Employers – Are You Ready for 2024?
By James McDade
With the new year, comes new laws. Below is a brief summary of some of the changes taking place effective in 2024. Employers are encouraged to consult with experienced legal counsel to determine which laws apply to them and the best way to implement them in their workplace.
SB 616 amends the Healthy Workplaces, Healthy Families Act of 2014 found starting at California Labor Code §245 – aka Paid Sick Leave. Paid sick leave applies to all full-time, part-time and temporary employees (including owners, officers, directors, and members of a corporation or limited liability company and working members of partnerships, if and as required by law). Currently, employees must receive at least 3 days (but not less than 24 hours) of paid sick leave each year. Starting January 1, 2024, employees must receive at least 5 days (but no less than 40 hours) of paid sick leave each year. As with the current version of the law, employees may receive sick time either in a lump sum at the beginning of each year or at an accrual rate of no less than one hour of sick leave for every 30 hours of work. In addition to the annual increase in Paid Sick Leave, the amount of accrual and carry-over from year to year increases as well – employees must be allowed to accrue at least 10 days (but no less than 80 hours) of sick leave a year, and the employee must be allowed to roll-over at least that amount in unused sick leave each year.
Per SB 616 and the DLSE FAQ, “5 days” means the number of hours normally worked in 5 days. Hence, employees who work less than 8 hours a day should get a minimum of 40 hours of sick pay. And those employees who normally work more than 8 hours a day should be given 5 times their daily hours, e.g., 50 hours if they are working 10 hour days for 5 days a week. If they work 10 hours a day for 3 days a week, they should get at least 40 hours of sick leave. Hence, the employee never receives less than 40 hours of sick leave.
There are rules for when new employees must be allowed to use sick leave, how much sick leave must be accrued each year, and how much unused sick leave must be allowed to roll over from year to year. You must pay sick leave using the correct formula found in Labor Code §246(l), which will not be the normal hourly wage rate if the employee receives extra pay or is not paid by the hour. Per DLSE Opinion Letter 2016.10.11, the exempt employee calculation formula under Labor Code §246 (l) (3), only applies to salaried, exempt administrative, executive, and professional employees. Read the Labor Code provisions and the FAQs on sick leave at the DIR website for all the details.
The available sick leave must appear on the employee’s paystub or on a separate sheet included with the paycheck. There is also a required poster that must be posted on the employee bulletin board, and employers must also use an updated wage rate Notice to Employees (DLSE NTE).
Employers should take the following action prior to January 1, 2024:
1. Amend your Employee Handbook or at least provide a separate statement amending your sick leave policy to comply with the new accrual rates.
2. Make sure that beginning January 1, 2024, your payroll system accounts for the new accrual rates, even if the employee is in the middle of a sick leave year and even if you have not yet modified your sick leave policy.
3. Make sure that beginning January 1, 2024, the proper sick leave amount appears on the employees’ paystubs as required by Labor Code §246(i).
4. Obtain and post the updated sick leave poster.
Of course there are penalties if you fail to comply with the paid sick leave law. You must also check to see if the county and city where your employees work have a local sick leave law that you must also follow. The California Chamber of Commerce website, HR California, has a “Local Ordinances Wizard” under the “Forms & Tools” tab to help you identify local ordinances such as minimum wage, sick leave, etc.
Reproductive Loss Leave
SB 848 adds Government Code §12945.6 which requires employers with 5 or more employees to provide at least 5 days of unpaid time off following a “reproductive loss event.” A “reproductive loss event” means a failed adoption, failed surrogacy, miscarriage, stillbirth, or an unsuccessful assisted reproduction. The employer must allow the employee to take reproductive loss leave in nonconsecutive days. The employee must be allowed, but is not required, to use paid time off, such as sick leave and vacation, etc., during the leave. This is a stand-alone leave which cannot be combined with FMLA, CFRA, or PDL. Reproductive loss leave must be completed within three months of the reproductive loss event, except if, prior to or immediately following a reproductive loss event, an employee is on or chooses to go on leave from work under any leave entitlement under a state or federal law (such as FMLA, CFRA, PDL, etc.). In that case, the employee must complete their reproductive loss leave within three months of the end date of the entitled leave. The employer must maintain the confidentiality of the employee and any information provided to the employer related to the request and use of reproductive loss leave, making disclosure only to internal personnel or counsel, as necessary, or as required by law. Employers should change their sick leave policy to add reproductive loss leave as a reason for using sick leave.
Cannabis Use & Testing
In 2022, AB 2188 was passed and it becomes effective January 1, 2024. It amends Government Code §12954 to prohibit employers from taking any adverse action against a job applicant or employee for using cannabis off the job and away from the workplace. In addition, employers are no longer allowed to use any drug test which would test for nonpsychoactive cannabis metabolites, meaning tests that show prior cannabis use. Employers can only use a drug test that screens for psychoactive cannabis metabolites, meaning tests that show current possible impairment. Of course employers must follow all other right of privacy laws which may or may not allow the employer to drug test applicants and/or employees.
