California Employment Law 2026: What to Know Before Jan. 1

Melissa Whitehead] (0:06 - 3:50)
Oh, an immediate 93 people. Good morning, everyone. Hello, hello. We can see the participant counter quickly ratcheting up, so we know people are still joining, so we're not going to get started. We're going to give it a couple minutes, but we want to welcome you to this year's 2026 Legal Update. I see a lot of familiar names on the attendee list, so happy to see those of you we know and happy to have some new folks here as well. You just give us a couple minutes. Actually, it looks like the list is already slowing down a bit. One thing we want to start with before we even get into introductions is a little poll. We want to get a sense of who we have here in terms of position. You know, we've got usually a lot of HR folks, sometimes some legal compliance folks, sometimes some business owners, so I'm going to pop up a poll. Bear with me because I can't talk and do it at the same time, and then after that, we'll do our introduction so you know who's talking at you, and we'll get started. Oh gosh, there we go. Let me relaunch. Okay, you should all have a poll now of what best describes your current role. Oh good, yeah, I see results, so it's happening. You're taking it. Just give it a minute for the numbers to slow down, and then I'll show everyone the results as well. It looks like people are joining and answering as they join, so just a second. I think we're slowing down. I always joke that at this stage of the webinars, it's like watching the participants list is like watching popcorn pop. Like when it's going really fast, you know, you don't want to stop it yet because there's still good kernels to be popped, but when it starts to slow down, you know we're about done. So I think that the kernels have slowed down and they're popping, so I'm going to end the poll, share the results, and we'll get started. All right, so this is who we have with us today online. Feel free to introduce yourselves to each other in the chat if you want a little interactive networking element to things. It looks like not super surprising. The vast majority here, we've got our human resources professionals. You guys are in charge of making sure your organizations are compliant, so that makes sense. Glad to have you guys here, and then we've got second place. There's other leadership. We know that not all organizations have a dedicated HR role, so that makes a lot of sense, and sometimes other leadership just want to be in the know. We've got some legal and some other, which is intriguing. So that is who we've got here today. So with that, let's introduce ourselves. I don't know. Sorry, I've got a weird window up, but you can't see it, so it's fine. So I'm Melissa. If you were here last year, I was here with you. I'm one of the partners here at Medina McKelvey. I practice primarily in, actually I kind of have my toe in everything. I do advice and counsel work and trainings. I also do single plaintiff litigation, the FIHA claims, things like that, and investigations, but my passion is training, and I'm a big legal nerd who loves being in the know on all the new updates, so that's why this is sort of, I anticipate you will see me most years on this webinar if you join us, and then I also have Elizabeth here and Alex, if you guys want to introduce yourselves real quick, and then we'll kick it off.

[Alex Medina] (3:50 - 4:18)
Sure, I'll go first, Elizabeth. I'm Alex despite the super formal Alexander Medina on my name, which I'm changing as we speak. I'm the co-founder of Medina McKelvey as well as our sibling company, CalComply, which is a wage and hour training, testing, and certification company, and I'm a class action and PAGA defense lawyer, and my passion is business and business owners and keeping all of you out of these crazy, crazy cases that we'll talk about a little bit later.

[Elizabeth Levy] (4:18 - 4:55)
And hi, I'm Elizabeth. I was briefly, briefly on the dark side, on the plaintiff's side about 15 plus years ago, but I have seen the light. I've been doing management side employment work for quite some time now, and I am similar to Melissa. I have my, my toe in a lot of different waters, but I do primarily wage and hour and advice and counsel with fun things thrown in there, and Melissa and I, we, we literally had fun putting this together and getting in the weeds and talking about some of these things, so very, very excited to help all of you figure out what's next up for California employment law.

[Melissa Whitehead] (4:55 - 8:17)
Perfect. Some just logistics to kick us off. If you have questions as we go, please pop them in the Q&A box. If you go down to your ribbon where there's, you know, chat, those types of things, if you don't see it, click on the more section, and there'll be something that says Q&A. Feel free to type those in as we go. My, my pro tip on that is please type in complete-ish sentences or at least give us the context, because we're going to try to take them as we go, but sometimes we might not get to them until the end, and so if I see something that just says, what does that mean, I may not be able to answer that question if it's not specific enough to say which statute you're talking about or something like that, so we will try to monitor those in real time, but we've built in time for questions at the end as well, so we will try to cover those as they come in. Related to that, our usual lawyerly disclaimer that this is not legal advice, this is general information, anything we talk about here is not privileged, we're not your attorney, there's no relationship, even if we are your attorney, because again, I saw lots of clients on there, which is always fun, but this is not a attorney-client privilege conversation, so this is just information. If you have super specific questions about a situation or particular facts, again, even if we are your attorney, we should handle those separately. If you're one of our clients in the advice world, think about how many times you've asked me a question that I've ever been able to answer without asking follow-up questions, right? We always need more information, so just take this as general information, please. Okay, this is what we're covering today at a very high level. It's been another big year with lots of bills signed. I've been doing these types of webinars for probably about 15 years, and I think every year I get to say that it's a record year for number of bills signed that affect employment law, but the good news is, as we get into it, they're not quite as monumental change your world as they have been in the past few years, it feels like, so we're going to be talking about pay equity, there's some changes to personnel record requirements, leaves, FEEHA, the usual topics, there's some new posters, there's a new rule about stay or pay, which will affect some of you, but probably not all of you, enforcement of wage judgments, then this can't cover everything, right? Like we said, or like I said, a huge number of bills have been signed, and we tried to cherry pick, as Elizabeth said, we kind of, she and I kind of nerded out, and we love this stuff, but we tried to cherry pick what is going to be most generally applicable to California employers across industries. So there's some things that we want to highlight for you that might be industry-specific, or you know, kind of honorable mention list, but even that, we're still not covering everything. And then at the end, Alex and Elizabeth will talk with us about what's going on in the lovely world of PAGA. Okay, so, and I already see a question in the Q&A, but it's about PAGA, so I'll wait till we get to that section, and I will let Elizabeth kick us off.

