Summary Of 2025 Employment Law Updates
As with preceding years, California has a number of new employment law changes set to take effect in 2025. New laws include an expansion to the mandated rest periods for nursing mothers, triggers for shareholders to vote on employee stockholder decisions, and details about workplace posters. As well, the new minimum wage rate will be $16.50.
Starting January 1, 2025, the 2019 legislative session saw the passage of SB 142, which will require any employer with at least 50 employees to provide a reasonable amount of time for an employee to express breast milk for their infant child. Under SB 142, such employer would be required "to provide a location in close proximity to the employee’s work area," which must be close enough to ensure that the employee can express breast milk "without having to leave the premises." Further, the employer must provide access to a sink or cold storage space for the purposes of storing expressed breast milk. In addition, the area provided for the employee must be locked and shielded from view, as well as in close proximity to a sink and fridge. The law does not go into effect until January 1, 2025, which means that even if a mother has returned from maternity leave in 2024, she will still have access to breast milk accommodations in 2025 .
Another change coming up on 2025 is SB 323, which modified Corporations Code Section 603. This change will essentially require shareholders to vote more often on employee stockholder decisions. SB 323 shifts certain non-corporate provisions into the articles of corporation, including non-discrimination and non-interference clauses, placement of successor corporations, grants of equity to employees, stockholder power over employee arbitration agreements, and the ability of stockholders to seek redress through a business judgment rule.
2430 Clarence Court LLC v. Labor & Workforce Dev. Agency changed labor law by adding Cal. Labor Code § 1189.2 for "processed food definitions and regulations." Under this law, the state’s Labor Commissioner must develop legally enforceable regulations for the processed food industry by January 1, 2025. This will ensure that employees are able to receive the full compensation that they are entitled to, as well as be parents/guardians under labor law.
As for workplace posters, the state’s Office of Business and Economic Development must update workplace posters (distributing them at no cost upon request) for new ADvanced Light Duty vehicles and Zero Emission vehicles by July 1, 2025.
In terms of wages, the minimum wage in 2025 will be $16.50, with other wage increases noted previously in 2021.
Changes To California Wage & Hour Law
In 2025, the minimum wage for all industries in California will be $15 per hour for employers with fewer than 26 employees, and $15.50 per hour for employers with 26 employees or more. (Cal. Labor Code Sections 1182.12 and 1182.13, 2016, 2019, 2020 and 2023.) California’s higher state minimum wage will apply regardless of whether employers are subject to a guaranteed wage order. And the exemption from overtime that applies to employees in industries under a wage order is not available to those employees until they are paid salaries at least twice the minimum wage. The minimum annual salary required to meet the executive exemption, for example, is $62,776 ($45,600/40 hours per week times 52 weeks) for employees with fewer than 26 employees, and $64,480 ($47,840/40 hours per week times 52 weeks) for those who work at employers with more than 26 employees in 2025. (Cal. Labor Code Section 515.5(c)(2), 2018.)
Amendments To Employee Classification And Exemption Rules
California’s new employment laws for 2025 include employee classification revisions. The 2025 laws revert some changes that were implemented under AB 5, which took effect January 1, 2020.
Many California employers know their independent contractor workforce must be carefully re-classified as employees. Even if the employer is willing to run the risk of an AB 5 investigation/prosecution, AB 5 allowed limited exceptions where businesses may continue to hire "1099s".
But what if AB 5 were tossed out by the voters, would it revert to the prior test for "independent contractors"? The answer is "No."
AB 5 was enacted in response to the passage of the Dynamex decision, and Dynamex established a new test for independent contractors. Because of those events, as a matter of practicality, when AB 5 was repealed (retroactive to January 1, 2020) it did not revert to the pre-2019 "right-to-control" test. Instead, as part of its legislative reversals, the new law clarifies that the previous law (prior to Dynamex) is unenforceable until the Supreme Court holds otherwise.
Thus, employers run the risk of being prosecuted by county prosecutors even if they technically are permitted to use the pre-2019 "common law" test.
As noted earlier, AB 2257 expands the AB 5 exemptions. Specifically, the business-to-business services exemptions for contract workers now includes media crews, fine artists, photographers, freelance copy editors, and freelance proofreaders, among others. However, it is not all positive. While AB 2257 broadens the exemption for professional services, it prohibits employers from including provisions in an independent contractor agreement where the service provider agrees to arbitrate claims or waives the right to testify in court.
Expansion Of Employee Benefits
Both California employers and employees can anticipate new employee benefits in 2025. Effective January 1, 2025, the California Fair Employment and Housing Act will expand the definition of "family care leave," allowing employees to take leave to care for any family member with any serious health condition within the meaning of the California Family Rights Act (CFRA). This new definition expands the definition of "family member" to include "siblings and siblings-in-law, grandparents and grandchildren, domestic partners, and parents-in-law." Although both legislations’ leave rights apply to employees who have worked a specified number of hours during a specific time period before the commencement of a CFRA or new expanded California Family Rights Act (CFRA) leave, the expanded employee benefits will make additional employees eligible for leaves.
