2024 Midyear Employment Law Update 

Usually, the busiest time of the year revolves around new laws taking effect on January 1. But over the last few years, a trend has emerged in which several labor and employment law developments occur throughout the year — and 2024 is no exception.

In fact, this year, not only are laws taking effect mid-year, but we also have new regulations, local ordinance updates and court cases — all of which are keeping employers quite busy.

Read on for a summary of employment law developments in 2024 so far, including minimum wage updates, workplace violence prevention requirements, indoor heat regulations, federal pregnancy accommodation regulations and the latest employment law decisions from the courts.

Minimum Wage Updates

This year, employers have multiple minimum wage updates to note, including increases in the health care and fast-food industries, and mid-year local ordinance minimum wage increases.

Fast Food

On April 1, 2024, California increased the minimum wage for covered fast-food restaurant employees to $20 per hour. This law covers restaurants that are part of a fast-food chain consisting of more than 60 establishments nationally that:

• Share a common brand, or that are characterized by standardized options for decor, marketing, packaging, products and services; and
• Primarily provide food and beverages for immediate consumption on or off premises where patrons generally order or select items and pay before consuming, with limited or no table service.

The law doesn’t apply to certain restaurants operated in conjunction with larger enterprises such as airports, hotels, events centers, theme parks, museums, corporate campuses and certain public lands.

Covered employers must post the Minimum Wage Order Supplement for Fast Food Restaurant Employees (MW-2024-Supplement) poster in an area frequented by applicants and employees where it may be easily read during the workday.

This new minimum wage rate is higher than the state’s general minimum wage rate. Covered employers should note that this impacts the salary threshold for exempt employees: covered fast food employers will need to use $20 per hour rather than the general state minimum wage of $16 per hour in their exempt employee calculations.

Under California law, the Fast Food Council may further increase minimum wage for covered employees beginning in 2025.

Health Care

Originally intended to take effect on June 1, California’s health care minimum wage has been pushed back to July 1 due to California’s budget issues and could potentially be pushed back even further under current pending legislation. AB 159, if signed by Governor Gavin Newsom, sets forth three possible effective dates:

• October 15, 2024, if the state’s income from July 1 to September 30, 2024 is at least 3 percent higher than originally budgeted for the same time period;
• 15 days after the California Department of Health Care Services notifies the Joint Legislative Budget Committee that it has undertaken data retrieval necessary for Medi-Cal increases; or
• No later than January 1, 2025, if neither of the other two conditions are met before then.

Covered employers should monitor the situation closely. CalChamber will continue to provide updates as circumstances develop.

When it does take effect, the health care minimum wage law will cover 20 different types of health care facilities, which must provide a specific minimum wage to their nonexempt “covered health care employee.”

The definition of “health care employee” is incredibly broad; it includes everything from physicians and nurses to groundskeepers, janitors and gift shop workers — basically all employees working for a covered health care facility whether they directly provide health care services or not. It also includes certain contracted workers when specified criteria are met.

The health care worker minimum wage has four schedules depending upon the facility type that vary between $18 to $23 per hour.

Lastly, the health care worker minimum wage alters how exempt covered health care employees are paid. Unlike the state law where an exempt employee is paid a salary equivalent to two times the standard statewide minimum wage, exempt covered health care employees must be paid the higher of either:

• Two times the standard statewide minimum wage; or
• One and a half times the applicable health care worker minimum wage.

Employers who are unsure whether their facilities fall within the list of covered health care facilities should consult with legal counsel.

Local Ordinances

Not all California cities and counties implement their local minimum wage rate at the first of the year — several implement their updated rates six months later. Effective July 1, 2024, these localities will increase their minimum wage to:

• Alameda: $17 per hour;
• Berkeley: $18.67 per hour;
• Emeryville: $19.36 per hour;
• Fremont: $17.30 per hour;
• Los Angeles City: $17.28 per hour;
• Los Angeles County (unincorporated areas): $17.27 per hour;
• Malibu: $17.27 per hour;
• Milpitas: $17.70 per hour;
• Pasadena: $17.50 per hour;
• San Francisco: $18.67 per hour; and
• Santa Monica: $17.27 per hour.

