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California’s Ban on Subminimum Wage for Disabled Workers Effective January 2025 and DOL May Soon Follow

Posted: | Category: California - Wage & Hour

By: California’s Ban on Subminimum Wage for Disabled Workers Effective January 2025 and DOL May Soon Follow

For years, Federal law authorized employers to pay wages below the federal minimum wage to incentivize employers to hire disabled employees who might not otherwise have been hired. To qualify, employers were required to obtain a “section 14(c) certificate” from the Department of Labor (DOL) authorizing a special minimum wage. 29 C.F.R. § 525.5. The DOL authorized section 14(c) certificates for workers with intellectual disabilities, visual and hearing impairments, and psychiatric disabilities, such as anxiety, depression, and bipolar disorder. 

Last week, the DOL proposed a rule phasing out section 14(c) certificates, reasoning that employment opportunities for individuals with disabilities have increased dramatically since the federal regulations were last updated in 1989. Under the proposed rule, the DOL will no longer issue new section 14(c) certificates on or after the effective date of the final rule. Employees subject to the FLSA would then be entitled to the federal minimum wage ($7.25 per hour) despite any impact their disability may have on productivity. Existing section 14(c) certificate holders will be able to continue paying the subminimum wage for up to 3 years after the effective date of the final rule. The DOL will hear comments on the proposed rule until January 17, 2025. This rule, along with many others adopted under the Biden administration, may be scrapped by the Trump administration. 

Whether or not the DOL moves forward with its proposed rule, employers should be aware that California already approved a similar phase-out, effectively banning subminimum wages for disabled workers. Effective January 1, 2025, an employee with a disability must be paid the state minimum wage or the applicable local minimum wage ordinance, whichever is higher. California Labor Code Section 1191.5, the previous law permitting California employers to pay a subminimum wage to workers with a physical or mental disability, will be repealed on January 1, 2025. (California Labor Code Section 1191.5(b)). 

If you have any questions about this post, please contact your favorite CDF attorney.

California Labor Commissioner Publishes New Whistleblower Protection Posting

Posted: | Category: California - Whistleblowers

By: California Labor Commissioner Publishes New Whistleblower Protection Posting

In July 2024, Governor Newsom signed AB 2299 into law. AB 2299 enacted sections 98.11 and 1102.8 of the California Labor Code. Section 98.11 requires the California Labor Commissioner to create a model list of employees’ rights and responsibilities under the state’s whistleblower laws and put it on its website. Section 1102.8(a) requires all California employers to post the model list prominently in the workplace and to ensure that the lettering is at least 14 14-point typeface. The statute also requires that the California State Attorney General’s Whistleblower Hotline phone number be included in the posting (1-800-952-5225).

Within the last week, the California Labor Commissioner created the model document and posted it on its website, available here. All California employers should prominently display this poster where other workplace posters are displayed, and ensure that the poster typeface is at least 14-point and includes the above phone number.

What’s Past is Prologue: Employment-Based Immigration in the Second Trump Administration

Posted: | Category: Immigration - General

By: What’s Past is Prologue: Employment-Based Immigration in the Second Trump Administration

Donald Trump’s 2024 campaign promised mass deportation, ending of birthright citizenship, and “sealing” the southern border. While Trump’s rhetoric is largely aimed at the undocumented population, his electoral victory will likely affect employers petitioning for and lawfully employing foreign national workers. This blog piece will offer some opinions on what California employers can expect in employment-based immigration out of a second Trump administration.

The one thing that we should not expect is any real changes in the law. While the Republican party controls the White House and both chambers in Congress, the GOP is unlikely to be able to overcome a filibuster without the votes of seven Democratic senators. Given the importance of immigration to our current national politics, it’s difficult to see a scenario where the GOP can expend sufficient political capital to garner the votes needed to make any substantial changes to the Immigration and Nationality Act.  

This does not mean that the practice of immigration law will not change in 2025.  Presidential administrations have vast amounts of control over the implementation of immigration law and policy. Looking to the past gives a glimpse into the future. The incoming Trump Administration will change the culture within the immigration agencies and the regulations that interpret the Immigration and Nationality Act. These changes are likely to complicate an already overly complicated process, raise costs, and raise the stress levels for (a) employers, (b) foreign nationals seeking to utilize lawful employment-based immigration processes, and (c) the lawyers that counsel them.

Change in Culture

Shortly after Inauguration Day, the incoming Trump Administration will almost definitely order the immigration agencies to change the criteria upon which immigration petitions are adjudicated. While it’s difficult to foresee exactly how the Trump Administration will tweak these rules, the past offers us a glimpse into the future.  

In the early days of the first Trump Administration, USCIS withdrew the policy of deferring to their prior decisions. This policy states that absent a showing of fraud or gross misrepresentation in the prior decision, USCIS will defer to its prior decision making. This change was foundational to all other sub-regulatory changes. With USCIS no longer bound to its prior decisions, the agency is now free to reinterpret its regulations and create chaos in lawful employment-based immigration. Educational degrees that were approved in prior petitions may no longer qualify for the visa sought. Government publications USCIS previously relied on as source material may no longer given any weight. Wages that met the standard in prior petitions now may not pass muster.  

We should expect that USCIS will communicate these changes not through notice and comment rulemaking, but through the adjudication process. Many petitions that were not questioned in the past will now likely draw a Request for Evidence or Notice of Intent to Deny. It is likely that USCIS will communicate their new standards by stating that petitions that once were approved without question no longer qualify.

