California Compliance Updates: Key Reforms You Need to Know for 2025

California’s employment landscape is in a state of continual evolution, responding to shifts in the workforce, societal priorities, and economic conditions.

Recent legislative updates reflect a growing emphasis on fairness, equity, and transparency, touching on everything from employee rights under PAGA to expanded leave entitlements and protections for freelance workers. 

For employers, understanding these changes isn’t just about avoiding penalties or compliance headaches — it’s about building a work environment that values respect, trust, and opportunity. By staying informed and taking proactive steps to adjust policies, train managers, and clearly communicate new standards, you can cultivate a workplace that meets the moment and positions your organization for long-term success.  

And, here at Combined HCM, A HUB International Company, we are committed to helping you do just that. 

In this article, we’ll break down key legislative reforms, highlight their implications, and offer guidance on how to respond effectively. Whether it’s clarifying obligations around hiring practices, ensuring proper compensation and treatment of freelance talent, or recognizing and respecting employees’ rights to opt-out of certain workplace discussions, these laws underscore the importance of putting people first.  

Let’s explore what’s new, so you can lead with confidence, keep compliant, and operate your business with care. 

Must-know changes to CA's labor & employment laws 

Before diving into the details of each law, here’s a quick snapshot of the major changes you’ll encounter in this article.

• PAGA Reform Act: Streamlining enforcement, clarifying penalties, and redefining the scope of Private Attorneys General Act (PAGA) claims. 

• Senate Bill 1100: Adjusting hiring practices by limiting driver’s license requirements in job postings to essential roles only. 

• Senate Bill 399: Protecting employees’ rights to refrain from attending employer-sponsored political or religious meetings and avoiding retaliatory actions. 

• Assembly Bill 2499: Expanding leave rights for victims of crime, jury duty, and court appearances, along with shifting enforcement to the California Civil Rights Department. 

• Assembly Bill 2123: Prohibiting employers from forcing the use of accrued vacation leave before accessing Paid Family Leave benefits, emphasizing greater employee autonomy. 

• Senate Bill 988: Implementing the Freelance Worker Protection Act, ensuring written contracts, transparent payment terms, and safeguarding freelance workers’ rights. 

Keep reading to see what these updates mean for your organization’s approach to compliance — and how to turn legal requirements into strategic advantages for your company. 

What is the PAGA Reform Act? 

Signed into law:  

On July 1, 2024, Governor Gavin Newsom signed the PAGA Reform Act into law, introducing significant changes to the enforcement of California’s labor laws under the Private Attorneys General Act (PAGA). 

Background on PAGA: 

Originally enacted in 2004, PAGA empowered employees to act as “private attorneys general,” filing lawsuits on behalf of the state against employers for alleged Labor Code violations. This approach aimed to encourage better compliance and hold non-compliant employers accountable.  

Over time, however, PAGA’s complexity and the surge in litigation — often which has been deemed frivolous — created challenges for both employers and employees. These included higher costs, delays in the legal system, and strained workplace relationships. 

Purpose of the legislation:

The PAGA Reform Act addresses longstanding concerns by streamlining the process, reducing unnecessary litigation, and clarifying enforcement mechanisms. In doing so, it seeks to maintain PAGA’s original intent — protecting employee rights — while mitigating the burdens and uncertainties that arose under the previous framework. 

Key changes under the PAGA Reform Act: 

Penalty structure amendments 

Capped Penalties for Prompt Compliance: 

Employers who quickly remedy violations face capped penalties, encouraging proactive corrections and reducing excessive fines. 

Increased Penalties for Malicious Actions:

Employers acting maliciously or fraudulently incur higher penalties, ensuring serious offenses are met with appropriate consequences. 

Enhanced Employee Compensation:

A greater percentage of penalty funds (35% instead of 25%) now goes directly to affected employees, ensuring they benefit more substantially from enforcement actions. 

Litigation procedure changes 

Expanded Cure Opportunities: 

Employers may resolve a broader range of Labor Code violations internally before litigation is initiated, potentially reducing court cases. 

Robust Right to Cure for Small Employers: 

Small businesses receive a more defined right-to-cure process, helping them address issues without costly litigation. 

Court-Limited Claim Scope:

Courts can limit the scope of claims, making cases more manageable and reducing strain on the legal system. 

Injunctive relief and standing requirements

Injunctive Relief: 

Courts may compel employers to implement necessary workplace changes, promoting proactive compliance with labor standards. 