[Elizabeth Levy] (8:17 - 11:54)
Thanks, Melissa. So, all right, so pay equity, this was one of the meatier areas in terms of updates. So existing law requires employers of a certain size to have the pay scale on job posting. So the law has now been amended to define, give a little bit more clarity as to what that means. So pay scale defined as a good faith estimate of the salary or hourly wage that the employer reasonably expects to pay upon hire, and they added that upon hire language, which may have an impact. I think the bottom line is that if you've got a good faith estimate, that is the most critical thing, but with the additional clarity, you know, I guess as an example, if there's a lockstep salary bump every year, and you're posting something, but you know you're not going to hire someone until the following year, well, then you're going to want to have the salary range that's going to be in effect at the time of hire. So just another reminder to make sure that you've got those postings properly squared away with the pay ranges, and we can keep going in pay equity world. So another area where there've been some changes are with respect to lawsuits regarding pay equity claims. So employees already have the right to file these types of claims. This has been around for a few years, not a new law, but the statute of limitations has changed, and that's a pretty big deal. That can get pretty expensive. So the statute of limitations to recover wages under this section is now three years after the last date of the unlawful action and allows for recovery up to six years, which is really hefty. Most recovery periods just are not that long. So I think it shows the legislature, you know, taking this seriously, and you know, I think six years may be a little draconian in my humble personal opinion, but that's what the law says now. There's also some alignment with the federal definition of what wages includes under this section of the labor code. So it includes all forms of pay, such as salary bonuses, stock options, life insurance, vacation, certain reimbursement allowances. And just to be clear, that doesn't mean you have to put that on a job posting. These are separate things. So if you've got, you know, life insurance benefits, that doesn't necessarily have to be part of the pay scale on the job posting in the law we just spoke about. But for the purposes of this section of the labor code, the 1197.5 wages is more specific. And so another area where there have been some changes is with respect to pay equity reporting. So larger employers with 100 or more employees, including those placed through staffing agencies, there's already a requirement to report demographic data. And this larger change, it's not going to go into effect until January 2027. But I think employers will need to start planning for it now. There's going to be additional categories that need to be reported on. So the current requirements are 10. Now there's 23 different categories, something to keep in mind in terms of future reporting. The law also has changed to, so that a failure to provide a report leads to a civil penalty upon request. And there's also a requirement that this demographic information be collected and stored separately from the personnel records. And with that, I will hand it back to Melissa, because I know there have been some changes on that front as well.

[Melissa Whitehead] (11:54 - 14:25)
Yes, indeed. And this is actually a sort of interesting one, because I deal with these a lot at our firm, and some of them with those of on this webinar, you get that demand that says, hey, I want a copy of my personnel records. And we know that California law requires you to provide copies of your personnel records to employees or former employees within 30 days of the request. But the big question is always, what do I need to include in that? What are personnel records? Because it's not defined by statute. So we sort of piece together different things. Now there is an amendment to the labor code to provide, in theory, to provide some clarity. But in my opinion, it doesn't really provide much clarity at all. It just adds a new recordkeeping requirement. So now they say that personnel records must include education and training records. So to be clear, they're not saying it only includes education and training records, right? It's still the other stuff that we'll talk, that are traditionally in personnel records. They're onboarding things, you know, policies, reviews, things like that. But must include education and training records. And those records must contain the employee's name, the training provider's name, the duration and date of the training, the core competencies. So for example, if this is a training on a specific piece of equipment or software, that needs to be included in the records. And then if there's a resulting certification or qualification, that needs to be in there. My hunch is that this will modify the records you're keeping for your employee trainings for most employers, because this is a pretty hefty list. So if you've got like the sign-in sheets, that might, maybe one way to do it would be to update the information you put on those, and then you keep a copy that you put in everyone's files. And I see a question in the chat that I'll just address really quick that says, does this include previous training or just training starting on January 1st? Of course, the law is not that clear on that. What I will say is this requirement begins January 1st, meaning this is when that information is required to be kept in your personnel records. So I would say if you have that information already, you should start putting it in the personnel records. You know, if you're keeping, you have those records, but you keep them separately, make it a project to start merging it into the personnel records. But I think there's a decent argument that there's only an affirmative obligation to do that starting January 1. All right.

[Elizabeth Levy] (14:25 - 14:38)
I think also, Melissa, what is potentially helpful for employers is that if there's training records in there that they want opposing counsel to see, like wage and hour training, then there you go, on the silver platter, that can be helpful.

