As discussed here, California’s AB 1076 amended existing California law to codify its position on restrictive covenants (e.g., noncompete agreements/clauses). Sending a very clear message, AB 1076 provides that, “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.”

The statute also requires employers to send an individualized notification to all current and former employees – employed after January 1, 2022[i] – advising that any noncompete agreements (or restrictive clauses within any agreement) are now void.

The statute’s notification deadline is February 14, 2024. Employers may face civil penalties of up to $2,500 per violation[ii].

A few recommended next steps:

• If you have not already done so, immediately begin a retroactive review of all employment contracts (in state or out of state).
• Begin compiling contact information and drafting individualized notifications for those impacted.
• Create a notice that includes reference to the specific agreement at issue, including identifying the impacted provision(s), and clearly states that due to the change in California law governing noncompete agreements/provisions, the company will no longer enforce or attempt to enforce such agreements/provisions.
• To ensure all impacted individuals receive the notice, send using a verifiable method such as FedEx, UPS or other such carrier. If sending by U.S. mail use a Return Receipt Request to confirm receipt.
• Seek counsel if you are unclear or unsure whether any of your company’s employment agreements entered into as of January 1, 2022 contain unenforceable noncompete language.

[i] Regardless of where they currently reside.

[ii] Payable to each individual who fails to receive notice.

In the evolving world of employment law, staying compliant and adopting best practices in your hiring processes isn’t just beneficial—it’s imperative.  Today, we’re zeroing in on an essential component: Hiring Practices.

1. Employment Applications: Seeking Appropriate Information

The initial step in auditing your hiring practices involves a thorough review of your employment applications. It’s crucial to ensure these applications seek only relevant and legally permissible information. Questions about race, religion, gender, age, marital status, and disabilities should be avoided unless they’re job-related and necessary for the business. This precaution helps prevent discrimination claims and ensures compliance with laws such as the Americans with Disabilities Act (ADA), the Age Discrimination in Employment Act (ADEA), and the California Fair Employment and Housing Act (FEHA).

Under California’s Ban the Box law, employers are prohibited from asking about an applicant’s criminal history on job applications. This means that the checkbox or question related to prior convictions must be removed from initial job application forms. Furthermore, SB 700 bans inquiries about past marijuana use and pre-employment drug screenings for cannabis.

2. Policy Acknowledgement by New Hires

Upon hiring, it’s essential that new employees are promptly informed about company policies, including those related to harassment, discrimination, and workplace conduct. Ensure that your onboarding process includes a mechanism for employees to acknowledge, in writing, that they have received, understood, and agreed to comply with these policies. This step not only educates new hires about your company culture and expectations but also provides a layer of legal protection by establishing that the employee was made aware of company policies from the outset.

3. Training Hiring Managers on Proper Interview Procedures

The role of hiring managers in the recruitment process cannot be overstated. It’s vital that they’re well-trained on appropriate interview procedures and questions. This includes understanding what constitutes illegal or inappropriate questions that could lead to discrimination claims. Training should cover the basics of employment law as it relates to hiring, including the importance of maintaining consistency in the questions asked of all candidates and focusing on the skills and qualifications necessary for the job. A well-informed hiring manager is your first line of defense against potential legal pitfalls in the hiring process.

4. Arbitration Agreements with Class Action Waivers

In an era where employment litigation can be costly and time-consuming, many employers opt to include arbitration agreements with class action waivers in their employment contracts. This practice can mitigate the risk of large-scale litigation by requiring individual arbitration of disputes. However, it’s important to review these agreements periodically to ensure they comply with evolving legal standards and are presented to employees in a manner that is considered fair and conscionable. The enforceability of such agreements often depends on the specifics of their wording and the context in which they’re presented, making regular audits of these documents a prudent practice.

Conclusion

Conducting an audit of your hiring practices is a proactive step toward ensuring legal compliance and fostering a positive workplace culture. By addressing these four critical areas—employment applications, policy acknowledgments by new hires, training for hiring managers, and arbitration agreements with class action waivers—you lay the foundation for a robust and compliant hiring process. Remember, the goal is not only to mitigate legal risks but also to create an inclusive and equitable hiring environment that attracts top talent to your organization.

Stay tuned for our next part in this series, where we’ll explore another vital aspect of employment practice audits – HR recordkeeping. In the meantime, consider getting Western Growers’ 2024 Personnel Procedures Manual. The PPM provides valuable guidance for agricultural employers in navigating California’s, Arizona’s and federal evolving employment laws.

California employers with 100 or more payroll or labor contractor employees are required to annually submit pay data – including hours worked and employee demographics – to the California Civil Rights Department (CRD).   

This year’s filing deadline for the 2023 reporting year is May 8, 2024. 

Starting February 2, 2024, employers should begin accessing the CRD’s Pay Data Reporting portal to review the required pay data reports. Updated templates to assist in preparing 2023 reports can be found on the portal along with instructions, a User Guide, and helpful FAQs. 

Since CRD has updated this year’s reporting requirements, covered employers must understand these changes before collecting data and creating pay reports. Covered employers should regularly monitor CRD’s FAQs and guidance materials for updates, as the Department regularly makes changes to these materials without notice.