Additionally, USCIS may return to the practice of advancing unreasonable, illogical, or irrational positions in its decision-making process. As one of many examples, in 2016, British music producer Austen Jux-Chandler won a Grammy Award for engineering and mixing Adele’s album 25. In 2020, during the first Trump administration, Mr. Jux-Chandler submitted an EB-1 Person of Extraordinary Ability immigrant petition claiming that he qualified because he had received a major, internationally recognized prize or award. USCIS denied his petition stating that while Mr. Jux-Chandler received a Grammy statuette, he had not won a Grammy Award.

Change in Regulations

Employers should expect the Trump administration to issue regulations reinterpreting the Immigration and Nationality Act. These regulatory changes will take longer to implement than the cultural changes mentioned above. The Administrative Procedures Act requires USCIS to publish proposed regulations and allow the public to commit on the proposed changes.

The Trump administration may publish regulations changing the H-1B visa requirements. While commonly used in Information Technology position, this visa is used to employ foreign nationals in positions that require at least a bachelor’s degree in a particular field. Changes to the H-1 programs in the prior administration removed the ability to place an H-1 worker at a third party worksite, eliminated the use of work experience to met educational qualifications, and restricted the education that qualifies for the visa.

The second regulatory change the prior Trump administration attempted to implement was a change to the Public Charge rule. The Immigration and Nationality Act forbids the entry of foreign nationals who are likely to need public assistance. Prior (and current) regulation requires immigrants to obtain a sponsor and submit a modicum of evidence to meet an objective standard that they are not likely to use public benefits. Expect a change to the Public Charge rule that will widen its scope. Immigrants that were previously not subject to the rule will likely be required to meet the public charge test. Also expect immigrants to be required to produce documentations akin to a loan application or extension of credit from a bank. Finally, and most alarmingly, we expect a new Public Charge rule to grant immigration officers wider latitude in determining if and when an immigrant is a public charge. 

Conclusion

Government, and in particular, President Trump is highly unpredictable. Thus, it is difficult to say exactly what changes will and will not occur with employment-based immigration during the Trump 2.0 administration. However, it does appear to be pretty clear that employers engaging with the employment-based immigration system should expect substantial additional scrutiny and unpredictability. The changes that are being made, regardless of what they actually will consist of, will very likely translate into higher costs in the form of additional attorney time to deal with changes to immigration processing, slower processing times as well as more challenges and obstacles in securing work visas for immigrant employees and immigrant students. CDF Labor Law LLP’s Immigration Practice Group is more than happy to assist California employers with their immigration law needs in 2025 and help employers navigate all the changes and new obstacles.  

California’s Computer Professional Exemption Minimum Compensation to Increase by 2.5% Next Year

Posted: | Category: California - Wage & Hour

By: California’s Computer Professional Exemption Minimum Compensation to Increase by 2.5% Next Year

Section 515.5 of the California Labor Code provides that certain California computer software professionals are exempt from the overtime requirements of state law outlined in the various wage orders and section 510 of the Labor Code. One of the criteria for qualifying for this exemption is that the employee’s compensation is equal to or greater than the specified minimum pay rates set by the California Department of Industrial Relations (DIR).  

Effective January 1, 2025, the DIR adjusted the computer software professional’s minimum hourly pay rate to qualify for the exemption from $55.58 to $56.97 and the minimum monthly salary for the exemption from $9,646.96 to $9,888.13. Finally, for those professionals paid annually, the minimum annual salary exemption moves from $115,763.35 to $118,657.43.  

If you are employing computer software professionals on an exempt basis in California and using the provisions of Section 515.5 of the Labor Code to qualify the employee as exempt, you’ll want to make sure the employee continues to receive the minimum compensation required when this change is implemented on January 1, 2025.

In addition to the salary requirement, the employer must also show that an exempt California computer professional satisfies the duties test set forth under Labor Code Section 515.5. This includes proving that the exempt computer professional employee regularly exercises discretion and independent judgment while engaged in intellectual or creative work. The duties test does not change from 2024 to 2025. California employers can determine if their computer software professionals perform the duties necessary to fulfill the duties test by comparing the duties their computer software employees perform and comparing it with the requirements of the statute.  

New California Laws Regulating Privacy and Artificial Intelligence

Posted: | Category: California - General

By: New California Laws Regulating Privacy and Artificial Intelligence

In September, Gavin Newsom signed a host of new legislation into law, including two bills – AB 3030 and SB 1223, designed to help regulate health data and generative AI in the healthcare space. 

SB 1223 is a less highlighted bill that simply modifies the California Consumer Privacy Act’s (CCPA) definition of sensitive personal information to now include “neural data,” also known as “information generated by measuring the activity of a consumer central or peripheral nervous system, and that is not inferred from nonneural information.” Essentially, this bill expands the protections for individual’s private health care data by adding protections for neural data, which is information received directly from a person’s body. 

The second bill, AB 3030, seeks to regulate generative AI which is a form of AI that “can generate derived synthetic content, including images, videos, audio, text, and other digital content.” Essentially, this type of AI is trained to create new data. This new bill seeks to strike a balance in the healthcare field by allowing the use of generative AI while also putting protective measures in place. The bill’s author believes that generative AI in healthcare can help transform medical research, patient care, and diagnosis. 