[Melissa Whitehead] (14:38 - 23:42)
Oh, absolutely. And at the risk of sounding self-serving, I will say that we do our compliance plans that Alex might talk to you a little bit about later, and we recommend folks do wage and hour training, and we work with CalComply, who they give these certificates to each employee saying that they have completed it. And I will tell you, as the person at our firm who oversees almost all of those pre-litigation demand letters that you get, when we send a personnel file that has those certificates of completion up front, it's a really strong starting point for sure. Okay. Leave laws. Oh, sorry. One other question on the training, and then I'll move on. Without assuming, does this include yearly compliance trainings as well? I would assume it does. I would assume that it doesn't say that expressly, right, in the law, but I would assume that any employee training that you now should be keeping those records and keeping them in the personnel file. Okay. Moving on to leave laws, one of my personal favorite topics. This is an interesting one. It does not go into effect until July 1 of 2028, but we're including it briefly because it's a new law and people see the headlines and they think, okay, maybe only Elizabeth and I see the headlines, but if you see the headlines, you might think, well, wait a minute, why didn't we cover this new leave law? So I just want to touch on it quickly. We'll highlight it again in 2028. This is not a new leave entitlement. I want to be clear. This is not saying you have to give new leave to anyone. California has its paid family leave wage replacement program for folks who are out on leave for specific qualifying reasons, including family care. And so this new law now allows for paid family leave to apply to somebody taking time off for a designated person, which is defined as any care recipient related by blood or with the equivalent of a family relationship. So again, this isn't saying you're going to have to give leave for new reasons. It's not a new leave entitlement because this is really already covered in either paid sick leave or CFRA. Both have designated person leave, essentially. Some people do, some don't. If you have a policy in your handbook that explains state wage replacement benefits, such as California paid family leave, then you'll want to update it in 2028 to include designated person. Also, by the way, on a side note, if you see in the bottom right corner of this slide that nifty little book logo, everybody's going to get a copy of these materials, by the way. When you do, that logo there is a sign to you that this may require a handbook update. So just keep an eye out for that. There's actually not that many this year, which is pretty exciting. But again, this is 2028, but we didn't want to ignore a new law. Okay, this one is a new leave. And for those of you working with us on handbooks, you'll see that we have a handy dandy new judicial proceedings leave policy in the handbook. It's not as big of a difference as you might think, though. So this is essentially saying two things. One, employees can use their paid sick leave for some new reasons now in addition to what's already existed. And this includes for a situation where either the employee or an employee's family member is a victim of specific crimes that are listed in the law. I'm not going to get too in the weeds today on that. So for those victims or family members who are victims, the employee is entitled to use their paid sick leave to take time off to attend certain judicial proceedings, including delinquency hearings, post arrest release decisions, pleas, sentencing, post conviction. This is in addition to if you remember last year, we talked about paid sick leave now covers time off for certain things associated with qualifying acts of violence. This is separate from that. This is a different thing for victims of specific crimes. The second thing that says is if the employee does not have paid sick leave available, they're still entitled to this time off. It just would be unpaid time off, but it is job protected time off. The law doesn't put a limit on how much time that they can use for this, but I will say by its nature, it's going to be limited because it's specific to these judicial proceedings. So it's only going to be to attend these proceedings. In that same law, the jury duty entitlements are changing a little bit. It's been amended to say it used to be that you would say, hey, those folks going out on jury duty have to give us reasonable notice that they're going on jury duty. That's actually been removed from the law. Don't type a question asking me why, because I won't be able to answer it. But nonetheless, it's what it is. But here's the fun wrinkle with inconsistencies in California law where people don't know how it all works. But because employees can use paid sick leave for jury duty, if they are using their paid sick leave, then they have to give reasonable notice, unless it's not possible, but it pretty much will be for jury duty. So it's a little bit tricky. Honestly, I think unlikely to change your practice as much, but will require a small modification to your jury duty leave policies. I'm going to not get in the weeds on the Qs and As. I'll look at those in a little bit. I want to make sure we have time to get through everything, but we will go back to the questions and make sure we cover everything. Okay, FEHA updates. And actually, I'm thinking, I mean, Elizabeth, correct me if I'm wrong, but I think this might be the first year in a very long time that we are not telling you that we need to change the list of protected characteristics under FEHA. I think that's... Yes, I think you may be right. At least in the last couple of years. Yeah. So, I mean, there's something, there's something, but there is still FEHA. This one is a fun one in a way, in a complete... Listen, I gave you the full disclosure that I'm a legal nerd. So when I say fun, it's just for me and Elizabeth maybe, but probably some of you too. This one goes into effect January 1. Oh, I forgot to mention on the last slides that these leaves, they went into effect immediately, October 1. So this is in effect now. So you'll want to update your practices as well as your policies as soon as possible. Okay. So for FEHA, there's this new law that essentially says that an employee's participation in bias mitigation training, which can include an assessment or even admissions or acknowledgements of their own personal bias, if it was made in good faith or otherwise solicited or required as part of that training, that's not in and of itself unlawful discrimination. I bet a lot of you are like, what? In the words of my 12 year old son, what are we yapping about now? Fair. So the intent behind this as stated in the bill is to encourage employers to conduct these bias mitigation trainings and to affirm that the training by itself does not constitute unlawful discrimination. I think it's interesting. I think that essentially what I think they're trying to do is say, hey, we think it's a good idea that companies do these bias mitigation trainings. Part of that is going to require people to acknowledge their own implicit biases. But what happens if somebody speaks up and says, I'm going to use this as a relatively safe example because I'm a woman, so I'll just use the woman as the protected class. If somebody speaks up and says, hey, you know what? Honestly, I do have a hard time. It's so foreign to how I think that I'm having a hard time thinking of an example. But something like somebody says, if I'm honest, I do assume that a woman is less educated than a man in this position or something like that, the idea here is we want to encourage the self-awareness so that we can improve and learn and things like that. So it's sort of protecting that speech so that then a person can't later file a claim saying, hey, this person admitted that they were discriminating against somebody because of their gender or something like that. What I really think this is, if I'm honest, we see this every single year. I think this is one of California's legislative knee-jerk reactions to what's happening in the federal government with removing a lot of diversity trainings and things like that. That's what I actually think is happening.

[Elizabeth Levy] (23:42 - 24:08)
Melissa, I think there's a lot of that in a lot of different capacities. There are probably aspects of pay equity where it's like, look, if there's a void at the federal level, we're going to come in full force and fill it over here. So I think at a really high level, if you, like Melissa and I, have spreadsheets about this stuff, at a high level, I think there's definitely a piece of that going on.