Personal Experience Requirement:

Employees must have personally experienced the alleged violation to file a PAGA claim, preventing third-party claims not grounded in actual harm. 

State enforcement updates 

DIR’s Enhanced Authority:

The Department of Industrial Relations (DIR) can expedite hiring and fill vacancies more efficiently, ensuring timely investigation and resolution of labor claims. 

Effective date: 

The PAGA Reform Act took effect immediately and is applicable to cases filed on or after June 19, 2024. Since this date has passed, employers should ensure they are fully compliant with the revised requirements and prepared for any new claims filed under the updated framework. 

Implications of the PAGA Reform Act: 

By clarifying standards, offering more opportunities to correct issues before litigation, and adjusting penalty structures, the PAGA Reform Act reduces friction in the enforcement process. It helps restore PAGA’s original purpose — protecting workers — while alleviating some of the legal and administrative burdens placed on employers and the courts. 

Greater fairness and efficiency 

Employers benefit from clearer guidelines and less exposure to frivolous lawsuits, while employees see more direct compensation and more meaningful protections. 

Reduced litigation costs and delays

With expanded cure opportunities and limited claim scopes, the system becomes more efficient, saving time and resources for all parties involved. 

Reinforced commitment to employee rights

The reforms underscore California’s dedication to promoting equitable labor practices, ensuring that employees remain central to the enforcement process without overwhelming the business community. 

By understanding and adapting to the PAGA Reform Act, employers and employees can navigate the labor law landscape more effectively, protect legitimate rights, and foster a healthier, more compliant workplace environment. 

What is Senate Bill 1100?  

Signed into law:  

On September 28, 2024, Governor Gavin Newsom enacted Senate Bill 1100 (SB 1100), introducing significant changes to California’s employment practices regarding driver’s license requirements in job postings. 

Purpose of the legislation:

This legislation responds to concerns about indirect discrimination against individuals who do not have a driver’s license. Such individuals may face barriers due to various reasons—disability, immigration status, or personal preference—even when driving is not essential to the role. 

Key provisions of SB 1100: 

Restrictions on driver’s license requirements 

Employers are now prohibited from including statements that a driver’s license is required in job advertisements, applications, and other employment-related materials unless specific conditions are met.  

This change aims to prevent unnecessary exclusion of qualified candidates who do not hold a driver’s license. 

Conditions for requiring a driver’s license 

Employers may only require a driver’s license in job postings if the following criteria are satisfied: 

Essential Job Function:  

The employer reasonably expects driving to be a primary function of the position. For example, roles such as delivery drivers, sales representatives who travel extensively, or field technicians may legitimately require a driver’s license. 

Non-Comparable Alternative Transportation: 

The employer reasonably believes that using an alternative form of transportation would not be comparable in travel time or cost to the employer.

Acceptable alternatives include: 

• Ride-hailing services (e.g., Uber, Lyft) 
• Taxis 
• Carpooling 
• Bicycling 
• Walking 

Effective date: 

The provisions of SB 1100 take effect on January 1, 2025. Employers must ensure that their job postings and hiring practices comply with this new law by updating any existing advertisements and establishing clear criteria for when a driver’s license is genuinely required. 

Implications of SB 1100: 

The enactment of SB 1100 is a pivotal move towards fostering inclusive hiring practices in California. By eliminating unnecessary driver’s license requirements, employers can achieve all of the following.

Broaden talent pools 

Access a more diverse and qualified workforce by removing barriers that prevent capable individuals without a driver’s license from applying for positions where driving is not essential. This inclusivity not only fosters a more equitable workplace but also enhances the overall quality and innovation within the company. 

Enhance compliance 

Reduce the risk of facing legal actions related to discriminatory hiring practices by adhering to state labor laws designed to promote fairness and equality in the workplace. Proactively updating hiring policies can help employers avoid costly penalties and legal disputes. 

Improve employer branding 

Implementing fair and non-discriminatory hiring practices enhances an employer’s reputation, making it a more attractive place to work. This positive branding can lead to increased employee satisfaction, retention, and overall business success. 

By understanding the requirements of SB 1100 and making necessary adjustments to your hiring processes, you can ensure compliance, protect your organization’s interests, and build a workplace culture that values inclusivity and equal opportunity. 

What is Senate Bill 399? 

