Ever Include Non-Compete Language in an Employment Agreement?

If you required an employee to sign a contract with a non-compete clause, you may be required to give notice to current and former employees.

Gov. Newsom signed Assembly Bill (AB) 1076 last fall, which was codified at Bus. & Prof. Code § 16600.1, and requires employers, prior to February 14, 2024, to notify all current employees and former employees employed after January 1, 2022, whose employment contracts contain a noncompete clause that does not satisfy one of the limited exceptions, that the noncompete clause or noncompete agreement is void.

The notice must be in a written individualized communication to the particular employee(s) and delivered to the last known address and email address of the current or former employee. A violation constitutes an act of unfair competition under Bus. & Prof. Code §§17200, et seq. We can help you determine if you must give notice and complete the process, but don’t delay.

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Most California Employers Must Provide Workplace Violence Prevention Plan by July 1st

Senate Bill (SB) 553, signed into law last fall, requires employers to implement a written Workplace Violence Prevention Plan (WVPP) on or before July 1, 2024. In addition to the WVPP, employers also must train employees on workplace violence hazards, maintain a violent incident log, and conduct periodic reviews of the WVPP. The new law will be enforced by California’s Division of Occupational Safety and Health (Cal/OSHA).

Codified at Labor Code Sec. 6401.9, the new law applies to most California employers, with exceptions for employers already covered by the Workplace Violence Prevention in Healthcare standard, employees teleworking from somewhere they choose that is not under the control of the employer, or workplaces inaccessible to the public and have less than 10 employees working at any given time.

The new law mandates that employers establish, implement, and maintain a WVPP with specific required elements and procedures. The WVPP must be in writing and available to employees and authorized employee representatives at all times. The WVPP may appear as a stand-alone section in the employer’s existing Injury and Illness Prevention Program (IIPP) or as a separate document.

In light of the extensive requirements under Section 6401.9, California employers should begin to take active steps to ensure compliance by July 1, 2024. These include:

·      Identify who will implement and administer the WVPP;

·      Assess potential workplace violence hazards;

·      Draft the WVPP; and

·      Prepare and conduct required training for supervisors and employees.

We are here to guide employers through these new requirements.

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California Employees Who Use Cannabis Gain Additional Protections

Effective January 1, 2024, two new California laws enhance protections for employees who use cannabis away from the workplace. SB 700 expressly prohibits employers from requesting information from job applicants relating to prior cannabis use. Assembly Bill (AB) 2188 prohibits employers from penalizing employees or applicants for off-duty cannabis use if it does not impair them at the workplace.

In AB 2188, the Legislature noted that the psychoactive chemical compound found in cannabis, may be stored in the body for as long as a month as a non-psychoactive cannabis metabolite after it is metabolized. The metabolites do not indicate that the individual is currently under the influence of cannabis, but only that s/he recently consumed cannabis. Because drug tests are intended to identify employees who may be impaired, the Legislature declared that tests that detect the amount of non-psychoactive metabolites in the blood do not accomplish that goal as they do not correlate to impairment on the job. In addition, alternative drug testing devices that do not rely on the presence of non-psychoactive cannabis metabolites, but which can identify the presence of THC in an individual’s bodily fluids, are more readily available and better indicators of impairment.

SB 700 expands AB 2188’s protections by prohibiting employers from requesting that applicants provide information about their prior cannabis use. However, SB 700 does not prohibit employers from inquiring about an applicant’s criminal history if doing so is otherwise permitted by law, such as from a legally obtained criminal history report, and if such information is otherwise lawful for an employer to consider in making employment decisions.

In the wake of SB 700, California employers should review their application process and any pre-employment drug screening protocols, as well as their policies and practices relating to drug screening in connection with hiring, discipline, and termination to ensure they will comply with the new law. We can assist with this process.

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California Increases Statewide Paid Sick Leave Minimum to Five Days/40 Hours

Effective January 1, 2024, California Senate Bill (SB) 616 amends the Healthy Workplaces, Healthy Families Act of 2014, increasing the number of paid sick days (or hours) to which California employees are entitled each year from three days (or 24 hours) to five days (or 40 hours). Employers continue to have the option to provide paid sick leave by the accrual or lump sum (front load) methodologies.

Under the accrual method, the amended law now requires employers who use this method to ensure an employee will accrue no less than five days (or 40 hours) of accrued sick leave by the 200th calendar day of employment or each calendar year, or in each 12-month period. Additionally, for employers using the accrual method, the new law increases the accrual and carryover cap to 10 days or 80 hours. There is no carryover required for employers using the lump sum method.