There will also be new worker benefits when California’s Family School Partnership Act goes into effect on January 1, 2025. Under the Act, employees will be entitled to take up to 40 hours of unpaid leave per calendar year to engage in a variety of activities related to their children’s education and school activities, after six months of employment. Employees will be entitled to take leave if the leave is an an activity reasonably related to the education of a child in grades K-12 at a public or private school, including, but not limited to, the following specific activities or events:
"School-related" activities or events include activities or events that occur during regular school hours or other hours established by a school.
Employee Anti-Discrimination And Harassment Protections
In 2025, California will continue its trend of enacting laws aimed at strengthening protections for employees, including those who affirmatively reject or are subjected to discrimination, harassment, or harassment on the basis of various protected characteristics. Since 2015, and step-by-little-step before that, California has expanded its anti-discrimination/harassment laws on private employers several times. The most recent additions prohibit discrimination by employers with five or more employees against any job applicant or employee on the basis of "reproductive health decision making" or "any protected factor" (more specifically, sex, gender, gender identity, gender expression, sexual orientation, race, religion, color, disability, medical condition, marital status, national origin, ancestry, retaliation, or persons transitioning gender). This overlapping hodgepodge of requirements compounding from year to year consequently leads to greater risk with each step.
Most recently, the laws went into effect January 1, 2025, amend the Fair Employment and Housing Act (FEHA) . These amendments define reproductive health decision making as having an abortion, using a contraceptive method or device, using emergency contraception, participating in a reproductive health clinical trial protocol, seeking reproductive health care services, or continuing pregnancy after being diagnosed with a reproductive health condition. As a result, expect private California employers with five or more employees to be required to provide reasonable accommodations for such decisions, including but not limited to, leave time, flexible schedules, modified work requirements, and suitable parking within proximity of the employee’s workspace.
The amendments also expressly protect employees from harassment and retaliation in all employer-sponsored or affiliated conferences, including workplace events outside of the physical workplace, such as employer-sponsored websites and online employer forums, conferences, and similar events, and extend the definition of employer to those who enter into contracts with labor contractors. Employers who fail to comply with the new laws may be liable for punitive damages, injunctive relief, and attorneys’ fees.
Implications Of The New Laws For Employers
Employers should review and update their compliance plans to address the changes. For example, many employers may need to adjust their onboarding process to ensure that notices are provided in the requisite manner. An employers’ EDD reporting process may also need to be modified to ensure that the EDD does not receive confidential information about an employee’s medical information. Employers with tip credit arrangements would be wise to specifically list all of the duties that group employees such as servers will be required to perform. Employers who use bonuses, merit bonuses and similar payments to calculate overtime will also need to reevaluate whether and how these payments will affect overtime calculations going forward.
Employers may also be faced to contend with additional employee claims which may be permitted based on the lack of specific language in law or their potential application to a similar industry or pay arrangement. For example, Illinois and Washington have made significant changes to their paid sick leave laws. California’s law is still limited to the existing definition of "Care" which does not include wellness time for the employee. However, would the absence of such language open the door for other types of California employee paid leave claims in the future?
Washington State amendment to its pregnancy discrimination prohibition, requiring reasonably graduation leave of up to 16 weeks, also opens the door for further claims under California’s disability leave law. Although the California pregnancy disability law already provided entitlement to reasonable accommodation in the form of leave, the California law did not specify a maximum amount of leave so long as the employee remained disabled from pregnancy. Thus, it is unclear whether California courts would be more flexible than Washington courts with a maximum limit of 16 weeks for leave that is presumed to be "reasonable." However, because California is more protective of its employees than other jurisdictions, it is also possible that California employees may still be able to pursue lack of pregnancy leave claims or PDL claims which are more than 16 weeks, even if employees are only seeking 16 weeks to conform to Washington law.
The more these states remain out in front of expanding employee benefits and protections, the more likely it becomes that employers will have to consider extending those protections and benefits to employees who might not otherwise be eligible for federal or state statutory benefits. Employers should consult with counsel to discuss how best to implement, coordinate and craft personnel policies that are both compliant with existing law and flexible enough to accommodate inevitable future changes.
What Employees Should Know
In light of the changes we outlined above, employees should consider taking the following steps to understand how these new laws may impact them.
Be Sure You Are Paid for All Work—Even Pay Practices that Seem to be Permitted May Not Be
Employees can now sue their employers for unpaid wages for work performed both on and off the clock, even if their particular pay practice appears to be permitted under federal law. Employers need to revisit their pay practices to assess risk of litigation exposure.
Understand All Potential Forms of Discrimination
Employees should not assume that workplace discrimination is limited to age, race, or gender (although these remain the most common). Additionally, employees should not assume that a manager or coworker’s unprofessional behavior may not violate the law if it is "just jokes . " Employers and employees should recognize that employees can sue for discrimination in many forms, and employees should understand that many other forms can constitute discrimination, such sexual orientation, military veteran status, association with another who belongs to a protected class, gender identity, gender expression, and genetic information.
Take Advantage of Consumer Improvements
Employees will benefit from privacy protections recently modified for businesses in California. If an employee wants to opt out from the sale or sharing of their personal information, employees should visit the operator’s website to determine whether a link allowing them to do so is available. If an employee (or their child) wants to request personal information collected by a business, employees should be aware that § 1798.100 gives them the right to do so by following specific instructions provided by the business.