California Employers: Are You Ready for the New Laws of 2025?

Topics: Discrimination, Harassment & Retaliation, Employee Hiring, Discipline & Termination, Employee Leave, New Laws & Legislation, Personnel Policies and Procedures, Union-Management Relations

The California legislature is never dormant when it comes to enacting new laws for California employers. This year, the statutes are less numerous than most other years, but there are still some important new changes that all California employers should be aware of.  

Below is a summary of the key changes. For a more comprehensive and detailed review of the new laws and published court opinions that affect California employers starting in January, we encourage you to register for our one-hour complimentary webinar on November 20, CDF Webinar: New California Employment Laws and Developments for 2025, that I will be conducting with my partner Nicole Legrottaglie Wohl.

Minimum Wage

Last week, California voters very narrowly rejected Proposition 32, which would have increased our state minimum wage to $18 an hour for large and medium-sized employers and $17 an hour for small employers with 25 or fewer employees.  

However, that does not mean the state minimum wage will be frozen for 2025. Instead, the minimum wage will increase based on the consumer price index (CPI). Effective 2025, the new California state minimum wage will increase to $16.50 an hour (up from $16 an hour).  

This fifty-cent increase also moves the minimum salary test for the primary overtime exemptions (administrative, executive, professional) to $68,640 annually or $5,720 monthly. If you are not paying your exempt employees who are qualified under these exemptions a salary of at least this much starting on January 1, 2025, they will not qualify as exempt. California employers should check the salary of its exempt middle management and salaried administrative personnel to ensure compliance. It is also important to remember that this salary test applies even to part-time exempt employees.  

In addition, many unionized California employers take advantage of certain exemptions to overtime laws, sick leave provisions, and other wage and hour laws only available to unionized employers. Most of these exemptions require, among other things, that the employees covered by the applicable collective bargaining exemption have provisions indicating that the employees are paid a minimum of 1.3x the state minimum wage.

Thus, all California employers taking advantage of any of the applicable collective bargaining agreement (CBA) wage and hour exemptions should ensure that their CBAs are compensating employees at least $21.45 an hour beginning January 1, 2025. If not, the state may find that the exemption is not applicable, and the employees covered by the CBA are required to be paid in strict accordance with California law. 

It is important to keep in mind that the standard $16.50 minimum wage is only half the story in California. Certain fast-food workers must be paid $20 per hour based on the state law that took effect last year. The California Fast Food Council has the authority to raise the fast-food minimum wage effective January 1, 2025, but so far has not acted to do so.  

Last month, state law kicked in requiring certain healthcare industry employees to be paid a minimum of $23 an hour through June 30, 2025, which will then increase to $24 an hour. The healthcare minimum wage is set to increase another dollar per hour to $25 an hour on July 1, 2026.  

In addition, there are many local ordinances that require higher minimum wages for employees working in those jurisdictions. Some of those local minimum wage ordinances apply to all employees in the jurisdiction. Others only apply to employees in certain industries or job classifications. Many of those local ordinances are pegged to inflation and thus have their own automatic increases for 2025.  

California employers are urged to audit their payroll to ensure they comply with all the new local and statewide minimum wage requirements for their industries and locations. Further, all California employers should ensure that with these changes their exempt employees continue to qualify as exempt under the new salary basis minimum, and that their CBAs that take advantage of the available exemptions to California wage and hour law meet the new pay requirements.  

Paid Family Leave 

Effective January 1, 2025, AB 2123 eliminates the ability of California employers to require their employees to use up to two weeks of accrued vacation time before they start receiving Paid Family Leave benefits under the EDD’s paid family leave program.

Sick Leave Expansion

Starting next year, under AB 2123, employees in California can now use sick leave to assist any family member who is a victim of certain types of violent incidents or threats of violence. California employers should provide notice of this change to their employees and alter their sick leave policies and practices. California employers should also consider training their management and human resources professionals, so that they are aware of these new changes and that leave is no longer limited to victims of domestic violence, sexual assault and stalking.

Captive Audience Meetings

With AB 399, California joins several other states in banning mandatory captive audience meetings. Effective January 1, 2025, under the California Worker Freedom from Employer Intimidation Act, California employers can no longer discharge, discriminate, or retaliate against, or threaten to carry out such actions because an employee refused to attend any employer-sponsored meeting related to religious matters, political matters, or matters related to the decision to support or not support a labor organization/union.  

Restrictions on Requiring Drivers’ Licenses for Job Openings

Effective January 1, 2025, SB 1100 prohibits California 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 can prove that it: (1) reasonably suspects driving to be one of the job functions of the position; and (2) reasonably believes that using an alternative form of transportation (such as biking, public transportation, etc.) that does not require a driver’s license would not be comparable in travel time or cost to the employer.  

As indicated above, this is only a brief summary of some of the key changes to California employment law for 2025. For the most comprehensive summary of the key changes and suggestions on how these changes should be implemented in the workplace, please click here to register for our November 20 webinar. The webinar will also address some of the key published judicial decisions that affect California employers, along with NLRB and other agency developments, from 2024.