Legislative Update: The End of the Road (for 2023)
Law & Legal

Legislative Update: The End of the Road (for 2023)

Seyfarth Synopsis: While Governor Newsom vetoed several impactful bills prior to his October 14, 2023, signing deadline, he approved a wide array of new laws with which businesses will need to comply with in 2024 and beyond, such as those affecting non-compete agreements, paid sick leave, workplace violence prevention plans, new minimum wage standards for health care workers, and more.

We previously detailed the remarkable number of bills California legislators introduced in 2023, many of which died before making it to Governor Newsom’s desk for consideration by his October 14, 2023, signing deadline. Governor Newsom signed 890 of the 1,046 bills presented for his consideration, and he vetoed 156 bills (approximately the same veto rate as last year) according to a prominent Capital lobbyist.

The labor and employment measures the Governor approved carry hefty obligations for employers. Top of employers’ minds are bills that impact the validity of non-compete agreements, increase paid sick leave allotments and accrual caps, relate to employment restraining orders and workplace violence prevention plans, raise minimum wages for health care workers, and create (again) a mandatory wages and working conditions program for fast food workers.

Below is our summary of the labor and employment bills the Governor signed into law, notable bills that are back before the Senate for reconsideration, and key measures that did not make the cut. All new laws are effective January 1, 2024, unless otherwise stated.

Bills Signed Into Law

Non-Compete Agreements

SB 699 and AB 1076: Non-Compete Agreements

As we previously reported, SB 699 makes any contract that is void under California law unenforceable regardless of where and when the employee signed the contract. AB 1076 codifies Edwards v. Arthur Andersen LLP, to void any non-compete clause or agreement in an employment context, no matter how narrowly tailored, with limited exception.  It also adds additional “protections” including a notification requirement for California employers, and makes a violation of these provisions a violation of BPC 17200 et seq.

These bills amend Section 16600 of and add Sections 16600.1 and 16600.5 to the Business and Professions Code.

Leaves and Accommodations

SB 616: Paid Sick Days Accrual and Use

As we reported in depth, SB 616 increases the annual amount of paid sick leave from three days or 24 hours to five days or 40 hours for eligible employees, and raises the accrual cap from 48 hours to 80 hours. It also extends the anti-retaliation and procedural provisions in California’s sick pay law to include those covered by a valid CBA, and expressly excludes railroad carrier employers and their employees. Of note, the new law preempts certain procedural, notice, and use provisions in local ordinances that contradict the state law.

This bill amends Sections 245.5246, and 246.5 of the Labor Code.

SB 848: Leave for Reproductive Loss

Following 2022’s mandatory (unpaid) bereavement leave, SB 848 requires employers to provide eligible employees up to five days of (unpaid, unless the employer has an existing policy stating otherwise) reproductive loss leave upon suffering a failed adoption or surrogacy, miscarriage, stillbirth, or an unsuccessful assisted reproduction. The bill also prohibits retaliation against an individual who uses this leave or shares information about it.

This bill adds Section 12945.6 to the Government Code.

Wage/Hour & Other Labor Code Bills

SB 497: Retaliation Rebuttable Presumption 

SB 497 creates a rebuttable presumption of retaliation under Labor Code sections 98.6 and 1197.5 if an employer subjects an employee to an adverse action within 90 days of an employee engaging in the conduct described by those sections (i.e. making complaints or claims related to rights under the jurisdiction of the Labor Commissioner, making complaints about unpaid wages, or making complaints about equal pay violations). The bill also increases the civil penalty imposed on an employer under section 1102.5 from $10,000 generally to $10,000 per employee per violation.

This bill amends Sections 98.61102.5, and 1197.5 of the Labor Code.

AB 594: Local Enforcement: Wage Theft

AB 594 authorizes public prosecutors, including the Attorney General, a district attorney, a city attorney, a county counsel, or any other city or county prosecutor, to independently prosecute specified violations of the Labor Code that occur within their geographic jurisdictions. The bill also provides that any individual agreement (i.e., not CBAs) that requires arbitration of a dispute or limits representative actions does not affect the prosecutor or Labor Commissioner’s ability to enforce the Labor Code.

