As we approach 2025, several significant legal changes in California will affect contractors, employers, and freelancers. From increased thresholds for unlicensed work to enhanced protections for freelance workers, these updates are critical for staying compliant and avoiding penalties. Here’s a summary of the most important changes:
1. Higher Dollar Threshold for Unlicensed Contractor Work
Under Assembly Bill 2622, the aggregate contract price limit for unlicensed contractor work will increase from $500 to $1,000. This means:
A contractor’s license is not required for projects under $1,000 if the work:
- Does not require a building permit, and
- Does not involve employing others to perform or assist in the work.
Unlicensed contractors may advertise for such work but must clearly state that they are not licensed.
Assembly Bill 2622 is codified as Business and Professions Code §7027.2 and 7048.
This law is effective as of January 1, 2025.
2. PAGA Exemption Extended for Unionized Construction Employers
Assembly Bill 1034 extends the Private Attorneys General Act (PAGA) exemption for certain unionized construction employers through January 1, 2038. To qualify, employers must:
- Pay workers at least 30% more than the minimum wage.
- Operate under collective bargaining agreements with specified worker protections.
This exemption is not automatic.
Action Required: Unionized employers must review their agreements to ensure compliance with these requirements to maintain the exemption.
3. New Rules for Driver’s License Requirements in Hiring
Under Senate Bill 1100, employers will face stricter rules regarding driver’s license requirements in job postings. Starting January 1, 2025, employers can require a driver’s license only if:
- Driving is a reasonably expected job function, and
- Alternative transportation is not feasible for the position.
What to Do: Review job descriptions and hiring practices to ensure driver’s license requirements are justified and documented. This law aims to prevent discrimination under the Fair Employment Housing Act (FEHA).
4. Expanded Protections for Freelance Workers
California has introduced new protections for freelance workers through recent legislation. Senate Bill 988 is the “Freelance Worker Protection Act”
Starting in 2025, private employers hiring certain independent contractors must:
- Provide a written agreement specifying the terms of work.
- Pay contractors’ compensation by specific deadlines.
This law aims to provide freelancers with basic worker protections and ensure timely payment.
How to Prepare: Employers who hire freelancers should create standardized written agreements and establish processes to meet payment deadlines.
5. Paid Family Leave
Assembly Bill 2123 will eliminate an employer’s ability to require an employee to use accrued paid time off (“PTO”) before using California Paid Family Leave (PFL). Previously employers could require employees to take up to two weeks of accrued vacation before accessing Paid Family Leave benefits. This law is effective as of January 1, 2025 and amends section 3303.1 of the Unemployment Insurance Code.
6. Whistleblower Rights Posting
Assembly Bill 2299 requires the state’s Labor Commissioner to develop a model list of employee rights and responsibilities under existing whistleblower laws. Currently, employers are required to post certain workplace notices, including a list of employees’ rights and protections under whistleblower laws. Beginning January 1, 2025, employers will be required to post a specific notice drafted by the Labor Commissioner outlining employee rights and responsibilities under whistleblower laws. This bill adds section 98.11 to the Labor Code and amends Labor Code section 1102.8
7. Workers Compensation Legal Advice Notice
Assembly Bill 1870 amends Section 3550 of the Labor Code to require provision of information regarding an injured employee’s ability to obtain legal consultation. Current law generally requires employers to post a notice in a conspicuous location that includes information such as to whom injuries should be reported, the rights of an employee to select and change a treating physician, certain employee protections against discrimination and other specific information.
Beginning January 1, 2025, the notice must also include information concerning an injured employee’s ability to consult a licensed attorney to advise them of their rights under workers’ compensation laws.
8. California Worker Freedom from Employer Intimidation Act
This new law means there are to be no mandatory “captive audience” meetings or communications about an employer’s opinion on religious or political matters, including labor organizing. If the meeting is held during work hours, employees must be paid even if the employee doesn’t attend. Senate Bill 399.
9. Crime Victim Leave Changes
Assembly Bill 2499 moves certain requirements regarding jury duty, court duty and time off for victims of crime from the Labor Code to the Fair Employment Housing Act. Specifically it moves the prohibitions on discrimination and retaliation against an employee who (1) takes time off for jury service; (2) takes time off to appear in court as a witness or victim pursuant to a court order or subpoena; (3) is the victim of a crime and takes time off work to obtain relief including, but not limited to, a temporary restraining order, restraining order or other injunctive relief; and (4) for employers with 25 or more employees, is the victim of a “qualifying act of violence” and takes time off for other specific purposes.
In addition, this bill adds a prohibition for employers with 25 or more employees on discriminating or retaliating against an employee for taking time off for various reasons related to a family member’s victimization of a qualifying act of violence and expands the list of crimes for which victims or their family members can take time off work. This leave is limited to twelve (12) weeks total; five (5) days for the purposes of helping a family member relocate; and ten (10) days if the employee’s family is a victim who is not deceased, and the employee is not a victim.
This bill also requires employers to notify employees of these rights upon hire, annually, at any time upon request, and at any time an employee informs the employer that the employee or the employee’s family member is a victim. A model form is expected to be made available by July 1, 2025.
10. Labor Commissioner: Public Works
Under existing law, the Labor Commissioner has the power to issue a civil wage and penalty assessment to a contractor or subcontractor for violations of the Labor Code for work performed on a public works project.
Assembly Bill 2705 clarifies that both contractors and subcontractors are jointly and severally liable for any unpaid wages or penalties, as determined by a final order or judgment. The Labor Commissioner is required to exhaust all reasonable means to collect from the subcontractor before seeking payment from the contractor. Any money collected is distributed with a priority towards wage claims over penalties. Portions of this bill will remain in effect until January 1, 2026, and as of that date, will be repealed and replaced with the full bill on January 1, 2026. This bill amends Section 1743 of the Labor Code.
11. Civil Disputes
Senate Bill 940 modifies several laws involving civil disputes. For contracts entered into, modified, or extended on or after January 1, 2025, this bill prohibits a seller from requiring a consumer, as a condition of entering into a contract, to agree to a provision that would require the consumer to arbitrate a claim outside of California arising in California or to arbitrate a controversy arising in California under the substantive law of another state. Further, if a consumer contract requires arbitration and the dispute may be adjudicated pursuant to the Small Claims Act, the consumer has the option to adjudicate the dispute in small claims court.
Why these changes matter: These updates reflect California’s continued efforts to balance worker protections with business interests. Contractors, employers, and freelancers should act now to adjust their practices, comply with the new laws, and avoid potential penalties.
12. CSLB Regulatory Changes
Senate Bill 1455 extends the sunset date of the Contractors State License Board (CSLB) to 2029 and makes some adjustments to the law, including:
- When awarding a public works project, the authority doing so much make sure those bidding hold the correct license classification.
- When the CSLB issues a letter of admonishment or citation, that contractor will now be required to reimburse any industry expert costs.
- Tribal businesses organized under the jurisdiction of a federally recognized tribe will now be licensed by the CSLB and able to work on construction projects off tribal lands.
- Full implementation of mandatory workers’ compensation insurance for all contractors (even with no employees) has been delayed from January 1, 2026, to January 1, 2028.
- CSLB will no longer charge a $100 rescheduling fee for PSI exam and candidates will pay $45.65 per exam or $91.30 for two exams directly
Summary
With 2025 fast approaching, now is the time to ensure your business practices align with California’s new legal landscape. Stay informed and ahead of the curve!
For detailed guidance and support, please reach out to us. Our associates and staff are ready to help you navigate California regulatory waters with confidence.
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.