This bill applies only to health facilities, clinics, physician’s offices, or offices of group practice that utilize this technology to create verbal or written patient communications about patient’s clinical information. 

If one of the designated facilities utilizes this technology, it must include a disclaimer to inform the patient that the communication was created using generative AI. Not only is the use of a disclaimer required, but the communication must also include clear instructions on how a patient can contact a human health care provider or employee of the applicable facility. The only exception to needing the disclosure and clear instructions is if the communication prepared by the generative AI is read and reviewed by a human licensed or certified health care provider. This bill’s purpose appears to be that patients understand that these messages, whether audio, visual, or written, are created by generative AI and not a real person. This bill follows the trend of creating more regulations and transparency surrounding the use and implementation of AI.

Overall, AB 3030 follows the recent trends of creating new regulations surrounding the use of AI. 

California Court of Appeal Supports Employers’ Fight Against “Headless” PAGA Actions

Posted: | Category: California - General

By: California Court of Appeal Supports Employers’ Fight Against “Headless” PAGA Actions

In 2022, the U.S. Supreme Court published its decision in Viking River Cruises v. Moriana (Viking River), which was hailed as a “Big Win for California Employers.” The decision allowed for partial enforcement of arbitration agreements in actions brought under California’s Private Attorneys General Act (PAGA). The celebration of the “Big Win” was short-lived as the fight over the enforceability of arbitration agreements in PAGA actions continued immediately after Viking River was decided.

Recently, PAGA plaintiffs began implementing a new anti-arbitration strategy wherein they attempted to bring a representative PAGA action that purportedly excluded the arbitrable portions of a PAGA action. Specifically, the PAGA plaintiffs assert that their representative PAGA action is solely based on alleged Labor Code violations against other, non-party employees. The PAGA plaintiff asserts that their PAGA action includes no arbitrable individual claim and that they seek no individual relief. Given the purported absence of claims by the plaintiff, these actions have been referred to as “headless” PAGA actions. And plaintiffs argue that these “headless” PAGA actions are immune from arbitration. 

Unfortunately, some trial courts have allowed PAGA plaintiffs to avoid arbitration and maintain “headless” PAGA actions in court. And the trend is gaining momentum. Bloomberg Law recently published an article about this anti-arbitration litigation tactic, titled “California Workers Try to Avoid Arbitration With ‘Headless PAGA,” [subscription required] explaining that over one-third of the PAGA actions filed in Los Angeles County over the past six months have been “headless” PAGA actions.

Plaintiffs purporting to have a “headless” PAGA action rely heavily on the Second District Court of Appeal decision in Balderas v. Fresh Start Harvesting, Inc. (Balderas). In Balderas, the plaintiff’s complaint asserted that she “is not suing in her individual capacity; she is proceeding herein solely under the PAGA, on behalf of the State of California for all aggrieved employees, including herself and other aggrieved employees.” The appellate court held “that an employee who does not bring an individual claim against her employer may nevertheless bring a PAGA action for herself and other employees of the company.”

If the Balderas decision stopped there, it would have been rather ordinary. One would reasonably construe the holding as a recitation of the long-held rule that an aggrieved employee has standing to maintain a PAGA cause of action even if they have no valid individual Labor Code cause of action. 

However, in dicta, Balderas states that the legislature extended “broad standing to aggrieved employees who do not depend on the viability or strength of a plaintiff’s individual PAGA claim. The inability for an employee to pursue an individual PAGA claim does not prevent that employee from filing a representative PAGA action.” The “headless” PAGA actions arose from these statements, which support the proposition that a plaintiff can maintain a representative PAGA action (i.e., a cause of action for civil penalties under PAGA) without asserting an arbitrable individual PAGA claim. 

Fortunately, though, the same Court of Appeal that decided Balderas recently published a decision with a holding that is entirely inconsistent with the dicta in Balderas. 

In Rodriguez v. Lawrence Equipment, Inc. (Rodriguez), the Second District Court of Appeal held that an arbitrator’s final adjudication of non-PAGA Labor Code claims has a preclusive effect on a related PAGA action. The plaintiff in the case, Rodriguez, unsuccessfully arbitrated his individual Labor Code causes of action, failing to establish that he suffered any Labor Code violations. After arbitration, Rodriguez sought to prosecute his representative PAGA action in court but the trial court dismissed Rodriguez’s PAGA action for lack of standing. The appellate court affirmed, concluding that “Rodriguez is precluded from relitigating the Labor Code violations in an attempt to establish he is an aggrieved employee,” and he “thus lacks standing to pursue the PAGA cause of action.”

The holding in Rodriguez is entirely inconsistent with the Balderas dicta that supports “headless” PAGA claims. Under Rodriguez, “the inability for an employee to pursue an individual PAGA claim” does eliminate that employee’s standing to maintain a PAGA action. Under Rodriguez, standing under PAGA does “depend on the viability or strength of a plaintiff’s individual PAGA claim.” 

Rodriguez will not stop PAGA plaintiffs from relying on Balderas to justify their “headless” PAGA actions. But their reliance is on shaky ground. The Rodriguez decision should help employers fight back against “headless” PAGA actions and successfully enforce their arbitration agreements under Viking River. It is also important that employers distinguish Balderas to ensure its holding is appropriately limited. Employers should also ensure that they use “PAGA claim” and “PAGA action” precisely and consistent with Viking River. And, further, they should be vigilant of how PAGA plaintiffs rely on pre-Viking River PAGA decisions to support their arguments to oppose arbitration pursuant to Viking River. Some of the focal points are set forth below.