Signed into law:  

On September 27, 2024, Senate Bill 399 (SB 399) was chaptered into California law. This legislation focuses on protecting employees from being forced to attend or participate in employer-sponsored meetings primarily intended to convey the employer’s opinions on religious or political matters. 

Purpose of the legislation:

 SB 399 addresses a long-standing concern about “captive audience” meetings—employer-hosted gatherings or communications where workers might feel compelled to listen to religious or political rhetoric. By granting employees the right to decline participation without fear of retaliation, this law aims to preserve employees’ freedom of belief, association, and personal political or religious choices in the workplace. 

Key provisions of SB 399: 

Protection against mandatory attendance 

Under SB 399, employers cannot require employees to attend or remain at meetings if the primary purpose of those meetings is to share the employer’s religious or political opinions. Employees who opt out of such meetings are still entitled to be paid for the time they would have otherwise spent at the meeting. 

Prohibition of adverse actions

It is unlawful for employers to discharge, discriminate, retaliate against, or otherwise subject employees to adverse actions because they decline to attend or engage in these meetings. This ensures workers can exercise their right to opt out without fear of negative consequences. 

Civil penalties and enforcement

Monetary penalty enforcement:

Employers who violate SB 399’s provisions may face a civil penalty of $500 per violation. 

Labor commissioner enforcement: 

The California Labor Commissioner is authorized to enforce these provisions, investigating claims and ensuring compliance. 

Private right of action: 

Employees who have experienced a violation may bring a civil lawsuit seeking damages, attorneys’ fees, and injunctive relief, providing an avenue for workers to protect their rights through the court system. 

Effective Date: 

Effective January 1, 2025, employers subject to the California Worker Freedom from Employer Intimidation Act should evaluate their policies regarding mandatory attendance at employer-sponsored meetings conveying religious or political opinions. It may be in their best interest to consider making meeting attendance voluntary or to proceed in accordance with the National Labor Relations Act to ensure compliance and maintain a positive workplace culture. 

Implications of SB 399: 

The enactment of SB 399 is a significant step toward ensuring that the workplace remains a space free from coerced participation in religious or political messaging. By recognizing the employee’s right to decline attendance at such meetings, SB 399 fosters an environment of genuine choice and mutual respect. 

Empowerment of employee rights

Workers can now confidently assert their right to refrain from participating in employer-sponsored religious or political discussions without fearing retaliation. This empowerment promotes an atmosphere of trust and autonomy within the workforce. 

Enhanced compliance and fairness

Employers must reevaluate their communication strategies and ensure that any religious or political content is presented in a manner that respects employees’ freedoms. Adhering to SB 399 reduces the risk of legal actions, penalties, and potential reputational harm. 

Positive workplace culture

By removing the pressure to conform or engage in potentially uncomfortable conversations, businesses may see improved morale and productivity. Employees who feel respected and free to hold their personal beliefs are more likely to remain engaged, loyal, and productive team members. 

By understanding and implementing the requirements of SB 399, California employers can create a more respectful and inclusive workplace, uphold employees’ rights to freedom of belief, and maintain compliance with the state’s evolving labor laws. 

What is Assembly Bill 2499? 

Signed into law:  

On September 29, 2024, Governor Gavin Newsom signed Assembly Bill 2499 (AB 2499) into law, significantly expanding California employees’ rights to take time off for jury duty, court appearances, or in connection with certain crimes. This measure broadens existing protections, ensuring that victims and their family members can attend to legal matters without fear of retaliation, and aligns enforcement with the California Civil Rights Department’s (CRD) authority. 

Purpose of the legislation:

AB 2499 builds on existing California laws that apply to employers with 25 or more employees and protect employees who take time off for jury duty, court appearances, or certain crime-related absences. By broadening the definition of “victims” and clarifying employees’ leave entitlements, the bill seeks to ensure that victims of violence and their families receive the flexibility and protection necessary to engage in the legal process, assist loved ones, and address their own safety and well-being. 

Key provisions of AB 2499: 

Expanded definition of “victim”

Under AB 2499, the term “victim” extends beyond the scope of prior legislation. Employees are protected when taking time off if they or their family members have been subjected to a “qualifying act of violence,” which includes:

• Domestic violence 
• Sexual assault 
• Stalking 
• Any act that causes bodily injury or death, or involves the threatened or actual use of force, firearms, or other dangerous weapons—even if no arrest, prosecution, or conviction occurs 

Leave entitlements and use of paid time off

Employees may use accrued vacation, personal leave, paid sick leave, or compensatory time off to cover their absence for jury duty, court appearances, or to attend to matters as a victim (or support a family member who is a victim). The ability to use paid leave provides financial security and acknowledges the personal and emotional toll these situations can impose. 

