2023 New Employment Laws

14 minute read

The 2022 California Legislative year resulted in a number of new laws affecting California employer practices.  This Alert summarizes key new laws that have either recently taken effect or will go into effect on January 1, 2023, as well as recent court decisions impacting wage and hour practices and requirements.  Companies should work with legal counsel to assess the best approach for complying with these new developments.

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Part 1: FEHA Expansion and Updated Leave Laws

2023 Laws Enacted Related to FEHA

Expansion of Protected Categories under FEHA

AB 2188: Government Code § 12954 (amended)

Beginning January 1, 2024, employers will be prohibited from discriminating against applicants and employees based on their off-duty use of cannabis away from the workplace.  The new law also prohibits discrimination based on an employer-required drug screening test that detects nonpsychoactive cannabis metabolites in their hair, blood, urine, or other bodily fluids.  

According to the Legislature’s findings, once the chemical in cannabis that causes impairment is metabolized, it’s stored in the body as nonpsychoactive cannabis metabolites.  Based on the Legislature’s findings, such metabolites indicate only that the individual has consumed cannabis in the last few weeks but do not cause impairment.

The bill contains exceptions for employees in the building and construction trades and applicants and employees hired for positions that require a federal government background investigation or security clearance.

The bill also does not preempt any state or federal law requiring applicants or employees to be tested for controlled substances or the manner in which they are tested to receive federal funding or federal licensing-benefits, or to enter into a federal contract.

Employer Pro Tips:

  • Review Drug Screening Practices: Employers should review their drug testing practices to ensure such tests do not detect the presence of nonpsychoactive cannabis metabolites.  If so, alternative tests that detect only impairment should be used.
  • Update Drug Screening Policy and/or Drug and Alcohol Use Policy:  Company policies should make clear that employees will suffer no adverse employment action based on their off-duty use of cannabis away from work and that the Company’s drug screening practices with respect to cannabis are used solely to detect impairment.
  • Revise EEO Policies: Company EEO and anti-discrimination, harassment, and retaliation policies should be revised to include the additional protected categories. 
  • Train Your Staff: Ensure that HR employees are aware of the new limitations on drug testing with respect to cannabis, as well as the new anti-discrimination requirements. 

SB 523 (“Contraceptives Equity Act”): Government Code § § 12920, 12921, 12926, 12940, 12993

Beginning January 1, 2023, employers will be prohibited from discriminating against an applicant or an employee based on their reproductive health decisionmaking— defined as “a decision to use or access a particular drug, device, product, or medical service for reproductive health.”

The law makes clear that discrimination based on “sex” also includes reproductive health decisionmaking.

Employers will also be prohibited from requiring applicants or employees to disclose information relating to their reproductive health decisionmaking.


2023 Laws Enacted Related to Expansion of Leave

Expansion of CFRA and Paid Sick Leave to Cover “Designated Person”

AB 1041: Government Code § 12945.2 (amended) & Labor Code § 245.5 (amended)

AB 1041 expands the class of people for whom an employee under the California Family Rights Act (CFRA) may take leave to care for to include any “Designated Person,” which is defined as any individual related by blood or whose association with the employee is the equivalent of a family relationship. The designated person may be identified by the employee at the time the employee requests leave.

AB 1041 also expands the definition of “family member” under California’s paid sick leave law (the Healthy Workplaces, Healthy Families Act of 2014) to include any “designated person”, which is defined as any individual identified by an employee at the time a request for paid sick leave is made.

Under each amended law, an employer may limit an employee to one designated person per 12-month period.

Employer Pro Tips:

  • Update Internal Leave Policies: Employers should update their CFRA and sick leave policies to ensure that leave and sick time off is available for employees caring for designated persons. Employers should also clarify, if desired, that a designated person is limited to 1 person per 12-month period.

Expansion of CFRA to Offer Bereavement Leave

AB 1949: Government Code § 12945.7 (added); Government Code §§ 12945.21, 19859.3 (amended)

AB 1949 amends California’s Family Rights Act to require private employers with 5+ employees to provide eligible employees with up to 5 days bereavement leave within 3 months of the death of the employee’s spouse, child, parent, sibling, grandparent, grandchild, domestic partner, or parent-in-law. The 5 days need not be taken consecutively.

Eligible employees are those who have been employed at least 30 days prior to the leave request.

In the absence of a pre-existing policy providing for paid leave, leave may be unpaid, provided that employers will be required to allow concurrent use of other forms of paid leave, if available, including paid sick leave or vacation.

Employers cannot retaliate or discriminate on the basis of an employee exercising their right to take bereavement leave and must maintain the confidentiality of any employee requesting to take bereavement leave. 