Employers should confirm where their remote employees are working, as they may be subject to different local minimum wage rates and ordinances than if they were reporting to the worksite. Review your employees’ hourly wage rates and make any necessary adjustments by July 1 to comply.

PAGA Reform

On June 18, 2024, an agreement was announced by Governor Newsom, Senate President pro Tempore Mike McGuire and Assembly Speaker Robert Rivas to reform the Private Attorneys General Act (PAGA) after months of discussions between labor advocates and the Fix PAGA coalition, which included CalChamber and representatives from the business community, non-profits, social justice advocates and family farmers.

Governor Newsom is expected to sign the pending legislation, AB 2288 and SB 92, reforming PAGA to ensure workers retain a strong tool to resolve labor claims and receive fair compensation, while limiting the shakedown lawsuits that hurt employers and employees.

The core elements of the reform package are:

• Employee Share of Penalty
  • Increases share employees receive from any penalty from 25 percent to 35 percent.
• Standing
  • Requires the employee (plaintiff) to personally experience the alleged violations brought in a claim.
  • Alleged violations must have occurred within the last year (presently, there is no time limitation).
• Penalty Caps for Proactive Compliance Efforts
  • Caps Penalties: For employers who proactively take steps to comply with the Labor Code before receiving a notice, the maximum penalty that can be awarded is 15 percent of the applicable penalty amount.
  • Caps Penalties: For employers who take steps to fix policies and practices after receiving a PAGA notice, the maximum penalty that can be awarded is 30 percent of the applicable penalty amount.
  • Reduces the maximum penalty where the alleged violation was brief or where it is a wage statement violation that did not cause confusion or economic harm to the employee (i.e. misspelling of company name or forgetting to add “Inc.” on the pay statement).
  • Levels the playing field for employers who pay weekly by ensuring a penalty is adjusted. Presently, such employers are penalized at twice the amount because penalties accrue on a per pay period basis.
  • Addresses derivative claims.
  • Creates a new penalty ($200 per pay period) if an employer acted maliciously, fraudulently or oppressively.
• Employer Right to Cure
  • Expands which Labor Code sections can be cured, so employees are made whole quickly.
  • Protects small employers by providing a more robust right to cure process through the state labor department (Labor and Workforce Development Agency) to reduce litigation and costs.
  • Provides an opportunity for early resolution in court for larger employers.
• Strengthening Enforcement Agency
  • The Administration will pursue a trailer bill to give the California Department of Industrial Relations (DIR) the ability to expedite hiring and filling vacancies to improve and expedite enforcement of employee labor claims.
• Judicial Discretion (Manageability)
  • Codifies that a court may limit both the scope of claims and evidence presented at trial.
• Injunctive Relief
  • Allows for injunctive relief.

This reform package will ensure that workers are having claims resolved more quickly and that businesses and non-profits which comply with the law are not penalized. Employers will now have the means to better defend PAGA claims.

CalChamber is hard at work creating additional resources related to the PAGA reform and will provide additional updates as they become available.

Workplace Violence Prevention

One of the most significant developments affecting employers this year is California’s new general industry workplace violence prevention requirements, which are applicable to nearly all California employers and enforced by the California Division of Occupational Safety and Health (Cal/OSHA).

Effective July 1, 2024, employers are required to establish, implement and maintain an effective workplace violence prevention plan, a comprehensive written document, tailored to a specific worksite, that must include information addressing 13 specific topics.

Employers must provide effective training to employees when the plan is first established and annually thereafter. This training must cover the employer’s plan, how to obtain a copy of the plan at no cost, how to participate in developing and implementing the plan, and how to report workplace violence incidents or concerns, among several other items.

In addition to the written plan, employers must create and/or maintain various documents for specified periods of time, including:

• Workplace violence prevention training records (one year);
• Violent incident logs, which are created after each workplace violence incident (five years);
• Records of workplace violence incident investigations (five years); and
• Records of workplace violence hazard identification, evaluation and correction (five years).

Employers must make these records available to Cal/OSHA upon request. Employers also must make these records available to employees upon request, with the exception of incident investigation records.