Enforcement and regulatory shift

Previously housed in the Labor Code, these time-off protections have now moved under the California Fair Employment and Housing Act (FEHA). This relocation gives the California Civil Rights Department (CRD) the authority to enforce these protections. Employers who violate AB 2499’s provisions could face CRD investigations, litigation, and potential penalties. 

Notification requirements

Employers must provide written notice of employees’ rights under AB 2499:

• New hires -- Notice upon hiring. 
• Annual notification -- Issued to all employees each year. 
• Upon request -- If an employee requests information about these rights. 
• When applicable -- Any time the employer becomes aware that an employee or their family member is a victim. 

Effective date:

All provisions of AB 2499 take effect on January 1, 2025. Employers should promptly update their policies, handbooks, and employee communications to align with the new requirements. 

Implications of AB 2499: 

The enactment of AB 2499 reinforces California’s commitment to supporting victims, ensuring they have the time and resources necessary to engage in legal proceedings or prioritize their safety and that of their families. By broadening the definition of protected victims and shifting enforcement to the CRD, the state strengthens the legal framework that guards employees’ rights to attend to critical, often sensitive, matters without professional repercussions. 

Protecting vulnerable employees

Victims and their families gain greater peace of mind knowing that their jobs are secure while they navigate court appearances, seek restraining orders, or assist in investigations. This creates a more supportive work environment and promotes overall employee well-being. 

Reduced legal risks for employers

Employers who comply with AB 2499’s provisions benefit from clearer guidelines and reduced exposure to legal claims. By proactively informing employees of their rights, maintaining updated policies, and ensuring managers are trained on these changes, employers can avoid costly disputes and foster trust. 

Enhanced workplace culture

Respecting the personal struggles employees may face outside of work demonstrates an employer’s commitment to fairness, empathy, and support. This, in turn, can improve morale, loyalty, and overall productivity—key factors in a positive organizational culture. 

By understanding and implementing the requirements of AB 2499, California employers can provide critical support to employees and their families during challenging times, maintain compliance with state labor laws, and cultivate a more compassionate and respectful workplace. 

What is Assembly Bill 2123? 

Signed into law:  

On September 29, 2024, Governor Gavin Newsom signed Assembly Bill 2123 (AB 2123) into law, affecting how California employers manage leave in connection with the state’s Paid Family Leave (PFL) program. This legislative update removes a longstanding employer prerogative to force employees to exhaust their accrued vacation time before tapping into PFL benefits. 

Purpose of the legislation:

The Paid Family Leave program provides partial wage replacement benefits to employees who take time off to care for a seriously ill family member, bond with a new child, or assist military family members during active duty. Prior to AB 2123, employers could require employees to use up to two weeks of accrued vacation leave before accessing PFL. By eliminating this requirement, AB 2123 ensures that employees have greater autonomy and flexibility in using their leave benefits without depleting their earned vacation time first. 

Key provisions of AB 2123: 

Prohibition on mandatory vacation usage

Under AB 2123, employers can no longer mandate that employees use accrued vacation leave before receiving PFL benefits. This change enables employees to preserve their vacation accruals for future use, giving them more control over how and when to allocate their paid time off. 

Alignment with employee needs

By removing the vacation-first requirement, the law acknowledges that employees facing caregiving responsibilities or family-related absences may not want to sacrifice their vacation time, which they may prefer to save for other purposes. This shift reflects a more employee-centered approach to leave management. 

Effective date:

All provisions of AB 2123 take effect on January 1, 2025. Employers should review and update their leave policies, employee handbooks, and any internal communications related to family and medical leave before this date. 

Implications of AB 2123: 

The enactment of AB 2123 represents a notable shift toward greater flexibility and worker empowerment in leave administration. By allowing employees to access PFL benefits directly—without first consuming their vacation time—the law helps ensure that PFL’s original intent (providing wage replacement during family caregiving or bonding) remains undiluted. 

Enhanced employee autonomy

Employees gain increased control over their paid leave options, enabling them to better plan and manage their time away from work. This autonomy can reduce stress and improve overall job satisfaction. 