[Melissa Whitehead] (24:08 - 26:32)
Yeah, for sure. And we see it every year, right? The year that Roe v. Wade was overturned, right after that, California put in the reproductive decision health making as a protected class. We see it a lot. And so I think that's what's happening here. This is one that I will recognize is probably mostly interesting to litigators, but it's just something to keep a heads up on. And I'll keep it really brief because it's a little bit complicated. But essentially, if you're familiar with the concept of statute of limitations, that certain legal claims must be brought within a certain amount of time. Otherwise, they're waived. This law would allow a person to sort of revive their claim, even if the statute of limitations had run or expired for allegations of sexual assault, if they can prove that an entity that was legally responsible for the resulting damages, and they engaged in a cover-up. And there's the definition there of what that means, that there was a concerted effort to hide evidence. This isn't just that they ignored it, they ignored their complaints, but it's an actual, they're trying to hide evidence, they're destroying evidence, they're paying people off to be quiet about it, that kind of thing. If there's evidence of that, then a person can bring those claims against those entities, even if the statute of limitations has expired. This is particularly relevant because the law says that this will also revive derivative claims, which can include wrongful termination and sexual harassment. I've got to hope that it's a unique fact pattern that this would come up under, because again, it would have to be somebody saying that there was a concerted effort and that the entity, the employer in this case, was the entity who did that cover-up or at least participated in it. But if that's the case, then it'll allow folks to revive those claims, either currently pending or anytime before December 31st, 2027. I suspect it'll be probably extended beyond that, because this is actually an extension of a bill that was supposed to grandfather out. So anyway, and I think we're on to posters, which I think is you, Elizabeth, right?

[Elizabeth Levy] (26:32 - 26:41)
Yeah, and there were a couple questions. I'm going to jump back before I forget on documentation for some of the judicial proceedings.

[Melissa Whitehead] (26:41 - 26:43)
Oh, I see that. Yes, thank you.

[Elizabeth Levy] (26:43 - 27:20)
So, Melissa, you certainly chime in, but basically, you can ask for documentation. The law gives you some examples for some of these things, like the court proceedings themselves, documentation from a licensed medical provider. It's going to depend on where the reasoning is, you know, maybe documentation from a victim advocate. There's different types of documentation in the statute that can be asked for. I'm trying to see if there's anything else we want to just jump back to.

[Melissa Whitehead] (27:20 - 27:59)
Yeah, I mean, related, there's the question of, can you require them? That's really sort of, if we're talking about judicial proceedings, that might have been about jury duty leave. Because there's a question, are they required to provide proof or do we just take them at their word? So if it's to judicial proceedings, that's what Elizabeth just commented on, that you can require documentation. Jury duty leave, I don't think that was changed. I honestly don't remember off the top of my head whether they changed that in the statute this year, but I don't think so. So I think you can require some form of documentation of jury duty leave.

[Elizabeth Levy] (27:59 - 30:58)
Do you recall that specifically, Elizabeth? Yeah, I think you're right. And I think that it may be something that can be provided after the fact if it's some kind of, you know, unusual situation where advance notice can't be provided. And I think somebody was asking, there was a question about examples of the judicial proceedings. I think we listed them out in the slide, but it is, so there's sort of two components. There's a very specific list of, it's like very specific felonies and very, very specific list of crimes that are applicable. And then in tandem with that, you have a list of specific judicial proceedings. So yeah, so delinquency hearings, post arrest release decisions, pleas, sentencing, post conviction release decisions. So the way that the law has language along the lines of, you know, if somebody's rights are being impacted, but those are, those examples are pulled straight from the law. So those types of things. And it's the kind of thing too, that, you know, when in doubt, take a close look at it. I think delinquency is one that seems like you'd want to make sure you're taking a close look. Because if somebody's saying, oh, I got to do a thing at my kid's school, it's like, well, yeah, you know, make sure you're not dealing with a protected situation, or if you are, make sure you figure out how to deal with it accordingly. But I want to make sure we're on track here. Keep on going. So for updated posters. So I, you know, I think as everyone knows, California has, there are a bunch of things that need to be posted and provided, especially at the time of hire. And so this is a new Know Your Rights poster. It needs to start being handed out on or before February 1. We don't have it yet. The Labor Commissioner is supposed to develop and post its template on their website by January 1, and it may update it annually. So it's always good to just double check, make sure the posters are up to date, that you have the most up to date slated posters. And so this Know Your Rights poster, it has, this is kind of at a really high level going to, I think, some of the things that Melissa was talking about in terms of response to things at the federal level. There are some things in the Know Your Rights poster, it's, you know, information about employee rights like workers comp, but also some things related to immigration and those types of things. And I think piggybacking on that along those lines, employers now also need to have contacted employees designated emergency contact if the employee is arrested or detained on the work site during work hours or in any way during the employee's job. So there's an explicit requirement there, I think, designed to address things that we're seeing trickle down from the federal level, especially in certain parts of California. And Melissa, I don't know if you wanted to add in anything on those.

[Melissa Whitehead] (30:58 - 31:13)
No, I thought the same thing when I saw that last bullet point, that that's, I 100% agree that that's a California reaction to what's happening in the political climate that, yeah, I just completely agree.

[Elizabeth Levy] (31:13 - 33:00)
And so this next one, the stay or pay, this is a new one. It's an interesting one. It's something that, I think, as Melissa said up top, not sure how applicable it's going to be. It's going to really depend on your industry and your business if there's some type of repayment obligation if folks don't stick around for a certain period of time. So this new law is going to prohibit contracts that require workers to repay certain debts upon separation. There are some carve outs for tuition payments, for transferable credits and discretionary bonuses, but you need to have, in order to carve those things out, you need to have it done in the right way. So you need to have those things be any kind of repayment contract be separate from the agreement. Depending on what is being repaid may or may not need to have a right to consult the attorney, time to consider. The worker may need to have the option to defer payment. So essentially it's like, so they don't have to repay it. They can say, hold off till I get past this period and then give me the money. But the big, big takeaway is just that if this is something that your business does, you want to make sure that, A, see if you can even have a carve out, and B, if you can, make sure that you're crafting the agreement the right way so that you can actually have some kind of repayment obligation if it's something that's available to you. And there is a private right action here. So it's something that can, I think, potentially really get costly if it's not done the right way.

[Melissa Whitehead] (33:00 - 33:31)
Yeah, yeah, exactly. I think it's one of those where just think through your policies. Because even if you have a policy, it might be something that doesn't come up that often. So I would really encourage you to think about if you have any, sorry, I skipped back. I didn't mean to. If you have any policies that would require an employee to pay back something that you had given them as some kind of benefit, think through whether it applies. Just be, again, it's probably not going to affect most of you, but we want to make sure if it does that you're paying attention to it.

