New Year, New Rules: 2024's Small Business Laws

California, a trailblazer in various social and economic matters, is once again at the forefront of change, this time in the realm of work and regulations. From expanded worker protections to increased business transparency, a wave of new legislation is impacting industries and employees alike. This blog post delves into 5 of recent changes in California law and federals laws that impact small business owners from now into the future. 

New rules for contractors to have workers' compensation insurance (SB 216)

California is overhauling its approach to worker safety in the construction industry. Effective July 1, 2023, most contractors, including concrete crews, HVAC technicians, asbestos abatement specialists, and tree service professionals, will be required to provide workers' compensation insurance, even if they have no employees. This requirement aims to protect workers from financial hardship if injured on the job, while also ensuring a level playing field for responsible contractors already carrying such coverage.

The timeline for compliance varies based on contractor type. Roofing contractors (C-39 license) already need to comply, while the aforementioned groups (C-8, C-20, C-22, D-49 licenses) have until July 1, 2023. All other contractors have a grace period until January 1, 2026. Joint ventures without employees can currently apply for an exemption.

Failure to comply with the new rules could lead to license suspension. The Contractors State License Board (CSLB) is responsible for enforcing these regulations and encourages all contractors to familiarize themselves with the specific requirements applicable to their business.

Bill expands existing laws on paid sick leave in California (SB 616)

This new legislation, which went into effect on various dates throughout 2024, introduces several key changes that will benefit both employees and employers in the state. Employees accrue more paid sick leave per year, with the maximum amount increasing from 24 hours to 40 hours. This provides greater flexibility and security for workers who need to take time off for illness, family needs, or other qualifying reasons. Employers are prohibited from limiting employees' use of accrued sick leave to less than 40 hours per year, ensuring full access to the earned benefit.

Employees have the right to use their accrued sick leave for various purposes, including doctor's appointments, caring for sick family members, or addressing personal health needs. The legislation includes specific provisions for in-home supportive services providers, recognizing the unique challenges and needs of this workforce.

Most employers in California are subject to the new law, with exceptions for a small number of employees covered by federal regulations. While some changes took effect immediately, the majority, including the increased accrual rate and expanded coverage, went into effect on January 1, 2024. The legislation includes detailed rules on calculating, accruing, and paying sick leave, providing clear guidelines for employers to ensure compliance.

Fast Food Council: health, safety, employment, and minimum wage (AB-1228)

A voter referendum that put on hold a previously-enacted law establishing a Fast Food Council to regulate the industry, California has proposed a new approach to protecting fast food workers' rights.The bill repeals the original Fast Food Council law only if the referendum petition challenging it is withdrawn by January 1, 2024. If the petition remains active, the new council will not be established.

The proposed council would have the power to set a minimum wage for fast food workers, starting at $20 per hour and increasing annually by up to 3.5% or the rate of inflation, whichever is lower. This provides a significant wage boost compared to the current state minimum wage. Beyond wages, the council can develop additional standards for working conditions, health, and safety within the fast-food industry. This includes addressing issues like scheduling practices, harassment, and discrimination.

The bill expires on January 1, 2029, unless the legislature extends or modifies it. This allows for periodic review and potential adjustments to the regulations based on changing needs and industry trends.

Discrimination in employment: use of cannabis. (AB 2188)

California has taken a significant step towards protecting the rights of its workforce by enacting a new law that shields employees from discrimination based on their off-duty cannabis use. This legislation, effective January 1, 2024, aims to create a fairer work environment for responsible cannabis users without compromising workplace safety.

While pre-employment drug screening remains permissible, employers cannot use tests that detect non-psychoactive cannabis metabolites. These metabolites linger in the body for weeks after use and do not necessarily indicate current impairment. The law aims to prevent discrimination based on past cannabis use that does not affect present job performance.

While pre-employment drug screening remains permissible, employers cannot use tests that detect non-psychoactive cannabis metabolites. These metabolites linger in the body for weeks after use and do not necessarily indicate current impairment. The law aims to prevent discrimination based on past cannabis use that does not affect present job performance.

Requires reporting companies to report BOI to FinCEN (Federal Register)

In a major step towards combating financial crime and safeguarding national security, the U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) has implemented the long-awaited Beneficial Ownership Information (BOI) access and safeguard provisions of the Corporate Transparency Act (CTA). This final rule, effective February 20, 2024, strikes a crucial balance between transparency and security, creating a database of BOI accessible to authorized users while prioritizing data protection.

The CTA requires most companies formed or registered in the U.S. to report information about their beneficial owners, individuals who ultimately own or control the company. Companies with 20+ full-time employees, a U.S. physical presence, and $5 million+ in revenue are exempt, as are tax-exempt entities. Companies report information about:Themselves: legal name, physical address, jurisdiction of formation, and Employer Identification Number (EIN). Their beneficial owners: name, date of birth, home address, and a copy of a government-issued ID.

Identifying beneficial owners can be complex. It involves determining individuals with either: Direct or indirect equity ownership of 25% or more: This includes stocks, shares, or other ownership interests.Substantial control over the company: This can involve management control, voting rights, or other means of influence.

Conclusion

The evolving legal landscape extends beyond these specific examples, and its impact reverberates across all industries. California continues to redefine the landscape of work and regulations, remember that you're not alone. By staying informed, utilizing available resources like the SBDC, and adapting your practices to ensure compliance

The University of La Verne SBDC is just a click away: www.lavernesbdc.org/newclient. We offer free 1-on-1 consultations, both in person and via Zoom, where you can connect with experienced consultants and discuss your specific business needs.

Funded in part through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, conclusions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.