Employer Pro Tips:

  • Review and Update Internal Leave Policies: Employers should review their leave polices to ensure that employees are afforded 5 days of bereavement leave (which can be unpaid) in the event of the death of an employee’s close relative.  Employers should update their policies to make clear that employees will suffer no adverse employment action based on their decision to utilize the leave provided to them under the law.
  • Train Your Staff: Prepare employees on how to promptly report any complaints of discrimination or retaliation related to exercising their rights to leave. Ensure that appropriate personnel understand (i) how to promptly respond to such complaints, and (ii) the requirements of maintaining confidentiality as it relates to leave requests.

New Protections in the Event of an Emergency Condition

SB 1044: Labor Code Chapter 11 of Part 3 of Division 2 (added)

SB 1044 prohibits employers from taking or threatening to take an adverse action against employees who, in the event of an “emergency condition,” refuse to come into work or leave work due to a reasonable belief that the worksite is unsafe. 

“Emergency condition” is defined to mean a disaster or extreme peril to the safety of person or property at the workplace caused by natural forces or a crime, or an evacuation order due to a natural disaster or crime at the workplace, an employee’s home, or their child’s school. It specifically excludes health pandemics.

In the event of an “emergency condition,” employers cannot prevent employees from accessing their mobile devices or other communication devices to seek emergency assistance, assess the safety of the situation, or communicate with a person to verify their safety.

Employer Pro Tips:

  • Train Your Staff: Train managers as part of emergency preparedness to understand and support employee rights during an emergency.
  • Update Emergency Policies: Update existing emergency protocols and procedures to reflect available rights of employees in the event of an emergency condition.

Extension of COVID-19 Supplemental Sick Leave

AB 152: Government Code Article 9.1 of Chapter 1.6 Part 2 of Division 3 of Title 2 (added and repealed); Labor Code §§ 248.6, 248.7 (amended)

AB 152 extends the existing paid time off available under COVID-19 supplemental paid sick leave through December 31, 2022.

The total maximum amount of COVID-19 supplemental paid sick leave a covered employee is entitled is 80 hours for the period between January 1, 2022, and December 31, 2022.

After an employee tests positive for COVID-19, an employer may require that the employee submit to a diagnostic test on or after the first positive test, and, if that test is positive, employer can require a second diagnostic test within no less than 24 hours (at the cost of employer).

Employers have no obligation to provide COVID-19 supplemental paid sick leave if an employee refuses to provide documentation of a positive test result for the employee or employee’s family member, or if the employee refuses to submit to diagnostic tests.

San Francisco Proposition G (“Public Health Emergency Leave Ordinance”)

Effective October 1, 2022, employers with 100+ employees must provide up to 80 hours of paid leave during a public health emergency (as declared by the City of San Francisco or California’s health officer or when the Bay Area Air Quality Management District issues a Spare the Air Alert) to each employee who performs work in San Francisco.

The paid leave is in addition to any other PTO to which the employee is entitled, provided that it can be offset by time taken under COVID-19 Supplemental Sick Leave after October 1, 2022. The ordinance’s requirements may be expressly waived in clear and ambiguous language in a collective bargaining agreement. Paid leave does not carry-over.

Employees may use this leave when they are unable to work due to: (1) recommendations or requirements of a federal, state, or local health order related to the Public Health Emergency; (2) the employee or the family member for whom they are caring has been advised by a Healthcare Provider to isolate or quarantine; (3) the employee or family member for whom they are caring is experiencing symptoms or has been diagnosed with a disease associated with the Public Health Emergency; (4) the employee is caring for a family member whose school or place of care has been closed due to the Public Health Emergency; or (5) an Air Quality Emergency if the employee is a member of a vulnerable population and primarily works outdoors.

Additional FAQs are available here.

Employer Pro Tips:

  • Update COVID-19 Policies and Continue Implementation: To the extent employers have written policies on COVID-19 Supplemental Sick Leave they should extend the deadline on such policy through December 31, 2022, and if desired, implement requirements for employees to submit to diagnostic testing to take such time off.
  • Post Notice on Public Health Emergency Leave Ordinance: Employers with employees in San Francisco must post or otherwise make a notice on the Public Health Emergency Leave Ordinance easily available to employees, which can include via electronic communication, and/or posting in a conspicuous place in an employer’s web-based or app-based platform. Every employer shall provide the notice in English, Spanish, Chinese, and any language spoken by at least 5% of the employees who are, or prior to the Public Health Emergency were, at the workplace or job site.

Part 2: Pay Transparency

  • Click here for updated information on California’s Pay Transparency requirements
  • Watch this Webinar: Pay Transparency is Here – Are you Ready?