SB 700 amends Government Code §12954 further to make it unlawful for an employer to request information from an applicant for employment relating to the applicant’s prior use of cannabis. In addition, the employer cannot consider or inquire about a person’s prior cannabis use obtained from the person’s criminal history. There are very limited exceptions to these rules. One exception is for “employees in the building and construction trades.” SB 700 changed the wording of the exception to read, “This subdivision (which used to be “section”) does not apply to an employee in the building and construction trades.” It is hard to say if SB 700 is attempting to expand or contract which Government Code §12954 provisions apply. In addition, there is no definition to what “employees in the building and construction trades” means. Hence it might be safer to treat office employees who are not performing safety sensitive work as if they were not “in the building and construction trade.” Seek legal counsel if your hiring and employment practices would potentially violate this law.
California General Minimum Wage Increases to $16.00 Per Hour
The minimum wage rate is now indexed so that it can be increased each year up to 3.5 percent (rounded to the nearest 10 cents) for inflation as measured by the national Consumer Price Index. On July 31, 2023, the California Department of Finance Director, Joe Stephenshaw, announced that beginning January 1, 2024, California’s minimum wage will increase from $15.50 per hour to $16.00 per hour for all employers, regardless of size.
The rise in minimum wage will affect such things as the following, which is only a partial listing of items linked to minimum wage:
- Overtime rates.
- Minimum monthly salary required to meet the California overtime exemptions. (The monthly minimum salary for most exemptions must be at least 2 times the state minimum wage x 40 hours a week x 52 weeks divided by 12 months. Round up and give a higher salary to be safe.) Seek legal counsel to determine the federal and state minimum salary or other pay levels for overtime exemptions.
- Split shift premium pay, i.e., the 1 hour of extra pay which must be given if an employee’s shift is divided by a period of no work longer than a normal meal period.
- Tools and equipment, i.e., the requirement of the employer to pay for all hand tools unless the employee earns twice minimum wage.
- Draws against commission (which must be equal to minimum wage and any overtime due unless the employee is exempt from minimum wage and overtime).
- Meal and lodging credit towards minimum wage.
- Wage rate for nonproduction time for piece rate workers and non-exempt commission employees and other non-exempt employees who are not paid strictly by the hour.
In addition, many counties and cities have passed their own minimum wage rate ordinances, which may be higher than the state minimum wage rate. Be sure to check the county and city ordinances where your employees work to make sure you are in compliance. The California Chamber of Commerce website, HR California, has a “Local Ordinances Wizard” under the “Forms & Tools” tab to help you identify local ordinances such as minimum wage, sick leave, etc.
Minimum Wage for Fast Food Franchises
AB 1228 adds sections 1474, 1475, and 1476 to the Labor Code. This law creates a “Fast Food Council” which has the power to establish an hourly minimum wage for fast food restaurant employees and to adopt fast food restaurant health, safety, and employment standards. This law applies to limited service restaurants that are part of a “national fast food chain. “National fast food chain” means a set of limited-service restaurants consisting of more than 60 establishments nationally that share a common brand, or that are characterized by standardized options for decor, marketing, packaging, products, and services, and which are primarily engaged in providing food and beverages for immediate consumption on or off premises where patrons generally order or select items and pay before consuming, with limited or no table service. The hourly minimum wage for fast food restaurant employees will be $20 per hour effective April 1, 2024. Thereafter, the Fast Food Council may establish minimum wages for fast food restaurant employees that take effect on an annual basis beginning on January 1, 2025. The hourly minimum wage established by the this law shall constitute the “state minimum wage” for fast food restaurant employees for all purposes under the Labor Code and the Wage Orders of the Industrial Welfare Commission. Hence, for all the items affected by the state minimum wage (including minimum required salary for exempt-salaried employees), this fast food minimum wage will apply even if the general state minimum wage is lower.
Minimum Wage for Health Care Employees
SB 525 adds sections 1182.14 and 1182.15 to the Labor Code. This law requires the minimum wage rate for covered health care employees to be at certain levels depending on the type of covered health care facility the employer is. The minimum wage rates will increase over time starting June 1, 2024. (The health care employee minimum wage rate will increase starting in 2025 for certain county-owned facilities). Follow the state minimum wage until the health care employee minimum wage under Labor Code §1182.14 or §1182.15, as applicable, becomes effective. The law is too intricate to set forth a detailed summary here. Health care providers, including certain physician groups, need to obtain and review the law itself and seek confirmation and clarification from legal counsel, health care associations, and the California Department of Labor Standards Enforcement. Note this this law applies to more than direct patient care givers. Per Labor Code §1182.14 (b) (2), a “covered health care employee” means any of the following: an employee of a health care facility employer who provides patient care, health care services, or services supporting the provision of health care, which includes, but is not limited to, employees performing work in the occupation of a nurse, physician, caregiver, medical resident, intern or fellow, patient care technician, janitor, housekeeping staff person, groundskeeper, guard, clerical worker, nonmanagerial administrative worker, food service worker, gift shop worker, technical and ancillary services worker, medical coding and medical billing personnel, scheduler, call center and warehouse worker, and laundry worker, regardless of formal job title. It also includes certain contracted and subcontracted employees, as defined by the law. The health care employee minimum wage shall constitute the “state minimum wage” for covered health care employees for all purposes under the Labor Code and the Wage Orders of the Industrial Welfare Commission. Hence, for all the items affected by the state minimum wage (including the minimum required salary for exempt-salaried employees), the health care employee minimum wage will apply even if the general state minimum wage is lower. Note that per Labor Code §1182.14 (g), the formula for calculating the minimum required salary for an exempt-salaried employee is different than normal. Labor Code §1182.15 looks similar to §1182.14 but applies to certain licensed skilled nursing facilities that are not covered by Labor Code §1182.14.
