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May IP Litigation Newsletter

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Review your policies to be sure they are up to date.

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Review your contracts for employees working in California to be sure they do not contain void non-compete provisions.

Be sure you are complying with all applicable minimum wage requirements.

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While that champagne and cider chill to ring in the new year, take a look below and be sure you are ready to implement these California employment laws that become effective Jan. 1 and beyond.

Increased Paid Sick Leave Entitlements and Other Revisions to the Healthy Workplaces, Healthy Families Act of 2014 (<a href="https://urldefense.com/v3/__https:/leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240SB616__;!!FRfqb9lMRA!2xgcix9KZ9x3jcNzr3TxihEReD7a6ipSId9cAsdzilJYe-jZZWFM-u4iweIKyT-f8NrRQV9DAgfzHLkb4zRnSnXpjhD5uQlp3A$" target="_blank" rel="noreferrer noopener">SB 616</a>)

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This bill contains a number of revisions to the existing California paid sick leave law; however, the most noteworthy revisions include the following:

The definition of the “full amount of leave” an employee must be provided in each year of employment, calendar year or 12-month period is increasing from 24 hours, or three days, to 40 hours, or five days. As before, employers can use a front-loading system that provides 40 hours, or five days, at the beginning of each year of employment, calendar year or 12-month period, or sick leave can accrue at a rate of no less than one hour for every 30 hours worked.&nbsp;

For employers using an accrual method, accrual may still be capped, but the cap increases under the new law to 80 hours, or 10 days.

To comply with the amended law, employers may opt to use an accrual method other than providing one hour for every 30 hours worked so long as the accrual is on a regular basis and an employee earns no less than 24 hours of accrued sick leave or paid time off by the 120th calendar day of employment or of each calendar year, or in each 12-month period, and no less than 40 hours of accrued sick leave or paid time off by the 200th calendar day of employment or of each calendar year, or in each 12-month period.

The exemption for individuals who are subject to a collective bargaining agreement (CBA) that meets certain requirements is still in place; however, the amended law gives CBA-exempted employees certain procedural protections that previously only applied to employees who were otherwise covered by the law, including the prohibition on retaliation for using paid sick days, the prohibition on the imposition of certain conditions on the use of paid sick days, and limiting the employer’s ability to place certain requirements on the use of paid sick days.&nbsp;&nbsp;

The California labor commissioner recently issued <a href="https://www.dir.ca.gov/dlse/paid_sick_leave.htm" target="_blank" rel="noreferrer noopener">these updated FAQs</a> reflecting these amendments. It is important to note that local ordinances may still provide greater benefits than the amended state law.

Employee’s Rights After Reproductive Loss (<a href="https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240SB848" target="_blank" rel="noreferrer noopener">SB 848</a>)

This new law gives employees who have been employed by an employer for at least 30 days the right to take up to five days of unpaid leave within three months of a reproductive loss event, which includes a failed adoption, a failed surrogacy, a miscarriage, a stillbirth or an unsuccessful assisted reproduction. If an employer does not have an existing applicable leave policy that provides for paid leave, reproductive loss leave may be unpaid, except that an employee may use vacation, personal leave, accrued and available sick leave, or compensatory time off that is otherwise available to the employee. Employers must allow employees to take nonconsecutive days off. If an employee experiences more than one reproductive loss event within a 12-month period, the employer may limit reproductive loss leave to 20 days in that 12-month period.

Questions Regarding Prior Cannabis Use (<a href="https://urldefense.com/v3/__https:/leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240SB700__;!!FRfqb9lMRA!2xgcix9KZ9x3jcNzr3TxihEReD7a6ipSId9cAsdzilJYe-jZZWFM-u4iweIKyT-f8NrRQV9DAgfzHLkb4zRnSnXpjhDFKcac2g$" target="_blank" rel="noreferrer noopener">SB 700</a>)

Last year, we alerted you to the passage of <a href="https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202120220AB2188" target="_blank" rel="noreferrer noopener">AB 2188</a>, which effective Jan. 1 prohibits employers from discriminating against a person in hiring, termination, or any term or condition of employment for (1) using cannabis off the job and away from the workplace or (2) taking an employer-required drug screening test that detects non-psychoactive cannabis metabolites in an employee’s hair or urine, blood or other bodily fluids. SB 700 adds a prohibition on employers asking prospective employees about their prior use of cannabis.

