California enhances the legal protections accorded California based employees every year, and 2025 is no exception. Employers of California employees should review the new workplace laws set to take effect on January 1, 2025, which expand protections and benefits for employees, for applicability to their own employees.

Minimum Wage Increases

Pursuant to inflationary adjustments provided in previous law, the statewide minimum wage for most California workers will increase from $16 per hour to $16.50 per hour next year. The minimum salary test for the primary overtime exemptions (administrative, executive, professional) will also increase to $68,640 annually, or $5,720 monthly. 

Higher minimum wage requirements took effect in 2023 for workers in the fast-food and healthcare industries. Certain fast-food workers must be paid $20 per hour, and certain healthcare workers must be paid a minimum of $23 an hour through June 30, 2025, which will then increase to $24 an hour.

In addition to statewide minimum wages, many local ordinances, including San Francisco, have higher minimums for employees working in those jurisdictions.

Paid Family Leave

AB2123 disallows prior law which allowed California employers to require employees to use up to two weeks of accrued vacation time before they start receiving benefits under California’s Paid Family Leave program.

Protections for Independent Contractors

SB988, the Freelance Worker Protection Act, provides protections for bona fide independent contractors retained to provide professional services. It requires the “hiring party” to provide the freelancer with a signed and written contract (physical or electronic), which specifies the terms of the agreement including the services to be provided, the dollar amount, method of payment and the due dates for the invoice and payment. Full payment must be made by the due date or within 30 days after the work is completed if no date is specified. 

“Hiring party” means any person, company or organization (except government agencies and an individual hiring services for the personal benefit of themselves, their family members or their homestead) in California that hires a freelancer for $250 or more within 120 days. The broad language of the law covers self-employed individuals performing many types of professional services. In addition to damages, an unpaid or underpaid freelancer is entitled to have their attorneys’ fees paid by the employer.

Companies doing business in California should keep in mind, however, that this new law applies only to individuals properly classified as independent contractors. Employers which misclassify employees as independent contractors are subject to many potential legal problems for lack of compliance with tax, wage and hour, workers’ compensation, and unemployment insurance requirements.

Prohibition Against Certain “Captive Audience Meetings”

SB399, the California Worker Freedom from Employer Intimidation Act, provides protections to employees who decline to attend employer-sponsored meetings on religious or political matters. SB399 is likely to be the most controversial of the new laws because the definition of “political matters” not only includes elections for political office, legislation, regulation, but also the decision to join or support any political party or labor organization. Because federal labor law, the National Labor Relations Act, governs employer and employee rights in regard to joining or supporting labor unionization, a challenge to SB399 is likely to be made on the basis that it is preempted by governing federal labor law.

Expansion of Paid Sick Leave for Family Members of Victims of Crime

Existing law requires employers with at least 25 employees to give workers who are victims of certain crimes or domestic violence unpaid leave to attend to their needs and ensure their safety. AB2499 expands the protection to provide unpaid leave for an employee to help a family member who becomes a victim of crime. Victims and their family members can opt to use paid sick leave for these purposes. Covered crimes include those who experience a “qualifying act of violence,” which includes domestic violence, sexual assault, stalking and any act or conduct that causes bodily injury or death to another person, the use or brandishing of a firearm and an actual or perceived threat to cause physical injury or death.

Prohibition Against Driver’s License Discrimination

SB1100 prohibits employers from including statements in job advertisements, job applications, or other employment materials that an applicant must possess a valid driver’s license unless the employer “reasonably expects” the position to require driving and “reasonably believes” that using alternative forms of transportation (such as biking, public transportation, etc.) would not be comparable in travel time or cost to the employer. Employers of California employees should review their job descriptions and other recruiting materials to verify compliance.

Anti-Discrimination Laws to Include “Intersectionality”

While the concept of “intersectionality”, the interplay between legally protected characteristics such as sex, race, national original or disability, is not new in the United States, California now becomes the first state to specifically protect against discrimination not just because of one protected trait but also because of the combination of two or more legally protected bases. In other words, current laws do not expressly recognize that discrimination can arise from the interplay between two or more legally protected characteristics. 

SB1137 amends the California Fair Employment and Housing Act, which provides employment protections, and the Unruh Act, which provides protections in accommodations in business establishments, to prohibit discrimination based on “intersectionality,” which is any combination of other legally protected characteristics. The California Fair Employment and Housing Act lists protected characteristics to include “race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, age, sexual orientation, reproductive health decision making, or veteran or military status,” including a perception that a person has any of these characteristics or is associated with a person who has, or is perceived to have, any of those characteristics.

Whistleblower Protection

New law AB2299 requires that an employer post a list of employees’ rights and responsibilities under the California whistleblower laws.

Recommendation for California Employers

Employers of California employees are urged to ensure compliance with California law in all aspects of their employment policies and practices. In particular, plaintiffs’ attorneys continue to file wage and hour and other class actions based on lack of compliance with the many nuances of California law, and employees continue to claim discrimination, harassment and/or retaliation on the bases of the many legally protected bases. Ongoing policy review and the training of management in California employment requirements is recommended.