[Elizabeth Levy] (33:31 - 33:57)
Yeah, and I see a question about if this has anything to do with equipment return. No, I mean, this would be an obligation to repay something. Equipment wouldn't be considered. Employee loans, I think that's going to fall into a separate, likely fall into a separate category, but it's also the type of thing that's going to depend on the exact circumstances if something's really a loan or a reimbursement.

[Melissa Whitehead] (33:57 - 35:08)
Yeah, I wouldn't think employee loans would be included because you're going to require them to repay that loan whether they're your employee or not. I think this is applying primarily to things that's saying, hey, employee, you need to repay me if you leave us, right? So it's going to be more like the tuition reimbursement, although there's some specific things where you say, hey, I'm going to pay you to go get that certification, whatever it is, but if you leave within six months after going through the program, you need to reimburse a portion of those proceedings. I think relocation, if you have a policy requiring, I see that question in the chat there that if you have the policy that says, hey, we're going to pay for you to relocate, but you have to pay us back if you leave within a certain amount of time, I would think that would be included too. It might be, and I honestly don't have memorized as, like Elizabeth said, there are some things where it says you can still do this, but you have to make sure you do it a certain way. So it's sort of, if you have any type of policy like that, it's a two-level analysis, just like Elizabeth said, first of all, does it fall under this law? And if it does, can I still do it, but do I have to change the policy or the agreement in order to do it that way?

[Elizabeth Levy] (35:08 - 35:22)
Yeah, and in terms of the card outs, it's tuition payments and certain discretionary bonuses, those seem to be the areas that are explicitly able to be carved out, but you've got to just do it in a really particular way.

[Melissa Whitehead] (35:22 - 38:01)
Yeah. Okay. All right. I'm just looking to make sure before. I think we... Okay. This is one that's going to excite no one, but we got to include it because it is new, and it's just good to know that employers are now, there's a new civil penalty. If you have ever been in the unfortunate position of facing a DSLE claim, actually, that's a typo, DLSE, not DSLE. Okay. Now I'm just like throwing my whole head. Anyway, labor commissioner complaint for wages. If you have been in that situation, you probably have seen that usually the claim is, hey, you didn't pay me, whatever it is, overtime, meal period premiums, waiting time, whatever it is. And that dollar amount is usually not a whole lot. It's usually relatively, but then all the fines and penalties will be double, triple what the claim for wages is. So we have a new one, a new civil penalty that this now applies if you don't pay for work and there's a judgment and you still haven't paid that judgment after 180 days, there's going to be an additional civil penalty of up to three times the amount of that upstanding judgment. So again, hopefully this won't affect any of you, but it is just a reminder. If you've got a judgment out there, you need to make sure you pay it within 180 days, or you're going to get hit with another giant penalty. And because we get asked this question, every time I talk about civil penalties with clients, in this case, 50% of that is going to go to the employee. And then the other 50% will go to the DLSE. And this is another situation where they could potentially get attorney's fees if they have to get an attorney to help them recover that penalty. One small piece of silver lining for employers is if you can provide clear and convincing evidence, so this is not preponderance, this is not more likely than not, this is like, it is clear and we are convinced that there was good cause for that delay, then the penalty can be reduced. So that's going to be, I've got to think, the situation where somehow you didn't get notice or, I mean, it's just going to have to be really clear, right? It's not going to be like, oops, our accounting department thought they paid it, but they didn't pay it. That's not going to work. That's not going to be good cause. That's not in the law. That's just my experience with the DLSE.

[Elizabeth Levy] (38:01 - 38:31)
I second that. And I think it's interesting too that there was the legislative will to do this. I mean, I wouldn't think that unpaid judgments were such a problem that really needed to be corrected, but the legislature felt otherwise. So I guess they're going after folks who just haven't paid and the DLSE is really, it's really its own creature in a lot of ways. It really is.

[Melissa Whitehead] (38:31 - 39:15)
Yeah, it really is. Yeah. I was surprised by this too, because I didn't know that there was such a big issue with unpaid judgments. And in fact, I worked with some folks on some trainings with the DLSE and my understanding was that they actually have an a lot of employers have, they have a backlog essentially of payments that have been paid by employers that have not yet fully been distributed to the, well, anyway, I don't know. But again, as I said before, don't ask me why, don't ask us why. It's California. Yes. Yeah. It's California. Yes. If all else fails, that's our answer. Okay. Honorable mentions. You want to talk us through some of them and I'll hit the last one. Sure.

[Elizabeth Levy] (39:15 - 41:59)
So these, like we said, up top, we can't possibly cover everything. There are really, really, really specific industry laws. Things that only apply to certain industries are just really specific scenarios. Just highlighting a couple of these that we thought maybe of note to everyone. So AB 858 expands some right to rehire COVID era protections that were in place for certain industries, which I don't know if any of you were as in the weeds in the COVID era laws as we were, but oh my goodness, so many of them. And this new law just basically keeps these afloat. So hotels, private clubs, event centers, airport hospitality slash airport service providers and building services. If you're in those industries, just keep in mind these kind of vintage at this point, COVID era protections are still in place. Be mindful of them. Next one on our list is SB 648 gives the labor commissioner the authority to investigate and issue a citation for gratuities withheld by employers. There's already existing law surrounding tips and employers needing to record certain things relating to tips. And this just gives labor commissioner the authority to investigate and go after those things. So basically just expanding the labor commissioner's authority a bit in that space. But if you've got employees who are getting tips, something to keep in mind. And SB 809 clarifies that mere ownership of a vehicle used to provide services does not make that person an independent contractor. This one I think is just interesting in a bigger picture sense that California is really kind of hostile to independent contractor relationships. This is just a little bit more icing on that cake. If you've got employees, I'm sorry, if you've got workers who are categorized as independent contractors, you just want to really make sure that that is the proper classification because misclassification claims can get so expensive so quickly, especially if there's a large number of folks in that category. If it's one or two, okay, fine, it's limited to one or two. But if there are hundreds and there's a real threat of misclassification, then oh my goodness, that is just about as, you know, expensive as it gets on the wage and hour litigation front. And then Melissa, I know you had some words of wisdom on 288 here.

