It’s Not Too Late to Update Employee Handbooks with These Compliance Recommendations for 2023 California Employment Laws for Small Business Private Employers

Small business private employers are wise to bring their Employee Handbooks into legal compliance with these top nine (9) 2023 California Employment Laws. For purposes of this blog, “Small Business Private Employers” is defined as private employers who employs less than 50 employees. A “private employer” refers to any employer that is not a government employer, regardless of whether the employer is publicly traded. The information and recommendations below may or may not apply to unionized work environments subject to collective bargaining agreements (CBAs). Unless stated otherwise, the employment laws listed below became effective on January 1, 2023.

Top Nine 2023 California Employment Laws to Update Employee Handbooks for Small Business Private Employers

1. Reproductive Health Decision-Making: A new protected class under FEHA

AB 5230 (Contraceptive Equality Act of 2022) revises the Fair Employment and Housing Act (FEHA) to add “reproductive health decision-making” as a protected class. This new law makes discriminatory practices based on reproductive health decision-making unlawful. FEHA now makes it unlawful for an employer to require, as a condition of employment, continued employment, or a benefit of employment, the disclosure of information relating to an applicant’s or employee’s reproductive health decision-making. “Reproductive health decision-making” includes, but is not limited to, a decision to use or access a particular drug, device, product, or medical service for reproductive health. Additionally, AB 5230 amends FEHA to expand coverage of contraceptives by a health care service plan contract, and health insurance policies.

Applies to: Small Business Private Employers regularly employing 5 or more employees.

Recommended Actions:

• Update EEO and Harassment, Discrimination and Retaliation Prevention Policy to include “Reproductive Health Decision-Making” as one of the protected classes. Include description of “Reproductive Health Decision-Making” from text of AB 5230.
• Train supervisors on this new law and reasonable accommodations that might be required.
• Update EEO Policy and Harassment, Discrimination and Retaliation Prevention Policy to change the name “Department of Fair Employment and Housing (DFEH)” to Civil Rights Department (CRD). SB 189.
• Post updated Discrimination & Harassment Poster.
• Distribute to all employees the updated Sexual Harassment Fact Sheet CRD-185. (January 2023).

2. CFRA and Paid Sick Leave Expands Definition of Family Member to include a “Designated Person”

AB 1041 The California Family Rights Act (CFRA): allows eligible employees to take an unpaid job- protected leave of absence of up to 12- work weeks in a 12-month period to take care of family members with serious health conditions. AB 1041 expands the definition of “family members” to include a “designated person”.  This is defined as “an individual related by blood or whose association with the employee is the equivalent of a family relationship”. The law allows an employee to designate this individual at the time the employee requests leave, but the employer may limit the employee to one designated person per 12-month period.

Applies to: Small Business Private Employers regularly employing 5 or more employees. Employees are eligible after they work for employer at least 1,250 hours in the 12-month period before the date they want to begin their leave.

AB 1041 California Paid Sick Leave: Labor Code 2445.5(c)(8)), also expanded the definition of family member to include a “designated person” but defined it slightly differently. It is defined to mean a “person identified by the employee at the time the employee requests paid sick days.”

As a reminder, on January 1, 2021, CFRA provided leave protections to care for additional family members, including domestic partners, children of domestic partners, grandparents, grandchildren, siblings and parents-in-law (the parent of a spouse o domestic partner).

Applies to: All Small Private Employers. Employees are eligible after they work for the employer for 30 or more days in a calendar year.

Recommended Actions:

• Add new definition of family member (designated person) to CFRA Policy consistent with AB 1041.
• Post updated “Family Care & Medical Leave & Pregnancy Disability Leave” Poster.
• Add new definition of family member (designated person) to California Paid Sick Leave Policy consistent with AB 1041 at Labor Code Section 245.5 (c)(8).
• Add Designated Person to Leave of Absence Request and Approval Forms.

