Welcome to 2023.
New Year,
New You,
New California Employment Laws!
Here is a quick overview of the most significant new laws that went into effect on January 1, 2023. This is not an exhaustive list but one that will apply to most small to medium-sized business owners in California.
PRACTICAL TIP: Make sure your documents reflect that you are implementing changes that are applicable to your business. For example, update your written notice to employees of the terms of their employment to reflect the new hourly rate if you have employees who make minimum wage. Update the language in your employee handbooks to reflect the ability to designate non-family members for CFRA and paid sick leave.
PAY
Minimum Wage Increases/Exempt Pay Increases
The California state minimum wage in 2023 is now $15.50 per hour for all employees, regardless of the employer’s size. However, some cities and counties have even higher local minimum wage requirements. Employers should check the minimum wage requirements for all cities and counties where their employees work.
Some cities with higher minimum wage requirements include Los Angeles, Menlo Park, Oakland, San Francisco and South San Francisco, San Jose, San Diego and Santa Clara.
Why does the minimum wage matter?
- Failure to correctly pay wages, especially paying at least minimum wage, constitutes wage theft in California and could be costly for employers. Employees could potentially recover the following:
- The difference between what the employee received and what they would have received and the minimum wage at the time the employee worked.
- An additional payment of the amount of the minimum wages the employee should have received as liquidated damages.
- Interest on the wages the employee should have received;
- The employee’s attorneys’ fees. This could easily be in the five to six-figure range;
- The costs of prosecuting a lawsuit;
- Civil penalties of $100 for an initial violation or $250 for subsequent violations, per pay period, per employee. For example, a company with 25 employees that pays employees every other week will be subject to $65,000 in penalties for the first violation. A second violation would bump that number up to $162,500 in penalties alone! These numbers double if the company pays employees every week;
- Waiting time penalties.
- A higher minimum wage changes the salary requirement for an employee to be considered an “exempt employee” – meaning that they are exempt from overtime and meal and rest break rules. In addition to meeting the duties test, the employee must also receive a salary of at least twice the minimum wage. That means that employees must now receive an annual salary of at least $64,480. Employees who are paid less than this are automatically not exempt even if they work as managers and perform exempt duties the majority of the time.
Pay Transparency and Updated Reporting Requirements
As of January 1, 2023, employers must provide the pay scale for a position to any job applicant, upon receipt of such a request from the applicant. If an employee requests a pay scale for their position, employers must now also provide the pay scale for the position in which the employee is currently employed.
Employers with 15 or more employees must now also include the pay scale in job postings and must provide the pay scale to any third-party company hired to announce or publish an open position and ensure that they post the pay scale.
Beginning in May 2023, private employers with 100 or more employees must submit a pay data report to the California Civil Rights Department (formerly known as the California Department of Fair Employment and Housing) by the second Wednesday of May each year. The pay data reports must include the median and mean hourly rates for each combination of race, ethnicity and sex within each job category. Employers with multiple establishments are no longer required to submit a consolidated report. Finally, each employer with 100 or more employees hired through labor contractors has a new obligation to produce data on pay, hours worked, race/ethnicity and gender information in a separate report.
COVID-19
Supplemental COVID Paid Sick Leave
California’s Supplemental COVID Paid Sick Leave that was set to expire at the end of 2022 has been extended. Employers with 26 or more employees must provide up to 80 hours of paid sick leave related to COVID19 for various qualifying reasons. Employees are entitled to a total of up to 40 hours of leave for each of 2 categories of leave, for a total of up to 80 hours of leave if the employee was considered a full-time employee or was scheduled to work on average at least 40 hours per week. The two categories of leave are: 1) for any COVID qualifying reason (i.e. quarantine or isolation); and/or 2) for if the employee or a family member tests positive for COVID.
Employers may require employees to get another test 5 days after a positive test, and if that test is positive, another one within no less than 24 hours after the submission of the previous positive test. However, employers must make these tests available to employees at no cost to the employee. If the employee refuses to take an additional test or submit documentation of testing, the employer has no obligation to provide additional supplemental paid sick leave.
