employers to distribute information to employees by electronic mail with the document or documents attached.
Workers’ Compensation – AB 1870
Employers subject to the workers’ compensation system are generally required to conspicuously post (in a location frequented by employees) an easy-to-read notice that includes to whom workplace injuries should be reported, the rights of an employee to select and change a treating physician, and certain employee protections against discrimination. AB 1870 also requires that the foregoing notice inform employees that they may consult a licensed attorney to advise them of their rights under workers’ compensation laws.
Private Attorneys General Act (“PAGA”) Reformation
On July 1, 2024, AB 2288 and SB 92 (collectively, the “PAGA Reform Bills”) were signed into law. They became effective immediately and apply to civil actions where the requisite PAGA notice was filed on or after June 19, 2024. The PAGA Reform Bills provide employers significant financial incentives and the opportunity to review their wage and hour practices and policies to ensure compliance with the California Labor Code. Key takeaways from the PAGA Reform Bills are detailed below.
First, a PAGA plaintiff formerly could seek penalties for any alleged Labor Code violation, even if that plaintiff was not subject to the alleged violation. If successful, a PAGA plaintiff would receive 25% of the penalty recovered, and the Labor and Workforce Development Agency (“LWDA”) would receive the remainder. Under the PAGA Reform Bills, a PAGA plaintiff must be subject to the alleged Labor Code violation and, if successful, the penalty percentage that the plaintiff would receive is increased to 35%.
Second, an employer who takes “all reasonable steps” to comply with the Labor Code before a PAGA plaintiff files the requisite notice may reduce incurred penalties by 85%, and an employer who takes “all reasonable steps” to cure an alleged Labor Code violation within sixty days of receiving a PAGA plaintiff’s notice may reduce any penalties incurred by 70%. “All reasonable steps” includes conducting periodic payroll audits and curing any violations found in the results of the audit; maintaining and enforcing lawful written policies; training supervisors to be compliant with California law; and taking appropriate corrective actions with regard to supervisors. Because it is often difficult for employers of any size to cure alleged Labor Code violations within sixty days, employers are encouraged to act quickly and decisively after receiving a notice of prospective claim under PAGA to comply with the Labor Code and to cure any alleged violation.
Third, employers with fewer than 100 employees may provide the LWDA with a confidential proposal to cure the asserted Labor Code violation(s) within thirty-three days of receiving a PAGA notice. Employers with more than 100 employees during the PAGA period may request an early evaluation conference and a stay of court proceedings, during which a neutral evaluator will work with the parties to determine: whether any of the alleged violations occurred and have been cured; the strengths and weaknesses of the plaintiff’s claims and the employer’s defenses; whether the plaintiff’s claims, including any claim for penalties or injunctive relief, can be settled; and whether the parties should share information that could facilitate early evaluation and resolution.
Next Steps
Employers with California-based employees are encouraged to review their employment policies and procedures, including compensation amounts and structure, advertisements and job postings, posted notices, training deadlines and procedures, worker contracts, and leave policies, to ensure compliance with the new laws.
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