3. New Leave of Absence Entitlements: Bereavement Leave and Military Service Leave for Short-Term Leave

Bereavement Leave: AB 1949 provides employees with job-protected bereavement leave of up to five days upon the death of a family member. A family member is defined as a child, parent, sibling, grandparent, grandchild, domestic partner, or parent-in-law. The law requires that leave be completed within 3 months of the date of date.  The days of bereavement leave need not be consecutive. If there is no existing bereavement policy, the leave is unpaid.

If an existing leave policy provides for less than 5 days of bereavement leave, the employee shall be entitled to no less than a total of five days of bereavement leave, consisting of the number of days of paid leave under the existing policy, and the remainder of the days of leave may be unpaid. The employee ay use available vacation, personal leave, accrued and available sick leave. Documentation may be required to verify need for bereavement leave as described in AB 1949.

Applies to: Small Business Private Employers who employ 5 or more persons to perform services for a wage or salary.

Military Service Leave: The U.S. Court of Appeals for the Ninth Circuit found that employers who provide paid leave for short term absences (such as sick leave or jury duty) may be required to provide similar paid leave for short-term military purposes under the Uniformed Services Employment and Reemployment Rights Act (USERRA). Please refer to Clarkson vs. Alaska Airlines, Inc. and White vs. United Airlines, Inc.

Applies to: All Small Business Private Employers.

Recommended Actions:

• Update Leave of Absence Policy to include Bereavement Leave
• Distribute or post Bereavement Leave FAQs.
• Add paragraph to Military Service Leave Policy that states that the company will provide paid leave for short-term military purposes to the extent it provides comparable types of paid leave for other short-term leaves, such as 24 hours of paid sick leave
• Train supervisors on these new leave of absence requirements

4. Pay Transparency- Pay Scales and Job Postings

SB 1162 enhances pay transparency by requiring employers to do the following:

• Provide the pay scale for a position to an applicant for employment, upon request, for the position the applicant is applying for.
• Provide the pay scale for a current employee, upon request, for the position in which the employee is currently employed.
• Include the pay scale for a position in any job posting, including in postings of third parties that the employer may engage to post the job description. (Applies only to employers with 15 or more employees)
• Maintain records of job title and wage rate history for each employee during the duration of employment plus three years after the end of the employment.

“Pay scale” means the salary or hourly wage range the employer reasonably expects to pay for the position. Note: Small Private Employers are not required to file an annual Payroll Employee Report (only applies to private employers with 100 or more employees). For more information on the California Equal Pay Act please refer to CRD’s FAQs.

Recommended Actions:

• If you have not already done so, conduct a job analysis to create job descriptions and determine pay scales for each position in the company. CRD Employer Resources on how to do this may be found by clicking on this link: https://women.ca.gov/californiapayequity/employers-resources/.
• Train supervisors and those employees who recruit on the following:
  • Provide the pay scale to an applicant for the position they are applying for, upon request by the applicant.
  • Provide current employees with the pay scale for the position they are currently performing, upon request.
  • Employers are not required to provide pay scales for other employees.
  • Employers may not prohibit employees from discussing wages (or working conditions) with other employees. This is a protected right under the NLRA.
  • Employers may not ask applicants about salary history nor consider salary history as a factor in determining whether to offer employment to an applicant or what salary to offer an applicant.
• Update Employee Handbook to include policy on Wages-Equal Pay. Review CRD Equal Pay Act FAQs to draft the policy.
• Set up system to maintain wage records as required by law.

5. New Retaliation Protections- Worksite Unsafe Due to Emergency Condition

SB 1044 prohibits Small Business Private Employers, in the event of an emergency condition, from taking an adverse action against any employee for refusing to report to, or leaving, a workplace within the affected area because the employee has a reasonable belief that the workplace is unsafe. The law also prohibits an employer from preventing an employee, with some exceptions, from accessing the employee’s mobile device or other communications device to seek emergency assistance, assessing the safety of the situation, or communicating with a person to verify their safety.

“Emergency Condition” means the existence of either of the following:

• Conditions of disaster or extreme peril to the safety of persons or property at the workplace or worksite caused by natural forces or a criminal act.
• An order to evacuate a workplace, a worksite, a worker’s home, or the school of a worker’s child due to natural disaster or a criminal act.