This bill amends Sections 218 and 226.8 of, and adds Chapter 8 and repeals Section 181 of, the Labor Code.

Other Bills

AB 933: Defamation Privilege: Sexual Harassment 

AB 933 extends the defamation privilege to expressly include an individual’s communications made without malice, regarding factual information related to incidents of sexual assault, harassment, or discrimination, experienced by that person, provided the individual had a reasonable basis to file a complaint (regardless of whether it was filed or not). The bill also authorizes a defendant who prevails in an action related to making such a privileged communication to recover its reasonable attorney’s fees and costs, treble damages, and punitive damages.

This bill adds section 47.1 to the Civil Code.

SB 428: Workplace Violence Restraining Orders: Harassment

SB 428 will, starting January 1, 2025, allow employers to seek restraining orders on behalf of their employees who have been harassed, or suffered unlawful violence or a credible threat of violence in the workplace or reasonably construed to be carried out in the workplace, or where there is “a knowing and willful course of conduct directed at a specific person that seriously alarms, annoys, or harasses the person, and that serves no legitimate purpose.” The new law will prohibit a court from issuing such an order if it would prohibit speech or activities protected by the National Labor Relations Act or provisions governing the communications of exclusive representatives of public employees.

This bill amends, repeals, and adds Section 527.8 of the Code of Civil Procedure.

SB 553: Workplace Restraining Orders and Violence Prevention Plan

As we reported in-depth, SB 553 requires nearly all employers in the State of California to prepare a Workplace Violence Prevention Plan, train employees on how to identify and avoid workplace violence, and maintain a violent incident log by July 1, 2024. It also has similar provisions regarding allowing employers to seek temporary restraining orders on behalf of employees suffering violence or credible threats of violence, as with SB 428.

This bill amends, repeals, and adds Section 527.8 of the Code of Civil of Procedure, and amends Section 6401.7 and adds 6401.9 to the Labor Code.

SB 365: Civil Procedure: Arbitration

This bill eliminates the automatic stay of trial court proceedings pending the appeal of an order denying a motion to compel arbitration. This means that the decision whether to stay proceedings will be discretionary with the trial court, though whether the FAA preempts this provision will be an issue.

This bill amends Section 1294 of the Code of Civil Procedure.

SB 235: Civil Procedure: Discovery

SB 235 requires parties to a civil action in state court to exchange initial disclosures with all other parties within 60 days of a demand by any party to the action, unless modified by stipulation. Similar to the initial disclosures already required under the Federal Rules of Civil Procedure, these disclosures must include: (1) the name and contact information of persons likely to have discoverable information and the subject of the information; (2) a copy or description of all documents in support of the party’s claims or defenses, or that is relevant to the action; and (3) contractual agreements or insurance policies under which an insurance company or person may be liable to satisfy a judgment entered in the action, or to indemnify or reimburse for payments made to satisfy the judgment. The only documents and information expressly excluded from these disclosures are those to be used solely for impeachment purposes. The new law also increases sanctions imposed for failure to respond in good faith to a document request, meet and confer in good faith regarding discovery disputes, or produce documents within seven days of a motion to compel discovery due to a failure to respond in good faith from $250 to $1,000. 

This bill amends Sections 2016.090 and 2023.050 of the Code of Civil Procedure

SB 700: Cannabis Use

SB 700 expands existing law which, starting January 1, 2024, makes it unlawful for an employer to discriminate against a candidate or employee because of the person’s use of cannabis off the job and away from the workplace. This bill also makes it unlawful to request information from an applicant relating to the applicant’s prior use of cannabis, with certain exceptions.

This bill amends Section 12954 of the Government Code.

Industry-Specific Bills

SB 41: Airline Cabin Crew Employees Meal and Rest Breaks 

SB 41 was approved by the Governor on March 23, 2023, and went into effect the same day. As of that date, airline cabin crew employees covered by CBAs with valid meal and rest break provisions are expressly exempt by virtue of new Labor Code section 512.2 from California’s meal and rest period requirements.

