At the November 5, 2024 election, California voters will determine the fate of Proposition 32, which proposes to increase the state minimum wage and provide for automatic future adjustments tied to inflation.

As artificial intelligence (AI) continues to transform the workplace, lawmakers and agencies are grappling with how to regulate its use in employment settings, from hiring practices to employee monitoring. The next administration’s approach to AI regulation will help shape the balance between innovation and worker protection, with each political party offering distinct views on the role of government oversight. A shift in power could lead to changes in how the U.S. Department of Labor (DOL), the U.S.

On June 29, 2024, Governor Newsom signed into law an amendment to California Code 1770, clarifying the scope of SB 478. Under SB 478 and previously published guidance from the attorney general, California restaurants were effectively prohibited from charging service fees or other surcharges, which many restaurants have implemented to offset rising costs, unless the amount of the service fee was specifically identified as part of the listed prices.

Background check industry groups have mounted a full-court press to remedy the recent slowdown in criminal record searches in California state courts caused by last year’s court of appeal decision in All of Us or None v.

Two noteworthy developments have occurred since the California Fair Employment & Housing Council released draft revisions to the state’s employment non-discrimination laws on March 15, 2022 that relate to the nascent law surrounding the use of artificial intelligence, machine learning, and other data-driven statistical processes to automate decision-making in the employment context.  

The Fair Credit Reporting Act (FCRA) is a federal law that governs employment-related background checks.  Most lawsuits asserting federal claims proceed in federal court.¹  The FCRA is atypical in that FCRA claims can proceed in either federal or state court.  A new opinion from a California court of appeal in Hebert v.

California state and local governmental bodies—our state legislature, and counties and cities—were active again this year in their efforts to regulate the workplace. Littler Workplace Policy Institute has been tracking these bills as they worked their way through the legislature. Some were signed into law by Governor Newsom earlier this year and have already gone into effect.

A May 2021 court decision in California, All of Us or None v.

Rod Fliegel, William Simmons and Wendy Buckingham discuss the current limitations on the use of background checks for employment in California.

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Updated July 31, 2023: The Council’s Modifications to Employment Regulations Regarding Criminal History discussed in this Insight have just been approved by the Office of Administrative Law, and the modified regulations will go into effect on October 1, 2023. Key changes from the initial proposal include:

Rod M. Fliegel and Alice H. Wang discuss the Civil Rights Council of the California Civil Rights Department’s latest revisions to the Fair Employment and Housing Act (FEHA) regulations that govern employers' use and consideration of criminal history in employment decisions.

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Alice Wang and Rod M. Fliegel say the Fair Chance Act of 2023, a California bill under consideration in the state senate, “would more or less upend the ordinary hiring process for just about every employer in California,” if passed.

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Rod Fliegel discusses California’s proposed Fair Chance Act of 2023, which would further restrict how employers can use information about the criminal histories of job seekers and employees, and offers tips for complying with the current Fair Chance Act.

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The California Civil Rights Council previously issued draft revisions to the Fair Employment and Housing Act’s regulations governing inquiries into and consideration of a job applicant’s criminal history in making hiring decisions.  On July 24, 2023, the Office of Administrative Law approved the Council’s proposed modifications to the regulations. 

Two new laws will take effect next year that restrict how employers may respond to worker off-duty cannabis use.  One law will restrict employers’ ability to ask about prior cannabis use in the hiring process, and the other will limit employer actions based on positive marijuana drug tests.

Companies that hire employees and engage independent contractors in California should brace themselves for an even greater slowdown in background checks that include criminal record searches in Los Angeles County.¹ This will result from the drastic impact of the court of appeal’s 2021 opinion in All of Us or None v.

Employers with operations in California are all too familiar with how state and local officials continue to restrict the access employers have to public records, including criminal history information.¹ For example, lengthy delays in completing standard criminal background checks are now routine in California.² Apart from criminal background checks, many employers rely on motor vehicle record checks (MVRs) to vet candidates for positions that require driving as part of the job.  In Doe v. California Dept.

Damon Ott discusses some options that trucking companies in the state may pursue when the old way of doing business is no longer open to them. 

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On January 14, 2022, the Puerto Rico Department of the Treasury issued Internal Revenue Circular Letter No. 22-01 (CL IR 22-01) announcing the applicable 2022 limits for Puerto Rico qualified retirement plans.

On December 14, 2022, the U.S. Department of Labor (DOL) and the Internal Revenue Service (IRS) signed and published a Memorandum of Understanding for Employment Tax Referrals (the “MOU”). The MOU establishes a system for referrals from the DOL’s Wage & Hour Division (WHD) to the Small Business/Self Employed Specialty Employment Tax unit (“SB/SE”).

The Puerto Rico Department of the Treasury recently issued Internal Revenue Circular Letter No. 23-01 (CL IR 23-01) announcing the applicable 2023 limits for Puerto Rico qualified retirement plans.

