No. 1: Minimum Wage. The California state minimum wage increased to $16.50 an hour on January 1. This means that the exempt salary threshold increased to $68,640 per year. Computer software employees must make at least $56.97 an hour, $9,888.13 a month, and $118,657.40 a year to maintain exemption.

Recommendation: Take a quick look at your salaried employees and make sure they meet the new threshold and make sure no one falls below. Also note that cities and counties in California may have higher minimum wages than the state minimum.

No. 2(a): Arbitration Agreements. Review your arbitration agreements to ensure that they do not apply to disputes unrelated to your employee’s employment and that the duration does not exceed the employee’s period of employment. Also, make sure there is mutuality, and very carefully spell out any third-party beneficiaries of the agreements, such as related companies or staffing companies. This will address some very difficult case law from 2024. 

No. 2(b): Arbitration Agreements. Also, make sure that your arbitration agreements have been signed or that someone can prepare a declaration with personal knowledge that an employee’s agreement was signed. Courts in 2023 and 2024 have been attacking arbitration agreements on the “contract formation” theory.

Recommendation: Consider adopting mandatory arbitration with clear policy acknowledgments. If you use arbitration agreements, ensure that you can run reports of everyone who has signed an arbitration agreement, everyone who has not, and everyone who has opted out, if applicable. Review and possibly revise your arbitration agreement and execution process per the above.

No. 3: Immigration. Be ready, with the second Trump Administration, for more I-9 audits, more audits generally, and an increase in site visits. 

Recommendation: Engage in a self audit for all immigration compliance, particularly I-9s, in the very near future. This is particularly true if you are in the construction, hospitality, food processing, or agricultural industries, all of which were a focus during the first Trump Administration.

No. 4: Discrimination based on intersectionality. This new California law makes explicit that discrimination based on a combination of protected classes (such as race and gender) is unlawful. Most companies’ policies already address this. Relatedly, discrimination based on “protective hairstyles” (like braids, locs and twists) is unlawful. 

Recommendation: Review your policies on discrimination and harassment, and make sure they cover Intersectionality. 

No. 5: PAGA reform “reasonable steps.” The reform from last summer to the state Private Attorneys General Act will not change much but it does give employers a few breaks, including a significant break (up to an 85 percent discount) on PAGA penalties if employers have taken “reasonable steps“ to comply with the Labor Code. 

Recommendation: Conduct a wage-hour audit, prepare and disseminate written policies if you have not done so already, train employees and supervisors on those written policies and document the training, and take appropriate corrective action against managers who fail to implement policies and document such actions. These four items are listed in the PAGA reform statute.

No. 6: Independent contractors providing “professional services.” Under the new Freelance Worker Protection Act, each itinerant worker who provides professional services (defined by Labor Code 2778, which is somewhat broad) must have a written contract where the amount paid is more than $250 for a 120-day period. 

Recommendation: Determine whether your independent contractors are providing arguably “professional services,” and if so provide them with a template written agreement. 

No. 7: Industry-specific minimum wage increases. The health care minimum wage for employees of large health care employers increased to $23 an hour, effective January 1. Some additional minimum wage increases for health care workers are scheduled for June and July. The minimum salaries for managers in that industry are also affected. In the fast food industry, the state has set a minimum wage of $20 an hour. Many cities and counties have their own minimum wages, but unlike the state laws affecting health care and fast food workers, the city and county minimums do not affect minimum salaries for managers.  Industry minimum wages for others are $21 an hour, and still others are $18 an hour. 

Recommendation:  Make sure you know where you stand.

No. 8: Whistleblower rights notice. California requires that employers post a workplace notice informing employees about their rights under the state whistleblower laws. The California Labor Commissioner has published a model notice, which is available here.

Recommendation: Be sure that your notice is posted.

No. 9: Paid sick days for victims of violence. AB 2499 expanded employment protections by allowing employees to use any available vacation, personal leave, paid sick leave, or compensatory time when they or their family members are victims of “qualifying acts of violence.”

Recommendation: Review your leave and accommodation policies to ensure that they address these expanded protections.

No. 10: Paid family leave. For any disability commencing on or after January 1, employers may not require employees to use their accrued paid time off before using California Paid Family Leave benefits under the state’s disability insurance program. Previously, employers could require employees to take up to two weeks of accrued, unused vacation before they could begin to receive benefits under the state program.

Recommendation: Review your leave policies to ensure that they comply with this new law. Everything else! Don’t forget the other mid-late 2024 changes, including the following: You can’t require a driver’s license requirements on a job application unless driving is a job function, San Diego County and Los Angeles County have “ban the box” laws for job applications, Cal-OSHA has a new workplace violence standard and plan requirement, as well as an Indoor Heat and illness standard and plan requirement. 

Here’s to a productive and compliant 2025!