Emergency conditions does not include a health pandemic. Certain individuals are exempted from this law as described in SB 1044.

When feasible, an employee shall notify the employer of the emergency condition requiring the employee to leave or refuse to report to the workplace or worksite prior to leaving or refusing to report.

Recommended Actions:

• Update Employee Handbook’s Safety or Emergency Policies and Injury and Illness Prevention Plan (IIPP) to include these new requirements.
• Train supervisors on the requirements of this new law, how to avoid adverse actions and responsible steps to take when employee’s leave or refuse to report to work because of a workplace emergency condition.

6. New Protections for Off-Duty Marijuana Usage and Drug Testing Limitations

AB 2188 This law does not go into effect until January 1, 2024, although employers are encouraged to prepare for the implementation of this new law in advance.  On 1/1/2024, it will be unlawful for an employer to discriminate against a person in hiring, termination, or any term or condition of employment, or otherwise penalize a person, if the discrimination is based upon the person’s use of cannabis off the job and away from the workplace, except for preemployment drug screening, or upon an employer-required drug screening test that has found the person to have non-psychoactive cannabis metabolites in their hair, blood, urine, or other bodily fluids.

This law does not preempt state or federal laws requiring applicants or employees to be tested for controlled substances as a condition of employment for federal background clearance or investigation, employers receiving federal funding or federal licensing-related benefits, or entering into a federal contract and employers in the building and construction industry.

Ab 2188 creates a protected status for marijuana use off the job and away from the workplace under the Fair Employment and Housing Act (FEHA). As such, beginning on January 1, 2024, employers may no longer refuse to hire, discipline or terminate an applicant or employee for cannabis use, even when that use takes place off the job, away from the worksite, and does not jeopardize safety or otherwise impair the worker’s performance. This bill does not bar employers from maintaining that employees may not be impaired or “high” on the job. This bill does not prohibit employers from testing for THC, or taking action against employees or prospective employees who test positive for THC or who fail a performance-based impairment test.

Recommended Actions:

• Determine if the company is exempt from this law. If so, the California Drug-Free Workplace Act and Federal Drug Free Workplace Act policy would include the requirement to test for controlled substances, including marijuana.
• If not preempted by Federal or State laws, employers that utilize or plan to utilize pre-employment testing and/or reasonable suspicion/cause testing in their Drug and Alcohol-Free policies will want to research testing companies that will be able to provide testing that does not rely on the presence of non-psychoactive cannabis metabolites. These alternative tests include impairment tests, which measure an individual employee against their own baseline performance and tests that identify the presence of THC in an individual’s bodily fluids.     
• Update Drug and Alcohol-Free policies and EEO policies on January 1, 2024 to include “cannabis use on the job and off the worksite” as a protected class under FEHA.  
• Employers are encouraged to continue to monitor cases and laws affecting cannabis use at work and seek legal advice before taking adverse action for suspected cannabis use at work. 

7. Cal-OSHA COVID-19 Prevention- Non-Emergency Regulation  

On December 15, 2022, Cal-OSHA Board voted to adopt non-emergency COVID-19 prevention regulations, which became effective on February 2, 2023. Small Business Private Employers must comply with the following requirements:

Notice Requirements: AB 2693 (2022) extends COVID-19 notice provisions through January 1, 2024. (Labor Code 6409.6).  

Injury and Illness Prevention Program (IIPP): Employers are no longer required to maintain a standalone COVID-19 Prevention Plan. Instead, employers must now address COVID-19 as a workplace hazard under the requirements found in Section 3203.  

COVID-19 Prevention:  Section 3205 applies until February 2, 2025, except for the recordkeeping requirements which will apply until February 2, 2026.  Definitions (such as close contact, exposed group, returned case, etc.) have been updated and are included in sections 3205.1 through 3205.3. Section 3205 describes employee training requirements, how to respond to COVID-19 cases, Notice of COVID-19 cases, face coverings, respirators, ventilation and reporting and recordkeeping requirements.