Reduced administrative complexity

Employers, though they lose a previously available tool to manage leave costs, can benefit from clearer, more straightforward leave administration. The removal of the vacation-first rule simplifies policy compliance and reduces the risk of misunderstandings or disputes over leave usage. 

Positive workplace culture

Embracing more flexible leave policies demonstrates an employer’s commitment to supporting employees during significant life events. Such an approach can enhance morale, loyalty, and productivity, and reinforce a culture of respect and understanding. 

By understanding and implementing the requirements of AB 2123, California employers can align their policies with evolving state standards, support their workforce more effectively during family-related absences, and maintain compliance with the state’s progressive approach to employee leave benefits. 

What is Senate Bill 988? 

Signed into law:  

In 2024, Governor Gavin Newsom enacted Senate Bill 988 (SB 988), establishing the Freelance Worker Protection Act. This new law sets forth specific requirements for written contracts, payment terms, and protective measures to ensure fair treatment of freelance workers in California. 

Purpose of the legislation: 

California’s new Freelance Worker Protection Act seeks to bring greater clarity, consistency, and equity to the relationships between hiring parties and independent contractors who provide certain professional services. By mandating written agreements and outlining explicit payment terms, the legislation aims to prevent misunderstandings, late payments, and exploitative practices while giving freelance workers a more secure and predictable working environment. 

Key provisions of SB 988: 

Definition of a freelance worker

A “freelance worker” is defined as a person — or an organization consisting of only one person — engaged as a bona fide independent contractor to provide professional services valued at $250 or more.  

The law applies to freelance service categories specified in California Labor Code Section 2778(b)(2). 

Mandatory written contracts 

Under SB 988, every agreement between a hiring party and a freelance worker must be in writing and include:

• Identification -- The names and physical addresses of both the hiring party and the freelance worker. 
• Services & compensation -- An itemized list of services, their overall value, and a clear explanation of how compensation is determined. 
• Payment terms -- Payment due dates or mechanisms for setting them, as well as due dates by which the freelance worker must report completed services to facilitate timely payment. 

Prohibition on changing terms mid-project 

Once a freelance worker begins providing services, the hiring party cannot force the worker to accept reduced compensation or perform additional work beyond the original agreement as a condition for receiving timely payment. 

Anti-retaliation measures 

SB 988 prohibits hiring parties from retaliating against freelance workers who:

• Oppose any practice the Act prohibits. 
• Participate in enforcement actions or proceedings related to the Act. 
• Seek to enforce their rights under the Act.  

Effective date: 

All provisions of the Freelance Worker Protection Act apply to contracts entered into or renewed on or after January 1, 2025. Employers and hiring parties should review and adjust their independent contractor agreements and internal practices before this date. 

Implications of SB 988: 

SB 988 represents a significant step toward ensuring fairness and transparency in California’s expanding freelance economy. By setting minimum contract standards and safeguarding timely payment, the law helps establish a stable foundation for independent contractors while also clarifying expectations for hiring entities. 

Predictable and secure working relationships

Freelancers benefit from clear contract terms and predictable payment timelines, reducing stress and uncertainty. This stability makes freelance work more viable and attractive to skilled professionals. 

Reduced legal risks and misunderstandings 

Hiring parties who comply with SB 988’s requirements can avoid disputes over payment or scope of work. Adhering to these guidelines helps prevent costly legal conflicts, protects professional relationships, and preserves an organization’s reputation. 

Promoting respectful business practices

By discouraging last-minute contract changes and retaliatory behavior, SB 988 encourages a more respectful approach to working with freelancers. This respect fosters trust, loyalty, and a higher quality of service, ultimately benefiting both parties. 

By understanding and implementing the requirements of SB 988, California hiring parties can ensure fair dealings with freelance workers, maintain compliance with evolving state labor laws, and contribute to a more stable, transparent, and mutually beneficial freelance marketplace. 

Next steps toward complete compliance in 2025 

We get it: 

These legislative changes can feel like one more layer of complexity (and, the time needed to pour into understanding it) in an already endlessly busy world. 

But, think of it this way:

Each compliance update is an opportunity to refine your policies, empower your team, and future-proof your business. 

If you’re feeling unsure about where to begin, our specialists at Combined HCM, a HUB International Company, are here to help you translate these new regulations into completely compliant policies for your company. 

Don't know where to start? Have questions?  

Let us help! 

Schedule a meeting with a compliance expert today!

This article is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.