Note, however, that there are exceptions for persons employed in certain industries as well as for situations when an employer is permitted to consider or inquire about information related to cannabis use under certain provisions of the California Fair Employment and Housing Act or other state or federal law.

Importantly, employers may also still prohibit employees from possessing, being impaired by or using marijuana while on the job and make employment decisions based on “pre-employment drug screening conducted through methods that do not screen for non-psychoactive cannabis metabolites.” Moreover, nothing in these new laws affects “the rights or obligations of an employer to maintain a drug-and alcohol-free workplace.” Accordingly, employers may still decline to hire an applicant based on a positive preemployment drug test, as long as the screening is scientifically valid and conducted through methods that do not screen for non-psychoactive cannabis metabolites.

Noncompete Clauses – Clarifications, New Requirements and Consequences (<a href="https://urldefense.com/v3/__https:/leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240AB1076__;!!FRfqb9lMRA!yh9sB1ozYP91KxuA3D74SlRUftkh3RpzIRNdrHzhJXbjAOc2N11VURQodx7x0X_p5flmWdRYyxLMeQagCV90ie11rSOnC2ZPHQ$" target="_blank" rel="noreferrer noopener">AB 1076</a> and <a href="https://urldefense.com/v3/__https:/leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240SB699__;!!FRfqb9lMRA!2xgcix9KZ9x3jcNzr3TxihEReD7a6ipSId9cAsdzilJYe-jZZWFM-u4iweIKyT-f8NrRQV9DAgfzHLkb4zRnSnXpjhCsV9VYXg$" target="_blank" rel="noreferrer noopener">SB 699</a>)

Section 16600 of the Business and Professions Code has long been interpreted by courts, including the California Supreme Court, to void any noncompete agreements in an employment context and noncompete clauses within employment contracts that are not subject to a specific exception.

AB 1076 codifies case law by explicitly stating that Section 16600 should be “read broadly, in accordance with Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937, to void the application of any noncompete agreement in an employment context, or any noncompete clause in an employment contract, no matter how narrowly tailored, that does not satisfy an exception … .” The bill also adds Business and Professions Code Section 16600.1, which provides that it “shall be unlawful to include a noncompete clause in an employment contract, or to require an employee to enter a noncompete agreement, that does not satisfy an exception in this chapter.”

This new law also adds an action item for employers to complete no later than Feb. 14; specifically, for current and former employees who were employed after Jan. 1, 2022, whose contracts include a noncompete clause, or who were required to enter a noncompete agreement, that does not satisfy an exception, the employer must notify the employee that the noncompete clause or noncompete agreement is void. Such notices must be in the form of an individualized communication to the employee or former employee and must be delivered to the last known address and the email address of the employee or former employee. Violation of these requirements is presumptively deemed to constitute unfair competition.

SB 699 takes the impact of these laws further by adding Business and Professions Code Section 16600.5, which provides that any contract that is void under the above-described laws is unenforceable regardless of where and when the contract was signed. The new statute also reiterates that an employer shall not (1) enter into a contract with an employee or prospective employee that includes a provision that is void under the laws prohibiting noncompete clauses and agreements or (2) attempt to enforce a contract that is void under this chapter regardless of whether the contract was signed and the employment was maintained outside California.

The law also provides that an employer that violates this law commits a civil violation and an employee, former employee or prospective employee may bring a private action for injunctive relief to enforce these laws or for the recovery of actual damages, or both. A prevailing, former or prospective employee in such cases will also be entitled to recover reasonable attorney’s fees and costs.

