For small business owners, labor laws can be a constant source of stress. State and federal labor regulations and employment laws are tough to implement and continually enforce, and their ever-changing nature makes it hard to keep up.
If you're a business owner in California, you may feel particularly overwhelmed by the slew of new laws that took effect in the new year.
To help you stay in compliance, here's a breakdown of California's top labor laws for 2023–new and old alike.
Updates to California Labor Laws in 2023
Last year, the state legislature passed multiple new labor laws and updated others. All of these changes became effective on Jan. 1.
Here are the biggest new laws that apply to the majority of California employers and business owners.
Minimum Wage Increase
The state minimum wage increase is one of the most famous of the state's new labor laws.
Now, all employees are entitled to a minimum of $15.50 per hour, regardless of a business's size. This law comes as a direct result of the push for better living wages across the state.
Before implementing pay increases to account for the new California minimum wage, be sure to check the minimum wage in your area—You have to pay the higher of the two.
For example, these California cities have higher minimum wages than the state's:
- Los Angeles: $16.04
- Pasadena: $16.11
- San Diego: $16.30
- San Francisco: $16.99
- Santa Clara: $17.20
Sick Leave Expansion
The California Family Rights Act or CFRA said employees can take 12 weeks of unpaid leave (and have their jobs protected) to care for themselves or family members–but now, with the passage of Bill AB 1041–that includes any "designated person."
So who, exactly, counts as a designated person?
Essentially, it's any individual related by blood or whose "association with the employee is the equivalent of a family relationship."
This may include:
- Immediate family members
- A domestic partner
- A guardian or adoptive parent
- A parent-in-law
This bill also allows employers to cap the number of designated people to one per year.
Although the CFRA leave is unpaid, employees may be eligible to receive income through their paid sick leave or sick days or other PTO.
Employers are also obliged to maintain the employee's health benefits during the leave. To be eligible for CFRA leave, employees must meet these requirements:
- Worked for their employer for a minimum of 12 months prior to the start of the leave
- Worked at least 1,250 hours during the previous 12-month period
This benefits even part-time employees who may also be eligible for CFRA leave if they meet the hourly requirement.
Employers must notify employees of their CFRA rights and maintain accurate records of employee leave, so be sure to update your business's guides and systems as soon as you can.
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Five Days of Bereavement Leave
Under CAL law AB 1949, workers employed for at least 30 days are entitled to receive up to 5 days of bereavement leave for a family member. This leave is unpaid, but a team member's job must be protected while they're out.
State-Run Retirement Expansion
Bill SB 1126 amends an existing law that requires employers to allow certain employees to save part of their pay in a retirement program.
The new bill expands the list of eligible employers to all with at least one retirement-age employee.
Pay Data Reporting and Pay Transparency
Under SB 1162, employers with a minimum of 100 employees must submit a pay data report to the state's Civil Rights Department. This is true even for employers who have to submit an EEO-1 Report (which covers a lot of the same info) to the federal government.
The state report is due annually by the second week in May. Reporting requirements include the average hourly rates for each job category by ethnicity, race, and sex.
This law also says that employers with 15 or more team members have to disclose pay scales in their job postings.
Meanwhile, employers of all sizes have to let candidates and current team members know the pay scales for their positions if they ask.
Agricultural Employee Overtime
As of 2023, employers in the agricultural industry with 25 or fewer employees must offer overtime pay for those who've worked more than 9 hours in a day or 50 hours in a week.
Businesses with more than 25 employees must provide overtime pay for any time over and above 8 hours in a day or 40 in a week.
Contraceptive Equity Act of 2023
The Contraceptive Equity Act of 2023 is not a part of California labor laws. However, it is an essential amendment to the California Fair Employment and Housing Act, which prohibits employers from discriminating against employees based on their reproductive health decision-making.
Here are some of the provisions you should know about:
- Employers should provide their employees with comprehensive coverage for all FDA-approved contraceptive methods, including birth control pills, IUDs, and emergency contraception. This coverage must be provided without cost-sharing, meaning employees will not have to pay out-of-pocket expenses for contraceptive care.
