New Laws for 2027
Question: I heard there are some new California laws that will affect employers in 2027. What are the new laws, and when do they go into effect?
Answer: Yes, several new employment laws will become effective January 1. This year, there are some significant impacts relating to minimum wage, the use of artificial intelligence, discrimination and harassment, training requirements, arbitration agreements, and leaves of absence. Below is a summary of the new laws in these areas.
Minimum Wage
California’s minimum wage for non-exempt employees will increase to $17.40 per hour. The minimum salary for full-time exempt employees will increase to $72,384 per year. Employers should keep in mind that the minimum wage differs for certain employees and should check their city or county’s minimum wage to ensure they are paying their employees the correct minimum wage.
Artificial Intelligence and Automated Decision Systems
This new law prohibits employers from using Artificial Intelligence to avoid compliance with labor and employment laws, inquire about an employee’s protected status, or to discipline employees for exercising their legal rights. Additionally, employers who primarily rely on Automated Decision Systems to make disciplinary or termination decisions must have a human review and corroborate the output of the Automated Decision System. The employer must also provide the affected employee with a written notice that the employer used an Automated Decision System.
Immigration Status Discrimination
The new law prohibits employers from using an employee’s perceived immigration status to dissuade the employee from exercising their rights as an employee or to persuade the employee into doing something they can legally refuse or opt out of. The actual immigration status of the employee is irrelevant, and an employer will still be liable for violating the statute even if the employee faced no risk of deportation or other adverse immigration consequences. Employers who violate this law may face a $10,000 penalty per employee for each violation.
Harassment and Discrimination on the Basis of Sex
The legislature has expanded the definition of the term “sex” under the California Fair Employment and Housing Act. The new definition of “sex” will include several new categories including but not limited to: pregnancy, childbirth, breastfeeding, and related medical conditions; gender identity and expression; gender-affirming healthcare; and variations in sex characteristics, including intersex traits or differences in sex development. Employers should review their policies and practices to ensure they comply with the expanded employee protections.
Bereavement Leave
Under the new law, employees will be permitted to designate any individual as their “designated person” when the employee requests bereavement leave. Employers must allow employees to take 5 days of bereavement upon the death of any “family member,” which now includes the employee’s designated person. Employers may limit an employee to one designated person in a 12-month period. Employers should update their bereavement policy and notify their supervisors and human resources managers of the change of law.
Arbitration Agreements
Arbitration agreements governed by the California Arbitration Act are now subject to all protections and exemptions codified in the Federal Arbitration Act. Employers with arbitration agreements governed by the CAA should review the FAA to ensure their arbitration agreements are still enforceable and update them as necessary.
To reduce risk, employers are encouraged to conduct internal audits of their handbook policies, personnel procedures, posting compliance, and use of AI. This article discusses only some of the new laws that will go into effect on January 1. Employers should contact their labor counsel to ensure compliance with all new labor and employment laws.
Update Workplace Violence Prevention Plan
Question: I have a workplace violence prevention plan, but I have not updated or reviewed it since I created it in 2024. Do I need to review my workplace violence prevention plan each year?
Answer: Yes, employers in California are required to review their workplace violence prevention plan annually, when a deficiency is observed or becomes apparent, or after a workplace violence incident.
Starting in July 2024, all employers are required to create and implement a workplace violence prevention plan. A workplace violence prevention plan is a policy that identifies the potential violence all employees are susceptible to, and potential violence employees are susceptible to because of their specific job. A workplace violence prevention plan outlines basic protocols on how the employer and its employees will prevent and protect employees from experiencing violence in the workplace. It also includes protocols on how employees should report and respond to incidents of workplace violence.
Employers are required to provide annual training and review their workplace violence prevention plan annually, when a deficiency is observed or becomes apparent, and after a workplace violence incident. This encourages employers to amend their workplace violence prevention plan to improve preventative measures or reaction protocols. However, this also means that even if a workplace is free of workplace violence for a year, an employer is still obligated to review their workplace violence prevention plan. This review will give an employer an opportunity to review the types of workplace violence with their employees, which are:
Type 1: Violence committed by a person who has no legitimate business at the worksite, and includes violent acts by anyone who enters the workplace or approaches workers with the intent to commit a crime.