[Melissa Whitehead] (41:59 - 44:44)
Yes, this is another one that is very much a response to what's happening on the federal level, federal policies and things. So AB 288 essentially, what it does, and then I'll explain it, is it creates a sort of mini national labor relations board within California. So it essentially gives HERB, which is what the public employee relations board, which is they oversee public employee relations. So state government, government employees primarily, they oversee certain disputes within that world, usually involving unions and things like that. This statute now says that HERB has jurisdiction over private employers for unfair labor practice claims. So this is the same as, you know, again, you may or may not have had experience with this, but there's the National Labor Relations Act, which protects certain concerted activity. Generally, it's thought of and then it's enforced by the National Labor Relations Board. So they hear claims of unfair labor practices. Typically that's thought of as only applying to folks who have unionized workforces, but that's not true. Any concerted activity is going to be covered or protected activity. It does not have to be a unionized work environment. And so this is now, if you've been following the federal sort of landscape, like as legal nerds have, the NLRB is in turmoil right now. In fact, I don't even know if they currently have, it's just changed recently, whether they have a quorum, which means essentially they're not hearing any claims of unfair labor practices because there's all kinds of just chaos happening there. So California said, fear not, we will create our own version in California. So essentially that means that there is now an entity that will take on unfair labor practice claims, even if you don't have a unionized workforce. It's creating a new agency. I mean, the agency is not new, but it's giving that agency new authority now here in California to hear those claims. So I see a quick question about whether that applies to ag employers who are under the ALRB. I don't know the answer to that off the top of my head. My hunch, just based on how administrative law usually works, is probably not. If you already have your own labor relations board, which I'm assuming is what that LRB stands for, probably they're going to maintain jurisdiction, but I don't know that answer off the top of my head.

[Elizabeth Levy] (44:44 - 44:52)
Okay. Whatever it's worth, I agree with you. My hunch is that it would be federally superseded, but don't have it off the top of my head. Yeah, exactly.

[Melissa Whitehead] (44:52 - 45:07)
Okay. So that's it for the sort of generalized things. We talked to you guys a lot last year about PAGA, and so we want to bring in Alex, our guru, and Elizabeth to give you guys some updates.

[Alex Medina] (45:07 - 48:59)
All right. You guys got to hear from all the smart employment lawyers about the employment laws. I'm just the dumb wage and hour lawyer here. I'm going to close it out on PAGA. So I'm going to assume that most of you know what PAGA is and what it stands for. The thing about new PAGA, I understand, actually changed the name. PAGA now stands for pay all the greedy attorneys or pay all the government authorities. Sorry, it was just a bad dad joke. That's not what it stands for. The thing about new PAGA is that PAGA is a four-letter word for a reason. It used to be rated R. It's now kind of PG-13, if you will. PAGA, in my opinion, these class action and PAGA cases, two separate things, but PAGA, in my opinion, is probably the biggest threat to any California employer because if you get hit with a PAGA lawsuit, most likely it's not covered by an EPLI policy, or if it is, it's covered by what's called a cost of defense policy where only your legal fees will be covered, but not any award, any damages, or any settlement. So any type of PAGA case needs to be treated very seriously because settlements are typically minimum six figures, maybe seven figures, even eight figures, depending on the size of your company, and the damages are always seven figures and above, not including your own attorney's fees and the other side's attorney's fees. I say this all the time. I know I have some of my clients on here. Even if you win 99% of your claims at trial, you pay 100% of the other side's attorney's fees. That's because in California, PAGA is a fee-shifting statute. That means PAGA was designed to benefit the public. It's a public benefit statute. Whether we agree with that or not, because meal and rest breaks and even overtime, court cases have said, are a matter of public safety. That means that if a plaintiff's attorney on behalf of one employee finds even one missed meal break, one short meal period, like a 29-minute lunch break, whether it's your fault or not, over a four-year period on a class case or a one-year period on a PAGA case, and that's found to be the fault of the employer, that one violation over that time period, you have to pay the other side's attorney's fees. So what does that mean? That means you, as the employer, to beat a PAGA case means you have to be perfect. You're not going to be perfect. I hate to break it to you. You're going to have a great culture. I'm sure you do. You're not going to be perfect. That's why these cases are such a threat to California employers. So on June 19 of 2024, new PAGA was enacted. It was, as we talked about last year, we're not going to go into the reasons for it, a little bit of a compromise between various groups. Governors signed it into law. What we said last year was we had about six months under our belts of what was happening on the ground, so to speak. We didn't have any court decisions, appellate decisions, California Supreme Court decisions, interpreting the law. Like any statute, they're written by lawyers, which means they're clear as mud. They're broad. They're ambiguous. Nobody really knows what they mean. And if the litigators like myself and Elizabeth were the ones kind of duking it out in the trenches, and because 98% of PAGA cases, maybe 99% end up in mediations and not in trials, it's actually mediations where we're seeing how PAGA cases and how the law is actually shaping out. We still don't have any appellate court decisions on new PAGA. So again, it's the mediations. It's the crucible. It's the test lab for new PAGA. Now we're another year later. It's been 18 months of new PAGA. And here's what we're seeing. There's been no legislative amendment. It's not even really new PAGA anymore. It's kind of like new-ish PAGA. What we're seeing is there are a few other parts of the new PAGA statute that you can read about. There's kind of this early cure thing that you can do. You can try to go to an early... I don't even know what to call it because nobody does it. I've yet to hear of anybody. And if you've heard of this, please DM me or whatever the kids do these days.

[Elizabeth Levy] (48:59 - 49:02)
I think it's called the early mutual evaluation.