Continued Phase-In of Overtime for Agricultural Workers
Pursuant to the “Phase-In Overtime for Agricultural Workers Act of 2016,” (Labor Code §857, et al.) the hours worked by agricultural employees before overtime applies has been reduced each year. Since 2022, daily overtime begins after 8 hours and weekly overtime begins after 40 hours for employers with 25 or more employees. Employers with less than 25 employees will have overtime phase-in as follows:
Year Daily Overtime Begins After: Weekly Overtime Begins After:
2024 8.5 hours 45 hours
2025 8 hours 40 hours
Be careful. Notice that the maximum weekly hours before overtime applies is less than six times the daily limit. Six times 8.5, for example, is 51; but the maximum weekly hours before overtime applies is 45 starting in 2024. Visit the DIR for information on how to count the number of employees you have, especially if the number fluctuates above and below 25 throughout the year.
The law also eliminated the sentence in Labor Code §554 which exempted agricultural workers from the requirements of Labor Code §500, et. seq. Hence, as of January 1, 2017, agricultural employees are no longer exempt from the requirements regarding wages, rest and meal breaks, and other working conditions found in Chapter 1 of the Labor Code commencing with Labor Code Section §500. For example, pursuant to Labor Code §512, a second meal period will be required for those who work more than 10 hours in a day. In addition, for employers with 26 or more employees, all employees subject to Wage Order 14 will also be entitled to double time for all work above 12 hours in a day beginning January 1, 2022. This will be delayed for employers with 25 or less employees until January 1, 2025.
New I-9 Form and Other Posters and Notices
Visit the U.S. Citizenship and Immigration Services website to obtain the newest I-9 Form with an expiration date of 07-31-2026. Employers must use this new form. Also obtain the latest employment posters and notices. The California Chamber of Commerce (HR California) is a good one-stop shop for most posters and notices. Update your employee bulletin board and new employee onboarding packet with these updated posters and notices.
Workplace Violence Prevention Program
SB 553 amends Labor Code §6401.7 to require all employers to add a written workplace violence prevention program to its existing injury and illness prevention program (IIPP) by July 1, 2024. The required elements of the workplace violence prevention program are contained in Labor Code §6401.9. The written plan may be incorporated as a stand-alone section in the IIPP required by General Industry Safety Order (GISO) §3203 or maintained as a separate document. However, places of employment where less than 10 employees are working at any given time and which are not accessible to the public do not have to add the written workplace violence prevention component to its IIPP if the workplace has an effective IIPP. Health care facilities and health care employers that comply with the workplace violence prevention provisions under GISO §3342 do not have to also follow Labor Code §6401.9. Employees who are teleworking from a location of the employee’s choice, which is not under the control of the employer, is also exempt. Cal/OSHA is directed to prepare model language that employers can use for its workplace prevention program. Employers Amy visit the Cal/OSHA website for model language; but note that such model language has not been posted yet.
COVID-19 Prevention Program
Do not forget that all employers must have a COVID-19 Prevention Program that meets the requirements of GISO §3205, et seq. This COVID-19 Prevention Program requirement will apply until February 3, 2025. However, under the IIPP requirements of GISO §3203, some form of illness prevention procedures should be incorporated into the IIPP now and after February 3, 2025. Employers should read the regulations and statutes for all details. Cal/OSHA has a model COVID-19 Prevention Program on its website for employers to use.
Sexual Harassment Prevention Training
Don’t forget to have your employees, including minors, complete sexual harassment training as required by Government Code §12950.1. Training must occur every two years, and within a certain amount of time for new hires and employees who become supervisors. Read the law for the training deadlines and other requirements. This law applies to all employers with 5 or more employees. However, it would behoove all employers of every size to conduct harassment prevention training, especially since the prohibition against harassment applies to all businesses with one or more employees. Free on-line training modules for supervisors and non-supervisory employees can be found at the California Civil Rights Department website. Training can also be obtained from the California Chamber of Commerce and other sources. Make sure the training meets Government Code §12950.1 requirements. If you are an employer with 5 or more employees who also employs minors (including children of the employer), then you must train HR managers and supervisors on their obligations to recognize and report child abuse as required by Penal Code §11166, §11166.5, and §11165.7.