Employers are not required to pay out an employee for accrued but unused paid sick days at the end of employment, although employers must reinstate unused paid sick days if an employee is rehired within one year. They must also provide employees with written notice that lists the amount of paid sick leave available either on the wage statement or in a separate writing provided on the pay date.

Employers should revise their handbooks and policies to reflect this important change in the law. We can help with this.

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Another Statewide Minimum Wage Increase Effective Jan. 1, 2024

On January 1, 2024, the California statewide minimum wage will increase to $16 per hour. The minimum salary for exempt employees will rise from $64,480 to $66,560. In addition to the increase in the state minimum wage, many localities have their own minimum wage requirements that are higher than the state’s minimum wage.

Certain specific industry employers, such as healthcare facilities and fast-food workers, also have unique minimum wage increases that become effective later in the year. Healthcare facility workers, for example, will enjoy an increased minimum wage beginning June 1, 2024, ranging from $18 to $23 per hour, depending on the size and location of the facility. The minimum wage for fast food workers will also increase to $20 per hour beginning April 1, 2024.

Employers with questions or concerns about the new minimum wage, particularly in the context of ensuring exempt employees meet the applicable salary threshold, should contact us.

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California Further Restricts Employee Non-Compete Agreements

SB 669, effective January 1, 2024, expands California’s restrictions on employee non-compete agreements. Such agreements are already void in California under Bus. & Prof. Code § 16600, with limited exception, such as the sale or dissolution of a business. SB 669 adds Bus. & Prof. Code Sec. 16600.5, which expands these restrictions to include agreements created out-of-state and also creates new enforcement rights for employees to challenge non-compete clauses.

Specifically, Section 16600.5 will bar “an employer or former employer from attempting to enforce a contract that is void regardless of whether the contract was signed and the employment was maintained outside of California.”

California’s prohibition against non-competes is not new. We have long counseled clients, as an alternative to unenforceable non-compete agreements, as well as agreements barring the solicitation of customers, clients or employees, to prohibit the use of confidential or proprietary information to compete or solicit customers or employees. While this remains a legally viable option, it is crucial (1) that confidentially agreements be carefully drafted to protect confidential information and limit its use; and (2) to take steps to ensure such information is demonstrably treated as confidential within the organization.

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Governor Signs Increase to California Paid Sick Leave

Gov. Newsom signed Senate Bill (SB) 616, which, effective January 1, 2024, expands California’s statewide paid sick leave law to increase mandatory sick leave for employees from three days or twenty-four hours to five days or forty hours.

Employers may continue to use alternative methods to provide paid sick leave: accrual and front-loading. Under SB 616, employers may continue the accrual method, to provide one hour of paid sick leave for every thirty hours worked, so long as an employee has accrued forty hours or five days by the end of the 200th calendar day of employment. Alternatively, employers may continue to frontload the entire paid sick leave amount.

SB 616 also increases the accrual cap for paid sick leave accrual at eighty hours or ten days. Currently, employers may limit paid sick leave accrual to forty-eight hours or six days. This amendment brings the entire state more in line with several municipalities which had instituted in piecemeal fashion more generous paid sick leave requirements since the Healthy Workplaces, Healthy Families Act (HWHFA) was first enacted in 2014.

This is a significant development for employers throughout California. With slightly less than three (3) months to prepare, employers should take this opportunity to revise policies and handbooks and conduct necessary training. We are here to assist with this process, including handbook updates.

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Pending Legislation Could More Than Double Employer’s Paid Sick Leave Obligation

California Senate Bill (SB) 616 proposes to expand the number of paid sick days California employers must offer to employees from 3 days (24 hours) to 7 days (56 hours). SB 616 will still permit employers to use either the lump-sum or accrual methodology, with some adjustment to the accrual method.

SB 616 would also increase the minimum accrual cap (including carry over). The current minimum accrual cap is 48 hours, or 6 days. The proposed Bill would increase the cap to 112 hours, or 14 days. We will continue to monitor this Bill and provide guidance.

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Avoiding Employer Liability for (Mis)Using Unpaid Interns

At first blush, an internship can seem like a win-win for everybody. Students gain valuable experience and industry contacts while business organizations are afforded an opportunity share knowledge, enhance their visibility and even develop a long-term applicant pipeline.