  • Balderas merely determined whether allegations were sufficient to overcome a motion to strike a complaint, and Balderas’ complaint alleged that she sought to recover civil penalties under PAGA “for all aggrieved employees, including herself and other aggrieved employees.” Balderas’ PAGA action was not purely representative, limited to “non-individual PAGA claims” brought solely on behalf of other aggrieved employees, and excluding claims on behalf of Balderas herself.
     
  • Viking River “use[d] ‘individual PAGA claim’ to refer to claims based on [Labor C]ode violations suffered by the plaintiff.” In Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104, the California Supreme Court “use[d] the terms ‘individual’ and ‘non-individual’ claims in accordance with the high court’s usage in Viking River.” Under both decisions, “individual PAGA claims” are subject to arbitration. A plaintiff’s claim that they are an “aggrieved employee” under PAGA is a claim that the plaintiff suffered Labor Code violations. Thus, all PAGA plaintiffs claiming to have standing as an “aggrieved employee” are asserting an “individual PAGA claim” that is arbitrable under Viking River.
     
  • Before Viking River was decided, the California Supreme Court decided Kim v. Reins Int’l California, Inc. (2022) 9 Cal.5th 73, explaining that “[t]here is no individual component to a PAGA action” and thus California courts routinely “reject[] efforts to split PAGA claims into individual and representative components” through an arbitration agreement, or otherwise. Viking River held that “the FAA preempts the [California] rule [that] precludes division of PAGA actions into individual and non-individual claims through an agreement to arbitrate.” No legal authority suggests that a PAGA plaintiff who agreed to arbitrate their individual PAGA claims may avoid such arbitration by filing a “headless” PAGA action. Absent the agreement to arbitrate under the FAA, PAGA actions may not be split in that manner. 
     
  • PAGA plaintiffs cannot avoid arbitration by declining to seek any civil penalty for themselves because PAGA authorizes “a civil penalty to … be recovered through a civil action brought by an aggrieved employee on behalf of the employee and other current or former employees,” and PAGA requires that the court distribute the civil penalty “to the aggrieved employees.” PAGA plaintiffs have no say in the matter. Moreover, California law requires arbitration of “any question arising between parties to an agreement whether the question is one of law or of fact or both.” A PAGA plaintiff’s claim that they are an aggrieved employee is a question of fact which, under Viking River and Adolph, must be bifurcated and compelled to arbitration. That is so even if the PAGA plaintiff could feasibly disclaim any individual relief.

The fate of “headless” PAGA actions will likely be determined next year, as it is expected that California appellate courts will begin to decide PAGA cases that are currently on appeal following the denial of motions to compel arbitration of “individual PAGA claims.” 

For example, Garcia v. Omni Hotels Management Corporation (Garcia), Case No. D084151, arose from a trial court’s order denying an employer’s motion to compel arbitration in a PAGA action because, the trial court found, “there is nothing to order to arbitration if Plaintiff is not seeking any [civil penalties] based on violations that occurred as to them.” That appeal is fully briefed before the Fourth District Court of Appeal. 

NLRB’s New Ruling Bans Captive-Audience Meetings

Posted: | Category: Labor Law - Union Organizing

By: NLRB’s New Ruling Bans Captive-Audience Meetings

By: NLRB’s New Ruling Bans Captive-Audience Meetings

Earlier this week, on November 13, 2024, the National Labor Relations Board (NLRB) issued its decision in Amazon.com Services LLC, ruling that employers violate the National Labor Relations Act (NLRA) by requiring employees to attend “captive-audience meetings” under threat of discipline or discharge. In doing so, the Board overruled its 1948 decision in Babcock & Wilson Co. Historically, mandatory captive-audience meetings have served as a powerful tool, which allowed employers to share their views with all members of the bargaining unit on why the workplace should remain union-free. 

The decision is not surprising. In April 2022, General Counsel Abruzzo issued a memorandum announcing that she planned to ask the Board to find that mandatory meetings where employers provide their outlook on unionization where unlawful under the NLRA. In Amazon, the Board followed through holding that Babcock was poorly reasoned and that captive audience meetings “have a reasonable tendency to interfere with and coerce employees in the exercise of their Section 7 right to freely decide whether or not to unionize…” 

A number of states, including California, have recently enacted legislation banning, at least in part, captive audience meetings. Under California’s AB 399, effective January 1, 2025, California employers can no longer discharge, discriminate, retaliate against, or threaten to carry out such action when an employee refuses to attend a captive audience meeting where the employer is discussing their views about politics, including unionization. 

Key Takeaways 

1.  Voluntary Meetings Are Still Allowed: 

The Board clarified that employers are still allowed to hold meetings where they express their views on unionization, but only under very specific conditions:

  • Employees must receive reasonable advance notice of the meeting, including the subject matter.
  • Attendance must be voluntary, with no adverse consequences for those who choose not to attend.
  • No attendance records may be kept.

2.  The Change Will Be Applied Prospectively 

The Board made it clear that this new standard will only apply moving forward, respecting the reliance employers may have placed on Babcock & Wilson and therefore the NLRB will not attempt to claim that prior mandatory meetings violated the Act.