Type 2: Violence directed at employees by customers, clients, patients, students, inmates, or visitors;
Type 3: Violence committed against an employee by a present or former employee, supervisor, or manager; and
Type 4: Violence committed in the workplace by a person who does not work there, but has or is known to have had a personal relationship with an employee.
A workplace violence prevention plan is intended to be a living document that is amended when employees experience workplace violence or identify potential workplace violence. A review of a workplace violence prevention plan is a great opportunity to ensure that your workplace violence prevention plan has current and correct contact information and has all the information required by law. Some of the required information includes:
- Names and job titles of the persons responsible in charge of implementing and enforcing the plan;
- Procedures that allow employees’ active involvement in creating, implementing, and amending the plan;
- Procedures on how an employee will report workplace violence and how the employer will respond to an incident of workplace violence;
- Details regarding workplace violence prevention plan training;
- The four types of workplace violence; and
- A policy that prohibits retaliation against employees that report any type of workplace violence.
An annual training and review will give the employer the opportunity to train new employees and retrain all employees on how to report and respond to workplace violence. It also gives employees the opportunity to identify potential workplace violence and collaborate with employers on how to implement protocols to prevent potential or recuring workplace violence.
If an employer is interested in creating, updating, or improving their workplace violence prevention plan, they may contact their local labor and employment attorney.
Arbitration Agreements
Question: I am interested in having my employees sign an arbitration agreement for employment-related disputes. Is that legal and how do I ensure it is an enforceable agreement?
Answer: Yes, employers in California may require employees to agree to an arbitration agreement for their employment related disputes as a condition of the employees’ employment.
For those who are unfamiliar with arbitration, arbitration is a private alternative to court that provides the parties with a legally binding alternative dispute resolution process. In arbitration, a chosen neutral third party, an arbitrator, takes the place of a judge by reviewing the evidence and facts to make a final decision for the parties. Employers may prefer arbitration because it is typically a faster, more efficient, and less formal alternative to court. Moreover, the employer can insert contract provisions that require employees to waive their rights to class action lawsuits against the employer. However, for an arbitration agreement to be enforceable, it must meet the following requirements:
Capable of Contracting
An adult of sound mind is capable of entering a contract. Therefore, ensure that the employees you intend to have sign arbitration agreements are not minors and are competent adults.
Consent to Arbitration
Employees must knowingly consent to arbitration. It is best practice to obtain a signed agreement from employees that they (1) consent to arbitration, or (2) acknowledge that their continued employment constitutes consent to arbitration.
Mutuality of Agreement
The arbitration agreement must have a mutuality provision—this means both parties agree to arbitrate their employment related disputes against each other. This requirement prevents employers from signing an agreement that forces employees to arbitrate against the employer but reserves the employer’s own right to sue their employees in court.
Neutral Arbitrator
For fairness reasons, the arbitration agreement must state that the arbitrator will be neutral. This prevents employers from unilaterally choosing an arbitrator that has a long-time business relationship with the employer. It also empowers employees to veto or propose an arbitrator the employee believes will be fair to both parties.
Adequate Discovery
The agreement must also contain an adequate discovery provision. When litigating a dispute in court, the Code of Civil Procedure governs the rules of discovery. The arbitration agreement must allow the arbitrator to apply the same substantive discovery rules that a judge would apply in a court of law.
All Relief Available in Court
The agreement must state that the parties are entitled to all the relief that would be available to the parties in a court of law. This means that any type of relief (e.g., injunctive) or damages (e.g., punitive) that a party could seek in a court, the party may also seek in the arbitration process.
Employer Payment of Excess Fees
The informal and efficient nature of the arbitration process comes with an increased price tag. Therefore, courts require that the arbitration agreement state that the employer will pay the extra arbitration related costs that an employee would not have paid if the parties had litigated their disputes in court.
Written Award
Finally, the agreement must also require the arbitrator to provide the parties with a written decision after the arbitration hearing. This written award, like a court order, will be enforceable and hold the parties accountable to the decision made by the arbitrator.
If an employer is interested in learning more about arbitration agreements or how to implement an enforceable arbitration agreement, they should contact their local labor and employment attorney.