Search ab 1228

In the ever-evolving landscape of California’s labor and employment regulations, the upcoming year promises to bring a fresh set of challenges for employers throughout the state. As we begin to close 2023, it’s imperative for businesses to familiarize themselves with the newest legal mandates and adjustments set to shape the way they operate, hire, and manage their workforce in 2024. This article delves into the key employment laws introduced for the forthcoming year, offering insights to ensure compliance and build a collaborative workplace.

AB 1228: Fast Food Franchisor Responsibility Act 

This bill repealed the FAST Act and implemented new regulations of the fast-food industry in California. Notably, this bill increases the minimum wage to $20 per hour as of April 1, 2024, and establishes the Fast Food Council. For details on how this Act will affect you, take a look at our detailed post here.  

Assembly Bill 594: Public prosecution for wage theft/labor code violations  

Public prosecutors (meaning, the Attorney General, a district attorney, a city attorney, a county counsel, or any other city or county prosecutor) can enforce labor code violations by pursuing civil or criminal actions for certain labor code violations. These labor code violations include unpaid minimum wage, unpaid overtime, failure to provide meal breaks, and failure to provide rest breaks. Public prosecutors may also enforce these labor code sections independently. Any money recovered until this code will go to the affected workers, and all civil penalties recovered under this section will be paid to the General Fund of California. The Plaintiff may also be entitled to reasonable attorney fees. It is important for employers to note that this is in addition and separate from the Labor Commissioners right to investigate and hear employee complaints, and the Labor Workforce and Development Agency’s rights under PAGA.  

Assembly Bill 1076 and Senate Bill 699: Noncompete Agreements and Clauses 

AB 1076 and SB 699 codifies existing law. SB 699 voids any contract that restricts an employee from engagement in a lawful profession, trade, or business of any kind, or a noncompete agreement. This would prohibit an employer from seeking to enforce a noncompete agreement, regardless of where or when the contract was signed. This restriction applies even if the contract was signed outside of California, or if the employment was maintained outside of California. SB 699 also authorizes an employee, former employee, or prospective employee to bring an action seeking injunctive relief, or for the recovery of actual damages, and allows the prevailing employee, former employee, or prospective employee to recover reasonably attorney’s fees and costs.  

Similarly, AB 1076, makes it unlawful to impose a noncompete clause on employees, unless a narrow exception applies. Employers should review all of their offer letter, employment agreements, or other policies distributed to employees to determine if there are any noncompete clauses with employees. If there are such policies, employers are required to notify all current and former employees that were employed after January 1, 2022, that any noncompete agreement or similar clause within their agreement is void, unless it falls within one of the exceptions. This notice must be made by February 14, 2023, and be made in a written, individualized communication delivered to the last known address and email address.  

Senate Bill 616: Paid Sick Leave Expansion 

Currently, employers are required to provide employees with three days, or 24 hours, of paid sick leave. Beginning January 1, 2024, employers will be required to provide five days, or 40 hours. Employers will be able to control the amount used per year at five days or 40 hours per year and cap accrual at 10 days or 80 hours. Many California cities, including West Hollywood, have established local paid sick leave ordinances that provide more leave than required under California law. Employers should be sure to review local ordinances to determine which leave applies.  

Senate Bill 723: Re-Hiring Rights for Laid-Off Employees  

Currently, employers in the hospitality and business service provider industries are required to offer reemployment to qualified former employees as long as the former employees were (1) employed for at least 6 months in the year before January 1, 2020, and (2) laid off for a reason related to the pandemic. This is now expanded to apply to former employees who were employed for at least 6 months and laid off on or after March 4, 2020. Additionally, any separation due to a lack of business, reduction in force, or other economic, nondisciplinary reason is presumably a reason related to COVID-19. This law sunsets on December 31, 2025.  

Senate Bill 497: Presumption of Retaliation 

Employers are prohibited from discriminating, retaliating, or taking any adverse employment action against an employee or applicant because they engaged in protected conduct. Now, there is a rebuttable presumption of retaliation if the employer disciplines or takes adverse action against an employee within 90 days of that employee engaging in protected conduct. This means that simply by taking that action, the Plaintiff will be able to establish its prima facie case. It will be up to the employer to dispute this and establish that it did not discriminate, retaliate, or take an adverse employment action because the employee or applicant engaged in protected conduct.  