The law permits employees to request retroactive payment, which must be made by the payday for the next full pay period after an employer received verbal or written request of paid leave from the employee. This leave is in addition to the regular paid sick leave that employees are already entitled to.
Employers must also update and provide notice to employees on their paystubs of the new amounts of supplemental paid sick leave the employee is entitled to at the end of the first full paid period following 3/29/21. If you have not been doing this, contact your payroll company to add this information to your paystubs going forward and consider issuing revised paystubs for past pay periods.
The good news for employers is that a grant was established for small businesses to obtain reimbursement for Covid-related paid sick leave that employers paid out to employees (California Small Business and Nonprofit COVID-19 Supplemental Paid Sick Leave Relief Grant Program). Grants will be no more than the actual costs incurred, up to $50,000, and will not count as gross income for state tax purposes. To qualify for a grant, a small business or nonprofit must: be either a “C” corporation, “S” corporation, cooperative, limited liability company, partnership, limited partnership, or registered 501(c)(3), 501(c)(6), or 501(c)(19); have begun operations before June 1, 2021, be currently active and operating, have 26-49 employees, provide COVID-19 Supplemental Paid Sick Leave, and provide organizing tax, and filing documents.
California Extends COVID-19 Exposure Notice Requirements
AB 2693 amends and extends the COVID-19 notice requirements until January 1, 2024. Under the amended law, employers may post a notice of exposure to COVID-19 in the worksite for 15 days to alert employees to a potential exposure instead of giving individual notices so long as the employer complies with the following requirements:
- The notice is displayed in areas where workplace rules or regulations for employees are customarily posted, including on any employee portal used for workplace notices.
- The notice is posted within one business day from when the employer is notified of a potential COVID-19 exposure and remains posted for at least 15 calendar days.
- The notice includes (a) the dates on which an employee, or employee of a subcontracted employer, with a confirmed case of COVID-19 was on the worksite premises within the infectious period; (b) the location of the exposures, including the department, floor, building or other area; (c) contact information for employees to receive information regarding COVID-19-related benefits to which the employee may be entitled under applicable federal, state or local laws, as well as anti-retaliation and anti-discrimination protections of the employee; and (d) contact information for employees to receive the cleaning and disinfection plan the employer is implementing.
Employers must also keep a log of the dates in which the notice(s) were posted at each worksite and must allow the Labor Commissioner to access such records upon request.
LEAVE LAWS
Bereavement Leave Required for Employers with 5 or More Employees
Effective January 1, 2023, AB 1949 made changes to Sections 12945.21 and 19859.3 and added Section 12945.7 to the Government Code, making bereavement leave a protected leave of absence in California. Employers with five or more employees must now allow employees to take up to five days of unpaid bereavement leave upon the death of the employee’s family member, defined as a spouse, child, parent, sibling, grandparent, grandchild, domestic partner or partner-in-law. To be eligible for bereavement leave, the employee must have been employed by the employer for at least 30 days prior to starting the leave, and the leave must be completed within three months of the family member’s death. Employers may require documentation to support the leave, such as a death certificate, a published obituary or other document verifying the death.
California Family Rights Act (CFRA) Leave Expanded
Under the California Family Rights Act (CFRA), employers with five or more employees must provide eligible employees with up to 12 workweeks of unpaid family care and/or medical leave in any 12-month period.
Effective January 1, 2023, the class of people for whom an employee may take family care leave under CFRA is expanded to include the care of a “designated person.” A designated person is defined as any individual related by blood or whose association with the employee is the equivalent of a family relationship. An employee does not have to pre-identify his or her designated person and may identify the person at the time of the leave request. However, the employer may limit the employee to one designated person per 12-month period.
AB 1041 similarly amended California’s paid sick leave law, with Labor Code Section 245.5 now allowing sick leave to be used for a “designated person” subject to the same terms and conditions that now apply to CFRA.