Workplace Violence Prevention Plans to Be in Place by July 1 (<a href="https://urldefense.com/v3/__https:/leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240SB553__;!!FRfqb9lMRA!2xgcix9KZ9x3jcNzr3TxihEReD7a6ipSId9cAsdzilJYe-jZZWFM-u4iweIKyT-f8NrRQV9DAgfzHLkb4zRnSnXpjhALxH_x5g$" target="_blank" rel="noreferrer noopener">SB 553</a>)

Among other things, this new law requires most employers in California (with some exceptions, such as for health care facilities) to establish, implement and maintain an effective written workplace violence prevention plan by July 1. The law outlines several requirements for the content of this plan, including effective procedures: to obtain the active involvement of employees and authorized employee representatives in developing and implementing the plan, for the employer to accept and respond to reports of workplace violence, to communicate with employees regarding workplace violence matters, to respond to actual or potential workplace violence emergencies, to develop and provide required training, to identify and evaluate workplace violence hazards, to correct workplace violence hazards identified and evaluated, and for post-incident response and investigation.

The law also requires employers to record information in a violent incident log for every workplace violence incident and to maintain records of workplace violence hazard identification, evaluation, correction and training. The Division of Occupational Safety and Health will have the authority to issue citations and penalties for violations of these new requirements.

We also want to alert you to some industry-specific laws, one of which will be effective only if a pending referendum is repealed.

Changes to Law Regarding Hiring Grocery Workers After a Change in Control (<a href="https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240AB647" target="_blank" rel="noreferrer noopener">AB 647</a>)

Existing law requires that, upon a change in control of a grocery establishment, the incumbent grocery employer provide and the successor grocery employer maintain a preferential hiring list of eligible grocery workers. This law requires a successor grocery employer to hire from this list for 90 days after opening to the public and to retain each eligible grocery worker hired for at least 90 days.

These requirements will continue under AB 647, but now the law excludes a retail store that has ceased operations for at least 12 months. It also excludes certain smaller grocery establishments if the number of grocery workers employed nationwide by the incumbent and successor combined, immediately prior to the change in control, is less than 300. The law also now covers distribution centers that meet specified requirements within the definition of “grocery establishment,” regardless of square footage, and revises the employee information an incumbent grocery employer is required to provide to the successor grocery employer.

For grocery employers with a unionized workforce, the new law requires an incumbent grocery employer to provide the list of eligible grocery workers to any collective bargaining representatives. Also, in order for the parties to a CBA to agree that the CBA supersedes the requirements of the law, the CBA must explicitly set forth in clear and unambiguous terms the requirements of the law that are superseded.

AB 647 provides employees with protections against retaliation for exercising their rights under this law and the ability to bring a private right of action for violations in addition to the labor commissioner’s authorization to enforce its provisions. Available remedies include back or front pay, punitive damages, penalties and attorney’ fees.

Extension, New Definition of Laid-Off Employee in COVID-19 Rehiring and Retention Law for Hospitality, Airport Service and Building Service Employers (<a href="https://urldefense.com/v3/__https:/leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240SB723__;!!FRfqb9lMRA!2xgcix9KZ9x3jcNzr3TxihEReD7a6ipSId9cAsdzilJYe-jZZWFM-u4iweIKyT-f8NrRQV9DAgfzHLkb4zRnSnXpjhAvX6iV9w$" target="_blank" rel="noreferrer noopener">SB 723</a>)

Existing law requires covered hotel, private club, event center, airport hospitality operation and airport service provider employers and those that provide building services to office, retail or other commercial buildings to provide, until Dec. 31, 2024, laid-off employees with certain information about jobs that become available for which they are qualified and offer those laid-off employees positions based on a specified preference system. &nbsp;

The new law redefines “laid-off employee” to mean any former employee who was employed for six or more months and whose most recent separation from active employment by the employer took place on or after March 4, 2020, and was due to a reason related to the COVID-19 pandemic. It also creates a presumption that an employee’s separation from employment is related to the pandemic if it is due to a lack of business, reduction in force or other economic, non-disciplinary reason. If faced with this presumption, an employer would need to establish by a preponderance of the evidence that an employee was not separated as a result of the pandemic. Additionally, the bill extends the law’s expiration date to Dec. 31, 2025.

Minimum Wages for Health Care Workers, Starting June 1 (<a href="https://urldefense.com/v3/__https:/leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240SB525__;!!FRfqb9lMRA!2xgcix9KZ9x3jcNzr3TxihEReD7a6ipSId9cAsdzilJYe-jZZWFM-u4iweIKyT-f8NrRQV9DAgfzHLkb4zRnSnXpjhAfuqfDIw$" target="_blank" rel="noreferrer noopener">SB 525</a>)

This bill establishes five separate minimum wage schedules for covered health care employees based on the type of employer. All the schedules include a gradual increase in minimum wage until it reaches $25 per hour. For employees paid on a salary basis, the monthly salary must be equivalent to at least 150 percent of the health care worker minimum wage or 200 percent of the applicable minimum wage, whichever is greater, for full-time employment in order to qualify as exempt from the payment of minimum wage and overtime.