What is Next? 

We expect that both the Amazon NLRB ruling and the new California statute will be challenged in the courts. Under the recent Loper Bright decision, the federal courts are less likely to respect an agency decision that overturns a 75-year precedent, and we believe there is a good chance that the decision could be overturned by the courts, especially if it makes it all the way to the United States Supreme Court.  

In addition, we know that a number of other state statutes banning mandatory captive audience meetings, like the one in California, are being challenged in the courts on the grounds that they either (a) are an unconstitutional restriction on the freedom of speech; and/or (b) are preempted by federal law and the National Labor Relations Act.  

Finally, with the recent election results, employers can expect to see another paradigm shift under the new Trump Administration. Even if the ban on mandatory captive audience meetings survives court scrutiny, the Trump NLRB, which will have a 3-2 pro-employer majority, is likely to look at all of the recent pro-union decisions issued by the Biden Board and seek to overturn them. Thus, it is doubtful that the federal ban on mandatory captive audience meetings will survive a four-year Trump NLRB.

Of course, until then, Amazon reflects the current standard, and effective January 1, a corresponding California ban on mandatory captive audience meetings will kick in. Employers involved in union elections also must be wary that under the Board’s 2023 Cemex decision, holding a captive-audience meeting that violates Amazon could be deemed an “unfair labor practice” that the Board may throw out the results of any election and issue a Cemex bargaining order requiring the employer to recognize and begin bargaining with the union. 

For more information about this decision and other critical legal updates for 2025, we encourage you to register for CDF’s complimentary November 20 webinar.

CDF Webinar: New California Employment Laws and Developments for 2025

Posted: | Category: California - General

Join us for a comprehensive, complimentary webinar on November 20, 2024, from 10:00 – 11:00 a.m. (Pacific), presented by CDF Partners Mark S. Spring and Nicole Legrottaglie Wohl.

With Unionization Efforts on the Rise, NLRB Tightens Scrutiny on Employer Statements During Union Elections

Posted: | Category: Labor Law - Union Organizing

By: With Unionization Efforts on the Rise, NLRB Tightens Scrutiny on Employer Statements During Union Elections

By: With Unionization Efforts on the Rise, NLRB Tightens Scrutiny on Employer Statements During Union Elections

The landscape of labor relations is rapidly shifting, particularly for California employers, as unionization efforts gain momentum across industries. Under President Biden and National Labor Relations Board (NLRB) General Counsel Jennifer Abruzzo, the agency has pursued a significant pro-union stance, ramping up scrutiny on employer conduct during union election campaigns. While that is likely to change with the new administration, the NLRB continues to issue many pro-union decisions that are expressly designed to make the path to union organizing easier for unions.

In a pivotal decision issued earlier this month, the NLRB overruled a 40-year-old precedent that had previously allowed employers to inform workers about certain potential consequences of unionization, including the likely changes to their relationship with management. The case, Siren Retail Corp. d/b/a Starbucks, marks a clear shift in how the current Board believes employer statements during union campaigns should be scrutinized. However, following Trump’s election to his second presidential term, CDF anticipates this ruling may be successfully challenged, but it remains the law until a new decision overturning it is issued. 

The Siren Decision: A Sea Change in Employer Communication

Historically, employers could tell employees that unionizing might limit their direct access to management or change how management addresses individual employee concerns. This was permissible under the 1985 Tri-Cast decision. However, this month, in Siren, the NLRB determined that the Tri-Cast ruling “erred in deeming categorically lawful nearly any employer statement to employees touching on the impact that unionization would have on the relationship between individual employees and their employer.”

While the NLRB still acknowledges that employers can make certain factual statements about unionization, such as acknowledging that union representation will change the dynamics of the employer-employee relationship, it now requires that such statements be made with more caution. Specifically, the Board’s majority held that any employer statements about unionization must be “carefully phrased” and based on objective facts, conveying the employer’s belief about the probable consequences of unionization. If such statements are not grounded in objective fact, or predict negative consequences that would result from the employer’s own actions, it is “no longer a reasonable prediction based on available facts but a threat of retaliation based on misrepresentation and coercion” and will be found to be a violation of the National Labor Relations Act by the Board.

A Changing Political Landscape

While the NLRB, under President Biden’s administration, has been about as pro-union as any Board in recent memory, this dynamic will almost certainly change dramatically under the Trump Administration. The courts have upheld the President’s authority to remove the NLRB’s General Counsel on inauguration day when Biden did this almost four years ago. Trump will likely take similar measures and appoint a new NLRB General Counsel shortly after being sworn into office. Just as Biden’s Board came with sweeping legal changes, CDF anticipates a significant paradigm shift under Trump’s term, returning to more employer-friendly standards and precedent. 

For more information on the Siren decision and other important recent NLRB decisions, as well as a discussion on the shifting tides of the NLRB, we encourage you to register for our November 20 complimentary webinar, where these items will be discussed at some length, as we help California employers prepare for 2025. 
 

California Employers: Are You Ready for the New Laws of 2025?

Posted: | Category: California - General

By: California Employers: Are You Ready for the New Laws of 2025?

The California legislature is never dormant when it comes to enacting new laws for California employers. This year, the statutes are less numerous than most other years, but there are still some important new changes that all California employers should be aware of.  