This bill adds Section 512.2 to the Labor Code.

SB 525: Health Care Employee Pay

As we reported in detail, SB 525, effective June 1, 2024, will raise minimum wages for health care workers across the state. The bill includes five separate minimum wage schedules for covered health care employees depending on the nature, size, and structure of the employer’s business, which establish a patchwork of three separate minimum wage schedules (setting minimum wages at a rising scale over time from $18-$25) for covered health care employees.

This bill adds Sections 1182.14 and 1182.15 to the Labor Code.

SB 723: Right to Recall in Hospitality 

SB 723 amends Labor Code 2810.8, established via SB 93 of 2021 (which we discussed at the time of its passage), to expand certain hospitality employees’ right to recall after being laid off for a reason related to the COVID-19 pandemic. This new law extends the December 31, 2024, sunset date to December 31, 2025.

This bill amends and repeals Section 2810.8 of the Labor Code.

AB 647: Successor Grocery Employers 

AB 647 places new requirements on successor grocery employers’ hiring and reinstatements when there is a “change in control,” reminiscent of legislative efforts in 2014-2015, and it expands the definition of a grocery establishment subject to existing laws about preferential hiring lists to include distribution centers.

AB 647 amends Sections 25022504, and 2512 of the Labor Code and adds Sections 2509, 2510, and 2517 to the Labor Code.

AB 1228: Fast Food-Industry Changes 

As we reported in depth, AB 1228 repeals existing law, presently suspended due to a referendum petition, which established the Fast Food Council within the Department of Industrial Relations, only if the referendum is withdrawn by January 1, 2024. If withdrawn by that date, the bill will, until January 1, 2029, re-establish the Fast Food Council, deem the council to be a governmental agency, and re-establish its duties to include, among other things setting: (1) minimum wages, and (2) requirements and review procedures for health, safety, and employment standards. It also increases minimum wage for fast food workers to $20 an hour, effective April 1, 2024.

This bill would add Part 4.5.5 (commencing with section 1474) to Division 2 of the Labor Code and repeal Part 4.5.5 (commencing with section 1470) of Division 2 of the Labor Code.

SB 476: Food Handler Card Expenses & Requirements

SB 476 requires an employer to pay costs associated with an employee obtaining a food handler card, including the time it takes for the employee to complete the training (which would be considered “hours worked”), the cost of the food handler certification program, and the time it takes to complete the certification program. The bill also prohibits an employer from conditioning employment on an applicant or employee having an existing food handler card.

The bill amends Section 113948 of the Health and Safety Code.

Vetoed Bills

SB 731: Notice of Remote Work as a Reasonable Accommodation

SB 731 would have required an employer to provide 30 days’ written notice to an employee working remotely that the employee has the right to ask the employer to allow continued remoted work as a reasonable accommodation before requiring that employee to return to work in person.

The Governor stated that the bill “would impose an inflexible 30-day advance notice requirement to return-to-work that would not take into account the needs of any particular employer. Businesses, especially small businesses, may have limited employees to staff in-person positions and the 30-day advance notice requirement of return-to-work could be impractical, especially in times of critical need or emergencies.”

SB 403: “Caste” Protected Class

SB 403 would have added “caste” as a protected class under the FEHA and Unruh Act. The bill attempted to clarify existing law prohibiting caste discrimination as a type of ancestry, which is already a listed protected class, and also define “ancestry” as including additional markers, such as “lineal descent, heritage, parentage, caste, or any inherited social status.”

SB 627: Chain Businesses Notice Requirements to Displaced Workers

Vetoed SB 627 would have required chain businesses consisting of 100 or more nationwide establishments to provide a 60-day displacement notice prior to closing a location to employees who have worked for the employer for at least six months. For one year after the closure of a covered establishment, employers would have had to offer workers the opportunity to remain employed by the employer and to transfer to a location of the chain within 25 miles of the closed location, as positions become available. To comply with the bill, employers would have also needed to maintain a preferential transfer list of covered workers and make transfer offers to covered workers based on their length of service.  

