Welcome to our blog series about new California employment laws affecting a wide range of businesses and employers. California already presents one of the most difficult legal landscapes for employers, and with several new laws taking effect, that challenge will only continue.
Part 1 of this series covers changes for independent contractors, wage and hour, and leaves of absence.
Unless otherwise noted, these laws each became effective January 1, 2025. As always, employers should also be aware of local laws that frequently have higher requirements.
New Contractual Requirements for Independent Contractors and Freelance Workers (SB 988, Bus. & Prof. Code section 18100, et seq.)
This new law applies to independent contractor and freelance worker contracts that are entered into or renewed on or after January 1, 2025.
The statute defines a “freelance worker” as a person or organization composed of no more than one person, whether or not incorporated or employing a trade name, that is hired as an independent contractor to provide “professional services” for $250 or more, either by itself or when aggregated with all contracts for services between the two parties during the immediately preceding 120 days. The definition excludes any individual hiring services for the personal benefit of themselves, their family members, or their homestead.
“Professional services” is defined in Labor Code section 2778(b)(2) to include a number of specified services, including marketing, human resources, travel agent, graphic design, grant writer, fine artist, licensed IRS enrolled agents, payment processing agent, photography-related work, writers, editors, illustrators or cartoonist, content-related activities for instructional materials, and licensed personal service activities.
Under the new law, an agreement with a freelance worker must be in writing and include (a) the names and addresses of both parties; (b) an itemized list of services, their value, and the compensation method; (c) payment due dates or mechanisms for determining them; and (d) due dates for the freelance worker to submit a list of services rendered under the contract to meet the hiring party’s internal processing deadlines for timely payment. If the contract does not specify a payment date, payment is due no later than 30 days after completion of the freelance worker’s services. Once performance has commenced, hiring parties cannot condition timely payment on the freelance worker’s acceptance of reduced payment or furnishing additional services or consideration. The law also includes a non-retaliation provision.
An aggrieved freelance worker can bring a civil action to enforce this law, and a prevailing plaintiff is entitled to reasonable attorneys’ fees and costs, injunctive relief, and specified damages. Public prosecutors may also enforce the law.
Additionally, hiring parties must retain contracts for no less than four years.
Wage and Hour
The state’s minimum wage increased to $16.50 per hour for all employers regardless of size. As the result:
- The minimum salary to qualify for the administrative, executive and professional exemptions from the state’s overtime laws increased to $68,640 annually ($5,720/monthly) (significantly higher than the $43,888 set by the federal FLSA).
- The tool reimbursement exemption threshold, which allows employers to require employees to provide their own tools, also increased to $33.00 per hour (double the minimum wage).
The minimum annual salary for computer professionals paid on a salary basis is now $118,657.43. The new minimum hourly rate for licensed physicians and surgeons paid on an hourly basis increased to $103.75. And, the new minimum wage rate to qualify for the collective bargaining exemption is now $21.45 per hour.
There are new requirements for fast food and healthcare workers, as well as for employers utilizing the computer professional exemption. The minimums for the state’s computer software professional exemption are $9,888.13 per month if paid on a salary basis ($118,657.43 annual salary) and $56.97 per hour if paid on an hourly basis. Additionally, employers must post supplemental minimum wage notices in the workplace next to the statewide minimum wage notice. The requirements for fast food and healthcare workers will be addressed in Part 2 of this blog.
Leaves of Absence
Jury Duty, Witness Duty, and Victims’ Time Off (AB 2499, Code Civ. Proc. Section 214, Education Code section 48205, Gov. Code section 12945.8, Labor Code sections 230, 230.1 and 246.5, Penal code section 679.027, Welfare & Institutions Code section 11320.31)
This bill amends numerous employment laws relating to an employee’s status as a victim of crime of abuse or for taking time off for jury duty, and, if the employee is a crime victim, for court appearances as a witness, or for obtaining relief.
Jury duty, court appearances, and victim-related time off laws that were formerly in the Labor Code have been moved to the Fair Employment and Housing Act (FEHA) and now fall within the jurisdiction of the Civil Rights Department (CRD). This change means that claimants can file complaints with the CRD in addition to the traditional discrimination, harassment, and retaliation claims the CRD has always handled. It also means that claimants can bring FEHA claims in court for alleged violations and seek the same kinds of damages that are available to other FEHA plaintiffs.
The scope of protection for victims has been expanded to cover “qualifying acts of violence,” which include domestic violence, sexual assault, stalking, or any act, conduct, or pattern of conduct that includes: (a) bodily injury or death to another; (b) brandishing, exhibiting, or drawing a firearm or other dangerous weapon; or (c) a perceived or actual threat to use force against another to cause physical injury or death.
The law also prohibits discrimination and retaliation against any employee who participates in the legal process, including those who take time off for jury service, to appear in court as a witness, or where they are a victim, to take time off to obtain certain relief.
Employers with 25 or more employees have a further obligation to protect employees with a family member who is the victim of certain violence and who take time off for purposes related to that violence.
Notwithstanding the broadened protections for employees, employers can still require employees to provide documentation for their time off.
Employers can also limit the total time off depending upon whether the victim is the employee (12 weeks) or the employee’s family member (10 days unless the victim dies as the result of the violence).
Employers must additionally allow employees to use available paid sick leave for matters relating to qualifying acts of violence, jury duty, and to appear in court as a witness in response to a subpoena or other court order.
The law directs the CRD to publish a model notice of the new laws by July 1, 2025. Once the model notice is published, employers must notify employees of their rights under this law. Employers are not required to use the model form, but must provide notice substantially similar in content and clarity. Moreover, employers must inform employees of their rights in writing at the time of hire and upon request.
Vacation and Paid Family Leave Benefits (AB 2123, Unemployment Insurance Code section 3303.1)
For any disability commencing on or after January 1, 2025, employers can no longer require employees to take up to two weeks of earned and unused vacation before the employee’s initial receipt of paid family leave benefits during any 12-month period in which employees are eligible for these benefits.
With the various amendments expanding employee protections, employers with California employees should take note of the updates and confirm their policies comply.