Below is a summary of the key changes. For a more comprehensive and detailed review of the new laws and published court opinions that affect California employers starting in January, we encourage you to register for our one-hour complimentary webinar on November 20, CDF Webinar: New California Employment Laws and Developments for 2025, that I will be conducting with my partner Nicole Legrottaglie Wohl.

Minimum Wage

Last week, California voters very narrowly rejected Proposition 32, which would have increased our state minimum wage to $18 an hour for large and medium-sized employers and $17 an hour for small employers with 25 or fewer employees.  

However, that does not mean the state minimum wage will be frozen for 2025. Instead, the minimum wage will increase based on the consumer price index (CPI). Effective 2025, the new California state minimum wage will increase to $16.50 an hour (up from $16 an hour).  

This fifty-cent increase also moves the minimum salary test for the primary overtime exemptions (administrative, executive, professional) to $68,640 annually or $5,720 monthly. If you are not paying your exempt employees who are qualified under these exemptions a salary of at least this much starting on January 1, 2025, they will not qualify as exempt. California employers should check the salary of its exempt middle management and salaried administrative personnel to ensure compliance. It is also important to remember that this salary test applies even to part-time exempt employees.  

In addition, many unionized California employers take advantage of certain exemptions to overtime laws, sick leave provisions, and other wage and hour laws only available to unionized employers. Most of these exemptions require, among other things, that the employees covered by the applicable collective bargaining exemption have provisions indicating that the employees are paid a minimum of 1.3x the state minimum wage.

Thus, all California employers taking advantage of any of the applicable collective bargaining agreement (CBA) wage and hour exemptions should ensure that their CBAs are compensating employees at least $21.45 an hour beginning January 1, 2025. If not, the state may find that the exemption is not applicable, and the employees covered by the CBA are required to be paid in strict accordance with California law. 

It is important to keep in mind that the standard $16.50 minimum wage is only half the story in California. Certain fast-food workers must be paid $20 per hour based on the state law that took effect last year. The California Fast Food Council has the authority to raise the fast-food minimum wage effective January 1, 2025, but so far has not acted to do so.  

Last month, state law kicked in requiring certain healthcare industry employees to be paid a minimum of $23 an hour through June 30, 2025, which will then increase to $24 an hour. The healthcare minimum wage is set to increase another dollar per hour to $25 an hour on July 1, 2026.  

In addition, there are many local ordinances that require higher minimum wages for employees working in those jurisdictions. Some of those local minimum wage ordinances apply to all employees in the jurisdiction. Others only apply to employees in certain industries or job classifications. Many of those local ordinances are pegged to inflation and thus have their own automatic increases for 2025.  

California employers are urged to audit their payroll to ensure they comply with all the new local and statewide minimum wage requirements for their industries and locations. Further, all California employers should ensure that with these changes their exempt employees continue to qualify as exempt under the new salary basis minimum, and that their CBAs that take advantage of the available exemptions to California wage and hour law meet the new pay requirements.  

Paid Family Leave 

Effective January 1, 2025, AB 2123 eliminates the ability of California employers to require their employees to use up to two weeks of accrued vacation time before they start receiving Paid Family Leave benefits under the EDD’s paid family leave program.

Sick Leave Expansion

Starting next year, under AB 2123, employees in California can now use sick leave to assist any family member who is a victim of certain types of violent incidents or threats of violence. California employers should provide notice of this change to their employees and alter their sick leave policies and practices. California employers should also consider training their management and human resources professionals, so that they are aware of these new changes and that leave is no longer limited to victims of domestic violence, sexual assault and stalking.

Captive Audience Meetings

With AB 399, California joins several other states in banning mandatory captive audience meetings. Effective January 1, 2025, under the California Worker Freedom from Employer Intimidation Act, California employers can no longer discharge, discriminate, or retaliate against, or threaten to carry out such actions because an employee refused to attend any employer-sponsored meeting related to religious matters, political matters, or matters related to the decision to support or not support a labor organization/union.  

Restrictions on Requiring Drivers’ Licenses for Job Openings

Effective January 1, 2025, SB 1100 prohibits California employers from including statements in job advertisements, job applications, or other employment materials that an applicant must possess a valid driver’s license unless the employer can prove that it: (1) reasonably suspects driving to be one of the job functions of the position; and (2) reasonably believes that using an alternative form of transportation (such as biking, public transportation, etc.) that does not require a driver’s license would not be comparable in travel time or cost to the employer.  

As indicated above, this is only a brief summary of some of the key changes to California employment law for 2025. For the most comprehensive summary of the key changes and suggestions on how these changes should be implemented in the workplace, please click here to register for our November 20 webinar. The webinar will also address some of the key published judicial decisions that affect California employers, along with NLRB and other agency developments, from 2024.  

California Prop. 32: A Closer Look at Minimum Wage Increases

Posted: | Category: California - Wage & Hour

By: California Prop. 32: A Closer Look at Minimum Wage Increases

Should Proposition 32 be voted into law this year, California faces yet another minimum wage hike.

Current Minimum Wage Landscape

The Golden State has surely lived up to its name, offering employees one of the highest state minimum wages in the country, trailing only the District of Columbia ($17.00 per hour) and Washington ($16.28). Juxtaposed with the Federal minimum wage, which has remained at $7.25 for the past 15 years, California’s minimum wage has doubled since 2010 and currently stands at $16.00 per hour.