Outbreaks: Employers must now report major outbreaks to Cal-OSHA.

Exclusion Pay: Employers are no longer required to pay employees while they are excluded from work. Instead, the regulations require employers to provide employees with information regarding COVID-19 related benefits they may be entitled to under federal, state, or local laws; their employer’s leave policies; or leave guaranteed by contract.

Recommended Actions:

• Replace your COVID-19 Prevention Plan with update to IIPP that incorporates standards required under Non-Emergency COVID-19 Regulations.
• Provide notice to employees and subcontractors consistent with Labor Code 6409.6.
• Comply with recordkeeping requirements of Section 3205.

8. 2023 IRS Mileage Rate

IRS mileage rate set at $65.5 cents per mile for 2023.

Recommended Actions:

• Employers who reimburse employees for travel expenses based on mileage must update employee reimbursement systems for new rate.
• Update Travel Reimbursement Expense policies.

9. 2023 California Minimum Wage Rate

California’s State Minimum Wage increased to $15.50 per hour for all employers. This impacts the minimum wage for exempt salaried employees (Executive, Administrative and Professional exemptions) who must receive a salary that is at least two times the minimum wage. Thus, the minimum annual salary for California exempt positions is $64,480.  If the employer has workers who perform work in certain cities and counties, they must be paid at the local minimum wage rate. A chart of local wages may be found here.  

Recommended Actions:

• Post up-to-date Minimum Wage posters in break rooms, and send electronically to remote workers.
• If local minimum rates apply, confirm that payroll is processing these rates correctly and local minimum wage posters are posted
• Ensure that all non-exempt employees are paid at least minimum wage, and new hires are offered at least minimum wages.
• Audit exempt employees to ensure exempt employees are receiving at least a minimum salary of $64,480 annually (which does not include bonuses, or other forms of compensation).

Helpful but Not Required Handbook Policies to Consider for Small Business Private Employers

1. Enhance Inclusivity and Minimize Harassment- Discrimination and Retaliation claims with Gender-Neutral Handbook and Pronoun Usage Policy.

The Civil Rights Department enforces employee rights to use and be addressed by the name and pronouns that correspond with their gender identity or gender expression. Small Business Private Employers are required to ensure that each employee’s chosen name and pronouns are respected to the greatest extent allowed by law.

Recommended Actions:

• Make your employee handbook gender-neutral by replacing “his/her” throughout the handbook with “they/their/them”. Give employees notice of this by including a paragraph such as:
  • “We respect each employee’s right to individually identify gender as male, female or nonbinary. For purposes of clarity, we have decided to make our handbook as inclusive as possible to our entire workforce by using the plural pronouns “they”, “their” and “them” instead of pronouns associated with gender choices” in the Introduction or Welcome section of the employee handbook.
• Update your Harassment, Discrimination and Retaliation Prevention Policy by including a paragraph or two on “Respectful Pronoun Use in the Workplace” that explains pronoun usage in the workplace, what is expected and prohibited and refers employees to the Human Rights Campaign to educate themselves on pronoun usage at work.
• Distribute or post “The Rights of Employees Who are Transgender or Gender Nonconforming”

2. Protect Confidential and Proprietary Company Information with ChatGPT (Artificial Intelligence) Policy.

To reduce legal risks of bias, accuracy and privacy, many employers are considering whether or not and to what extent they want to use or restrict ChatGPT in the workplace. Small Business Private Employers are encouraged to consider adding a ChatGPT policy to their employee handbooks. Such a policy might prohibit the use of ChatGPT for work purposes without the approval of management, and, if approved provide notice to employees that they are prohibited from entering confidential, proprietary company information into AI chatbots or language models such as ChatGPT.

Recommended Actions:

• Check out these proposed new laws re AI: in employment:  Littler: https://www.littler.com/publication-press/publication/update-californias-efforts-regulate-use-ai-employment-decision-making; SHRM: https://www.shrm.org/resourcesandtools/legal-and-compliance/state-and-local-updates/pages/california-artificial-intelligence-regs.aspx.
• Read this article in The National Law Review on: ChatGPT Risks and the Need for Corporate Policies.