Senate Bill 848: Reproductive Loss Leave 

This bill expands employee’s bereavement rights. Employers must provide employees with five days leave for a “reproductive loss event.” A “reproductive loss event” is defined to include failed adoption, failed surrogacy, miscarriage, stillbirth, or an unsuccessful assisted reproduction. This bill applies to private employers with five or more employees, all public employers, and apply to employees that have worked for the employer for at least 30 days. As with the bereavement leave requirements, this leave may be unpaid; however, the employee can use other accrued leave. Employees must take the leave within 3 months of the reproductive loss event, and an employer would not be required to provide more than 20 days in a 12-month period.  

Senate Bill 428: Workplace Restraining Orders 

Employers are already authorized to seek a temporary restraining order on behalf of an employee who has suffered an unlawful violence or a credible threat of violence if it can reasonably be carried out in the workplace. Now, employers may also seek a temporary restraining order on behalf of employees who have suffered harassment. The employer must allow the employee the opportunity to decline being named in the order before filing the petition. The bill includes a carve out to prevent a temporary restraining order against speech or activities that are protected by the NLRB.   This bill goes into effect on January 1, 2025.  

Senate Bill 553: Workplace Violence Prevention 

The California Occupational Safety and Health Act of 1973 already requires employers to establish and maintain an effective injury prevention program. Now, employers will be required to establish and maintain a workplace violation prevention program. Employers must provide effective training to employees on the workplace violence prevention plan. In addition to the prevention program, employers must maintain records of workplace violence hazard identification, evaluation, and correction, training records, violent incident logs, and workplace incident investigation records. Employers have until July 1, 2024, to establish this program.  

Senate Bill 700: Marijuana Protections 

Employers may no longer ask an applicant about their prior marijuana use. This bill clarifies that the law against discrimination on the basis of marijuana includes information the employer obtained about prior marijuana use from the applicant’s or employee’s criminal history.  Our detailed article about SB 700 can be found here.

Senate Bill 525: Healthcare Workers Minimum Wage 

This bill creates a series of minimum wage requirements varying by type of healthcare employer with yearly increases. Additionally, covered health care employees that are paid on a salary basis must earn a monthly salary equal to no less than 150% of the health care minimum wage or 200% of the applicable minimum wage, whichever is greater, for full-time employment, to qualify as exempt from payment of minimum wage and overtime.  

Learn more during our webinar

Join our experts on Thursday, October 26, 2023, as we dig deeper into these new laws and how they may affect you. Register for our free webinar here: https://us06web.zoom.us/webinar/register/6316951613202/WN_RDLUQU6mSvKBzkCfB9eU-A.  

Big changes are coming to the quick service industry in California.  An agreement reached between labor and fast-food companies has been documented in a Term Sheet dated 9/11/2023 proposes to drastically alter the FAST Act and the fast food industry in California.  The term sheet agreement, if it becomes final, introduces pivotal provisions impacting fast food workers, employers, and the entire sector at large.  Here’s a breakdown of what this means for the industry if the agreement between representatives and business becomes final:

  1. Repeal of the FAST Act: AB 257, known as the FAST Act, would be repealed.  The FAST Act was a paradigm shift on how regulations would be implemented for an industry, whereby the legislature shifted its power to regulate the fast food industry to a group of unelected members of an appointed council. 
  2. Raise in Minimum Wage For Limited-Service Restaurants: As part of the negotiations, it was agreed that starting April 1, 2024, all limited-service restaurants that are a part of a chain with over 60 locations nationwide, must pay a minimum wage of $20.00 per hour.
  3. No More Referendum on AB 257: Under the agreement, businesses supporting the referendum on AB 257 (the FAST Act) have agreed to withdraw this challenge to the law by January 1, 2024.  We previously wrote about the referendum challenging the FAST Act here.
  4. Joint Employer Provisions Eliminated in AB 1228: AB 1228’s joint employer provisions will be removed.  As a reminder AB 1228, deemed the Fast Food Franchisor Responsibility Act, would require fast food franchisors to share in civil legal responsibility and liability for the franchisee’s violations. An employee, or former employee, would be able to bring an administrative charge or civil lawsuit against not only the franchisee, but also the franchisor for violation of various employment laws.  Under this agreement, joint employer liability between franchisor and franchisee would be deleted from the bill.  We previously wrote about what AB 1228’s impact would have been on the industry here. 
  5. The Industrial Welfare Commission Will Not Be Revived: The budget appropriation for the Industrial Welfare Commission (IWC), including its budget control language, has been scrapped under the deal.  By funding the IWC, labor had a backup plan to continue to regulate the quick-service industry (among other industries across California) in case the FAST Act was repealed by the voters in 2024.  Governor Newsom signed AB 102 on July 10, 2023 and a part of that bill funded the IWC to reconvene to issue wage orders regulating the “wages, hours, and working conditions” for various industries.  Employers could have expected regulations from the IWC covering nearly every industry in California (as the current wage orders cover most industries) by October of 2024. 
  6. Establishment of the Fast Food Council:
    • This council, set up within the Department of Industrial Relations, looks to have representation for all interests – employers, employees, and advocates alike.
    • The council would be made of 9 voting members, including representatives from various sectors of the fast food industry, fast food restaurant franchisee or restaurant owners, fast food restaurant employees, advocates for fast food restaurant employees, and a neutral chairperson.  However, the Governor still maintains the power to appoint all but 2 of the 9 positions on the council.
    • The council’s responsibilities are significant.  From 2025 to 2029, they can adjust the hourly minimum wage each year.  However, they’re capped at an increase of the lesser between 3.5% or the annual change in Consumer Price Index.  They also have the flexibility to reduce future wage increases by region with specific limitations.
    • The council can also recommend standards to state agencies. But, these recommendations will undergo rigorous review under the California Administrative Procedure Act.
  7. Local Municipalities Are Limited On Setting Minimum Wages: Local governments won’t be able to set a higher minimum wage for fast food employees than what is mandated by the council.

The term sheet published by the Save Local Restaurants is available here.  This agreement introduces major changes, and employers in the quick-service industry must closely watch the implementation of this agreement.  We will report on any other developments. 

July 1 is just around the corner, and with it comes a series of local minimum wage increases across Southern California. For employers operating in multiple jurisdictions, staying compliant can be complex—but it’s essential to avoid costly penalties and maintain employee trust.

Below is a breakdown of the new rates, followed by a practical compliance checklist tailored for California employers. While this is usually a Friday’s Five article, we’re stretching a bit into seven key steps to keep you covered.

Minimum Wage Increases in Southern California (Effective July 1, 2025)

  • Los Angeles County (Unincorporated Areas): $17.81/hour
  • City of Los Angeles: $17.87/hour (increased from $17.28/hour)
  • Pasadena: $18.04/hour (increased from $17.50/hour)
  • Santa Monica: $17.81/hour (increased from $17.27/hour)
  • West Hollywood (Hotel Workers): $20.22/hour (note: non-hotel employees must be paid $19.65/hour and this rate will be in effect until December 31, 2025)
  • City of San Diego: $17.25/hour has been in effect since January 1, 2025

Note: Other jurisdictions throughout California also have their own minimum wage ordinances. Employers should verify all applicable rates based on their workforce’s location.

7-Step Compliance Checklist for Employers

1. Identify All Applicable Jurisdictions

Determine where your employees are performing work. Local minimum wage ordinances are typically based on work location, not where the business is headquartered.
Tip: For employees who work across multiple cities, you must pay the highest applicable minimum wage.

2. Update “Notice to Employee” Forms (Labor Code 2810.5)

Employers are required to provide non-exempt employees with written notice of wage rates. Update these notices to reflect the new local minimum wage amounts.

3. Review and Adjust Pay Stubs

Pay stubs must accurately reflect current hourly rates. This includes updates to wage lines for hourly workers and any overtime calculations.

4. Post Updated Workplace Notices

Most cities require employers to post official local minimum wage notices in a conspicuous place at each worksite. Make sure your postings are current and legible.

5. Audit Multi-Jurisdiction Work

For employees working in more than one city or county with different minimum wages, ensure your payroll systems and HR teams are calculating wages based on the higher rate.

6. Review Industry Applicable Rates

Certain sectors, such as fast food, healthcare, and hotel workers, have distinct minimum wage requirements. For instance, fast-food workers are entitled to a minimum wage of $20.00 per hour under AB1228, which may be increased soon in 2025. Also, certain healthcare workers will see their minimum wage increase to $24.00 per hour effective July 1, 2025. Click here to see the recently updated DIR’s FAQs for Health Care Workers.  Also in the news is LA City’s recent bill to increase hotel and airport worker’s minimum wage to $30 per hour by 2028.  However, there has been a referendum petition filed against this new bill. 