The Governor stated as his reason for veto: “new notice requirements, transfer rights, processes and criteria, and associated penalties established by this bill would impose significant burdens on employers. The arbitrary 25-mile radius for transfers does not take into account substantial regional differences among commute times. In addition, this bill applies to an overly broad list of establishments and creates vague processes and criteria, which will lead to implementation and enforcement challenges.”

SB 725: Successor Grocery Employers 

SB 725 was vetoed by the Governor as “unduly prescriptive and overly burdensome”. The bill would have required a successor grocery employer to provide a dislocated worker a one-week allowance of pay for each year of employment if the successor grocery employer does not hire or retain the eligible grocery worker.

AB 524: The Family Caregiver Anti-Discrimination Act

AB 524 would have added “family caregiver” status as a protected class under the Fair Employment and Housing Act (“FEHA”). The Governor stated he was “concerned about the large burden it will place on employers, particularly small businesses, especially given the ambiguous nature of the language,” as “it is not clear what types of acts would constitute unlawful discrimination and what types of acts would be lawful denials of ‘special accommodations’,” which would “be difficult to implement and lead to costly litigation for employers in California.”

AB 575: Paid Family Leave Benefits: Child in Loco Parentis

AB 575 would have, beginning February 1, 2025, added “an individual’s assumption of responsibilities for a child in loco parentis” to the reasons for which an employee taking leave may receive family temporary disability (PFL) insurance benefits to bond with a minor child within one year (in addition to existing reasons of the child’s birth, and placement of the child in connection with foster care or adoption). The bill also would have removed the restriction that only one family member at a time is allowed to access PFL benefits and prohibited the employer from requiring a worker to take vacation leave before receiving benefits.

The Governor vetoed the bill because it “would create pressure on the DI Trust Fund’s solvency and adequacy resulting in higher disability contributions paid by employees… [and] contains implementation costs not accounted for in the annual budget process.”

AB 1356: Mass Layoff Notifications 

AB 1356 would have amended California’s Worker Adjustment and Retraining Act (Cal-WARN) to expand its application beyond industrial or commercial facilities to all places of employment that have employed 75 or more persons in the preceding 12 months, and included non-temporary employees of labor contractors. The bill would also have increased the notice period for employees from 60 to 75 days prior to initiating a mass layoff, and revise the definition of “mass layoff” to include employees “reporting to” to those at a covered establishment. The bill would also have prohibited employers from conditioning severance payments in a mass layoff situation on the employee assenting to a general release, waiver of claims, or non-disparagement or nondisclosure agreement, unless additional consideration for those terms is provided and clearly stated. In his veto message, the Governor: “urge[d] the author to work with my Administration to develop solutions that may better address the problem, while fulfilling the objectives of Cal/WARN.”

SB 799:  Striking Workers’ Unemployment Benefit Eligibility 

SB 799 would have made striking workers eligible for unemployment benefits after two weeks of leaving work due to a trade dispute (other than a lockout). In his September 30 veto message the Governor said: “[a]ny expansion of eligibility for UI benefits could increase California’s outstanding federal UI debt projected to be nearly $20 billion by the end of the year and could jeopardize California’s Benefit Cost Ratio add-on waiver application, significantly increasing taxes on employers….Now is not the time to increase costs or incur this sizable debt.”

Workplace Solutions

We welcome you to attend our November 2, 2023, webinar regarding these new laws, and the new compliance obligations they create for employers. Among other things, we’ll discuss necessary updates to paid sick leave policies and practices, the need to revise or create workplace prevention plans, the new pay rate requirements for health care workers, and more. Please visit our website to register for the free webinar.

And, of course, stick with us here at Cal Peculiarities, and you can also check out our Policy Matters podcast and newsletter for regular check-ins on California (and national) policy and legislative updates.

Edited by Cathy Feldman and Coby Turner

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