3. Set the Stage for Less Disruption in the Workplace with Dress Code Policy that Includes Prohibition of Political Clothing at Work or While On-Duty.

Because of the divisive nature of politics, many employers are adding language to their Dress Code policies to prohibit political clothing or paraphernalia (e.g., hats, masks, t-shirts, scarfs, buttons, buckles, etc.) at work. Having a written policy that is consistently applied may help prevent potential problems and disruption. Although California Labor Codes §§ 1101-1104 prohibit employers from disciplining or discharging an employee for engaging in political activities, employers may take action consistent with its written policies, if, for example, an employee’s political expression or dress interferes with productivity, disrupts co-workers, or hinders the goals of the business.

It’s also important to note that the National Labor Relations Board (NLRB) ruling decided that it is unlawful to restrict pro-union apparel unless the employer can demonstrate that “special circumstances” exist justifying the employer’s regulation of such activities. Please refer to Barnes & Thornburg’s blog on this ruling for more information.

Recommended Actions

• Seek legal advice or further research to draft Dress Code policy that includes prohibition against political dress or paraphernalia at work. Implement and enforce this policy consistently.
• Train supervisors on how to monitor and enforce this policy. Seek legal advice before taking any adverse action against an employee for violations of this policy or before taking any action against an employee wearing pro-union apparel.

4. Ensure Remote Teleworkers Understand County, State and Federal Tax and Legal Implications with Remote/Telework Policy, Agreement and Safety Checklist.

During the pandemic, many Small Private Employers were forced to offer remote/telework work to their employees. Temporary COVID-19 laws emerged to regulate these temporary work arrangements. Many employees liked working from home and some of them used this opportunity to move out-of-state for more affordable housing and costs, while maintaining full time employment with their California employers.

Post-COVID-19, many of these temporary regulations are now, or soon to be, ending. Thus, it is more important than ever to draft a legally compliant Telework/Remote Work Policy that describes the process and procedures for being eligible for Telework/Remote Work Arrangement, and then entering into a Telework/Remote Work Agreement signed by both the employer and employee. This Agreement would include topics such as job responsibilities, compliance with company policies (such as wage and hour laws), equipment and supply needs and reimbursement, safety, security, employee responsibility for local zoning, personal legal liability for third parties at home remote work environment, tax implications and termination of the Agreement.

Recommended Actions:

• Seek legal and tax advice to draft legally compliant Remote/Telework Policy and Agreements. See Journal of Accountancy blog “Understand the Tax Consequences of Remote Work”.
• Ensure that all Remote/Teleworkers have signed a legally compliant Remote/Telework Agreement.

It’s Never Too Late to Minimize Small Private Employer Risks

It’s important to realize that legal compliance is simply a cost of doing business. Litigation is expensive and time consuming. We understand that laws are complicated and often difficult to understand, even for lawyers. Hopefully, this listing of Top Nine 2023 Employment Laws for Small Business Private Employers will make it a little easier to whip your Employee Handbooks in shape. Save this page as a favorite so you can come back to it when issues or questions come up and you want to refer to direct source materials. You might also find our Self-Help Legal Resources useful which includes links to employment agencies.

Need More Help?

Feel free to contact the authors if you have any further questions about these new 2023 California Employment Laws, including applicability to your industry and how to implement them.

Authors: Chuck Farrar, aka The Frog Knows Employment Lawyer and Janice Knight, Senior HR Consultant (Knight Line Consulting)

Contact Chuck (for legal advice) or Janice (for HR compliance prevention strategies) with questions or to schedule an appointment.

Disclaimer

The Law Office of Chuck Farrar provides this Blog/Website post for educational purposes only, as well as to give the public general information and a general understanding of the law in California. It is not intended to and does not provide specific legal advice. By using this Blog/Website you understand that there is no attorney client relationship between you and The Law Office of Chuck Farrar. Do not use this Blog/Website as a substitute for competent legal advice from a licensed professional attorney in your state.