7. Communicate with Your Workforce

Transparency is key. Let your employees know when changes will take effect, why they’re occurring, and what adjustments they can expect to see.

Final Thoughts

California’s patchwork of local wage laws continues to grow more complex. By reviewing your policies and procedures now, you can avoid last-minute headaches and ensure you’re on solid legal footing. Make sure your HR, payroll, and management teams are aligned and up to date.

Need help auditing your current wage practices or navigating overlapping jurisdictions? Reach out to legal counsel with expertise in California employment law for tailored guidance.

California’s fast-food industry is once again at a crossroads. Following the April 1, 2024, minimum wage increase to $20 per hour (as previously covered here), fast-food operators have struggled with higher labor costs, price increases, job losses, and store closures. Now, the Fast Food Council is considering another increase to $20.70 per hour, with a final vote expected in April or May 2025.

If the proposed wage hike is approved, fast-food employers will need to act quickly to adjust labor budgets, pricing strategies, and compliance measures. Here are five key steps operators should start considering now to prepare for another wage increase.

Five Steps Fast-Food Employers Should Start Considering Now

1. Review Payroll and Budget for the Potential Wage Increase

If the new $20.70 per hour wage is approved, employers must:

  • Ensure payroll systems are updated to reflect the new rate as soon as it takes effect.
  • Adjust labor budgets to account for increased wage costs.
  • Project financial impacts on operations, including potential reductions in hours, staffing, or menu price adjustments.

2. Plan for Higher Overtime Costs

With a higher minimum wage, overtime rates will also increase:

  • 1.5x Overtime Pay: $31.05 per hour
  • 2x Double-Time Pay: $41.40 per hour

Employers should evaluate scheduling practices, limit unnecessary overtime, and consider staffing adjustments to manage costs.

3. Update Employee Notices and Pay Stubs

If the increase is approved, fast-food operators will need to:

  • Update employee notices as required by Labor Code section 2810.5 to reflect the new wage.
  • Ensure pay stubs are accurate, displaying the correct new hourly rate and applicable overtime calculations.

4. Assess the New Exempt Employee Salary Threshold

A higher minimum wage means exempt employees will also require a higher salary to maintain their exempt status. If the wage increases to $20.70 per hour, the new minimum salary for exempt employees in covered fast-food businesses will be:

$20.70 x 2 x 2,080 = $86,112

That means managers and other exempt employees would need to be paid at least $86,112 annually to remain exempt from overtime laws. Employers should start reviewing their exempt employee classifications now and determine if reclassification or salary adjustments will be necessary.

5. How Employers Are Responding to Rising Labor Costs

The latest economic data on California’s $20 per hour minimum wage highlights the widespread financial strain on fast-food operators, with job losses, reduced hours, and increased menu prices becoming unavoidable realities. According to a February 2025 report by Berkeley Research Group (BRG):

  • California’s fast-food sector lost 10,700 jobs (-1.9%) between June 2023 and June 2024, marking the worst employment trend in decades outside of economic recessions.
  • Nearly 89% of surveyed fast-food operators reduced employee hours in the first few months after the wage increase, and 87% expect to make further cuts in the next year.
  • Menu prices in California’s fast-food sector increased by 14.5% from September 2023 to October 2024, almost double the national average (8.2%), making fast food significantly more expensive for consumers.
  • 35% of operators reduced employee benefits, and automation adoption has increased as businesses look for ways to offset labor costs.

With the Fast Food Council now considering an increase to $20.70 per hour, these trends are expected to continue. Employers will likely make additional reductions in staffing and hours, further raise menu prices, and accelerate automation investments to maintain operations. More layoffs and restaurant closures could be on the horizon as businesses struggle to absorb rising labor costs.

What’s Next for Fast-Food Operators?

The Fast Food Council is expected to vote on the proposed wage increase in April or May 2025. If approved, employers will need to move quickly to implement changes and adjust business strategies to stay competitive.

By planning now, fast-food operators can mitigate financial strain, ensure compliance with labor laws, and make informed business decisions before the next potential wage increase takes effect.