Upcoming Changes to California Minimum Wage

Due to annual inflation, the state is currently scheduled to see another wage increase on January 1, 2025, regardless whether Proposition 32 is enacted or not. If the ballot measure should fail, all employers can expect to pay employees at least $16.50 per hour. However, should the measure pass, this rate would raise even higher. Employers with 25 or fewer employees would be required to pay non-exempt employees at least $17.00 per hour beginning January 1, 2025, and employers with 26 or more employees—$18.00.

If passed, Proposition 32 would also include a subsequent wage hike in 2026 for employers with 25 or fewer employees, thereby matching the minimum wage for all non-exempt employees at $18.00 per hour. Afterwards, any further increases year after year will be tied to the U.S. Consumer Price Index (CPI-W).

Interplay With Other Minimum Wage Laws

These increases would not immediately impact persons already subject to a higher minimum wage, such as certain fast-food workers earning at least $20.00 per hour and certain health care workers earning $25.00 per hour, or employees in various locales where minimum wage is higher than that set by the State. 

Competition Among Employers

One major concern with these increases is the impact on competition among employers. As wages rise, industries may feel pressure to match these rates to attract and retain talent. Workers are likely to gravitate towards positions that offer better pay, compelling employers across various sectors to reconsider their compensation strategies. This, coupled with anticipated increased overhead costs, could have a significant impact on many employers in the coming years.

Current Polling Status

As for the political landscape surrounding Proposition 32, polls indicate a mixed response from voters, but are trending towards opposition to the ballot measure. While some surveys continue to show support for higher wages across the job market, others reveal hesitance regarding the broader implications of such measures. Predictions about the outcome of Proposition 32 passing remain uncertain, but at least one poll released by the Public Policy Institute of California recently showed that only 44% of voters back the measure, down from approximately 50% in September, 2024.

Conclusion

Whatever the result, one thing is clear: the outcome will not only shape California’s labor landscape, but also set a precedent for minimum wage policies across the nation. Ultimately, the decision rests in the hands of voters, who will be forced to weigh the benefits of higher wages against potential challenges for employers and the broader economy.

Stay tuned for updates as we monitor the developments leading up to and following the election!

FTC Appeals Injunction Against Final Rule Banning Non-Compete Employment Agreements

Posted: | Category: Restrictive Covenants

By: FTC Appeals Injunction Against Final Rule Banning Non-Compete Employment Agreements

Last Friday, the Federal Trade Commission (“FTC”) gave notice to appeal Judge Brown’s nationwide bar on the FTC’s final rule creating a Non-Compete Ban or enforcement of the rule in the case of Ryan LLC v. Federal Trade Commission. This appeal followed another appeal by the FTC of an adverse ruling from Properties of the Villages, Inc. v. Federal Trade Commission.

While it is still early days on the appeals, because the Ryan appeal is within the Fifth Circuit and the Villages appeal is within the Eleventh Circuit, conflicting opinions could result. And, if there are conflicts among the Circuit Courts, the United States Supreme Court will likely give the last word as to whether the FTC’s ban must be followed or not.

For the moment, employers are relieved from any Federal rules in this area but should continue to monitor and ensure compliance with state laws governing non-compete agreements in the employment arena.

If you need assistance with determining the enforceability of non-compete agreements, please reach out to Dan M. Forman or your favorite CDF attorney.

LWDA Publishes PAGA Frequently Asked Questions

Posted: | Category: California - General

By: LWDA Publishes PAGA Frequently Asked Questions

The California Labor & Workforce Development Agency (“LWDA”) recently published Frequently Asked Questions pertaining to the Private Attorneys General Act (“PAGA”) and the recent amendments that impact PAGA claims after June 19, 2024.

Previously, CDF provided guidance on the PAGA reforms introduced by Assembly Bill (AB) 2288 and Senate Bill (SB) 92.

The FAQs address one of the most significant reforms, the stricter standing requirement that a PAGA plaintiff represented by private counsel is limited to seeking PAGA penalties for alleged labor code violations the employee personally experienced. The stricter standing requirement does not apply to plaintiffs represented by non-profit legal organizations, who, like under prior law, may seek PAGA penalties based on alleged violations they did not personally experience, as long as the employee claims to have experienced at least one labor code violation.

The FAQs specify that for claims based on post-June 19, 2024 PAGA notices, 65 percent of recovered penalties go to the State and 35 percent go to the aggrieved employees (and Courts may award injunctive relief). And, as before, for PAGA notices pre-June 19, 2024, recovered penalties will continue to be distributed as 75 percent to the State and 25 percent to the aggrieved employees.

The FAQs also address limitations on recoverable penalties. With some exceptions, the maximum civil penalty will be capped at 15 percent of the maximum penalty if the employer took all reasonable steps to comply with the law prior to receiving the PAGA notice, or at 30 percent if the employer takes all reasonable steps to achieve compliance within 60 days of the PAGA notice. It remains to be seen how the courts will define the “all reasonable steps” standard.

The FAQs specify that employers may take new steps to cure certain violations. Within 33 days of the PAGA notice, the employer must give written notice to the aggrieved employee and to the LWDA that the alleged violations have been cured, with a description of the actions taken, including specific requirements for alleged wage statement violations and alleged violations involving unpaid wages. Effective October 1, 2024, employers with fewer than 100 employees may first, within 33 days of the PAGA notice, submit a cure proposal to the LWDA and then work with the LWDA to ensure the violations have been cured.

