California’s legislative session nears its end in the next few weeks, and as usual, state legislators have introduced several bills that will surely affect employers if they become law. Although this session had fewer employment legislation than those of previous years, there are still a handful of proposed laws of which you should be aware as the session comes to a close.

PAGA Reform – AB 2288 / SB 92

The biggest measure this year focused on reforming the Private Attorneys General Act of 2004 (PAGA).

Governor Gavin Newsom, in partnership with legislative leaders and business and labor groups, announced the PAGA reform agreement in June, after decades-long efforts to revise the law. The bill poses a solution that is a big win for both employers and employees. The agreed-upon changes were woven into AB 2288 and AB 92, companion bills that required both be signed for the reform to be effective. Governor Newsom signed both bills on July 1.

Newly signed AB 2288 and SB 92 allow an employee to bring PAGA claims only for Labor Code violations the employee “personally suffered” within the statute of limitations. According to Gov. Newsom’s statement, the PAGA reform bill will do the following:

Reform penalty structure

• Encourages compliance with labor laws by capping penalties on employers who quickly take steps to fix policies and practices and make employees whole after receiving a PAGA notice, as well as employers that act responsibly to take steps proactively to comply with the Labor Code before receiving a PAGA notice.
• Creates new, higher penalties on employers who act maliciously, fraudulently, or oppressively in violating labor laws.
• Ensures that more penalty money goes to employees by increasing the amount allocated to employees from 25% to 35%.

Reducing and streamlining litigation

• Expands the Labor Code sections that may be cured to reduce the need for litigation and make employees whole quickly.
• Protects small employers by providing a more robust right-to-cure process through the Labor and Workforce Development Agency (LWDA) to reduce litigation and costs.
• Codifies the ability of a court to limit the scope of claims presented at trial to ensure cases can be managed effectively.

Improving measures for injunctive relief and standing

• Allows courts to provide injunctive relief to compel businesses to implement changes in the workplace to remedy labor law violations.
• Requires the employee to experience personally the alleged violations brought in a claim.

The new PAGA law is not retroactive and it will apply only to lawsuits arising from PAGA notices that were submitted on or after June 19, 2024.

Prohibiting Algorithmic Discrimination – AB 2930

The rise of artificial intelligence (AI) and the increased availability of AI tools have ushered in a new work era, from generating content to even automated decision making. The latter is the focus of AB 2930, a key AI bill the legislature is considering to regulate the use of automated decision tools to prevent algorithmic discrimination.

AB 2930 is not inherently an employment-related bill, but it would affect employers if signed into law. Among other things, the bill requires that any entity that uses automated decision tools – including employers – perform impact assessments before using these tools and annually thereafter.

Additionally, the bill would prohibit a deployer – again, including but not limited to, an employer – from using an automated decision tool if an impact assessment identifies a reasonable risk of algorithmic discrimination, which the bill defines as the condition in which an automated decision tool contributes to unlawful discrimination, including differential treatment or impacts disfavoring people based on race, ethnicity, sex, religion, age, national origin, limited English proficiency, disability, reproductive health, or any other classification protected by state or federal law.

These requirements would take effect on January 1, 2025, with a one-year grace period for pre-existing tools. AB 2930 is currently slated to be heard in the Senate Appropriations Committee on August 5.

Other Employment-Related Bills

A few other employment bills of note:

• Whistleblower Protections (AB 2299) – requires the Labor Commissioner to develop a model list of employee rights and responsibilities under existing whistleblower laws for employers to use to meet existing posting requirements. This bill was signed into law on July 15.
• Discrimination for Not Having a Driver’s License (SB 1100) – would make it unlawful for an employer to include a statement in employment materials requiring the applicant to have a driver’s license, unless the employer expects the duties of the position to require driving and believes that satisfying that job function by using an alternative form of transportation would not be comparable. This bill is currently in the Assembly Appropriations Committee, hearing date TBD.

Conclusion

The California legislature is always moving the needle. While this session did not have the large line-up of employment bills featured in previous sessions, there are still impactful new laws right around the corner.

California’s legislative session ends on August 31, so all bills must pass the legislature by then. From there, Governor Newsom has until September 30 to sign or veto bills on his desk.