[Alex Medina] (49:02 - 58:47)
Yeah, early mutual evaluation. Let me know if you know anybody who's done this, but I think the courts are too overloaded. The mediators that I know don't want to do it because there's no money in it. And there's a lot of risk because you have to post some attorney's fees. That's a part of new PAGA that is just essentially, there's just nothing to it. What we are seeing though is the part of new PAGA that has some real teeth and that has a real benefit for employers is the part where employers can obtain penalty reduction with the reasonable steps language. What does that mean? Oh, I even have a PowerPoint. I should probably look at it. I speak and do PAGA all the time. So most of the reason that people put a slide in front of me is so I don't go crazy and talk for an hour or two hours or three hours. So I should probably look at this PowerPoint. Oh yeah, that's right. Okay. So what do reasonable steps mean? So employers who treat PAGA seriously, because PAGA at its core is a remedial statute. What does that mean? There are PAGA penalties in place to tell employers, take this seriously. We are going to penalize you for violating the labor code in order to incentivize you to get into compliance. Don't just say we've got a great culture. We treat our employees well, and we didn't do anything wrong. Employers who do that, they get hit hard. And I'm sure you all do treat your employees well, and you probably didn't do anything wrong. But in California, it's not about right or wrong. It's not about being good or bad. It's just about did you comply with the law or not and to what degree. So for years, California courts have had discretion to reduce PAGA penalties under a variety of circumstances, but it was unpredictable. We would make these arguments at mediation. We would say, hey, our client did a lot of things. We did an audit. We fixed policies. We fixed practices. We trained everybody. We treated wage and hour compliance like a health and safety issue. And we did very, very well in mediations on behalf of our clients who went through what we call a compliance plan. We started doing that back in 2021, almost five years ago. I'm smart enough to do the math on that. What new PAGA did was that essentially codified the benefits of compliance and remediation. So employers who take reasonable steps to comply with the labor code can reduce their potential PAGA penalties by up to 85%. And let me explain. So if you take these reasonable steps within 60 days of a potential PAGA claim, that's the letter that gets sent to the state agency before the complaint is filed. If you start that remediation process within 60 days, you get a 70% penalty reduction. If you do that before a PAGA notice comes, you get up to 85% penalty reduction. The way I read the statute is that that's a ceiling, excuse me, that's a floor, not a ceiling, because I believe that the penalty reduction cases that have been around for 15 to 20 years, those don't go away, and that courts have discretion to reduce penalties even higher. We have seen some cases where courts have reduced penalties 95% and even higher. What are the reasonable steps? It's paraphrased here, but essentially it's an audit of an employer's wage and hour policies and practices, and it's doing something in response to that audit. So if you see something, an unlawful policy, policies that should be in place that aren't in place, rolling out lawful policies, maybe a new handbook, unlawful practices, let's say you don't pay rest period premiums. A lot of employers don't even realize that you have an obligation to monitor and enforce 10-minute rest breaks, and if you find a rest period violation, that you have to pay a rest period premium equal to the regular rate of pay every single time. You do that, you're taking a reasonable step, and then you train supervisors in wage and hour compliance, and have a system in place to have periodic payroll audits. If you have a documented process to do that, then you can qualify for this penalty reduction. And what we have found in our cases where folks are taking these reasonable steps in active litigation, when we go to mediation, we have essentially neutralized PAGA, and we have been able to settle these cases sometimes for pennies on the dollar, even more than a 70% penalty reduction. And what we also believe, because we've been seeing this now for about 18 months, is that for future PAGA claims, the plaintiff's lawyers who bring these cases are less likely to want to move forward with PAGA, because the pie is smaller, right? If you think about it, if a PAGA penalty is essentially $100 per violation per employee per pay period, if you as an employer qualify for 85% penalty reduction, instead of $100 per violation, it's $15. Plaintiff's lawyers, they don't get paid by the hour. They get a 35% contingency most of the time. If they're only getting $15, their ROI is a lot lower. So they're going to be disincentivized to come after an employer who has a documented system in place to meet this penalty reduction. So employers who take these reasonable steps can not only reduce their potential exposure, but can also have a deterrent effect. And so what we have done as a firm is we call it having a compliance-first approach to PAGA compliance. Do you have any questions? Please repeat your comment about a 10-minute break. How can an employee who has a remote employee in California take the required 10-minute break? Okay, really tricky question. Almost out of time here. It's about as tricky as it gets, because California technically does not require rest periods. All you have to do is authorize and permit them. But here's the problem. It's not a problem until you get sued. And so an employee is going to say, I didn't get my rest periods. You're not going to have a record of that. And you shouldn't take a record. You shouldn't track your rest periods. But then under a case called Donahue v. AMS Services from February 2021, the California Supreme Court actually changed the burden of proof. All an employee has to do is have what's called a prima facie or a facial showing of a meal or rest period obligation. And then the burden shifts to the employer to disprove. It's assumed to be at fault in that. And the other law that's in place is essentially, if you don't pay rest period premiums, then it's going to be presumed that you have an unlawful rest period policy. And it's really hard to describe in the short amount of time that I have. So if you reach out to me separately, I even did a video on this that tries to explain it. But essentially, proof of a lawful rest period policy is proof of paying premiums. And it's like a catch 22 or whatever you want to call it. But it's kind of weird. You prove that you have a lawful policy by proving that you have violations. So how can violations be proof of following the law? Well, it's because California wants you to treat meal and rest breaks like a health and safety issue. You're never going to be perfect because human beings are not perfect. And if you have two rest periods for every eight hour shift over the course of a four year period for a class action, depending on the size of your company, that might be a million rest breaks. And a judge is basically going to say, are you trying to tell me that over a four year period, you had a one million perfect 10 minute uninterrupted off duty paid rest periods? Come on, give me a break. But if you pay rest period premiums, that's proving to me that you are treating rest breaks like a safety issue, like an actual dangerous life and loom issue. And so that shows that you are treating these rest breaks seriously. And that shows that you are actually doing what you're supposed to do under California law, kind of going a little bit off field. But that is one. And there's multiple ways that you can to monitor and enforce such as interactive attestations, training, which has like videos, a lot of other things that you can do besides just saying, we've got a really good policy and we tell our people and they don't want to take their breaks because they're grownups. And that's what I hear a lot, unfortunately. No longer in California can you say they're grownups and they don't want to take their breaks. You do have to police meal and rest breaks in California. How often was preventive measures, e.g. statewide payroll, has to be repeated to preserve the 85% reduction? Nobody knows. It says periodic. What does periodic mean? I've talked to mediators who get this issue in mediation. There's not really a consensus. The recommendation is once a year. I'm trying not to make this sound like a plug. So forgive me for this. But the CalComply online training, testing and certification program we do that has the wage and hour testing, we have a certification check-in feature where you can do it every three months where employees and supervisors are doing the wage and hour certification. It takes 30 to 45 minutes. And then every three months, they do a two to three minute check-in for recertifying their wage and hour training. What percent is valid California fines or PAGA claims? Is there any proposed legislation providing... I'm talking really fast. We track all this and we see anywhere from 30 to 50 wage and hour cases filed every day in California. And usually they are class claims and PAGA claims together. The LWDA website, we track those as well. It's not a perfect science, but there's thousands of them filed every single year. Is there any proposed legislation? No, not as far as I know. It usually gets killed. And why is that? Because the state of California takes 65% of PAGA recovery and the state of California makes hundreds of millions of dollars every year. Since PAGA was enacted 21 years ago, the state of California has made billions of dollars. What do they say? Follow the money. It ain't going anywhere.

