Key Updates in 2024 For California Employers: Paid Sick Leave, Cannabis Protections, Reproductive Loss, Covenants, and COVID-19 Requirements

2024 brings crucial updates for California employers navigating the intricacies of workplace policies. In this alert, the Allen Matkins Labor & Employment Practice share key updates employers should make note of including: expanded paid sick requirements, cannabis use protections, leave for reproductive losses, restrictive covenants, and COVID-19 workplace requirements.

Expanded Paid Sick Leave Requirements

Senate Bill 616 expands paid sick leave requirements under California’s Healthy Workplaces, Healthy Families Act. Existing law allows for: (i) 24 hours or three days of accrued sick leave or paid time off (although some jurisdictions imposed more stringent requirements); and (ii) minimum annual use caps of 24 hours or five days and minimum accrual caps of 48 hours or six days. As of January 1, 2024, this amendment requires employers to provide at least 40 hours (or five days) of accrued sick leave or paid time off that may be used for sick leave purposes by an employee’s 200th calendar day of employment, or each calendar year, or in each 12-month period. Additionally, the amendment increases the limitations on an annual use cap to 40 hours or five days and increases the minimum allowable cap on an employee’s total accrual of paid sick leave to 80 hours or 10 days. Employers should review and revise their paid sick leave or paid time off policies to comply with these new requirements.

Expanding Protections for Off-Duty/Off-Premises Cannabis Use

Expanding on last year's Assembly Bill 2188 (operative on January 1, 2024), which was covered in our 2023 update and generally prohibits California employers from discriminating against a person in hiring, termination, or any term or condition of employment, or otherwise penalize a person for the use of cannabis off the job and away from the workplace except in limited circumstances, Senate Bill 700 also makes it unlawful for California employers to request information from a job applicant relating to the applicant’s prior use of cannabis, including the applicant’s criminal history, except in limited circumstances, such as if the employer is permitted to consider or inquire about that information under a specified provision of the California Fair Employment and Housing Act (FEHA) or another state or federal law.

The protections for off-duty/off-premises cannabis use does not apply to certain employees in the building and construction trades or to positions that require a federal government background investigation or security clearance. In addition, the law does not preempt federal or state laws that require applicants or employees to be tested for controlled substances as a condition of employment, or those that are applicable to companies receiving federal funding or federal licensing-related benefits, or that have federal contracts.

Leave for Reproductive Losses

The FEHA’s existing bereavement leave law requires employers provide protected leave to an employee who experiences the death of a family member. On January 1, 2024, Senate Bill 848 will go into effect, expanding the FEHA's protection for leave for a covered employee’s reproductive loss. The law will apply to public employers of any size and private employers who employ five or more individuals. Employees must be employed for at least 30 days prior to the commencement of leave to qualify for SB 848’s protection.

Pursuant to SB 848, it will be an “unlawful employment practice for an employer to refuse to grant a request for any employee to take . . . leave following a reproductive loss event.” A “reproductive loss event” is broadly defined to include “a failed adoption, failed surrogacy, miscarriage, stillbirth, or an unsuccessful assisted reproduction,” for which the individual “would have been a parent” had the loss event not occurred.

A qualifying employee may take up to five days of job protected leave. The leave need not be consecutive, but it must be taken within three months of the reproductive loss event. Employers are required to provide up to 20 days of leave to an employee who experiences multiple reproductive losses in a 12-month period. Reproductive loss leave can be either paid or unpaid. If an employer has an existing leave policy, reproductive loss leave must be taken in accordance with the existing policy. If the employer does not have an existing leave policy, leave may be unpaid. However, employees are permitted to use other paid time off for which they are eligible, including “vacation, personal leave, accrued and available sick leave, or other compensatory time off that is otherwise available to the employee.” Unlike other California leave laws, no documentation is required to support an employee’s request for leave.

Employers should understand other unique features of SB 848, including a mandatory requirement to maintain the confidentiality of all information communicated to the employer by the employee requesting leave except where disclosure to internal personnel or counsel “[i]s necessary or required by law.”

Expansion on Restrictive Covenants

California has enacted two new bills that seek to expand the reach and consequences of its limitations regarding restrictive covenants. Governor Newsom signed Senate Bill 699 and Assembly Bill 1076, which bolster the protections in California’s Business and Professions Code Section 16600. That statute dictates that “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” California courts have long interpreted Section 16600 generally to render non-compete clauses void, and many have recently begun interpreting the statute to bar employee non-solicit agreements as well. These two new laws amend and add to Section 16600 (creating Sections 16600.1 and 16600.5), and expand potential liability for employers that utilize restrictive covenants.

New Business and Professions Code Section 16600.5 dictates that any contract which is void under Section 16600 is unenforceable “regardless of where and when the contract was signed.” Employers can expect further litigation regarding the reach of this new law. While this provision appears aimed to cover contracts and employees outside of California, employers will contend it is still subject to standard choice-of-law analyses. Extension of this new law to matters wholly within another state also may be challenged based upon constitutional concerns.

New Section 16600.5 also establishes that employers may not enter into a contract with an employee or prospective employee that includes a provision that is void under Section 16600, and further provides that any company that enters into or attempts to enforce such a contract “commits a civil violation.” Additionally, the new law creates a private right of action for employees whose agreements include restrictive covenants and provides for an award of attorney’s fees for any current, former, or prospective employee who successfully brings suit over an employer’s use of those restrictive covenants.

AB 1076 both amends Business and Professions Code Section 16600 and creates another new statute, Section 16600.1. Among other things, it dictates that Section 16600 “shall not be limited to contracts where the person being restrained from engaging in a lawful profession, trade, or business is a party to the contract.” New Section 16600.1 also bars non-compete clauses in an employment contract. Furthermore, any companies whose contracts included a non-compete clause are required to issue a notice to all current employees and former employees who were employed after January 1, 2022, that the non-compete clauses in their contracts are void. The deadline for this notice is February 14, 2024.

The California legislature and courts have become increasingly strict regarding restrictive covenants. These most recent legislative changes may also create additional risks, and spark further litigation.

COVID-19 Workplace Requirements

While companies and employees have returned to “normal” in the workplace in many regards, state, county and local regulations are still in place regarding the reporting, testing and handling of known COVID-19 cases. Though state and county regulations have been updated, protocols are still in place for reporting and handling “outbreaks” of COVID-19 infections, as well as protocols for reporting occurrences of COVID-19 infections in the workplace. In case of positive COVID-19 cases or an outbreak, employers should review or consult with counsel for requirements for handling those scenarios.

Employers, both inside and outside California, are advised to consult with employment counsel to discuss responses to these new or amended laws.