To help employers navigate these complicated requirements, CalChamber has two helpful offerings:

• A Workplace Violence Prevention Toolkit, which contains numerous resources designed to assist employers in establishing their workplace violence prevention plan, training program and related workplace violence prevention procedures; and
• A recorded webinar in which CalChamber’s employment law experts explain the law’s various components and share real-life scenarios designed to help you fulfill the practical requirements of complying with this law (and it includes the toolkit!).

Indoor Heat Illness

After a lengthy rulemaking process, the Occupational Safety and Health Standards Board (OSHSB) — Cal/OSHA’s standards-setting agency — voted to adopt indoor heat illness standards on June 20, 2024.

The indoor heat regulations will affect employers with a structure/indoor work site in California that meets or exceeds 82 degrees; generally, because office spaces are air conditioned, the temperature won’t rise above the 82-degree threshold — but employers should pay attention to such spaces as warehouse buildings, sheds, kitchens and other areas that are not air conditioned and/or have poor ventilation.

While many of the indoor heat illness regulations parallel those of the outdoor heat illness regulations, there are some differences as well. Indoor employers should review the regulation carefully for their obligations, including (but not limited to):

• Establishing and maintaining a written Heat Illness Prevention Plan.
• Providing effective training to employees and supervisors on specified heat illness topics.
• Recording heat index temperatures and maintaining temperature records.
• Having and maintaining one or more “cool-down areas” when employees are present, which must be kept at a temperature below 82 degrees.
• Allowing and encouraging employees to take preventative cool-down rests in the cool-down area(s) when they feel the need to do so, and monitor them for signs of heat illness.
• Observing all employees during heat waves in areas where no measures control the effect of outdoor heat on indoor temperatures.
• Developing emergency response procedures.

The California Office of Administrative Law (OAL) must review and approve the regulations before they can take effect. While the OAL review typically takes weeks, the office has been asked to expedite review, which means the regulations may take effect August 1 at the earliest.

Pregnant Workers Fairness Act Regulations

The federal Pregnant Workers Fairness Act (PWFA) has been on the books since 2023, but the Equal Employment Opportunity Commission’s (EEOC) PWFA regulations took effect more recently on June 18, 2024.

The PWFA requires covered employers (those with 15 or more employees) to provide reasonable accommodations for the “known limitations of a qualified employee related to pregnancy, childbirth, or related medical conditions, absent undue hardship.”

While the PWFA substantially overlaps with California law as far as providing reasonable accommodations to those affected by pregnancy, there are some significant differences between the laws.

The PWFA’s reasonable accommodation framework will be largely familiar to those who have handled accommodation requests under existing state and federal laws. One of the most notable PWFA provisions, however, allows for the temporary inability of an employee to perform an essential function of their position. This departs from California law, which doesn’t require employers to excuse an employee from performing their job’s essential functions.

The PWFA specifically states that an employee remains qualified under the law if:

• Any inability to perform an essential function is for a “temporary period;”
• The essential function could be performed “in the near future;” and
• The inability to perform the essential function can be reasonably accommodated (absent undue hardship).

The EEOC’s PWFA regulations further state that determining whether the employee can perform the essential functions in the near future is made on a case-by-case basis. If the employee is pregnant, however, “it is presumed that the employee could perform the essential function(s) in the near future because they could perform the essential function(s) within generally 40 weeks of its suspension.” In other words, covered employers may be required to reasonably accommodate pregnant employees by temporarily suspending essential functions for up to 40 weeks in certain situations.

On the issue of documentation, the PWFA regulations provide that if an employer decides to require documentation supporting the accommodation request, it is only permitted to do so if under the specific circumstances, it is reasonable for the employer to determine whether to grant the accommodation.

This is similar to California law, which allows employers to require a medical certification supporting the accommodation request. Unlike California law, however, the EEOC’s rule also lists several instances in which requiring documentation is not reasonable, meaning employers cannot obtain supporting documentation. These include:

• When the known limitation and need for reasonable accommodation are obvious.
• When the employee has already provided sufficient information, such as prior medical certification.
• When the employee is pregnant and the requested accommodation is one of four “predictable assessments” described in the regulation, which are accommodations the EEOC asserts are reasonable in virtually all cases, including:
  • Carrying water and drinking as needed during the workday;
  • Taking additional restroom breaks;
  • Sitting when their work requires standing and standing when their work requires sitting; and
  • Taking breaks as needed to eat and drink.
• Anything more than self-attestation for lactation accommodations.