Part 3: Wage & Hour

  • Minimum Wage increases:
    • Starting January 1, 2023, California’s minimum wage will increase to $15.50 per hour, for all employers regardless of size, based on a cost-of-living provision in the state minimum wage law.
    • More than 30 California cities and counties have minimum wages that already exceed $15.50 per hour, and some of those are set to increase in 2023.
    • The white-collar exemptions will remain pegged to the state minimum wage, and not the local minimum wages. The salary to qualify for the administrative, executive, and professional exemptions from California’s overtime laws will increase to $64,480 on January 1, 2023 for all sized employers (there will no longer be a lower threshold for small employers). The salary to qualify for the computer professional exemption will increase to $112,065.20 annually and $53.80 per hour.
    • There is a trend toward industry-specific minimum wages. For example, the City of Los Angeles has a minimum wage of $17.64 for employees of hotels with 150 or more rooms. In September 2022, the governor signed the FAST Recovery Act, which creates a council to address working conditions and wages of workers at fast food chains with 100 or more establishments. And efforts are underway in several cities, particularly in Southern California, to raise the minimum wage for healthcare workers to $25 per hour. 
  • Arbitration Developments:  
    • Viking River Cruises, Inc. v. Moriana (2022) 142 S.Ct. 1906
      • This case held that employers can compel arbitration of an employee’s individual claims brought under the Private Attorneys General Act (also known as PAGA). Before this decision, employers could not compel PAGA claims into arbitration. The Court also held that compelling an employee’s individual claims into arbitration would deprive that employee of standing to bring a representative claim (i.e., a claim on behalf of other workers) under PAGA. A more detailed analysis is here, and we expect further developments from the courts and the legislature regarding arbitration of such claims.
    • Payment of arbitration fees
      • Recent developments highlight the requirement to pay arbitration fees timely. SB 762 became law in 2022 and required payment of arbitration fees “upon receipt”, with failure to pay resulting in a waiver of the right to compel arbitration. A more detailed analysis is here. Gallo v. Wood Ranch USA, Inc., (2022) 81 Cal.App 5th 621, held that this requirement is not preempted by the Federal Arbitration Act.
    • Mendoza v. Trans Valley Transport (2022) 75 Cal. App.5th 748.
      • This case underscores the importance of having a standalone arbitration agreement signed by both the employer and employee. In Mendoza, a court refused to find an enforceable agreement to arbitrate where the agreement merely appeared in a handbook, even though the employee had signed a handbook acknowledgement.
  • Naranjo v. Spectrum Security Services, Inc. (2022) 13 Cal.5th 93 (Penalties for Meal and Rest Break Violations)
    • This California Supreme Court in Naranjo clarified that meal and rest break violations trigger waiting time and wage statement penalties. This case highlights the importance of compliant break policies, as the derivative penalties can be significantly higher than the penalties for the violations.
  • Camp v. Home Depot U.S.A., Inc., Case No. H049033, 2022 WL 13874360 (Cal. Ct. App. 2022)(Rounding Time Entries)
    • California’s Sixth Circuit Court of Appeals in October further chipped away at the practice of rounding of employee time entries. In Camp, the court held that a facially neutral rounding policy was not a complete defense to unpaid wage claims where the employer could, and did, track the actual time employees worked down to the minute. This follows the ruling last year in Donohue v. AMN Services, LLC, 11 Cal. 5th 58 (2021), which held that employers could not round meal period time entries. In light of these cases, employers should consider tracking time entries exactly rather than rounding.
  • AB 984 (Digital License Plates)
    • This law permits the use of digital license plates, which have built-in GPS functionality and can display messages and be used to track fleets.
    • If employers use digital plates to monitor employees, the tracking must be “strictly necessary” to the employee’s duties and only done during work hours. The company must provide a detailed notice regarding issues such as how the data will be used, and the time and frequency of the monitoring, among many other things.
    • Penalties for non-compliance are $250 per each employee for the initial violation. For subsequent violations, penalties are $1,000 for each employee, per day.

Part 4: California Privacy Rights Act

  • The California Privacy Rights and Enforcement Act (CPRA), which amends the prior California Consumer Privacy Act (CCPA), takes effect on January 1, 2023. Unless the legislature or Gov. Newsom acts prior to January 1, 2023, the CPRA eliminates employer exemptions in the CCPA applicable to employee/applicant data and expands on several areas of the CCPA, and creates several privacy-related obligations for employers, including: (1) notifying applicants, employees and contractors about the categories of personal information that is or may be collected by the employer, and describing the purpose(s) for the collection and disclosure of such information, and providing information regarding the sharing and retention of personal information, (2) creating a category of “special information” that is entitled to additional protections, (3) employees’ rights to access or restrict the use or disclosure of certain categories of personal information, (4) employees’ rights to correct or delete personal information (subject to statutory exemptions that may apply), and (5) employees’ rights to request the personal information that has been collected about them during the preceding 12 months.
  • To prepare for CPRA compliance, employers should, among other things, update their employee/applicant privacy notices, assess the various databases and systems where they store employee and applicant data, categorize the various ways in which they use this data (particularly where they might work with a vendor to store or analyze this data), and develop plans for how they would promptly address any employee requests to access, correct, and/or delete data.
  • For additional guidance on steps employers should take to prepare for CPRA compliance, please click here for a client alert on California’s Privacy Rights Act: 10 Things Companies Should do.