Unfortunately, unless strict requirements are met, unpaid internships can violate state and federal laws, exposing unwary employers to substantial liability risks, including for unpaid wages, unpaid overtime, rest and meal breaks, unreimbursed expenses and waiting time penalties.

The following are the federal and state standards for when an employer can legitimately use unpaid interns. As with all employment laws, California employers must comply with both federal and state-specific law.

The federal law derives from the Department of Labor (DOL)’s unpaid internship rules, which require the employer to ensure that:

1.     The intern knows that the position is unpaid.

2.     The training is similar to training received at an educational institution.

3.     The internship is tied and integrated to the student’s educational program or degree.

4.     The intern only works during periods that do not conflict with academic commitments or the academic calendar.

5.     The internship only lasts for a period of time in which it imparts beneficial learning upon the intern.

6.     The intern’s work does not replace existing employees’ work while providing significant educational benefits.

7.     The intern understands that this internship does not provide entitlement to a job.

In addition to the DOL test, California courts tend to apply the following criteria in evaluating when an unpaid internship is lawful:

1.     Whether the internship is part of an educational curriculum which requires the participation of a school or a similar institution.

2.     Interns cannot receive employee benefits, such as medical insurance and workers’ compensation.

3.     The training must be general enough so that the intern can work for any similar business, rather than just for a specific company.

4.     The screening process for the internship cannot be the same process used for regular employees.

5.     Advertisements for the internship must clearly indicate that the internship position is educational and not for paid work.

Employers considering unpaid interns are encouraged to contact us to ensure their program complies with the law and will not expose them to liability.

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Significant Minimum Wage Hikes Coming July 1st for Some California Cities

While the California statewide minimum wage remains $15.50, several municipalities will raise the applicable minimum wage effective July 1, 2023. These include:

·      City of Los Angeles, increasing to $16.78 (from $16.04)

·      County of Los Angeles, increasing to $16.90 (from $15.96)

·      Malibu & Santa Monica, increasing to $16.90 (from $15.96)

·      Pasadena, increasing to $16.93 (from $16.11)

·      West Hollywood, increasing to $19.08 (from $17/$17.50, depending on size)

·      San Francisco, increasing to $18.07 (from $16.99)

This list is not exhaustive. Additionally, the minimum wage for hotel workers will increase in Santa Monica ($19.73). Employers with remote workers should ensure that anyone performing remote work in an affected municipality must adhere to the municipality’s minimum wage.

Some local ordinances contain specific notice requirements. This includes posters in a conspicuous place at the worksite and may be required in multiple languages. Notices may be emailed to remote workers (we recommend a method to confirm receipt). Employers with questions about the applicable minimum wage or the notice requirements should contact us.

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Two Important Bills for Employers Pending Before California Legislature

There are a slew of bills pending before the California Legislature that, if passed, will impact California employers. Two such bills are Senate Bill (SB) 731 and 616.

 

SB 731 – Remote Work as an Accommodation. SB 731 would authorize an employee with a qualifying disability to initiate a renewed request for reasonable accommodation to perform their work remotely if certain requirements are met, including that the employee performed their essential job functions remotely for at least 6 of the 24 months preceding the renewed request.

SB 616 – Dramatically Increased Paid Sick Leave. If passed, SB 616 would amend California’s statewide paid sick leave requirements to change accrual methods and increase the total amount of sick leave an employee may accrue annually from 24 hours (3 days) to 56 hours (7 days), with a maximum accrual of 112 hours (14 days). Importantly, this would alter the statewide Paid Sick Leave requirement; several cities and counties, including Los Angeles and San Francisco, already exceed the statewide minimum.

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Federal Appeals Court Clears Path for California Employers to Mandate Arbitration

Since 2015, the California Legislature has attempted to hinder employers’ attempt to resolve disputes with employees though mandatory arbitration. Assembly Bill (AB) 51, effective January 1, 2020, prohibited employers from making mandatory arbitration a condition of employment. However, several industry groups, including the California Chamber of Commerce, sued to prevent enforcement of AB 51 immediately when it became effective.

Three years of circuitous litigation followed, culminating in the decision by the federal Ninth Circuit Court of Appeals, in Chamber of Commerce v. Bonta, affirming a district court injunction striking down California Assembly Bill (AB) 51 as preempted by the Federal Arbitration Act (FAA). As a result, for now at least, California employers may continue to implement mandatory employment arbitration agreements for employee claims for unpaid wages, discrimination, and other causes of action under the Labor Code and the Fair Employment and Housing Act (FEHA).

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