In an opinion issued on June 20, 2023, the United States Court of Federal Claims reminded taxpayers that they must obtain a certificate of coverage in order to claim an exemption from Social Security and Medicare taxes (FICA) under a totalization agreement.

On January 31, 2024, the Puerto Rico Department of the Treasury issued Internal Revenue Circular Letter No. 24-01 (CL IR 24-01) announcing the applicable 2024 limits for Puerto Rico qualified retirement plans.

We recently reported on the saga that followed the Constitutional Court's ruling of February 8, 2024 on the conditions for applying the partial exemption from payment of withholding tax for employers organizing shift work (CIR/92, art. 275/5). 

The ruling of February 8, 2024, had given rise to fears among many employers whose successive shifts fluctuate in size that they would simply lose the tax advantage, which can represent a reduction of 10 to 15% in the wage costs associated with shift workers. 

Joy Rosenquist discusses what California employers should watch for after the state’s AI bias bill failed and its Civil Rights Department continues work on proposed regulations that could be game-changing.

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Bradford J. Kelley and Maria Malaver-Reyes discuss how Loper Bright will impact federal and state administration of AI statutes, regulations and guidance.

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Rebecca Goldstein talks about new workplace violence prevention laws in California and New York.

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Starting in January 2025, California’s Fair Employment & Housing Act (FEHA) will prohibit employers from including a statement in a job advertisement, posting, application, or other material that an applicant must have a driver’s license unless the employer “reasonably” anticipates driving to be an essential job function that cannot be comparably performed by alternative means. The stated purpose of the new FEHA amendment is to help facilitate employment for non-drivers who rely on ride hails, public transportation, biking, and walking as their primary means of transportation.

Adam Fiss and Sebastian Chilco review updates to California’s paid leave law.

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Bradford Kelley and Britney Torres predict politics in the workplace will remain an issue beyond the election and so California employers need a long-term plan measures for issues that include voter intimidation and discrimination and employees taking time off to vote.

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Adam Joshua Fiss and Sebastian Chilco discuss a new California law that will eliminate employers’ ability to require employees to use up to two weeks of company-provided vacation before they start receiving paid family leave benefits.

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Rod M. Fliegel discusses California legislation that further amends the Fair Employment and Housing Act to prohibit discrimination in the hiring process based on the applicant’s lack of a driver’s license.

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Following other states and cities across the nation, California Governor Gavin Newsom signed Senate Bill 988, the Freelance Worker Protection Act (FWPA), into law on September 28, 2024. This new law aims to provide greater protections to freelance workers (e.g., “independent contractors”).

On June 28, 2023, the California Second District Court of Appeal issued a decision interpreting the scope of California Code of Civil Procedure section 1281.98(a)(1), a recently amended California statute that requires employers to pay all arbitration costs and fees within 30 days of the due date, or risk being in material breach of the arbitration agreement.  In Cvejic v. Skyview Capital, the court held that an arbitrator cannot cure a missed or late arbitration fee payment.

California’s legislature covered a wide array of labor and employment law topics this legislative session. The laws discussed below were signed into law by Governor Newsom and will become effective on January 1, 2024 unless otherwise noted.  This Insight includes highlights of new laws affecting employers and is not intended to cover every new state and local law that was enacted this session.

Employers should begin reviewing these requirements to help ensure compliance with these new laws. Time to update those Employee Handbooks and train the management team!

Alexander MacDonald explains when California employers’ employment agreements are subject to state law and AB 51 may apply. 

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On April 12, 2024, the U.S. Supreme Court addressed whether the Federal Arbitration Act’s (FAA) transportation exemption—meaning the FAA would not apply—only relates to workers within the transportation industry. In Bissonnette v. LePage Bakeries Park St., LLC,¹ the Supreme Court unanimously held Section 1 of the FAA exempts classes of workers who are actively engaged in interstate transportation, even if the individuals are not employed by a company in the transportation industry (the “Transportation Exemption”).

On September 29, 2021, National Labor Relations Board (NLRB) General Counsel (GC) Jennifer A. Abruzzo released a nine-page memorandum taking the unequivocal position that “certain Players at Academic Institutions” are employees under Section 2(3) of the National Labor Relations Act (NLRA).  Refusing to call such players “student athletes,” Abruzzo asserts in the memorandum (GC 21-08) that:

National Labor Relations Board (NLRB) General Counsel (GC) Jennifer Abruzzo filed a long-anticipated complaint on May 18, 2023 against the University of Southern California (USC), the Pac-12 Conference, and the National Collegiate Athletic Association (NCAA), alleging that their failure to use the term “employee” to refer to student-athletes in the university’s student athlete handbook and related social media policies intentionally discourages student athletes from exercising their alleged Section 7 rights as employees under the National Labor Relations Act (NLRA).

Tyler A. Sims disagrees with a National Labor Relations Board (NLRB) regional director’s ruling that men’s college basketball players at Dartmouth College are employees for National Labor Relations Act (NLRA) purposes.

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