“Covered health care employees” include contracted or subcontracted employees if the employee’s employer contracts with a health care facility employer, or with a contractor or subcontractor to the health care facility employer, to provide health care services, or services supporting the provision of health care and the health care facility employer directly or indirectly, or through an agent or any other person, exercises control over the employee’s wages, hours or working conditions. There are exceptions for outside salespeople, certain public sector work, certain delivery or waste collection work on health care facility premises, and certain medical transportation services in or out of a covered health care facility.

“Covered health care facility” includes facilities or work sites that are part of an integrated health care delivery system, licensed general acute care and acute psychiatric hospitals, licensed skilled nursing facilities, a patient’s home when health care services are delivered by an entity owned or operated by a general acute care hospital or acute psychiatric hospital, a licensed home health agency, community and rural health clinics, urgent care clinics, and physician groups, among others. In addition to the minimum wage schedules, this bill establishes a civil cause of action for employees and is enforceable in an action by the labor commissioner.

In addition, the law requires the development of a waiver program for covered health care facilities to apply for and receive a temporary pause or alternative schedule for the minimum wage requirements. A covered health care facility will need to demonstrate that complying with the new minimum wage requirements would raise doubts in the covered health care facility’s ability to continue as a going concern. This new waiver program is to be established by the Department of Industrial Relations, the Department of Health Care Services and the Department of Health Care Access and Information by March 1.

Higher Minimum Wage for Fast Food Restaurants and a Reenvisioned Fast Food Council – Pending Withdrawal of a Referendum(<a href="https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240AB1228" target="_blank" rel="noreferrer noopener">AB 1228</a>)

Existing law establishes the Fast Food Council (the Council), which is within the Department of Industrial Relations. However, the existing law is suspended due to a <a href="https://oag.ca.gov/system/files/initiatives/pdfs/22-0005%20%28%26quot%3BReferendum%20of%20AB%20257%26quot%3B%29_0.pdf" target="_blank" rel="noreferrer noopener">referendum</a> petition. This bill would repeal the existing provisions but only if the referendum is withdrawn by Jan. 1.

If this bill goes into effect, it would, among other things, add new provisions to the Labor Code that largely include applicable definitions and information about the purpose and operations of the Council, which will have the ability to adopt and review fast food restaurant health, safety and employment standards, with involvement from the Occupational Safety and Health Standards Board and the Civil Rights Council if any minimum standards fall within their jurisdiction.

Of key importance, if this law goes into effect, it will increase the state minimum wage for “fast food restaurant” employees to $20 per hour, effective April 1. “Fast food restaurant” means a limited-service restaurant in the state of California that is part of a national fast food chain. The definition excludes an establishment that on Sept. 15 operated a bakery that produces for sale on the establishment’s premises bread, as defined under Part 136 of Subchapter B of Chapter I of Title 21 of the Code of Federal Regulations, so long as it continues to operate such a bakery. This exemption applies only where the establishment produces for sale bread as a stand-alone menu item, and it does not apply if the bread is available for sale solely as part of another menu item. Beginning Jan. 1, 2025, the Council would have the authority to raise the minimum wage annually, within specified limits, including that the Council is not permitted to establish any minimum wage increase that takes effect commencing on a date after the 2029 calendar year. In addition to impacting pay for hourly workers, note that minimum salaries for employees who are classified as exempt under California’s white collar exemptions must be at least two times the applicable state minimum wage. The law also precludes cities and counties from enforcing an ordinance or a regulation applicable to fast food restaurant employees that sets the amount of wages or salaries for fast food restaurant employees.

For more information about these new laws and developments, or if you have other California employment law questions, please contact a BakerHostetler Labor and Employment Practice Group attorney or your BakerHostetler contact.

New California Employment Laws to Ring in the New Year

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