DISCRIMINATION
Discrimination based on Reproductive Health Decision-Making Prohibited
Effective January 1, 2023, SB 523 made it unlawful for an employer to require applicants or employees to disclose information relating to reproductive health decision-making, or to discriminate against an applicant or an employee based on reproductive health decision-making.
“Reproductive health decision-making” includes but is not limited to “a decision to use or access a particular drug, device, product, or medical service for reproductive health.” Reproductive decision-making also may be construed to fall under the definition of “sex” in the Fair Employment and Housing Act.
SB 523 amended a number of code provisions, including the California Government Code, to require most health benefit plans or contracts to provide coverage for contraceptives, vasectomies and related services consistent with various requirements of the Health and Safety Code and Insurance Code beginning on January 1, 2024.
MISCELLANEOUS
No Retaliation for Employees’ Refusal to Work Under Emergency Conditions
Effective January 1, 2023, SB 1044 added Section 1139 to the Labor Code, prohibiting employers from taking or threatening adverse action against an employee who refuses to report to or leaves a workplace due to his or her reasonable belief that the workplace is unsafe due to an “emergency condition.”
An employee’s belief is “reasonable” if a reasonable person would conclude that there is a real danger of death or serious injury if that person enters or remains on the premises. An emergency condition is defined as either of the following:
- Conditions of disaster or extreme peril to the safety of persons or property at the workplace or work site caused by natural forces or a criminal act.
- An order to evacuate a workplace, a work site, a worker’s home or the school of the worker’s child, due to a natural disaster or a criminal act.
SB 1044 also made it unlawful for employers to prevent employees from using their mobile devices to seek emergency assistance, assess the safety of a situation, or communicate with a person to verify their safety in such an emergency condition.
However, this law does not apply to a number of essential first-responder and emergency jobs such as disaster service workers, healthcare facility employees or contractors providing direct patient care, licensed residential care facility employees, and employees of companies that provide utility, communications, energy or roadside assistance when the employees are engaged in aiding in emergency responses. See Labor Code Section 1139(b)(1) for the complete list of exemptions.
CalSavers Expanded to Employers with At Least 1 Employee
Effective January 1, 2023, SB1126 requires eligible employers with 5 or more employees and that do not offer a retirement savings program to have a payroll deposit savings arrangement (such as an IRA) to allow employee participation in the program within 36 months after the board opens the program for enrollment.
Additionally, the bill expands California’s CalSavers Retirement Savings Program by requiring employers with at least one employee to register for CalSavers by December 31, 2025, if the employer does not sponsor a retirement plan for its employees, or register as exempt if a retirement plan is provided. Any employer may also choose to have a payroll deposit retirement savings arrangement (such as an IRA) to allow employee participation in the program. However, SB 1126 excludes from the definition of “eligible employer” any sole proprietorships, self-employed individuals, or other business entities that do not employ any individuals other than the owners of the business.
PREVIEW OF 2024
Prohibition Against Off-Duty Cannabis Discrimination
Although it does not become effective until January 1, 2024, AB 2188 added Section 12954 to the Government Code to make it unlawful for an employer to discriminate against a person in hiring, termination, or any term or condition of employment, or otherwise penalize a person, based upon either (1) the person’s use of cannabis off the job and away from the workplace; or (2) an employer-required drug screening test that found nonpsychoactive cannabis metabolites in the person’s hair, blood, urine or other bodily fluids. However, the law does not prohibit discrimination based on a test that does not screen for nonpsychoactive cannabis metabolites. The new law will also exempt certain applications and employees in the building and construction trades and those requiring federal background investigation or clearance.
Importantly, the law does not permit or excuse an employee’s possession, use or impairment by cannabis while on the job, and it maintains employers’ rights and obligations in keeping the workplace drug- and alcohol-free. Since the law does not take effect for another year, employers have some time to prepare for these changes in how they must treat employees and applicants who use cannabis off the job and away from the workplace.