Employers covered by both laws should ensure their policies and procedures comply with both.

Court Cases and Agency Decisions

In addition to statutes, regulations and local ordinances, court cases and agency decisions are impacting employers this year, including significant wage and hour decisions, a discrimination case from the U.S. Supreme Court, and another employee-friendly decision from the National Labor Relations Board.

Wage and Hour

In recent years, the California Supreme Court has issued decisions that broadened and strengthened the rules around “hours worked” and compensable time for nonexempt employees, including Troester v. Starbucks (which rejected the federal de minimis rule that allowed exclusion of some small amounts of time from compensation) and Frlekin v. Apple (which required compensation as hours worked for end-of-shift security checks of employee belongings).

Huerta v. CSI Electrical Contractors

Following this trend, the California Supreme Court recently answered three certified questions from the Ninth Circuit Court of Appeals in a wage and hour class action case, Huerta v. CSI Electrical Contractors, holding that where an employer exercises sufficient control over an employee’s actions, that time under the employer’s control will be compensable.

First, the court concluded that when an employee must go through a security checkpoint in their personal vehicle when entering and exiting the employers’ worksite — which included waiting five to 30 minutes in line, visual inspection of the vehicle and scanning a security badge — such time was “hours worked” under California law due to the level of employer control over that time. This was consistent with the court’s decision in Frlekin v. Apple.

Second, when considering whether driving from the security gate an additional 10 to 15 minutes on the employer’s property to the employee parking lot was compensable as either “hours worked” or “employer mandated travel time,” the court concluded that such time was not “hours worked” because, though the employee was subject to certain rules while driving from the security gate to the parking lot (speed limits and other restrictions due to the presence of endangered species), the employer didn’t have sufficient control of the employee during that time. It may, however, be compensable as employer-mandated travel time if there is evidence that the employer required the employee’s presence at the initial location “for an employment-related reason other than accessing the worksite.”

And third, in California, nonexempt employees are entitled to unpaid, uninterrupted 30-minute meal periods during which the employer relieves the employee of all duties and relinquishes all control over them. California Labor Code section 512 and Wage Order 16 (applicable in this case) exempts employees from this rule if the employees are subject to a valid collective bargaining agreement (CBA) that meets the requirements set forth in the law.

In Huerta, the employee was subject to a valid CBA and was not permitted to leave the worksite during meal periods, for which the employee wasn’t paid. The employer claimed that because they are exempted from the entire meal break rule through a valid CBA, no part of the rule applies, including where an employee must be paid for an on-duty meal period.

The court disagreed, because this would be the same as an employee bargaining away the right to a minimum wage for “hours worked,” which is unlawful. Instead, the court held that what the employee and employer bargained for with a valid CBA is a voluntary on-duty meal period, even if the nature of the work would otherwise not permit an on-duty meal period under the law.

Through this recent case, we see that the California Supreme Court continues to focus on ensuring employees are paid for all hours worked, no matter how incidental to the employee’s actual job duties.

Naranjo v. Spectrum Security Systems

In another recent case, this one a rare win for employers, the California Supreme Court held that if an employer reasonably and in good faith believed it was providing a complete and accurate wage statement as required by California’s wage statement law — even if it was ultimately incorrect — then it hasn’t “knowingly and intentionally” failed to comply with the law, which would subject the employer to additional penalties.

In this case, Naranjo v. Spectrum Security Systems, an employee brought a class action wage and hour case seeking meal break premium pay, as well as penalties for failure to pay final wages at separation and failure to report premium pay on wage statements. Among the disputed issues was whether meal break premium pay should be reported on wage statements.

The California Supreme Court noted that whether premium pay for missed meal breaks should be reported on wage statements as “wages” was unsettled when the case was tried between 2007 and 2009, and wasn’t settled until the California Supreme Court’s 2022 decision in this case. Imposing liability under these circumstances would “penalize Spectrum not for failing to apprise itself of its obligations, but for failing to predict how unsettled legal issues would be resolved many years down the line.”