Also, employers of any size may request a stay of court proceedings and an early evaluation conference with a neutral evaluator, which is intended to facilitate early evaluation and resolution of the lawsuit. However, it is not clear how this will be carried out.

CDF will provide updates on further clarification, court decisions or additional guidance released by the LWDA. If you have any questions about this blog post, please contact your favorite CDF attorney.

A Reminder to California Employers: Time Off to Vote Notice Requirement Approaching on October 26

Posted: | Category: California - General

By: A Reminder to California Employers: Time Off to Vote Notice Requirement Approaching on October 26

With the 2024 election fast approaching in a few short weeks, California employers should refresh themselves on complying with the state’s voting leave and posting requirements for employees.

Employer Notice Requirements

California Elections Code section 14001 requires employers to post a notice, at least ten days before a statewide election, notifying employees of their eligibility to take paid leave in order to vote. This notice should be posted in a conspicuous place either in the workplace or where employees can see it when they enter or exit the workplace. This year’s election is on November 5, 2024, so employers must comply with the notice requirement by October 26, 2024.

Employers can download a sample notice in various languages here or call the Elections Division at (916) 657-2166 to order posters.

Paid Time Off to Vote

California Elections Code section 14000 details employees’ voting rights: 

  • Employees are eligible for paid time off to vote if they are unable to vote outside of working hours; employees can take as much time as they need to vote, but only two hours will be paid.
  • Employers may require that time off for voting be taken only at the beginning or end of an employee’s shift, unless mutually agreed otherwise.
  • Employers may require that employees provide at least two days advance notice that they will need time off work to vote.
  • Polls are open from 7:00 a.m. to 8:00 p.m. on election day, but in-person voting starts well before November 5, 2024, varying across counties.
  • Employers should permit employees time off to vote any day in-person voting is available in their area, not just on election day.

Employers should start informing their supervisors, management, and HR personnel about the company’s time-off policy for voting and what California law requires in advance of election day. Employers should also review their company handbooks to ensure that their voting leave policies are up-to-date and comply with California law.

If you have any questions about California’s voting leave or notice requirements, please contact your favorite CDF attorney.

Former DraftKings’ Employee Loses Bet On California’s No Non-Compete Law

Posted: | Category: California - Restrictive Covenants

By: Former DraftKings’ Employee Loses Bet On California’s No Non-Compete Law

In what might be the first published case discussing California’s newest anti-non-compete laws, Cal. Bus & Prof. Code § 16600.5(a) & (b), DraftKings successfully obtained a preliminary injunction and defeated the appeal of that order against its former employee to bar him from competing. 

DraftKings, a Massachusetts headquartered entity, sued its former employee to enforce a non-compete agreement after the former employee quit his job at DraftKings, moved to the Golden State to take a similar job with the California-based Fanatics and sued DraftKings in California to attempt to stop the enforcement of the non-compete. DraftKings commenced its action in a Federal District Court in Massachusetts for breach of the non-compete agreement and other claims. It sought, and won, a Preliminary Injunction against the employee working for the competition for one-year in the United States (rejecting DraftKings’ request for a worldwide injunction).  

The employee pursued an immediate “interlocutory” appeal to the United States Court of Appeals for the First Circuit. The Court of Appeals upheld the District Court’s decision, holding that the employee was bound by Massachusetts’ law even though the Massachusetts Supreme Court had previously deferred to California law in a similar case. See Oxford Glob. Res., LLC v. Hernandez, 106 N.E.3d 556 (Mass. 2018). In Oxford, the employee had signed a non-compete under Massachusetts law while living and working for the former employer in California, and the Massachusetts Supreme Court concluded that California had a materially greater interest than Massachusetts to enforce California’s public policy over non-compete agreements in that case. The Oxford court also found significance in the fact that Massachusetts did not have much statutory law at that time. However, in Draftkings, the Court concluded that the employee’s residence (not California), his work for Massachusetts’ headquartered DraftKings, his frequency of travel to Massachusetts, and because Massachusetts passed its own law to regulate non-competes, provided sufficient reasons to conclude that Massachusetts’ law (that the employee had agreed to) should be applied, and that under Massachusetts’ law, the non-compete was to be enforced. 

Even though California’s law asserts that the location of the signing of the contract is not relevant, the Court of Appeals relied heavily on the fact that the employee was a New Jersey resident (not California) when he worked at Draftkings and signed the Non-Complete, which called for enforcement under Massachusetts’ law, and then, later, quit to move to California to work for a competitor.

This case illustrates the importance of the “race to the courthouse” when a non-California former employer is confronted with the need to either attempt to enforce a non-compete or, conversely, where an employee or the employee’s new employer wants to invalidate a non-California non-compete. Even if a California court ultimately concludes that the employee’s non-compete is not enforceable, the employee and his current employer may be confronted with competing and conflicting orders from different jurisdictions and the potential consequences of violating an injunction. Ultimately, each state that allows for non-competes and the Federal Courts within them will make decisions about whether California’s public policy against non-competes will prevail over other states’ laws that may allow for non-competes.   

California and Non-California employers should consult with counsel, such as the team from CDF, when evaluating whether to take legal action related to non-competes signed by former employees, especially non-compete agreements signed under the laws of other states.