As we move into 2024, California is introducing a set of new laws that may significantly impact small business operations and the construction trades. It’s important for business owners and contractors to understand these changes to adapt their business operations accordingly.

Here’s an overview of laws you should be aware of as a small business owner or building contractor:

Paid Sick Leave Expansion

Senate Bill 616 amends the 2014 Healthy Workplaces, Healthy Families Act. This new law, effective from January 1, 2024, introduces statewide standards for Paid Sick Leave (PSL), a response to the various ordinances across California that created a complex regulatory environment for multi-location businesses.

Here are the key points:

• Full-time employees now have a minimum PSL of 40 hours, up from 24 hours.
• Full-time and part-time employees must accrue a minimum of 1 hour of PSL per 30 hours worked.
• Employees can use their accrued sick leave starting 90 days after employment begins.
• The cap on accrued PSL hours increases from 40 to 80 hours (10 days), with a minimum carryover of 40 hours each year.
• Employees qualify for paid sick days after working in California for the same employer for 30 or more days within a year.
• Employers must inform employees about their PSL balance, for example, via pay stubs.
• Any local ordinances providing lower minimums are superseded by this state law.
• Employers can choose from state-guided accrual, lump sum, or a custom calculation, each with specific standards to meet.

Preparation for this law should include a review and update of your current policies, updates to your employee handbook, training of HR staff on the new requirements, and revisions to your payroll systems.  If you have questions about this law or need assistance, please contact us.

Increase in Minimum Wage

California’s minimum wage is set to increase to $16 per hour in 2024. This hike will impact labor costs across various sectors, including construction, retail, service, and hospitality industries. A rise in hourly minimum wage also affects salaried employees.  In general, a salaried exempt employee must be paid twice what they would have earned as an hourly fulltime employee. Small businesses need to plan their budgets accordingly to accommodate this increase.

Enhanced Worker’s Compensation Classification

Effective from July 1, 2024, Assembly Bill 336 requires contractors to certify workers’ compensation classification codes when renewing their licenses. This law intends to ensure proper compensation coverage and accurate worker classification. Businesses must review and potentially adjust their current worker classifications to comply with this new mandate.

New ADU Construction Standards

Senate Bill 897 introduces new regulations for the construction of Accessory Dwelling Units (ADUs). Starting in 2024, this bill sets minimum height limits and allows the possibility of two-story units in ADU construction, offering new opportunities for building expansion and modification. Contractors should get acquainted with these new guidelines to participate in the ADU market effectively.

Mandatory Toilet Facilities at Construction Sites

From January 1, 2024, AB 521 mandates the provision of toilet facilities at all construction jobsites. This law is aimed at ensuring adequate sanitary conditions for workers. Contractors need to plan for the installation and ongoing maintenance of these facilities to meet the new standard.

Marijuana Usage Protections

AB 2188, passed in 2022 and effective January 1, 2024, introduces protections for California employees who use marijuana during their personal time, with an exception for “employees in the building and construction trades” or applicants or employees hired for positions that require a federal government background investigation or security clearance.

Similarly, this new cannabis law expressly does not preempt state or federal laws requiring applicants or employees to be tested for controlled substances as a condition of employment, receiving federal funds or federal licensing-related benefits or entering federal contracts.

The new Government Code as amended by SB 700 further prohibits employers from asking job applicants, including those in the construction and building trades, about their prior use of cannabis. Discrimination based on information about a person’s prior cannabis use obtained from the person’s criminal history is prohibited unless the employer is permitted to consider or inquire about prior cannabis use under state or federal law.

To comply with these new laws, employers will need to review their policies and procedures relating to drug testing, hiring and standards of conduct.

Specialty Contractor Contracting Prohibitions

AB 1204 restricts specialty contractors from engaging in contracts with multiple subcontractors holding the same license type on a single project, unless two conditions are met: (1) either the subcontractor uses employees to perform work under that specific license classification for the project, or (2) the specialty contractor has signed a legitimate collective bargaining agreement. Failure to comply with this rule is grounds for disciplinary action. This regulation applies to more than forty different types of specialty contractor licenses, such as those for concrete, drywall, carpentry, electrical, flooring, landscaping, roofing, sheet metal, and solar.

Noncompete Agreements Invalidated

AB1076 modifies California Business and Professions Code Section 16600, reinforcing a broad interpretation aligned with the California Supreme Court’s 2008 ruling in Edwards v. Arthur Andersen LLP. This bill explicitly invalidates any noncompete agreements in employment contracts, regardless of how specifically they are crafted. It also makes it illegal for employers to include noncompete clauses in employment contracts or to ask employees to sign such agreements.

Furthermore, by February 14, 2024, AB1076 mandates that employers provide written notification to current and past employees (who worked after January 1, 2022) affected by noncompete clauses or agreements, informing them that these clauses or agreements are void. This notice must be personalized and sent to the individual’s last known postal and email addresses.

