Client Alert: New Employment Laws Taking Effect January 1, 2025
Starting on January 1, 2025, several new federal laws impacting California employers and new California employment laws will take effect, including an expansion of rights of employees who are victims of violence and revisions to paid family leave.
More information on the new employment laws is available below. Please reach out to Katherine M. Forster and Margaret G. Maraschino for more information.
**Federal Laws Impacting California Employers**
Federal Contractor Minimum Wage Increase: Beginning on January 1, 2025, the minimum wage will increase to $17.75 per hour for workers who are performing work on or in connection with federal contracts in the following categories that were entered into, renewed, or extended on or after January 30, 2022: (1) procurement contracts covered by the Davis-Bacon Act, (2) service contracts covered by the Service Contract Act, (3) concessions contracts, and (4) contracts entered into, renewed, or extended on or after August 17, 2024, in connection with federal property or lands and related to offering services for federal employees, their dependents, or the general public.
For federal contracts in these categories entered into, extended or renewed prior to January 30, 2022, the minimum wage for employees will increase to $13.30 per hour (for nontipped workers) and $9.30 per hour (for tipped workers). Note that these rates are lower than California’s minimum wage; employers should pay the applicable California or local minimum wage, whichever is higher.
Pregnant Workers Fairness Act (PWFA): The final regulations and interpretative guidance from the Equal Employment Opportunity Commission on PWFA went into effect on June 18, 2024. Although California already provides protections for pregnant workers, employers should ensure that their policies and practices also comply with PWFA.
**New California Employment Laws**
State Minimum Wage Increase: California state minimum wage will increase to $16.50 per hour effective January 1, 2025. The salary for California exempt-status employees will increase to $5,720 per month (i.e., $68,640 annually). Fast Food Restaurant employees have a minimum wage of $20.00 per hour and Healthcare Facility employees have a minimum wage between $18.00 to $23.00, although this is set to increase again on July 1, 2025.
Local Minimum Wage Increase: Employers are encouraged to check city and county minimum wage ordinances to confirm they are also in compliance with local minimum wage laws.
Adjusted Salary Threshold for Computer Professionals: Effective January 1, 2025, the minimum hourly rate of pay for a computer software employee to qualify as exempt from overtime is $56.97 per hour (i.e., $9,888.13 per month, or $118,657.43 per year).
Wages for Mentally Ill or Physically Disabled Employees of Nonprofits: Beginning on January 1, 2025, non-profits must pay at least the legal minimum wage to employees with disabilities.
PAGA Reform: On July 1, 2024, two PAGA Reform bills went into effect for civil actions filed (or based on notices filed) on or after June 19, 2024. PAGA Reform provides many potential benefits to employers, including additional standing and manageability requirements that may reduce the scope of PAGA claims, opportunities for early evaluation conferences by a third-party neutral and a stay of court proceedings, potential opportunities to cure alleged violations, and reduced penalties in some circumstances. Information on key changes included in PAGA Reform can be found here.