[Melissa Whitehead] (58:47 - 59:02)
Also, just so everybody knows, Sam D., who, if you work with us, you know how amazing she is. She just posted in the chat a link to the video that Alex was talking about, about rest break compliance, as well as information about CalComply for training.

[Alex Medina] (59:02 - 59:36)
It's an important 15-minute break. First of all, it's a 10-minute break, not a 15-minute break. If you want to get 10 minutes, that's great. You need to pay a 10-minute meal, a rest period premium at the regular rate of pay. It's not their base rate of pay. It's the regular rate of pay, which is a different rate, more complicated issue. I'm taking up Elizabeth's time. I'm a total selfish jerk. Let's move on to headless PAGA. Elizabeth, I'm going to zip it. Reach out to me. I'm not going to charge you for it. My email address is everywhere. You can look me up online, set up a call with me, and I'll talk to you through all of these crazy issues. There's 305 ways to get hit with a PAGA lawsuit.

[Elizabeth Levy] (59:36 - 62:39)
So many ways. All right. I'll try to talk really fast. The last couple of slides are really just things that we are seeing. And for better or worse, I have either viewed, however you want to look at it, either the fortune or the misfortune of doing a ton of advice and counsel and also litigating. So I just see both sides of the coin. And what I see on both sides of that coin in terms of PAGA, a few other just noteworthy things that we've seen in the last couple of years. So if folks know about Viking River, giant landmark decision, the California PAGA and arbitration landscape has kind of just gone into a blender since then. It's wild. A lot of big, big changes. Something that we're seeing now, this is just the absolute forefront of PAGA litigation. If you are as intrigued in that stuff as I am, I think it's fascinating. There's some litigation that's opened the door to the idea of a headless PAGA action. So normally, PAGA, you're representing a group of employees through some really tortured interpretations of all kinds of things. The decisions are wild. There's now this door that's been opened to headless PAGA, where somebody doesn't necessarily have to have the individual PAGA component that Viking River sort of created and other courts and other decisions have gone farther down the path of. So it's something to be aware of. And if we just flip to the last slide here, as Alex mentioned, we want to make sure that if you have, first of all, arbitration agreements can be a fantastic tool, especially with respect to getting rid of class claims. In terms of PAGA, it gets complicated. If you've got arbitration agreements, you may want to take a look at them and take a look at them with this potential idea of headless PAGA in mind. There are cases briefing this month happening. The California Supreme Court is likely going to make some decisions next year that will have a pretty huge impact on which way the wind is going to blow on that. Some courts have said, yay, you can do it. Some courts say no. It's a really just wild and fascinating issue. But in terms of arbitration agreements, another thing that we've seen just in the cases are that when arbitration agreements are rolled out in tandem with confidentiality agreements, you need to take a close, close look at those confidentiality agreements. Because as was said, California courts can be very, very hostile to arbitration agreements. So if you've got provisions in your confidentiality agreement that don't meet certain standards or are problematic, then the arbitration agreement can be found to be unenforceable because it's coming out in tandem with these other agreements. So if you've got arbitration and confidentiality agreements being rolled out in tandem together, take a close look at both of them. See what you can do. It's one of many great tools that you can have to try to protect against wage and hour claims.

[Melissa Whitehead] (62:39 - 63:37)
I know we're a minute over, but if you're still with us, thank you for bearing with us here. Yeah. And I know we didn't get to all your questions. We got a lot in. If you see here, you can always call us or we've got an email address there. If you've got some questions that didn't get answered, please feel free to shoot them our way. I don't know if Alex or Elizabeth, if you saw any others you wanted to cover, but I think we're at time. So again, yeah, there was a lot to cover, even though this wasn't one of our meatiest years, it still was a lot. So please do feel free to shoot us an email to that legal updates. If you know, feel free to email any of us directly individually. We're happy to work with you too, like Alex said, but this is a handy dandy way to make sure one of us gets back to you. We appreciate you guys joining us today. Great turnout. So we're really happy you joined us. Look for us next year and look for some more trainings coming up in the future. Thanks for everyone for joining us. Appreciate it.

[Alex Medina] (63:37 - 63:38)
Thanks everybody.

[Melissa Whitehead] (63:38 - 63:39)
Thank you.

[Alex Medina] (63:39 - 63:39)
Yeah.