Because the employer was able to establish a good faith defense at trial, the California Supreme Court agreed with the Court of Appeal that the employer’s good faith belief that it was complying with state wage and hour laws — even if ultimately incorrect — precluded the award of both waiting time and wage statement penalties under the Labor Code.

Discrimination

The U.S. Supreme Court recently issued a decision in Muldrow v. City of St. Louis holding that a lateral job transfer can be discriminatory under Title VII of the Civil Rights Act when the transfer brought some harm to the employee, rejecting some circuit courts’ precedents that the employee must show the lateral transfer caused “significant” harm.

From 2008 through 2017, Muldrow worked as a plainclothes officer with the St. Louis Police Department in the specialized Intelligence Division. She investigated public corruption and human trafficking cases, oversaw the gang unit, and served as head of the gun crimes unit. Her position warranted deputization as a task force officer with the FBI, which granted her FBI credentials, an unmarked take-home vehicle and authority to pursue investigations outside of the city.

In 2017, the new Intelligence Division commander had Muldrow transferred out of the unit and replaced with a male police officer. Muldrow was reassigned to a uniformed job supervising the day-to-day activities of neighborhood patrol officers. Her rank and pay remained the same in her new position, but her responsibilities, perks and schedule did not. Muldrow sued for sex discrimination under Title VII.

The lower court found no “significant” change in working conditions producing a “material employment disadvantage” because she experienced no change in her salary, rank or benefits; she retained a supervisory role; and she presented no evidence that the transfer harmed her career prospects.

The U.S. Supreme Court disagreed, holding that an employee challenging a job transfer under Title VII must show that the transfer brought about “some harm with respect to an identifiable term or condition of employment, but the harm need not be significant.” The Court’s ruling largely rested on Title VII’s language that states it’s unlawful for an employer to “discriminate against any individual with respect to [their] compensation, terms, conditions, or privileges of employment, because of such individual’s race, color religion, sex, or national origin.” This language, the Court said, does not require “significant” harm. To require significance adds words to Title VII and imposes a new requirement on claimants that goes beyond what the law requires.

Protected Concerted Activity

The National Labor Relations Board (NLRB) issued a decision earlier this year finding that an employer violated federal law when it directed an employee to remove the hand-drawn acronym for Black Lives Matter (BLM) from their work apron to comply with the company’s dress code, because wearing BLM on their uniform was protected concerted activity under the National Labor Relations Act (NLRA).

The NLRA — which applies to most employers, even if not unionized — generally protects the rights of employees to engage in “protected concerted activity,” which is where two or more employees take action relating to the terms and conditions of employment for their mutual aid or protection. This can include discussions with coworkers or management about discrimination in the workplace, compensation, workplace safety, union matters and other topics.

In this case, the employee was subject to racially discriminatory conduct over a period of time and made several complaints about it. During a meeting with management about the conduct, the employer said employees could no longer wear the initials BLM on their work apron because it was contrary to the company’s dress code, even though the employee and several other customer-facing workers had been wearing “BLM” on their uniforms for several months.

The NLRB found that the employee wearing and refusing to remove BLM from their uniform was “protected concerted activity” under the NLRA because it was a “logical outgrowth” of the employee’s prior complaints about workplace discrimination.

In recent years, NLRB decisions have interpreted the NLRA broadly to find more activity and speech to be “protected concerted activity,” with this case following the trend. As such, when faced with these workplace issues, employers should carefully consider the context of employees’ political or social messaging or displays prior to discipline.

On the Horizon

While employers are busy getting a handle on these midyear employment law developments, the California Legislature is busy crafting new labor and employment legislation, and several employment bills are still moving forward— so employers can expect more updates on pending legislation once the Legislature returns from its summer recess in early August.

Future regulatory developments are also in the works. The California Civil Rights Department (CRD) has proposed modifications to its employment regulations based on its concern for algorithmic, artificial intelligence and machine-learning tools used in the employment context, such as in recruiting, and screening resumes and applications, etc. The first hearing on the proposed rule is scheduled for July 18, 2024. Since the CRD’s rulemaking is in the early stages, it may be some time before any revisions take effect.

As always, there are also pending employment law cases at the state and federal levels. CalChamber continues to monitor important cases and will provide updates as decisions are released.