Navigating California labor laws and those of the larger nation can feel like aiming at a moving target. Staying compliant requires keeping up-to-date with continuous legislative changes. For 2025, both California and U.S. employers face key updates in labor laws that will impact hiring processes, compensation practices, and workplace policies.
Whether it's the rise in California minimum wage, adjustments in hiring protocols, or expanded employee protections, these changes can have crucial implications for how businesses operate. This post breaks down the major updates to help business owners, HR professionals, and hiring managers stay ahead of compliance requirements.
The Highlights of 2025 Labor Law Updates
Before diving into details, here are a few key updates at a glance that will be affecting California and U.S. employers in 2025:
- California Minimum Wage Increase: Rising to $16.50 per hour for all businesses, with corresponding changes to exempt employees' salary thresholds.
- Driver’s License Requirement Prohibitions: Employers can no longer require a driver’s license in job postings unless driving is essential for the role.
- Strengthened Paid Time Off Provisions: New regulations allow for more robust employee protections in using sick leave or accessing family leave benefits.
- Updated Employee Notifications: New whistleblower and workers’ compensation notices are now required to be visibly posted at worksites and workplaces to ensure employees understand their rights.
These are just the tip of the iceberg. Below, we'll explore these updates in more depth, along with the steps your company can take to integrate the changes smoothly.
California Minimum Wage and Exempt Salary Thresholds
Effective January 1, 2025, California labor laws mandate that minimum wage will increase to $16.50 per hour across the board for all businesses, regardless of size. This means companies with smaller workforces now face the same wage base as larger organizations.
What does this mean for exempt employees? California law also ties salary thresholds for exempt employees to the minimum wage. The new annual salary threshold for exempt employees will rise to $68,640 (or $5,720 per month). Employers in industries like healthcare or fast food may be subject to even higher rates per laws that started to take effect last year. See our 2024 labor laws update post for more details on these.
Action Steps for Employers on New Minimum Wage
- Audit Payroll Practices: Ensure wages and salaries meet the updated minimum wage and exemption thresholds.
- Review Budgets: Factor the increased labor costs into your financial forecasts for 2025.
- Communicate Changes: Be transparent with employees about these updates to address any potential questions.
Changes to Hiring Practices
A major update comes in the form of SB 1100, which prohibits employers from including a driver's license requirement in job postings unless driving is an essential function of the position. Keep in mind, this does not apply to the two forms of ID you may be taking for screening, this is simply as a requirement for the job itself. Employers must also consider whether alternate modes of transportation (e.g., ride-sharing, public transit, biking) could fulfill the role’s travel requirements.
Why This Matters
Job descriptions that previously listed a driver’s license as a blanket requirement while the job itself does not require driving as a primary responsibility may now violate California labor laws. Employers need to ensure their hiring practices adhere to this change.
Action Steps for Employers dealing with Driver's Licenses
- Update Job Descriptions: Review and revise job postings to remove unnecessary driver’s license requirements if the role does not directly require driving.
- Evaluate Essential Job Functions: Identify roles where driving is genuinely necessary and ensure these are clearly documented and promoted as such.
- Train Hiring Managers: Educate HR teams on compliance when drafting job descriptions and have a discussion with any employment agencies you may contract with.
Strengthened Protections for Paid Time Off and Family Leave
Two new updates reshape how employees access and use their time off in California.
- Employees are no longer required to use accrued vacation days before accessing paid family leave benefits. This ensures employees can retain their earned PTO while still receiving family leave support when necessary.
- Agricultural workers are now permitted to use their accrued sick leave during hazardous conditions, such as smoke or flooding emergencies, etc. to protect their health.
Action Steps for Employers for New Time Off Rules
- Update PTO and Sick Time Policies to align with new family leave and hazardous conditions requirements.
- Train Managers on the expanded paid leave rights for employees, particularly if you are in any industries affected by smoke or outdoor hazards.
- Communicate Updates clearly to employees, emphasizing any new benefits available to them depending on your company's industry and worksite conditions.
Expanded Employee Notifications
Starting in 2025, employers are required to comply with additional notification updates to ensure employees are aware of their legal rights. See the new notices that are required to be posted visibly for all employees below.
- Whistleblower Rights: Employers must post updated notices about employee whistleblower protections, including contact information for reporting violations.
- Workers’ Compensation Notices: The new requirement mandates that employees be informed of their right to consult an attorney regarding workers' compensation claims.
Action Steps for Employers
- Display Updated Notices prominently in workplaces. The whistleblower notice, for example, must use at least 14-point font and align with state guidelines.
- Update Employee Manuals to reflect changes in these areas.
- Distribute New-Hire Information that includes the most recent notices as part of your onboarding process.
How These Changes Can Impact Your Business
Staying compliant with labor laws isn’t just about avoiding penalties—it’s also about creating a fair, transparent, and understanding workplace. For example, improving family leave access can boost employee morale, while ensuring accurate minimum wage adjustments reduces liability risks, employee turnover, and more issue that you are better off not dealing with.
The challenge lies in navigating the complexity of these changes, especially when multiple updates take effect simultaneously, like often occurs at the start of a new year.
Beyond Compliance: The Bigger Picture for Employers
2025 labor law updates reflect a broader shift toward prioritizing employee rights and well-being. Businesses that proactively adapt to these changes can do more than just avoid fines; they can strengthen their reputation, attract top talent, and foster greater workplace satisfaction.
If compliance feels daunting, consider leveraging HR tools or seeking expert advice from a workforce staffing and consulting agency such as SkillsetGroup to stay ahead. By approaching these updates strategically, your business can turn compliance challenges into opportunities for growth and improvement.
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