Violating Section 16600.1 is considered an act of unfair competition under Business & Professions Code Section 17200, which allows for remedies like injunctions and restitution. However, AB1076 does not apply to noncompete agreements related to certain types of business ownership sales.

Reproductive Loss Leave

SB 848 grants eligible employees who have been with their employer for at least 30 days, up to five days of leave for “reproductive loss.” This includes events like a failed adoption, failed surrogacy, miscarriage, stillbirth, or unsuccessful assisted reproduction, and refers to the day of, or in case of a multi-day event, the last day of such occurrences. This leave must generally be taken within three months of the event and should align with any existing leave policies of the employer. It is important to note that this leave is in addition to other entitlements under the California Family Rights Act and the Fair Employment and Housing Act.

If an employee undergoes multiple reproductive loss events within a year, the employer can limit the total leave to 20 days in that 12-month period. In cases where the employer doesn’t have a specific policy, this leave may be unpaid. However, employees can use other types of leave, such as accrued paid sick leave, during this period.

Additionally, SB 848 mandates employers to keep information about an employee’s reproductive loss leave confidential. It also prohibits employers from retaliating against employees for taking this leave or for providing information or testimony regarding their reproductive loss leave.

Extended Statute of Limitations for CSLB Offenses

SB 601 revises the Contractors State License Law, which oversees the licensing and regulation of contractors under the Contractors State License Board within the Department of Consumer Affairs. Existing law requires:

1. Written Contracts with Specific Amounts: Home improvement contracts must be in written form and include a clearly stated contract amount.
2. Downpayment Limitation: The initial downpayment for these contracts is limited to the lesser of $1,000 or 10% of the total contract amount.
3. Payment Regulations for Contractors: Contractors are prohibited from asking for or accepting payments that are greater than the value of the work completed, or materials provided. Violating these regulations is a criminal offense, punishable by a fine of $100 to $5,000, up to one year in jail, or both. In instances of violations in natural disaster-affected areas, the maximum fine must be imposed.
4. Misuse of Licenses and Permits: The law makes it a criminal offense to misuse licenses, certificates, permits, or registrations issued by the department, such as lending or using a license unlawfully.

Traditionally, legal action for such offenses had to commence within one year of the offense. SB 601 extends this timeframe, allowing prosecution of misdemeanors related to license misuse to start within three years from when the offense was discovered or completed, whichever is later. This change effectively extends the legal window for prosecuting these specific crimes, making it part of a state-mandated local program.

Prevailing Wage for Large NEM Solar Projects

AB 2143- Effective January 1, 2024, any commercial-scale, non-residential net energy metered (NEM) solar project over 15 kW is considered a public works project and is therefore subject to prevailing wages. This includes any energy storage associated with a project. This law is applicable to all construction workers and apprentices who work on these projects. The California Public Utilities Commission (CPUC) is currently in the process of defining what it means to start a project before January 1, 2024. It has been proposed by the CPUC that the “start date” is determined by the interconnection submission date.

Effectiveness Reviews of Workplace Violence Protection Plans

SB 553- Effective July 1, 2024, most California employers are required to establish, implement, and maintain an effective workplace violence prevention plan. Plans can be stand-alone or part of the Illness and Injury Prevention Program (IIPP). The new requirements are detailed and include a requirement to review and evaluate the effectiveness of the workplace violence program plan “at least annually when a deficiency is observed or becomes apparent and after a workplace violence incident.” The requirements apply to most employers, although there are exceptions, including employees teleworking from a location of the employee’s choice and small establishments (less than 10 employees) not open to the public. Cal/OSHA will enforce the workplace violation plan requirements. Cal/OSHA is required to propose standards by December 1, 2025, and adopt standards by December 1, 2026.

Employee Retaliation Claims

SB 497 makes it easier for employees who engage in certain protected activities under the California Labor Code, such as filing complaints with the Labor Commissioner or enforcing equal pay complaints, to make retaliation claims. If an employee who engages in a protected activity experiences an adverse employment action, such as termination or demotion, within 90 days of the protected activity, SB 497 creates a presumption of illegal employer retaliation. The burden then shifts to the employer to show a legitimate non-retaliatory reason for the action. Even then, the employee can still argue that the action was nonetheless retaliatory. The presumption of retaliation based solely on a temporal element is a notable shift in the legal framework. This change only serves to reinforce employer best practices: document performance and disciplinary issues timely and thoroughly and ensure consistency in taking adverse action against employees.

The incoming laws in California for 2024 bring significant changes, particularly for small businesses and the construction industry. Understanding these new requirements and preparing for them is vital for operational success and legal compliance. Staying informed and flexible will be key to effectively managing these changes in the California business landscape.

Please note that this article is only intended to provide some general educational information. For your particular legal questions, be sure and consult with an attorney.

Scott Green
(805) 306-1100 ext. 114
scott@thegreenlawgroup.com