- Employers cannot discriminate against employees who choose to use contraception, seek sterilization, or obtain an abortion. Doing so would violate both the Contraceptive Equity Act and the Fair Employment and Housing Act.
Employees who think their rights have been violated under the Contraceptive Equity Act can file a complaint with the Department of Fair Employment and Housing.
The department will investigate the complaint and take appropriate action to remedy any violations of the law.
Off-Duty Cannabis Use
The California legislature has recently passed Assembly Bill No. 2188 (AB-2188), which prohibits employers from discriminating against employees for the use of cannabis outside of working hours.
However, employers are still allowed to do drug testing, but they can't fire or demote employees if they find non-psychoactive cannabis metabolites in a drug test unless the employee is impaired at work or uses marijuana on the job. This specific part of the new law goes into effect in Jan. 2024.
Still, it's a key part of the law because these metabolites can remain in a person's body for weeks or even months after cannabis use, which can lead to false positive results on drug tests.
These protections acknowledge that cannabis use is legal in California (and it's no longer considered a criminal act) and that employees shouldn't be punished for exercising their lawful rights.
Protections for Workers during Emergency Conditions
California Senate Bill No. 1044 updated the labor code so that employers can't punish workers for not going to work or leaving work during an emergency if they have a reasonable belief it's not safe.
Employers also can't stop workers from using their mobile devices to get help or check on safety during conditions of disaster.
So what's a disaster or emergency as per this bill? They include:
- Natural disasters or forces
- Criminal acts
A health pandemic isn't considered an emergency under this act.
So, for example, if you run a business in the health care space, and another major pandemic happens, you could take action against employees who decide not to come to work because of that pandemic specifically.
Workers must tell their employers about the emergency that made them leave the worksite or not come in at all. This bill doesn't apply once the emergency is over and there's no more risk.
Additional California Labor Laws
California is largely a pro-worker state, meaning eligible employees are entitled to a range of rights and protections. Here's what you need to know about Cal labor codes.
The state has a number of fair employment practices that prohibit discrimination of any kind against employees in protected classes. This includes any unfair treatment on the basis of race, class, sex, gender, or disability.
Here are some examples of violations of this law:
- Promoting a male sales associate because you feel that men are better suited for leadership roles than women
- Terminating an employee who's closing in on retirement age because you don't think they'll be able to keep up with the younger generation
- Asking a potential female hire if she plans on getting pregnant in the near future
Businesses must also offer equal pay (regardless of gender), give employees access to their personnel files, and permit wage discussions.
Employers in California are required to pay non-exempt employees overtime for all on-the-clock time that exceeds 40 hours each week, all hours exceeding 12 in a single day, and the seventh consecutive workday.
The overtime rate in California is one and one-half times the employee's regular hourly pay.
Employees are also entitled to one meal period of at least 30 minutes per day (two if the employee works over 10 hours a day).
For every 4-hour period of work time, employees must also receive a paid 10-minute break time.
Safety and Workers' Compensation
California employers are required to fix safety hazards, keep an up-to-date safety plan, and hold safety training so working conditions are safe for all team members.
Employees who are injured at work are entitled to workers' compensation–which means businesses have to carry this type of insurance (unless you have no team members!).
If an employee gets injured, workers' comp can protect you from a lawsuit and give them disability benefits, medical care, and supplemental job displacement benefits.
What Is the Longest Shift You Can Legally Work in California?
In California, the length of employee shifts isn't capped. But if an employee works for more than a certain number of hours, they may be entitled to overtime compensation.
Time to Face (Compliance) Reality
Complying with California law is a reality that all small business owners have to face, yet these laws are often in flux.
Arming yourself with knowledge is one of the best ways to ensure that you keep up with the latest requirements. While most of these laws went into effect in early January, it's not too late to make sure you're adhering to them (and it's certainly better than letting them fall off your radar).
So, get in touch with your HR department or administrator for your business, and make sure you're up to date on all the new laws–that way, you can avoid any fines or penalties and save yourself some serious stress.